Opinion
No. 14105.
April 17, 1953.
Will A. Morriss, Sr., San Antonio, Tex., Clyde W. Mays and Dave T. Miller, Fort Worth, Tex., Howard Dailey and Clyde G. Hood, Dallas, Tex., Hood Dailey, Dallas, Tex., Mays Mays, Fort Worth, Tex., Morriss, Morriss, Boatwright Lewis, San Antonio, Tex., of counsel, for appellant.
R. Daniel Settle, Sp. Asst. to U.S. Atty., Frank B. Potter, U.S. Atty., and Cavett S. Binion, Asst. U.S. Atty., Fort Worth, Tex., for appellee.
Before HUTCHESON, Chief Judge, and HOLMES and RIVES, Circuit Judges.
The appellant was convicted of willfully and knowingly attempting to defeat and evade a large part of the income tax due and owing by him and his wife for the years 1948 and 1949, 26 U.S.C.A. § 145(b). The appellant admitted that he failed to report the larger portion of his income and reported only his salary as Assistant District Attorney of Tarrant County, Texas. He denied that his conduct was willful or that he had any evil motive or intent to defraud, and insisted that he acted under a bona fide misconception of the income tax law. In wholly failing to report his fees from private law practice, he claimed that he thought his deductions would more than offset those fees and that it was not necessary to report them. It was further his understanding, so he claimed, that income invested in capital assets need not be reported until the property was sold.
"(b) Failure to collect and pay over tax, or attempt to defeat or evade tax. Any person required under this chapter to collect, account for, and pay over any tax imposed by this chapter, who willfully fails to collect or truthfully account for and pay over such tax, and any person who willfully attempts in any manner to evade or defeat any tax imposed by this chapter or the payment thereof, shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, be fined not more than $10,000, or imprisoned for not more than five years, or both, together with the costs of prosecution."
It is now settled that "willfully", as used in this offense, means more than intentionally or voluntarily, and includes an evil motive or bad purpose, so that evidence of an actual bona fide misconception of the law, such as would negative knowledge of the existence of the obligation, would, if believed by the jury, justify a verdict for the defendant.
United States v. Murdock, 290 U.S. 389, 54 S.Ct. 223, 78 L.Ed. 381; Hargrove v. United States, 5 Cir., 67 F.2d 820, 90 A.L.R. 1276; Haigler v. United States, 10 Cir., 172 F.2d 986; Battjes v. United States, 6 Cir., 172 F.2d 1; Gaunt v. United States, 1 Cir., 184 F.2d 284; Balter, Fraud Under Federal Tax Law, Sec. 18, p. 37, Sec. 158, p. 267 and Sec. 161, pp. 269-271.
Claimed ignorance, however, could hardly be established so conclusively as to justify a directed verdict. It seems to be conceded that the appellant intentionally, though (he claims) mistakenly, failed to include a large part of his income in his return. That is more than the mere failure to return income and pay the tax on it held insufficient to constitute the offense of willfully attempting to defeat and evade the income tax in Jones v. United States, 5 Cir., 164 F.2d 398. Further, the Government offered evidence from which the jury might have concluded that appellant's return for a previous year, and his treatment of income from sales of other assets were inconsistent with his claimed misconception of the law; and the Government insists with some force that appellant's conduct in reporting only his salary as a public official was because he knew that that salary was a matter of public information. It was for the jury to say whether the appellant had the requisite criminal intent, that is whether he willfully and knowingly attempted to defeat and evade income tax. See United States v. Johnson, 319 U.S. 503, 63 S.Ct. 1233, 87 L.Ed. 1546; Schuermann v. United States, 8 Cir., 174 F.2d 397.
Jones v. United States, supra, was based upon Spies v. United States, 317 U.S. 492, 63 S.Ct. 364, 87 L.Ed. 418, where the Supreme Court drew the distinction between the misdemeanor of willfully failing to make a return and pay the tax, section 145(a), and the felony of willfully attempting to evade or defeat the tax, see § 145(b). To commit the felony requires some affirmative action implied from the term "attempt". Willfully making a false return may constitute that affirmative action and is to be distinguished from a mere omission to make any return. Indeed, under section 145(c), the making of a willfully false return in and of itself constitutes a felony.
The defense in this case was founded entirely on a denial of the necessary criminal intent. The comments and remarks of the court in the presence of the jury would have had no effect other than to impress the jury with the belief that there was no good faith defense. Further, the court, after telling the jury that the attempt to defeat and evade the tax must be willfully and intentionally done, charged as follows:
"Counsel, aren't you in this attitude, suppose I am a country boy, and driving an automobile up and down the country roads and never seen a red light, but drive into Dallas, and run a red light, I didn't know I was doing wrong, and that fact would be a mitigating circumstance, that the traffic regulations should consider, perhaps, or —
"The presumption is that a person intends the natural consequences of his acts, and the natural presumption would be if a person consciously, knowingly, or intentionally did not set up his income and thereby the government was cheated or defrauded of taxes, that he intended to defeat the tax."
The appellant duly excepted to this charge. We think the exception was good and the giving of this charge was prejudicial error. The intent involved in this offense is not inherent in the act itself, but is a specific intent involving bad purpose and evil motive and that specific intent must be proved by or clearly inferred from the evidence. See authorities Footnote 2, supra.
In a recent case of stealing Government property, 18 U.S.C.A. § 641, where the district judge had said "That [felonious intent] is presumed by his own act", the Supreme Court used the following forceful language:
"We think presumptive intent has no place in this case. A conclusive presumption which testimony could not overthrow would effectively eliminate intent as an ingredient of the offense. A presumption which would permit but not require the jury to assume intent from an isolated fact would prejudge a conclusion which the jury should reach of its own volition. A presumption which would permit the jury to make an assumption which all the evidence considered together does not logically establish would give to a proven fact an artificial and fictional effect. In either case, this presumption would conflict with the overriding presumption of innocence with which the law endows the accused and which extends to every element of the crime. Such incriminating presumptions are not to be improvised by the judiciary. Even congressional power to facilitate convictions by substituting presumptions for proof is not without limit. Tot v. United States, 319 U.S. 463, 63 S.Ct. 1241, 87 L.Ed. 1519." Morissette v. United States, 342 U.S. 246, 275, 72 S.Ct. 240, 243, 256, 95 L.Ed. 288.
It has been well said by the Ninth Circuit in Hubbard v. United States, 79 F.2d 850, 853: "An intent to defraud cannot be presumed from an unlawful act which does not naturally bespeak fraud. * * * The color of the act determines the complexion of the intent only in those situations where common experience has found a reliable correlation between a particular act and a corresponding intent."
Even when not reversible error, "The use of the words `presume' or `presumption' in this connection is not to be approved." Grayson v. United States, 8 Cir., 107 F.2d 367, 370.
We find it unnecessary to pass upon the other specifications of error. The judgment of conviction is reversed and the cause remanded for a new trial.
Reversed and remanded.