Yarborough v. United States

• Decision Date: 14 February 1956
• Docket Number: No. 7050.,7050.
• Parties: David V. YARBOROUGH, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

230 F.2d 56 (1956)

David V. YARBOROUGH, Appellant, v. UNITED STATES of America, Appellee.

No. 7050.

United States Court of Appeals Fourth Circuit.

Argued January 12, 1956.

Decided February 14, 1956.

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Albert J. Ahern, Jr., and James J. Laughlin, Washington, D. C., for appellant.

James H. Langrall, Asst. U. S. Atty., and George Cochran Doub, U. S. Atty., Baltimore, Md., for appellee.

Before PARKER, Chief Judge, and SOPER and DOBIE, Circuit Judges.

PARKER, Chief Judge.

This is an appeal in a criminal case in which appellant was convicted under all fourteen counts of an indictment, the first two of which charged wilful failure to file income tax returns for the years 1949 and 1950 and the remainder charged wilful failure to file returns of income taxes withheld from the wages of employees and social security taxes due with respect to their wages for the six quarterly periods embracing the year 1950 and the first half of the year 1951. Appellant was operating a restaurant in Washington City, and the evidence shows without contradiction that his receipts for each of the years in question were in excess of $72,000 and adjusted gross income was in excess of $12,000 for one of the years and in excess of $8,000 for the other. He had a number of employees from whose wages he made deductions on account of income and social security taxes, the deductions so made together with his share of the social security taxes due amounting to more than $600 per quarter for each of the quarters. He admits the receipt of income and the liability with respect to the income withholding and social security taxes and also the failure to file returns; and for this failure no excuse is offered except that he did not have the money to pay the taxes due on the returns. Four principal questions are raised by the appeal, viz.: (1) whether the District Court for the District of Maryland had jurisdiction of the cause; (2) whether wilful failure to file returns as to income withholding and social security taxes constituted a crime; (3) whether the law was correctly charged with respect to the element of wilfulness and reasonable doubt; and (4) whether there was error in refusing to charge the jury on the question of compromise.

On the first question, we think there can be no doubt as to the jurisdiction of the court. Whatever may be said as to the desirability of prosecuting in the District of Columbia violations of the income tax law by residents of the District, there can be no question but that, since the District of Columbia has been established by law as a part of the Revenue Collection District of Maryland, income tax returns must be filed with the Collector at Baltimore. The same is true as to returns required of social security and income withholding taxes. See Treasury Regulations 116, secs. 402.606 and 405.601. And it is well settled that failure to file such returns at Baltimore, where they are required to be filed, constitutes an offense within the District of Maryland. Bowles v. United States, 4 Cir., 73 F.2d 772, certiorari denied 294 U.S. 710, 55 S.Ct. 506, 79 L.Ed. 1245; Reass v. United States, 4 Cir., 99 F.2d 752, 754; Beaty v. United States, 4 Cir., 213 F.2d 712, 715; United States v. Warring, D.C., 121 F.Supp. 546, 549, affirmed 4 Cir., 222 F.2d 906, certiorari denied 350 U.S. 861, 76 S.Ct. 102. In the case of Bowles v. United States, supra, this court, speaking through the late Judge Northcott, after giving the history of the incorporation of the District of Columbia in the Collection District of Maryland, said 73 F.2d 774:

"The defendant being a resident of the District of Columbia, it became his duty to make his income tax return to the Collector at Baltimore, Md., and failure to make such return constituted an offense within the District of Maryland. In United States v. Lombardo, 241 U.S. 73, 36 S.Ct. 508, 60 L.Ed. 897, it was held that a resident of the state of Washington was guilty of an offense in the city of Washington, District of Columbia, for failing to file with the Commissioner General of Immigration, in the District of Columbia, a statement in writing required by an Act of Congress. In Rumely v. McCarthy, 250 U.S. 283, 39 S.Ct. 483, 486, 63 L.Ed. 983, the court said:

"`It is contended, indeed, that there was no probable cause to believe that the offense charged in the Washington indictment was committed within the District of Columbia, and this upon the ground that appellant was not personally present in the District at the time of the alleged offense, and that he was under no duty to make report there to the Alien Property Custodian. The commissioner, however, found as a matter of fact that the Custodian\'s office was in the District of Columbia, and as the finding was supported by competent evidence the District Court properly held that it was not reviewable on writ of habeas corpus. That being so, the duty imposed by the statute to make report to the Alien Property Custodian involved the duty to make such report in the District of Columbia, and failure to make it was an offense against the United States committed in that District. United States v. Lombardo, 241 U.S. 73, 76, 36 S.Ct. 508, 60 274 L.Ed. 897; New York Central & H. R. R. Co. v. United States, 2 Cir., 166 F. 267, 269, 92 C.C.A. 331.\'"

On the second question, the contention of appellant is that no crime is charged in counts 3 to 14 of the indictment, since, according to his contention, there is no statute making criminal the failure to file returns of social security taxes or income taxes withheld from the wages of employees. There is no merit in this contention. The Federal Insurance Contributions Act of August 14, 1935, 49 Stat. 636, Internal Revenue Code of 1939, 26 U.S.C. § 1400 et seq., levying "Social Security" taxes, in section 807(c) thereof, 26 U.S.C. § 1430, incorporates by reference "all provisions of law, including penalties, applicable with respect to any tax imposed by section 2700" of 26 U.S.C. One of the provisions of law applicable with respect to any tax imposed by section 2700 is 2707, entitled "Penalties". Subsection (a) thereof prescribes a civil penalty and subsection (c) makes wilful evasion a felony. Subsection (b), under which counts 4, 6, 8, 10, 12 and 14 of the indictment are drawn, is a misdemeanor section and is as follows:

"(b) Any person required under this subchapter to pay any tax, or required by law or regulations made under authority thereof to make a return, keep any records, or supply any information, for the purposes of the computation, assessment, or collection of any tax imposed by this subchapter who willfully fails to pay such tax, make such returns, keep such records, or supply such information, at the time or times required by law or regulations, shall, in addition to other penalties provided by law, be guilty of a misdemeanor and, upon conviction thereof, be fined not more than $10,000, or imprisoned for not more than one year, or both, together with the costs of prosecution."

Counts 3, 5, 7, 9, 11 and 13 of the indictment are also drawn under 26 U.S.C. § 2707(b), which is made a part of the Federal Withholding Income Tax Act of June 9, 1943, 57 Stat. 126, 26 U.S.C. § 1621 et seq., which by section 2(a), 26 U.S.C. § 1627 incorporates by reference "all provisions of law, including penalties, applicable with respect to the tax imposed by section 1400". As we have seen, the penalty provisions of 26 U.S.C. § 2700 are applicable with respect to the tax imposed by section 1400.

Incorporation of provisions of the internal revenue laws by reference in other sections of those laws is common practice. The provisions applicable to section 2700 have been adopted by reference not only in the sections above indicated but also in sections 2408, 2479, 3294(c) and 3449. As said by the Court of Appeals of the Ninth Circuit in Young v. United States, 178 F.2d 78, 80, certiorari denied 339 U.S. 913, 70 S.Ct. 573, 94 L.Ed. 1339: "Incorporation of statutes by reference has been a common practice in federal legislation, and the adoption of an earlier statute by reference makes it as much a part of the later statute as though it had been incorporated at full length." Kendall v. United States, 12 Pet. 524, 625, 9 L.Ed. 1181; In re Heath, 144 U.S. 92, 94, 12 S.Ct. 615, 36 L.Ed. 358; Panama R. Co. v. Johnson, 264 U.S. 375, 391-392, 44 S. Ct. 391, 68 L.Ed. 748; Engel v. Davenport, 271 U.S. 33, 38, 46 S.Ct. 410, 70 L.Ed. 813. It is argued that the intent of Congress in the referral sections was to adopt the civil but not the criminal penalties provided with respect to section 2700; but it is a sufficient answer that Congress made no such distinction but adopted all provisions of law, "including penalties" applicable with respect to the tax imposed by that section. Section 2707 was the statute imposing "penalties" with respect to that tax. It was entitled "Penalties"; and included criminal penalties as well as civil. The rule that criminal statutes are to be strictly construed does not mean that they should be construed foolishly so as to defeat the manifest intention of Congress.

Appellant complains because the judge refused to charge that ignorance of the law would constitute a defense to the charges contained in the indictment. It is a sufficient answer to this that there was no substantial evidence upon which to base such a charge. Appellant had filed income tax returns as late as 1943. He was doing a restaurant business with annual receipts of more than $72,000 per year and adjusted gross income of more than $8,000 per year. He was employing a number of persons in his business and deducting approximately $600 per quarter from their wages on account of social security taxes and income withholding taxes. He was filling out forms furnished by the Revenue Department showing the deductions from the wages of these employees and was furnishing the employees copies thereof. While he testifies that...