Shotwell Mfg. Company v. United States

PETITIONER: Shotwell Mfg. Company
RESPONDENT: United States
LOCATION: Bay County Circuit Court

DECIDED BY: Warren Court (1962-1965)
LOWER COURT: United States Court of Appeals for the Seventh Circuit

CITATION: 371 US 341 (1963)
ARGUED: Oct 11, 1962 / Oct 15, 1962
DECIDED: Jan 14, 1963

Facts of the case


Media for Shotwell Mfg. Company v. United States

Audio Transcription for Oral Argument - October 15, 1962 in Shotwell Mfg. Company v. United States

Audio Transcription for Oral Argument - October 11, 1962 in Shotwell Mfg. Company v. United States

Earl Warren:

Number 16, Shotwell Manufacturing Company, et al., Petitioners, versus United States.

Mr. Christensen.

George B. Christensen:

Mr. Chief Justice, if it please the Court.

The tragic tale that's unfolded by this record is I think one that with tax your credulity where we not able to document it, so well as we assert we have documented it.

And once it's understood it's a -- not only tragic but it's a dark and frightening tale but for two things, those two things are first, your decision in the Jencks case in 1957 that gave us the tools to work with at least to start the investigation by the production of witness statements and that ultimately led to grand jury testimony that disclosed how this record at least upon the remanded proceeding had been put together.

And that in turn led us to the evidence of the perjury that had been offered against the citizens we represent upon their original jury trial.

And of course the second thing that relieves the tragedy of this case that we assert brings a blush of shame to American jurisprudence is the right to apply here for certiorari and fortunately to have obtained it.

Now, the case is complicated.

I fear that you are going to have the greatest of difficulty in following the facts.

Basic to an understanding of it, I think is this, this was a criminal indictment or evasion of a portion of the income taxes of the Shotwell Manufacturing Corporation, a corporation, for the years 1945 and 1946 indictment alleged some $500,000 of gross income or of net income was unreported and that the resulting tax by the time of trial, they claim they had there shown time of trial not $500,000 but approximately $454,000.

Now that mind you is the year 1953 when the trial took place.

Now, there's a greatest difference between that figure and something that had occurred years before and which was in large part, subject to Justice Harlan's opinion when we were here the first time.

Bearing in mind that this alleged evasion is assumed to have occurred in 1945 and 1946 and that the prosecutors delayed until the last day before the statute ran in 1952 before pitching in an indictment.

The fact is that in early 1948 when the Treasury so-called “voluntary disclosure program” was in effect.

These petitioners went to Ernie Sauber then assistant deputy collector in Chicago and made a voluntary disclosure.

Now, mind you, here is where mentally you have to shift gears and you get in to some of the confusion in which this entire case evolves.

The Shotwell Company made candy.

It made a variety of candy that instead of using corn -- instead of using cane sugar, used corn syrup as its principal sweetener.

And in the year 1945, after the V-E Day, the fact was, and there is no dispute about this, that the Office Price Administration's price ceilings upon corn, raw corn, corn in the bin in the hands of the farmer, became totally out of balance with respect to the price on hogs.

And it was of course far more profitable then for a farmer instead of selling his corn to feed it and sell his hogs and there came a time in the late fall of 1945 and I speak from the record that any time I depart from the record, I will tell you so.

When cash corn virtually disappeared from the greatest corn market in the world, the Chicago Board of Trade, the Commodity Credit Corporation either in late 1945 or early 1946, I forget which itself went out on the so-called black or gray market and began paying anywhere from 25 cents to 50 cents a bushel upward for corn.

Well, what went on, I don't but obviously, the war was over, the period of price controls was about over.

They were not adjusted until some time in about June 30th, 1946.

That is near enough when the ceiling upon corn was removed, it became plentiful and after that, there became plenty of corn syrup and on we went in our way.

Now, during that time, it is our contention that to get cash, it did not show upon Shotwell's books so that we wouldn't be caught by the OPA inspectors.

We sold some candy.

A character by the name of Lubben whom you've met before, not merely in your first go-around with this case but in the Long and Giglio cases arising out of New York.

We sold candy to him in which he paid in addition to the ceiling invoice price of the candy, a premium per pound.

A great dispute as to what the amount of that premium was.

We then took that cash, didn't record it, said nothing about it and we used that in turn to pay elevator operators or so-called “bird dogs”, you would pay them the premium price upon corn and they would sell and then make corn available to corn products refining, Hubinger, Penick and Ford, whoever the corn refiner was.