UNITED STATES of America, Plaintiff-Appellant, v. Sidney A. BRODSON, Defendant-Appellee.
No. 11648.
United States Court of Appeals Seventh Circuit.
Feb. 7, 1957.
241 F.2d 107
Duffy, Chief Judge, and Finnegan, Circuit Judge, dissented.
See, also, 234 F.2d 97.
John L. Palmer, David E. Beckwith, Milwaukee, Wis., for appellee.
Opinion of the Court on Rehearing, En Banc.
Before DUFFY, Chief Judge, and FINNEGAN, LINDLEY, SWAIM, and SCHNACKENBERG, Circuit Judges.
SCHNACKENBERG, Circuit Judge.
Plaintiff appeals from an order entered by the district court which inter alia sustained defendant‘s motion to dismiss an indictment charging defendant with willful attempted evasion of his income tax for each of the years 1948 to 1950 inclusive, in violation of
In a bill of particulars, the government indicated it intended to prove the allegations in the indictment by the net worth and expenditures method.
The pertinent grounds of defendant‘s motion to dismiss are that the initiation of a criminal prosecution for tax evasion during the pendency of a jeopardy assessment and accompanying tax liens deprives him of liberty and property without due process of law and the effective assistance of counsel for his defense, in violation of the Fifth and Sixth Amendments to the United States constitution, and specifically that defendant will be unable to get a fair trial and will be deprived of assistance of counsel for his defense, because the jeopardy assessment and liens prevent him from using his assets to insure adequate preparation for trial and representation at the trial. Affidavits were submitted by each side.
The defendant argued in support of the motion that, as a result of the pending jeopardy assessment and tax liens, he was without funds to defray the expenses of his defense, particularly to engage the services of an accountant to aid in meeting the government‘s net worth proof. The district judge indicated that, if defendant filed an affidavit as to his financial inability and if the government did not then see fit to release the tax liens in part and to place a reasonable amount of defendant‘s assets in escrow with the clerk of the court for the purpose of defraying the expenses of the defense, he would be inclined to the view that defendant was being deprived of his constitutional right to a fair trial. Such an affidavit was filed. The government informed the court that it was without authority in law to release any part of the assets subject to the tax liens.
In granting the motion to dismiss, the district court held defendant could not, in the court‘s opinion, effectively refute the government‘s evidence without the extensive assistance of a trained accountant.
Defendant contends that under the circumstances the district judge “has the authority and duty to dismiss the indictment“, because the prosecution of this case “denies to defendant due process of law and effective assistance of counsel guaranteed to him by the Fifth and Sixth Amendments to the United States constitution.”
Citing the cases of Powell v. State of Alabama, 1932, 287 U.S. 45, 53 S.Ct. 55, 77 L.Ed. 158 and Avery v. State of Alabama, 1940, 308 U.S. 444, 60 S.Ct. 321, 84 L.Ed. 377,
He quotes from Rochin v. People of California, 1952, 342 U.S. 165, at page 173, 72 S.Ct. 205, 208, 210, 96 L.Ed. 183:
“* * * Due process of law, as a historic and generative principle, precludes defining, and thereby confining, these standards of conduct more precisely than to say that convictions cannot be brought about by methods that offend ‘a sense of justice.’ * * *”
Defendant states that the Powell decision rejects the premise that the Fifth and Sixth Amendments impose mere formal, rather than substantive, standards. He asserts that the right guaranteed by the Sixth Amendment is an absolute right, relying upon Betts v. Brady, 1942, 316 U.S. 455, 462, 62 S.Ct. 1252, 1256, 86 L.Ed. 1594 and Johnson v. Zerbst, 1938, 304 U.S. 458, 467, 58 S.Ct. 1019, 1024, 82 L.Ed. 1461.
In each of the cases thus cited by defendant the court was reviewing a final judgment of conviction. He has cited no case and we have been unable to find a case in which any court has held that a trial to be held at some time in the future will not be a fair trial and hence dismissed an indictment without a trial. The nonexistence of such a decision is probably because no judge has ever undertaken on such a motion to forecast what will occur at a trial. On the other hand, in retrospection with knowledge of what has occurred at a criminal trial, a court would be in a position to apply to the facts thus established, any applicable constitutional requirements. No court possesses the prescience to effectively apply those principles to presently unascertainable facts. Perhaps the futility of such an attempt at anticipation cannot be illustrated more aptly than by considering the circumstances existing in the case at bar.
It is not unreasonable to assume that events happening between the entry of the order, from which this appeal was taken, and a trial on the merits may remove or make irrelevant the alleged present financial inability of defendant to procure an accountant. In fact, defendant‘s affidavit presages the possibility of the occurrence of events any one of which might solve the difficulty in which defendant says he is involved. His affidavit shows that, since the jeopardy assessment was made and the tax liens filed, he borrowed to pay debts, insurance premiums and living expenses. He listed fourteen loans totaling $17,482.58 made from April 14, 1952 to December 31, 1954. Included in the list is an advancement of $1,000 on August 27, 1954, by Martin Brill to Lipton, an attorney retained by defendant.2 The other lenders are unidentified. In view of the fact that these sources of financial relief were available to defendant despite the pendency of the jeopardy assessment and liens, the possibility of further financial relief from such sources cannot be ignored. These transactions took place despite the contention of defendant‘s counsel that the assessment and liens prevent such transactions.
Furthermore, if needed, an accountant might volunteer before the trial to assist defendant‘s counsel, one of whom did suggest by letter to the district judge several accountancy firms who might be requested so to act. Also some friend may gratuitously furnish defendant with the services of an accountant.
Again, the presentation of the government‘s case upon a trial may reveal that the services of an accountant are wholly unnecessary. For instance, a substantial increase in defendant‘s assets during the taxable years in question might be shown to be the result of a gift, an inheritance, or other nontaxable acquisition. Certainly any competent tax attorney could present such evidence without the assistance of an accountant. Defendant since his indictment has been represented by lawyers skilled particularly in the field of income tax law. Palmer, one of his present counsel, stated in an affidavit that he has since October 1949 devoted himself primarily to income taxation law and been engaged in a number of “net worth” cases. Attorney Lipton stated by affidavit that he was an attorney in the office of the Chief Counsel, Internal Revenue Service, for about 10 years and handled many cases, and, in addition thereto, he has been engaged exclusively in the practice of tax law since December 1, 1950, handling inter alia criminal income tax cases. Lipton selected and employed an accountant to work in this case, for whose work he paid $800. The relevancy and adequacy of that work can be determined only on a review of a conviction where a court can come to grips with the question of whether defendant received a fair trial.
Whether defendant is correct in his contention that the constitution re-
Defendant calls for the establishment of such a policy because the preparation “and analysis of a defendant‘s financial history involves and requires not only legal techniques but also accounting skills and techniques.” He indicates that “the need for expert accounting assistance is the primary one in the effective preparation of defense“.3 It is apparent that defendant is seeking not merely the services of an expert witness but the services of an expert accountant who is to be used in preparation and analysis of defendant‘s financial history and in assisting his counsel at and before the trial of his case. Such a policy, if now established, would as a matter of consistency be subject to extension to experts in other fields—psychiatrists, ballistics experts, chemists, physicians, and an unlimited number of other specially trained persons. It is this natural consequence of such a policy which, in addition to the reasons above stated, dictates that, if established, it must be based upon a record containing the actual proceedings at a trial, rather than the inferences drawn from pretrial affidavits.
Inasmuch as it is a fact that only by a post-trial study of the whole case can it be determined whether defendant‘s constitutional rights to a fair trial will be violated, it is well to point out that it may never be necessary to decide that question. The necessity may be obviated by defendant‘s plea of guilty, his acquittal, a dismissal of the indictment on motion of the government, a directed verdict, or the death of the defendant. All of these possibilities emphasize that the court should not on a pretrial motion prematurely decide the constitutional questions raised by defendant. The court must cross the bridge when and if it gets to it. It should not exercise its power in resolving, in the shadow of a hypothesis, a controversy which it may, in the light of reality, justly and completely settle in the future, when and if the occasion arises.
In defendant‘s brief it is admitted that a jeopardy assessment may be levied without violating constitutional rights.
Inasmuch as the only question before us at this time is that of the propriety of the order of the district court, and inasmuch as we have no jurisdiction to decide, in advance of a decision of the district court, questions which may arise in the future, for the reasons stated we reverse the order dismissing the indictment and discharging defendant‘s bail bond and remand the cause, without prejudice to the right and power of the district court to conduct further proceedings not inconsistent with the views herein expressed and to take such appropriate action as may be deemed necessary and proper in this proceeding, having due regard to the rights of both the government and the defendant.
Reversed and remanded with directions.
DUFFY, Chief Judge (dissenting).
As a member of the panel of this Court which first heard this case, I filed a dissenting opinion. I reaffirm the statements made therein, but see no necessity for repeating that opinion here.
The Government levied a jeopardy assessment on October 26, 1951. This assessment was for a sum of $100,000 greater than the claimed assets. The notice of deficiencies was dated December 11, 1951. The civil action in the Tax Court was commenced March 7, 1952. Defendant was not indicted until April, 1953. Defendant insisted the civil case be tried first. It had been pending more than a year before the indictment herein was returned. The Government successfully resisted all efforts to bring the civil action to trial. Such a trial would have clearly demonstrated whether accounting services were necessary for the defendant in the criminal case. The result of such a trial would have abated the jeopardy assessment.
Here the Government, by its deliberate act, by a jeopardy assessment, captured the defendant‘s assets and thus denied him the use of his own funds to defend himself; the tools of defense were taken from him; the Government pauperized him by placing him in a financial straight-jacket.
Due process of law requires that convictions cannot be brought about by methods that offend a sense of justice. Rochin v. People of State of California, 342 U.S. 165, 173, 72 S.Ct. 205, 96 L.Ed. 183. As applied to a criminal trial, denial of due process is the failure to observe that fundamental fairness essential to the very concept of justice. Lisenba v. People of State of California, 314 U.S. 219, 236, 62 S.Ct. 280, 86 L.Ed. 166. The tactics of the Government in this case in preventing defendant from utilizing the necessary tools of defense certainly offends my sense of justice. There were no elements of fairness present in the Government‘s tactics.
The tactics of the Government in this case also were a violation of defendant‘s rights under the Sixth Amendment which provides that a defendant is entitled to have the assistance of counsel for his defense. The denial of effective assistance of counsel also violates due process. Powell v. State of Alabama, 287 U.S. 45, 58, 53 S.Ct. 55, 77 L.Ed. 158. This right to the effective assistance of counsel entitled the defendant to a reasonable opportunity to defend. In re Oliver, 333 U.S. 257, 275, 68 S.Ct. 499, 92 L.Ed. 682.
The conduct of the Government in this case violates those canons of decency and fairness to which any defendant in a criminal case is entitled under the Fifth and Sixth Amendments of the Constitu-
FINNEGAN, Circuit Judge (dissenting).
My initial position separately stated in United States v. Brodson, 7 Cir., 1956, 234 F.2d 97, 100 remains unchanged. Now I am recording my views on current phases of the appeal because the court retained jurisdiction, and recently I participated at the en banc hearing granted subsequent to three separate opinions handed down, (United States v. Brodson, 7 Cir., October 31, 1956, No. 11648) by a panel which heard oral arguments after the motion to transfer was first denied.
Of course the correctness of the ruling below is the question before us, but when it now and currently is said “we have no jurisdiction to decide, in advance of a decision of the district court, questions which may arise in the future,” I part company with the majority. The fallacy embedded in the quoted statement is generated by circular reasoning. Jurisdiction is disavowed by tacitly classing the situation as premature1 and the situation is rated as premature so that the conclusion will reflect lack of jurisdiction.
This record is replete with investigation, affidavits, documents and conferences utilized by the district judge before he finally ruled. See e. g. 234 F.2d 97. Allowing another bite at the judicial apple in the district court evades solution of a serious question squarely facing us today.
“3. The defendant‘s motion of August 15, 1955, to dismiss the indictment upon the grounds that the initiation of a criminal prosecution for tax evasion during the pendency of a jeopardy assessment and accompanying liens deprives the defendant of liberty and property without due process of law, in violation of the Fifth Amendment to the United States Constitution, and to the effective assistance of counsel for his defense, in violation of the Sixth Amendment to the United States Constitution be and it hereby is granted and the indictment be and it is hereby dismissed.”
A reading of the district judge‘s opinion, reported as United States v. Brodson, D.C.Wis.1955, 136 F.Supp. 158, brings into clear focus his reasons for dismissing the indictment. They ought not to be lightly cast aside by a remand from this level. Under
I would define our problem within the framework of organic law, “In all criminal prosecutions, the accused shall * * * have the Assistance of Counsel for his defence”
Mr. Justice Sutherland speaking for the majority in Powell v. State of Alabama, 1932, 287 U.S. 45, 57, 59, 53 S.Ct. 55, 77 L.Ed. 158 on the point (coming from the state level, to be sure) of denial of the right to counsel and opportunity for trial preparation, said:
“In any event, the circumstance lends emphasis to the conclusion that during perhaps the most critical period of the proceedings against these defendants, that is to say, from the time of their arraignment until the beginning of their trial, when consultation, thorough-going investigation and preparation were vitally important, the defendants did not have the aid of counsel in any real sense, although they were as much entitled to such aid during that period as at the trial itself.” (Italics added.)
I am well aware of the Powell court‘s own limitation, 287 U.S. 45, 71, 53 S.Ct. 55, of what it considered as the question for decision. Yet I cannot read the passage quoted as completely estranged from the decision point. That the prosecution‘s brief tells us of an inability to
A similar thread runs through Glasser v. United States, 1942, 315 U.S. 60, 76, 62 S.Ct. 457, 467, 86 L.Ed. 680 in the frequently quoted line: “The right to have the assistance of counsel is too fundamental and absolute to allow courts to indulge in nice calculations as to the amount of prejudice arising from its denial.”
There are many concepts of the word “assistance.” They range from judicial notions expressed in cases involving parties to crime and the attendant problems of accessorial liability, to Old Age Assistance. When examined in connection with the constitutional guaranty, courts have reversed convictions despite the physical presence of a law license holder at the defendant‘s side. United States v. Venuto, 3 Cir., 1950, 182 F.2d 519; United States v. Bergamo, 3 Cir., 1946, 154 F.2d 31.
The district judge was right, in my opinion, for rejecting
“The court may order the defendant or the government or both to show cause why expert witnesses should not be appointed, and may request the parties to submit nominations. The court may appoint any expert witnesses agreed upon by the parties, and may appoint witnesses of its own selection. An expert witness shall not be appointed by the court unless he consents to act. A witness so appointed shall be informed of his duties by the court at a conference in which the parties shall have opportunity to participate. A witness so appointed shall advise the parties of his findings, if any, and may thereafter be called to testify by the court or by any party. He shall be subject to cross-examination by each party. The court may determine the reasonable compensation of such a witness and direct its payment out of such funds as may be provided by law * * *” (Italics added.)
Even if I am unduly optimistic and assume there are funds provided by law to compensate experts, there is nothing showing in this record that the government auditors would approve a voucher submitted by an expert failing in rendering services to both sides. In short, I am troubled by the mandatory word “shall” in
“Wilfulness” is one of the critical elements in prosecutions under
While I do not accept statements simply because they appear in law reviews or journals, what has just been quoted does point up a fragment of the problem confronting defense counsel in these cases. If society merely wants automatic convictions then a hamstrung defense will facilitate achievement of that shabby aim, but if society desires that courts engage in a search for truth, before punishing, then I would avoid being stingy with defense materials.
Holland v. United States, 1954, 348 U.S. 121, 125-127, 75 S.Ct. 127, 130-132, 99 L.Ed. 150 manifests some awareness of the current and forces influencing the adjudicatory process when the net worth theory supplies buoyancy for the prosecution‘s case:
“Nevertheless, careful study indicates that it [net worth theory] is so fraught with danger for the innocent that the courts must closely scrutinize its use. * * *
“* * * the method requires assumptions, among which is the equation of unexplained increases in net worth with unreported taxable income. Obviously such an assumption has many weaknesses. * * *
“* * * There is great danger that the jury may assume that once the Government has established the figures in its worth computations, the crime of tax evasion automatically follows. The possibility of this increases where the jury, without guarding instructions, is allowed to take into the jury room the various charts summarizing the computations; bare figures have a way of acquiring an existence of their own, independent of the evidence which gave rise to them. * * *
“When there are no books and records, willfulness may be inferred by the jury from that fact coupled with proof of an understatement of income. But when the Government uses the net worth method, and the books and records of the taxpayer appear correct on their face, an inference of willfulness from net worth increases alone might be unjustified, especially where the circumstances surrounding the deficiency are as consistent with innocent mistake as with willful violation. On the other hand, the very failure of the books to disclose a proved deficiency might indicate deliberate falsification.”
A charge to the jury, in my opinion, resplendent in law, logic, and learning could not repair the ravages of an unfair trial. In substance, the district judge reasoned to the conclusion that the complicated nature of the case to be presented against Brodson would render a trial engaged in by inadequately equipped defense counsel so likely to result in “injustice as to be fundamentally unfair.” His view is predicated upon a searching
“Due process of law, as a historic and generative principle, precludes defining, and thereby confining, these standards of conduct more precisely than to say that convictions cannot be brought about by methods that offend ‘a sense of justice’ * * *”
Of course Rochin arose on the state level and required squaring with the Fourteenth Amendment, yet I think the following theme helpful in this appeal:
“The faculties of the Due Process Clause may be indefinite and vague, but the mode of their ascertainment is not self-willed. In each case ‘due process of law’ requires an evaluation based on a disinterested inquiry pursued in the spirit of science, on a balanced order of facts exactly and fairly stated, on the detached consideration of conflicting claims * * * on a judgment not ad hoc and episodic but duly mindful of reconciling the needs both of continuity and of change in a progressive society.” 342 U.S. 165, 173, 72 S.Ct. 205, 209.
The jeopardy assessment involved here was levied before August 14, 1953, hence the abatement provision of
If the statute of limitations were not lurking in the background of this case, I dare say the prosecution‘s interest might have long since flagged. But I refuse to let the threat of time expiration deter me from the key issue. I would affirm.
KENNETH P. GRUBB
UNITED STATES DISTRICT JUDGE
Notes
“Mr. Hilgendorf (Assistant United States Attorney): I would like to come to that point * * *” After reading roughly 150 printed pages of record and substantial briefing I have yet to find when and where the “point” was reached.
Following the oral argument on October 17, 1955, defendant filed three affidavits as to his inability to finance the preparation of his defense. (R. 88, 96, 107). These uncontroverted affidavits establish, inter alia, the following:
1. The levying of jeopardy assessments and tax liens on October 29, 1951, immediately rendered the defendant insolvent. (R. 89).
2. This insolvency has been continuous. (R. 89).
3. In the absence of said levies and liens, defendant would be solvent. (R. 89).
4. As a result, defendant lacks funds to finance effective preparation of his defense. (R. 89).
5. No person, firm or corporation holds any money or assets not known to the government as agent or trustee for the defendant and/or subject to his control or withdrawal. (R. 89, 100, 108-109).
6. As a result of defendant‘s inability to pay fees and disbursements, defendant‘s former attorney withdrew from the case. (R. 65, 89).
Defendant‘s court-appointed counsel filed an affidavit on October 24, 1955, stating that the services of skilled certified public accountants were necessary in the preparation and trial of this case. (R. 91). This fact is uncontroverted. (R. 141). Following the filing of defendant‘s first affidavit (R. 88) and of his counsel‘s affidavit (R. 91) on October 25, 1955, Judge Grubb invited the United States Attorney to make any objections to the affidavits. (R. 93). By letter filed November 1, 1955, the United States Attorney propounded six questions relating to defendant‘s first affidavit (R. 94). In reply defendant filed such an affidavit on November 7, 1955 (R. 96).
On November 8, 1955, Judge Grubb invited criticism of said affidavit by the government. (R. 101). On November 10, 1955, the United States Attorney and the District Director of Internal Revenue filed affidavits. (R. 102, 105). The latter states that the sum of $78,244.41 had been levied upon and that the affiant was holding other assets, not as yet reduced to cash. On November 10, 1955, defendant filed a third affidavit relating to his financial condition.
On November 17, 1955, the United States Attorney advised that the Internal Revenue Service could not and would not release funds to the defendant under existing law. (R. 109).
See Donnelly‘s review of Beany, The Right to Counsel in American Courts, 64 Yale L.R. 1089, 1094 (1955); Cross, “The Assistance of Counsel for his Defense“. Is This Becoming a Meaningless Guarantee? 38 A.B.A.J. 995 (1952).
5. The implications found in Himmelfarb v. United States, 9 Cir., 1949, 175 F.2d 924, are not complete answers to the problem shaped by his appeal.