United States v. Shotwell Manufacturing Company

PETITIONER: United States
RESPONDENT: Shotwell Manufacturing Company, et al.
LOCATION: Shotwell Manufacturing Co.

DOCKET NO.: 1
DECIDED BY: Warren Court (1957-1958)
LOWER COURT: United States Court of Appeals for the Seventh Circuit

CITATION: 355 US 233 (1957)
ARGUED: Oct 17, 1957
DECIDED: Dec 16, 1957
GRANTED: Feb 25, 1957

ADVOCATES:
George B. Christensen - for the respondents
Phillip Elman - for the petitioner

Facts of the case

Shotwell Manufacturing, along with several employees, was convicted of evading income taxes. The U.S. Court of Appeals for the Seventh Circuit reversed the conviction because the district court had denied Shotwell’s motion to suppress evidence of certain disclosures. Shotwell allegedly made these disclosures in good faith, thinking they would shield them from liability. After the government petitioned for certiorari, they moved to remand the case to the district court in light of new evidence. If true, this new evidence could prove Shotwell lied while testifying about making the disclosures in good faith.

Question

Is it in the interest of justice to remand the case for findings on a pre-trial motion to suppress evidence in light of new evidence?

Media for United States v. Shotwell Manufacturing Company

Audio Transcription for Oral Argument - October 17, 1957 (Part 2) in United States v. Shotwell Manufacturing Company

Audio Transcription for Oral Argument - October 17, 1957 (Part 1) in United States v. Shotwell Manufacturing Company

Earl Warren:

United States of America versus the Shotwell Manufacturing Company, Byron A. Cain, Frank J. Huebner, et al., Number 1 on the docket.

Mr. Elman.

Philip Elman:

Mr. Chief Justice, may it please the Court.

This case is here on certiorari the United States Court of Appeals for the Seventh Circuit the writ being limited to the questions presented by a motion to remand which the Government has filed in this Court and by the answer made thereto by the respondents.

This is a criminal tax evasion case in which the defendants, the respondents here were convicted after a trial lasting five weeks.

The record in the case is of formidable proportions covering some nine volumes and 5,000 pages of testimonies and exhibits.

But nevertheless we believe that the only issue that's presented to Your Honors at this posture of the litigation is a very narrow one that it is essentially a question of judicial administration that does not call for any adjudication on the merits by the Court.

Now, in broad outline, the case is this.

The defendants were the Shotwell Manufacturing Company, the Chicago Illinois Corporation engaged in the manufacturing sale of candy and its three chief officers and stockholders, Cain, its President, Sullivan, its Executive Vice President and general counsel, and Huebner, its Vice President and general manager.

The indictment returned in March 1952, charged them with willfully attempting to evade a large part of the corporations income taxes the years 1945 and 1946.

The unreported income alleged by the indictment consisting of almost a half million dollars in cash in the nature of so-called black-market payments which the company received from its customers in excess of the OPA ceiling prices.

Now after the indictment was returned but before the trial, the defendants filed a motion to suppress certain evidence which they said they had turned over to the Government as part of a voluntary disclosure made in January 1948 in reliance of what was then the voluntary disclosure policy of the Department of the Treasury.

Now, at this point by way of background, I should describe briefly what that general policy was.

It was first publicly announced in 1945.

It continued for about seven years until January 1952 when it was publicly abandoned and withdrawn by the then Secretary of the Treasury, Mr. Schneider.

It was never promulgated in the form of statute or regulations or any other such formal forms.

The found expression gathered in press releases and speeches that were made by treasury officials during that period.

And as described by these officials, the policy was intended to encourage delinquent taxpayers to come forward voluntarily in their own free will before any investigation have been begun by the Treasury, and to make a full disclosure of their liability.

And if that was done, if there were such a disclosure that was made in good faith disclosure that was sufficient, disclosure that was timely then the policy of the Treasury Department as it was stated was not to recommend criminal prosecution to the Department of Justice.

But in each of these pronouncements by the officials concerned always two elements were stressed.

First, the disclosure had to be a real disclosure.

It had to be intended to reveal information and not to conceal it.

It had to be made in good faith and it had to be a full disclosure.

The second requirement was that it would be timely that had come before the Treasury was on dissent of something wrong that come before the investigation and not after.

Now --

How long that policy had been a disclosure policy?

Philip Elman:

It started in -- it was publicly announced as a policy in 1945.

It was withdrawn in 19 -- early in 1952 for a period of about seven years.

We are not -- I would not wish the Court to understand that the Government is contending that because the policy was expressed in an informal way but that detracted in any way from its validity or from its significance.

It was the policy.