APPEAL FROM A JUDGMENT OF CONVICTION OF THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PENNSYLVANIA (D.C. Crim. No. 79-152)
Before Adams, Hunter and Higginbotham, Circuit Judges.
The appellant, Antonio John Palumbo II, was convicted on one count of conspiracy to possess and distribute cocaine, and on other counts relating to the possession and distribution of counterfeit bills. Although the indictment charges that Palumbo conspired with other individuals in the distribution of cocaine and counterfeit bills, he was the only person tried below. From our review of the record, this appeal raises two related questions. First, whether the district court properly admitted into evidence several grams of cocaine that was found in a search of an unindicted co-conspirator; and second, whether the court properly admitted the hearsay testimony of a police officer who stated that the unindicted co-conspirator had identified Palumbo as the source of the cocaine found in her possession. Because we find that this hearsay testimony was inadmissable and that, absent this testimony, there was no foundation linking the cocaine to the defendant, we reverse Palumbo's cocaine conviction, although we affirm his convictions on all other counts.
Palumbo was indicted on September 6, 1979 for the following offenses: conspiracy to possess and pass counterfeit bills, in violation of 18 U.S.C. § 371 (Count I); conspiracy to possess with intent to distribute cocaine, in violation of 21 U.S.C. § 846 (Count II); possession of counterfeit bills, in violation of 18 U.S.C. §§ 2 & 472 (Count III); transfer and delivery of counterfeit bills, in violation of 18 U.S.C. §§ 2, 472, & 473 (Counts IV, V, and VI); and possession and distribution of cocaine, in violation of 21 U.S.C. § 841(a)(1) (Counts VII and VIII).*fn1
At trial, much of the government's case was based on the testimony of an unindicted co-conspirator of Palumbo, Mary Jane Pfaff. Pfaff testified that in early August of 1978 she entered into an agreement with John Crosson to receive $5,000 in counterfeit bills, which she was to exchange for real currency. She returned part of this currency, per their agreement, to Palumbo a week later. Palumbo and she agreed that he would supply her with counterfeit bills in the future, which she would exchange for real money and return in part to Palumbo. They engaged in several of these transactions during the fall of 1978.
Pfaff also stated that sometime between August, 1978 and October, 1978 she asked Palumbo to obtain some cocaine for her. According to Pfaff, he agreed, and later sold her one ounce of cocaine for $1,800 on two separate occasions. Pfaff stated that she resold some of the cocaine and retained some for her own use.
The principal problem raised in this appeal concerns several evidentiary rulings made by the trial court relating to the 12.7 grams of cocaine found in Pfaff's possession (along with $10,000 in counterfeit bills) when she was arrested on October 27, 1978. Pfaff told the arresting officer and later the grand jury that she had received the cocaine from Palumbo. At trial, however, Pfaff said she could not recall where she had gotten the cocaine. The court permitted the government, over defense objections, to remind her in front of the jury of her earlier identification of Palumbo in testimony before the grand jury. Pfaff continued to maintain that she could not recall the source. The court was not requested to give any instructions limiting the grand jury testimony to the purpose of refreshing recollection or impeachment. The government, however, made no attempt to introduce the prior statement as substantive evidence, even though it later argued in summation that the grand jury statement showed Palumbo supplied the drug. The district court also permitted the police officer who arrested Pfaff with the cocaine to testify, again over defendant's objections, that Pfaff had identified Palumbo as the source of the cocaine. The court did not explain the basis of its decision to admit this statement which occurred when defendant was not present. Later the court, once again over defendant's objection, admitted the cocaine seized from Pfaff into evidence and permitted it to be passed among the jurors.
The jury convicted Palumbo on all of the Counts relating to the possession and distribution of counterfeit bills (Counts I, III, IV, V, and VI) and also on the charge of conspiracy to possess cocaine (Count II). It acquitted him of the Count relating to the distribution of cocaine (Count VIII). The Count relating to possession of cocaine with intent to distribute (Count VII) was dismissed during trial. The court imposed consecutive two year sentences for the two conspiracy convictions, a one year consecutive sentence for the possession conviction, and concurrent two year terms for the other three counts. The net result of the sentence was either a 5 or 6 year prison term.*fn2 On appeal, Palumbo has asserted various errors by the trial judge. Although we find that his challenges to his conviction on the counterfeiting counts lack merit,*fn3 we conclude that his challenge to the introduction of cocaine into evidence and certain related testimony is correct, and requires a reversal of his conviction for conspiracy to distribute that drug.
There are two possible grounds under which it might be argued that the cocaine could have been admitted into evidence. We find neither rationale sufficient justification for its admission.
The first, which the district court relied on, is that the cocaine seized from Pfaff was admissible as evidence of a conspiracy between Pfaff and Palumbo to distribute cocaine, even though Pfaff may not have received that particular cocaine from the defendant. The trial court stated:
I am going to overrule the objection (to the admission of the cocaine) because I think part of the testimony here has been that there has been an agreement to distribute cocaine and that the Defendant delivered some cocaine to Pfaff, and, therefore, the cocaine, whether or not it agrees with the quantity delivered by the Defendant to Pfaff, is in part corroborating evidence of Pfaff's testimony with respect to the agreement to distribute, the conspiracy count. Objection will be overruled.
Transcript at 507. This rationale is impermissible. The mere fact that a co-conspirator of the defendant possessed cocaine cannot be used to implicate the defendant for possession or conspiracy to possess cocaine if, as in this case, there is no evidentiary connection made between the drug possessed by the co-conspirator and the defendant in the conspiracy in issue. See United States v. Falley, 489 F.2d 33, 37-38 (2d Cir. 1973). This precaution is certainly necessary where the witness, as here, has admitted that she was a frequent user of drugs, received drugs from various individuals, and does not recall whether she got the drugs in issue from or through the defendant.
The government argues on appeal, alternatively, that the district court properly admitted the cocaine into evidence because there was testimony from the arresting officer that Pfaff had identified Palumbo as the source. We conclude, however, that the district court should not have admitted this testimony because it was inadmissible hearsay. Although the trial judge did not offer a reason for his ruling, the government has suggested at oral argument that the statement came ...