James v. United States (366 U.S. 213)/Concurrence-dissent Harlan

by John Marshall Harlan II

Mr. Justice HARLAN, whom Mr. Justice FRANKFURTER joins, concurring in part and dissenting in part as to the opinion of THE CHIEF JUSTICE.

I fully agree with so much of The Chief Justice's opinion as dispatches Wilcox to a final demise. But as to the disposition of this case, I think that rather than an outright reversal, which his opinion proposes, the reversal should be for a new trial.

I share the view that it would be inequitable to sustain this conviction when by virtue of the Rutkin-Wilcox dilemma it might reasonably have been thought by one in petitioner's position that no tax was due in respect of embezzled moneys. For as is pointed out, Rutkin did not expressly overrule Wilcox, but instead merely confined it 'to its facts.' Having now concluded that Wilcox was wrongly decided originally, the problem in this case thus becomes one of how to overrule Wilcox 'in a manner that will not prejudice those who might have relied on it.' 366 U.S. at page 221, 81 S.Ct. at page 1056.

It is argued, in reliance on Spies v. United States, 317 U.S. 492, 63 S.Ct. 364, 87 L.Ed. 418, and Holland v. United States, 348 U.S. 121, 75 S.Ct. 127, 99 L.Ed. 150, that so long as Wilcox remained on the books the element of 'willfulness' required in prosecutions of this kind ^[1] 'could not be proven,' and hence, that the conviction of this petitioner fails without more. This would mean, I take it, that no future prosecution or past conviction involving tax derelictions of this nature, occurring during the Wilcox period, may be brought or allowed to stand I cannot agree to such a disposition, which, in my view, is warranted by neither principle nor authority and would carry mischievous implications for the future.

The Spies and Holland cases, which are said to support outright reversal, stand for no more than that where, as here, a criminal tax statute makes 'willfulness' an element of the offense, the Government must prove an 'evil motive and want of justification in view of all the financial circumstances' on the part of the defendant, in failing to do what was required of him. While I agree that in the present case this made germane on the issue of willfulness the petitioner's reliance or nonreliance on the continued vitality of the Wilcox doctrine, ^[2] I can find nothing in Spies or Holland which justifies the view that the mere existence of Wilcox suffices alone to vitiate petitioner's conviction as a matter of law. If, as appears to have been the case, there was erroneous failure to take that factor into account at the trial on the issue of willfulness, the most that should happen is that petitioner should be given a new trial. This indeed is what Spies and Holland affirmatively indicate as the right solution of the problem this case presents. In Spies, it was said (317 U.S. at pages 499-500, 63 S.Ct. at pages 368):

'* * * By way of Illustration, and not by way of limitation, we would think affirmative willful attempt may be inferred from conduct such as keeping a double set of books, making false entries or alterations, or false invoices or documents, destruction of books or records, concealment of assets or covering up sources of income, handling of one's affairs to avoid making the records usual in transactions of the kind, and any conduct, the likely effect of which would be to mislead or to conceal. If the tax-evasion motive plays any part in such conduct the offense may be made out even though the conduct may also serve other purposes such as concealment of other crime.

'In this case there are several items of evidence apart from the default in filing the return and paying the tax which the Government claims will support an inference of willful attempt to evade or defeat the tax. These go to establish that petitioner insisted that certain income be paid to him in cash, transferred it to his own bank by armored car, deposited it, not in his own name but in the names of others of his family, and kept inadequate and misleading records. Petitioner claims other motives animated him in these matters. We intimate no opinion. Such inferences are for the jury. If on proper submission the jury found these acts, taken together with willful failure to file a return and willful failure to pay the tax, to constitute a willful attempt to defeat or evade the tax, we would consider conviction of a felony sustainable.' To the same effect, see Holland, supra, 348 U.S. at page 139, 75 S.Ct. at page 137.

In the case at hand, the evidence of devious financial arrangements might well support the inference that petitioner's purpose was not only to commit the embezzlement but also to secrete and immunize his gains from what he considered to be his tax liabilities in respect of those gains. The District Court, as the trier of the facts (there having been no jury), found that petitioner's acts were 'willful and were done in a knowing and conscious attempt to evade and defeat' his tax obligations. But since it does not appear that petitioner's possible reliance on the Wilcox doctrine was considered below, Spies and Holland make it appropriate for us to send the case back for a new trial. They do not support foreclosing the Government from even undertaking to prove that the petitioner's conduct was 'willful' in this respect.

An outright reversal is equally unsound on principle. I take it that our decisions in the tax and any other field for that matter relate back to the actual transactions with which they are concerned, and that that is only the normal concomitant of the fact that we do not sit as an administrative agency making rulings for the future, but rather adjudicate actual controversies as to rights and liabilities under the laws of the United States. There can be, I think, two justifications for barring a prosecution of this petitioner in the unusual circumstances presented here: (1) that by reason of Rutkin having formally left intact the Wilcox doctrine, petitioner did not have due warning of his possible criminal liability; and (2) that the Court, in making new 'law' in Rutkin, should, like the legislature, not impose criminal liability ex post facto.

As to the first consideration, where the defendant is charged in a case like this with having 'willfully' violated the law, I believe that both reason and authority require no more than that the trier of fact be instructed that it must take into account in determining the defendant's 'evil motive and want of justification,' Spies v. United States, 317 U.S. at page 498, 63 S.Ct. at page 368, his possible reliance on Wilcox, which not until now has this Court explicitly stated was wrongly decided. As far as fairness to this petitioner is concerned, I do not see why that is not amply accorded by the disposition which Spies itself exemplifies. See page 243 of 366 U.S., page 1068 of 81 S.Ct., supra. On the other hand, if the trier of fact, properly instructed, finds that the petitioner did not act in bona fide reliance on Wilcox, but deliberately refused to report income and pay taxes thereon knowing of his obligation to do so and not relying on any exception in the circumstances, I do not see why even the strictest definition of the element of 'willfulness' would not have been satisfied. Willfulness goes to motive, and the quality of a particular defendant's motive would not seem to be affected by the fact that another taxpayer similarly situated had a different motive.

An altogether analogous situation was presented in United States v. Murdock, 290 U.S. 389, 54 S.Ct. 223, 226, 78 L.Ed. 381. In that case the respondent had been convicted of willfully failing to supply information to the Bureau of Internal Revenue in that he relied on the possibility of state prosecution as justifying his invoking the federal privilege against self-incrimination. The Court said in that case:

'* * * He whose conduct is defined as criminal is one who 'willfully' fails to pay the tax, to make a return, to keep the required records, or to supply the needed information. Congress did not intend that a person, by reason of a bona fide misunderstanding as to his liability for the tax, * * * should become a criminal by his mere failure to measure up to the prescribed standard of conduct. * * *

'It follows that the respondent was entitled to the charge he requested with respect to his good faith and actual belief. Not until this court pronounced judgment in United States v. Murdock, 284 U.S. 141, 52 S.Ct. 63, 76 L.Ed. 210, (82 A.L.R. 1376,) had it been definitely settled that one under examination in a federal tribunal could not refuse to answer on account of probable incrimination under state law. The question was involved but not decided in Ballman v. Fagin, 200 U.S. 186, 195, 26 S.Ct. 212, 50 L.Ed. 433, and specifically reserved in United States ex rel. Vajtauer v. Com'r of Immigration, 273 U.S. 103, 113, 47 S.Ct. 302, 71 L.Ed. 560. The trial court could not therefore properly tell the jury the defendant's assertion of the privilege was so unreasonable and illfounded as to exhibit bad faith and establish willful wrongdoing. This was the effect of the instructions given. We think the Circuit Court of Appeals correctly upheld the respondent's right to have the question of absence of evil motive submitted to the jury * * *.' (Emphasis supplied.)

It would seem that precisely the same disposition is in order in this case. Nor do I think that distinctions in terms of the nature of the defendant's legal misapprehension, its degree, its justifiability, or its source are either warranted or would be manageable as a basis for deciding future cases.

Coming now to the other possible rationale for barring the prosecution of this petitioner, it might be argued that petitioner at the time he failed to make his return was not under any misapprehension as to the law, but indeed that at the time and under the decisions of this Court his view of the law was entirely correct. The argument not only seems to beg the question, but raises further questions as to the civil liability of one situated in the circumstances of this petitioner. Petitioner's obligation here derived not from the decisions of this or any other court, but from the Act of Congress imposing the tax. It is hard to see what further point is being made, once it is conceded that petitioner, if he was misled by the decisions of this Court, is entitled to plead in defense that misconception. Only in the most metaphorical sense has the law changed: the decisions of this Court have changed, and the decisions of a court interpreting the acts of a legislature have never been subject to the same limitations which are imposed on legislatures themselves, United States Constitution, Art, I, §§ 9, 10, forbidding them to make any ex post facto law ^[3] and in the case of States to impair the obligation of a contract. Ross v. State of Oregon, 227 U.S. 150, 33 S.Ct. 220, 57 L.Ed. 458; New Orleans Waterworks Co. v. Louisiana Sugar Refining Co., 125 U.S. 18, 8 S.Ct. 741, 31 L.Ed. 607.

The proper disposition of this case, in my view, is to treat as plain error, Fed.Rules Crim.Proc. 52(b), 18 U.S.C.A., the failure of the trial court as trier of fact to consider whatever misapprehension may have existed in the mind of the petitioner as to the applicable law, in determining whether the Government had proved that petitioner's conduct had been willful as required by the statute. On that basis I would send the case back for a new trial.

Notes

1  The relevant statutes are set forth in footnotes 1-2, 4-5 of The Chief Justice's opinion. 366 U.S. at pages 214-215, 81 S.Ct. at pages 1052-1053.

2  Compare American Law Institute, Model Penal Code, tentative draft No. 4, § 2.04:

'(1) Ignorance or mistake as to a matter of fact or law is a defense if:

'(a) the ignorance or mistake negatives the purpose, knowledge, belief, recklessness or negligence required to establish a material element of the offense * * *.'

3  Aside from problems of warning and specific intent, the policy of the prohibition against ex post facto legislation would seem to rest on the apprehension that the legislature, in imposing penalties on past conduct, even though the conduct could properly have been made criminal and even though the defendant who engaged in that conduct in the past believed he was doing wrong (as for instance when the penalty is increased retroactively on an existing crime), may be acting with a purpose not to prevent dangerous conduct generally but to impose by legislation a penalty against specific persons or classes of persons. That this policy is inapplicable to decisions of the courts seems obvious: their opportunity for discrimination is more limited than the legislature's, in that they can only act in construing existing law in actual litigation. Given the divergent pulls of flexibility and precedent in our case law system, it is disquieting to think what perplexities and what subtleties of distinction would be created in applying this policy, which so properly limits legislative action, to the decisions of the courts.