United States v. Moody, 16862.

• Decision Date: 27 January 1967
• Docket Number: No. 16862.,16862.
• Citation: 371 F.2d 688
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. John Burton MOODY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

371 F.2d 688 (1967)

UNITED STATES of America, Plaintiff-Appellee, v. John Burton MOODY, Defendant-Appellant.

No. 16862.

United States Court of Appeals Sixth Circuit.

January 27, 1967.

Lucius E. Burch, Jr., Memphis, Tenn., for appellant, Tom Mitchell, Jr., Memphis, Tenn., on the brief, Burch, Porter & Johnson, Farris, Hancock & Mitchell, Memphis, Tenn., of counsel.

Odell Horton, Jr., Asst. U. S. Atty., Memphis, Tenn., for appellee, Thomas L. Robinson, U. S. Atty., Memphis, Tenn., Mitchell Rogovin, Asst. Atty. Gen., Joseph M. Howard, Atty., Tax Div., Dept. of Justice, Washington, D. C., on the brief.

Before EDWARDS and CELEBREZZE, Circuit Judges, and KALBFLEISCH,^* District Judge.

EDWARDS, Circuit Judge.

Appellant has twice been tried and convicted before a jury in the United States District Court for the Western District of Tennessee on a four-count indictment charging willful evasion of federal income taxes in violation of the Internal Revenue Code of 1954, § 7201. On appeal to this court, the previous conviction was reversed. United States v. Moody, 339 F.2d 161 (C.A.6, 1964). This court held that defendant had been denied the right to introduce evidence pertaining to, and had been denied an instruction on, his claim that he owed no additional taxes for the disputed years.

On retrial and reconviction defendant was again sentenced to five-year concurrent sentences on each of the four counts. On this appeal defendant complains of many aspects of the judge's charge to the jury. He also claims prejudicial error in several comments to the jury made by government counsel during closing arguments. And he likewise complains of the admission of hearsay evidence at the second trial by dint of cross-examination of a defense witness pertaining to what had happened at the first trial.

Defendant is a medical doctor in private practice in Dyersburg, Tennessee. The indictment alleged (and proofs showed!) that defendant filed a tax return for the year 1956, showing $2,584.90 taxable income, and no federal income tax due; for the year 1957, showing taxable income of $3,639.64, and tax due of $53; for the year 1958, showing taxable income of $2,019.80, and tax due of $403.96; and for the year 1959, showing taxable income of $2,119.06, and tax due of $423.81. The indictments also charged that defendant knew his taxable income and tax due in those same years was 1956 — $6,503.73 and $1,350.82; 1957 — $5,079.42 and $1,037.47; 1958 — $8,576.59 and $1,829.91; and 1959 — $13,633.39 and $3,210.02.

As we have noted, the jury at this second trial found defendant guilty on all four counts. No issue pertaining to the sufficiency of the evidence to uphold this verdict is presented to us. But it seems essential to us in dealing with the legal and procedural problems which are advanced to note both the essential nature of the evidence from the prosecution and the essential nature of the defense.

The chief prosecution witness, a special agent with the Intelligence Division, Internal Revenue Service, made an analysis of the checking account operated during these four years by defendant. After adding the known items paid by defendant in cash during those years and deducting all deposits which were of a non-income nature, he arrived at the total taxable income for each year previously noted in the indictment. These proofs showed $33,793.13 of taxable income for the four years in question, whereas defendant's returns for those years showed a total of $10,363.40. As far as we are able to deduce, these totals are not in dispute in this appeal — nor apparently were they at the end of the trial.

Secondly, the prosecution produced witnesses who testified to the amounts actually paid defendant by them for medical services and introduced the canceled checks for such services. Thus the prosecution demonstrated that in 132 instances (totaling $5,023.70) either these amounts were entirely omitted or were entered on the defendant's books (from which his tax returns were made up) in very much smaller sums. All of these items were based upon microfilms of canceled checks upon out-of-town banks which the government subpoenaed from the Dyersburg State Bank. But the proofs showed that the Dyersburg State Bank did not keep or make microfilms of local checks.

The defense did not seek to establish the accuracy of the defendant's returns. Basically it contended before the jury, first, that as to the 132 items referred to above, their omission or inaccurate recordation was due to errors of the doctor's bookkeeper. The bookkeeper (defendant's mother-in-law) testified that during the years in question defendant saw 25 to 30 patients daily and that she could have made sufficient errors to account for the $5,000 discrepancy. It was clearly established, however, that the defendant received the fees and made all bank deposits and simply told the bookkeeper of the amount to enter. Defendant did not testify.

The second and principal defense was that because of various deductions (to which it was argued the doctor was entitled) and certain claimed loans during the period in question, the defendant actually owed the government no tax for the years in question. These claimed deductions and loans were over and above any similar items shown on the defendant's tax return and had not been referred to in those returns. If allowed in total, they would have served to offset the government claim of $6,547.45 tax due.

Of course, we must read the jury verdict as resolving such factual disputes as were presented to it in favor of the government; and as we have noted, defendant submits no appellate issue as to weight or sufficiency of the evidence.

On appeal the argument before this court was begun by appellant's counsel with the frank statement that defendant was an abortionist and that, hence, this court should take great care to see that his procedural rights in this tax evasion case were properly observed — presumably because of the prejudicial effect that the source of his income might have had upon the judge or jury. The fact that income is procured by means which are illegal under state law does not, of course, constitute evidence of violation of federal tax statutes. Lurding v. United States, 179 F.2d 419 (C.A. 6, 1950). But, equally obviously, it does not create any immunity from them either.

As to appellant's issues 4 through 12, based upon the judge's charge as given, or on his failure to give defendant's requests to charge, we find no reversible error. We have reviewed the charge in toto and considered each of defendant's detailed complaints about it. The trial judge was clearly under no obligation to give his instructions in language chosen by one of the contending parties. We believe those matters covered by defendant's request to charge, which should have been made part of the charge, were adequately and fairly set forth to the jury in the charge as given. The charge was full, informative, accurate and balanced and contained in our judgment no error which served to prejudice defendant's case.

Appellant's principal reliance at oral argument was on his first two stated issues, which pertained to two claimed loans from one Eddie Adkins to defendant. At this trial defendant's counsel, without calling Adkins, cross-examined the principal witness for the prosecution on Adkins' previous testimony at the first trial. Over the government's objection, he read into the record an affidavit by Adkins stating that in 1958 he loaned Dr. Moody $5,000 and in 1959 he loaned Dr. Moody $4,000, and that Dr. Moody repaid approximately $1,000 and still owed Adkins $8,000.¹

With defendant's counsel still cross-examining, there followed this colloquy:

"Q. Now, you know that Adkins had asserted that he was a crap-shooter and had brought that money back from Burma from gambling in the Army in a money belt?

"Had —

"A. The reason I wanted to hesitate, I thought there was something stated a few minutes ago that I could not testify that Mr. Adkins or anybody else had testified.

"That is all conclusion —

"Mr. McTighe: We have no objection.

"Q. You have hesitated, now, to go ahead and answer. But your lawyers are telling me it can be done, the lead can be done.

"Now, go ahead, answer.

"A. Yes, sir. I didn\'t want to get in trouble with the Court on hearsay evidence. But, to answer your question, Mr. Adkins did testify that he did come back from overseas with this money strapped around his waist, and that he didn\'t let his wife know he had it, and carried it around the country, either around his waist or would stick it in the back of the car, or something, and that, although he was borrowing, he did not let his wife know that he had this money, and that Dr. Moody was a good friend of his, and he loaned it without charging him any interest.

"Q. Well, now, in inquiring as to whether he received that money, did you inquire into his

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