United States v. David M. Beal
810 F.2d 574
6th Cir.
1987
Check Treatment

*1 tion is calculated. The “economic to be Jerrico, indicates reality” here know- America, UNITED STATES of obtaining minority it was Patterson’s Plaintiff-Appellant, rate, not, bargain fact, did interest at a

pay noncompeti- for the any consideration BEAL, Defendant-Appellee. M. tion As the Fifth David covenant.8 Circuit has pointed out: No. 86-3056. taxpayer’s proof A failure of on this

point Appeals, not be United States Court overcome abstract arguments, not tethered fact Sixth Circuit. transaction, might as to what have Argued 21, Nov. equitable price appor- or been a fair It is not Decided tionment. the task of this or Feb. taxpayer’s to restructure a court Rehearing Rehearing En Banc dealings, facing pre- in lieu of his April 27, 1987. Denied proof, justi- scribed burden order

fy his entitlement some tax benefit. Beverages,

Better

The Commissioner and ar Jerrico

gue that, he was minority since

shareholder, technically Patterson never goodwill

“owned” US’s and therefore

could not have transferred it his sale of However, realistically,

stock. Patterson’s presence in operations

dominant of US

from inception and his role its rise to

profitability clearly aspects are of the busi

ness which were transferred to Jerrico via

the stock As sale. the Ninth Circuit noted Schulz, there is reason to believe “[i]f prospered the business has because of reputation or the pro character

prietor partner this would tend to genuine

show that a business reason prompted reputation the covenant. Such sitting by Edgar, desig- or character part would also form nation, opinion. dissented filed an goodwill.” Therefore, at 56. al though Patterson’s covenant not com

pete obviously with Jerrico some

theoretical, value, potential Jerrico has

failed to establish cost basis in the cove

nant. find the We Tax decision Court’s purchase price payment entire accompany Patterson’s stock and

ing goodwill supported evi

dence, and its decision is AFFIRMED. er, (CCH) (1974); 8. When the value of the interest transferred 33 T.C.M. Howard Con- purchase struction, price, Commissioner, exceeds the the Tax Court has Inc. v. 43 T.C. 343 ruled that there no "room" for an allocation. See, e.g., ValleyBroadcasting Co. v. Commission- *2 Olah, Bauer, R. Steven David O. Michael Div., Rae, Justice, Dept, T. Crim. Cleveland, Ohio, (argued) Louis M. Fischer Counsel, Div., Washington, Crim. Lead D.C., plaintiff-appellant. for Eisner, Cleveland, Ohio, Gary de- W. for fendant-appellee. PECK, GUY, Judge,

Before Circuit EDGAR, Circuit Senior Judge.* District PECK, Judge. JOHN W. Senior Circuit government appeals from the dis- granting court’s order the motion of trict accused, Beal, suppress David two .22 caliber seized from a subject that was the of a valid dresser warrant. The formed the search for Beal’s indictment for basis unregistered firearms and firearms net by serial The sole is- identified numbers. appeal is district court sue on whether the determining seizure did erred in not fall within require- Fourth Amendment’s warrant herein, For reasons we af- ment. stated firm.

I. suppression at the The evidence adduced 27, 1982, Ak- hearing May that on showed police executed valid search warrant ron Angels’ head- Motorcycle Hells Club at the Akron, part In relevant Ohio. quarters items of objects of the search warrant were being sto- suspected furniture bedroom police a dresser property. len apart- in the search warrant in Beal’s listed floor was located on the second ment which establishment. Because the dresser, seizure of the authorized contents, police officer John not its but removing personal began effects Williams doing clothing, one at While a time. * designation. Edgar, sitting by United States R. Allan Honorable Tennessee, the Eastern District of

so, appeared upon he two items which defined prong came pens. noted of the doctrine. Brown, to be fountain Texas “extremely plurality opinion, heavy” were and there- Court stated “suspicious.” Coolidge’s them fore He showed Agent Thornton, require unduly high who was test does not Special to F.B.I. “an de- gree certainty federal search in an *3 incriminatory a warrant to the evidence,” adjoining Thornton in turn asked character of room. but rather that the reasonable, Baraducci be Special Agent “presumptively of the Bureau of seizure as- Alcohol, and Firearms to look at that suming probable Tobacco there is cause to Baraducci, produc- pens. who was not the property associate with criminal ac- suppression hearing, (emphasis added).” 730, at the testify tivity ed to 460 U.S. Thprnton 741-42, 1535, 1543, allegedly Williams and that 103 told S.Ct. 75 L.Ed.2d (1983) thought pens actually guns York, he (quoting Payton 502 v. New 573, 587, 1371, possession illegal 1380, 445 U.S. 100 and that their would be S.Ct. 63 (1980)). under law. Baraducci stated 639 federal never possession pen guns why thought he of the “immediately This characterization of the illegal. pens would be were then apparent” test was Brown consistent analysis seized. Later lab confirmed that court’s understanding with this earlier expel “pens” projec- .22 could caliber 352, 484 F.2d 356 subsequently tiles. Beal indicted on was (6th Cir.1973), 1158, 414 possessing reg- one count of firearms 916, 94 S.Ct. 39 L.Ed.2d 110 and in Registra- istered in National Firearms States United v. F.2d tion and Transfer Record in violation of 26 (6th Cir.1975), Coolidge, 1176-77 that su 5861(d), possess- U.S.C. and one count of § pra, probable a embodies cause standard. firearms not identified serial num- This court has since stated that Brown 5861(i). bers in of 26 violation U.S.C. § proposition for the “stands evidence in plain view be seized where execu II. ting ‘probable officers have cause’ to be lieve that nexus exists between the plain view doctrine or activity.” item and viewed criminal United to the Fourth Amendment’s re warrant Szymkowiak, (6th States v. quirement executing permits officers Cir.1984). cause, defined, Probable as so to seize objects warrant outside the “apparent” must be “immediate” and scope provided of the warrant three criteria object’s to the officer from the nature. Id. are met: the initial intrusion the officers requirements at 98. These avert the dan lawful; discovery must be the in ger enlarge specific that officers will inadvertent; criminating evidence must be general warrant into a under incriminating and the nature of the evi Id.; Brown, prolonged rummaging. take “immediately dence apparent.” must be (Stevens, at at 1546 S.Ct. Hampshire, Coolidge v. New J., concurring). 2022, 2038, 29 L.Ed.2d 564 undisputed It this case determining probable In whether pur executing officers’ initial intrusion connect cause to the seized item with crimi suant to a search warrant lawful valid was apparent, nality empha this court has discovery and that of the for, have looked sized certain factors. We inadvertent. The re issue therefore holding necessary without it to be a criteri maining incriminating is whether the na on, object a nexus between the seized ture of particularized in the search war items justify officers so as to 98; Gray, at Szymkowiak, rant. 727 F.2d seizure under the doctrine. Jennings 484 F.2d 355. See also (6th Cir.1986). Rees, Coolidge,

Since both the Court We the “intrinsic and this court have considered and further have also examined whether object weapon illegal. of a appearance of the seized would be nature” or it is Jennings, to believe that See gives probable cause On state record, of the United the district court did not err associated with McLernon, concluding probable cause to associ- States Cir.1984); 727 F.2d at Szymkowiak, ate the with criminal prong the test re- immediacy apparent. can at quires that Similarly, the district court also discovery object of the on the the time correctly immediacy concluded that the ele to them determine then available facts lacking. In ment was addition to the above object’s probable cause of the factors, way, there was no absent disas F.2d at 95. nature. sembly pens, agents of the could words, immediate, other immediately discern cause at the direct must be “the result pens’ discovery time of the to associate the *4 sensory perception officer’s instantaneous pens i.e., activity; with criminal they that McLernon, 746 F.2d at object.” the unregistered and lacked num were serial evidence, bers. The which formed the ba government’s argu Despite the was, sis for the indictment and could distinguishable is Szymkowiak ments that be, gathered subsequent to the seizure and appeal, the case on we conclude that from disassembly. Although argues the dissent controlling in this case. Szymkowiak is probable that cause existed because Bara “pens” cause to connect the with Probable in experience ducci no doubt his immediate criminality apparent. agents’ The was not ly pens really guns the knew that were “produced only visual perceptions initial rare, that their lawful Bara ‘intrinsically images of two innocent’ alleged expertise ducci’s and assessments McLernon, Al items.” speculation govern due to the are mere though and Thornton were struck Williams produce ment’s failure to Baraducci as a “pens,” con by weight the neither witness. them with criminal behavior. nected alternative, government In the the has fact, suppression admitted at the argued Szymkowiak, supra, poor- that hearing pens pa could have been that the ly opinion conceived and one which we did not indi perweights and their heaviness It is well estab- should decline to follow. they cate that were contraband. panel once a has lished in this circuit that prov burden of government, which has the issue, it becomes the law of the ruled on an seizure, propriety the of a warrantless may not be overruled anoth- circuit Matlock, see United States Curd, panel. er No. 85-5626 Messer v. 988, 996, 39 L.Ed.2d 242 1986). Szymkowiak Dec. If Cir. produce did not Baraducci at Brown, supra, and states too misreads Thus, hearing. suppression the record the cause, probable is not for strict a test for it hearsay the statements of contains say. panel this to sim Williams and Thornton that Baraducci us, under on the facts before the Based pens explanation that the ply said without agents lacked teaching Szymkowiak the they illegal.1 and that were to probable cause at the time of the seizure Further, the there was no nexus between “pens” believe that the were contraband specified in the the furniture “pens” and activity. criminal otherwise associated with sought evidence of warrant which observes, ironic, Moreover, may dissent knew It be Thornton property. stolen appearance pen guns’ benign outer for whom mere not a felon that Beal was However, 104(a). hearsay govern Evid. we note Rules of Evidence do 1. The Federal judge proceed- hearings to determine admissibil- the critical in this before a nature of hearsay may be considered ity ing, evidence and it have affected because well Matlock, admissibility hearings. judge gave weight judge to the evidence. 993-95; 172-75, S.Ct. at Fed.R. U.S. at capabilities and deadly their contents. concealed were observed prevent possibly helped na- Officer placed Williams when he being “immediately apparent.” ture from contents a dresser drawer on a bed. Nonetheless, vigorously circuit has ad- precise issue here is whether the requirement to hered Coolidge requirement met, i.e., third is appar- both immediate and cause must be whether it immediately apparent ent. were evidence of is mindful of the standard Su- [T]his unlawful Because preme warning constant Court’s is warrant, seizure made without a the Fourth Amendment’s “immediately apparent” requirement ‘carefully Warrant delineated.’ Clause merely requirement formulation of the Where ... connect the “probable that the officers have cause” item with criminal viewed behavior seize the item. Probable cause exists ‘apparent,’ ‘immediate’ and ... where the facts and circumstances within retaining posses- individual’s interests knowledge of the officers and of which property maintaining pri- sion reasonably trustworthy informa- vacy society’s ... and interest lawful tion are sufficient within themselves to greatly enforcement are com- warrant man of reasonable caution in the promised. belief that an offense being has been or is F.2d at committed. United States *5 The order of the is district court AF- 1174, (6th Cir.1975) F.2d (citing 1177 Car- FIRMED. States, 132, roll v. United 267 U.S. 45 S.Ct. 280, (1925)). 69 L.Ed. 543 inquiry, EDGAR, Judge, dissenting. therefore, is whether the discovery the question in this case is whether the object under the circumstances “would properly law enforcement officers seized police a warrant officer of reasonable cau- two the .22-caliber under the tion in believing that an offense has been “plain exception to view” the fourth being or is committed object and that the is requirement. amendment’s warrant See evidence the accused.” Coolidge 443, Hampshire, v. New 403 U.S. Truitt, 521 F.2d at 1177. 2022, 91 29 S.Ct. L.Ed.2d 564 Un- Szymkowiak, This in formulation, citing Court der this Unit Circuit’s (6th ed v. plain not be seized under States 484 F.2d 352 excep- the view Cir. 1973), (1) 1158, tion unless 414 the officers show cert. S.Ct. (2) prior intrusion, 916, a (1974), valid an inadvertent 39 L.Ed.2d 110 con Truitt (3) discovery, and that the evidence of the seizing cluded that the have would unlawful act only if cause the “intrinsic na to them. Szymkowiak, ture” the object seized was incrimina (6th Cir.1984). ting. Szymkowiak, 727 F.2d at 99. Other wise apparent” require the majority out, the points

As parties the do ment would not met because there dispute not requirements that the first two would be no nexus between the seized view in are met items and the case. The officers a criminal behavior. valid warrant Id. to 98-99; search and seize the dresser. The warrant see also United States McLer non, Cir.1984).1 authorized seizure of the furniture but not McLemon, majority prob- activity. also to seems indicate that F.2d at In requires Szymkowiak, able cause a the nexus between seized a after decision issued Jones, object particularized Szymkowiak, and the items in the search who wrote discusses a though language requirement police warrant. Even there is have the that the need effect in 727 F.2d at there is cause the item to believe that seized has crimi- language significance evidentiary also in that same decision which re- nal value. quires summary, a nexus between item the viewed at 1125. In I believe that under the Upon arriving the other location. by thirty the min- pen It is found clear call, utes after were, very agent Szymkow- in this case officers in immediately recognize did not iak the fire- nature, intrinsically suspicious. Officer illegality, arm’s and could not make that thought Agent FBI Thornton disassembling determination without later enough to consult BATF suspicious them Instead, it. this case is controlled Baraducci, Agent Agent When Baraducci. Truitt, officers, In Truitt. in exe- scene, was shown one who was on a gambling cution of was, response his “I think pen guns, paraphernalia, upon came a sawed off shot- gun, illegal.”2 If it it gun. that is is a gun. Recognizing that weapon such a is upon state of mind Baraducci’s3 usually registered rarely not put and is viewing the same as that use, legitimate it. Sup- the officers seized of the officers when discov- Truitt pression though was denied even the sawed cases, shotgun. off ered sawed shotgun sporting goods off seized in a posses- the officers knew that the lawful store. “is, weapon they in ordi- sion my It is belief the conclusion that is nary experience, rare indeed. There majority reaches in this case is not weap- very legitimate use for such a little necessarily mandated Szymkowiak be- Truitt, 521 F.2d at 1177. It was on.” facts in the two cases are distin- simply necessary for Baraducci to di- However, guishable. my it is also pen guns for him connect sassemble the decision, Szymkowiak with em- them with criminal phasis on “ap- the words “immediate” and certainly gun say One can places higher parent,” standard on law “intrinsically object. an innocent” See officials enforcement than fourth States, 335 F.2d Porter v. United requires amendment and is inconsistent (9th Cir.1964), denied, 379 with the Court’s decision Texas 695,13 85 S.Ct. cited Brown, pen gun A (1983). In L.Ed.2d 502 that case a four- appearance innocent its outward *6 judge plurality said that: purposely that it which conceals fact Coolidge Decisions of this Court since deadly can .22-caliber bullets. It fire phrase indicate the use “im- of majority ironic that the concludes that mediately very likely an successfully purposeful concealment has words, unhappy since it choice of can be illegal pen nature of these prevented the unduly high to imply taken that an de- being “immediately guns apparent.” from gree certainty incriminatory as to the necessary character of the evidence This case is unlike where officers “plain application for an view” rifles, ordinary looking copied seized doctrine. numbers, serial and later learned that at U.S. 103 S.Ct. at stolen. It is also different from been remarked, a fire- frequently where officers seized As the Court has flexible, agent is a common- in a BATF from an- cause arm and called Agent required on BATF Baraducci who was the scene ease law of this circuit the nexus application “plain progress, appropri of the view” it is while the search was knowledge nexus item and criminal between seized of all ate to consider the collective behavior, not between the seized or admissibility scene. The the officers on the items in the items and the listed warrant. fortuity not limited this evidence is pen happened upon guns. first which officer out, majority points 2. As this statement Johnston, (1st was, however, hearsay, hearsay. It admissible Newton, Cir.1986); States v. United questioned party Bara- and no has (8th Cir.1986); United States v. ducci made the statement. Cir.), Wright, 641 guns actually pen While Williams, FBI showed them to Officer Agent who Thornton, who then showed them merely requires It sense standard. to the officer would

the facts available

“warrant a man reasonable caution belief,” that certain items property stolen or useful

contraband or crime; it does de- evidence of showing

mand that such a belief be likely true than false. A

correct more

“practical, probability that nontechnical” is involved is all required. that is Jr., Ralph Guy, B. Circuit filed (citations 103 S.Ct. at 1543 concurring opinion. omitted).

I Szym- would that under either the hold

kowiak standard standard,

or the “common-sense” Brown officers here had

conclude that illegal. decision of the district

court should be REVERSED.

In re GRAND JURY PROCEEDINGS. COMMUNICATIONS, INC.,

STORER Stone, Bradley M.

Petitioners-Appellants,

Wayne County Circuit Court Wil- *7 GIOVAN; Wayne County

liam J. Prose- O’Hair;

cuting Attorney John D.

Wayne Ficano, County Sheriff Robert

Respondents-Appellees.

No. 86-1787. Appeals,

United States Court of Circuit.

Sixth

Argued Oct.

Decided Feb.