Document: 343 U.S. 130 72 S.Ct. 571 96 L.Ed. 833 RUTKINv.UNITED STATES. No. 195. Argued Dec. 3, 1951. Decided March 24, 1952. Rehearing Denied May 12, See 952, 1039. Mr. Jack L. Cohen, Newark, N.J., for petitioner. Irving I. Axelrad, Washington, D.C., respondent. Justice BURTON delivered the opinion of Court. 1 The principal issue before us is whether money obtained by extortion income taxable to extortioner under § 22(a) Internal Revenue Code.1 For reasons hereafter stated we hold that it is. 2 petitioner, Rutkin, was indicted 26 U.S.C. 145(b), U.S.C.A. 145(b),2 willfully attempting evade and defeat a large part his victory taxes 1943. He charged with filing false fraudulent return stating net be $18,966.64, whereas he knew $268,622.04. That difference, which would increase tax liability from $6,843.93 $222,408.32, due largely omission original $250,000 received him in cash Joseph Reinfeld. United States claims this sum petitioner as such income. Petitioner contests both fact conclusion law if so obtained. contends also did not attempt or tax. found guilty jury District Court New Jersey, fined $10,000 sentenced four years prison. Appeals affirmed, one judge dissenting. 189 F.2d 431. We granted certiorari, 342 808, 50, pass upon alleged conflict between decision Commissioner v. Wilcox, 327 404, 66 546, 90 752. 3 facts are unusual but there can no doubt that, instructions given jury, must regard its verdict reflecting extortion.3 There substantial evidence supporting result. Reinfeld's first association 1929 several others bootlegging operation known 'High seas venture.' It accomplished through use ship sale whiskey at sea more than 12 miles shore. Reinfeld testified contributed enterprise taken because associates were afraid otherwise they get 'interference trouble' His interest recognized 6% but, when venture liquidated 1933, already overdrawn distribution made him. Without including then organized Browne Vintners Co., Inc., York corporation, engage liquor business. In 1936 without making an investment, claimed Vintners. Despite denial petitioner's claim, paid $60,000 took assignment 'any all shares capital stock said Co. I am entitled to.' 1940 sold $7,500,000 purchaser who assumed $8,000,000 company's debts. stood names of, transferred by, 'nominees' conceal identity other beneficial owners. A gains profits these sales respective nominees.4 neither stockholder record nor owner any company time. 4 1941, response request, gave about help buy tavern. When used purposes refused finance further 'trouble' began. 1942 again had Company give $100,000 pay Upon refusal, threatened kill From time on, presents lurid story unsatisfied demands various sums up $500,000, threatening gun repeated statements family unless met. Finally, on 11, 1943, cash.5 5 Throughout melodrama asserted payments demanded former Vinters Company. never identified positively interest. Nevertheless, handed same $358,000 Zwillman Stacher representing their conceded proceeds stock. Petitioner, Stacher, thereupon signed 'general release.' state amounts purport release Reinfeld, signers against them. 6 Under jury's verdict, accept basis claim extortion. Accordingly, constitute extortioner, unlawful. factual whether, surrounding circumstances, amounted willful open review here. settled supported evidence.6 remains determine legal 22(a). 7 here meant thereto, harassing therefor threats payment made.7 unable induce believe true. induced consent creating fear harm come family. own Petitioner's control over absence unlikely repudiation transaction demand money's return, could enjoy fully though title unassailable. 8 An unlawful gain, well lawful one, constitutes recipient has practical matter, derives readily realizable economic value it. Burnet Wells, 289 670, 678, 53 761, 764, 77 1439; Corliss Bowers, 281 376, 378, 50 336, 337, 74 916. occurs cash, here, taxpayer manner allows freedom dispose will, even may have been fraud assailable someone better 9 Such yearly period during realized. This statutory policy invoked orderly administration. '(C)ollection revenue cannot delayed, should Treasury compelled decide possessor's warrant.' National City Bank Helvering, Cir., 98 93, 96. adequate reason why treated differently respect gains. Certainly treating them leniently. Sullivan, 274 259, 263, 47 607, 71 1037. 10 widespread administrative judicial recognition taxability many kinds 22(a).8 application section obvious legislative history. Section II, subd. B Income Tax Act 1913 provided 'the person shall include gains, profits, * business carried gain profit, derived source whatever *.' (Emphasis supplied.) 38 Stat. 167. 1916, 39 756, amended omitting word 'lawful' intent thereafter whatever.9 11 little now where secured taxable.10 instant case questioned fraudulently inducing being so, extraordinary result free transparent mislead victim instead fraud. do reach situation involved limit facts. embezzled funds held embezzler extorted solely violence included definition gross think power Congress receipts Sixteenth Amendment unquestionable. broad language supports declarations enacting exercised full income.11 therefore conclude reaches receipts. 13 considered contentions find merit sufficient justify reversal remand case. 14 judgment accordingly affirmed. 15 Affirmed. 16 BLACK, whom REED, FRANKFURTER, DOUGLAS concur, 17 752, decided February, 1946, Code. pointed out bona fide equitable money, definite obligation rightful owner, consequently kind 'gain' 'income' taxed merely borrowed money. One extorts owed stands precise situation. continuing owner. See, e.g., Pet. 8, 19, 299; Miller Eisele, 111 N.J.L. 268, 168 A. 426; N.J.S.A. 2:73—1. COMPARISON BURTON'S dissent Wilcox reveals beyond today adopts reasoning prior dissent, thereby rejecting interpretation left effect six thus altered consequence change Court's personnel. our right Government suffering failure collect embezzlers extortioners. Indeed considerations strengthen my support holding. 18 agree earnings businesses gambling subject illegal transactions. majority seems holds some states laws special circumstances permit particular groups assert recovery losses bootleg liquor. But vary far too much scope saying businessmen monies And '* generally assume, plain indication contrary, enacts statute federal act dependent law.' Jerome States, 318 101, 104, 63 483, 485, 87 640. Moreover, take recoupment into consideration, recovered decrease questionable businesses. To intents bootleggers gamblers engaged going make regular legitimate endeavor. However, stretches provious interpretations classify sporadic loot embezzler, robber business, trade profession. just intended treat plunder criminals theirs. 19 illusory believe, apparently does, burden honest American taxpayers will lightened governmental pursuing extortioners futile efforts taxes. guess trial cost next twenty-five years. If interpreted what financially best taxpayers, probably construed save eliminating prosecutions crimes guise punishing evaders. 20 Since pretty clear extortioners, another applying extract others. Government's brief suggestive only me—to Washington punish purely local embezzlement Today's illustrates expansion criminal jurisdiction fields enforcement heretofore wholly communities. wise standpoint states. 21 Insofar concerned, taking lowers prestige system justice. certainly tends top-heavy. Of supreme importance perform monumental tasks lie time, energy institutions expended field enforcement.1 22 Federal encroachment very injurious Extortion, robbery, offenses nature traditionally matters concern.2 elements problems underlying state. assumption job enforcing necessity tend sense responsibility conditions.3 Even play traditional role enforcement, overriding authority forces surrender construing laws. State courts lose laws,4 deprived chance discretion vested legislatures impose sentences accordance ideas. prosecutors all-important function deciding offenders prosecuted. Final important decisions becomes located distant city D.C. Here, elsewhere, cooks spoil broth. 23 consistent ideas fair cases. question wisdom fairness subjecting double triple conduct, since nation, municipality might mistake wrong punishable crime. 'That consideration gives additional weight view duplicate build law, reluctant expand defined requirements terms statute.' supra, page 105, 486. course, looked technically, multiple conduct avoided national prosecution part, municipal third part. still leave defendant faced defending three separate prosecutions. 24 Expansion entails unfair complicating factors. Criminal rules substance procedure widely among jurisdictions.5 Punishment frequently different. fact, ignored worth punishment while serious offense another. example, White Slave Law men imprisoned five all. Schwartz, Jurisdiction Prosecutors' Discretion, Contemporary Problems 64, 72. specific legislation, differences treatment inevitable, judicially extended purpose officials prosecuting offenses. 25 takes like us, resulting confusion issues manifestly prejudicial defendant. Here instance hardly Rutkin tried evasion. Most 900 printed pages oral testimony two week's devoted proof things Four deal Rutkin's allegedly 1943 return; amount actually reported; contain tending show evasion bring within Spies 317 492, 364, 418. mere reference contents remaining 887 shows great threat convicted 'bad man' ('scoundrel' court's title) regardless innocent charged. dealt following aspects past life associations: Back prohibition days joined scheme called organization millions. About 1940, after ended, acting group, establishment net. accounting methods management satisfactory associates. They back share associates, 'overdrawn' nothing $7,500,000. quarrel went required hundreds thousands dollars partners swindled lawyers whose reputations seem above reproach. openly. eight later sued millions death. Yet theory crime 'extortion.'6 27 beginning end showing lawless led 1920's 1950, ranging bribery gambling. charge court emphasized reemphasized iniquity shown testimony. Early told jury: 'You bigger scoundrel, Rutkin; blandly admitted stand prostituted justice country; public servants close eyes violation, canker eats away body public. you passing degrees scoundrelism people. bland way Reinfelds Rutkins Zwillmans cause pause, now.' 28 concluding 'The doesn't ask sacrifice anybody prove might. asks That's do, that's government do. remember rights too, remembering unpunished crime, undetected majesty dignity government; undermines government. duty favor.' 29 My study leads me fantastic supposed accepted presented uncolored manifold inflammatory 'tax evasion' 30 depart holding, poor so. reverse judgment. '§ 22. Gross '(a) General definition. 'Gross income' includes salaries, wages, compensation personal service form paid, professions, vocations, trades, businesses, commerce, sales, dealings property, real personal, growing ownership property; interest, rent, dividends, securities, whatever. *' 9, 574, 22(a), 145. Penalties '(b) attempts imposed chapter thereof, shall, addition penalties felony and, conviction $10,000, years, both, together costs prosecution.' 62—63, 145(b). following: somebody lied committed perjury perfectly patent contradictory stories told, say truth lies; problem determining peculiarly yours. 'But $250,000. says final settlement Vintners, so—and does contend paid—he obliged report no, 'that got family,' instances those made. piece corroboration seven people present Holtz's cellar. 'If threats, reporting contention didn't know $250,000; whole point properly. properly paid.' concedes although, strict construction Code, reported rather owners, provide violation testified: 'Q. (your family's) lives danger? thought yes. Did anything protect lives? off. You gunning man? hoped so.' conformity views expressed 499, 368, indicated before, satisfy statute, something else indicate consider appear evidence, cash; receipt money; split sent sister-in-law placed her vault 'wault' $150,000 defendant's vault. factors transaction. 'Rutkin kept books; books time; sixty, seventy, eighty thousand year, was, bootlegging, admits tax; These procedure. presence people, Zwillman, recall it, lawyers. Well, me, inclined go publish it.' suggestion relied, defense represented stockholding nominees 1940. proved false, necessarily destroyed itself, demonstrated willfulness paying Jersey follows: 'Any who, extort thing directly indirectly threaten bodily injury man, woman child high misdemeanor punished imprisonment hard labor term exceeding thirty fine dollars, both.' 2:127—4. also, effect, relating affecting interstate commerce: 'extortion' means obtaining property another, consent, wrongful actual force, violence, fear, color official right.' 60 420, 420e—1(c) (Revised 1951(b)(2)). Johnson 189, 549, 704 (money political leader protection police interference gambling); 1037 (illicit traffic liquor); Humphreys Revenue, 125 340 (protection racketeer ransom kidnapper); Chadick 961 (graft); Commerford, 64 (bribes); Patterson Anderson, F.Supp. 799 (unlawful insurance policies); Petit T.C. 1253 (black market gains); Droge 35 B.T.A. 829 (lotteries); Rickard 316 (illegal prize fight pictures); McKenna 326 (race track bookmaking). discussion see 410—411, 550, Akers Scofield, 167 718. wealthy widow treasure hunts. funds. Helvering Bruun, 309 461, 468, 631, 634, 84 864; Clifford, 331, 334, 554, 556, 788; Midland Mutual Life Ins. 300 216, 223, 57 423, 425, 81 612; Safety Car Heating & Lighting 297 88, 56 353, 356, 80 500; Douglas Willcuts, 296 1, 59, 62, 3; Stockholms Enskilda Bank, 293 84, 89, 55 52, 79 211; Bowers Kerbaugh-Empire 271 170, 174, 46 449, 451, 70 886; Irwin Gavit, 268 161, 166, 45 475, 476, 69 897; Eisner Macomber, 252 203, 40 192, 521. limited provisions, 22(b)(9) (income discharge indebtedness), 22(b)(13) (compensation members armed forces), provisions apply opposing certain anti-theft Attorney Mitchell wrote Senator Norris machinery overtaxed. 'Earnest devise relief congested capacity prisons requirements. Until adequately troubles confront ought adding law-enforcement legislation kind.' Cong.Rec. 6214. Along line, 'It long few hundred agents Department enough work 130,000 peace officers Broad Program Needed Crime Control, J.An.Jud.Soc. 196, 200. 1950 1951, Senate Committee conducted investigations Third Interim Report stated, program controlling account fundamental system. primarily responsibility.' S.Rep.No.307, 82d Cong., 1st Sess. 5. Commenting said, 'Experience type tendency authorities cease toward courts. experience Dyer Act.' Boudin, Place Anti-Racketeering Constitutional-Legal System, Cornell L.Q. 261, 270 et seq. Lanza, 260 377, 43 141, 67 314, subjected despite conduct. York's repeal months highlights loss entered field. N.Y.Laws 1923, c. 871. n. 5, infra. Enforcement injects element uncertainty trials. Questions arise how applies. Then applies criminal. opportunity obtain authoritative matter highest denied. Thus uncertain Erie R. Tompkins, 304 58 817, 82 1188, thrust accused 'And either forbids requires doing vague common intelligence meaning differ violates essential process Connally Const. 269 385, 391, 126, 127, 322. supra.

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