UNITED STATES оf America, Plaintiff-Appellee, v. Alex Shondor BIRNS, Defendant-Appellant.
No. 17790.
United States Court of Appeals Sixth Circuit.
May 9, 1968.
395 F.2d 943
We find that neither consideration advanced by taxpayer would preclude taxing her on the payments involved here. The fact that she donated the policies, and not simply the income earned thereunder, might exempt her from taxation on income earned subsequent to the time of the gift. See Blair v. Commissioner of Internal Revenue, 300 U.S. 5, 57 S.Ct. 330, 81 L.Ed. 465 (1937). Relinquishment of the figurative tree, however, will not prevent taxation of the fruit which has already ripened upon it. Austin, supra; Friedman, supra. Furthermore although the cases relied upon by the government involved taxation of payments made in the same tax year as the gift, we find no illegality in the imposition of tax liability in 1954 for payments made in that year under a policy donated in 1953.6
It should be added that the policies involved here continued to earn interest subsequent to the time of the gifts, and that our decision should not be taken to suggest that all payments made to the foundation subsequent to 1954 necessarily subject taxpayer to liability. We hold only that taxpayer has failed to show any illegality in the 1954 assessment. With regard to the State Mutual policy donаted in 1953, taxpayer has failed to demonstrate that the increments earned up to and including 1953 were insufficient to account for the payments to the foundation in 1954. With regard to the Massachusetts Mutual policy donated in 1954, all interest subsequent to 1938 was to be accumulated for payment in 1963, and the payments in 1954 must therefore have been earned prior to the time of the gift.
The judgment of the District Court is affirmed in part and reversed in part, and the case is remanded for proceedings consistent with this opinion.
James R. Willis, Cleveland, Ohio, for appellant.
Robert J. Rotatori, Cleveland, Ohio, Merle M. McCurdy, U. S. Atty., Bernard J. Stuplinski, Asst. U. S. Atty., Cleveland, Ohio, on brief, for appellee.
Before EDWARDS, PECK, and McCREE, Circuit Judges.
McCREE, Circuit Judge.
Appellant had been convicted many years previously for income tax fraud and had been sentenced for three years which he served in prison without parole. As an incident of this conviction, the Government had obtained a substantial civil judgment against him for his tax liability. The instant prosecution resulted from his subsequent offer to compromise this liаbility. Two counts of the
Several errors are assigned including (1) The erroneous denial of a motion to suppress evidence concerning the money orders on the theory that the Government was directed to this evidenсe as a consequence of the unlawful seizure of other money orders from appellant on another occasion;2 (2) The admission into evidence of several money orders, not claimed to be hidden assets, for the asserted purpose of providing exemplars of appellant‘s handwriting, and to prove intent or motive with the result that, although some were later ordered stricken, the jury was permitted to learn that appellant had enjoyed a cash flow of $126,000 during the period in which he claimed tо be without substantial assets; (3) An erroneous instruction concerning the ownership of the Cadillac automobiles allegedly in conflict with Ohio‘s certificate of title statute,
We reverse and order a new trial, sustaining the fourth contention. In Michelson v. United States, 335 U.S. 469, 69 S.Ct. 213, 93 L.Ed. 168 (1948), the Court said,
The state may not show the defendant‘s prior trouble with the law, [or] specific criminal aсts * * * even though such facts might logically be persuasive that he is by propensity a probable perpetrator of the crime. The inquiry is not rejected because character is irrelevant; * * * [but] that its disallowance tends to prevent confusion of issues, unfair surрrise and undue prejudice. 335 U.S. at 475, 69 S.Ct. at 218.
See also United States v. Fisher, 377 F.2d 285 (6th Cir. 1967); Barnes v. United States, 124 U.S.App.D.C. 318, 365 F.2d 509 (1966); Lyda v. United States, 321 F.2d 788 (9th Cir. 1963).
The Government, however, urges that the admission of exhibit 16 was proper under an exception to the general rule prohibiting evidence of a defendant‘s prior criminal activity. It seeks to justify the admission of this evidence to show intent, design, scheme, motive or knowledge on the part of the defendant, relying on United States v. Iacullo, 226 F.2d 788 (7th Cir. 1955), cert. den. 350 U.S. 966, 76 S.Ct. 435, 100 L.Ed. 839 (1956). In the instant case, the information that appellant has been incar-
Although we reverse for the reason stated, we comment briefly on appellant‘s other contentions since the case may be tried again.
We believe that appellant‘s contention that money orders introduced at the trial should have been suppressed because they were disclosed as the result of othеr money orders illegally seized is without merit. If we assume, as did the District Judge, that other money orders were illegally seized by the Cleveland policemen, there is nevertheless evidence to support his finding that the money orders admitted at the trial were discovered through sources independent of that search. Silverthorne Lumber Co. v. United States, 251 U.S. 385, 40 S.Ct. 182, 64 L.Ed. 319 (1920). The finding that the evidence employed was not fruit of the poisonous tree, Nardone v. United States, 308 U.S. 338, 60 S.Ct. 266, 84 L.Ed. 307 (1939), renders it properly admissible. Cf. Wong Sun v. United States, 371 U.S. 471, 83 S.Ct. 407, 9 L.Ed.2d 441 (1963).
Appellant‘s next claim of error relates to the admission, for collateral purposes, of evidence as to a number of financial transactions. The court admitted testimony concerning a series of 63 checks made payable to one Jane Ann Collins, a name allegedly employed by defendant. Since this testimony and the 63 exhibits were subsequently ordered stricken, we assume they will not be received in the same circumstances over objection if offered in a new trial. And since we reverse on other grounds, it is unnecessary to determine whether the court‘s admonition to the jury to “completely disregard the witness‘s testimony regarding those 63 checks * * *” was sufficient to dispel any taint of prejudice resulting from its earlier admission. See Nash v. United States, 54 F.2d 1006 (2d Cir. 1932).
Appellant also objects to the admission of testimony of Government witnesses Barricelli, Blane and Kirsch in regard to a number of negotiable instruments which appellant endorsеd. The court‘s instruction limited this evidence (1) to lay a foundation for the opinion of an expert expected to testify about appellant‘s handwriting and (2) to bear upon the intent, scheme or plan that may have been used by appellant.
It does not аppear that defendant‘s handwriting was an issue with reference to the documents described in the indictments. However, assuming a dispute on this issue, it is evident that the Government possessed other examples of appellant‘s signature which did not have the collatеral and highly prejudicial effect of advising the jury of the substantial cash flow represented by the protested evidence.
Although evidence of a defendant‘s acts similar to those charged in the indictment under some circumstances may be admissible to provе intent, scheme or plan, the evidence offered was not of acts similar to those charged but merely evidence from which the jury might conclude that appellant‘s financial dealings were conducted behind a smokescreen. This might make a jury suspicious of any representation he might make, but there was no defense asserted here that appellant did not intend to misrepresent his assets and unless the question of intent is in dispute, evidence concerning the commission of similar acts at other times should not ordinarily bе admitted. United States v. Byrd, 352 F.2d 570 (2d Cir. 1965).
There was testimony that the titleholder acquired title to the 1958 and 1960 Cadillacs as an accommodation to appellant who made the payment on the time purchase contract, paid the insurance premiums, paid for repairs and exercised effective control. Under the charge of the court, the jury could have found that the 1958 and 1960 Cadillac automobiles were assets owned by defendant.
State law controls in determining the nature of the legal interest which one may have in the property involved here. Cf. Aquilino v. United States, 363 U.S. 509, 80 S.Ct. 1277, 4 L.Ed.2d 1365 (1960); United States v. Durham Lumber Co., 363 U.S. 522, 80 S.Ct. 1282, 4 L.Ed.2d 1371 (1960); United States v. Trilling, 328 F.2d 699 (7th Cir. 1964).
The Ohio Certificate of Title law was enacted to prevent thefts and frauds in the transfer of title to motor vehicles, and does not preclude the existence of constructive trusts with regard to the ownership of such vehicles. In re Lee, Inc., 129 F.Supp. 920 (D.C.1955). Accоrdingly, we find no error in the admission of the evidence relating to the two Cadillac automobiles nor in the charge which would have permitted the jury to find that at the relevant time appellant had such an interest in and control and ownership of the vehicles as tо make them his property in the sense that they were assets available to him for the payment of his debts and at that time he then knew he had such interest and ownership and made the misrepresentation willfully and knowingly.
Reversed and remanded.
JOHN W. PECK, Circuit Judge (concurring).
I am in complete agreement with so much of the majority opinion as deals with the merits of this appeal, but express reservations concerning the portion of the opinion purporting to offer guidance to the District Judge at retrial.