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2d 59
The main argument here of the defendants concerns the taxability of bribes
under I.R.C. 22(a). Relying on C. I. R. v. Wilcox, 327 U.S. 404, 66 S.Ct. 546,
549, 90 L.Ed. 752, they urge that bribes closely resemble the proceeds of
embezzlement there found nontaxable. It is difficult to perceive what, if
anything, is left of the Wilcox holding after Rutkin v. United States, 343 U.S.
130, 72 S.Ct. 571, 96 L.Ed. 833, which ruled that moneys received by extortion
were within 22(a). Certainly the whole approach of the later case, stressing
actual possession and control, is diametrically opposed to the "claim of right"
criterion of the earlier case. The reconciliation evolved by other circuits seems
to be that even temporary dominion over illicit gains is sufficient to render them
taxable in the hands of the holder thereof. Briggs v. United States, 4 Cir., 214
F.2d 699, certiorari denied 348 U.S. 864, 75 S.Ct. 86; Marienfeld v. United
States, 8 Cir., 214 F.2d 632, certiorari denied 348 U.S. 865, 75 S.Ct. 87; Kann
v. C. I. R., 3 Cir., 210 F.2d 247, certiorari denied 347 U.S. 967, 74 S.Ct. 778,
98 L. Ed. 1109; Rollinger v. United States, 8 Cir., 208 F.2d 109. Although
eminently justified by the Rutkin holding, this formulation in effect does what
the Supreme Court purported not to do; it overrules the Wilcox case. See Judge
Johnsen's concurrence in Marienfeld v. United States, supra, 8 Cir., 214 F.2d
632, 639-640; and Judge Kalodner's dissent in Kann v. C. I. R., supra, 3 Cir.,
210 F.2d 247, 253-255.
of money or property from the true owner. Compare N.Y. Penal Law 1290
and 439, McK.Consol.Laws, c. 88. That distinction is particularly relevant to
the facts before us, since there is no indication that the kickbacks resulted in
any loss to defendants' employers. While a presumption of such loss may be a
sufficient basis on which to predicate a liability to the employers under state
law, see Donemar, Inc., v. Molloy, 252 N.Y. 360, 169 N.E. 610, it is not
sufficient to override the paramount interest of the government in assessing
income taxes on the basis of beneficial enjoyment and control. See National
City Bank of New York v. Helvering, 2 Cir., 98 F.2d 93.
4
Defendants next argue that a significant part of the income from the bribes was
not received by them individually in such a way as to render them taxable or
subject to criminal prosecution therefor. In the year 1951 the year covered
by Count III of the indictment, one of the counts upon which imposition of
sentence was suspended Bruswitz and Koenke, who previously had received
their "commissions" personally and in cash, set up a variety of corporations to
bill and receive payments for the services rendered. These new arrangements
were necessitated by demands on the part of the payor corporations that they be
allowed to regularize their accounting on these transactions. They contend that,
since the corporations which they set up paid corporate income taxes, they
themselves were not liable for personal taxes on the same amounts, except as
they were filtered through as dividends. The prosecution characterized these
corporations as mere conduits for the receipt of income earned by, and hence
taxable to, appellants. C. I. R. v. Sunnen, 333 U.S. 591, 68 S. Ct. 715, 92 L.Ed.
898; Helvering v. Eubank, 311 U.S. 122, 61 S.Ct. 149, 85 L.Ed. 81; Higgins v.
Smith, 308 U.S. 473, 60 S.Ct. 355, 84 L.Ed. 406; Paymer v. C. I. R., 2 Cir., 150
F.2d 334; C. I. R. v. Smith, 2 Cir., 136 F.2d 556. There was sufficient evidence
to support such a characterization to make the question one for the jury under
appropriate instructions.
On the merits, it is to be said that the judge clearly indicated in the charge as
given that he was discussing income and intent separately, and that positive
findings on both were required for a finding of guilt. It is not reasonably to be
concluded that his entirely proper and complete charge on intent was nullified
by his entirely proper and complete, though distinct, earlier charge on the
substantive facts. In the instructions on intent the jury was told that defendants
were entitled to acquittal if they had, in good faith, believed that their tax
liability was being elsewhere discharged. The judge's failure to single out the
particular piece of evidence on intent which the defendants stress was thus
neither error nor prejudicial, regardless of the other evidence which he
mentioned. See United States v. Goldstein, 2 Cir., 120 F.2d 485, affirmed
Goldstein v. United States, 316 U.S. 114, 62 S.Ct. 1000, 86 L.Ed. 1312.
None of the other assigned errors, largely concerned with the admissibility of
Convictions affirmed.
FRANK, Circuit Judge, concurring:
10
I concur in the result and in all of the court's opinion except that I do not agree
to what would be the effect upon convictions for previous years if we were to
reverse the conviction for 1951 because of the charge in regard to intent. I am
reluctant to concur on that point which I think we should not and need not
discuss, because we have concluded there is no basis for reversing the
conviction for 1951.