Smith v. United States ( 1948 )

MARTIN, Circuit Judge.

Appellant. J. Robert D. Smith, was sentenced to three years’ imprisonment upon conviction by jury verdict of wilful and corrupt perjury in violation of section 125 of the Criminal Code, Title 18, section 231, U.S.C.A. He insists that the District Court commjtted reversible error in overruling his motion for a directed verdict of acquittal and in declining to discharge him for the alleged reason that there was insufficient evidence of perjury to justify submission of the case to the jury.

The indictment upon which he was convicted charged that, on February 19, 1947, Smith committed wilful and corrupt perjury in testifying under oath before Norman Joss, a special agent for the Intelligence Unit, Bureau of Internal Revenue of the Treasury Department. It was charged that his testimony was material to the investigation then being conducted by that official. The indictment charged specifically that Smith swore falsely that, on _ the date mentioned, he had no accounts or monies to his credit with, or in the hands of, any brokerage firm in Toledo, Ohio, or elsewhere; whereas, in fact, appellant well knew that he had a credit or cash balance of $11,823.09 with the brokerage firm of Bell and Beckwith in Toledo. It was further charged in the indictment that the false statement of appellant was made for the purpose of defrauding and deceiving the United States Government, which, at the time, had against him a claim in excess of $100,000 for unpaid income taxes due and owing by Smith.

Coneededly, Special Agent Norman Joss possessed the essential legal qualifications to administer the oath to appellant, and did so. It cannot be denied that the testimony given before him by appellant was material to the official investigation being conducted. Moreover, the agent informed appellant of his constitutional right not to testify or give incriminating evidence against himself.

Appellant was interrogated in the presence of Willard Rutchow, Deputy Collector of Internal Revenue at Toledo and Mrs. Alma E. White of the Intelligence Unit of the Bureau of Internal Revenue at Toledo. Mrs. White recorded in shorthand the questions asked appellant and the answers given by him. She subsequently transcribed her shorthand notes; and both the original notes and the transcribed record were introduced in evidence at the trial.

After the appellant had been questioned concerning his income from all sources for the years 1944, 1945, and 1946, and as to where he might have had money on deposit, it appears from the testimony of Joss and that of Mrs. White that Joss asked appellant Smith this question: “Do you carry any brokerage accounts with any bond houses?” The appellant answered: “No, Sir.” The indictment rests upon the charge that this answer constituted wilful and corrupt perjury.

To prove that the sworn statement of appellant was false, the Government introduced as a witness William J. Smith, custodian of books and records of Bell and Beckwith of Toledo, commission brokers holding a membership on the New York Stock Exchange. He testified that appellant originally opened an account with his firm on December 19, 1945; closed it on January 8, 1946; reopened it on November 18, 1946, for deposit of two hundred shares of General Motors stock; and that, on February 19, 1947, the crucial date, appellant J. Robert D. Smith had a credit balance with Bell and Beckwith of $11,823.09, which had been credited to his account on February 6, 1947, from the proceeds of the sale on that date 'by appellant’s order of the two hundred shares of General Motors stock belonging to him. The witness testified further that the account thus remained open continuously , until June 26, 1947, when the money was paid to the Collector of Internal Revenue at Toledo pursuant to notice of levy under date of the preceding day.

The broker, who at the time he testified, was a member of the firm of Bell and Beck-with, stated that on February 6, 1947, Attorney Eugene Howard telephoned him that his client, J. Robert D. Smith, wished to sell his General Motors stock, which was on deposit with Bell and Beckwith. The broker told the attorney that he desired direct instructions from the appellant, who then took the telephone and gave instructions to sell the stock at the market. 'The witness was positive in his statement that he recognized the voice of appellant.

He testified further that, around the time the money was received from the sale of the stock, he read in newspapers that the Government had filed levies and distraint warrants against appellant; whereupon, he sought legal counsel and was advised to freeze the account. When appellant, accompanied by his attorney on February 6, 1947, came to withdraw the proceeds of the stock sale, he was told that the Government had seized the money and that he could not get it; that the account was frozen. There was some confusion in the testimony of the witness as to whether his firm was holding the money for the United States Government or for appellant; but, on redirect examination, the broker stated that, as far as the account with his brokerage firm was concerned, the money realized from the General Motors stock was the property of appellant.

William Rutchow, Deputy Collector of Internal Revenue at Toledo, was presented as a Government witness. He swore that, on January 29, 1947, four warrants for distraint were issued for the purpose of reaching all property of appellant; that, altogether, some thirty different levies were filed against him as assets came to light; and that the levy filed upon the funds belonging to appellant on deposit with Bell and Beckwith was filed and served on June 26, 1947. This witness corroborated the testimony of Joss and Mrs. White as to answers given by appellant to questions asked him on February 19, 1947, including the assertion by appellant, when questioned by Rutchow that he had no present recollection of buying any General Motors stock; that he had never possessed any in his own name, but had bought some for his mother, who lived in Florida.

The'last witness put on the stand by the Government was Joseph M. Drugay, Chief of the Toledo Field Division, Bureau of Internal Revenue. He personally served •the notice of levy on Bell and Beckwith demanding that the amount owed by that firm to appellant be applied in payment, pro tanto, upon the amount of $121,909.01, owed by appellant to the United States in internal revenue taxes. He explained that a warrant for distraint is merely a bill for collection presented to the taxpayer. At the conclusion of the Government’s proof, appellant moved that the indictment be dismissed and the defendant discharged because of the insufficiency of the indictment. After hearing argument, the court overruled the motion.

Only two witnesses, Eugene Howard and Henry R. Bloch, both lawyers, were introduced by appellant, who did not testify in. his own behalf. The District Judge was careful to instruct the jurors that the failure of the defendant to testify should not in any manner whatever prejudice him in. their eyes.

Mr. Howard testified to the circumstances under which appellant retained him as one of his attorneys. He asserted that his. client told him that he had some General Motors stock which he wanted to dispose of, in order to raise money to make a bond required in connection with litigation with his wife. He testified to the same general effect as did broker William J. Smith concerning the orders to sell the General Motors stock. He said that appellant instructed the broker to sell the stock, send him the money, and close the account; that about two days after the sale there was "a lot of publicity” in local newspapers concerning the issuance of distraint orders and levies against all of appellant’s property; and that he received a telephone call from Mr. Bloch, attorney representing Bell and Beckwith. Mr. Bloch stated over the ’phone that he had advised the brokerage firm that, “even though they were not under any order of the Government, they were under notice; and he instructed them not to pay the money; and the account was frozen.” Bloch considered the newspaper publicity sufficient notice to the brokers; and declared that the proceeds from the sale of the stock would not be released to appellant “unless we get a release from the Government.” He requested Mr. Howard to convey this information to his client. When informed of the brokerage firm’s position, appellant, according to the witness, made “some expletive remark: ‘Well, that is gone’ — something to that effect.”

The brief testimony of Attorney Bloch brought forward no new matter and was not contradictory, but partly corroborative, of the testimony of the broker, Smith, and that of Mr. Howard.

Appellant contends that his motion for a directed verdict should have been granted, because his answer to the crucial question upon which the indictment was based was “literally accurate, technically correct and legally truthful.” He points out that about fifteen days before he made oath that he did not carry any brokerage accounts with any bond houses, he ordered the brokers to sell all his stock, close the account and send him the money; that the brokers complied by selling the stock on February 5, 1947, but wrongfully kept the money against his will and refused to turn it over to him. No other 'business having been transacted since the sale of the stock, he insists that he was not guilty of perjury in denying that he had a brokerage account on the 19th of February, 1947, inasmuch as the brokers intended to deliver to him the proceeds from the sale of the stock 'but upon advice of counsel decided not to do so and, eventually, turned over the money to the Internal Revenue Department. He insists that the question put to him upon which the indictment was based was not sufficiently definite; that he should have been questioned directly as to any “cash balance, monetary dealings or possession of any assets.”

In overruling the motion of appellant for a directed verdict at the conclusion of the Government’s proof, the court ordered stricken from the indictment the words, “or monies.” From this, appellant argues that it was prejudicial error to refuse to order stricken from the indictment the phrase, “or to his credit with or in the hands of any brokerage firm at Toledo or elsewhere,” and also the language that the defendant “well knew he had a credit or cash balance of $11,823.09 with the brokerage firm of Bell and Beckwith.” Appellant says that these deletions should have been made by the court, for the same reason that the words “or monies” were stricken from the indictment.

He makes the additional point that, in view of the deletion of the words “or monies,” the indictment was insufficient inasmuch as it fails to allege that “the defendant well knew on the day he so testified, that he carried such brokerage account,” but recites, instead, that he “well knew he had a credit or cash balance of $11,823.09.” This summarizes the contentions of appellant.

Appellant is right in his contention that there can be no lawful conviction in a perjury case when an answer of the defendant, under oath, to a question propounded to him is “literally accurate, technically responsive, or legally truthful.” It is also true that, tb sustain a conviction, it must be shown by clear, convincing and direct evidence to a moral certainty and beyond a reasonable doubt that the defendant committed wilful and corrupt perjury. The following cases, cited by appellant, sustain the contention. Hart v. United States, 9 Cir., 131 F.2d 59, 61; Fotie v. United States, 8 Cir., 137 F.2d 831, 840; United States v. Slutzky, 3 Cir., 79 F.2d 504, 505; Allen v. United States, 4 Cir., 194 F. 664, 668. It should be observed, however, that in Hart v. United States, supra, and in United States v. Slutzky, supra, convictions on the first count of the respective perjury indictments were reversed; but convictions of perjury on the second count were affirmed in both cases.

The acceptance of the doctrine of the strict requirement of convincing proof to justify convictions in perjury prosecutions was evidenced by this court in reversing a conviction of perjury in Galanos v. United States, 6 Cir., 49 F.2d 898, 899. There, upon the facts, it was found that the negative answer of the defendant, to the question whether he himself had arranged for the making of a bond for an arrested woman, was literally true. The proof showed that the defendant had participated with others in preliminary negotiations eventually leading to the making of the bond, but that he, himself, had not in fact made the arrangements. It was held that his motion for an instructed verdict of acquittal should have been granted. Upon factual comparison of the Galanos case with this one, we find no similarity of such nature as to indicate that consistency requires like action here.

For illustrative cases in which this court has sustained convictions of perjury, see: Jacobs v. United States, 6 Cir., 31 F.2d 568; Laughters v. United States, 6 Cir., 155 F.2d 29; Kahn v. United States, 6 Cir., 20 F.2d 782.

It is, of course, for the court to determine, before submitting a perjury case to the jury, whether the quantitative rule of evidence has been satisfied. In Weiler v. United States, 323 U.S. 606, 65 S.Ct., 548, 89 L.Ed. 495, 156 A.L.R. 496, the Supreme Court held that, in order to convict in a prosecution for perjury, the falsity of the statement made under oath must be established by two independent witnesses, or by one witness and corroborating circumstances. This court had made a holding to the same effect before the announcement of the opinion of Mr. Justice Black in the Weiler case. See Fraser v. United States, 6 Cir., 145 F.2d 145, certiorari denied 324 U.S. 842, 65 S.Ct. 586, 89 L.Ed. 1403. We do not perceive that the Weiler case furnishes any guidance here. The false statement in this case made by appellant Smith under oath was proved, as has been shown, by the testimony of two witnesses: Norman Joss and Mrs. Alma White. The testimony of Willard Rutchow is also corroborative.

We cannot accept as valid the argument of appellant that his answer, “No, sir,” to the question, “Do you carry any brokerage accounts with any bond houses?” was literally true. The truth or falsity of his answer must, of course, be judged by the facts existing at the time he gave the answer on February 19, 1947. Although his two hundred shares of General Motors stock had been sold by his order on February 6, 1947, the proceeds from the sale were not paid out but remained in the account to his credit on the books of the brokerage firm on the crucial date and, indeed, until June 26, 1947. Regardless of his instructions, the account had not been closed out on February 19, 1947, for the books of account of the brokerage firm show the uncontradicted fact that, on that date, appellant’s account with the firm had a credit of $11,823.09.

As a practical matter, it is well known that a brokerage account is not considered to be closed as long as funds remain on the books of the broker to the credit of the customer. If the funds on deposit are sufficient, the customer may, through 'his 'broker, acquire stocks at any time, often by a mere order given by telephone; or the broker may, upon order of the customer, purchase and carry stocks for him on margin, if the deposit with the broker is sufficient to meet marginal requirefnents. The relationship between stockbroker and customer, as debtor and creditor, is well discussed in Hammon v. Paine, 1 Cir., 56 F. 2d 19.

No levy was issued by the Government against the money in appellant’s account with Bell and Beckwith until June 25, 1947. During the interim between the sale of the stock and the levy, the brokerage firm was under no restraining court order or legal levy which prevented it from paying out the money to appellant. Refusal to pay was on the advice of the firm’s own counsel and was not due to any court order or levy. The status of the account on February 19, 1947, and until June 26, 1947, was that of a “frozen” account. Although frozen, the account showed a credit of $11,823.09 to appellant. Therefore, his answer that he had no brokerage accounts with any 'bond houses on February 19, 1947, was not literally true.

Whether appellant wilfully and corruptly testified falsely was an issue for determination by the jury under appropriate instructions as to the applicable law.

For an illustrative authority as to the right of the jury in a perjury case to draw inferences from evidence, see Jacobs v. United States, 6 Cir., 31 F.2d 568, supra. In Epstein v. United States, 2 Cir., 271 F. 282, the court held that whether an alleged false statement was made with corrupt intent is a question solely for the jury. In both these cases, convictions were sustained on appeal. See also United States v. Mascuch, 2 Cir., 111 F.2d 602, 603, holding the proof sufficient to support a finding by the jury that the defendant was guilty of perjury.

The District Judge carefully, correctly and adequately charged the jury upon the applicable principles of law and amply protected the lawful rights of appellant. The jury was instructed that the burden of proof rested upon the Government to establish beyond a reasonable doubt the truth of each essential element of the indictment. The essential elements were correctly defind. The court’s explication of the ingredients of the crime was clear, correct and easily understandable. Among other instructions, the following were quite explicit: “The charge that the defendant did commit wilful and corrupt perjury in his answer to a question propounded by the authorized officer will not be established if the proof goes no further than to show that the defendant was honestly mistaken and in good faith believed his answer to be true. Also if you find from the testimony that the defendant’s answers to the agent’s questions were literally true, you cannot find him guilty of this charge. * * * If you shall find that the Government has proven beyond a reasonable doubt that the defendant did commit wilful and corrupt perjury in his answer to the revenue agent, and did give certain testimony which was material to the investigation then being conducted, and that he did make oath that the testimony would be the truth, the whole truth, and nothing but the truth, and that the defendant so being sworn did falsely testify on the 19th day of February, 1947, that he had no accounts to his credit with or in the hands of any brokerage firm in the City of Toledo, whereas, in truth and in fact he well knew that he had a credit or cash balance of $11,823.09 with a brokerage firm in Toledo, Ohio, and that said statement was made by the defendant for the purpose of defrauding and deceiving the Government in its efforts to satisfy an income tax claim against the defendant, then you should find the defendant guilty under this indictment. On the other hand if you should find that the Government has failed to prove these facts or any one or more of them beyond a reasonable doubt, then you must find the defendant not guilty. * * * The sole material question relied upon by the Government, and the sole answer which the Government claims to have been materially and wilfully false, were the question ‘Do you carry any brokerage accounts with any bond houses ?’ and the answer ‘No, sir.’ ” No exceptions to the charge were reserved.

In our judgment, the trial court properly denied the motion of appellant for a directed verdict and dismissal. We find no error in its, rulings, instructions, or conduct of the trial.

The judgment of conviction and sentence is affirmed.