United States v. McDaniel

• Decision Date: 13 December 1972
• Docket Number: No. 549,551,576.,549
• Citation: 352 F. Supp. 585
• Parties: UNITED STATES of America v. Gary R. McDANIEL (two cases). UNITED STATES of America v. Gary R. McDaniel et al.
• Court: U.S. District Court — District of South Dakota

352 F. Supp. 585

UNITED STATES of America v. Gary R. McDANIEL (two cases).

UNITED STATES of America v. Gary R. McDaniel et al.

Nos. 549, 551, 576.

United States District Court, D. North Dakota. Northwestern Division.

December 13, 1972.

Harold O. Bullis, U. S. Atty., Eugene K. Anthony, Asst. U. S. Atty., Fargo, N. D., for plaintiff.

William R. Mills, Bismarck, N. D., for defendants.

MEMORANDUM OF DECISION

BENSON, Chief Judge.

Gary R. McDaniel, on October 15, 1969, appeared before the North Dakota State Grand Jury, which was investigating the First Western State Bank in Minot, North Dakota.

Subsequent to his grand jury testimony, McDaniel was indicted on twelve counts by the federal government, and found guilty on eleven of them. In his appeal to the Court of Appeals for the Eighth Circuit, 449 F.2d 832, McDaniel contended that the federal convictions were obtained in violation of his privilege against self-incrimination, for the reason that he testified before a state grand jury under a grant of immunity, which accorded him transactional immunity from all federal prosecution for offenses revealed by the compelled testimony.

I. THE APPELLATE COURT'S MANDATE

The Court of Appeals, adopting the rationale of Murphy v. Waterfront Commission, 378 U.S. 52, 84 S.Ct. 1594, 12 L.Ed.2d 678 (1964), declared that the 5th Amendment requires immunity from federal prosecution in all matters relating to the charges—e. g. "transactional immunity".

The Court recognized the distinction where dual sovereigns are involved, one being the questioning sovereign and the other being the prosecutor. In such a case, the 5th Amendment protection would be complete by granting only "use immunity". The situation giving rise to this appeal was one where the federal government saw the grand jury transcript, in effect placing it on the role of both questioner and prosecutor. The Murphy rule requires the federal government to forego prosecution as to those matters to which the prosecution relates. This result cannot be avoided by permitting the state to compel the testimony, and then permitting the federal government to see the testimony.

The Court concluded that if, in fact, McDaniel testified before the state grand jury as to matters related to the federal prosecution, then, since the government has seen the testimony, the indictments should be dismissed.

In remanding for an evidentiary hearing, the Court directed that:

"If the trial court finds that McDaniel testified before the state grand jury under a grant of immunity to matters related to the instant prosecution or any severable part of them, the charges on which testimony was given must be dismissed . . ." United States v. McDaniel, 449 F.2d 832, 841 (1971). (Italics supplied.)

II. DID McDANIEL TESTIFY UNDER A GRANT OF IMMUNITY?

Two North Dakota Statutes, each available for immunity have, at one time or another, been cited as a basis for McDaniel's immunity. North Dakota Century Code § 31-01-09, as amended, provides for a conditional grant of immunity if a person refuses to answer on the grounds that he may be incriminated; and if the prosecutor, with the attorney general's approval, requests the court to order the person to answer.

It is clear from reviewing the testimony of the grand jury transcript and the evidentiary hearing transcript, that no immunity under § 31-01-09 was ever afforded McDaniel. The Ward County State's Attorney makes this clear where, in reply to a question posed by the Assistant United States Attorney, he says,

"At this time I said absolutely not, that if Mr. McDaniel testified it would be done so voluntarily; that we would give no grant of immunity under § 31-01-09 . . ."

The First Assistant Attorney General of the State of North Dakota also renounced any grant of immunity, to-wit:

". . . I opened my remarks to Mr. Kerian by saying that `we are not going to give any immunity or special consideration for any testimony . . .'"

Despite the above denials, the First Assistant Attorney General does say that at no time during the grand jury testimony was McDaniel told that he didn't have immunity. The Ward County States Attorney also admits that McDaniel was never specifically told that he did not have to testify.

The grand jury, in its investigation, was concerned with violations of the North Dakota Century Code, Chapters 16-08 (Banks) and 16-20 (Corrupt Practices).

The second statutory reference to immunity is set out in Chapter 16-20-10, North Dakota Century Code, to-wit:

". . . No person shall be prosecuted nor subjected to any penalty . . . for . . . any . . . thing concerning which he may testify . . . and no testimony so given or produced shall be used against him upon any criminal investigation or proceeding."

The appellant's attorney, in his reply brief, says that McDaniel testified with this statute in mind, and in fact, was urged to do so by his attorney who was representing him at that time.

The Government, in its brief, asserts the main question is whether McDaniel testified with reliance on Section 16-20-10, or whether it was voluntary. The government contends the latter is true, charging that the only purpose in his testifying was to construct a defense by implicating everyone else. In his grand jury testimony, McDaniel comments that,

"I made the decision, and my lawyers made the decision for me . . . to go in this direction . . . it's the course I've chosen . . ."

Reliance is placed on this statement by the government to show that McDaniel was not under any compulsion to testify, that it was of his own volition.

Appellant's attorney, however, reads this passage as substantiation for the position that McDaniel's attorney (at that time), made the decision to testify based upon his knowledge of § 16-20-10. This position does have weight, in that McDaniel's attorney did talk to the First Assistant Attorney General some time prior, and was informed that no immunity under § 31-01-09 would be forthcoming.

Appellant's attorney also bases his compulsory testimony position on the fact that McDaniel was subpoenaed. This, according to him, is compulsion.

Countering this, the government replies that the subpoena was issued only so that McDaniel could have free transportation, and that both he and his attorneys were well aware of the government's position on a grant of immunity. The government never distinguishes between § 31-01 immunity, and § 16-20 immunity, and repeatedly refers to a "grant" of immunity. It is noted that a "grant" is not necessary under § 16-20-10, it being an automatic application. This same section also seems to compel testimony by the words, "no person shall be excused . . ."

This is the position that North Dakota District Judge Coyne took when he reviewed this issue on March 30, 1970. Although the government maintains McDaniel went to the grand jury voluntarily, its position cannot be sustained. Judge Coyne asked: "How do you compel a witness to testify, other than by subpoena?" To which the Ward County States Attorney replied there was no immunity because McDaniel did not refuse to testify, nor did the state give him a grant of immunity. The Judge determined that immunity was afforded automatically by the provisions of § 16-20-10, and that under said provision, McDaniel could not refuse testimony on the grounds of self-incrimination. "16-20-10 clearly indicates that he must give testimony." If this is a correct position, then it would have been pointless for McDaniel to have refused or to have made objections at the proceedings.

It would have been impossible for McDaniel to testify for 472 pages on matters related to the investigation of the bank, without giving evidence relating to his own conviction.

Referring to Counselman v. Hitchcock, 142 U.S. 547, 12 S.Ct. 195, 35 L.Ed. 1110 the court held that no immunity statute which leaves the party subject to prosecution after he answers the criminating question, can have the effect of supplanting the privilege against self-incrimination. Such a statute is valid only if it supplies a complete protection from all the perils—transactional immunity. From this authority then, it is clear that § 16-20-10 must afford a witness complete immunity as to all incriminating matters. See McDaniel, supra, 449 F.2d at 836.

Although the government contends that McDaniel's testimony before the grand jury related only to charges of bribery and corruption, under the rationale of the decision of the Court of Appeals, he still may have immunity as to other matters.

"The test, however, of whether immunity has been acquired in return for compelled testimony is not what legal labels are attached to the criminal conduct which is the subject of the incriminating testimony, but whether the conduct revealed by the compelled testimony is related to the subject matter of the federal prosecution . . ." United States v. McDaniel at 840.

The government further contends that this relationship must be a `substantial' relationship. It would seem that had this been the intent of the appellate court, it would have been specifically set out—it was not. On pages 840 and 841, the court sets out the phrase "matters related" some four times. As basis for its assertion of a "substantial relationship" requirement, the government cites United States v. Marcello, 423 F.2d 993 (5th C.A. 1970); United States v. Onassis, 125 F.Supp. 190 (D.C.1954); and United States v. Zirpolo, 288 F.Supp. 993 (D.N.J.1968). A review of these cases does not lead this court to the government's position.

Marcello disallowed the privilege because "no matter what the answer might have been, it could not possibly result in, or present evidence leading to, any criminal or civil liability. . ."

In Onassis, the court read the grand jury minutes with the following consideration in mind . . . "that the facts concern a matter as to which the answer might with reasonable possibility be incriminating." `Reasonable possibility' does not...