United States v. Niarchos

• Citation: 125 F. Supp. 214
• Decision Date: 09 September 1954
• Docket Number: No. 685-53.,685-53.
• Parties: UNITED STATES of America, v. Stavros NIARCHOS, Ambrose Capparis, George Trypanis, George Emmanuel, Constantine Emmanuel, alias Costa Emmanuel, Mary Dracopoulos, David R. Dorn, Robert A. Murphy, Compania Internacional de Vapores Ltda., a corporation, North American Shipping and Trading Company, Inc., a corporation, Delaware Tanker Corporation, a corporation, Joseph E. Casey, E. Stanley Klein, Julius C. Holmes, American Overseas Tanker Corporation, a corporation, Defendants.
• Court: U.S. District Court — District of Columbia

125 F. Supp. 214

UNITED STATES of America, v. Stavros NIARCHOS, Ambrose Capparis, George Trypanis, George Emmanuel, Constantine Emmanuel, alias Costa Emmanuel, Mary Dracopoulos, David R. Dorn, Robert A. Murphy, Compania Internacional de Vapores Ltda., a corporation, North American Shipping and Trading Company, Inc., a corporation, Delaware Tanker Corporation, a corporation, Joseph E. Casey, E. Stanley Klein, Julius C. Holmes, American Overseas Tanker Corporation, a corporation, Defendants.

No. 685-53.

United States District Court District of Columbia.

September 9, 1954.

COPYRIGHT MATERIAL OMITTED

Leo A. Rover, Allen J. Krouse, J. Frank Cunningham, Howard F. Smith, Frederick W. Becker, Washington, D. C., for plaintiff.

Edward B. Williams, William E. Leahy, Wm. J. Hughes, Jr., Henry T. Rathbun, Washington, D. C., for defendants.

YOUNGDAHL, District Judge.

This is one of a series of cases arising out of the disposition of surplus vessels after the Second World War. At that time there were many surplus vessels which had been built to carry supplies and troops. As a result Congress passed The Merchant Ship Sales Act of 1946, 50 U.S.C.A.Appendix, § 1735 et seq., which gave authority to the Maritime Commission to sell the vessels and set a price formula for the Commission to follow in selling them. The Act is merely directory to the Commission. It contains no penal provisions. Among other things the Act provides that preference in the sale of the surplus vessels shall be given to citizens of the United States, 50 U.S. C.A.Appendix, § 1740, and adopts the definition of citizenship appearing in Section 2 of the Shipping Act of 1916 as amended¹. Suspicion arose that some alien purchasers were misrepresenting their citizenship in order to obtain vessels, and on terms as favorable as those given to citizen purchasers. An investigation was initiated. It has resulted in thirteen indictments against an aggregate of ninety-one defendants on the criminal side, and libel proceedings against many of the vessels on the civil side.

The present indictment arose from the following alleged facts. On December 19, 1947, defendant American Overseas Tanker Corporation, (AOTC), contracted to purchase five vessels from the Commission. AOTC wanted to transfer the vessels to Panamanian registry and flag. Under Section 9 of the Shipping Act of 1916, approval of the Commission is required before a vessel can be placed under foreign registry or flag.² And, Section 41 of the Shipping Act of 1916 provides that whenever approval of the Commission is required by Section 9, the approval may be given either absolutely or upon such conditions as the Commission prescribes.³

In the contract of December 19, 1947, the Commission gave its approval, as required by Section 9, to the transfer of each vessel to Panamanian registry and flag. However, as authorized by Section 41, the Commission attached a condition to its approval. The condition was: "The Buyer agrees that, with respect to each vessel, the American citizen ownership and Panamanian registry of the vessel shall not be changed without prior approval of the Commission, and that if in the judgment of the Commission the national interest so requires, the Buyer shall return the vessel to documentation under the United States flag".

Defendants have been indicted for violation of Sections 9 and 41 of the Shipping Act of 1916 and under 18 U.S.C. § 371 for conspiracy to violate these Sections. Section 41 makes it a crime to violate a condition attached to approval under Section 9. The Government alleges that the condition was in fact violated by the sale of the stock in AOTC to alien interests which did not satisfy the citizenship requirements in Section 2 of the Shipping Act of 1916. Section 9 makes it a crime to transfer vessels to foreign registry or flag without approval of the Commission. The Government also alleges that under Section 41 a result of violating the condition is to treat the original transfer to Panamanian registry and flag as though it had been done without the approval of the Commission, thereby causing a violation of Section 9.

The cases against all but defendants Joseph E. Casey, E. Stanley Klein and Julius Holmes have been disposed of. This concerns motions by defendants Casey and Klein to dismiss and by Casey to inspect the minutes of the grand jury. The grounds forwarded by each defendant in his motion to dismiss are similar except that Casey presents, as an additional ground, that he is immune from prosecution under the Fifth Amendment and Section 28 of the Shipping Act of 1916, 46 U.S.C.A. § 827. This claim of immunity will be considered first.

Immunity

Section 28 provides:

"No person shall be excused, on the ground that it may tend to incriminate him or subject him to a penalty or forfeiture, from attending and testifying, or producing books, papers, documents, and other evidence, in obedience to the subpoena of the commission or of any court in any proceeding based upon or growing out of any alleged violation of this chapter; but no natural person shall be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter, or thing as to which, in obedience to a subpoena and under oath, he may so testify or produce evidence, except that no person shall be exempt from prosecution and punishment for perjury committed in so testifying."

Casey claims that he is entitled to immunity under Section 28 because he testified, under subpoena, before a grand jury in a proceeding "based upon or growing out of" alleged violations of the Shipping Act of 1916, and because his testimony was concerning the subject matter of the present indictment.

Casey testified before a grand jury impanelled in the District of Columbia on September 2, 1952. That grand jury subsequently indicted Casey in Criminal No. 1647-53. However, at the time of his testimony, Casey was already named as a defendant in the present case under a sealed indictment. It is clear at the outset that Casey's rights, whatever they are, under Section 28 are not diminished by the fact that he was already under indictment at the time of his testimony. The language of the immunity provision is clear that a person shall not "be prosecuted" "for or on account of any transaction, matter, or thing" as to which he may testify. The protection of immunity provisions is to prosecution and not to indictment. As is indicated hereafter, the immunity provision would be ineffective if it did not apply to indictments already returned and in which the witness was named as a defendant.

The only purpose of immunity provisions is to compel evidence that is otherwise not obtainable because of the Fifth Amendment privilege against self-incrimination. The history of immunity provisions has been recently considered in United States v. Monia, 1943, 317 U.S. 424, 63 S.Ct. 409, 87 L.Ed. 306 and Smith v. United States, 1949, 337 U.S. 137, 69 S.Ct. 1000, 93 L.Ed. 1264. Further discussion here is inappropriate.⁴ It is sufficient to note that this history has simply been the process of making the immunity provisions effective by giving a witness the full protection to which he is legally entitled under the Fifth Amendment,⁵ while at the same time providing safeguards against their misuse.⁶ With this in mind we come to a consideration of Casey's claim of immunity.

Two questions are presented: (A) Is Section 28 applicable to the proceeding before which Casey testified? and (B) Is Casey entitled to its protection?

A. Is Section 28 Applicable to the Proceeding Before Which Casey Testified?

The language in Section 28 makes it applicable in "any proceeding based upon or growing out of any alleged violation of this chapter". The Government claims that the proceeding was not based upon nor did it grow out of alleged Shipping Act violations, but rather was limited to inquiry of possible violations of 18 U.S. C. § 371 (conspiracy) and 18 U.S.C. § 1001 (false claims) which contain no immunity provision. In support of this the special assistant to the attorney general who was in charge of the proceeding has submitted his letter of authority for that special grand jury. The letter only makes reference to possible violations of 18 U.S.C. § 371 and § 1001. And in fact the indictment which that grand jury returned was brought under these sections only. The Government further argues that the subject matter of that inquiry was not related to Shipping Act violations, but concerned only possible false applications, balance sheets and financial statements submitted to the Commission in order to qualify for the purchase of vessels and that the procedure for the sale of the surplus vessels was covered only by the Merchant Ship Sales Act of 1946 which contains no immunity provision. Specifically, the Government claims that Casey was examined only as to these applications to purchase under the 1946 Act and was not questioned as to any matter based upon or arising out of Shipping Act violations.

The question is what comprises a "proceeding based upon or growing out of alleged violations of this chapter".

The test clearly cannot be that the indictment must be brought under the Shipping Act or whatever act contains an immunity provision. The result of a special grand jury investigation often indicates violations of different or additional laws than those on which the proceeding was initially "based". The words "growing out of" must be given their common sense meaning. The undesirable consequence of the test the Government suggests is easily seen. Assume that a witness' compelled testimony indicated possible violations of Act A, which has an immunity provision, and Act B, which does not. The Government then prosecutes the witness under Act B arguing that the proceeding, as seen by the indictment, was one neither based upon nor growing out of alleged violations of Act A. If the Government's argument were successful the immunity...