Paritem Singh Poonian v. United States

294 F.2d 74, 8 A.F.T.R.2d (RIA) 5400, 1961 U.S. App. LEXIS 3705

• Court: Court of Appeals for the Ninth Circuit
• Decided: August 24, 1961
• Docket: 17068_1
• Status: Published

Opinions

ROSS, District Judge.

Appellant was charged under two different indictments which were consolidated for trial without a jury. The first indictment, containing four counts, was brought under Section 145(b) of the Internal Revenue Code of 1939 and Section 7201 of the Internal Revenue Code of 1954. By that indictment, appellant was charged with having willfully evaded federal income taxes for the years 1953 to 1956, inclusive. The second indictment, containing two counts, was brought under Section 1001, Title 18 United States Code. By that indictment, appellant was charged with having made false and fraudulent statements in his income tax returns for those years. Count I of the second indictment charged that, as to 1955, the statements in the tax return were false in that appellant had understated gross profits from “his” farm income. Count II of the second indictment charged that, as to 1956, the statements in the tax return were false in that appellant had understated “his” fruit and cotton sales.

The trial court, sitting without a jury, acquitted the appellant of the charges contained in the first indictment. The parties agree that the acquittal was based on the proposition that the government had failed to establish beyond a reasonable doubt that the alleged evasion was of taxes due and owing from the appellant. That is, it was appellant’s contention, successfully urged below, that the income giving rise to the allegedly evaded tax belonged to appellant’s mother, she being the beneficial or “real” owner of the income-producing property in question.

Appellant was, however, convicted under both counts of the second indictment. We have jurisdiction over his appeal by virtue of 28 U.S.C. §§ 1291, 1294.

Because the judgment of conviction will be reversed, we find it unnecessary to consider any of appellant’s specifications of error save that which charges that there was a fatal variance between the allegations in the indictment and the evidence adduced at the trial. Appellant points out that the indictment charged that he falsely stated “his farm income gross receipts for 1955” and “his” fruit and cotton sales for 1956. (Emphasis supplied). However, the evidence, even according to the trial court, did not establish beyond a reasonable doubt that the sales and income were “his,” that is, appellant’s. This, of course, amounts to a variance between pleading and proof, and it will be deemed fatal if it affects the substantial rights of appellant. Berger v. United States, 1935, 295 U.S. 78, 82, 55 S.Ct. 629, 79 L.Ed. 1314. Bearing in mind that the rule against variance is designed to enable the defendant to prepare his defense, to protect against undue surprise, and to prevent multiple prosecutions for the same offense, ibid., we are of the opinion that the variance in the instapt case is not fatal unless the reference in the indictment to “his” income and sales was essential to its validity. That is, if the personal reference was-mere surplusage, in that a crime was adequately charged without it, then there was no objectionable variance.

We must first consider the relationship, if any, between the statute and the concept of “materiality,” i. e., whether the falsification must be “material.” With respect to 18 U.S.C. § 1001, this Court at one time indicated, but did not hold, that materiality is not an essential element of the crime of making a false statement, as distinguished from the crime of concealing a fact. Fisher v. United States, 9 Cir., 1956, 231 F.2d 99, 102. However, in Brandow v. United States, 9 Cir., 1959, 268 F.2d 559, 565, we recognized that “this requirement of materiality has been described as essential [to the entire statute] by the greater weight of authority, and for the purposes of this case, we approve and follow such majority rule.” No good reason suggests-itself why our position in Brandow, supra, should be limited to that case. Accordingly, we hold that materiality is an essential element of the crime of making a false statement; i. e., in order to gain a conviction under 18 U.S.C. § 1001, the government must prove that the false statement was “material”' as that term has been defined in the case law.

The instant indictment does not allege that the allegedly false statements made by appellant were material. However, even if “materiality,” as such, need not be alleged in the indictment, then there must be at least an allegation of sufficient facts from which the inference of materiality may be drawn. Stapleton v. United States, 9 Cir., 1958, 260 F.2d 415, 418, 17 Alaska 713. Here, the indictment charged that the appellant had understated “his” income and sales. Was the personal pronoun mere surplusage? We think not, for it was an allegation crucial to any inference that appellant’s allegedly false statements were material.

In support of our conclusion, we note that the income tax return filed by appellant only required that he report “his” income. It did not require that he report the amounts which constituted income to any other person. Appellant was in much the same position as a nominee of a stock brokerage account. He is not required to report as his own, income in which he has no beneficial interest. It is beside the point that appellant may have been the “owner” of the income in the general sense. The fact is that we are dealing with a transaction that can only be understood properly if we bear in mind the laws and distinctions peculiar to income tax law. Since, then, appellant only was required to report his own income, and since he only purported to do that, appellant’s statement of “his” income is the only matter in which, as to him, the Internal Revenue Service had a legitimate interest. Although it is true that a volunteered statement is within 18 U.S.C. § 1001, and although as a matter of fact the appellant volunteered what actually was a statement of his mother’s income, the significant fact is that he did not purport to state his mother’s income when he filed his income tax return, nor is there any evidence that the government ever construed his return as being anything other than what it was.

In short, under the circumstances of this case, appellant would be guilty of having violated 18 U.S.C. § 1001 only if he understated his own income, not that of another person. Therefore, the indictment, to be valid, cannot withstand deletion of the reference to “his” income and sales; yet, the evidence did not establish that appellant had falsely stated “his” income. This is simply a case where, although appellant may have intended to falsify, that alone is insufficient to convict, for it is hornbook law that in every crime there must be a joint union of act and intent. Here, there may have been intent. There was no act, because it was legally impossible for appellant to be guilty of having falsified, i. e., understated, income which was not his. This Court refuses to construe the statute in question so as to permit a taxpayer to be convicted of reporting more taxes than he rightfully owes, regardless of what his intentions may have been.

The evidence did not prove the charges set forth in the indictment. There was, under the law, a fatal variance between the pleading and the proof, and therefore the judgment of conviction must be reversed.