U.S. v. McCorkle, 73--1084

• Decision Date: 01 April 1975
• Docket Number: No. 73--1084,73--1084
• Citation: 511 F.2d 482
• Parties: 75-1 USTC P 9270 UNITED STATES of America, Plaintiff-Appellee, v. Charles D. McCORKLE, Jr., Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 482

511 F.2d 482

75-1 USTC P 9270

UNITED STATES of America, Plaintiff-Appellee, v. Charles D. McCORKLE, Jr., Defendant-Appellant.

No. 73--1084.

United States Court of Appeals Seventh Circuit.

Argued en banc Dec. 10, 1974.

Decided Feb. 24, 1975.

Rehearing and Rehearing En Banc

Denied April 1, 1975.

Charles R. Purcell, William A. Barnett, Chicago, Ill., for defendant-appellant.

James R. Thompson, U.S. Atty., Gary L. Starkman, Asst. U.S. Atty., Chicago, Ill., for plaintiff-appellee.

Before SWYGERT, Chief Judge, CASTLE, Senior Circuit Judge, FAIRCHILD, CUMMINGS, PELL, STEVENS, SPRECHER and TONE, Circuit Judges.

CASTLE, Senior Circuit Judge.

Defendant Charles D. McCorkle, Jr. was convicted by a jury of willfully failing to file federal income tax returns for 1965, 1966 and 1967 in violation of 26 U.S.C. § 7203. ¹ The sole issue before the jury was whether McCorkle's failure to file was willful.

On appeal, a panel of this court reversed McCorkle's conviction, holding that the trial court incorrectly instructed the jury on the issue of willfulness and erred in limiting McCorkle's cross-examination of two Internal Revenue Service agents. Subsequently, a majority of the active judges on this court voted to rehear the case en banc. After carefully reviewing McCorkle's contentions, we affirm his conviction.

I.

McCorkle argues that in order to find that he willfully failed to file his tax returns, United States v. Bishop, 412 U.S. 346, 361, 93 S.Ct. 2008, 36 L.Ed.2d 941 (1973) requires an intent to defraud the Government or other similar 'bad purpose or evil motive.' He asserts, therefore, that the trial court's instructions ² directing the jury that it need not be concerned with whether the defendant intended to evade taxes or defraud the Government precluded the jury from determining that his failure to file was not willful.

Prior to the Supreme Court's decision in Bishop, this court was confronted with the same argument as is presented here in United States v. Matosky, 421 F.2d 410 (7th Cir.), cert. denied 398 U.S. 904, 90 S.Ct. 1691, 26 L.Ed.2d 62 (1970). In finding no error in the instructions on willfulness in that case, we held that:

(T)he defendant's motive need not be restricted to an intent to defraud the Government in order for there to be a violation of § 7203. Rather, the Government has proven its case when it has established beyond a reasonable doubt: that the defendant was required to file a return; that he knew that he was so required; and that he willfully or purposefully, as distinguished from inadvertently, negligently, or mistakenly, failed to file such a return. His reasons for failing to so file are irrelevant under § 7203, so long as the above facts are shown. Id. at 413 (Footnote omitted).

Thus, Matosky established that in order for the violation to be willful, the government need only prove a deliberate intention not to file returns which the defendant knew should be filed. Although Bishop disapproved our statement that the meaning of willfulness under the tax felony statutes would differ from its meaning under such tax misdemeanor statutes as § 7203, we believe the definition of willfulness enunciated in Matosky complies with the uniform meaning adopted by the Court in Bishop.

In Bishop, the Court held that 'willfully' has the same meaning in both tax misdemeanor and tax felony statutes. The Court stated that the word 'willfully' in these statutes 'generally connotes a voluntary, intentional violation of a known legal duty,' 412 U.S. at 360, 93 S.Ct. at 2017, and went on to rule that specific intent the Government must prove 'we therefore shall continue to require, in both tax felonies and tax misdemeanors that must be done 'willfully,' the bad purpose or evil motive described in (United States v. Murdock, 290 U.S. 389, 54 S.Ct. 223, 78 L.Ed. 381 (1933)).' 412 U.S. at 361, 93 S.Ct. at 2017. Contrary to the defendant's contentions, we believe that the Court employed the terms 'bad purpose' and 'evil motive' as a convenient method of referring to the longer definition of 'willfully' as a 'voluntary, intentional violation of a known legal duty,' and not as engrafting an intent to defraud requirement or other similar evil purpose on that definition. Examination of the bad purpose or evil motive described in Murdock supports this conclusion.

The defendant in Murdock refused to supply information concerning his tax liability to federal revenue officials, fearing that such information would lead to prosecution under state law. Subsequently, the defendant was prosecuted for willfully failing to supply information under a statutory predecessor to § 7203. His defense was that he relied in good faith on his privilege against self-incrimination, and that therefore his refusal to supply the information requested could not be termed 'willful.' The trial court, in its charge to the jury, stated that it believed the defendant to be guilty.

The Supreme Court, in affirming the appellate court's reversal of the defendant's conviction, held that the trial court judge had improperly expressed his opinion that the defendant was guilty. The Court arrived at this result because it first concluded that to find that the defendant willfully violated the statute, it must be found that the defendant acted not only voluntarily, but also with 'bad faith or evil intent.' 290 U.S. at 398, 54 S.Ct. 223. Then, because it was not undisputed or admitted that 'defendant's assertion of the privilege was so unreasonable and ill founded as to exhibit bad faith and establish willful wrongdoing,' 290 U.S. at 396, 54 S.Ct. at 226, the Court found that the trial court's comment had invaded the province of the jury. The implication of Murdock, therefore, is that had it been undisputed that the defendant knew that his reliance on the privilege was invalid, the trial court's comment would not have constituted error, and the conviction, without any further showing by the government, would have been upheld. Thus, the evil motive described in Murdock that would have satisfied the requirement of willfulness would have been the defendant's voluntary refusal to supply information, knowing that such refusal was wrongful.

Cases decided after Bishop have also interpreted that decision to mean that willfulness only requires an intentional violation of a known legal duty. United States v. Hawk, 497 F.2d 365 (9th Cir.), cert. denied, 419 U.S. 838, 95 S.Ct. 67, 42 L.Ed.2d 65 (1974); United States v. Klee, 494 F.2d 394 (9th Cir.), cert. denied, 419 U.S. 835, 95 S.Ct. 62, 42 L.Ed.2d 61 (1974); United States v. Smith, 493 F.2d 906 (5th Cir. 1974) (dictum). Thus, in United States v. Hawk, supra, at 368, the court found that the thrust of Murdock was that the requirement of willfulness is satisfied by proof that the act was done voluntarily and with knowledge that it was wrongful, and concluded that the terms bad purpose and evil motive are merely 'convenient shorthand expression(s)' for the required elements of proof. Consequently, we reject the argument that intent to defraud is essential to prove that a violation is willful, and conclude that Bishop did not alter the definition of willful as set forth in Matosky.

Examination of the instructions in this case shows that in three instances the trial court correctly charged the jury that willfulness requires both an intentional failure to file, and knowledge by the defendant that he was under a legal obligation to do so. ³ The defendant's contention that other statements in the court's charge might have misled the jury is without merit when the statements are considered in context and in light of the proper instructions that were given.

Finally, McCorkle argues that the instructions had the effect of eliminating justifiable excuse as a consideration in resolving the issue of willfulness. However, as we noted in Matosky, supra, 421 F.2d at 413, only an inadvertent failure to file or 'a bona fide misunderstanding as to (defendant's) . . . duty to make a return' would constitute 'justifiable excuses.' Since the instructions required the jury to find an intentional violation of a known legal duty, it would have been essential for the jury to conclude that McCorkle's conduct was unjustified. United States v. Kaczmarek,490 F.2d 1031 (7th Cir. 1974). We find the trial court's instructions to be proper.

II.

McCorkle next claims that the trial court erroneously limited his cross-examination of two Internal Revenue Service agents by excluding testimony concerning portions of conversations between McCorkle and the two agents after admitting testimony concerning other parts of the conversations during direct examination of the agents. The officers testified on direct examination that McCorkle admitted his failure to file his federal tax returns for the decade 1957--1967 and that he also recalled being advised that he could file his returns without payment or with only partial payment of the tax due. McCorkle further admitted to the agents that copies of purported tax returns for 1959--1960 furnished to a savings and loan association were fictitious, and that amounts representing estimated tax payments supplied to his accountant to present the appearance of diligent tax filing, were also fictitious.

At trial, McCorkle offered to prove that he also told the agents during these conversations that (1) he failed to file because he did not have the money to pay the tax due; (2) he did not file because of the possible criminal consequences arising from his failure to file earlier returns; (3) he did not file because he had been contemplating suicide; (4) he did not file because he feared the government, on learning of his tax liability, would place liens on his property and jeopardize his business; (5) he was involved in a divorce suit with his wife at the time of the investigation and the returns would have been voluntarily filed when the divorce was final; (6) he timely filed all employer's...