United States v. Kushner

• Citation: 135 F.2d 668
• Decision Date: 21 June 1943
• Docket Number: No. 195.,195.
• Parties: UNITED STATES v. KUSHNER.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

135 F.2d 668 (1943)

UNITED STATES v. KUSHNER.

No. 195.

Circuit Court of Appeals, Second Circuit.

May 5, 1943.

Writ of Certiorari Denied June 21, 1943.

Samuel M. Ostroff, of New York City (Herman Mendes and Charles L. Raskin, both of New York City, on the brief), for defendant-appellant.

Robert M. Hitchcock, Asst. U. S. Atty., of Buffalo, N. Y. (George L. Grobe, U. S. Atty., of Buffalo, N. Y., on the brief), for plaintiff-appellee.

Before SWAN, CHASE, and CLARK, Circuit Judges.

CLARK, Circuit Judge.

Five counts of an indictment brought in the district court against the appellant herein, Bernard Kushner, together with four codefendants, accused him of violating the Customs Act, 19 U.S.C.A. §§ 1593(a), 1593(b), and § 483(b), by importing and assisting the importation of undeclared gold bullion from Canada; a sixth count charged him and the others with conspiring to commit these offenses and to defraud the United States, 18 U.S.C.A. § 88. Appellant's codefendants pleaded guilty, and a jury convicted him on all counts. It was undisputed that the codefendants successfully engaged in a conspiracy between 1938 and 1942 to import undeclared gold bullion into the United States from Canada; the issue concerned the extent to which appellant, a licensed gold refiner who admittedly purchased gold from at least two of the codefendants, was connected with the affair. This appeal challenges the sufficiency of the evidence for the jury, the propriety of the court's charge and refusals of requests to charge, numerous rulings made at trial, and, initially, the illegality in any event of the importation of undeclared gold bullion. We take up the latter question first.

1. The substantive law. Appellant's attack on the legal theory of the prosecution centers on two main points: that gold being duty free, 19 U.S.C.A. § 1201, par. 1638, its importation does not violate the Customs Act, and that in any event the exclusive penalty for any unlawful dealing with gold, including importation, is under the Gold Reserve Act, 31 U.S.C.A. § 443, providing penalties for the acquisition and use of gold in violation of law.

It seems clear, however, that the statutes, 19 U.S.C.A. §§ 1461, 1484, which require the inspection and invoicing of all "merchandise" brought into the country include duty-free gold bullion. Merchandise is defined by 19 U.S.C.A. § 1401 (c) as "goods, wares, and chattels of every description and includes merchandise the importation of which is prohibited." This is broad enough to include gold. Shaar v. United States, 5 Cir., 269 F. 26; Lozano v. United States, 5 Cir., 17 F.2d 7. Hence the statutes here particularly relied on become applicable if the requisite intent is shown: § 1593(a), prohibiting smuggling "with intent to defraud the revenue of the United States,"¹ § 1593(b), prohibiting the fraudulent or knowing importation of merchandise contrary to law, or the assisting therein,² and § 483(b), also providing a penalty for aiding the unlawful importation of merchandise.³

Appellant's point that the Gold Reserve Act, 31 U.S.C.A. § 443, is exclusive stresses 31 U.S.C.A. § 446 to the effect that all laws inconsistent with that Act are repealed. But § 443 applies only to importations in disregard of regulations or licenses of the Secretary of the Treasury, issued pursuant to 31 U.S.C.A. §§ 441, 442, with a view to stabilizing the domestic monetary economy; and it is in no wise inconsistent with §§ 1593(a), 1593(b), and 483(b), as here directed at the impairment of the efficiency of customs administration by a failure to declare or to invoice any imported gold. Each statute stands for a separate function. Cf. General Motors Acceptance Corp. v. United States, 286 U.S. 49, 52 S.Ct. 468, 76 L.Ed. 971, 82 A.L.R. 600; Farber v. United States, 9 Cir., 114 F.2d 5, certiorari denied 311 U.S. 706, 61 S.Ct. 173, 85 L.Ed. 458. Furthermore, § 443 is much more limited in scope than the penal provisions of the Customs Act. Repeals by implication are not favored; and where, as here, there are reasonable grounds for the continued effectiveness of both statutes, a repeal will not be presumed. Cf. Bookbinder v. United States, 3 Cir., 287 F. 790, certiorari denied 262 U.S. 748, 43 S.Ct. 523, 67 L.Ed. 1213; Goldberg v. United States, 8 Cir., 277 F. 211.

We need not now pass upon the case in which a violation of the Gold Reserve Act is sought to be penalized under the provisions of the Customs Act. Cf. In re 200 7/12 Dozen Wool Hose and Half Hose, 2 Cir., 263 F. 376. The lower court in its charge to the jury cautiously excluded the admitted violation of that Act here as a basis of conviction under §§ 1593(a), 1593 (b), and 483(b); and the penal provision of the Gold Reserve Act has not been invoked against appellant. The situation is thus totally unlike Palmero v. United States, 1 Cir., 112 F.2d 922, which condemned an attempt to punish twice the same violation of the Narcotic Drugs Import and Export Act, 21 U.S.C.A. § 173 — once under that law and once under the Customs Act.

Perhaps a more serious problem is posited by appellant's contention that the requisite intent for violation of the three statutes is lacking in any case involving duty-free merchandise, since the statutes were intended solely to prevent and punish frauds on the Government with respect to its revenue. Sec. 1593(a) does require an "intent to defraud the revenue of the United States." This hardly grammatical expression appears in certain other statutes (cf. 26 U.S.C.A. Int.Rev. Code, §§ 3321, 3323(a) (3)), but its meaning cannot be said to be wholly clear. The district court relied on the decision of Judge Augustus N. Hand in United States v. Twenty-Five Pictures, D.C.S.D.N.Y., 260 F. 851, 854, which dealt directly with the meaning of "fraudulently" in what is now § 1593(b), but added that if "proof of an intention to defraud the government" was required, "the requisite fraud need not consist of deprivation of customs revenues. The collation of information in order to pass upon the classification of merchandise, and the question often most difficult as to whether it is dutiable, and, if so, just what duty is imposed, is an important function of the revenue department of the government. Without such information, the Customs Act cannot really be enforced or the revenues collected." Judge Hand's interpretation was in line with the well settled view as to the meaning of the expression "to defraud the United States," as in the conspiracy statute, 18 U.S.C.A. § 88. Haas v. Henkel, 216 U.S. 462, 30 S.Ct. 249, 54 L.Ed. 569, 17 Ann.Cas. 1112; United States v. Barnow, 239 U.S. 74, 79, 36 S.Ct. 19, 60 L.Ed. 155; Wallenstein v. United States, 3 Cir., 25 F.2d 708, certiorari denied 278 U.S. 608, 49 S.Ct. 13, 73 L.Ed. 534. But here there is an additional term, "revenue"; and while this may mean the revenue department, thus avoiding the difficulty of defrauding an inanimate thing, yet it seems likely that an actual loss of government income was contemplated. See Dunbar v. United States, 156 U.S. 185, 194, 15 S.Ct. 325, 39 L.Ed. 390. The Supreme Court has shown a tendency to restrict the broader meaning of defrauding whenever the circumstances suggest, even if they do not state, a narrower view. United States v. Cohn, 270 U.S. 339, 46 S.Ct. 251, 70 L.Ed. 616; cf. Keck v. United States, 172 U.S. 434, 19 S.Ct. 254, 43 L.Ed. 505; United States v. A. Graf Distilling Co., 208 U.S. 198, 28 S.Ct. 264, 52 L.Ed. 452. The question is not free from doubt,⁴ but we incline to the view that an intent to deprive the Government of revenue must be held an ingredient of the crime defined in § 1593(a). Accordingly the conviction of appellant under the first count, the only one which relies on this statute, must be reversed.

The express requirement of an intent to defraud the revenue in § 1593(a) helps to negate any inference of an implied limitation to this effect in §§ 1593(b) and 483(b), which omit such provision. It is not brought back by the term "fraudulently or knowingly" in § 1593(b), as Judge Hand demonstrated in United States v. Twenty-Five Pictures, supra. Hence, if the evidence was sufficient, conviction on the remaining substantive counts was proper. And the requisite intent for the conspiracy charge would be present, under the authorities above cited. So far as it included a reference to § 1593(a), no objection or request to charge as to that alone was made. United States v. Smith, 2 Cir., 112 F.2d 83. Since the only sentence under the first count was of imprisonment concurrent with like sentences under other counts, the reversal on this count will not, as a practical matter, reduce his punishment.

2. The sufficiency of the evidence. We come, then, to the important issue of the sufficiency of the evidence to convict appellant of aiding and abetting these violations of the Customs Act and of knowingly participating in a conspiracy so to do. In the conspiracy which was proved, two Canadians, Dollinger and Faibush, secured gold bullion in Canada and brought it without declaration into the United States and to the codefendants Rubin and Roth in New York City or sent it by go-betweens, Julius and Abrahams, the other codefendants. Rubin and Roth then disposed of it to a licensed refiner in this country. Advantage was taken of a favorable disparity in rates of exchange. Overt acts were shown to have occurred on September 26, 1941, when Canadian authorities observed Abrahams and Julius to cross the border after leaving Faibush's home with a bag, and on October 4, 1941, when Abrahams and Julius were stopped at the border and searched, and a concealed vest was discovered on Julius containing some $10,308 in gold bullion.

Strongly implicating appellant in the conspiracy was the testimony of Rubin, Roth, and Julius, as government witnesses, to the effect that appellant, as a licensed refiner, bought the imported gold bullion with full knowledge of its illicit origin; that on occasion Dollinger...