Court Opinion

ID: 9676436
Source: CourtListenerOpinion
Date Created: 2023-08-24 05:24:33.755098+00
Date Added: 2024-06-11T18:16:48.644196
License: Public Domain

SABERS, Justice
(concurring in part and dissenting in part).
I agree with the majority that jury Instruction 12A defining the “percentage” method of analysis, did not switch the burden of proof to Karras. However, Instruction 12B, defining the “bank deposit” method of analysis, switched the burden of proof to Karras and improperly required him to prove his innocence. Instruction 12B created a mandatory inference in violation of provisions of South Dakota law and the state and federal constitutions.
A simple comparison of Instruction 12B with Instruction 12A demonstrates the error.
Instruction 12A contains permissive language: “then you may determine ... ‘you may consider’_” (emphasis added). In contrast, the language of Instruction 12B is mandatory: "... an inference arises ... [and] ... similarly raises [an] inference....” Instruction 12B would have been proper if the key language had stated an inference “may” arise and similarly “may” raise an inference.
The net effect of the court’s instruction was a mandatory inference that all deposits in defendant’s bank accounts and all cash payments represent taxable gross receipts. This shifted the burden of proof to the defendant and provided the State with a presumption or inference to satisfy the State’s burden of proof. The jury could conclude that even though the Time Out Restaurant could not generate the gross sales as charged by the State, consideration of cash payments or unexplained deposits authorized the jury to conclude that such sales were made. This was improper. It cannot be over emphasized that the inference was mandatory. The jury was not instructed that it may infer that such bank deposits or such cash payments represent taxable gross receipts. The instruction did not read that cash payments may raise an inference. The instruction directed the jury to infer in a mandatory sense that such evidence (cash payments or deposits into bank accounts) represented taxable gross receipts from the defendant’s business.
This injustice was magnified by the court’s refusal to give the defendant’s proposed Instruction # 16 which read as follows:
If the State has proven beyond a reasonable doubt the existence of an unidentified source of money, but failed to prove that such money came from the business, you must find the defendant not guilty.
Article VI, §§ 2 and 9 of the South Dakota Constitution protects Karras from being obligated to come forward with proof as to the source of cash deposits and perhaps incriminate himself in so doing. Cf., State v. Jones, 406 N.W.2d 366 (S.D.1987) (it is settled criminal law in this state that the “burden of proof” rests upon the prosecution at every stage of the trial); State v. Devine, 372 N.W.2d 132 (S.D.1985) (the burden of proof was shifted to the defendant jeopardizing his due process rights and undermining his protection against self-incrimination in violation of art. VI, §§ 2 and 9).
The majority opinion relies heavily on Holland v. United States, 348 U.S. 121, 75 S.Ct. 127, 99 L.Ed. 150 (1954). This reliance is misplaced because of the essential difference between this case and Holland. Holland was a federal income tax evasion *220case. In a federal income tax evasion case, any and all income is subject to tax liability. In a state sales tax evasion case only income generated by or arising from the business in question is subject to tax liability. By necessity, the State must prove that the business was capable of generating the unreported sales. If the State was unable to prove that Karras’ business did in fact generate the unreported sales, then the defendant should be acquitted. It is of no consequence if the defendant has additional legal or illegal sources of income independent of the business as long as all sales from the subject business have been reported to the State. If the business did not generate the sales, other sources of income cannot convict the defendant in a sales tax case.
In Holland, the Supreme Court concluded that the government proved the defendant’s business was capable of producing more income than was reported and in an amount sufficient to account for the increase in net worth. Id., 348 U.S. at 138, 75 S.Ct. at 137. For that reason, the Court concluded that the government did not have to negate all the possible sources of non-taxable income. Here, the jury was instructed that the cash payments and unexplained income were assumed to be attributable to Karras’ business. The unexplained income, by itself, was assumed to be attributable to the defendant’s business. Under these instructions, there was no need for the State to prove that the business was capable of producing more sales than reported. Holland cannot be used to permit this.
Not only constitutional law but statutory law as well requires that such an instruction be framed in a permissive context. The jury may regard the basic facts as sufficient evidence of the presumed fact but cannot be required to do so. SDCL 19-11-4 mandates:
Whenever the existence of a presumed fact against the accused is submitted to the jury, the court shall instruct the jury that it may regard the basic facts as sufficient evidence of the presumed fact but is not required to do so. In addition, if the presumed fact establishes guilt or is an element of the offense or negatives a defense, the court shall instruct the jury that its existence, on all the evidence, must be proved beyond a reasonable doubt.
Under Instruction 12B, the jury was given no choice but to infer that the deposits and cash payments represented taxable gross receipts. This directly contravened SDCL 19-11-4 and the defendant’s right to due process guaranteed by the South Dakota Constitution.
In State v. Traversie, 387 N.W.2d 2 (S.D.1986), the court affirmed a conviction because the instruction created a permissive inference as opposed to a mandatory presumption. A mandatory presumption, whether conclusive or rebuttable, would be constitutionally infirm if it relieved the state of the burden of persuasion on an element of the offense. Id. In Francis v. Franklin, 471 U.S. 307, 105 S.Ct. 1965, 85 L.Ed.2d 344 (1985), the Supreme Court stated:
A mandatory presumption instructs the jury that it must infer the presumed fact if the State proves certain predicate facts. A permissive inference suggests to the jury a possible conclusion to be drawn if the State proves predicate facts, but does not require the jury to draw that conclusion, (footnote omitted).
Id., 471 U.S. at 314, 105 S.Ct. at 1971. The fact that the presumption may be rebutted does not save the instruction. “A mandatory rebuttable presumption is perhaps less onerous from the defendant’s perspective, but it is no less unconstitutional.” Id., 471 U.S. at 317, 105 S.Ct. at 1972. This position is consistent with State v. McDonald, 421 N.W.2d 492 (S.D.1988), which held that an instruction concerning presumptions that the driver was under the influence was defective where the instruction failed to include an admonition that the state must prove the basic fact presumed beyond a reasonable doubt.
Accordingly, I would reverse and remand for a fair trial on proper jury instructions in accordance with this writing.