United States v. Harry Barfield Company, Inc.

359 F.2d 120, 17 A.F.T.R.2d (RIA) 790, 1966 U.S. App. LEXIS 6521

• Court: Court of Appeals for the Fifth Circuit
• Decided: April 12, 1966
• Docket: 21948
• Status: Published

Opinions

GRIFFIN B. BELL, Circuit Judge:

Appellee taxpayer is a Georgia corporation engaged in commercial printing. The business was conducted as a partnership for several years prior to the formar tion of the corporation in 1958. The three partners formed the corporation by transferring the assets of the partnership to the corporation. They became the sole stockholders, receiving common stock and ten year six percent debenture notes for the assets. The District Director concluded that the debenture notes did not evidence a bona fide indebtedness but were actually contributions to capital. Interest payments made in fiscal years 1958 and 1959 theretofore claimed as deductions under 26 U.S.C.A. § 163(a) were disallowed. Taxpayer paid the deficiencies assessed, and suit for refund was filed after claims for refunds had been denied. The suit for refund was tried to a jury; judgment was entered on a verdict for the taxpayer; and this appeal followed the denial of the government’s motion for new trial.

An unusual approach, made on one of the jurors in the presence of two other jqrors by the president of taxpayer corporation, is the basis for one of the assignments of error. The president was a principle witness for the taxpayer at the trial. He was one of its three stockholders. When the court adjourned for the noon recess following the charge to the jury and prior to the submission of the case to the jury, the president and his brother’s wife chanced to enter the elevator with the three jurors for the purpose of leaving the building. Certain conversation took place between the president and two of the jurors on the elevator and just after leaving the elevator. This conversation was called to the attention of the court by counsel for the United States immediately after the noon recess.

It was contended that the conduct of the president was improper and prejudicial and that a new trial was in order. Apparently counsel intended to use the term mistrial rather than new trial but the relief sought was clear to all concerned. The court disposed of the question presented by questioning the president and his sister-in-law out of the presence of the jury, and then letting the case go to the jury. The court adopted the procedure of reserving judgment with the end in mind of granting a new trial if the jury should render a verdict for the taxpayer and prejudice appeared from the conduct of the president in conversing with the jurors. The court did not wish to examine the jurors at that juncture of the case. The following testimony of the president in question and answer form is pertinent:

“Q. * * * did you have any conversation with any of the jurors after the lunch recess?

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“A. As we were going down in the elevator, one of the jurors, let let me see, yeah, one of the jurors, Mr. Lockhart, I asked Mr. Lockhart if he was the one that operated a Lockhart Pharmacy, and he said that he was.

“Q. Was Mr. Lockhart the only jur- or who was there?

“A. No, I believe there was another one going down in the elevator. I can’t call his name. I spoke to him, in other words, I said, ‘Hello,’ or something like that.

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“Q. Did you have any further words or contact after you got out of the elevator?

“A. Let me see. Well, we were in the process of walking out of the elevator, and he said that he was the Mr. Lockhart who had a drugstore on Boulevard, I believe it was. And I mentioned to him that my wife had lived in that area on Boulevard and he said, well, he did know the family, and then we were in the process of walking out, and we walked on out.

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“Q. And there was another juror present ?

“A. Yes, there was. There was another one with him coming down, but as I say, I can’t call the man’s name because I don’t know the jurors by name.

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“Q. Did you know Mr. Lockhart?

“A. No. I don’t. I actually do not know the gentleman. The name had come up, and I don’t know, I just happened to wonder if he, when he got up and said who he was, he said he was a retired druggist as I recall and I just happened to wonder if he was the one, that I knew there was a Lockhart Drugstore many years ago on Boulevard, which might be a mistake, which had no bearing or anything on the case, but I do not know the gentleman and he did not know me.

“Q. Well, did he say anything else, anything to the — you, to the juror?

“A. I don’t remember that I — oh, wait a minute. Wait a minute. There was another juror in the elevator. I have forgotten about him completely. Neither do I know him either. Let’s see, the man had been a, I think he is the one that has been an announcer, a radio announcer or something.

“Q. Stocky man with slightly balding hair?

“A. Yes. He was in the elevator. I had forgotten about him. I’m sorry. As he came out, what did he say, I believe he said he did not know me, that he did not remeihber me or something, but he remembered later that he had known my brother or something like that. But I didn’t know the man.

“Q. The man from WSB?

“A. Yes.

“Q. Had known your brother, * * ?

“A. Well, I’m not sure which one he referred to, really. It was more or less a casual remark that he made, and as I say, about that time we were all going out in our separate ways into the rain, and I momentarily had even forgotten he was in the elevator.

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“Q. The initial inquiry was as to Mr. Lockhart’s former business ?

“A. Yes, I did ask him if he was the same Dr. Lockhart that had had a drugstore on Boulevard.

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“Q. What did [your sister-in-law] say?

“A. I don’t really recall that she said anything. It — I don’t think she did * * *

“Q. Now, when you say the ‘drugstore,’ you meant that your wife knew of a drugstore and her family lived in the area?

“A. Yes, my wife’s people had lived in that general area.

“Q. Did you mention the fact that any member of your family or relatives had patronized that drugstore ?

“A. No, sir. I just simply stated what I stated, my wife’s people—

“Q. Had you—

“A. —had lived in the area, sir.

“Q. Had you or any member of your family patronized the drugstore ?

“A. No.”

The sister-in-law then testified to what the president said at the time:

“A. Well, when he spoke to this one gentleman, it seemed that Carroll’s wife when she was a child lived in the same neighborhood with this gentleman, when she was a girl going to school, and they just passed the comment they knew that this, that she was a Boles, and I don’t think at first he got the connection there who it was, and then somebody else spoke to Carroll, and he just says, ‘Hi,’ and I don’t know whether he knew him or not, or just spoke, because sometimes people in the hall, since we’ve been here, you’ll just nod to them. But as far as me speaking to them, no, sir, I have not.”

After the rendition of the jury verdict, the juror, Mr. Lockhart, testified in chambers. It appeared that the third juror in the elevator served as foreman of the jury. He simply heard the conversation. There is no testimony that any remarks were directed to him. Mr. Lockhart gave his recollection of the conversation as follows:

“A. Well, we were talking about personal matters. He says, he says, [the president] says, ‘Don’t you —I bet you know my wife.’ I says, ‘Who was your wife ?’ And he says, ‘Ray Boles.’ I says, ‘Well, I have known her ever since she was a little girl.’ I said, T didn’t know you married her, though.’ And I says ‘Where are her brothers ? Are they living?’ He says, ‘Yeah, they are living.’ He told me some place. I said, ‘Is Mrs. Boles living, Ray’s mother?’ He said, ‘Yes, she’s living, but her daddy is dead.’ And then we went on and I went, and got dinner and went on some place.”

It was clear that there was no discussion of the case, and Mr. Lockhart testified in response to questions from counsel for the taxpayer that his decision as a juror was in no way influenced by the conversation. The court then overruled the motion for new trial, saying that it did not think any harm had been done by the occurrence.

By way of summation it is clear that the taxpayer president approached the jurors. They did not approach him. He sought to identify with juror Lockhart through the fact of knowing about his drug business. He then sought to cement the identity by giving the juror his wife’s name which led to a conversation regarding his wife’s family. He apparently also managed to find out that the juror from the radio station had known his brother.

The taxpayer argues and the court concluded that no harm was done by this activity. The juror did testify that he was not influenced, and it would no doubt be difficult to have a juror admit that he was influenced by such an approach. The average person might sincerely believe that he was not influenced, and the juror here may not have been influenced. However, if the occurrence is such as to be so inherently unfair as to reflect on the jury system, we think a mistrial should be declared or, as the matter was handled by the court here, a new trial should be granted. Over and above the rights of the litigants, the jury system could not long survive abuse of the type here made out. In Pekar v. United States, 5 Cir., 1963, 315 F.2d 319, where the impropriety did not exceed, if indeed it reached the level reached here, the court said: “Such conduct is not only inexcusable, it is clear grounds for the setting aside of a conviction.” That decision was founded on the impropriety of a social contact which resulted in a long but random conversation during a recess between a juror and the Assistant United States Attorney prosecuting the case relating to the juror’s business. There was no discussion of the case. It is true that no evidence was offered there to show that the juror was not influenced but we reversed, saying that the conduct would have been plain error under Rule 52(b), F.R.Crim.P., even in the absence of objection. We treated the conduct as being prejudicial per se and not subject to being overcome by a showing of harmlessness.

Here, the president of the taxpayer corporation deliberately sought to identify himself with one of the jurors in a way that would have been impossible through an inadvertent or accidental meeting. It required the effort of first inquiring about the drugstore, and then letting the juror know to whom he was married. This conduct cannot be excused. We do not consider the approach on the juror who was employed by the radio station. We have not overlooked it, but the facts concerning that approach were not fully developed; and it formed no part of the government’s objection in the District Court nor is it relied on here.

In Mattox v. United States, 1892, 146 U.S. 140, 13 S.Ct. 50, 36 L.Ed. 917, the Supreme Court said:

“It is vital * * * that the jury should pass upon the case free, from external causes tending to disturb the exercise of deliberate and unbiased judgment. Nor can any ground of suspicion that the administration of justice has been interfered with be tolerated.”

That case does suggest that a verdict rendered under such circumstances may be saved if forbidden communications with jurors are made to appear harmless. But, as in Pekar, we think the harm is inherent in the deliberate contact or communication which exists under the facts of this case. Every case of this kind turns on its own peculiar facts, but the harm here appears to a degree which may not be overcome; and thus prejudice or harm appears as a matter of law. The conduct here was deliberate and intentional as distinguished from a mere inadvertent or accidental contact involving only an exchange of greeting in order to avoid an appearance of discourtesy. See Annotation, 62 A.L.R.2d 298 (1958).

Pekar and Mattox are criminal cases but the integrity of the jury system is no less to be desired in civil cases. Our system of trial by jury presupposes that the jurors be accorded a virtual vacuum wherein they are exposed only to those matters which the presiding judge deems proper for their consideration. This protection and safeguard must remain inviolate if trial by jury is to remain a viable aspect of our system of jurisprudence. Any conduct which gives rise to an appearance of evil must be scrupulously avoided. What occurred in this case exceeded the bounds of propriety and will not do. The case must be reversed for a new trial.

The United States also urges two additional assignments of error. It is contended that the court committed error in permitting one of the partners in the law firm representing the taxpayer to testify as an expert in the case. The record discloses he was placed on the stand and qualified as an expert in corporate and tax law. The only objection interposed was on the basis that an expert might not invade the area of law reserved for the court. There was no merit in this objection. Expert testimony was proper on the characteristics of debenture notes and common stock. Cf. VII Wigmore on Evidence, 3d Ed., 1940, § 1955. The witness participated in the formation of the corporation and also testified negatively that there was no intent to treat the debenture notes as capital stock. No question of his competency to testify as an expert or as to facts in view of his position as counsel was preserved for appeal. The same is true as to any question of propriety. On the question of competency, see French v. Hall, 1886, 119 U.S. 152, 7 S.Ct. 170, 30 L.Ed. 375; Modern Woodmen of America v. Watkins, 5 Cir., 1942, 132 F.2d 352; Steiner v. United States, 5 Cir., 1943, 134 F.2d 931. On the question of propriety, and the weight to be given such testimony, see Lau Ah Yew v. Dulles, 9 Cir., 1958, 257 F.2d 744; Sears Roebuck and Company v. American Plumbing & Supply Co., E.D.Wis.1954, 19 F.R.D. 329; VI Wigmore on Evidence, 3d Ed., 1940, § 1911; Canon 19, Canons of Ethics of American Bar Association; and Canon 3-119, Canons of Ethics of State Bar of Georgia. See also “The Testifying Advocate” 41 Texas Law Review 477.

Lastly, the United States contends that the court committed error in allowing counsel for the taxpayer, over objection, to argue the law of the case to the jury. The fact is that the law was argued to the court in the presence of the jury. There was no objection on the ground that the law was cited to the court in a misleading or otherwise improper manner. We hold that the court did not abuse its discretion in overruling the objection. The court stated to the jury at the time that the argument was addressed to the court, and also in the charge the court stated that the jurors were to take their instructions on the law from the court.

Reversed and remanded for further proceedings not inconsistent herewith.