Opinion ID: 296729
Heading Depth: 1
Heading Rank: 2

Heading: the instructions on

Text: THE PRESUMPTION 24 The appellant also contends that the trial judge erred in repeatedly instructing the jury that there was a presumption that the assessment of the tax penalty was correct. Appellant argues that once the presumption served its procedural purpose with respect to the production of evidence, 'thereafter, it was wrong to weight the scales for the government by charging as to any presumption.' 14 25 The presumption is a rule for the conduct of the trial. In applying it, we believe that the trial judge correctly applied it to the burden of proof. Although in the absence of evidence to rebut it the presumption can be decisive, it is nonetheless a rule of law and not evidence. It '   is not evidence and may not be given weight as evidence.' N.Y. Life Ins. Co. v. Gamer, 303 U.S. 161, 171, 58 S.Ct. 500, 503, 80 L.Ed. 726 (1937). The additional instructions on the presumption, however, had the effect of giving it evidential value. The appellant contends that the evidence he introduced should have destroyed the effect of the presumption of accuracy of the Commissioner's assessment. The court, however, said 'I charge you to the contrary.' It is difficult to comprehend what the court meant and what the jury could have understood by such instruction. It is not clear what the jury could have understood the trial judge to mean when he repeatedly charged '   the law presumes that the determination made by the Commissioner of Internal Revenue and its agents is correct   .' The trial judge placed the maximum requirement that can be assigned to a party in a civil suit when he fixed the burden of persuasion upon the appellant, including the burden of proving that appellant did not act willfully. The appellant's major defense was that he did not act willfully in failing to pay the taxes withheld. He introduced considerable evidence to support his contention that he had been excluded from operational control of Berkeley. The burden of persuasion was properly his under the court's charge. The court, however, imposed upon the jury a seemingly impossible task when it also charged, in essence, that the presumption of correctness must be weighed against the conflicting evidence, even as to the essential element of willfulness. 15 This required the jury to weigh the testimony of witnesses and other evidence presented by appellant against an opposing presumption and to determine which 'evidence' was of greater probative value. 16 26 We do not believe that there was any necessity for the court to give the jury any instructions on the presumption. 17 It had fully served its purpose. It had been applied by the trial court as a rule for the conduct of the trial. In discussing appropriate instructions to the jury, where a defendant has, by substantial evidence, met a presumption upon which the plaintiff has relied, Judge Learned Hand noted 'that if the trial is properly conducted the presumption will not be mentioned at all   .' Alpine Forwarding Co. v. Penna. Railroad Co., 60 F.2d 734, 736 (2d Cir. 1932). 18 We do not decide that an instruction to a jury on the presumption of correctness is reversible error in every case. We do believe that the recurring instructions on the presumption in this case, however, were bound to give the jury the impression that the presumption was evidence. Although the court repeatedly referred to the presumption of correctness, it failed to furnish guidance to the jury as to the amount or quantity of proof required to dispel the presumption. In this context, it is doubtful that the jury was able to distinguish this rule of law from the evidentiary facts. This was not harmless error. The major issue at trial was whether or not Psaty had willfully failed to pay over the taxes to the Government. The charge as a whole unfairly weighted '   the scale of justice against the party with the burden of proof.' Cal. Evidence Code, 600, supra. We, therefore, are of the view that the instructions on the presumption in this case, especially as to the issue of willfulness, amounted to prejudicial error. See Kentucky Trust Company v. Glenn, 217 F.2d 462 (6th Cir. 1964). 27 III. INSTRUCTIONS NOT TO SPECULATE AS TO AMOUNT OF PENALTY, AND THE FORM OF THE VERDICT 28 We now turn to the final questions raised by appellant: 29 (1) the instructions to the jury not to speculate as to the amount of the penalties and (2) the form of of the verdict. 30 Taxes were withheld from the more than one hundred persons employed by Berkeley. At the trial, appellant attempted to prove that the payroll was both overstated and contained fictitious names. He called six employees who gave testimony that their payroll figures were overstated. There was evidence that two names carried on the payroll performed no services. The appellant argues, therefore, that the logical and inescapable inference to be drawn from these instances is that they were typical of payroll frauds perpetrated upon Berkeley and the United States by Merrill. He concludes that this evidence demonstrated the unreliability of the payroll figures. Since it was his position at trial and on appeal that the burden of proof on the counter-claim was upon the Government, he argued that it had the responsibility to prove the amount owed for taxes actually withheld. 31 With respect to the money that should have been withheld and paid over to the Government, the court charged the jury not to speculate, to decide what amount represented true wages and what amount should have been withheld from the particular employee's wages and paid over to the Collector of Internal Revenue. The appellant contends that such instructions against speculation were prejudicial, 'resulting in a judgment against the plaintiff for a sum of which some indeterminate part was certainly never withheld from actual employees and, therefore, never owed by Berkeley or the plaintiff.' Since it is our view that the presumption had the effect of casting the full burden of persuasion upon the appellant in the counter-claim also, we do not agree that the trial judge erred in this aspect of the charge. 32 The appellant brought his suit on the theory that the assessment constituted an aggregate of divisible parts represented by the taxes withheld from each employee. His proof of error as to a small number of employees was not necessarily proof of error as to all. In such circumstances, proof of the amount due as to some did not meet his burden of establishing the amount due as to the others. Hoffman v. C.I.R., 298 F.2d 784 (3d Cir. 1962). 33 Since we must remand this case for a new trial, there is no purpose in discussing the questions pertaining to the form of the verdict returned and the propriety of its amendment by the trial judge. 34 The judgment of the court below will be vacated and the cause remanded for a new trial in accordance with the considerations herein set forth.