PALERMO v. UNITED STATES
Legal provision: Jencks
Argument of Wyllys S. Newcomb
Chief Justice Earl Warren: Number 471, Anthony M.Palermo, Petitioner, versus United States of America.
Mr. Wyllys S. Newcomb: Mr. Justice -- Mr. Chief Justice and members of the Court.
This is a criminal tax evasion case.
The issue to be determined here is whether the trial court committed reversible error when it denied a defense motion to inspect what has been marked Court's Exhibit 2.
The case, in bare broad outline, was roughly this.
The petitioner's tax returns contain substantial understatements of income from dividends and capital gains.
On the trial, it developed that on legitimate business, the petitioner was away from home each year during tax time.
He happened to be the team physician for a major league baseball team and was down south on spring training.
His returns, the tax return forms were signed by him in blank.
He left in New York checks signed in blank to cover the payment of his taxes.
His returns were prepared and the blank checks were filled out by a firm of certified public accountants in which his brother-in-law, Arthur R.Sanfilippo, was the senior partner.
His returns were certified by Sanfilippo or his partner and filed in New York, together with the checks.
The returns were never seen by the petitioner after they were filled out nor copies -- nor were copies of them given to or seen by him.
The defense in the case, thus, was reliant on the accountants.
The Government's theory was that the petitioner had given false information to his accountants and he withheld true information from them, and that he had done all this with intent to evade.
An important element in the Government's proof was Government's Exhibit 6, and the evidence offered by the Government as to when and under what circumstances Exhibit 6 was first received by the accounting firm.
The defense contention was that Exhibit 6 was, first, delivered to the accounting firm early in 1952 for use in preparing the petitioner's 1951 return.
There was substantial evidence supporting the defense position.
The Government's theory was that Exhibit 6 was, in effect, petitioner's secret, a little black book.
That it was withheld and concealed from the accountants.
That it was not produced by him or given to his accountants until after -- long after the criminal tax investigation of his affairs had been begun.
It is now appropriate to have a look at Exhibit 6.I've requested the Clerk to afford the Justices a copy, and I've given one to the Solicitor General.
It is a list of dividends in the doctor's own handwriting, the petitioner's own handwriting.
The hieroglyphics or hand tracks are stock market symbols.
The total dividends of the pertinent class shown on Exhibit 6 for 1951 is $16,900 plus.
In his tax return for 1951, the dividends in this class that were reported were only $3800.
Needless to say, the prosecutor and counsel for the petitioner fought over that piece of paper, from the beginning of the trial to the end, like two terriers over a bone.
Whichever could make off with it would, in all probability, make off with the case as well.
To prove its position, the Government relied on the testimony of Mr. Sanfilippo, the senior partner of the accounting firm, and elicited from him, on direct examination, the following testimony on page 27 of the record.
The question I show you, Government's Exhibit, for identification, “Can I ask you to tell the Court and jury if you have seen that before?”
Question - “when did you first see it?”
Answer, “During the course of the tax examination of Mr. Mishler in 1953.”
Question, “Who gave it to you?”
On cross-examination, there being doubt as to just what Sanfilippo meant by “during the course of a tax investigation,” the counsel for petitioner pinned the witness down and, on page 81 of the record, it appears that the witness testified that he received it after the agent asked for additional information and after he, Sanfilippo, had asked the taxpayer for additional information.
This testimony was absolutely false and demonstratively so.
And, without laboring the details of the evidence, I refer the Court not only to our main brief, but matters analyzed on page 10 of our reply brief which the Court may examine at its leisure.
The defense, then, brought out that the testimony of the witness on this point had vastly changed.
It had begun, months before, with a flat sworn statement, “I do not know when I got this.
I can't remember it.
I cannot account for it.
I have no recollection.”
One year-and-a half after that testimony was given, this witness testified upon trial to a direct, clear, positive, and damning recollection that he got it at a definite time for a definite purpose.
The process -- the story had gone through a process of evolution.
On July 16, 1956, when he was examined by the special agents under oath, and this was the first time they ever asked him about this exhibit, he said “I don't know.
I don't remember it.
I can't account for it.”
Six weeks later, the special agents had him in again, on August 23, 1956.
They showed him copies of the doctor's returns and Exhibit 6, and they made him compare them.
The message was plain.
Whether or not it was spelled out to him is not important now.
If his firm had Exhibit 6 when the defendant claimed they had it, then the firm had either been guilty of negligence of the most aggravated character or Sanfilippo was a co-conspirator, a codefendant in a conspiracy case.
Justice Potter Stewart: When did the defendant claim that they had it?
Mr. Wyllys S. Newcomb: Mr. Justice Stewart, if you would look at the exhibit, you will observe that there are two columns on the left-hand side and you will observe that there is written in, it's somewhat indecipherable, as to each item in 1951, and only as to each item in 1951, certain interpretations of the stock market symbols.
Those interpretations were placed there by Mrs. Irene LaCombe, who had been a clerk in the Sanfilippo's office.
She testified unequivocally that she put them there in December 1952 while working in preparation of the defendant's 1951 return.
She was a government witness.
Justice Potter Stewart: Okay, that return would have been due in April of 1952, would it not?
Mr. Wyllys S. Newcomb: Sir?
Justice Potter Stewart: His 1951 return have been due in April of 1952?
Mr. Wyllys S. Newcomb: March 15.
Justice Potter Stewart: March in --
Mr. Wyllys S. Newcomb: Yes, sir.
Justice Potter Stewart: The case, yes.
Mr. Wyllys S. Newcomb: Yes, Mr. Justice.
He said, and she said it, she was a government witness, and she said it clearly, the government attorney immediately turned around and tried to attack her -- attack her testimony, and the record is right there for the Court to examine, and she was clear and she stuck to it.
Moreover, I haven't the time to analyze circumstantial evidence, but there was other circumstantial evidence indicating that this was there.
Now, the Government will quarrel with it.
This is a defense contention but there was evidence, and no doubt about it.
Chief Justice Earl Warren: Well --
Mr. Wyllys S. Newcomb: The --
Chief Justice Earl Warren: Just so I'll get a word in it, when was the return for 1951 made?
Mr. Wyllys S. Newcomb: March 15 -- or March 1, 1952.
Chief Justice Earl Warren: Well, these documents -- this document, it --
Mr. Wyllys S. Newcomb: Yes, sir, I --
Chief Justice Earl Warren: Seems to me, it goes down to -- at least to --
Mr. Wyllys S. Newcomb: Mr. Chief Justice --
Chief Justice Earl Warren: June 30th.
Mr. Wyllys S. Newcomb: I can anticipate your question.
Chief Justice Earl Warren: Well, that -- in --
Mr. Wyllys S. Newcomb: The doctor and his brother-in-law, as a family, passed the documents back and forth constantly between the doctor and his office and the accountants and their office.
So, the -- they had this document for 1951 early in 1952, and then, returned it to the doctor who continued it, returned it again to them in 1952.
Chief Justice Earl Warren: But it isn't, then, purported to be the way it was when they use --
Mr. Wyllys S. Newcomb: When this girl --
Chief Justice Earl Warren: When they used it to make up the report.
Mr. Wyllys S. Newcomb: Yes, Your Honor.
No, it does not, but that is the --
Chief Justice Earl Warren: All right.
Mr. Wyllys S. Newcomb: Significance of the fact that Mrs.LaCombe's entries are only there for 1951.
Chief Justice Earl Warren: Right, that's all I was interested in.
Justice Charles E. Whittaker: Can I ask you --
Mr. Wyllys S. Newcomb: Pardon me?
Justice Charles E. Whittaker: I'm not sure I understand.
Is this considered that, admittedly, it correctively affirmed that they collected both all the documents, is that what they did to come --
Mr. Wyllys S. Newcomb: Substantially so.
There are a few omissions.
They consist of yearend dividends that were put in 1952 or a few minor omissions.
Justice Charles E. Whittaker: Now, is this return report, you would say, exists through the accountants trying to look for the purpose of determining the 1951 returns?
Mr. Wyllys S. Newcomb: Yes, sir.
Justice Charles E. Whittaker: Then, how could it be that, since the report of the payment, the dividend he receives subsequent to the taking to return the suit?
Mr. Wyllys S. Newcomb: Mr. Justice Whittaker, the evidence was that, and this was conceded by the partners in the accounting firm, the clerks, and others, that the doctor's records would go down to the accounting firm's office where they would be worked on and then returned to the doctor where they would be continued.
And then, when the next year came around, the documents go to -- go down and come back.
Justice Charles E. Whittaker: Then, it's just to give the forms right back and forth --
Mr. Wyllys S. Newcomb: Yes.
Justice Charles E. Whittaker: Between the accountant's office --
Mr. Wyllys S. Newcomb: Yes, sir.
Justice Charles E. Whittaker: And the defendant's office?
Mr. Wyllys S. Newcomb: Yes, sir, and we had substantial, definite, and direct evidence to that effect.
Now, what's the time that Mr. Sanfilippo finally -- I think you said there were several versions of his testimony, but when is it he said he finally got this thing?
What's the date he gave?
Mr. Wyllys S. Newcomb: He finally said he did not get it until after, approximately, April 1953, which was after the criminal tax evasion investigation had been gone.
Justice Potter Stewart: Now, at that time, on April 1953, was the young lady who put these marks, according to her testimony, on six -- employed by Sanfilippo?
Mr. Wyllys S. Newcomb: She left the firm -- I think she was.
There was another girl who had left, as early as she did.
If I --
Justice Potter Stewart: Yes, I --
Mr. Wyllys S. Newcomb: Now, may it please the Court.
In this evolution of Sanfilippo's testimony, the first date was July 16, 1956, when he said I don't know.
The next time was August 23, 1956, when he signed an affidavit and he had a conference with the agents.
When we reached that point on the trial, we moved for the production of any memorandum made by the agent, showing what Sanfilippo had said to him in this conference with respect to this subject matter and the others on the charge.
It appeared that the conference lasted three-and-a half hours.
There was a memorandum.
It consisted of four typewritten pages.
It was dated the same day.
It was made within several hours after the conference by Special Agent Harper.
It was later signed also by Special Agent McGowan.
It was made under circumstances establishing awareness on the part of the agent that the case literally hang on what Sanfilippo was saying.
Unless the agent was lacking in intelligence, and he was a very good and fine and honest agent, he knew that he was questioning a man who would be either a codefendant or the principle witness for the Government.
According to what we have learned from the Government's statements, it consisted -- it constituted the agent's summary of what he said.
He -- and, under our view, there is no question that, unless defense counsel saw what was in that memorandum, unless counsel saw how this testimony had been evolved from total lack of recollection to total recall incriminating the defendant, then he simply could not get a fair trial.
May it please the Court, I'm a trial lawyer.
The man has told four stories.
This was when one of them was developed.
As a trial lawyer, I say with deep sincerity, and if I am not given access to what that man said to the agents on this occasion in whatever form, it may be recorded, I have been deprived of a fair opportunity to cross-examine the witness.
Until I came here, yesterday, I felt strongly that the statute was not exclusive.
I still think that a “substantially verbatim recital” can embrace a single sentence which says, in substance, he said to me so and so.
That could be an intelligent, reasonable, constitutional interpretation of the statute, but the Government says that that is not so.
I made that point, but I say to the Court that if, under the circumstances here presented, the statute says that a court cannot, and this Court did not even examine the document, there is an error in the Government's brief, the Court did not examine the document.
It says to me, “You cannot see it or any part of it,” then, I say that justice has not been done.
The motion should have been granted, just as required, no less.
And, I think that what I am talking about is due process of law under the Fifth Amendment of the Constitution of United States.
Justice William J. Brennan: Did you say that -- was this -- this case was tried after the Jencks statute?
Mr. Wyllys S. Newcomb: Yes, sir.
Justice William J. Brennan: Do you say the trial judge did not see the statement at all?
Mr. Wyllys S. Newcomb: No, Sir.
Justice William J. Brennan: Did he say why he would not look at it?
Mr. Wyllys S. Newcomb: Yes, he said Jencks was only impeachment and that this was a document that you couldn't impeach with.
Justice William J. Brennan: Well, how did he know that if he didn't look at it?
Mr. Wyllys S. Newcomb: At the opening of the argument, Judge Dimock said to me, “You are not within in 100 miles of the statute, are you?”
And, so, I would open and I said “no, but I -- maybe not, but I'm under Jencks clearly.”
So, I argued constitutionality.
They argued “are you Jencks?”
I just couldn't make him see it.
Justice William J. Brennan: Well, what are you and he arguing about, and you get this?
Neither of you had seen it?
Mr. Wyllys S. Newcomb: May it -- Mr. Justice Brennan, I developed, and the Government said, there was such a memoranda.
I think, as a trial lawyer, I was not far off when I took the position that there was anything that Sanfilippo said.
Justice Felix Frankfurter: Could you --
Mr. Wyllys S. Newcomb: I --
Justice Felix Frankfurter: Did you say, because I understand you to say, a minute ago, that you agreed with Judge Dimock and this was not within the term of the statute?
Mr. Wyllys S. Newcomb: Well, I could certainly qualify that we're in agreement, Your Honor.
He certainly --
Justice Felix Frankfurter: Well, you should ask -- what did you say?
Did the record show what you said?
Mr. Wyllys S. Newcomb: Yes.
Justice Felix Frankfurter: What did he --
Mr. Wyllys S. Newcomb: He --
Justice Felix Frankfurter: What did you say, may I turn to the documents, introduce into evidence, and probably the documents --
Mr. Wyllys S. Newcomb: I said I do not think I am with it or I do not hope to bring --
Justice Felix Frankfurter: But you relied on Jencks.
Mr. Wyllys S. Newcomb: But I relied on Jencks.
Justice Felix Frankfurter: That's what I understood you to say.
Mr. Wyllys S. Newcomb: But --
Justice Felix Frankfurter: You relied on Jencks?
Mr. Wyllys S. Newcomb: Mr. Justice Frankfurter, I did not say that, until after Judge Dimock had said to me, “Mr. Newcomb, you are not within 100 miles of the statute.”
Justice Felix Frankfurter: Well, you wouldn't have to see this as the same way that he did, did you?
Mr. Wyllys S. Newcomb: No, sir, but we had had the Jencks case up before in the statute, and I sincerely believe that I made no concession which was anything more than a graceful act of deference to a clearly indicated opinion on the trial court -- on the basis of the trial court.
Justice Felix Frankfurter: I'm not blaming you for saying --
Mr. Wyllys S. Newcomb: I understand, sir.
Justice Felix Frankfurter: I understand your argument to be what the preceding argument was, that Jencks survived the statute and that you made the outside of the statute, yet, within the Jencks.
Mr. Wyllys S. Newcomb: Yes, sir, and if the statute --
Justice Felix Frankfurter: That is your position now, isn't it?
Mr. Wyllys S. Newcomb: Yes, sir.
Justice Felix Frankfurter: So --
Mr. Wyllys S. Newcomb: I --
Justice Felix Frankfurter: You didn't surrender anything if you intellectually thought that.
Mr. Wyllys S. Newcomb: I think you're right, though, Your Honor.
It follows that the conviction below must be reversed and there should be another trial.
Chief Justice Earl Warren: Mr. Spritzer.
Argument of Ralph S. Spritzer
Mr. Ralph S. Spritzer: Mr. Chief Justice and may it please Your Honors.
I do not like to take an undue amount of time in discussing the facts of the case in as much as the Court does have statutory and constitutional questions before it.
However, in as much as the Government's position on the statute has already been elaborated in the proceeding case, particularly, in relation to its application to memoranda or summaries.
I think perhaps that it may be helpful to attempt to place the issue as to production, as it arose in this case, more clearly in its setting.
And, I do wish to review very briefly the nature of the proof and to indicate the theories of the prosecution and defense and precisely how this issue arose and how it was handled by the Court.
In view of the difficulty of dealing with figures, I have asked the Clerk to distribute a chart which has several tables in it.
Now, I want to call the Court's attention, if I may, at the outset, that this case involves tax evasion not merely for the year 1951, but for three years, 1950 to 1952 inclusive.
And, that the defendant was convicted on all three counts and that concurrent sentences were handed down.
Now, actually, the proof went back beyond 1950 and showed that the pattern of under reporting went back at least as far as 1948.
The first table on this form which I've submitted to the Court is simply drawn from the tax returns, and it shows a comparison of the income reported by Dr. Palermo on his original return with the income which he ultimately reported on his amended return for the same year.
He filed amended returns for these five years in 1956, some-four years after the tax investigation by the Internal Revenue agents began.
The Court will observe the discrepancy as between the amounts reported on the original and the amended returns.
Perhaps, the biggest variation is in 1951, $9000 reported originally, $31,000 ultimately reported.
Now, the second table shows dividend income returns, and we have that table here because the under reporting was concentrated in the area of under reporting of dividends.
The other area was under reporting of capital gains on the sale of securities.
Now, the Court will see from Table 2 that, in 1950, for example, 14,000 in dividends was reported.
The actual figure should have been 33,000 in dividends.
In 1951, the variation is 13 against 30.
The least discrepancy is in 1952, and the 1952 return was filed after the Treasury agents had begun an investigation into taxpayer's 1951 returns.
Justice John M. Harlan: Could I ask you a question?
Mr. Ralph S. Spritzer: Yes.
Justice John M. Harlan: This amended return, that is his amended return and not --
Mr. Ralph S. Spritzer: His amended return.
Justice John M. Harlan: What the Government complains?
Mr. Ralph S. Spritzer: These are conceded figures now filed by the taxpayer.
In every year, except 1952, far less than half of Dr.Palermo's dividends were reported and, of course, as the first table indicates, far less than half of his net income was reported.
But, actually, that doesn't begin to give the full picture.
One can narrow this evasion to a smaller area.
Dr. Palermo bought stock in two ways.
He bought it on margin through margin accounts and he bought it outright.
Stock bought on margin, of course, does not become the registered stock of the buyer.
It remains, in the term of the trade, in street name and the dividends on such margin stock go to the broker and not directly to the ultimate purchaser.
As a result, all of the dividends on the margin account purchaser -- purchases went through the brokers and the brokers kept regular formalized records, and they submitted monthly statements to the -- to Dr. Palermo.
Now, of course, those regularized monthly statements would be readily acceptable to any tax investigator.
There was not evasion in respect of the dividends received on securities bought on margin.
The evasion was concentrated in the area of the securities which were bought outright, the securities that the doctor had in his vault, which he might have been holding for six months or a year or five years.
The figures in Table 3 show the under reporting of dividends on stock which was owned outright by Dr. Palermo.
Here is a man who received, in 1950, over $18,000 in dividends on his outright owned securities.
The figure he gave the accountant as representing his dividends for that year was 4000 on such securities.
In 1951, the discrepancy is over 20,000 received and 3800 reported as representing dividends on this class of securities.
Table 4 on our chart, over which I shall not linger, indicates the amount of capital gain on the sales of securities which were not reported.
One further word about the under reporting of dividends, the outright owned securities were held some in the name Dr. Palermo and others in the names of nominees - Dr. Palermo's mother, a niece, a former lady employee.
It was conceded that all of the dividend checks which were made payable to these nominees were endorsed and cashed by Dr.Palermo.
It appears that at no time were any of the dividends received by these nominees reported by the doctor.
Now, I come to the question of how the doctor's tax returns were prepared and, to the -- briefly, to the evidence on that point.
As the Court has heard, the doctor's brother-in-law, Sanfilippo, was an accountant.
Sanfilippo's partner, Amoruso, was a friend of the doctor also, some-30 years standing.
They both testified.
Dr.Palermo did not testify, so we have nothing from him as to his relationship with his accountants.
Both the accountants testified and they both said that they never, at any time, made any investigation, any audit or any form of accounting inquiry into the figures which represented the doctor's dividends on the securities which he owned outright.
As to the margin account stocks, they got -- he furnished them his broker's monthly statement.
As to his other stocks, held in his name or by his nominee, they got the information from him and they took the figures, they testified, as submitted.
They said they weren't paid to make an audit.
That they relied on the figures which he gave them.
Normally, they said those figures were provided to them over the telephone.
Now, I'd point out parenthetically that even if contrary to the testimony of the accountants, they had information accessible to them so that they should have known that he was grossly understating his income, assuming that they were winking at the evasion, that would hardly serve to exonerate the doctor who gave them these grossly inadequate figures, who stood to profit by it, and who must have known, I submit, that he was hardly paying the taxes that were due.
In one year, for example, Dr.Palermo had over $30,000 in dividends, as well as income from his medical practice, income from rents on properties that he owned, more than $30,000 of dividends, I emphasize, and he paid a total tax of less than $2000.
Was he unaware of what was going on?
I must defer on the suggestion that he filed, “gave blank checks to his accountants and signed all of his returns in blank,” because the evidence only supports, in our view, including the references cited by petitioner in his brief, that one -- the return in one year was signed in blank.
But, all of this apart, let us consider the Government Exhibit 6, the document by which the defense seeks to suggest fault or complicity on the part of the accountants.
Your Honors have seen the report -- the form, I should say.
It's a blank form of the kind that a brokerage firm gives out to customers so they can note, in daily journal form, the dividends that they receive.
Now, there's no question that, at some point, the accounting firm received this report -- this form, and the question is just when it was received, it being --
Justice John M. Harlan: Mr. Spritzer.
Mr. Ralph S. Spritzer: Yes, sir?
Justice John M. Harlan: Even though I didn't have the benefit of the argument of the previous case --
Mr. Ralph S. Spritzer: Yes, sir?
Justice John M. Harlan: I certainly don't want to ask you to repeat it, but just so I can understand, the thrust of your present argument is to show that the exclusion of the -- or the failure to give this to the defendant's counsel was not prejudicial, is that right?
That if -- the error, it was not prejudicial error?
Mr. Ralph S. Spritzer: If there was error.
Justice John M. Harlan: Yes.
Mr. Ralph S. Spritzer: Our primary argument in all of these cases is, of course, that summaries, as distinguished from substantially verbatim transcripts or signed statements, are not producible.
And, I've been giving this because it bears both on any question of harmless error, if there was error, and -- but there was not error is our first argument.
I've been giving it with that partly in mind, but also, since there has been some discussion of the fact to the try to give the benefit of -- the Court the benefit of understanding the precise issue or production as each developed.
And, I am gradually trying to focus in on that.
As I say, the question as to this Steiner-Ralls form, so-called, it's the sort of stature Your Honors have, is when the accountants got it.
The defense suggests that if the accountants got it before March 15, 1952 that, then, they were negligent, at the least, in showing $3800 in dividend on outright owned securities because this form, if you add up, shows some $16,000 in dividends on outright owned stock for 1951.
Now, I think there are various circumstances which support Sanfilippo's testimonies that this was not available to the firm in 1951.
In the first place, as the Court has noted, this is a continuing daily journal kind of entry and, if the doctor submitted he has paid this paper to the accounting firm which normally took some weeks at least to makeup his return, presumably, he'd start a fresh piece of paper to show his 1952 dividend, but this continues uninterrupted.
In the second place, there was the testimony of Amoruso who supervised the preparation of the return for 1951.
And, he testified that the doctor gave him the $3800 figure which was in the worksheets and found its way into the return, that the doctor gave him the $3800 figure over the phone, and that he never saw this paper when he prepared the 1951 return.
In the third place, we find that Dr.Palermo, himself, has never claimed that he gave this form to the accountants before the tax return of 1951 was filed.
Agent Harper, the same agent who subsequently spoke to the witness Sanfilippo, interviewed Dr. Palermo.
Dr. Palermo told Harper that he could not recall when this form was given to the accountants.
The only suggestion that the accountant had it in 1951 or in early 1952, when the 1951 return was prepared, is by a lady who worked in the firm, Mrs.LaCombe, whose testimony, far from being unequivocal, showed a great deal of confusion.
She testified that she had seen this form, she thought, when the 1951 return was made out.
She also testified that that was when a Mr. DeGeorge, another employee of the firm, worked there.
When it was pointed out to her that Mr. DeGeorge did not work there until a considerably later date, she finally testified at Record 292, I refer the Court to the top half of the page, that it could have been in 1952 or it could have been in 1953.
Now, I --
Justice John M. Harlan: Could I ask you one question?
I understand you to say this exhibit adds up to $1600.
Mr. Ralph S. Spritzer: The 1951 --
Justice John M. Harlan: The 1951.
Mr. Ralph S. Spritzer: Part of it.
Justice John M. Harlan: And does that mean that, as compared with the amended return, there's still a discrepancy of $1400?
Mr. Ralph S. Spritzer: No, because this dividend list is on outright owned security.
Justice John M. Harlan: Oh, I see.
Mr. Ralph S. Spritzer: And, the amended return has the figures from the broker.
Justice John M. Harlan: I see.
Mr. Ralph S. Spritzer: This list, however, is -- is incomplete as to outright owned securities itself and, as a matter of fact, in 1952, the accountants used this part of the form to get the taxpayer's dividends and the jury found him guilty of tax evasion in 1952 because he didn't write all his dividends down here and at no point were the dividends paid to nominees' reporting.
Moreover, in 1952, he had a $10,000-capital gain that wasn't reported.
But, I emphasize this because, in the next year, this form was used as a basis for preparing the return and the jury found him guilty in that year as well.
Justice John M. Harlan: This very paper or similar to that?
Mr. Ralph S. Spritzer: This very paper was used by the accountants the next year.
Justice John M. Harlan: I understand because this only appears to go through six months of the year, through June 30th.
Mr. Ralph S. Spritzer: Well, this was not the only -- no, I think it goes on --
Justice John M. Harlan: Or am I mistaken?
Mr. Ralph S. Spritzer: I think it goes on later thereafter, it is which -- or later in the year.
You've got to look at the final column.
It's a rather difficult paper to read.
Justice John M. Harlan: I see.
Justice William J. Brennan: Mr. Spritzer, this lady testified that these translations of the symbols aren't her own handwriting?
Mr. Ralph S. Spritzer: Yes.
Justice William J. Brennan: Did she say -- did she testify of circumstances under which she has --
Mr. Ralph S. Spritzer: She testified that she knew she worked with the paper at some point.
Now, after the tax investigation of petitioner's affairs began in December 1952, the accounting firm did work to determine whether the 1951 return was accurate.
They wanted to find out what additional was owing and there would have been just as much reason for her to go over the dividends then as at any prior time.
And, that brings me to Sanfilippo's testimony and the effort to impeach Sanfilippo, of course, is the effort which leads to the issue as to production in this case.
Now, Sanfilippo testified on more than one occasion, and I would like to take his statements chronologically.
On July 16, 1956, Sanfilippo was interviewed by Agent Harper for some-three hours.
A transcript to that interview was made.
It became available to the defense.
The Court has copies of it, marked Y (7).
At pages 32 and 33 of that transcript, Sanfilippo said to Agent Harper that he didn't recall when he got this Steiner-Ralls form or when he first saw it.
The next month, in August of 1956, Sanfilippo returned to the agents' offices and was with them for some-three-and-a half hours.
At this interview, Sanfilippo examined the transcript of the prior July interview.
He made certain corrections which appear of the face of that transcript and any initial of those changes.
At that second meeting with Agent Harper, he executed a supplementary affidavit that was made available to the defense, and the Court has that as Exhibit Z7.
Sanfilippo said that he -- well, outspoken in part, he said in that supplementary affidavit “I recall that Mr. Mishler,” Mishler was the first Revenue agent who looked into the taxpayer's affairs, his investigation having began in December 1952.
“I recall that Mr. Mishler requested additional information concerning the doctor's dividend income and I believe that Dr.Palermo supplied me with this form with a notation of dividends at that time.”
Now, the record shows Mishler was a witness, that Mishler commenced his investigatin in December 1952, that he called upon Dr.Palermo at that time to come in and reply, if he would talk about his tax affairs, and that Mishler questioned Dr.Palermo in December 1952 as to apparent discrepancies in dividend income.
Now, the next time, the third time that Sanfilippo spoke about the date of receipt of the Steiner-Ralls memorandum was before the grand jury.
The grand jury minutes, over the Government's objection, were made available to the defense in this case.
They're marked W (7).
And, at page 28, Sanfilippo, quite consistently with his supplementary affidavit, told the grand jury that the firm received the Steiner-Ralls dividend form after the commencement of the tax investigation by Mr. Mishler.
And, at page 29, he says he did not see it prior to preparation of the 1951 return.
But, finally, we come to the trial.
Again, Sanfilippo testified that he did not have this dividend form when preparing the 1951 return and that it was his recollection that Palermo -- Dr.Palermo's submission of this form was precipitated by the action of Agent Mishler in December 1952, calling Palermo in and questioning him about his dividends.
Sanfilippo also explained how his recollection came to be refreshed.
He said that, after the July meeting with Agent Harper, he went back and talked with his partner, Amoruso.
It then came back to him, he said, that the occasion of their receiving this form, and usually they'd receive figures from the doctor over the phone, sometimes lump sum figures.
It came back to him, he said, that the occasion of receiving this form was that concern had been engendered by Mishler's interrogation of Dr. Palermo.
Mishler emphasized, when he called Dr.Palermo in, that there were apparent discrepancies of dividend income.
Justice John M. Harlan: That is the grand jury testimony?
Mr. Ralph S. Spritzer: No, I'm talking about his trial testimony now.
Justice John M. Harlan: What page?
Mr. Ralph S. Spritzer: 149 and 150 has a portion of that, Your Honor.
Now, at this point, the defense had received, had seen the question-and-answer transcript of the first interview with Harper, the supplementary affidavit prepared at the second interview with Harper, and the grand jury minutes with Sanfilippo's testimony.
The defense then sought any memorandum of the August 1956 meeting which Agent Harper might have made.
The Assistant United States Attorney advised the Court that the Government had no statement -- no approved statement and no transcript of matter that Sanfilippo had said at the meeting in August with Agent Harper.
The Assistant advised the Court that he had a memorandum which Agent Harper had prepared after that meeting.
He said it was not a substantially verbatim transcript.
The Court asked defense counsel on what basis he thought he was entitled to production of the memorandum, indicating that the Court did not believe that he would be entitled to it if it were a memorandum.
Now, defense counsel did not seek to challenge the representation of the Assistant United States Attorney that this was merely a memorandum.
He accepted that representation.
I think I can say that with confidence, when the record shows, and I refer the Court to Record 153, counsel stating in a colloquy with the Court, the Court, “Mr. Newcomb, how do you hope to bring yourself within 3500 (e)?”
And Mr. Newcomb says “I do not hope to bring myself within it.
I do not think I belong within it.”
And, so, it seems to me that the defense's reliance was on the proposition that the statute doesn't control that there may be some provision for getting it outside the statute, or that the statute is unconstitutional.
I say that, in this case, there can be no question of procedure to determine whether the memorandum is in fact a summary or is, perhaps, a substantially verbatim transcript, though it appears to be a summary, because there was no challenge made to the representation that it was a summary.
Now, it does not clearly appear that Judge -- from the transcript, at the time of the colloquy, that Judge Dimock read it at that time.
There's no statement in the record that it was handed off, so I can't say that he read it at that time, though the record shows that the Assistant told the Court it was there for him to see.
I assume that Judge Dimock did, at some point, examine it because he took care to send it forward to the Court of Appeals as a court exhibit so that that Court could examine it.
The Court of Appeals did examine it and it found that the internal evidence made clear that it was a summary or memorandum and not a substantially verbatim transcript.
This Court, of course, has the -- has that Court's Exhibit 2, the Field Exhibit, before it.
And, this Court can consider that internal evidence as well.
This Court could also consider whether, if on any theory the memorandum should have been produced, it would serve any purpose to grant a new trial.
If it appears on the face of the document that the only information there doesn't add or subtract one whit from what was stated in the supplementary affidavit, which was executed that day and which was made available to the defense, that it couldn't conceivably be of any use.
In that circumstance, I would certainly suppose that there would be no purpose in ordering a new trial.
Now, I've gone into the facts that I should attempt to make clear in concluding that by emphasizing the facts, I do not mean to suggest in any way that we do not rely basically and as our first contention on the proposition that this was a memorandum or summary and that the statute prohibited turning that over.
And, I haven't deem it necessary to attempt to argue further the meaning of the statute and its plain application, it seems to me, here only because the Government's position on that score has been fully elaborated in the preceding case.
Justice John M. Harlan: The Court of Appeals, I take it, notwithstanding these (Inaudible)
Mr. Ralph S. Spritzer: Oh, yes.
Justice John M. Harlan: In other words, you just proceed to hold it through the statement throughout the reply (Inaudible)
Mr. Ralph S. Spritzer: Well, no, I -- I don't think we did.
I think that the point is at least conclusive, however, on the proposition that he -- that he could not now be heard to say, and I don't understand him to say, he could not now be heard to say that -- that it was doubtful whether it was, in fact, what it was represented to be, namely, a summary or contemplation.
Chief Justice Earl Warren: We'll recess now.
Argument of Wyllys S. Newcomb
Chief Justice Earl Warren: Mr. Newcomb.
Mr. Wyllys S. Newcomb: Mr. Justice and learned Justices.
I suggest that whether or not, as a matter of fact, the court below examined the document is something that should not be in issue here.
In our brief in the Court of Appeals, we've categorically stated that the Court did not examine the documents.
The appeal was argued by the Assistant United States Attorney who tried the case, and the argument in the Court of Appeals was all upon the basis that the Court did not examine the document.
And, I respectfully suggest that a simple check by the Solicitor General would suffice.
Let us, if the Court please, go back to the fundamentals.
Why are we here?
In examining Sanfilippo, I put to him this question which is the key to why we are here and, I respectfully say, it is why this Learned Court granted the petition for certiorari.
I said to him, we're referring to Exhibit 6, “Mr. Sanfilippo, I ask you whether your memory of it was better then,” namely, on July 16th when he said, “I don't know,” “than your memory of it when you testified here upon the trial, some 16 or 18 months later, and approximately four-and-a half or five years after you say you received this paper.”
He answered, “I feel my recollection of the circumstances is better today because we reviewed that several times.”
And petitioner does not challenge the right or even the duty of skilled investigators and prosecutors to refresh recollection of witnesses even by using repeated and suggestive interrogation, if honestly done.
The prosecution must be vigorous, determined and persistent.
Truth is not obtained from witnesses always in the first instance.
Therefore, the interest and right of the Government is that there should be vigorous investigation and prosecution.
But, as one who has been a prosecutor local, state and federal for many years, I have long been conscious as I am sure this Court is conscious of the fearsome power which the skilled investigator and the skilled prosecutor possesses if, may it please the Court, there is a record of a change and evolution of testimony on a vital point.
And it appears, as a matter of timing, that it occurred coincidental with repeated interrogation and preparation.
This is not an indictment of the Government, the prosecutor or the Investigator.
But, I say to the Court, with real sincerity, that if that is to be done, as it must be done, then the defense, when it occurs, must be given every reasonable, fair, intelligent opportunity to inquire as to whether it was done and, if so, how and when?
And I say to the Court that that right in this case was clearly denied to us.