Source: https://openjurist.org/588/f2d/521/griffin-v-united-states
Timestamp: 2018-04-22 10:44:48
Document Index: 462130148

Matched Legal Cases: ['§ 2515', '§ 2517', '§ 2517', '§ 44', '§ 1', '§ 4411', '§ 4401', '§ 3', '§ 44']

588 F2d 521 Griffin v. United States | OpenJurist
588 F. 2d 521 - Griffin v. United States
588 F2d 521 Griffin v. United States
588 F.2d 521
79-1 USTC P 16,310
Marion D. GRIFFIN, and Madelyn Youngblood Simpkins,
Executrix of the Estate of John H. Simpkins,
Deceased, Plaintiffs-Appellees-Cross Appellants,
No. 76-3633.
I. Disclosure of wiretap evidence
After the initial briefs were filed in this case, this court decided Fleming v. U. S., 547 F.2d 872 (CA5), Cert. denied, 434 U.S. 831, 98 S.Ct. 113, 54 L.Ed.2d 90 (1977). In that civil wagering tax assessment suit, the government used information derived from the same wiretaps as those in the present case against another member of the numbers operation. The same argument as in this case that interdepartmental transfers are barred by the wiretap statute was presented to this court in Fleming and was rejected on the basis of the facts of Fleming. The court reached the conclusion that § 2515 did not bar admission at trial of wiretap evidence improperly disclosed from one federal agency to another, so long as the initial wiretap was lawfully authorized. Moreover, the court suggested that FBI disclosure of wiretap information gathered in the course of a criminal investigation of a gambling ring to IRS for purposes of assessing civil wagering tax liability is specifically authorized by either § 2517(2)3 or § 2517(3)4, or both. The Court, however, did not hold that its reading of the wiretap statute to allow free inter-agency disclosures of wiretap information was applicable to all conceivable cases. Instead it limited its construction of the statute to the specific facts before it, concluding that no statutory purpose would be served by a more restrictive interpretation of the government's authority to allow inter-agency disclosures of wiretap information where (1) there is no showing that the original criminal investigation was a "subterfuge for developing information for civil tax proceedings," and (2) there is no infringement on any privacy interest caused by disclosure of the conversations from one agency to another. We held that there had been no "subterfuge" because the wiretaps had resulted in criminal convictions and that the privacy interest infringed by the disclosure was "weak" because the intercepted communications were "already part of the public record of a criminal prosecution." The Fleming court concluded that it would not make greater efforts to resolve any possible ambiguities in the statute until a stronger showing of infringement upon privacy interests or a showing of subterfuge was made in a subsequent case.
If Griffin had done nothing more than pick up money from the writers and turn it over to the bank, he would not be liable for the tax. The Supreme Court has construed the phrase "receiving wagers" as not including middlemen in a gambling scheme who merely convey wagers from writers to the central bank, U. S. v. Calamaro, 354 U.S. 351, 77 S.Ct. 1138, 1 L.Ed.2d 1394 (1957), and Treasury regulations conform to this view. See 26 C.F.R. § 44.4411-1(b) (1977).15
The government relies upon Griffin's power to select writers and his "payment" of the writers17 as tending to prove that the writers were his agents.18 The argument is contrary to agency law. If an agency relationship did exist between Griffin and his writers, he would have had the power to hire and fire and the power of supervision, but his exercise of these two powers is not sufficient to show that a principal-agency relationship existed. See, e. g., Radich v. U. S., 160 F.2d 616, 618 (CA9, 1947) (power of termination does not establish agency); Mathews Conveyor Co. v. Palmer Bee Co., 135 F.2d 73, 81 (CA6, 1943) (power of one to control conduct of another does not establish agency); First Jackson Securities Corp. v. B. F. Goodrich Co., 253 Miss. 519, 176 So.2d 272, 278 (1965) ("employee" not synonymous with "agent"). The most characteristic feature of an agency relationship is missing. The writers employed by Griffin were given no power to bring about business relationships between third parties and Griffin. They were employed by Griffin to bring about contractual relationships between bettors and the bank. Griffin was not liable on the bets placed with his writers; he was not responsible for paying off winning bettors. Since an essential characteristic of an agency is the power of the agent to commit his principal to business relationships with third parties, See, e. g., Esmond Mills v. Commissioner,132 F.2d 753, 755 (CA1, 1943); Easterling v. Volkswagen of America, Inc.,308 F.Supp. 966, 981-82 (S.D.Miss., 1969); Economic Research Analysts, Inc. v. Brennan, 232 So.2d 219, 221 (Fla.App., 1970); First Jackson Securities, supra ; Restatement (Second) of Agency, § 1(2) & 1(3), Comments d & e (1957), Griffin was not the principal of the writers when they were writing numbers on which the bank was obligated to pay. The most plausible way to view the arrangements of the gambling operation is that the writers accepted wagers not as agents of Griffin but as agents of the bank, which bore responsibility for paying the winners. Thus, still leaving aside the few bets that Griffin physically accepted, we conclude that Griffin was not "engaged in receiving wagers" within the meaning of § 4411 and that it was not necessary to submit to a jury the issue of whether the writers were his agents. U. S. v. Marquez, 332 F.2d 162, 163-64 (CA2, 1964) (Marshall, J.), is apparently to the contrary, but we do not accept its reading of Calamaro to mean that only gambling operation members who are exclusively pick up men are exempt from the wagering tax. The policy argument that imposing liability on Griffin would further the statutory purpose of ascertaining the identity of the ringleaders of gambling rings, is misplaced because, as the Calamaro court said,
354 U.S. at 357, 77 S.Ct. at 1142, 1 L.Ed.2d at 1399.
III. The amount of Simpkins' tax liability
If, as here, a taxpayer fails to keep a daily record of all wagers placed with him as required by law, the Commissioner of Internal Revenue may estimate the amount of tax liability. See U. S. v. Firtel, 446 F.2d 1005 (CA5, 1971). In a refund suit by the taxpayer, he bears a double burden of proof. To recover he must first prove that the Commissioner's estimate is inaccurate and then prove the correct amount of tax owed. U. S. v. Janis, 428 U.S. 433, 440, 96 S.Ct. 3021, 3025, 49 L.Ed.2d 1046, 1052 (1976). For purposes of this opinion we assume that the rule in this circuit is that the taxpayer bears the same burden of proof with respect to a government counterclaim for additional taxes due. See Heyman v. U. S., 497 F.2d 121 (CA5, 1974).19 Finally, the law of this circuit is that a taxpayer cannot meet either his burden of proving the Commissioner's assessment inaccurate, Heyman v. U. S., supra, or his burden of proving the correct amount owed, Heyman; Carson v. U. S., 560 F.2d 693, 699 (CA5, 1977), solely by his own uncorroborated oral testimony about the amount of wagers handled.
IV. Inconsistency of jury special verdicts
Ten percent during the time the numbers ring was in operation, since reduced to 2%. See I.R.C. § 4401(a), As amended by Act of Oct. 29, 1974. Pub.L. No. 93-499, § 3(a), 88 Stat. 1549
Treasury regulations provide that in order for a person to be "in the business of accepting wagers" he must "(make) it a practice to accept wagers with respect to which he assumes the risk of profit or loss depending upon the outcome of the event or contest with respect to which the wager is accepted." 26 C.F.R. § 44.4401-2(b). Except for the "very few" bets that Griffin personally wrote, See notes 10 & 11 Supra, the jury could reasonably have found that he did not stand to win or lose depending on the number selected for the day. Thus his duties as a pick up man could not make him liable under this section. Cf. Evans v. U. S., 349 F.2d 653, 658 (CA5, 1965) (three classes of persons covered by federal gambling statutes are "bankers," "writers" and persons having a "proprietary interest"). But see Gennaro v. U. S., 369 F.2d 106, 108-10 (CA8, 1966), Vacated on other grounds, 390 U.S. 200, 88 S.Ct. 900, 19 L.Ed.2d 1036 (1967) (seemingly holding that a proprietary interest is not required in order for a person to be "in the business of accepting wagers") (Semble ). The district judge did not submit to the jury whether Griffin was liable under this clause for the bets he actually wrote, and the government did not except to this failure
One sentence in Calamaro suggests that application of agency principles might be appropriate. In explaining why a pick up man does not "receive" a wager, the Court stated, "Before the pick-up man enters the picture, in such a case as we have here, the wager has been received physically by the writer And in legal contemplation, by the writer's principal as well. 354 U.S. at 354, 77 S.Ct. at 1141, 1 L.Ed.2d 1397 (emphasis added)