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UNITED STATES v. SCHWARTZ

March 22, 1966

UNITED STATES of America
v.
Milton H. L. SCHWARTZ



The opinion of the court was delivered by: VAN DUSEN

 This case is now before the court on the above post-trial motions (N.T. 938-9 and Documents 54 and 55) after a second trial of this defendant has resulted in a guilty verdict.*The one-count indictment charges the defendant and Rudolph R. Bregman with knowingly and unlawfully removing and concealing, on October 30, 1954, 18 trailers, property of Rudolph Motor Service, Inc., with intent to evade and defeat the collection of taxes assessed against that corporation (hereinafter called "taxpayer"). Mr. Bregman (hereinafter referred as "Bregman"), President of taxpayer, was convicted at the first trial and the background facts and legal issues are stated in United States v. Bregman, 306 F.2d 653 (3rd Cir.1962), cert. den. 372 U.S. 906, 83 S. Ct. 718, 9 L. Ed. 2d 716 (1963), which affirmed the sentence imposed after the jury verdict.

 The concealment and removal of the trailers was accomplished by a false book entry, which the Government contends was made by the accountant, at the direction of, or aided and abetted by, both Bregman and the defendant, who was the taxpayer's and Bregman's counsel. The principal evidence against the defendant was a written statement (Exhibit G-62) admittedly signed by Bregman after its preparation by his attorney and submitted by mail to the sentencing judge, so that it was received the day before Bregman was sentenced in September 1961, after he had been found guilty at the first trial (N.T. 373, 381-2). This statement contained the following wording: *fn1"

 
"* * * I am further sure that these entries were not made by me inasmuch as Milton H. L. Schwartz was representing me and taking a very active part in the operations of the business at that time; that the entries were directed to be made by him."

 This Exhibit was received in evidence, the above sentence being treated as substantive evidence (N.T. 397), and the trial judge used the following language in commenting on it to the jury (N.T. 1047-1048):

 
"I want to explain to you G-62, because this is one of the primary items of evidence on which the Government relies to prove the alleged concealment by this defendant. You remember, G-62 is the statement that was signed by Mr. Bregman on September 11, two days before he was sentenced by me for commission of this crime, and it was sent to me by his lawyer, and I had it there before me at the time of sentence. It was sent to persuade me to give him a light sentence, as his written statement of the view of what had happened at the time of this crime, for which he had been found guilty.
 
"After consideration of all the evidence, you will have to decide whether you accept the testimony of Mr. Bregman last week that he probably, and possibly another officer of Rudolph Motor Service, Inc., directed that the October 30, 1954, entry concerning repossession of the 18 trailers by the Strick Company be made, - that is what he testified here on the stand, that he did it, or possibly another officer of the taxpayer, but not Mr. Schwartz - since he said he would not let Mr. Schwartz make any decisions for him and his company, - that is what he told you here on the stand - or whether you are going to accept the statement signed by Mr. Bregman on September 11, 1961, in G-62, and submitted to the Court the next day, that the entries concerning the alleged transfer of the trailers to Rudolph Freight Lines from Rudolph Motor Service were directed to be made by Mr. Schwartz, who was taking a very active part in the operation of the business at that time. That is what he signed and submitted to me in September of 1961." *fn2"

 Under the situation presented by this record, the admission of this sentence in G-62 as substantive evidence was proper under these principles underlying the hearsay rule and the exceptions to that rule. *fn3"

 A. Principle of Necessity4

 Without intending any criticism of Bregman, he was such an unsatisfactory witness in January 1966 *fn5" that there was a real necessity for using a statement which he conceded he had made previously with the assistance of an attorney (N.T. 381-382), rather than relying on the evasive, unresponsive and contradictory ramblings *fn6" of a witness who was apparently a very sick man. He had been in the hospital shortly before the trial and died on January 17, 1966, having testified during the week of January 3, 1966.

 B. Cross-examination

 Wigmore points out that when a witness who has made a prior statement is on the stand, that witness is subject to cross-examination. This language appears in § 1018(b) of III Wigmore, Evidence (3d Ed.), pp. 687-8:

 
"* * * the theory of the Hearsay rule is that an extrajudicial statement is rejected because it was made out of Court by an absent person not subject to cross-examination. * * * There is ample opportunity to test him as to the basis for his former statement. The whole purpose of the Hearsay rule has been already satisfied. Hence there is nothing to prevent the tribunal from giving such testimonial credit to the extrajudicial statement as it may seem to deserve. Psychologically of course, the one statement is as useful to consider as the other; and everyday experience outside of court-rooms is in accord."

 The jury knew that the witness had foreclosed detailed questioning about the statement by stating that he did not "recall" it (N.T. 374 - see, also, Exhibit B, and N.T. 1048 - see, also, Exhibit A, where the charge reminded the jury that " he said he could not recollect signing it"). Also, the jurors had the opportunity to observe the witness' demeanor. *fn7"

 C. Guarantees of Trustworthiness

 In § 1422 of V Wigmore, Evidence (3d Ed.), pp. 204-205, this wording appears:

 
"We see that under certain circumstances the probability of accuracy and trustworthiness of [the] statement is practically sufficient, if not quite equivalent to that of statements tested in the conventional manner. * * *
 
* * *
 
"b. Where, even though a desire to falsify might present itself, other considerations, such as * * * the fear of punishment, would probably counteract its force; * * *."

 The following four guarantees of trustworthiness are considered important factors present with reference to this statement:

 
1. G-62 was prepared by Bregman's attorney. It can be assumed that a statement prepared by an attorney, who knew at the time he prepared it that it was to be submitted to a judge in connection with the sentencing of his client, would be carefully made.
 
2. An attorney is presumed to know, and to notify his client of, the law. Bregman's counsel in this case was undoubtedly aware of the penalty for submitting a false statement to the Government [see 18 U.S.C. § 1001, and United States v. Bramblett, 348 U.S. 503, 509, 75 S. Ct. 504, 99 L. Ed. ...

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