Costello v. United States – Oral Argument – January 16, 1956

Media for Costello v. United States

Audio Transcription for Oral Argument – January 17, 1956 in Costello v. United States

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Earl Warren:

Number 72, Frank Costello, versus, United States of America.

Osmond K. Fraenkel:

May it please the Court.

Earl Warren:

Mr. Fraenkel.

Osmond K. Fraenkel:

I expect to take about half of my time in the — of our time in the direct presentation, leaving to Mr. — my Associate Mr. Shilensky time for rebuttal after the argument by the Government.

Earl Warren:

You have followed that time yourself?

Osmond K. Fraenkel:

Yes.

This case arises out of a prosecution for income tax frauds, at which the Government sought to convict the defendant and succeeded on the basis of the net worth expenditure theory with which this Court is familiar.

And the problems which arise in that connection are not here since this Court has limited our certiorari to the one point arising out of the indictment.

The — prior to the trial, the defendant had moved for an inspection of the grand jury minutes and to dismiss the indictment on the ground that the saying was not based on any evidence, that motion was denied on the ground that the papers were not sufficiently specific.

At the trial, defendant’s counsel announced his intention of establishing there what he had not been able to establish previously, and began questioning each witness who appeared at the trial, whether or not that witness had also testified before the grand jury.

And in the beginning, the Government objected and the objection was sustained, but the summaries are not disclosed.

The Government did not persisted its objection, and therefore, all of the witnesses were asked, because one of the witnesses as to whom the objection was originally sustained was later allowed to answer the same question.

All of these were asked, whether or not, they had testified before the grand jury.

And it transpired that no one of the witnesses who produced the large record, which is before Your Honors, had testified before the grand jury who had had any personal transaction to whatsoever with the defendant.

Not even with the one government agent by name of her own name who had — had a conversation with defendant which is in evidence.

And there are only three persons of all those witnesses had testified before the grand jury who were all government agents who testified at the trial as experts basing their testimony there of course, on the testimony which had previously been given at the trial by various individuals who have had personal transactions with the defendant.

And on the basis of that proof, the defendant again at the trial moved the application to dismiss the indictment which we denied.

In the Court of Appeal, Judge Hand characterized the testimony at the trial by saying, those who had appeared and had had no personal acquaintance with Costello or his affairs, they were accountants or experts, and we find it impossible to escape the conclusion that their computations must have been based on hearsay.

Now — as we view, this case it rests on three rather simple propositions.

First, the man of the Constitution for a prosecution of this character and there’s no question that this prosecution comes within it’s power to describe in the Constitution as infamous because of the nature of the punishment permissible must be prosecuted by indictment means more than a formal claiming of an indictment, a mere piece of paper.

And secondly, that that means that there must be before the grand jury some substantial competent evidence.

And third, that there must be a remedy in case such a requirement be not complied with.

The only available remedy in view of the fact that an application to dismiss an indictment is interlocutory or not appealable, the only available remedy is, therefore, after conviction, it must result in a reversal.

And we think those views having been well expressed by the Oklahoma Court of Criminal Appeals in Estelle, the Estelle case which we have cited on our brief although this quotation does not appear there.

I’m referring to an almost identical provision of the Oklahoma Constitution, that Court said, “This section of the Constitution does not mean an accusation in the form of indictment.

It does mean, a presentment or indictment found and returned by a grand jury, legally selected, impaneled and sworn, and upon competent evidence is authorized by law, and a trial of a person for such crime, without an indictment thus found is in violation of constitutional right and void.”

Rather, concept that a grand jury should act on competent evidence, to the exclusion of hearsay, is one well found in American law.

As early as 1831, the then Solicitor General of Massachusetts, Daniel Davis, in a book called, “Precedents of Indictments” published that in Boston said, “That it is a rule without an exception, that no evidence can be admitted or received by the grand jury which would not be admitted on the trial of the defendant, such as hearsay evidence.”

And that thought has been voiced on numerous occasions, by Mr. Justice Field in a charge to the grand jury in California, by a judge in Boston, by another judge in California more recently.

It has been voiced in statements in numerous federal decisions.

Osmond K. Fraenkel:

It has actually resulted in the reversal of convictions and the question of indictments.

It is true that in several of the cases in which that result followed, the objection was not on the basis of hearsay are such but on the basis of other disqualification or incompetence of the evidence before the grand jury.

Felix Frankfurter:

Do we know — do we know here — are there any means of knowing what the hearsay was which is before the grand jury as the basis of the charge?

Osmond K. Fraenkel:

We know officially only what Judge Hand has told us, because the defendant has not been afforded the opportunity to see the grand jury minutes.

Felix Frankfurter:

We don’t have here the —

Osmond K. Fraenkel:

We know that the trial court did see —

Felix Frankfurter:

Seeing that it’s cogitated, what did — how did he know what he knows?

Osmond K. Fraenkel:

Well, I was going to say, we know that the trial court saw the grand jury minutes in a different context.

We do not know whether they were before the Court of Appeals or whether they have been sent here.

I have been informed, I was not present at the trial, but I am informed that when the grand jury minutes where handed up at the trial, they were a very thin bundle.

Nothing indicating that it — there was readable actual testimony taken.

Felix Frankfurter:

Is there any — any requirement of federal law that they must be admitted to the grand jury proceedings?

Osmond K. Fraenkel:

No.

We have found no positive reclaimant that there must be but modern practice is that there is.

Felix Frankfurter:

And you think it’s constitutionally required that there should be?

Osmond K. Fraenkel:

No.

I don’t suppose that that — oh, you mean it’s constitutionally required that there should be?

Certainly, it could be constitutionally required.

Felix Frankfurter:

But the —

Osmond K. Fraenkel:

I don’t think it’s a necessity.

I don’t — I don’t —

Felix Frankfurter:

The — those minutes of grand jury proceedings?

Osmond K. Fraenkel:

No.

I’m not claiming that the Constitution compels the taking of minutes.

I — however, I also see nothing in the Constitution to prohibit Congress from requiring —

Felix Frankfurter:

Well, but the things that aren’t prohibited by the Constitution aren’t required.

Osmond K. Fraenkel:

Oh, no.

I’m not suggesting that, Mr. Justice.

I’m not suggesting that the taking of the minutes be required, but I may say this.

That even in olden times, in some of the states, as my research has indicated, whether one or minutes taken, states which have recognized, I’m coming to that shortly, which have recognized the principle for which I am contending, and it established a practice whereby that principle can be vindicated.

Felix Frankfurter:

I —

Osmond K. Fraenkel:

I permitted testimony by persons —

Felix Frankfurter:

But I know —

Osmond K. Fraenkel:

— to show what there was before the grand jury.

Now, that’s not this —

Felix Frankfurter:

Mr. — Mr. Fraenkel, I’d like for myself, and that is written just as this problem.

That was in my connection with grand juries in the past, in federal grand jury.

I’m greatly aware of the difference between a conduct of federal grand jury and the state grand jury.

I would like to know exactly what question is before us, because I don’t want to decide in that judgment as to whether an indictment should be based on hearsay evidence.

Osmond K. Fraenkel:

Well, you have precisely before you on the record, the fact that no one of a host of witnesses who had various transactions with the defendant, including as I said, the only government agent who had such transactions, that no — only such persons testified before the grand jury.

Felix Frankfurter:

Do we know who did testify?

Osmond K. Fraenkel:

You know, the three agents did testify.

Now, I am frank to say, there is nothing in the record which establishes beyond the peradventure of a doubt, whether there was — may have been someone else.

Felix Frankfurter:

Did those three — did those three agents, I would ask a series of questions in order to really focus this case to it’s proper considerations and not the abstraction which brought the case here or which was stated by Judge Hand.

Do we know who the three witnesses were and were before the grand jury?

Osmond K. Fraenkel:

Oh, yes.

We know —

Felix Frankfurter:

Who went also before the petit jury?

Osmond K. Fraenkel:

Yes.

We know the three government agents, testified in both places.

Felix Frankfurter:

Do we know what the —

Osmond K. Fraenkel:

And we know —

Felix Frankfurter:

— three people — what the three people who testified before the grand jury testified at the trial?

Osmond K. Fraenkel:

Oh, yes.

Felix Frankfurter:

Do we know what they testified to?

Osmond K. Fraenkel:

We know.

We have here before you — you had before you the record of the trial which indicates that these three agents whose names were Murphy, Leath, L-E-A-T-H, and (Inaudible) testified.

Now, at the trial —

Felix Frankfurter:

They’d only testified about at the trial?

Osmond K. Fraenkel:

Oh, yes.

Osmond K. Fraenkel:

You have that — that’s one reason.

Felix Frankfurter:

Do you mind telling us what they were?

Osmond K. Fraenkel:

I will.

Felix Frankfurter:

What it was.

Osmond K. Fraenkel:

Murphy testified in the main with regard to the asset’s net worth changes of the defendant on the basis of the testimony of various witnesses, bank accounts and other things of that kind.

Leath made the overall summarization on the basis of the testimony of the various persons with whom Mr. and Mrs. Costello had dealt, considering the expenditures which they had incurred.

So, and he testified on the basis of a large exhibit, which is in the Volume 4 of the record, 365 (a), I think, with several subsidiary schedules which summarize that.

In fact, the exhibit will indicate the basis of the Government’s reliance by referring to witnesses and exhibit numbers.

Felix Frankfurter:

What I — cover it with page — exhibit — what page is it?

Osmond K. Fraenkel:

That exhibit is on page 3, beginning on page 42, you have Exhibit 363 and there’s 363A and so on, those are — you have the expenditures, the expenditure’s exhibit — Schedule D of that Exhibit begins on page 46 of that volume.

And you will see —

Hugo L. Black:

Which volume?

Osmond K. Fraenkel:

The small volume, Volume 4 where the pages are separately numbered, and that opens out, there are several pages, three —

Felix Frankfurter:

These are exhibits summarizing and apparently before we had — of transactions which the defendant had with other people, and perhaps there’s been others, is that right?

Osmond K. Fraenkel:

With all kinds of individuals.

If Your Honor will look, it starts out with Fort Washington Safe Deposit Company where a rental for safe deposit was paid.

Cemeteries whom payments were made, R.H. Macy & Company, Saks Fifth Avenue, various other — Liberty Music Shops, all kinds of suppliers with whom the defendant and his wife had dealings.

Felix Frankfurter:

And these data were taken — and these data were put down on this schedule of exhibits by people who did that who did not have first hand on his knowledge of what he bought or what he bought that one would tell us and so on, and if the underlying data, out of which this exhibit was made up, is that right?

Osmond K. Fraenkel:

This exhibit was based on the testimony of witnesses at the trial.

Witnesses either who had had personal dealings or who produced records from —

Felix Frankfurter:

But these exhibits are largely subtractions from in compilation, made out of these records.

Osmond K. Fraenkel:

Entirely.

Felix Frankfurter:

All right.

Osmond K. Fraenkel:

And Your Honors will see for instance, 301, the extreme right exhibit numbers, which refers to exhibit numbers at the trial of documents introduced at the trial by various witnesses.

Felix Frankfurter:

And these three witnesses, who did appear then were the only people who appeared before the grand jury, testified to — testified what is called hearsay at the trial and which was competent at the trial, because the underlying data were authenticated, is that true?

Osmond K. Fraenkel:

No.

They didn’t testify to any hearsay at the trial.

They testified —

Felix Frankfurter:

Well then, they were put in these exhibits?

Osmond K. Fraenkel:

Oh, yes.

Osmond K. Fraenkel:

But the exhibits — the exhibits were mere summaries, Your Honor.

The exhibits were summaries on the basis of documents which were properly in evidence.

Felix Frankfurter:

But the — but the — but these three witnesses were witnesses at the trial who put in these exhibits?

Osmond K. Fraenkel:

No.

The exhibits for instance, Your Honor, would open this —

Felix Frankfurter:

What these three witnesses testified —

Osmond K. Fraenkel:

Well —

Felix Frankfurter:

— to at the trial?

Osmond K. Fraenkel:

They summarized the testimony of the other witnesses.

Felix Frankfurter:

But, in these exhibits, in these trials, these —

Osmond K. Fraenkel:

Yes.

Felix Frankfurter:

Isn’t that all (Voice Overlap) —

Osmond K. Fraenkel:

That’s right.

And they expressed it.

They therefore — they — and they gave a total for instance.

They said, the total expenditures as testified to by all of the other witnesses and as reflected on this chart is so many dollars, and that to the net worth changes.

Make certain adjustments in the net worth.

Felix Frankfurter:

But these exhibits are hearsay, aren’t they?

Osmond K. Fraenkel:

This exhibit — this Exhibit Schedule D, which I have referred, this paper is not hearsay.

This —

Felix Frankfurter:

But witness who testify to them could only testify that he carefully and accurately abstracted what the other witnesses said.

Osmond K. Fraenkel:

That’s right.

Felix Frankfurter:

And therefore, I call that hearsay at the trial and gives it before the grand jury.

Osmond K. Fraenkel:

It was clearly hearsay before the grand jury.

But of course before the grand jury, there was no basis for it.

At the trial, it was not independent testimony at all.

Felix Frankfurter:

I understand that.

Osmond K. Fraenkel:

It was merely a summarization.

Felix Frankfurter:

But these summarizations are, in any technical sense, hearsay, aren’t they?

Osmond K. Fraenkel:

Well, they’re opinions in a sense.

Felix Frankfurter:

Well, call them opinions —

Osmond K. Fraenkel:

Yes.

Felix Frankfurter:

— as a result.

Osmond K. Fraenkel:

But in any cases —

Felix Frankfurter:

It wasn’t — it was admitted at the trial.

Osmond K. Fraenkel:

They were admitted at the trial —

Felix Frankfurter:

And for all —

Osmond K. Fraenkel:

— as summaries of things properly in evidence.

Felix Frankfurter:

And for all I know, these exhibits and these summaries, without the presence of the underlying data to (Inaudible) the witnesses of making, (Inaudible) and so on, that was the testimony these three people gave at the grand jury, am I — is that it?

Osmond K. Fraenkel:

Well —

Felix Frankfurter:

Is that — do you say that?

Osmond K. Fraenkel:

— that — well — not this — not this exhibit, because it appears at the trial.

Felix Frankfurter:

Well, the data on this piece of paper.

Osmond K. Fraenkel:

Some similar data, maybe.

Felix Frankfurter:

Some similar data.

Osmond K. Fraenkel:

Because — because this data was prepared during the trial as counsel for the Government said at one stage, “It isn’t even ready yet, because we have some other witnesses we don’t know about.”

Felix Frankfurter:

Well, I speak from personal knowledge that that’s precisely the kind of thing that was done in the Morse trial and others in the Southern District of New York that Treasury agents or agents of the Comptroller of the Currency have abstracted — extracted and abstracted data from brokerage accounts and so on.

Brokerage accounts running to the hundreds and they put that exhibit before the grand jury on the basis for grand jury action, and that’s what was done here.

Osmond K. Fraenkel:

Well, it — it’s a fair assumption that something like that was done here.

We have no way of knowing for sure.

Felix Frankfurter:

But I — I —

Osmond K. Fraenkel:

But in any case —

Felix Frankfurter:

— shouldn’t defend a case on that basis and not the abstract question whether hearsay which means everything and nothing in the law is made as a basis of an indictment.

Osmond K. Fraenkel:

Well, of course, this much I must say at the outset, there is no case anywhere that I was able to find and I think there’s none that the Government is able to find, which deals with that precise situation.

We’d have to take the cases as we find them, and the cases indicate this.

In the federal courts, there has been a consistent statement of opinion in almost all of the Circuits.

That the evidence before the grand jury must be competent and that an indictment should not rest solely on incompetent or hearsay evidence.

Accompanied with some decisions as I was indicating, resulting in either quashing of indictments or reversals.

Generally, in terms of hearsay, I never specifically in the terms of a limited variety of hearsay because that hasn’t arisen, in the states, there is a considerable variety of expression, but almost no case which actually decides contrary to the position for which we are here contending.

And a number of cases which expressly adopt the point of view for which we are contending and to rest it not as the Government would seek that the Court believe because of particular state statutes although such do exist.

Osmond K. Fraenkel:

But because of the state courts’ belief, that the constitutional requirements compelled the result.

Thus, in New York, where there is a statute expressly limiting the grand jury to competent evidence and excluding hearsay, and where the courts have quashed indictments based on hearsay.

The Court of Appeals has pointed out that that is a rule based on the constitutional requirement.

This power, said the Court, is based upon the inherent right and duty of the courts, to protect the citizens in his constitutional prerogatives and to prevent oppression or persecution.

It is a power which the legislature couldn’t curtail nor abolish, and to the extent that legislative enactments are designed to affect either of these ends, they are unconstitutional, and that was said in connection with an argument.

That, New York law permitted an indictment to be quashed only on certain grounds and this was not among them.

Now, in several of the states that you — has not been followed and statutes limiting the quashing of indictment had been strictly construed.

And in other states, the courts have simply said, “We will not concern ourselves with the problem.

We will make no inquiry.”

But we know of no case where the facts have been developed, where a court has refused to take action.

Now, in Alabama, in New York, in Oklahoma, there are precise decisions, reversing convictions or quashing indictments.

In several other states, such as California, Chief Justice knows the method is approached in a somewhat different way.

They — they are used through a prohibition as the basis for an inquiry.

Now, the extent of the inquiry permitted there is a great deal from state to state.

But in no state where the general principle is accepted, is there a denial of some right of inquiry?

Now here, that problem does not necessarily arise because we submit that the facts had been exposed sufficiently by what occurred at the trial.

And that we have here somewhat the same kind of a situation as exist in connection with illegal searches and seizures.

Now, that this Court can well lay down a rule similar to the one there involved, recognizing as it was stated only this morning here, that in the supervision of federal courts, this Court adopts principles that are not necessarily coexistent with the Constitution.

So that, just as there has been held a remedy can be devised to determine whether or not evidence has been obtained with the result of an illegal search and seizure or unlawful wiretapping.

The conviction based on the use of such illegally obtained evidence will be set aside.

So here this Court, can likewise rule, but unless there is competent evidence before a grand jury, the conviction so obtained cannot stand.

Now —

Earl Warren:

Mr. Fraenkel.

Osmond K. Fraenkel:

Yes.

Earl Warren:

Did I understand you to say that there was no way of — of indicating from this record whether anymore witnesses testified than these three agents or not?

Osmond K. Fraenkel:

Well, there was no —

Earl Warren:

Was there — could there —

Osmond K. Fraenkel:

There was no practical way at the trial for the defendant to develop —

Earl Warren:

Yes.

Osmond K. Fraenkel:

— that fact.

Earl Warren:

Yes.

Osmond K. Fraenkel:

Because he could do no more than ask the witnesses who had appeared at the trial.

Earl Warren:

Yes.

Osmond K. Fraenkel:

But there is one —

Earl Warren:

Yes.

Osmond K. Fraenkel:

— thing that is significant.

The defendant made some effort to find out what at least the witnesses who testified at the trial had testified to before the grand jury.

Earl Warren:

Yes.

Osmond K. Fraenkel:

And what exhibits were put into evidence before the grand jury.

Earl Warren:

Yes.

Osmond K. Fraenkel:

That all of those evidence were brought by objections which were sustained.

Earl Warren:

Yes.

Osmond K. Fraenkel:

Except in one instance, where the Court overruled an objection presumably thinking that the answer of the witness was going to give was going to be different from the answer given.

The witness Leath was asked, “Now, when you testify before the grand jury, did you base your testimony on the exhibits and testimony that are in evidence here?”

Objection sustained.

Did you testify as to a sum total of expenditures?

Answer My testimony, sir, before the grand jury was.

And then, the Court said, “Why don’t you answer the question you were asked?”

That was a question which objections — taken the objection overruled, and the answer was, “No.”

Earl Warren:

It’s the defense?

Osmond K. Fraenkel:

So we have — so we have a witness, the witness who at the trial testified to the sum total of expenditures saying that before the grand jury he hadn’t done so.

Earl Warren:

But the question — question that I asked is this.

Do we know, that these three agents were the only three witnesses who testified before the grand jury or could there have been others testified that are not reflected in this record?

Osmond K. Fraenkel:

The record does not indicate, Your Honor, one way or the other.

I will say this, that the Government has never claimed that there were other witnesses.

Even in its footnote in its brief here where he talks about documents which may have been before the grand jury.

It doesn’t go so far as to suggest that those documents were before the grand jury.

In other words, the Government, which is in possession of the facts has, so to speak, played the cat and mouse game with us.

Hugo L. Black:

Did you ask that they produce evidence in connection with that?

Osmond K. Fraenkel:

Well, we asked —

Hugo L. Black:

Whether — whether you were there or not as counsel?

Osmond K. Fraenkel:

In that forum, I don’t think that that precise formulation took place at the trial.

Hugo L. Black:

In what way — in what way did the defendant seek to bring that to the attention of the Court?

Was there (Voice Overlap) —

Osmond K. Fraenkel:

Well, at the very — early part of the trial, defendant’s lawyer said that he expected to show that there was no competent proof before the grand jury.

And that was — that was at the time when his objections were still being overruled.

Hugo L. Black:

What objection?

Osmond K. Fraenkel:

It is when he is — when the Government objects throughout of being sustained.

Felix Frankfurter:

May I help you, Mr. —

Osmond K. Fraenkel:

Yes.

Felix Frankfurter:

— Fraenkel by suggesting that your short answer is Judge Hand’s statements in his opinion.

The defendant did all he could to bring them — the questions before the Court.

Osmond K. Fraenkel:

Well, I think that is a fair statement.

And I think also that it is clear that —

Hugo L. Black:

But what was the ground upon which the Court refused to permit the defendant to bring that before the Court?

Osmond K. Fraenkel:

Well originally, the Court took the position that what transpired before the grand jury was a collateral issue and therefore not properly gone into at the trial.

And as I say, when the question first came up, the Government objected and the Court sustained the objection.

Hugo L. Black:

Was that on the ground that it should’ve been more previously by a motion to quash or some other action?

Osmond K. Fraenkel:

Well, a motion to quash had been made and denied.

Hugo L. Black:

On that ground?

Osmond K. Fraenkel:

Well, on page 115, it simply said it was objection.

And then on page 126 and then on 127 —

Earl Warren:

What volume is that?

Osmond K. Fraenkel:

Volume 1.

Earl Warren:

115?

Osmond K. Fraenkel:

On page 126 of the record, there’s some colloquy.

I certainly have a right to interrogate this witness as to whether or not he appeared before a grand jury.

“That is exactly what I have said you have not the right to do.

You and I disagree on that.

If you have a ruling, and you may use it wherever you think it appropriate.”

Earl Warren:

Is this at the trial?

Osmond K. Fraenkel:

At the trial.

Earl Warren:

At the trial.

Osmond K. Fraenkel:

That was —

Hugo L. Black:

What effort was made before the trial?

Osmond K. Fraenkel:

Well, the trial, a motion was made on an affidavit.

Hugo L. Black:

To quash?

Osmond K. Fraenkel:

To quash and to inspect the grand jurymen’s —

Hugo L. Black:

What’s in the affidavit — what did the affidavit setout if nothing had been offered except hearsay?

Osmond K. Fraenkel:

Well, the affidavit was not — the affidavit, Your Honor, will be — you will find on page 83.

83.

Osmond K. Fraenkel:

Page 83.

Earl Warren:

Page what?

Osmond K. Fraenkel:

The — 83, in the first volume, the affidavit of defendant.

He says, “Your deformity is firmly convinced that there could be no legal or competent evidence before the grand jury which would justify the indictment.”

At that time of course, the defendant didn’t know who had testified before the grand jury and since he was denied access to the grand jury minutes, he couldn’t particularize.

At the trial, the defendant’s attorney asked for the grand jury minutes in order to cross-examine the witness, page 127A, and he said, “The Court denied that,” so that the defendant had never had access to the grand jury minutes.

Although as I stated, they were handed up to the clerk for the limited purpose of determining whether or not the testimony of a certain witness —

I —

Osmond K. Fraenkel:

was inconsistent.

Stanley Reed:

Why — why did you say he didn’t have access to them?

Osmond K. Fraenkel:

Well, it’s the practically universal custom in the Southern District of New York to deny an application for inspection of grand jury minutes, almost —

Stanley Reed:

And — and he made that application?

Osmond K. Fraenkel:

He made the application and it was denied.

Stanley Reed:

It was denied.

He made it before the trial.

Osmond K. Fraenkel:

And he’s renewed a —

Stanley Reed:

Before trial?

Osmond K. Fraenkel:

Before trial.

And he renewed it at the trial, it was again denied.

Felix Frankfurter:

I don’t know as much as the — he says, Mr. Fraenkel, but in my time, certainly only selected cases was stenographically before the — that there was a stenographer during the — before the grand jury.

Osmond K. Fraenkel:

Well, I think —

Felix Frankfurter:

As I remember it only in rare cases.

Osmond K. Fraenkel:

I think it’s pretty general now.

In any case they were recorded in this case, that much is clear.

Felix Frankfurter:

I won’t deny that but all I’m saying is that one reason, it’s not the main reason why that has been the rule, certainly that was (Inaudible) in courts throughout the country for not giving inspection of grand jury minutes, go up the street on — in the State Supreme Court that — those motions were granted all about.

Osmond K. Fraenkel:

Yes.

Well, Judge Hand, many, many years ago said, “He, who, denied it and he hoped no judge would ever grant such an application,” expressing a strange reluctance dealing that much information to a defendant accused of crime.

Earl Warren:

Well, this affidavit —

(Voice Overlap)I

Osmond K. Fraenkel:

It was also —

Earl Warren:

This affidavit of the defendant simply says, in view of the fact that your deponent has reported all of his income for said years, your deponent is firmly convinced that there could be no legal or competent evidence before a grand jury which would justify the indictment.

Is that what you rely on?

Osmond K. Fraenkel:

I’m — no.

I’m not suggesting that that was technically sufficient Mr. Chief Justice.

I recognize that more than that probably should had been said, but —

Earl Warren:

But that’s all it was said.

Osmond K. Fraenkel:

That’s all it was said.

However, as Judge Hand pointed out in his opinion, an attempt was made at trial to find out the facts, and he felt that, therefore, the defendant had done what he could to find out the facts.

And since the facts were disclosed as they were, the issue was before the Court as I believe it is here.

The facts being that you have in effect what our expert witnesses, because the third one of these agents, (Inaudible), testified as to the tax that might be due on the basis of the income which Leath testified arose from the expenditures on the basis of the assets which Murphy testified existed.

And you have therefore three experts summarizing things without any basis before the grand jury as we firmly believe and there’s nothing ever been suggested to the contrary to support the testimony of those experts.

And of these cases that we’ve cited on our prior brief, experts can’t lift themselves up by their bootstraps and express opinions on facts that are not previously found.

Stanley Reed:

But I — I believe you said Mr. Fraenkel that the record didn’t show, who decides these three were before the grand jury.

Osmond K. Fraenkel:

The record didn’t show categorically that no one else were before the grand jury.

That I must say what I have then said —

Stanley Reed:

And you have no way —

Osmond K. Fraenkel:

That there is no way that a defendant —

Stanley Reed:

(Voice Overlap) —

Osmond K. Fraenkel:

— can ever do that.

Stanley Reed:

— and you have no way to find it out.

You did everything you could.

Osmond K. Fraenkel:

We did everything to find out.

We asked for the minutes.

We questioned the witnesses who were there.

And the Government has never, even in argument, made a claim that there was any other witness before the grand jury.

And it would have been very easy for the Government who have established that that it was a fact.

I think I will leave the rest of the case to my associate.

Earl Warren:

Very well, Mr. Fraenkel.

Mr. Frankel.

Marvin E. Frankel:

May it please the Court.

I plan to devote the bulk of these oral presentations to what I hope will be answers to questions put by Mr. Justice Frankfurter.

I’m anxious that the Court didn’t have a concrete picture of what was proved at the trial in this case, and what we know or must necessarily assume was before the grand jury.

Now, in this four-volume record, you have the record of a five week trial that reflects the most painstaking, laborious, detailed kind of investigation extending over months and years into the Court long and difficult to ascertain financial affairs of Mr. Costello.

This case is a careful structure of hundreds and hundreds of little bits of evidence.

No one or 10 or 50 of which are in themselves at all incriminating.

No one or 10 or 50 of the 140 witnesses at this trial could have established the Government’s case against Frank Costello.

It is plain as day from the most cursory examination of this case that this is not a case where the Government with hope and suspicion only went before a grand jury to get an indictment hoping to get the evidence later.

It is clear as day that the evidence was all known and all had been carefully sifted before the Internal Revenue Service recommended prosecution, Department of Justice agreed with that recommendation.

And the grand jury believed on the presentation made before it that Costello should be brought to trial for attempted tax evasion.

Now, leaving aside for just a moment the testimony of these three agents about which I plan to speak at length.

What was there in this record?

What was produced by these 140 odd witnesses?

I’d like to turn again to the exhibits referred to by Mr. Fraenkel in his argument.

First, to page 42 of Volume 4 of the record, Government’s Exhibit 363.

The Court will see there that the basis for the inference of unrecorded income is two things, a total of net worth increases in two of the four prosecution years, these with decreases, and very large annual expenditures by Costello and his wife.

You will see too examining this exhibit that the heart of the Government’s case, in the sense of putting over and establishing clearly these huge excess and available assets, the heart of the case was the expenditures.

And now, if you will turn to page 46 of this same volume, you will get a bird’s eye view on this page and the pages following of these expenditures.

Mr. Fraenkel has referred to then.

You will see that these —

Earl Warren:

At Volume 1?

Marvin E. Frankel:

Volume 4, sir.

Earl Warren:

Oh, Volume 4.

Marvin E. Frankel:

Volume 4 and at this Exhibit 363D on page 46 of Volume 4 which opens that.

You will see that the 103 witnesses whose testimony is summarized on this exhibit, each in turn came from a store, a merchant, a dentist, a doctor, somebody who had received money from Costello or his wife for goods and services.

You will see that each item, practically without exception is a relatively small one, a few hundred dollars, some as little as $15.

And you will see from this and from the testimony on which it is based that these represents a series of witnesses for some four weeks, one after the other, bringing through the trial jury the records from Macy’s, in B. Altman’s, and the doctor, and the maid, and so on.

In some cases they were not records.

In most, they were.

Adding up these figures, no one item of testimony, no 20 or 50 items at all incriminating, each are simply clear, simple, and unquestioned demonstration that Costello had spent so much and so much money with this merchant or that person who rendered service.

Stanley Reed:

Does the record show how the information was gathered?

Marvin E. Frankel:

Yes, Your Honor, and I’m turning to that now.

I’m turning now to precisely that question and I’m turning to the knowledge of these three agents who we know did appear before the grand jury.

Now very quickly, almost as quickly as I can say it, you can find the summary of that knowledge, beginning at page 1382 of the record, that’s in Volume 3, 1382, the testimony of Agent Murphy.

And if you read the eight or nine or 10 pages, beginning with 1382, you will find this.

That these gentlemen were not merely — had not merely been accountants who were able to tell the grand jury and the petit jury of the niceties of accounting, and were able to give expert testimony only in that sense.

These are special agents, the Government’s investigators in this kind of case.

Felix Frankfurter:

May I trouble you to tell us where in the indictment it was found and when this trial was held?

Isn’t that mostly at this point as though they —

Marvin E. Frankel:

The indictment was found, Your Honor, in March of 1953, and I believe the trial begins early in 1954, in April of 1954, sir.

Felix Frankfurter:

That’s the exception on the — postponed to answer, they didn’t take it up in this setting, did the testimony of the two witnesses show when they begun their inquiry, their study of these brokerage and merchants have found?

Marvin E. Frankel:

Well, I can remember only one, Your Honor, and that’s the first, Agent Murphy who, right here on page 1382 says, his investigation, his assignment to the case was in June, 1952, approximately 10 months before the indictment was returned.

But I think there will be no quarrel with this, that the record showed by the kind of material in the record that Costello’s affairs had been under investigation often on for sometime before this.

The record contains among other things a statement to a Treasury agent going back to 1937.

And the information in the record covers that whole period from 1937 through 1949, the whole picture of his financial history.

Felix Frankfurter:

But — but the record is explicit that —

Marvin E. Frankel:

That Agent Murphy —

Felix Frankfurter:

— that hearing — hearing before the grand jury took place in February or March of 1953, is that right?

Marvin E. Frankel:

I should think so Your Honor, I don’t know —

Felix Frankfurter:

And that these agents, at least one agent had been on this particular investigation nine months — for nine months since the —

Marvin E. Frankel:

That’s right Your Honor.

I think the — I’ve suggested and I — I don’t know but I don’t think there’ll be any disagreement on it that this is a picture of an investigation that had preceded by sometime even that.

But there, you have at least nine months from my quick reference to this page in my offhand memory.

Now, what did these agents know?

What knowledge did they have to the grand jury?

Murphy testified, they had searched and located all the assets and liabilities of Costello and his wife.

They had circularized hundreds of banks in New York, Arkansas, Florida, Louisiana, and brokerage houses to find where Costello had assets, and — and this is important under the Court’s recent net worth decisions, where Costello didn’t have assets.

They had searched real estate records, to find what real estate, if any, the Costellos own, and they had found three parcels, not more an important fact.

They had searched surrogates records and other pertinent records to find what inheritances if any the Costellos had have, and they found one small one and no other.

And as the Court knows, the availability of nontaxable receipts like inheritances is an important question in this kind of net worth expenditures proof.

Now finally, these agents had tracked down all of these minute numerous expenditures of the Costellos.

The ladies and gentlemen, from Macy’s and B. Altman’s and the other places didn’t accidentally show up at this trial.

They had all been interviewed and they were evidence discovered obviously by these agents, and Murphy so testified at the trial.

Now, these then was the knowledge that the agents had before the grand jury.

And I might interpolate here that I think there will be no quarrel with our assumption that the agents gave to the grand jury, intelligently and as fully as the grand jury required through its understanding, the knowledge they had.

On any other assumption, petitioner’s case would go up in smoke because he has assumed and we have gone along with him that the agents could give the grand jury no more than they knew, and he says that what they knew was hearsay.

And what we say is, you have to assume by the same token that they didn’t give the grand jury less than they knew, because the alternative would be, that even if all 144 witnesses at this trial had said, “Yes, we were before the grand jury.”

If you didn’t assume that they told the grand jury what they knew, then it would be meaningful.

And in every case, by the mere assertion on information and belief, the mere assertion of innocence and the mere suggestion that the evidence before the grand jury was insufficient, you’d had to open up the grand jury minutes, a step which this Court has — as recently as United States against Johnson in 319 U.S. rejected, a step which would mean that every case would be not only a trial before the petit jury but a retrial of a kind of nisi prius determination by a grand jury that the defendant would be brought to trial.

Whatever the precedents are in a very few states, particularly New York, which Mr. Fraenkel has mentioned, it has been clear throughout our history and throughout the history of England from which we adopted our grand jury that no such procedure is permissible.

Now, as I —

Felix Frankfurter:

(Inaudible) — may I interrupt, Mr. Frankel?

Marvin E. Frankel:

Yes, Your Honor.

Felix Frankfurter:

I notice the indictment is handed down on March 14th.

Is there anything in the record or rather, that you can take judicial notice, to know how — how many days this grand jury had been in session before this indictment was on the ground?

Marvin E. Frankel:

I know of nothing in the record, Your Honor.

Now, this information that I have summarized, the assets, the liabilities, the expenditures of the Costellos, was the information that these agents had collected.

Now, I might say only in passing and not to destroy in full the question before the Court that it is not at all clear to us that all these questions, even within the — all these testimonies, even within the technical rules of evidence was hearsay.

At least, when the agents testified that we did this and we investigated that and we came up with these negative findings, there was no objection by petitioner’s counsel on the ground that this testimony was incompetent.

And further, as I’ve said, it was testimony that was important.

Marvin E. Frankel:

This negative testimony, negating other assets, negating cash at this turning point, it was testimony which was important for the net worth expenditures demonstration, the Government was making at the trial.

Now, even assuming that this evidence was technically within a part of that huge hearsay rule, we say that there was no practical, reasonable, common sense basis for holding that the grand jury could not indict on this ground.

Now, the only real practical objection or the only real difficulty that might have arisen in connection with this evidence in its posture before the grand jury could’ve been, first, were the agents stupid or careless when they copied the figures from Macy’s and B. Altman’s and so forth.

Or second, were the agents lying?

Now, these are questions with any kind of evidence that a grand jury is always required to ask itself, and always permitted to answer for itself with finality.

Felix Frankfurter:

Well, the cross-examination of these three agents at the trial, or is the cross-examination subject the accuracy of their tabulation, the cross-examination and the proof of the finances?

Marvin E. Frankel:

There –was such cross-examination at the trial, Your Honor, yes.

Leath —

Felix Frankfurter:

In what — on what order?

What kind is it?

Marvin E. Frankel:

Well, it tends —

Felix Frankfurter:

He didn’t say it isn’t copies to make what the Macy account was?

Marvin E. Frankel:

Oh, no, no.

No.

Felix Frankfurter:

So what’s the —

Marvin E. Frankel:

Attempts to upset for the most part, to upset the theory on which these computations were involved.

Felix Frankfurter:

But I don’t — I mean, merely the — the pertinency of the raw figures, there were X number of brokerage accounts that this defendant had, is that right?

Marvin E. Frankel:

That’s right, Your Honor.

Felix Frankfurter:

And they would — (Inaudible) where they can accomplish the — either short, either long on this — of these securities and to be — be this proper to accept that.

Was there any attack on the accuracy of their — the — of the obstructions made in these tabulations from the original books of the broker of which the tabulation?

Marvin E. Frankel:

No, Your Honor.

No, there was none.

Felix Frankfurter:

Was there any — was there any —

Marvin E. Frankel:

There were one or two items of expenditure about which when the witness was on the stand.

There were some questions about the propriety of introducing it or the adequacy of the proof of it.

But for the most part, these expenditures, this — this heart of the case and the assets, built on bank records and brokerage records and so on, are fully proved at the trial.

Felix Frankfurter:

Was Mrs.– Mrs. Costello a witness in the case?

Marvin E. Frankel:

No, Your Honor, she was not.

Felix Frankfurter:

She was not a witness?

Marvin E. Frankel:

But —

Felix Frankfurter:

Was anybody a witness to say that a Rolls Royce — I’m giving a hypothetical case, supposedly bought in 1951 was in fact not bought.

Marvin E. Frankel:

That a Rolls Royce —

Felix Frankfurter:

Well, I’m — some — some piece of a (Voice Overlap) —

Marvin E. Frankel:

No, Your Honor.

Felix Frankfurter:

— refer as a — was it pertinent?

Marvin E. Frankel:

No, Your Honor.

There was only one witness for the defense.

And that witness was, indeed, an expert.

He was an accountant who setup his summary of the evidence, and his assumptions on the basis of which it would be shown that there was no tax evasion, but there was no contradiction of any —

Felix Frankfurter:

Now, this Court — this Court long ago, way back, 40 years ago it did held that such a summary by incompetent persons of complicated mass of raw data, thinking as competent evidence.

And by this time it has established itself (Inaudible) nobody has challenged it anymore.

And that’s what the essence of these figures were, weren’t they?

Marvin E. Frankel:

Yes, Your Honor.

Now, of course, the whole thrust of our argument and we think fairly read although there is some broad language in it, the effect of the opinion below as applied to these facts, is that to ask whether the question — whether the evidence before the grand jury was competent or incompetent in terms of the trial rules of evidence is the wrong question.

And we have shown in our brief that dealing with this very kind of Treasury agents’ testimony, the Eighth Circuit, on two older decisions of which the petitioner relies, has held that this evidence, this kind of evidence before the grand jury was competent.

And therefore, that an indictment based on it cannot be set aside.

Now, we would think it makes little difference whether your determination is based on the ground that the evidence is competent, perhaps competent in some sense referring to the functions of the grand jury or on the ground that the mere hearsay label, because some particular evidence would technically be hearsay at the trial, is not sufficient to nullify the action of the grand jury at least, where the evidence is rationally, reasonably probative of the facts.

It’s there rational reasonable basis on which layman, the lay tribunal which is the grand jury, could reasonably decide that one of their fellow citizens should be accused and be brought to trial.

Now, the grand jury —

Stanley Reed:

That’s the — this same evidence which came before the petit jury?

Marvin E. Frankel:

This same evidence came before the petit jury in the form of a parade of witnesses.

Stanley Reed:

You mean the sales, the keepers of the account in Macy’s for instance.

Marvin E. Frankel:

That’s right, Your Honor.

The — the people who could testify that these are Macy’s records and they showed $200 spent by the Costellos in such year, in such year, in such year.

Stanley Reed:

And the Department thinks that’s necessary to bring special witnesses from Macy’s to testify rather than the account in support of it?

Marvin E. Frankel:

We have thought that within the technical rules of evidence, because these come within a shot full of exceptions to the hearsay rule.

It was necessary and proper to bring these people in with their documents to testify before the petit jury.

We have thought that if a defendant —

Earl Warren:

(Voice Overlap) more — more liberal rule before the grand jury?

Marvin E. Frankel:

We think that there is certainly a more liberal rule before the grand jury.

Marvin E. Frankel:

And that, as such, in their standard Wigmore form, the trial rules of evidence do not apply to the grand jury.

Now that is not to say, it is by no means to say and Learned — Judge Learned Hand carefully excluded this case that the grand jury may act on mere rumors, suspicion, or evidence which is not rationally probative of what they’re supposed to be finding out.

That is merely to say that the trial rules of evidence, which is what they are, which contemplate the whole adversary paraphernalia of the trial court with objections and rulings by a trial judge, that these have no — had application to the grand jury.

That merely defines that the grand jury acted wholly or partly on evidence which would have been excluded on objection if there were any place of objection in the grand jury, is no basis for holding than an indictment is invalid.

Felix Frankfurter:

Have you of any case —

Stanley Reed:

No dispute over the partly, I take it.

Marvin E. Frankel:

I beg your pardon.

Stanley Reed:

That part, it may rely partly on the evidence which (Voice Overlap) —

Marvin E. Frankel:

There was no dispute over the partly, indeed the rule —

Stanley Reed:

So, what we have is whether exclusively evidence which would — that one before the grand jury would not be admitted before the trial court?

Marvin E. Frankel:

If there were an objection.

And I — I add that because —

Stanley Reed:

Because there were no objections, yes.

Marvin E. Frankel:

It’s familiar law that if there was not an objection —

Wasn’t that —

Marvin E. Frankel:

— such evidence which is probative.

Stanley Reed:

I — I intended to add objection.

Marvin E. Frankel:

Now —

Earl Warren:

Well, I understood you to say, Mr. Frankel, also that some of this evidence, at least the negative evidence could not be hearsay, and — and most under any circumstances have been competent.

Marvin E. Frankel:

I think so, Your Honor.

Earl Warren:

Yes.

That’s why (Voice Overlap) —

Marvin E. Frankel:

And I have mentioned that in a footnote, because it is not my purpose to ask for a dismissal in a way that’s improvidently granted, but it is a fact that I think should be before the Court.

It is also a fact that as I understood it, Mr. Justice Frankfurter, and Mr. Fraenkel, engaged in some discussion, as to whether the mass of this affirmative evidence was hearsay.

And we think that the mysteries reflected in that discussion, the technicalities involved in the application of the hearsay rule have no place in judging the nature of the substantial right under the Fifth Amendment to an indictment of the grand jury before you may be brought to trial.

Felix Frankfurter:

Even if you discuss technical hearsay, this — this whole question in the area of the (Inaudible) to what extent would the bookkeeping argument either immediately or accumulatively or (Inaudible)

That the law has changed enormously but has allowed without bringing in the fellow who made the first initial inquiry, but on this (Inaudible) is a big shock.

Marvin E. Frankel:

That’s right, Your Honor.

Felix Frankfurter:

50 years ago, you have to bring down the last boy in the Court, to hold up the whole — is all that.

I should think, critically the federal court would go along but now you can bring in a complicated accounting without reason in every blessed person who checks or received the cash or put it into a (Inaudible) to get a cash here, so that, what is hearsay, the point of view of certain constitutional law isn’t something which is fixed, 1789 or maybe 1889 or 1900 and that’s — but that’s not here.

Marvin E. Frankel:

Well, I think certainly no, and of course, while I — I’m not going into it and — and do not propose to discuss it at length.

As far as 1789 is concerned, we have reviewed the precedence in our brief at some length.

And I think it’s clear from there that a question like this, a proposal to review the grand jury’s determination, whether they were sufficient or sufficiently competent evidence to indictment, was never countenance in the English law adopted in our Constitution.

Now, we recognize full well that in the realm of personal liberties and in the realm of the bill of rights, there is development.

And we conceive that if there were some substantial interest at stake here, we could develop beyond the English rule embodied in the Fifth Amendment.

But what we say in the upshot is that there is no such sanctity in the hearsay rule with all its ramifications that it should be written into the Constitution.

Hugo L. Black:

What about the rule of that — about being confronted by the witnesses against him, is that hearsay?

Marvin E. Frankel:

Well, of course —

Hugo L. Black:

And do you draw any distinction between the rights to be confronted — have the witnesses confronts you in connection with an indictment in connection with the trial.

Marvin E. Frankel:

Well, of course, there is in fact a distinction, Your Honor, if I understand your question correctly.

No one has a right if he is a potential defendant to appear before a grand jury or even to know that the grand jury is considering a possible indictment against him.

The ordinary situation is that the grand jury, unless the prosecution or its own curiosity leads it further, hears the evidence for prosecution.

This is an ex parte inquiry where there are no objections and where there is no confrontation, and where there is no cross-examination itself, perhaps, the most important probably, the most important basis for the hearsay rule.

Hugo L. Black:

Have you — have you looked into the cases sufficiently to know whether in this country, either in colonial trials or since, grand juries have been permitted to act on their own knowledge without regard to any of it?

Marvin E. Frankel:

Well, this Court has said in the Hurtado case and our opponents acknowledged in their brief, that although it is a rare thing and we do not rely heavily upon it, there is no indication that the historic power of the grand jury to act on its own knowledge has ever been taken away.

And I think it’s assumed on both sides that the grand jury has such power.

And of course if you pursue that far enough, you will find that this own knowledge which a grand jury can act on like much of the knowledge that all of us carry with us traces to hearsay of one kind or another.

But here, where we have a very concrete case, and where we have all the indicia of care and fairness, we — although we do it in our brief, had not thought that our oral presentation should follow all these possible ramifications.

Hugo L. Black:

Well, do you think it’s necessary for you to assume that those for me, it’s very few, to assume that you could convict the man on this evidence, on this — this statement, they did missed him without confronting him with the equipments, in a trial for his liberty or his right?

Marvin E. Frankel:

Oh no, Your Honor, I misunderstood your question.

We — we —

Hugo L. Black:

I can understand your argument when you limit it to the grand jury better than I care when you appeared to take the position that they — somehow they get to — be a sanctity about the fact that someone is looking at some books.

Marvin E. Frankel:

Oh no, Your Honor.

Hugo L. Black:

Like the one the man did.

Marvin E. Frankel:

I went away down that path with Mr. Justice Frankfurter, and I am not prepared to say or — or what we would do about that path —

Hugo L. Black:

I know.

I only want you to consider —

Marvin E. Frankel:

— if we were worried about it.

Hugo L. Black:

— this myself.

Marvin E. Frankel:

But —

Hugo L. Black:

— in connection with the grand jury indictments.

Felix Frankfurter:

I didn’t accompany myself down the path that indicate it.

Marvin E. Frankel:

Well, I thought I was —

Felix Frankfurter:

(Voice Overlap) —

Marvin E. Frankel:

— being led, sir.

Felix Frankfurter:

— in the grand jury, the basis of an indictment, and the basis of a conviction, I can’t imagine a more — a more patent wide, drawn, indeed different, and what had graduate in that town and what can secure a conviction.

Marvin E. Frankel:

I concur, Your Honor, and whoever led me, I’ve returned from any — any suggestion I might have made that the arguments we present here go in any way to modify the rules of evidence and the rights of confrontation and cross-examination at a trial before the petit jury.

I was interested primarily and we have been throughout, precisely in distinguishing the mode of proceeding at a trial and the requirements for determination of guilt from the mode of proceeding before the grand jury where there was no cross-examination of anybody.

No confrontation by the prospective defendant.

Hugo L. Black:

I assume that probably also would be different if you don’t speak in terms of hearsay as to speak in terms of being confronted by the witnesses, between offering a summary of bookkeeping facts such in a civil case and in a criminal case where you’re going to take somebody’s liberty in his life.

Marvin E. Frankel:

Well, the — we have assumed for purposes of this case as the court below assumed, that in its posture before the grand jury, the knowledge which the agents presented through the grand jury is within the hearsay rule for the most part at least.

I indicated those exceptions for that negative investigation which we think is important and to which the agents did testify at the trial without objection.

And what we say is, that merely because you can dub this evidence hearsay is not enough in point of precedent or in point of this substantial guarantee that the right to indictment gives is not enough for invalidating an indictment.

And let’s illustrate that, if we may, in terms of this particular case.

Hugo L. Black:

May I suggest —

Marvin E. Frankel:

Yes.

Hugo L. Black:

— one other question then —

Marvin E. Frankel:

Yes, sir.

Hugo L. Black:

— I would ask you some more.

Do we have to assume here that the only evidence, it was all of the evidence of these three papers?

Marvin E. Frankel:

By no means, Your Honor.

Hugo L. Black:

As I understand it, there’s an assumption — a presumption that there was evidence before the grand jury upon whom does the burden rests in connection with the challenge for the grand jury and to what evidence is offered there.

Marvin E. Frankel:

The burden rests extraordinarily heavily on the defendant who is challenging the determination of the grand jury, and we have cited in the vicinity of page 54 of our brief cases where the courts go forward to presume that evidence which could have been before the grand jury or was before the grand jury.

Now, I want to say parenthetically in regard to that, Mr. Fraenkel has cited us for not asserting that there was other evidence before the grand jury.

I’ll be frank with the courts to say that I do not know.

It did not seem to me appropriate since the minutes have not been disclosed, and since, two courts have felt that the minutes should not be disclosed, to attempt to make it shown that this late day as to whether or not, there was additional material before the grand jury.

We have assumed for the purposes of this argument, that the showing our opponents have made is a demonstration that these three agents were all that were before the grand jury.

We have said that the courts below, particularly the Court of Appeals.

Stanley Reed:

I would — you assume that only these three were there.

Marvin E. Frankel:

We have assumed that through our argument, but we have made the footnote —

Hugo L. Black:

Are we to assume that?

Marvin E. Frankel:

We put to your — to the Court the suggestion that in the other cases where there has been an opportunity for an assumption, the presumption has been the other way.

The presumption has been in favor of the grand jury and in favor of the propriety of its action.

Stanley Reed:

Well we — we must assume that, must we, Mr. Frankel, since the — as I understand it, the defendant made every effort to get the record to the grand jury and be able to prove precisely who was there?

Marvin E. Frankel:

I don’t think it follows, Your Honor, that you must make that assumption.

The — let’s trace it.

At the outset of the trial, the defendant claimed he was innocent.

Therefore, the grand jury could not have had any competent evidence.

Therefore, he should be allowed to see the minutes.

Now Mr. Fraenkel has acknowledged quite correctly, I think, that the denial of that motion for inspection of the minutes was certainly proper, because if that kind of motion could prevail, everybody would always inspect the minutes.

Then, he went through the trial and he claimed, as he claimed in his brief, that by his showing, that only these three agents of all those at the trial had appeared before the grand jury, he had established the invalidity of the indictment.

He did not again seek — seek inspection of the minutes at that point.

Stanley Reed:

Oh, I — I understood (Voice Overlap) —

Marvin E. Frankel:

The motion had been denied before trial by Judge Weinfeld.

The case was tried by Judge McGohey and there is no reassertion before Judge McGohey of a claim or demand for inspection of the minutes.

The assertion simply is that he had made his showing and on the basis of that showing, the indictment should be set aside.

And it’s on that basis that it went through the court below and came here.

We’ve also noted in our brief that —

Stanley Reed:

Well, Judge — Judge Hand said that he’d exhausted every effort.

What did he do?

Marvin E. Frankel:

He —

Stanley Reed:

Were those his words?

Marvin E. Frankel:

I haven’t finished my answer to your real question, Your Honor.

He had exhausted every effort and as things stood, he could not find out anymore about what had transpired before the grand jury.

But we think it does not follow that we must therefore assume that the case is, as he states it, these three and no others appeared before the grand jury.

The fact is that what went on before the grand jury is almost never known to the defendant.

This is a perfectly fortuitous occurrence.

Several times, defendants have made incipient efforts to retry before the petit jury the finding of the grand jury, and if asked questions like this, “Did you appear before the grand jury?”

And the questions have been objected to by the Government, and the objections have been sustained and we think properly, because that issue is not a relevant issue at the trial, and need not be explored in the trial court.

Well that —

Marvin E. Frankel:

Now —

Wouldn’t that be true only in case of what is necessary to have confrontation before the grand jury?

That you could indict people without the knowing of the — whose making the charges in (Voice Overlap)?

Marvin E. Frankel:

Well, you — you — I think it’s clear that you can indict people and — and that the Government faithfully does without the defendant knowing who were the witnesses against him.

He knows who the grand jury was.

And if that grand jury under oath has determined that there was probable cause to bring him to trial.

But, it is not by any means uniform custom that the names of the witnesses are endorsed on the indictment or that the defendant has any other way of knowing who appeared before the grand jury.

Stanley Reed:

Perhaps, in one way he doesn’t know it — what he does know, is it?

Marvin E. Frankel:

When he does know.

Now — now, I understand that the custom in the Southern District where this case comes from is not to endorse the names.

And here, these questions for reasons that I do not know although they were first objected to and the objection sustained were then permitted, but we leave with the Court the question, whether this showing is sufficient even to assume that this was all the grand jury had and we suggest that the presumption is to the contrary.

But like the court below —

Stanley Reed:

Well, let’s assume that he repeated his motion after the witnesses had testified, would you make that same statement of the — of not to assume they were the only people?

Marvin E. Frankel:

I think I would, Your Honor, because I don’t think that inspection of the grand jury minutes ought to be permitted on this kind of issue.

If — if my answer were otherwise, I think I would be driven to the point of saying that the kind of motion this defendant made at the outset of the trial should also be granted.

Because here — here is a perfect accident of procedure that makes it possible for him to know whereas other defendants don’t know, that of the witnesses at the trial, only these three were before the grand jury.

Now, if that — the kind of accidental foundation is to be a basis for exploration of the grand jury minutes and revision of the grand jury’s determination, we don’t think it should rest simply there but that you would be led to opening up these minutes and making this kind of revision, much more broadly.

As in the states which entertain this kind of complaint against the indictment with it.

Those states usually —

Stanley Reed:

Or — or in saying that any reasonable belief of the grand jury that a man’s reasonable suspicion of guilt is enough to indict one.

Marvin E. Frankel:

I’m sorry, sir.

Stanley Reed:

A grand — a grand jury indicts.

And if from one — your court or another, they get information that a crime has been committed that they think is reasonable to accept, that make an indictment, give an indictment.

Marvin E. Frankel:

Well, I think — I think that the — the direction of the decisions of — of the one decision of this Court that I will mention and rely on strongly, and of some dicta is that way, that the determination of probable cause by a grand jury is conclusive.

The Court has used that language, but we don’t go nearly that far in this case.

And Judge Learned Hand did not go nearly that far.

He said, that if it could be shown that the grand jury had no evidence before it, which rationally tended to prove the fact, then he would be, he and his brethren would be the first to hold that such an indictment was invalid.

Hugo L. Black:

But if we accept that, I’m not saying whether we should or not but if we do accept it, certainly there should be some way for him to make a motion and summon witnesses and prove it.

Marvin E. Frankel:

Well —

Hugo L. Black:

Do you stand on that ground?

Marvin E. Frankel:

I say that, we — we are prepared to stand on that ground Your Honor.

The fact that I suggest the alternative basis of decision, I hope doesn’t mean abandoning any one of them even though they might not all be perfectly consistent.

But our main argument here is that by that test and on this showing, and on the assumption that these three agents were the only witnesses before the grand jury, Costello’s complaint fails.

That here, the agents have shown, that they had knowledge before the grand jury, voluminous detail, rationally probative knowledge on which the grand jury could reasonably determine that Costello should be brought to trial.

Hugo L. Black:

Did they have enough evidence so that the jury could reasonably find that — we find that there was a reasonable ground at least he was guilty of this crime.

Marvin E. Frankel:

The grand jury?

Hugo L. Black:

That’s right.

Marvin E. Frankel:

Yes.

Yes, Your Honor.

And why do I say that?

I say that because these agents have shown that they had knowledge of all the facts adduced at the trial.

Now, the United States Attorney —

Stanley Reed:

They have knowledge of the record to the facts.

Marvin E. Frankel:

They had a record of the facts.

Stanley Reed:

Well, they had knowledge of the record.

Marvin E. Frankel:

Well, that — that is correct and that’s where the hearsay come — comes in.

They knew what Macy’s book showed.

They knew what B. Altman’s book showed.

They knew what the Surrogate Courts’ record showed and the real estate records and the bank records and so on.

And they went to the grand jury and they said, “These records show this and we’ve copied out this number.

And this means this and we claim that Costello has evaded his taxes.”

Now, what could the grand jury —

Felix Frankfurter:

(Inaudible)

Marvin E. Frankel:

Well, I — I was simply going to say —

Felix Frankfurter:

You were drawn to another amendment?

Marvin E. Frankel:

Well, it’s —

Felix Frankfurter:

Well, I was just going to say that, but of course it’s your duty not merely with adequacy to cut the case down to limit its size as you mention.

You take your broader position in this present case.

And I — I do not think you should have said to the suggestion that it isn’t for the grand jury to have reasonable grounds for finding guilt.

That isn’t its job.

Felix Frankfurter:

Its job is to have reasonable grounds for making a charge which is a very different thing?

Marvin E. Frankel:

I’m — I — unless it gets me into too much trouble, I would be happy to accept —

Felix Frankfurter:

Well, isn’t that the function of the grand jury —

Marvin E. Frankel:

— that suggestion but —

Felix Frankfurter:

— has it?

Marvin E. Frankel:

— but what I’m saying really is that, however you put it, however you put it, this grand jury had rationally probative evidence that was sufficient for reasonable men, reasonably to decide that Costello should be brought to trial.

Now —

Stanley Reed:

Oh, because these three men had gone out checking accounts.

Marvin E. Frankel:

That’s right.

Stanley Reed:

Now, is it reasonable to think that that’s — these people that have been charged on the books by the people who brought it.

Marvin E. Frankel:

That’s right, Your Honor.

Stanley Reed:

That’s all you need.

Marvin E. Frankel:

And we think — we think that that is certainly all you need.

Now, the grand jury which if our research is correct, is itself an extremely independent historically and extremely independent and largely self ruled tribunal, the grand jury could have said this doesn’t convince us.

We want to see the ladies and gentlemen from Macy.

We want to see their books and not perhaps the photostats that you’ve brought or whatever the agents had with them.

And in that case, of course, the U.S. Attorney would have gone ahead and parade it, 10 or 20 or 50 or all hundred on of these witnesses before the grand jury until it became convinced.

But what we say about this lay tribunal is that it’s impossible on the basis of this showing to hold that it behave unfairly, unreasonably, oppressively in being convinced on this showing that there was probable cause.

Now, the United States Attorney on his own motion could have paraded 10 or 20 or more of these witnesses with their little pieces of documentary evidence before the grand jury.

And then we would have within petitioner’s proposed rule, some competent evidence.

The enlightenment of the grand jury would not have been enhanced, because no dozen or two dozens of these witnesses were enough in themselves to make out this case.

You needed, maybe a hundred of them or more in toto to build up this case.

No one of them or any of them had facts which were in themselves incriminating.

Now, let me even —

Harold Burton:

Can we see with any degree of certainty that on this record only hearsay testimony was before the grand jury?

Marvin E. Frankel:

Oh, I don’t think so, Your Honor.

I have said that — that some of the testimony of the agents at the trial which we assumed they had for the grand jury does not seem to us to be hearsay.

But I have argued further in defense of the court below, that that label, that rubric, that term from a new relevant context, the context of an adversary trial, that term hearsay is not a mechanical answer to the substantial question that might arise under the Fifth Amendment if there were any real showing that a grand jury had behaved unfairly, unreasonably, in a way that, the kind of lay tribunal of grand jury is, should not act if there was to be any substantial guarantee in the right to an indictment.

Or I will even say that you have wholly different problem.

If you have a murder case, or some other crime, where an investigator goes before the grand jury and says, “There were two eye witnesses to this murder, and they told me that the accused committed the murder.”

Marvin E. Frankel:

Now there, I think you’d have hearsay of an entirely different order.

There would be no justification for that kind of shortcut.

A proper grand jury should be suspicious of that kind of evidence.

A well behaved prosecutor would probably not want to take a shortcut of that kind.

There, although we certainly don’t reach it here, you might well reach the situation referred to in the opinion below of an absence of rationally probative evidence before the grand jury.

A situation where again in Judge Hand’s words, the grand jury had advocated, but you have — you have no such situation here.

Earl Warren:

Mr. Frankel, would you mind indicating to us those parts of the testimony of these three agents that you consider not to be hearsay?

You mentioned — you mentioned the negative evidence where they investigated the land records, the banks, and — and the inheritances and things of that — that kind to show that there — there were none except those that they introduced.

Now, what — are there any other phases of the testimony that you consider are not hearsay?

Marvin E. Frankel:

No, Your Honor.

No.

That’s — I just —

Now, all the rest is hearsay in the sense that the foundation witnesses who carried the books —

Earl Warren:

Yes.

Marvin E. Frankel:

— and the papers and so on at the trial —

Earl Warren:

Yes.

Marvin E. Frankel:

— were not there.

And I say that that, for purposes of this substantial right, is — is an innocuous matter.

And that — only an arid insistence on hearsay and the — and the sacrosanct character of Wigmore and the hearsay rule would insist, would demand a transfer from the trial situation where this rule have some relevance, although it is even being questioned there.

We don’t question it here.

Would insist on a transfer of the rule from that context to the context of a wholly different situation in the grand jury room where all the paraphernalia for administering these exclusionary rules is absent.

And the basic justification for the hearsay rule, the right to cross-examination does not exist.

Felix Frankfurter:

What — was there in this record any evidence to the point that the underlying data of the agent summary in the exhibit represented a cost of living which gave customers in it through the record?

That would be — that’s for your amusement if you look at —

Marvin E. Frankel:

You mean —

Felix Frankfurter:

— the (Inaudible) case in 227, that was a case where a landlord (Inaudible) where books were entered or admitted in a criminal case which sends a very esteemed man to jail.

They were admitted because although the entrance were uncalled, the books had been represented across the business, and therefore required the kind of reliability and trustworthiness that required even the facts that that’s what people acted upon.

Now then, you like that to be brokerage — breakage accounts into that order?

Marvin E. Frankel:

Well, there are — there are documents, Your Honor, in this record admitted in accordance with the criminal and civil rules with no — with no witness at all to bring them in.

I mean there are — there are tax returns, records of oil leases, deeds and matters like that which are admitted at the trial without objection, with no certifying or authenticating witness and which, I suggest —

Are there —

Marvin E. Frankel:

— this in a footnote, you could well presume were before the grand jury as well.

Felix Frankfurter:

You’re not arguing that this case requires a good deal of fighting into the very questions of whether such books without the original person who did the pencil or ink in them upon which this sum was drawn did have to be present on any — on what you called the arid hearsay rule.

And that become established until this Court (Inaudible) 212 in the record, so that is all right?

Marvin E. Frankel:

I want to mention two other precedents.

One of this —

Stanley Reed:

Before — before you go on, you were — you were going to refer to a case from this Court —

Marvin E. Frankel:

Yes.

Stanley Reed:

— what it held in regard to the reasonableness of the evidence that it was sufficient that the grand jury had reasonable evidence before it?

Marvin E. Frankel:

No.

I want to refer to a case —

Stanley Reed:

I thought you’ve mentioned such a case.

Marvin E. Frankel:

Well, I want to refer Your Honor to — however, I may have described it to Holt against the United States, which is in 218 U.S. 245 is described at pages 31 and 32 of our brief.

It is a unanimous decision of this Court, opinion by Mr. Justice Holmes.

Now in that case and I’m — I might state at the outset the exact lines of my purpose in invoking this case.

This case, as we view it now, after reflecting on it, goes much further in upholding the action of the grand jury than does the decision of the court below and the decision we seek here.

Briefly, the case involved this.

There was a showing that the grand jury had before it incompetent evidence in the form of confessions unlawfully coerced and procured by unlawful inducements.

There were threats and inducements which resulted in those confessions.

And it was shown and the Court decided on this basis that there were these confessions before the grand jury and “very little other evidence.”

The nature of which was not specified.

Now, there, rejecting a claim that the indictment should have been set aside, Mr. Justice Holmes stated briefly, first, that this was a matter largely within the discretion of the trial court, and second and more important, that if objections of this kind were to be entertained, the abuses of criminal procedure would be enhanced.

Now, let me spell out which is all necessary, the significance of that case.

There you had before the grand jury incompetent evidence of the most damaging kind, not merely incompetent because some dry rule of evidence made it so, but because a very fundamental constitutional policy made it so, evidence of the most damaging kind, evidence taken in violation of constitutional rights, and evidence in its nature inherently untrustworthy and no other evidence.

It’s interesting to note for very little other evidence the nature of which is not shown.

I’ve looked at the record in that case and it’s also interesting to note that the evidence of these confessions was attempted to be introduced at the trial and was excluded unlike the testimony of the agents in this case.

Now, we think it would be unrealistic in the extreme to doubt that the grand jury in the Holt case acted wholly or entirely on the basis of those unlawful confessions.

Now, we have said, and I think we’ve lead ourselves be drawn into a hypertechnical trap that the case is not squarely implied because there was some other evidence alleged to have been before the grand jury.

We think now that the case is not only incoherent but it makes this case a fortiori, because it illustrates the artificiality and the impropriety of transplanting the rules of evidence from the trial jury to the grand jury.

Now, in the Holt case, if you have a petit jury at jury trial, and an effort to introduce those confessions as you did, and they had been introduced before the petit jury, over objection, the conviction would be reversed for the very good and substantial reason that in any sensible administration of this trial rules, because, you cannot know what improper evidence the grand jury may have a light — the petit jury may have a light on.

Marvin E. Frankel:

You have to reverse if evidence more than trivial was wrongfully admitted.

But here, everybody concedes and the Holt case flatly hold that if there is some competent evidence before the grand jury, the fact that there are loads of incompetent evidence makes no difference.

Felix Frankfurter:

What was the — what were the circumstances that made the confession incompetent in the Holt case, Mr. Frankel?

What —

Marvin E. Frankel:

The opinion does not show.

But the briefs in —

Felix Frankfurter:

(Voice Overlap) to —

Marvin E. Frankel:

— record show —

Felix Frankfurter:

— look in the record.

Marvin E. Frankel:

— that there were threats made to the defendant.

Felix Frankfurter:

In other words that the — that the exigency that while as a matter of what we call sometimes truthfully but in such a way for excluding extorted confession points to the same notion as our criminal proceedings.

What made it incompetent or the circumstances that it would — the evidence couldn’t be admitted as you indicated and if it had been, it would have reversed the conviction.

Marvin E. Frankel:

That’s right, Your Honor.

Wholly unlike the evidence here which came in or which was admissible, which violated no rights of the defendant which was lawfully, fairly, carefully obtained.

And I’d like to mention one other case for another point, and that is the Second Circuit’s —

Stanley Reed:

Well — before you leave the Holt case was —

Marvin E. Frankel:

Yes.

Stanley Reed:

— that a case of a written confession that was presented to the grand jury?

Marvin E. Frankel:

No, Your Honor.

The — this was an army captain going before the grand jury —

Stanley Reed:

(Voice Overlap) a witness merely testified that the man had confessed to it?

Marvin E. Frankel:

That’s right, Your Honor.

And that indictment was upheld.

Now, I’d like to refer the Court if I could to the dissenting opinion of Judge Learned Hand who wrote for the court below in this case, the dissenting opinion in United States against Remington in 208 F.2d 567.

Now there, the ultimate issue was one with which we’re not concern but the majority assumed and Judge Learned Hand stated at length to his conclusion that an indictment that was involved in that case was invalid.

And Judge Hand based his conclusion on two things.

First, that a grand jury had treated a witness oppressively, and second, and this was his clinching reason, that the grand jury had overwritten a marital privilege in accepting the testimony of this same witness.

Now there, if you examine the opinion, you see an application of a rule of evidence and other considerations, not mechanically, not simply laying against the evidence the rules in Wigmore, but sensibly, reasonably, and a determination that a grand jury had not acted reasonably and fairly, and that its action should be set aside.

Now, that is a clear indication of an important point that neither Judge Hand nor his Brothers on the court below have suggested that an indictment under any circumstances with any kind of incompetent and unfair and unprobative evidence is always inviolable.

That’s by no means what they suggest for what they hold is that, merely to say that the grand jury didn’t know it’s Wigmore and didn’t obey a technical rule of evidence is not enough to set aside its action.

Marvin E. Frankel:

And we say, that Costello has been justly indicted, fairly tried, and properly convicted, and found guilty beyond a reasonable doubt by a petit jury and in a verdict approved by two courts.

And we say that in these circumstances, in the circumstances of this case, to send the case back now, for a grand jury to determine whether there is probably cause to indict would enforce no substantial right and would in the — in the language of this Court in the Johnson case, go far to make the grand jury upon in a technical game or rather than respecting it as the great historic tribunal of lay inquiry into criminal wrong doing.

Earl Warren:

Mr. Shilensky.

Morris Shilensky:

Your Honor, I’d like to take the Holt case first because it was last mentioned.

That case stands for the principle which is the only principle that stands for, that when there is some competent evidence and some incompetent evidence before the grand jury, the courts will not undertake to determine as they do before petit juries, whether the incompetent evidence influenced the grand jury.

Now, the very proof that there was sufficient competent evidence before the grand jury in the Holt case was that Holt was convicted at the trial, without the confessions.

So obviously, there existed and I of course don’t know whether that was before the grand jury in the Holt case, but there existed competent evidence other than his confession on which the grand jury could have acted.

And the opinion on the Holt case of course makes it perfectly clear that all the Court was deciding that it could not undertake to sift out the evidence before the grand jury, to determine whether the bad affected the grand jury.

In this —

Felix Frankfurter:

You would agree that — you will have agreed that evidences to a confession amongst the most powerful types of evidence will get this for (Inaudible)

Morris Shilensky:

Yes, I would say that.

Now in this case, the court below recognized, that if there was no evidence before the grand jury, I’m not discussing where there’s (Inaudible) or an income, that there was no evidence before the grand jury, the indictment can’t stand because it has no beginning.

Hugo L. Black:

Did they indicate that was based on the constitutional rule on a court-made rule?

Morris Shilensky:

You mean in the Holt case, Your Honor?

Hugo L. Black:

Yes.

I — I was just wondering —

Morris Shilensky:

No, I — I —

Hugo L. Black:

Commonly, for a long time at least, it was thought that the grand jury couldn’t act on its own information?

Morris Shilensky:

But when it acts on its own information, Your Honor, historically, it acted on its oath that they knew the facts.

They took an oath.

This goes back historically and I don’t think it’s true in this country anymore because of the complexity of society.

I don’t think grand juries are on the position to act —

Hugo L. Black:

Well, in some —

Morris Shilensky:

— but historically when the —

Hugo L. Black:

Some places in the country, they are.

Morris Shilensky:

Oh, imagine sir, but where they do act on their own knowledge, it is on their oath that they know something to be so, and they as it were, the juror who knows it testifies as it were to his brethren on the grand jury.

Felix Frankfurter:

Including — including a charge of witchcraft, did they even (Voice Overlap) —

Morris Shilensky:

Sometimes —

Felix Frankfurter:

— of their own knowledge.

Morris Shilensky:

Yes.

Morris Shilensky:

Sometimes, I guess they did that.

Now, in this case Your Honor —

Earl Warren:

Mr. Shilensky, do you agree with the Government that some of this testimony was not hearsay?

Do you agree with them that the negative testimony was not hearsay?

Morris Shilensky:

I would say that the testimony, negative testimony that no gift tax return was filed, if made by an agent who is in a position to check that is not hearsay but not at the substance of crime.

Earl Warren:

But the investigation of the banks and the land offices —

Morris Shilensky:

No, I wouldn’t go so far as the banks, Your Honor.

If one wants to prove that a bank, a particular bank has no account for Mr. Costello, you call an officer of the bank where you produce their books, or you have someone who knows it.

These agents acted on a letter.

They wrote a letter to a bank and said, “Do you have an account to Mr. Costello?”

And the bank will —

Earl Warren:

If they investigated every bank in the country, would they have to bring a man from every bank in the company — in the country —

Morris Shilensky:

No.

Earl Warren:

— to say that he had no —

Morris Shilensky:

No.

Because the negative proof is of no great consequence, Your Honor.

The affirmative proof is the thing that turned — that turn into a trick in this case.

Earl Warren:

Well, it was evidence in the case.

Morris Shilensky:

The affirmative evidence —

Earl Warren:

The evidence —

Morris Shilensky:

— at the trial?

Earl Warren:

The negative evidence was in there, wasn’t it —

Morris Shilensky:

Oh, yes, Your Honor.

Earl Warren:

— at the trial?

Morris Shilensky:

Oh, yes.

But it did not turn that — it was no more than just excluding possibilities, Your Honor.

It didn’t turn the case, couldn’t have.

Earl Warren:

We’ll recess now Mr. Shilensky.