Source: https://supreme.justia.com/cases/federal/us/303/391/case.html
Timestamp: 2016-06-29 00:53:46
Document Index: 436012957

Matched Legal Cases: ['§ 36', '§ 276', '§ 146', '§ 293', '§ 293', '§ 291', '§ 292', '§ 293', '§ 294', '§ 293', '§ 293', '§ 718']

U.S. Supreme CourtHelvering v. Mitchell, 303 U.S. 391 (1938)Helvering v. MitchellNo. 324Argued January 14, 1938Decided March 7, 1938303 U.S. 391CERTIORARI TO THE CIRCUIT COURT OF APPEALS
Mitchell appealed to the Board of Tax Appeals, which sustained the Commissioner's determination. Mitchell v. Comm'r, 32 B.T.A. 1093. Upon a petition for review, the Circuit Court of Appeals concluded that there was ample evidence to support the Board's findings that Mitchell had fraudulently made deduction of the loss and that he had fraudulently failed to return the amount received from the management fund, and that, despite the facts hereafter stated, Page 303 U. S. 396 the Board was free to find the facts according to the evidence. It accordingly affirmed the assessment of the deficiency of $728,709.84; but it reversed the Board's approval of the additional assessment of $364,354.92 because of the following facts:
The Circuit Court of Appeals held that the prior judgment of acquittal was not a bar under the doctrine of res judicata, and hence it affirmed the assessment of the $728,709.84. But it held that our decisions in Coffey v. United States, 116 U. S. 436, and United States v. La Franca, 282 U. S. 568, required it "to treat the imposition of the penalty of 50 percent as barred by the prior acquittal of Mitchell in the criminal action." 89 F.2d 873, 878. Mitchell's petition for certiorari to review so much of the judgment as upheld the assessment of the deficiency Page 303 U. S. 397 of $728,709.84 was denied. 302 U. S. 723. The Commissioner's petition to review so much of the judgment as denied the 50 percentum in addition was granted because of the importance in the administration of the revenue laws of the questions presented and alleged conflict in decisions. 302 U.S. 670.
The difference in degree of the burden of proof in criminal and civil cases precludes application of the doctrine of res judicata. The acquittal was "merely . . . an adjudication that the proof was not sufficient to overcome all reasonable doubt of the guilt of the accused." Lewis v. Frick, 233 U. S. 291, 233 U. S. 302. It did not determine that Mitchell had not willfully attempted to evade the tax. That acquittal on a criminal charge is not a bar to a civil action by the Government, remedial in its nature, arising out of the same facts on which the criminal proceeding was based has long been settled. Stone v. United States, 167 U. S. 178, 167 U. S. 188; Murphy v. United States, 272 U. S. 630, 272 U. S. 631-632. Compare 218 U. S. Abaroa, 218 Page 303 U. S. 398 476, 218 U. S. 481-482. [Footnote 1] Where the objective of the subsequent action likewise is punishment, the acquittal is a bar, because to entertain the second proceeding for punishment would subject the defendant to double jeopardy, and double jeopardy is precluded by the Fifth Amendment whether the verdict was an acquittal or a conviction. Murphy v. United States, 272 U. S. 630, 272 U. S. 632.
Second. Mitchell contends that this proceeding is barred under the doctrine of double jeopardy because the 50 percentum addition of $364,354.92 is not a tax, but a criminal penalty intended as punishment for allegedly fraudulent acts. Unless this sanction was intended as punishment, so that the proceeding is essentially criminal, Page 303 U. S. 399 the double jeopardy clause provided for the defendant in criminal prosecutions is not applicable.
Remedial sanctions may be of varying types. One which is characteristically free of the punitive criminal element is revocation of a privilege voluntarily granted. [Footnote 2] Page 303 U. S. 400
Forfeiture of goods or their value and the payment of fixed or variable sums of money are other sanctions which have been recognized as enforceable by civil proceedings since the original revenue law of 1789. Act of July 31, 1789, c. 5, § 36, 1 Stat. 29, 47. In spite of their comparative severity, such sanctions have been upheld against the contention that they are essentially criminal, and subject to the procedural rules governing criminal prosecutions. Passavant v. United States, 148 U. S. 214; United States v. Zucker, 161 U. S. 475; Hepner v. United States, 213 U. S. 103; Oceanic Steam Navigation Co. v. Stranahan, 214 U. S. 320; Chicago, B. & Q. Ry. Co. v. United States, 220 U. S. 559, 220 U. S. 578; United States v. Regan, 232 U. S. 37; Grant Bros. Construction Co. v. United States, 232 U. S. 647, 232 U. S. 660; Murphy v. United States, 272 U. S. 630; Various Items v. United States, 282 U. S. 577; Lloyd Sabaudo Societa v. Elting, 287 U. S. 329, 287 U. S. 334. [Footnote 3] Page 303 U. S. 401
2. The remedial character of sanctions imposing additions to a tax has been made clear by this Court in passing upon similar legislation. They are provided primarily as a safeguard for the protection of the revenue and to reimburse the Government for the heavy expense of investigation and the loss resulting from the taxpayer's fraud. [Footnote 4] In Stockwell v. United States, 13 Wall. 531, 80 U. S. 547, 80 U. S. 551, the Court said of a provision which added double the value of the goods:
3. In §§ 276 and 293, it is provided that collection of the 50 percentum addition, like that of the primary tax itself, Page 303 U. S. 402 may be made "by distraint" as well as "by a proceeding in court." If the section provided a criminal sanction, the provision for collection by distraint would make it unconstitutional. [Footnote 6] Compare Lipke v. Lederer, 259 U. S. 557; Regal Drug Corp. v. Wardell, 260 U. S. 386. See also United States v. Chouteau, 102 U. S. 603, 102 U. S. 611; Boyd v. United States, 116 U. S. 616; Lees v. United States, 150 U. S. 476; United States v. La Franca, 282 U. S. 568. That Congress provided a distinctly civil procedure for the collection of the additional 50 percentum indicates clearly that it intended a civil, not a criminal, sanction. Civil procedure is incompatible with the accepted rules and constitutional guaranties governing the trial of criminal prosecutions, and where civil procedure is prescribed for the enforcement of remedial sanctions, those rules and guaranties do not apply. Thus, the determination of the facts upon which liability is based may be by an administrative agency, instead of a jury, [Footnote 7] or, if the prescribed proceeding is in the form of a civil suit, Page 303 U. S. 403 a verdict may be directed against the defendant; [Footnote 8] there is no burden upon the Government to prove its case beyond a reasonable doubt, [Footnote 9] and it may appeal from an adverse decision; [Footnote 10] furthermore, the defendant has no constitutional right to be confronted with the witnesses Page 303 U. S. 404 against him, [Footnote 11] or to refuse to testify; [Footnote 12] and finally, in the civil enforcement of a remedial sanction, there can be no double jeopardy. [Footnote 13]
4. The fact that the Revenue Act of 1928 contains two separate and distinct provisions imposing sanctions, and that these appear in different parts of the statute, helps to make clear the character of that here invoked. [Footnote 14] The sanction of fine and imprisonment prescribed by § 146(b) for willful attempts "in any manner to evade or defeat Page 303 U. S. 405 any [income] tax," introduced into the act under the heading "Penalties," is obviously a criminal one. The sanction of 50 percentum addition "if any part of any deficiency is due to fraud with intent to evade tax," prescribed by § 293(b), introduced into the act under the heading "Additions to the tax," was clearly intended as a civil one. This sanction, and other additions to the tax are set forth in Supplement M, entitled "Interest and Additions to the Tax." The supplement includes, besides § 293(b), §§ 291, 292, 293(a), and 294. Section 291 prescribes a 25 percentum addition for failure to make and file a return; § 292 prescribes interest at the rate of 6 percent per annum upon the deficiency from the date prescribed for payment of the tax; § 293(a), an addition of 5 percentum if the deficiency "is due to negligence, or intentional disregard of rules and regulations, but without intent to defraud;" and § 294 prescribes an addition to the tax of 1 percentum per month in case of nonpayment. Obviously all of these "additions to the Tax" were intended by Congress as civil incidents of the assessment and collection of the income tax. [Footnote 15]
but, Page 303 U. S. 406 construing § 293(b) as imposing a penalty designed to punish fraudulent tax dodgers, "and not as a mere preventive measure," it thought that the Coffey case and United States v. La Franca, 282 U. S. 568, required it "to treat the imposition of the penalty of 50 percent as barred by the prior acquittal of Mitchell in the criminal action." Since we construe § 293(b) as imposing a civil administrative sanction, neither case presents an obstacle to the recovery of the $364,354.92, the 50 percentum addition here in issue.
United States v. Warner Bros. Pictures, Inc., 13 F.Supp. 614, aff'd on other grounds, 298 U.S. 643; United States v. Donaldson-Shultz Co., 148 F. 581; United States v. Schneider, 35 F. 107; Sanden v. Morgan, 225 F. 266, 268, 269.
Taylor v. United States, 3 How. 197, 44 U. S. 210; Bartlett v. Kane, 16 How. 263, 57 U. S. 274; Cliquot's Champagne, 3 Wall. 114, 70 U. S. 145; Dorsheimer v. United States, 7 Wall. 166, 74 U. S. 173; Passavant v. United States, 148 U. S. 214, 148 U. S. 221. Compare McDowell v. Heiner, aff'd on opinion below, 15 F.2d 1015; Doll v. Evans, 7 Fed.Cas. p. 855, No. 3,969; Stearns v. United States, 22 Fed.Cas. p. 1188, No. 13,341.
Hepner v. United States, 213 U. S. 103; Four Packages v. United States, 97 U. S. 404, 97 U. S. 412; Chicago, B. & Q. Ry. Co. v. United States, 220 U. S. 559, 220 U. S. 578. Compare United States v. Thompson, 41 F. 28; United States v. Atlantic Coast Line, 182 F. 284.
Lilienthal's Tobacco v. United States, 97 U. S. 237, 97 U. S. 265-267, 97 U. S. 271; United States v. Regan, 232 U. S. 37; Grant Bros.Const. Co. v. United States, 232 U. S. 647, 232 U. S. 660. Compare New York Cent. & H. R. Co. v. United States, 165 F. 833, 839; Grain Distillery No. 8 v. United States, 204 F. 429; Pocahontas Distilling Co. v. United States, 218 F. 782, 786; United States v. Louisville & N. Ry. Co., 162 F. 185, aff'd, 174 F. 1021; St. Louis-South Western Ry. Co. v. United States, 183 F. 770, 771; United States v. Illinois Cent. Ry. Co., 170 F. 542, 545, 546; Atchison, T. & S.F. Ry. Co. v. United States, 178 F. 12, 14; Missouri, K. & T. Ry. Co. v. United States, 178 F. 15, 17-18. Compare also Act of March 2, 1799, c. 22, § 718 1 Stat. 627, 678; Locke v. United States, 7 Cranch 339, 11 U. S. 348; Cliquot's Champagne, 3 Wall. 114, 70 U. S. 143-144.
Compare United States v. Claflin, 97 U. S. 546; United States v. Zucker, 161 U. S. 475; United States v. Regan, 232 U. S. 37. See also United States v. Baltimore & O.S.W. Ry. Co., 159 F. 33, 38, modified, 220 U. S. 220 U.S. 94; United States v. Louisville & N. Ry. Co., 167 F. 306, 307, 308; United States v. Illinois Cent. Ry. Co., 170 F. 542, 545. Compare United States v. Sanges, 144 U. S. 310.
Similarly, if the Government is successful, it may recover costs as in other civil suits. Grant Bros.Const. Co. v. United States, 232 U. S. 647, 232 U. S. 665. See also United States v. Southern Pac. Co., 172 F. 909, 911; United States v. Minneapolis, St. P. & S.S.M. Ry. Co., 235 F. 951, 952, 953.
Murphy v. United States, 272 U. S. 630; Various Items v. United States, 282 U. S. 577. Compare Egner v. United States, 16 F.2d 597; Wood v. United States, 204 F. 55, 57; United States v. St. Louis-South Western Ry. Co., 184 F. 28, 32; Slick v. United States, 1 F.2d 897, 898. See also United States v. Three Copper Stills, 47 F. 495, 499; United States v. Olsen, 57 F. 579, 582-586; Castle v. United States, 17 F.Supp. 515, 518-520. Compare Hanby v. Commissioner, 67 F.2d 125.