*1 failing judgment in enter its erred * * * against Randall, it would favor by decision to abide have been content ** * appeal [except for the below by oral On and Presto].” taken argument, Gilbert agreed counsel Allied’s properly appeal described could

its

“protective.” by Allied concessions these view judgment our conclusion

against in favor of and Presto Gilbert correct, reach the we do

Allied was cross-appeal affirm the merits finding trial court that Randall personally for the debt liable

was not

due Allied. prayer for the assessment Allied’s including appeals, all costs these attorneys, is denied. fee for

reasonable judgments the district entered respects are all affirmed.

court

Affirmed. EDWARDS, Appellant,

Albert Lee, Sarasota, Fla., appellant. for Dick America, UNITED STATES Levine, Atty., Appellee. D. U. Arnold Asst. S. Mount, House, Atty., Edith U. S. Joe H. EDWARDS, Appellant, Frank S. Asst, III, Hanlon, Sp. J. Thomas to U. S. Florida, Tampa, Atty., Fla., D. of S. America, STATES of UNITED appellee. Appellee. RIVES, CAMERON and Before Nos. 19828. Judges. HAYS,* Circuit Appeals Court of Fifth Circuit. Judge. HAYS, Circuit July judgments appeal from Defendants States District conviction District of Flor- Court for Southern J., Lieb, jury, Joseph ida, and a P. special failure to fed- “willful” persons in the busi- tax on eral wagers. accepting 26 U.S.C. ness of §§ * designation. sitting Circuit, Of the Second

325 States, Yarborough 230 In v. United 4401, 4412, 4411, conceded It is denied, Cir.), 56, (4th 351 61 cert. pay tax. F.2d did that defendants not 1487 969, 1034, L.Ed. 100 however, de- U.S. 76 S.Ct. proof, There was that no Appeals for the (1956), the Court of tax fendants of the federal were aware Hargrove citing case Circuit, “willfully” pay Fourth We and refused to it. Murdock, infra, indispensable, United States v. hold was that said: accordingly reverse both convictions dis- and direct that the informations be “Ignorance no defense law is missed. crime, except that, wilful- to where ig- crime, unnecessary an evi- ness is element of the It is review the to duty imposed say law norance of may dence. ample proof a Suffice it that there to negative jury could wilfulness from duty.” engaged perform conclude that defendants were business. Murdock, 290 U.S. United States v. 389, 223, (1933) 54 S.Ct. 78 L.Ed. 381 Appellants convicted under § the defendant mis- was convicted of a 7203) (26 7203 of the Code U.S.C. § 1 predecessor demeanor under statute provides: which section to 26 U.S.C. 7203 for refusal to answer § “Any person required this agents. questions put by certain revenue pay title estimated tax * * * Defendant his refusal maintained that willfully tax who fails upon pros- * to answer was based * * fear pay such tax or estimated tax Court, ecution under state law. shall, penalties in addition to other versing upon the conviction in reliance provided by law, guilty mis- of a States, 699, * Felton v. United * 24 (emphasis demeanor *.” (1877) L.Ed. 875 found error supplied). charge regarding the element of willful- government argues :, ness of the law is excuse and that evidence “Congress per- did not intend a that defendants son, by reason of a fide bona mis- business, together with the concession understanding liability as to his required tax, did not tax, as to his make a re- support is sufficient to a conviction. turn, adequacy or as to the maintained, records he should be- long that, But court has this held come criminal his mere failure statutory where the definition up prescribed to measure crime of failure to a tax includes standard conduct. And the re- specific willfulness, the element of wrongful “a quirement that the omission these intent, is, actual instances, willful, must be to be obligation of the existence of criminal, persuasive that the same wrongful it, to evade intent essential to the offense Hargrove States, essence.” v. United failing supply information. 820, (5th 90 A.L.R. 1276 Cir. ****** 1933). felony prose States, 672, 1. The law in a is settled United attempt 1314, (1959); cution for “willful” to “evade or L.Ed.2d 3 1503 United any tax”, Shaffer, 7201, (7th Cir.), defeat 26 § U.S.C. or con State v. 291 F.2d 689 spiracy denied, section, 915, to violate that evi cert. 368 U.S. S.Ct. 82 (1961); dence must show that the defendant know 7 L.Ed.2d 130 United States v. Mollet, (2d 1961); took 290 some F.2d “affirmative 273 Cir. (such concealment), action” as acts of Wardlaw 203 F.2d 884 purpose” prevent gov 1953); (5th with a “bad Cir. States v. Mar collecting tell, (3d 1952), F.2d ernment revenue. 670 199 Cir. cert. Spies denied, U.S. 63 345 97 L. (1943); Ingram (1953). L.Ed. Ed. 1350 Mertens, respondent’s Tax answer Law of Federal Income refusal to “The legal (1958). ation 55A.09 § was intentional without justification, but con- While cases we have cited were find that it was nevertheless gam- cerned with taxes other than *3 prompted in- by evil bad faith or bling tax, reason we can conceive no tent, makes an which the statute why apply to the same rule should not the offense.” gambling comply failui'e tax with the 396-98, 226. 290 at 54 at U.S. S.Ct. provisions. legislative history of gambling tax reveals intention no involving Subsequent cases impose gambling a stricter standard in closely report pay followed taxes have H. cases than in other cases. tax See See, g., Barrett the rule in Murdock. e. Rep. 586, (1951), Cong., 82d 1st Sess. (5th States, Cir. v. United 296 F.2d 309 reproduced Cong. 2 Admin. U.S.Code & 1961) ; Palmero, 259 States v. United S.Rep. 1781, (1951); Serv. at 1837-44 laxity, (3d 1958) (“mere F.2d 872 Cir. 781, Cong., (1951), 82d 1st re- Sess. disregard imposed careless of the produced Cong. 2 & Admin. U.S.Code by gross negligence, unat or even 1969, (1951). Serv. at 2089-96 probative not tended ‘evil motive’ are Simon, United v. 241 F.2d 308 ”); v. Cir of ‘willfulness’ United States (7th 1957) Cir. involved failure illo, (3d 1957), 251 F.2d cert. 638 Cir. gambling constru- tax. The court in denied, 949, 914, 356 78 2 L.Ed. U.S. S.Ct. ing extensively quoted 7203 from a § (1958) (“[‘willfulness’ requires] 2d 843 number of tax cases which knowledge legal Rip obligation”); quired showing knowledge of the perger States, v. United 248 F.2d 944 violated, statute and then held: (4th 1957), denied, Cir. cert. 355 U.S. knowledge “Defendant had 940, 428, (1958); 78 2 S.Ct. L.Ed.2d 421 intentionally law and com- refused to Litman, United States v. 246 F.2d 206 ply. proof There is no that such re- (3d Cir.), denied, 869, cert. 78 355 U.S. good fusal was in faith.” 118, (1957) (the 2 L.Ed.2d S.Ct. 75 omis 241 F.2d at 312.2 sion must be “advertent” and motivated Yarborough government purpose”); We conclude that “bad v. Unit since the States, wholly (4th Cir.), ed 230 F.2d 56 failed to cert. an essential ele- denied, 1034, charged, 969, 351 U.S. 76 100 ment the crimes the convic- (1956); Pappas L.Ed. 1487 tions must be v. United reversed and the informa- (10th States, 1954); 216 F.2d tions dismissed.3 515 Cir. may assume, arising deciding, 3. In other cases under these stat We without nonpayment utes, involving where the issue of in cases of income willfulness raised, g. States, there e. Holland v. was evidence that United 348 requirements. 121, 127, 99 defendant knew U.S. 75 S.Ct. L.Ed. 150 (1954); Spies Shaffer, States, States v. 291 United F.2d 689 317 U.S. (7th Cir.), denied, 492, 364, 915, (1943); cert. 87 368 U.S. 82 63 S.Ct. L.Ed. 418 192, (1961) (one States, 7 L.Ed.2d 130 Wardlaw United 203 F.2d 884 (5th 1953), registered, had defendants served as Cir. the almost universal front others); knowledge States, for Rutherford United the existence of that tax (9th Cir.), justify placing denied, F.2d 180 would 264 cert. the initial burden 359 1003, 79 S.Ct. on the 3 L.Ed.2d 1001 defendant. require (1959) (asked States, if he knew of the Cf. Abdul v. United replied ments, (9th 1958) defendant 292 Cir. F.2d 234 inapplicable (9th 1960), denied, because Cir. cert. he was not a book maker) ; (1960) Brown v. 81 S.Ct. 5 L.Ed.2d justices (5th (two dissenting) (withholding 1957), denied, F.2d 306 Cir. cert. tax). absolutely evidence, 710, 2 There is L.Ed.2d 719 (defendant however, support (1958) complied prior dissenting our col years): league’s premise Contreras v. basic the federal (5th 1954) equally (defendant known, F.2d tax is Cir. well nor judicial had been warned to we take notice of such a tax but so). Wigmore proposition. failed to do IX dubious Evi- fendants, clearly dismissed. result uncon- which is

Reversed and informations taking judicial Moreover, stitutional. no- tice defendants’ would Judge (Specially CAMERON, Circuit charged effect be to convert the crime Concurring). imprisonment govern- for debt opinion fully concur in the able ment, lia- rather than evasion of tax following Judge Hays and add the would bilities. comments. Judge dissent, As Rives in his states It cannot be too often that mentioned charge the issue of the correctness prosecutions we are as these which “ * * * including part: pre- reviewing prosecutions are viola- *4 sumption every person is that knows taxing laws, not for of federal the tion the what law forbids and law what the gambling And, “in violation of laws. ”* * * requires to be done not be- is construing we would not [the statutes] necessarily us. fore the But before us is justified resorting mo- be in collateral adage propounded old so often in crim- congressional tives or effects desire [a “Ignorance cases: inal the is no of laws standing suppress wagering] which, excuse.” taxing apart power, from the federal constitutionality place really the of the exception This case is not an general statute in doubt.” United v. Cala- Ignorance that rule. of crim- the maro, 351, 358, evading inality excuse, of taxes if is short, wilfully L.Ed.2d 1394. In tax, one evades the thus commit- gambles one no ting whether or not of know, the crime. One how- must government, to the federal concern ex- ever, positive requirements the of the taxing cept power insofar as alone is register law federal that one must involved. wilfully the tax before he can evade it. It be that this is difference suggests Judge Rives his in dissent between sins of commission and sins of require proof that to affirmative that the legal part omission. It is a our herit- taxing defendants are aware of the age, however, that courts law tradi- quirements will make convictions exceed- tionally punishment out mete for sins ingly rare. Besides the that do fact we Judgments of commission. on sins of positive, not hold here that affirmative usually High- omission are reserved for a proof required, result, if that be the sitting Day. at er Court a later possibility so it. Such a does not war- my suggestion rant, opinion, in in the Judge RIVES, (dissenting). Circuit judicial we dissent that take notice of the persons engaged gam- says, all ample fact that in As the “there was bling require- are business aware of the from which the could conclude dealing engaged ments. with this serious defendants that in the taking liberties, business citizens’ business.” we Neither of them privileged registered paid are not assume that the tax as re- by quired well “tax is so known as to be one of the U.S.C.A. 4411 and § 4412. § holds, frequent subjects however, that, most of conversation The Court as a mat- gamblers.” among professional law, there was The fact ter of insufficient evidence exceedingly doubt I it that if is true defendants’ failure to gamblers “professional” register all the tax know was “willful” possibility making such Nor does sense the tax. statute war- in holding misdemeanor, rant a that defendants affirma- U.S.C.A. § tively require- opinion, establish As understand certainly put To do so would effect holds ments. in the Court the Government affirmatively prove proving part innocence on as a the de- must burden crime, (1940). proved knowl- Defendants’ was therefore to be § dence government. edge like all elements other aware of the defendants were claimed written intro- case “that lease which was having tax,” in federal knew the duced evidence. He admitted telephone imposed by a ing law. in denied be- the house. He lottery On or bolita business. business cross-examination, he further testified: engaged aof consisted defendants were lottery “Q. your testimony operation of considerable Is it here to- or bolita admittedly day you scope a house have never conducted Edwards. A search owned Frank bolita business ? warrant dis- the house under a search right. “A. That’s lottery paraphernalia

closed used “Q. Ever; is that correct? viz., pads, operations; memo or bolita adding (No response) “A. tally tapes, or re- sheets machine “Q. your testimony today, Is that pickup men, cap cards sheets of sellers or Mr. Edwards? winning buyers notify used to trying radios, number, “A. am to think back. short wave and a two telephone name of Frank Ed- listed “Q. oath, You and I want are wards. your you time and reflect. to take *5 expert lottery qualified A on bolita and ’49, I it “A. Yes. Back in think necessity operations testified was. large keeping a on hand amount of cash. “Q. in busi- You were the bolita When Frank Edwards was arrested at ness? Palace Bar in front the the Green got “A. arrested. lottery from which the was con- house “Q. You were here in Court- the ducted, pocket he had in his and $71.47 and heard room various witnesses bag person $1,091.47. on his There in testify you that were delivered sacks testimony was considerable about five- your I don’t know what. What is gallon Frank had can which Edwards on respect those sacks with to statement carried. occasions The can filled with being as de- that discussed lottery paraphernalia various was found you people? to various livered under the house next door to that from My statement is didn’t “A. operations which the were conducted. any from receive sacks no one.” Frank Edwards been observed had meet- Negroes ing parking various in the lot upon Edwards also testified Albert accepting Palace Bar and Green son Frank He was the Edwards. trial. them; packages from he had been ob- having simply any denied He made going in served and out of house sales of bolita tickets which to lottery was conducted. where witnesses had Government testified. paid purchased informers had Two lot- significant present on It issue tery tickets from or bolita Albert Ed- that neither defendant testified he the Green Palace Bar. wards not aware of the tax was or they purchased bolita tickets were ignorant duty imposed by of the law. They in evidence. introduced also had persons making pur- other seen similar foregoing summary is a brief from Albert Edwards. chases very prop- which the evidence Court arrest, erly ample proof time his At the Frank holds to be Ed- from which ownership house, admitted could conclude wards defendants lottery officer op- testified: “I asked him were or and bolita house, in the lived and Frank he said he eration. Edwards fits who the de- out, scription it but he refused to tell of the “banker” rented me and Albert Upon trial, was.” it Frank Ed- Edwards that the “writer” in who Calamaro, 1957, the stand took and testified that he wards States 353, the house rented to If, had Mahalia S.Ct. L.Ed.2d Sea- Johnny Simpson, produced holds, the Court now necessary, brook as it is ease, Mur its context. United States dock, part of the Government’s as a go affirmatively [54 further may L.Ed. It well mean some 381]. aware of the defendants nonpayment appre- thing applied law; then, I more as they knew the applied failure a tax willful than when convictions hend that voluntary ex- make Mere tax will become return. distinguished purposeful, as ceedingly rare. accidental, make a omission to will- me that the It seems to timely the test return meet including of the fulness, an awareness in view of our But of willfulness. in- tax imprisonment traditional aversion to attending the circumstances ferred from debt, without the we would not op- lottery or bolita the conduct Congres clearest manifestation of ef- to be I understand that eration. sional mere intent assume that holdings this Court both of fect of the knowing and intentional default Ingram Supreme in the and of the payment tax, where of a there Ingram 5 Cir. case. been no to disclose willful failure 886; part and affirmed liability, is intended to constitute 672, 79 part, reversed in degree. a criminal offense of 1314, L.Ed.2d 1503. expect We would willfulness in such present True, does not as case this a case to include some element of evil large operation an or much effort justification motive want Ingram. operations conceal the as did view of all the financial circum operation However, the size of can- (Em taxpayer.” stances of the controlling, and there was in this *6 not be phasis supplied.) concealment; effort at for ex- some case ample, attempt to hide behind the Holland v. placing lease, and fictitious 121, 139, 127, 137, U.S. 75 S.Ct. 99 L.Ed. containing five-gallon lottery para- can felony involved the more serious adjacent phernalia house. Cer- charge willfully attempting of to evade tainly operations were not so brazen taxes. caption income Under the prevent as to and unconcealed the defend- Present,” “Willfulness Must be the Court denying any participa- ants in toto said: tion them. upon which The informations the de- necessary final “A were tried fendants charged convicted conviction peti- is willfulness. The they willfully failed both tioners contend that willfulness ‘in- register with the District Director to specific volves a intent which must special gambling tax. If proven by independent evidence registered they simply but had failed and which cannot be inferred from might pay the the case stand dif- the mere understatement of income.’ they ferently, here but failed to do both. This is fair statement of the rule. Spies States, 1943, v. United As said in Here, however, there was evidence of 492, 497, 498, 364, 367, pattern a consistent of underreport- 368, 87 L.Ed. 418: ing large amounts income, petitioners’ “The difference failure on part between willful due, include all of a tax their failure to when which income in their misdemeanor, books and Since, made records. and willful proper on submission, attempt jury one, defeat and evade could have felony, easy found that supported is made a these acts an willfulness, inference of detect or define. Both must be their ver- willful, willful, said, Spies dict must as we stand. have v. United many States, supra, meanings, a word its con- [317 at 499-500, U.S.] being struction [63 368].” often influenced wrongdoing. It that the de- willful seems to me that This w is the engaged given. business fendants in a effect of the instructions Ap- of a consistent We also involves “evidence think the Circuit pattern,” peals is, correctly upheld numerous sales the resoond- redemptions lottery right question tickets.. or bolita ent’s to have the testimony Indeed, Edwards’ from Frank absence motive submitted of evil quot- jury, opinion on ed, which I have cross-examination and we are of jury requested have concluded that apt well instruction was engaged purpose.” (Emphasis that he had been bolita supplied.) business as far as 1949. back aIn case like this where law is my brothers, it With deference to plain, settled, certainly definite and well utterly to me unrealistic and ex- seems present the defendants must evi- some tremely naive for or the either dence of their the law be- persons court to assume that fore the Government is called on to business are unaware of were aware of the tax or gambling- federal tax. have no their under the law. As has been doubt that tax is well so known as said, while each the defendants testi- frequent subjects to be one most fied, any ig- professed neither of them among gam- professional of conversation of the law. In Cruz norance blers. 10 Cir. aware, present far am So as hold- Judge Phillips said: ing precedent imposition is without in its “Furthermore, if there was a want upon the Government of the burden of knowledge the existence of proving defendants knew the part Section on the the defend- plain, which was definite and well ants, peculiarly that was a fact with- many years. settled for The situation knowledge, in their and when the different in United States v. Mur- government prima established a dock, 1933, 389, 396, case, adducing facie the burden of 223, 226, 78 L.Ed. 381: presumption evidence to rebut the respondent follows that “It of such rested on de- *7 charge entitled to the was he re fendants. Blumenthal v. United respect good quested with to his States, supra 1937, Cir. [8 F.2d and faith actual belief. Not until 530]; 522, Crapo pronounced judgment court this Cir., 996, 1001, 100 F.2d and cases Murdock, United States v. cited note 4.” 141, 63, 210], [52 S.Ct. 76 L.Ed. own case of Wardlaw Our v. definitely been had it settled that'one 1953, 884, 885, 5 Cir. examination in a tri federal involving felony charge attempting could not bunal to answer on refuse tax, similarly evade income treated probable account incrimination proceeding:. burden of question under state law. The was ‘willfully’ is now settled that “It involved, decided, but not in Ball offense, used in this means more as Fagin, v. man[n] intentionally voluntarily, or than [,26 433], 50 L.Ed. an evil motive includes or bad specifically reserved. in [United purpose, so that evidenceof an actual Vajtauer Comm’r, ex rel.] misconception bona Immigration, fide negative knowledge as would 560], [,47 71 L.Ed. The S.Ct.. the obligation, existence of not,, therefore, court could trial would, jury, jus- if believed properly tell the the defend tify verdict defendant.” privilege assertion ant’s Continuing Wardlaw, unreasonable and so ill founded we said: “Claimed.ignorance, however, bad faith and to exhibit could establish hard- J conclusively as to ly so be established Marjorie Bodzy al., H. BODZY and H. et verdict.” justify a directed Petitioners, holding that, without is present evidence, de- any indication or COMMISSIONER OF INTERNAL REV or ignorant law fendants ENUE, Respondent. district of the federal unaware No. 20148. judgment have entered court should submit did court district Appeals States Court of acquittal. The Fifth Circuit. willfulness, as follows: the issue July “Now, you omis- will note that charged to act or failure sion alleged been to have information willfully to act A failure done. voluntarily willfully done if done specific in- purposely with a law re- what the do to fail to tent say, quires done. That is to to be disobey purpose either to

with disregard law. or necessary prose- for the “It ac-

cution particular act cused that unless of law a violation act is outweighed by evidence until contrary. presumption is every person knows what what law forbids and

law

quires done. to be

“However, evidence if be- or failed to act acted accused is to of the law cause determining wheth- considered failed acted or the accused or not er alleged.” specificintent as with act charge an- counsel defendants’ this To objection. Hence, had no he

nounced *8 vel is not an issue on non correctness dissenting, however, I appeal. charge is an court’s say the district as I un- the law statement

admirable it.

derstand goes submit, majority

Certainly, ordering informations dis- far

too goes appellants’ brief missed. Trial to “submit than further

Judgment reversed and a new should permissible granted.” That is un- trial States, 1950, Bryan der L.Ed. length to which this the extreme go view. should respectfully dissent.