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United States v. Indian Trailer Corp.

October 21, 1955

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
INDIAN TRAILER CORPORATION AND HARRY L. BARTHOLOMEW, DEFENDANTS-APPELLANTS.



Author: Duffy

Before DUFFY, Chief Judge, and MAJOR and SWAIM, Circuit Judges.

DUFFY, Chief Judge.

Defendants, Indian Trailer Corporation and Harry L. Bartholomew, its president, were convicted under a single count indictment of violation of ยง 145(b), Title 26 U.S.C.A., to-wit: of wilfully and knowingly attempting to evade a large part of the tax owing by the corporation for the fiscal year ending October 31, 1946, by filing false and fraudulent returns.

The cause was tried as a consolidated case with two other indictments in one of which Harry L. Bartholomew was charged with a like crime in regard to his individual income for the calendar year 1946, and in the other, Bartholomew's wife, Julia, was charged with a like crime in regard to her individual income for the same year. The jury disagreed as to the charges in the indictment naming Harry L. Bartholomew individually, and acquitted Julia Bartholomew of the charges made in the indictment against her.

Defendants rely on four principal claims of error. 1) Failure to sustain a Motion to Dismiss which raised the question of the Statute of Limitations; 2) The refusal to admit a record of the corporation known as "Bill of Materials"; 3) Admitting as a matter of rebuttal a 12-page stenographic transcript of an interview of government agents with defendant Bartholomew; and 4) based on instructions given and refused.

The indictment in the case at bar was returned on January 7, 1953. It alleges the filing of false and fraudulent returns on January 9, 1947. The 6-year Statute of Limitations is applicable. Proof was offered by defendants that the returns were, in fact, filed on January 6, 1947, and that the indictment was thus barred by the Statute of Limitations.

Bartholomew testified that on January 4, 1947, a Saturday, he signed three checks each drawn on the corporation's account, and each made payable to the Collector of Internal Revenue, and that said checks were numbered consecutively. The first of these checks, No. 8544, in the amount of $21,823.70, was in payment of the final portion of the taxes owing on the corporate return in question, and was stapled to such return; the second of such checks, No. 8545, was in the amount of $8,046.77 and was given in payment for the excess profits tax for the fiscal year under consideration, to which return it was likewise stapled; the third of said checks, No. 8546, was in the amount of $8,500.00 and was given to discharge a quarterly payment upon Bartholomew's individual declaration of estimated tax, such declaration being also stapled to the check. He testified that all three checks were prepared by his bookkeeper, given to him by his auditor, Weinig, and simultaneously signed by him, and that all three returns, with checks attached, were placed in a single envelope with postage prepaid, duly addressed to the Collector of Internal Revenue.

It was stipulated that in the event mail was posted in a box at either of the post offices where Bartholomew customarily deposited the company mail, it would reach the Collector's office in the ordinary course of the mails on Monday, January 6, 1947. On the face of the declaration of the estimated tax, which was paid by check No. 8546, there appears a government stamp showing the document was received by the Collector on January 6, 1947. Mr. Weinig, the auditor, testified that the two returns of the corporation and the declaration of estimated individual tax were signed on January 4, 1947, and that the three checks, Nos. 8544, 8545 and 8546 were prepared in sequence on that day. Mrs. Bartholomew testified that she placed the envelope in the mail at a certain post office box which she identified as being the box she always used when posting mail for the company.

It is apparent that a strong showing was made that all of the documents were mailed to the Collector on January 4, and it is without dispute that one of them was received by the Collector on January 6. If the other two were received on the same date, prosecution on the indictments was barred by the Statute of Limitations.

On this point the government called only one witness who testified that he was in charge of receiving tax returns in the office of the Collector in Chicago, and he described the customary procedure. He testified that the stamp showing the date of the receipt of the income tax return of the corporation was January 8, 1947, and this indicated that the return was actually received by the Collector's office on that date. It further appeared in answer to the trial court's questions, that all three checks had cleared the bank on the same day, January 9, 1947. Judge Barnes, who heard the testimony on the Motion to Dismiss, made a finding that the return in question was actually received by the Collector on January 8, 1947. There was some evidence which, if believed by him, supports such finding. Improbable though it may seem to us, we cannot disturb the court's finding as he was the sole judge of the credibility of the witnesses who testified before him.

Defendant, Indian Trailer Company, was in the business of manufacturing mobile house trailers to be sold to dealers or distributors. It was the theory of the government's case that during the period in question the distributors paid to defendants $200.00 per trailer over the invoice price, and that such receipts were not shown on the books of the corporation, nor were they otherwise accounted for to the government. The defendants admitted that Bartholomew received money from distributors, the receipt of which was not shown on the books of the corporation, but claimed that such funds were used for the purchase of scarce materials used in the manufacture of trailers, which purchases likewise did not appear on the records of the corporation, same having been obtained at over-ceiling prices. Defendants claim the monies so received were placed by Bartholomew into a procurement pool or "kitty" which was not a fund of the corporation, and that this fund was totally exhausted by using same for the purposes for which it was established. Bartholomew claimed he never received full reimbursement for his own personal advances to the corporation from his own funds.

During the period in question trailers such as manufactured by defendant corporation were in short supply and there was a broad market for same. The distributors and dealers were clamoring for more trailers than they had been receiving. Testimony was received showing that many more trailers were produced than could have been manufactured with material obtained from regular sources of supply. The evidence is quite clear that many of the distributors and dealers knew that the monies they paid over the regular invoice price was due to the difficulty defendants were having in obtaining material necessary for the construction of the trailers.Nevertheless, if the only question before us was the sufficiency of the evidence, we would feel that the judgment should be affirmed although we recognize that the case was a close one. Any claimed error must be closely scrutinized, for such error might have been the deciding influence which caused the jury to find the defendant corporation and its president guilty.

We think serious questions are presented as to an instruction which was refused and in the admission of certain evidence offered by the government.

In considering whether substantial and prejudicial error was committed, we must keep in mind that the burden was upon the government to prove beyond a reasonable doubt that the defendant did wilfully and knowingly attempt to defeat and evade taxes as alleged, and that the burden of proof never shifted to the defendant. United States v. Fenwick, 7 Cir., 177 F.2d 488, 492.And, on the question of instructions "* * * the defendant is entitled to have presented instructions relating to a theory of defense for which there is any foundation in the evidence, even though ...


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