United States v. Massei

PETITIONER:United States
RESPONDENT:Massei
LOCATION:Alabama State Capitol

DOCKET NO.: 98
DECIDED BY: Warren Court (1957-1958)
LOWER COURT: United States Court of Appeals for the First Circuit

CITATION: 355 US 595 (1958)
ARGUED: Jan 09, 1958
DECIDED: Mar 03, 1958

Facts of the case

Question

Audio Transcription for Oral Argument – January 09, 1958 in United States v. Massei

Earl Warren:

Number 98, United States of America versus William W. Massei.

Mr. Fisher.

Roger D. Fisher:

Mr. Chief Justice, may it please the Court.

This is a criminal tax case of a different sort.

It is here on writ of certiorari from the Court of Appeals for the First Circuit.

The basic issue is whether Federal Income Tax Evasion is proved by the net worth method.

When you’re doing this, it is indispensable to prove a likely source of the income or whether guilt may be established by other circumstances.

The Court of Appeals for the First Circuit held that proof of a likely source of a net worth increases was indispensable to a conviction on a net worth method.

William O. Douglas:

Is this the case —

Roger D. Fisher:

The Court —

William O. Douglas:

— was in conflict with the —

Roger D. Fisher:

Yes.

The Courts appeals for the Second and Third Circuits have held to the contrary the conflict with — for the Ford case in the Second Circuit was dismissed as moot when Mr. Ford died.

William O. Douglas:

So, there’s no longer any conflict?

Roger D. Fisher:

No, there’s still conflict on the law.

You no longer have two cases here raising the point.

Both the Second and Third Circuits have affirmed convictions in which there was not proof of a likely source and stated that to be the law, the First Circuit has reversed the conviction, held that proof or likely source was indispensable.

You think the case is properly (Inaudible)?

Roger D. Fisher:

I think it is, Your Honor.

The respondent was indicted in 1953 for evading income taxes for the five years, 1946 through 1950.

During this time, he was a policeman in Worcester Massachusetts.

The voluminous evidence which was developed over a 12-day trial has been summarized and has put in some detail in our brief.I’d like to summarize it here in a few minutes.

Respondent was a member of the Worcester Police Department from 1923 until his retirement in 1951, the year after the last year here involved.

His principal duties were motorcycle patrol and vice squads of which he was the head in a few years prior to 1943.

During two of the indictment years, not based on calendar years, but during the period of about two years, he was a — the license board officer who handled applications for licenses for taxi cabs, gas stations and parking lot within the city of Worcester.

During three years, he was a personnel officer whose duties were those of an inspector.

It was his duty to see that other officers particularly the uniformed officers carried out their duties, their assignments.

At all times, prior to 1945, which is the last of the first years afore which we are here — which we‘re concerned, his salary was less than $3000.

During the indictment years, it went up until it was $4080 during 1950.

His wife with whom he had married 1933 did not work and had no income and at no time had any gifts or inheritance of any kind.

Roger D. Fisher:

During the years prior to 1946, the respondent and his wife deposited in banks and spent some of the money greatly in excess of their reported income.

At the end of 1945, he and his wife had a net worth of at least $61,000.

During the indictment years, the respondent reported income bearing from $3200 to $6000.

During the same five years his net worth as was established by proof below, increased by $88,000 to a total of $149,000.

This — there was evidence dividing up these increases by years during the five-year period.

Funds were divided among nine different accounts in eight different savings institutions.

And both prior and during the indictment period, he purchased and paid a — for time and annuity contracts in large amounts, each policies over $25,000 — each of three policies over $25,000 all purchased in cash.

And throughout the indictment of five years, he made large purchases in cash continually.

There were half a dozen or more of over a thousand dollars each in cash enlisted some of them in the reply brief.

Charles E. Whittaker:

Is there kind of an inference Mr. Fisher from your statement of this (Inaudible)?

Roger D. Fisher:

Our basic premise is that circumstances in a case may support the inference that increases were taxable income even though by themselves, they might not support proof beyond a reasonable doubt of a particular source.

We think the Court — no, I mean a divide circumstantial evidence up in too many categories which each of which must be proved independently.

We think the circumstance here is highly relevant that he was a policeman in Worcester in a position where he could receive grant on the outside.

Felix Frankfurter:

Do you mean he must show a likely source of untaxable income?

Roger D. Fisher:

No, we’re not shifting a burden in that — I’ll probably come with that in some detail Your Honor.

This is like a complete —

William O. Douglas:

Is this a rule for all the office holders?

Roger D. Fisher:

No, I would think that a clerk can the — the — it is a relevant circumstance in a net worth case whether a man was a policeman on the vice squad or whether he was a — a statistical clerk in the census bureau but —

William O. Douglas:

Governor?

Judge?

Roger D. Fisher:

The — the circumstance which should be considered, I’m afraid in the case — I’m not withdrawing any conclusion from this and you can therefore conclude anything at all.

In fact, the court below charged the jury.

They could — there was a presumption that he did not take any bribes during that period.

William O. Douglas:

— room for policeman that you’re arguing.

Roger D. Fisher:

No, Your Honor.

I’m saying that the Court charged the jury below.

This is a — there was a presumption that he did not take bribes that — unless they found evidence that he did.

They had to find out before they could find the source, but we think that the — it is a circumstance that people have different opportunities for outside income.

One more item on the fact that I would like to get across is there were some problems of admissions here.

Mr. Garrity, a lawyer represented the respondent during the investigation.

Roger D. Fisher:

On four occasions, once in the presence of the respondent himself and three other times with agents, he told the investigating officers that respondent had received grant while he was on the vice squad.

The admissions went further.

One of them stated that — has testified too later that respondent was the number one man responsible for gambling supervision in Worcester.

Garrity told the agents that respondent had accumulated a cash hoard through graft prior to 1945.

And during the investigation, this was the general explanation of the ending resulting net worth of $149,000 at the end that he had all these in a cash hoard at the beginning.

He explained he had a net worth in the beginning about $100,000 to $110,000.

This would not have explained the entire resulting net worth and Mr. Garrity stated that respondent had inherited a certain sum from his father, an unspecified sum who quote, “Had saved a lot of cash.”

The respondent’s father had accumulated a large sum of cash with reference to liquor sales.

Investigation showed that respondent had not inherited any cash from his father and he inherited a half interest in the house in which he was then living and that’s all.

Investigation also indicated he did not have a cash hoard on-hand at the beginning.

There were proofs of small loans against his passbook that was cashing in some Government funds which he then spent, things of that kind, indicating that he did not have a large cash hoard on hand.

Charles E. Whittaker:

Was there been past income tax returns (Inaudible)?

Roger D. Fisher:

Past income tax returns, there were no income tax returns during the period when the municipal officers were not taxable up to 1939.

They would — their salary was not taxable.

There was no outside income reported prior to 1939.

From 1940 to 1945, the return showed his salary plus some interest income from dividend and interest on the various accounts which were known.

He reported all those accurately as far as investigation could tell.

On the stand, Mr. Garrity testified that he has asked the respondent if he had any nontaxable receipts during the five years and that respondent had told him of nothing except a half interest in the house.

The jury found the respondent guilty on all five accounts.

He was sentenced to two years, $5000 fine which is less than authorized on any one count.

Charles E. Whittaker:

(Inaudible)

Roger D. Fisher:

A general sentence in total.

It was not — not — the sentence was not by counts, a gross sentence.

The Court of Appeals reversed the conviction.

The Court’s theory was that proof of a likely source from which the increase of the net worth came with indispensable element in the proof of tax evasion.

There are a lot of prior civil case of their own which the suit protects efficiency.

The Court found that the admissions of Garrity and the admissions of the respondent himself that he had received graft that a discussion — conference with Garrity and the respondent together with the agent.

They formed a corner stone of the Government’s theory, they were — the Court regard this as crucial and that they had to be corroborated.

They then found that there was no independent proof of source and found that therefore there was lack of corroboration.

They found that we had to corroborate — we have to give evidence which would corroborate not only the final conclusion but the — pin it back to the source.

Roger D. Fisher:

The Court also said that the admissions of graft in prior years would not have been relevant and this was not the main ground but it is covered by their opinion that he could not introduce evidence of one crime to prove another because a man sinned once, he couldn’t presume he would sin again and that should have been excluded on that ground.

And the Court concluded that the evidence as to the admissions was struck, there was no proof of a likely source.

And therefore, a directed verdict should have been entered in favor of the respondent.

Because of the conflict in Circuits, the Government petitioned for certiorari which this Court granted.

The issues of those, the sufficiency of the evidence to support the conviction in this case and any of the five counts, with particular regard of it, proof of source.

There’s a subsidiary question as to whether the admissions that respondent took graft were, (a) corroborative and (b) relevant.

The case turns on the construction and application to this Court’s opinion in Holland against the United States on which both sides consider controlling.

I think I can narrow the question from respondent’s brief.

He agreed that the only issue here is whether or not there was sufficient proof of a likely source.

If you turn to page 18 of his brief which I invite your attention, he listed what he considers the five elements where — in which the Government must sustain the burden of proof.

He attempt to evade tax that the attempt was willful, that there was an additional tax owing that — to establish a starting point with reasonable certainty.

The fifth he lists is the Government must introduce evidence to the likely source to account for the increases in net worth.

He then states, “This case resolves itself another question of whether the Government satisfied its burden of proving the essential element of a likely source.”

We regard this as an agreement with us that the — there has been proof that the attempt was willful, adequate proof, that there is an additional owing, we tried to evade it and we’ve established the starting point and that unless proof of the likely source is indispensable, the crime has already been made up.

The — the — I’m turning to page 20.

The first point of his argument states that the Government investigation showed the respondent received no nontaxable receipts.

And the — the heading of his argument that evidence proving no nontaxable receipts does not support the inference that increases in net worth must be attributable to unreported taxable income.

Hugo L. Black:

When did the Court of Appeals say that there has to be such proof presented (Inaudible)?

Roger D. Fisher:

The — it’s in their opinion which —

Hugo L. Black:

The opinion is in your —

Roger D. Fisher:

It’s in the petition.

It’s printed — it quoted — on page 24 of our petition, they said recently in reviewing a civil tax deficiency case, we interpret the above language from the Holland case as meaning that proof of a likely source is, “An indispensable element for the net worth method in any of its applications.”

Hugo L. Black:

And the Court held that was not indispensable, that was not any proof —

Roger D. Fisher:

They held — when they had stricken all the admissions of respondent as to graft in prior years as being uncorroborated and also on the second ground that it was evidence of one crime to prove another are not relevant, not properly admissible.

When the evidence had been struck, there would have been no evidence as to source.

Hugo L. Black:

But if they were right in that in which — the only way we could reverse them would be to redirect.

They were right on those principles of law.

We have to redirect it to see if they were right.

Roger D. Fisher:

To see if they’re right on what, Your Honor?

I fail to —

Hugo L. Black:

Well, I understand that they said without that evidence (Inaudible).

Roger D. Fisher:

The — the —

Hugo L. Black:

Is that right?

Roger D. Fisher:

Without that evidence, there was not enough to prove an — to independently prove a likely source and the only other evidence there was in there beside from the admission of respondent or the discussion of the respondent himself in revision through his attorney was that he was a police of — as the source say he was a policeman of increasing responsibilities, a long period in the vice squad, a long period on — on the motorcycle patrol on the main street of Worcester.

And that he dealt in cash in large amounts of — of — not large bills but — of large amount of small bills and cash transactions.

And aside from that, there is no evidence as to source where he got this cash from.

Hugo L. Black:

I was just wondering if —

Roger D. Fisher:

And you don’t have to — I — I’ll give you that and I have to look for the record for the — more than that.

Hugo L. Black:

(Inaudible)

Roger D. Fisher:

The — if you read the opinion, Your Honor, I —

Hugo L. Black:

— perhaps to read.

I’m just wondering if you think we have to reach that point where we would review the evidence.

Roger D. Fisher:

No.

I believe they — the Court — the court below in — before it treated the evidence, the Court of Appeals said, “Proof of a likely source is an indispensable element.”

And they then said, “Since that this is the corner stone of the Government’s case, it must be corroborated, it cannot be proved by admissions of prior crimes which are prejudicial.

Strike that.”

Then there’s no proof of likely source.

Now, our theory here is there’s enough proof in this case taken what we —

Hugo L. Black:

Of a likely source?

Roger D. Fisher:

Of — that the income was taxable, that the income was taxable that —

Hugo L. Black:

Do you think they do not have to show — the Government doesn’t have to show that it was a likely source?

Roger D. Fisher:

The Government does not have to prove that an in dispense — as a separate element and a circumstantial evidence, a likely source.

We believe that — that in the Holland case which I’d like to turn.

To the Court it was very clear in length considering what were indispensable and what were requisite and what — or other points that should be born in mind.

Now, they said that — this is in 348 U.S. three years ago and the Court had the Holland case and a group of net worth cases.

The Court stated, “We agree with petitioner’s essential condition,” in cases of this type with the establishment with reasonable certainty of an opening net worth.

There’s no question here about the net worth and under two headings later, they say, “Also requisite to the use of the net worth method is evidence supporting the inference.”

That is evidence supporting the inference that the defendant’s net worth increases are attributable to currently taxable income.

The — in that case, there were — the petitioners claim that the Government failed to adduce adequate proof, have been negative, all possible nontaxable sources.

The Government said to — the Court said to require the Government in every case to negative all possible sources of being insuperable burden and about proof, increases in net worth standing alone cannot be assumed to be attributable to currently taxable income, proof of a likely source from which the jury could reasonably find net worth increases sprang is sufficient.

Roger D. Fisher:

Now, we read that opinion as not saying, proof of a likely source is indispensable, but that in that case where the Government had failed to disapprove or failed to adduce much proof rebutting nontaxable sources, but they did not have to in the absence of relevant leads by the petitioners there, but could introduce evidence of a likely source.

Now, we — we think that the — that other evidence maybe equally or more persuasive that in a circumstantial evidence case, it is be a poor idea to put proof of a likely source as a separate structure toward which evidence must be given.

Since inherently, if you could prove the source itself, it wouldn’t be a net worth case.

So, you don’t have to prove the source beyond reasonable doubt.

No one has suggested that.

Petitioners — the respondents here suggest that the Government must prove beyond a reasonable doubt that the source is like, but we think that a possible source is not the most persuasive evidence that there can be adduced but other circumstances, may be equally or more persuasive.

Felix Frankfurter:

Well in — may I pursue Justice Black’s question, are you then saying that if we agree with the abstract proposition which you just made, that’s all we have to do as a matter of — as a matter of reasons, why shouldn’t speak in the back (Inaudible) negative other likely sources.

That is not absolute but you can reach the same result by its proposition (Inaudible).

Roger D. Fisher:

And —

Felix Frankfurter:

Is that all we have to decide with an abstract proposition?

Roger D. Fisher:

At the abstract proposition in remand to the Court fails to reconsider in the light of that.

We have then — our — our —

Felix Frankfurter:

— that they overstressed and over weighed the reference of the like — the other likely source.

Roger D. Fisher:

I think that the least you have to do.

I think that we would also like you to comment on the admissibility of these admissions because —

Felix Frankfurter:

You said sending it back to the Court of Appeals?

Roger D. Fisher:

That’s the remedy we asked for there are other questions in this case such as denial of a speedy trial in the series of other points which the Court of Appeals —

Felix Frankfurter:

Not — not by this point.

Roger D. Fisher:

— did not reach.

Felix Frankfurter:

Now this point on, do you suggest that — that the Court of Appeals unduly read the significance of the reference in the Holland case as likely source, is that right?

Roger D. Fisher:

That’s right, Your Honor.

That’s right.

They — they vindicated themselves that the evidence as to the increases in net worth and as the opening net worth were beyond question.

Respondent conceives in his brief I believe or maybe it’s not a concession, but certainly indicates he does not challenge the — our negative proof of nontaxable sources.

The — I’d like to — to go on that in a — in a moment.

The — I’d like to point out before we —

Felix Frankfurter:

— aren’t you doing — aren’t you in a way doing what you say the Court of Appeals shouldn’t have done, namely, taking that thing, that strand out of the fabric and disregarding the general cautionary attitude that the Court indicated in the Holland case for this method and therefore he’d wanted to put something that it recognized as in theory potentiality to the view.

Roger D. Fisher:

The — the — the Holland case did pick up two elements which must be proven —

Felix Frankfurter:

But before it takes out —

Roger D. Fisher:

— they — there large —

Felix Frankfurter:

— it question the whole — it says the whole method as defined.

Roger D. Fisher:

It — it’s — it’s a doubtful method.

It has doubts in it.

Inherently, it’s a circumstantial evidence method.

The — the Court in the Holland case did say you must have independent evidence proving the opening net worth.

You must have evidence to support the inference that the gains were taxable and went on to say that if ever the Government failed to investigate leads which are reasonably capable of being checked, the Court could direct a verdict of acquittal.

This is a burden on United States, whenever a — a taxpayer, he could stay solid and make us prove the case, but he have the additional tabs that he can — that if there — an innocent taxpayer, he can suggest sources and we — if they were reasonably capable that the ones that — are possible of being checked, the Government has a burden of going out with two doors and soon trying to check.

Now, that — those are cautionary rules the Court laid down.

In addition as Your Honor points out, the Court indicated general caution.

We — we — I don’t think I’m doing what was criticized in the Court of Appeals for doing.

I’m saying consider whether the evidence that went to the jury was sufficient for an inference that the gains were taxable and you should not divide up the kinds of inferences.

I think the evidence that he was a policeman and not a statistical clerk is relevant even though you cannot by itself it wouldn’t mean a thing.

I think the evidence — he was the head of a vice squad while gambling was in Worcester.

It’s relevant, but not by itself not enough.

Do you read the — you read the Court of Appeals’ opinion as indicating that if they were wrong as to the need of proof for a likely source — of a likely source, the evidence was — would have been sufficient?

Roger D. Fisher:

Yes, Your Honor, we do.

Do you read it that way?

Roger D. Fisher:

We read it — I read it that way that there — that they — the — as to our rebuttal of nontaxable sources and as to our proof of the — they — they specifically stated that the net worth opening was established, that the increases were established.

I’d like if I may to touch on the — before — before I touch on the evidence here of non — non-taxability, I’d like to just point one further consideration why we think that source should not be picked up as the touchstone of a critical point.

It is not what determines taxability.

If we had proven the source of these funds to be John Smith, we do not know whether they’re taxable or nontaxable.

It was a gift or a bribe.

If we have proved these funds to come from the Jones Corporation that he wasn’t interested in, we wouldn’t prove it was a withdrawal of capital or whether it was income.

Source is relevant.

Proof of source makes it easier for a jury to — to appreciate the facts and be — be satisfied that it was taxable, but proof of source is not the crime.

The statute doesn’t indicate source has anything to do with it.

If it’s taxable, it makes no difference from what source it came.

William O. Douglas:

I see —

Roger D. Fisher:

Now —

William O. Douglas:

— that the District — the trial court did charge his likely sources.

Roger D. Fisher:

That’s right.

Trial — the trial court did charge the proof of likely source.

We think this charge was unduly favorable to the respondent.

On the — we believe that as respondent recognized in his brief —

Felix Frankfurter:

Well, assuming that too is a charge of — lower charge to be unduly favorable, non-concept of defining by the jury, the satisfaction of the excessive and needlessly favorable charge did not enter into the jury’s verdict.

Therefore, the — the case should be held to the way in which it was left to the jury.

Roger D. Fisher:

Respectfully, I submit not.

I think that if we adequately — if they were specifically charged on a number of items, they must find this, they must find that, they must find that.

Felix Frankfurter:

Plus why which is not —

Roger D. Fisher:

Plus why which we think it’s not necessary.

Felix Frankfurter:

You don’t think that the — that the —

Roger D. Fisher:

I think if —

Felix Frankfurter:

(Inaudible) satisfy why?

Roger D. Fisher:

Oh, the record that went to the jury satisfied why.

Felix Frankfurter:

What satisfied why?

Roger D. Fisher:

There’s — there was no question that the record that went to the jury satisfied why.

The Court of Appeals said, the evidence before the jury should not have been considered.

The evidence was that — that you’ve testify as a lawyer and permitted that he was for a while just before the period, he was head of the —

Felix Frankfurter:

Well, that’s what I —

Roger D. Fisher:

— gambling and not — and —

Felix Frankfurter:

That’s what I mean on satisfying it if they left the right theory, if they left a need of — of satisfying the tax thereby and that should not have been put to the jury and on concept they would have filed to require (Inaudible)

Roger D. Fisher:

Well, I — I’ll leave that to —

Felix Frankfurter:

Well, is that so?

Roger D. Fisher:

— if I may.

Felix Frankfurter:

— is that so?

Roger D. Fisher:

That they would not have —

Felix Frankfurter:

I’m not saying they would not.

If —

Roger D. Fisher:

That they (Voice Overlap) — if the jury found the fact that was not necessary.

Felix Frankfurter:

— find A, B, C, D and E.

Roger D. Fisher:

Yes.

Felix Frankfurter:

And he need not or should not have as a matter of correct law said you must not define E, but he didn’t do that.

And the Court of Appeals properly pursued that he should not have left that with that.Can the verdict stand because the (Inaudible) was sufficient?

Roger D. Fisher:

I believe so, yes.

Felix Frankfurter:

You do?

Roger D. Fisher:

I would —

Felix Frankfurter:

How do you know if the jury would have found that it was bad and (Inaudible)?

Roger D. Fisher:

Unless E were — were deemed highly prejudicial as — as — that’s why I asked you to pass on the point if this evidence was relevant and was not inadmissible.

The — here, we did not have a mere failure.

The evidence of none — that he did not have nontaxable receipts.

It was not a mere diligence search and failure to find, we’d had that.

But we had here a binding admission considerably finding that his wife had no gifts, inheritance or nontaxable receipts, evidence that the receipts were spread out evenly over long number of years which is not the way he received inheritances or other nontaxable gifts or even to — to usually borrow money at that kind with the funds he had.

Testimony of his lawyer that he had asked the respondent of any other nontaxable receipts and has responded and only told him of the half interest in the house, not in controversy.

The statement of his lawyer representing has found to be authorized that all the funds had been on hand at the beginning of the period.

Now, we think that contains not only an assertion that there were no taxable funds during the period, but an admission that there were no nontaxable funds.

The evidence of concealment, denying bank accounts, cash story and the false story of his father’s inheritance.

We believe that this evidence is sufficient to support the inference taken together that the increases, absolutely proven increases unexplained in his net worth proof of taxable sources.

I’ll save the balance of my time.

William O. Douglas:

What did — repeat what did he say to (Inaudible)?What did he say the sources were —

Roger D. Fisher:

Unexplained.

William O. Douglas:

Oh, I thought he said something about his father’s estate.

Roger D. Fisher:

Oh, during the investigation, he said he inherit — that there is an unexplained $40,000.

There’s about $100,000 at the beginning.

There was $40,000 unexplained.

He say inherited — unstated amount from his father who had a lot of cash and has saved up a lot of cash.

That story was disapproved.

He inherited nothing from his father in a way of cash, the half interest in the house in which he was living is all he inherited.

Richard Maguire:

Mr. Chief Justice —

Earl Warren:

Mr. Maguire.

Richard Maguire:

— may it please — please the Court.

Richard Maguire:

I’d like to direct my attention first to the first of three lines of proof which the Government say are in the case which support the conviction.

The Government in its brief argues and the trial judge at the Court charged the jury that an increase in net worth plus a negation of nontaxable sources is sufficient on which to base a conviction.

I say that clearly under the Holland decision, as well as any other case I have ever read, that that is just not correct law and I have recited in my brief from the opinion of Judge Hand in the Costello case where he talks about just what this Court meant in the Holland decision when it talked about the negation of nontaxable sources.

And I think if I may just to read briefly to you just what he says with which I wholly concur, he states however, it is not that it does not follow that all the taxpayer expended was necessarily taxable income or indeed income of any kind.

Conceding something for the difficulty of establishing by impregnable proof, how much was an income?

The Court is satisfied with proof of a likely source from which the jury could reasonably find that the net worth increases sprang.

Through a likely source may not be the true source so that it is necessary in addition to exclude the possibility that what he received did not come from gifts, inheritances or loans.

Now, in this case, the only evidence that was introduced as to a likely source were these admissions, which I will come to in a minute, I would like to go — go ahead to state that the Court of Appeals said on two grounds, one of relevance and one of lack of corroboration that these admissions should not have been received and therefore, it should have been a — it should have been a directed verdict.

And they specifically state in their opinion that they do not disagree or do not either agree or disagree with the Adonis decision of the four decisions.

In other words, they never came to that point, but that is the first line of proof which the Government apparently argues and as I say as the trial court charged the jury that simply showing the bulge plus the negation of nontaxable sources that that’s sufficient in which to base a conviction.

Do you mean by that that the Court of Appeals said that whether a likely source is necessary or not with this other evidence out, the case is insufficient?

Richard Maguire:

Exactly.They never got to that question.

The second argument which was also charged by the trial judge is the fact that the defendant through his attorney made a calculated fabrication such as we find in the Adonis case.

During the course of arguing what the district counsel of Internal Revenue, Mr. Garrity representing the taxpayer, stated that in the year 1949, his client received a sum of money from his father’s estate, cash.

Mr. (Inaudible) was the district counsel says there was no amount mentioned.

He says it was X dollars.

Mr. Hirst who was the intelligence agent also at present, his testimony was that no sum was mentioned.

That is what the Government argues and the District Court charged is a calculated fabrication such as we find in the Adonis case.

The Court of — the court below, the Court of Appeals said, “We find without agreeing or disagreeing with the Adonis decision that that evidence is just not that calculated fabrication.”

So that we don’t have to have to come to the question as to whether we agree or disagree with the Adonis case and the Adonis case is a — the defendant was indicted for tax evasion in the year 1948.

The increase in assets was sum of $38,000 which was represented by the purchase of a house.

And it seems that Mr. Adonis testified in a judicial proceeding in Holland in the year 1951 and he was in — asked as to the source of the same $38,000.

And he gave explanation as to where he got the money, getting it from three different sources.

His mother gave him some, the Government at the tax trial, a year or two later proved beyond any question that the mother was impoverished and a very elderly lady living with her — one of her daughters.

Secondly, there was a question of a highly, just from reading, at a highly fictitious loan and to sum it up very briefly, they completely exploded in the tax trial.

Mr. Adonis’ explanation is advanced in this Holland judicial proceeding.

The Court in the Third Circuit held that that calculated fabrication could be in effect a substitute for the likely source as I understand it is demanded by the Holland case.

Now, if I may at this point, go back to what I understand, this Court meant in terms of the decisions prior to the Holland case and the Holland case itself as to what was meant by proof of a likely source.

That was done under the cases in one of two ways.

First, you show that the taxpayer was in an income producing business, witness the Holland case where he’s in a hotel business, the Johnson case where the taxpayer owned a string of gambling houses.

Richard Maguire:

The second item is by evidence of specific items of undisclosed income and two illustrations of that is the Chapman case, all of these are cited in the brief, Chapman case where they brought in witnesses that they were paying the defendant over this in-cash, over the ceiling black market payments.

In the Skidmore case where the — where they were paying protection, the bookmakers were paying protection to these fellows on a monthly basis.

Now, we filed in this case a motion for bill of particulars and the Government in answer to our bill of particulars as to the question of source, specify that the source of the income in this case were illegal payments received by the defendant in the course of his duties from various people engaged in illegal activities.

Well, as far as were concerned, we had no doubt in the world what they were going to introduce evidence of specific payments to him during the prosecution years of graft or bribes, whatever you call it.

There is not one eye order of evidence in the case of anything of that nature, not — not an eye order.

At the morning of the trial and now I’m coming to the question to these admissions.

On the morning of the trial, we learned for the first time that the Government intends to prove the source in this case basically through admissions of the taxpayer’s attorney.

Now, those occurred on three different occasions.

In the course of the investigation, of course Mr. Garrity representing the taxpayer was in constant touch with Mr. Hirst who was the intelligence agent and you will find from reading the record that in effect, there’s no dispute about the assets or the increases in assets which occurred during the indictment years.

In fact, all of that information was furnished to the Government by Mr. Garrity acting on behalf of the taxpayer.

The issue was always that Mr. — that — the — the defendant had this money in his possession at the start of the period.

Mr. Garrity pointed out that he was on the vice squad on three different occasions prior to 1945 which is the starting period in this case.

He was on it for some 10 months back in 1932.

He was on it for a year and eight months in 1938.

And from 1940 to 1943, some three years, he was in charge of the vice squad.

Hugo L. Black:

Who pointed that out?

Richard Maguire:

This is Mr. Garrity in talking with Mr. Hirst all the way through the pre-investigation Your Honor.

Hugo L. Black:

The lawyer?

Richard Maguire:

Yes, the respondent’s counsel.

And his whole approach was if he had — if this money did not come when he was relegated to in charging of peddler’s licenses or looking after the physical plant as a police officer.

It came — if it came at all, it came back there.

Now, Mr. Garrity testified on the stand that he had no personal knowledge of the defendant’s activities.

That never concerned him.

And the only thing that was — concerned him is the defendant’s counsel was — what he did, did he get any graft during the years under indictment?

In any event, the Government seeks to introduce these admissions made by Mr. Garrity to prove likely source.

At the trial, they were objected to on the grounds that they’re irrelevant.

Secondly, they’re objected to in the grounds of materiality that — secondly, they’re objected to in the grounds of incompetence that whatever knowledge Mr. Garrity would have of Mr. Massei’s activities would obviously come to him by a reason of his attorney-client relationship and he certainly would be a violation of that to disclose it.

Secondly, that there was no proof in the case and there was a great deal of time spent on this in the record.

There is no proof at all in the case that Mr. Garrity was authorized to make these admissions.

Your client wasn’t present when (Voice Overlap) —

Richard Maguire:

There is one instance which I’ll come to Your Honor, but on these three occasions that I recite, they all occur in the years 1951 and 1952.

On two occasions, the admissions were testified as occurring from Garrity to Mr. Hirst who was the intelligence agent, just the two of them.

The third occasion is a conference with Mr. Isba, the district counsel and Mr. Hirst where Mr. Garrity is endeavoring to convince Mr. Isba that the Government did not have a case and that it should not be recommended for prosecution.

And he in effect goes into this conference and makes a lawyer’s argument and says in effect, well, look at this man — have this money of the — he didn’t get it during the indictment years.

He must have got it back there when he was on the vice squad.

Now, he’s build up his (Inaudible) beginning of the period.

That’s what he was doing.

Richard Maguire:

In effect, he had the — he had it at the start of the period, Your Honor, yes.

Earl Warren:

And all of these tend to back that up.

Richard Maguire:

Well, in effect of course, yes.

Were the statements ever — ever repudiated with the taxpayer?

Richard Maguire:

The taxpayer did not take the stand, Your Honor.

They only witness offered by the — by the defendant was the attorney’s counsel himself, but I may say and I think probably I’m understating this from the point of view of Mr. Garrity and myself who was trying the case, it came to us as a distinct shot that the statements made or an argument made between two lawyers and trying to work out the case to stop the prosecution and to wind it up severely.

We’re going to be thrown back at them as it were to prove this case against this client and what are the amounts to if Your Honors please is presently — if these admissions in effect will be the thing that are going to send Mr. Massei to jail, without him there is no case.

Hugo L. Black:

Suppose the Court would — the Court of Appeals was wrong solely they were inadmissible, what in your judgment could be required about this (Inaudible) assuming at that point it decided against you.

I want to find this (Inaudible).

Richard Maguire:

Well, I think if Your Honor please, we — well, I’m not sure we’re overboard, but we’re certainly in trouble if these admissions get in.

Hugo L. Black:

What I asked was, I want to know if (Inaudible) if the Court of Appeals reverses the lack of sufficient evidence was dependent on its holding in that (Inaudible).

Richard Maguire:

Well, I don’t think it was dependent.

I think as I read the Court’s opinion, they simply —

Hugo L. Black:

Crucial to it.

Richard Maguire:

Well, that — they — they reached the decision that they shouldn’t have come in and therefore there was no case.

Hugo L. Black:

So that if — if they were wrong on that rejecting the evidence, I assume the case was in fact they have to go back to them for consideration (Inaudible)

Richard Maguire:

I believe, if Your Honor please, that is so.

And as — as pointed out by my brother, there are numerous other points which were raised in the Court of Appeals which they did not touch on and one of them, cheap ones was this question of the competency of this evidence.

Felix Frankfurter:

Mr. Maguire, may I ask you this question?

Assume one concludes to the sanction, assume one concludes that it’s a fair inference that the client authorize Mr. Garrity to make the statement or to make this argument off of this hypothesis with the view to presenting or persuading, pressuring people not to recommend the prosecution merely for that purpose, but I want to know is — what is your view?

Can a client restrict his lawyer to make an admission for a limited purpose and if later what the client or the lawyer said to that limited purpose offered in a criminal case, made by the client that objects his introduction as exceeding, as breaking the relationship because the relationship is allowed to be made public only to that (Inaudible)

Richard Maguire:

I would be very fearful that if he authorizes it for a limited purpose, he’s probably in trouble, Your Honor at a later date.

Felix Frankfurter:

So, the question really is whether what Mr. Garrity said was within the fair scope of the lawyer, effectively trying to represent his counsel is a crime.

Richard Maguire:

Exactly.

Now, on the question of relevance, if Your Honor please —

Felix Frankfurter:

(Inaudible) in that regard?

Richard Maguire:

Well, I certainly don’t think, if Your Honor please, that a lawyer has got the right in effect to make admissions which is going to — which are going to put –s

Felix Frankfurter:

(Inaudible)

Richard Maguire:

He’s got the right to manage the case.

Now incidentally, there was no evidence whatsoever in the case as to the contents of the power of attorney.

It is —

Felix Frankfurter:

(Inaudible) but really this gets down to a judgment of what was an invaluable freedom of arguments which the lawyers (Inaudible)

Richard Maguire:

Well, I — I think to some extent, Your Honor.

We have, I think, two other very substantial grounds, one is relevance and one is lack of corroboration, but on that question, I would agree with you, Your Honor and I would like to point out that during the trial, we endeavor to bring out that all certain hypothetical statements which Garrity made in terms of arguing his case to Isba.

And at the early stage of that, that was all excluded by the trial judge as being not important.

And of course, what we were trying to bring out was that Garrity in effect was making illegal argument here.

He was citing cases, for instance, this one specific illustration.

I asked Mr. Garrity in the stand, “Well, did you cite some cases to Mr. Isba on this question of source and showing that you have to prove a likely source during the prosecution period that was excluded?”

Later, at the very end of the testimony, he did allow us at the very end to put in some of it that by and large most of it was excluded.

Did I correctly understand you (Inaudible) to say that Mr. Garrity had said in these discussions with the (Inaudible) that he had no personal knowledge of the facts?

Richard Maguire:

No.

There is no testimony.

He testified to that himself on the stand in the case, but his testimony as to what transpired at this conference, Your Honor is simply that he was making an illegal argument.

Yes, but at the trial he testified.

Richard Maguire:

He testified flatly that he had no personal knowledge whatsoever of Massei’s activities in the pre-indictment years.

On the question of lack of corroboration, at the close of the Government’s case, we move to strike all these evidence if not having been corroborated and it — it went in and the judge charged the jury that you can find corroboration which means some sort of independent evidence which strengthens your belief it’s true.

We submit on this that there is no — no evidence whatsoever of corroboration.

The Government argues that in the pre-indictment years or they start them off with an opening net worth of $61,000 and they say that because he had a very limited salary not more than $3000 in his 20, almost 20 years that he was on the police force that he in effect couldn’t have accumulated this money.

I would point out to you that his salary as a municipal employee down to 1939 was exempt.

In addition to that, of course he had the usual $2000 exemption which was in effect at that time.

His living standard would have cost him to live according to the Government’s evidence which was introduced in 1945 was $1300 so that we have, as I say it, he could have very well during that period have saved at least $2500 a year.

Furthermore, let — let me if I may come to this question of relevance and I’m not going to dwell on it.

It’s covered in the Court of Appeals below and in our brief.

Richard Maguire:

And the basic proposition is simply if I rob a man’s apple tree 10 years ago, cannot be introduced in evidence against me on the charge that I robbed this man’s apple tree or robbed an apple tree today.

And I say under the cases and the Court of Appeals stated that definitely that cannot be done.

I think in conclusion, if I may please, incidentally in terms of — I think Justice Black’s question.

As I see it, this Court will very definitely have to read the entire record.

As I see it that this evidence — this evidence of the admissions should have been excluded and without that, I say there is absolutely nothing on the record to support this conviction on the proof of a likely source.

Now, as I pointed out before and I’d like to say it again in conclusion of the court below never reached that conclusion and they say and I’ll read if I may — well, I can’t put my finger on it, but, well the court below said in its opinion at page 905, “We have mentioned the Adonis case above and the Second Circuit Ford case earlier in this opinion.

We do not mean to infer that we either approve or disapprove of the exceptions to the necessity of proving likely source that this holding seemed to have established.”

Hugo L. Black:

Where are you reading that from?

Richard Maguire:

This, I’m reading from page 19 of my brief, but it appears in the decision of the court below at page 905.

Felix Frankfurter:

(Inaudible)

Richard Maguire:

I’m referring at page 33 of the petition.

I’m referring to the decision in the —

Felix Frankfurter:

905 in federal report.

Richard Maguire:

In the federal report.

Felix Frankfurter:

I beg your pardon?

Richard Maguire:

I’m sorry.

Felix Frankfurter:

I’m sorry to interrupt.

Richard Maguire:

I respectfully submit that the decision of the Court of Appeals should be affirmed.

Roger D. Fisher:

In a few second, I’d like to answer some of the questions if I could Justice Frankfurter.

The jury was charged in the alternative that they had to find likely source for most years or for those years after his father died that if they found that the story was false and it was a delivered fabrication intended to convey a material evasion of where his funds were, the story inherited money from his father who have a lot of cash.

If they found that false, then for that year, they could —

Felix Frankfurter:

Where — where does the deliberate fabrication — I mean the phrase.

Roger D. Fisher:

That’s in the Adonis case which was — which this district judge used.

Felix Frankfurter:

Was there any — was there any evidence about anybody which will justify the judges characterizing it as a deliberate fabrication?

Roger D. Fisher:

Yes, there — the lawyer stated that — that in — when asked to explain where the money had come from, the testimony was — I’m not saying Mr. Garrity’s testimony, the testimony of the agents who heard it was that he said that his — he inherited money from his father who had lot of cash saved up or who had a lot of money saved up in the liquor business and this would have explained if the opening net worth of $110,000 which is suggested, this might have explained the balance.

It was found that he received not one cent from his father’s estate.

The executor knew of no asset that he received other than the half interest in the house.

Felix Frankfurter:

I missed the record, the Government agent holding Mr. Garrity.

Roger D. Fisher:

That’s right.

Felix Frankfurter:

He told him the story.

Roger D. Fisher:

That’s right.

Felix Frankfurter:

And the judge said — that hold everything about it except that the lawyer denied (Inaudible)

Roger D. Fisher:

That’s right.

The —

Felix Frankfurter:

And that (Voice Overlap) —

Roger D. Fisher:

The lawyer admitted he have said everything came before.

Felix Frankfurter:

Pardon me?

Roger D. Fisher:

The lawyer testified that his position was that most everything he had had come before and this was —

Felix Frankfurter:

But he deny having (Voice Overlap) —

Roger D. Fisher:

No.

He suggests that when he said this, there was a hypothesis –

Felix Frankfurter:

Yes.

Roger D. Fisher:

— he was developing.

The judge charged the jury that they must find that these statements were not made in order to make any representative at all.

Felix Frankfurter:

But I mean he used the phrase that came — if this was a deliberate fabrication, is that right?

Roger D. Fisher:

I believe that’s —

Felix Frankfurter:

Now, who was it to fabricate it, the lawyer or the client?

Roger D. Fisher:

The lawyer being authorized by the client to — to make the statement.

Felix Frankfurter:

Well, I have to read what Judge (Inaudible)

Hugo L. Black:

Where is the — what was the evidence of authorization to make that statement?

Roger D. Fisher:

The — there was — about half of the trial was devoted to authorization of these points.

The evidence was that Mr. Garrity’s whole course of conduct was to not to let the agent see respondent but to have factual matters conveyed through him.

He admits and counsel concedes that every time in the repeated letters which he stated — which Mr. Garrity stated something, Garrity — that is a binding admission authorized by the lawyer if it’s in writing.

The judge asked Garrity on the stand.

If he would have spoken to the agent, if he had not been authorized to speak orally as well as in writing and he said you — that’s a fair assumption that I was authorized to speak, there was testimony, powers of attorney.

It was admitted that a power of attorney — if it’s undoubted testimony, the power — general power of attorney that it had — a power of attorney of undefined terms have been filed and Garrity testified to these bribe takings in the presence of respondent that he had received grant during prohibition error by charging every truck that rolled out (Inaudible) and so much of each truck.

This was made in the presence of the respondent.

This issue was first passed on a 100-page of the record of (Inaudible).

The judge found and authorized and he then decided to protect the respondent and was submitted to the jury, charged and they must find it authorized.

The jury found it authorized —

Hugo L. Black:

What is the relevancy of that to what had occurred in prohibition?

Roger D. Fisher:

Showing — the relevancy of that is it showed that respondent authorized Garrity to make statements about his prior receipts prior to the opening net worth.

That’s — that’s why it’s definitely a question of authority.

Hugo L. Black:

Take the money out of hand (Inaudible).

Roger D. Fisher:

That was the general contention.

There was no ever any contention that any nontaxable receipts came into the — the estate.

If I may answer one question of Justice Black, Your Honor, the — you asked, if you would find the admissions admissible, we think they are of course.I

f you find them admissible, what would you do with case?

The — the Court of Appeals on — this is on page 32 of our petition where the section of the opinion is printed.

Concluded — they said, “The Government had to present some evidence of actual graft taking or opportunity for such in order to establish the element of likely source.

Since it failed to do this, the District Court should have stricken the evidence concerning the admissions in the record.

So, under the test as they construed to the Holland case as requiring proof of the likely source is indispensable.

They also construed that as requiring directed evidence of taking money from that source.

So, under their view, our case would not be sufficient even with the admissions and under their standard if they construed the case.