Opinion · Court of Appeals for the Second Circuit
United States v. McGovern
60 F.2d 880
- Type
- Opinion
- Court
- Court of Appeals for the Second Circuit
- Jurisdiction
- Federal
- Date
- 1932-08-23
- Topic
- litigation
CHASE, Circuit Judge -(after stating the facts as above). The appellant now complains because, as he says, due process of law was denied him, in that “there was no attempt to formulate or define an accusation against the defendant. He was confronted with an entire record, was told that he had testified falsely before the Grand Jury and that the false testimony was in the record of the proceedings.” The short and sufficient answer to this is found in the fact that counsel for the appellant expressly waived objection at the opening of the hearing. That there was any doubt or misapprehension as to the charges is inconceivable and we need now take no time, in view of the waiver of objection, in considering the sufficiency of the specifications. On May 25th the district attorney clearly stated the substance of the grounds upon which the appellant was presented for contempt, and he was given until May 31st to prepare to meet them.
Citator
- Cited by
- 27 opinions
UNITED STATES v. McGOVERN,60 F.2d 880(2nd Cir. 1932)
UNITED STATES v. McGOVERN.
No. 469.
Circuit Court of Appeals, Second Circuit.
August 23, 1932.
Page 881
Patrick McGovern was convicted of willful contempt of court, and he appeals.
Affirmed.
The appellant was adjudged guilty of willful contempt of the District Court, and sentenced to a term of imprisonment after he had appeared as a witness and testified five times before a grand jury in the Southern district of New York which was investigating alleged violations of section 146(b) of the Revenue Act 1928 (26 USCA § 2146(b).
He was the president of Patrick McGovern, Inc., and the owner of more than 90 per cent. of the stock in that corporation. He had been engaged in the contracting business for thirty-six or thirty-seven years. His corporation did a large business, including subway and tunnel construction in New York, and his income from his corporate business had been large. In 1928, he received from his corporation checks to the amount of $595,198.94; in 1929 over $310,000; in 1930 over $635,000; and in 1931 over $258,000. He spent large sums of money for his personal use without keeping any account of it. On the other hand, his corporation had an excellent bookkeeping system which reflected accurately its financial condition. He experienced some difficulty with the government in adjusting his own income taxes for 1930, but this matter was settled, and, although the amount in controversy happened to be $380,000, it had nothing to do with the five checks totaling that amount to which reference herein will be made. His corporation was a large employer of union labor, but did not employ such labor exclusively on the work in New York.
It is enough for present purposes to state that the grand jury was investigating, inter alia, the taxable income of Patrick H. Commerford, who was a delegate of the Hoisting Engineers' Union; that of Mat McConville, who had been a delegate of that union until the spring of 1930; and that of Arthur Huddell, then dead, who had been president of the International Hoisting Engineers' Union. The appellant's corporation employed men who belonged to this union, and the grand jury desired to know whether the appellant paid these three men any money which they should have reported as income.
On April 29, 1932, the appellant first appeared and testified before the grand jury. Upon that occasion, he was shown a check of his corporation dated April 5, 1929, for $50,000, drawn to his order by himself as president and treasurer and indorsed by himself. He identified his signatures, said he presumed that he received the check, but could not remember the transaction or what he did with the money. When asked whether he had deposited the check in any account, he refused to answer on the ground that his answer might tend to incriminate him. He was then shown a check dated June 5, 1928, for $50,000, payable to his own order and signed by himself on behalf of his corporation and bearing his indorsement. He again identified his signatures, but said he could not remember the transaction and had no recollection about either of these two checks. A check of his corporation for $70,000, dated July 11, 1928, payable to himself and signed and indorsed as the other two, with the additional indorsement of E.D. Hubbard, then a vice president of the corporation, was shown him and the signatures identified. He refused to state whether or not he had received the check on the same claim of privilege he had before made. A check for $160,000, dated August 14, 1928, signed by him for his corporation and payable to and indorsed by himself was shown him, and he testified as to it as he had in respect to the other checks. And a check for $50,000, dated November 17, 1928, signed and payable as were the others, with the exception of the indorsement of Mr. Hubbard, was accorded the same treatment in his testimony. He refused to answer under the same claim of privilege when asked what these five checks in the aggregate amount of $380,000 were for, but finally said they must have been loans, although he could not tell whether they were or not. He did testify that these five checks were cashed and that the proceeds were never put in any account, and then said, "I suppose I got the cash for those," referring to such checks.
He said he knew Commerford and McConville and had known Huddell, and refused, on the same claim of privilege, to testify as to whether or not he had paid Commerford or McConville or Huddell any money in 1928 or 1929 or 1930. It was explained to him that he was not asked to testify as to any payments to these men within two years, the period of the state statute of limitations applicable to prosecutions for giving an unlawfulPage 882fee to an employee, and he still refused to answer.
The appellant, on the same day, appeared with counsel before a District Judge, who, after hearing, directed him to testify, and he immediately returned to the grand jury and testified that he had not paid a cent to the three men named during 1928, 1929, or 1930 either directly or indirectly, or had any financial transactions during those three years with any of those men. He explained that he was trying to protect his constitutional rights when he previously refused to answer; said he refused to tell with what the money represented by the five checks was concerned, and that, after it was put in a drawer he took it out as he wanted it for general expenses, for living expenses, for many things, for private expenses.
In the examination which followed, the appellant was pressed to disclose the disposition he had made of the $380,000 in cash which he no longer questioned having received personally, but he did not do more than make vague intimations that he had used some of it for charity, lost some of it at cards, used some of it for family expenses, and, in short, spent it when and as he pleased, without keeping any account or having any independent memory which would enable him to tell what he had done with it. When the course of the examination touched his method of keeping this money, the following took place:
"Q. Where did you keep this money, in a drawer? A. In a drawer in the bank.
"Q. Safe deposit box? A. Yes, sir.
"Q. Which bank? A. Chase National Bank.
"Q. Which branch? A. 41st St.
"Q. How long have you had that box in that bank? A. A number of years.
"Q. Do you mean it goes to before 1928? A. I think so.
"Q. How big a box was it? A. A good sized box.
"Q. What do you pay a year? A. I don't know.
"Q. Miss Boyce looks after that? A. Yes, sir.
"Q. That is a box you open with a combination? A. No, it is opened with a key.
"Q. Who has access to that box? A. Miss Boyce and myself.
"Q. Nobody else? A. For the corporation, my daughter and Miss Boyce can go for the corporation or I can go with my daughter or Miss Boyce.
"Q. Then you have two boxes, one for the corporation? A. Several for the corporation.
"Q. And one for you? A. Yes.
"Q. Are they all in the name of the corporation in that branch? A. Yes, sir.
"Q. You have access to all of them? A. Yes, sir.
"Q. In which of the various boxes did you keep this cash? A. In my personal box.
"Q. Is that true of all of the cash? A. In the office we keep some money at times. That is the only place cash is kept, in the banks and in my drawer.
"Q. You mean you keep corporation cash in your safe deposit box? A. No.
"Q. Corporate cash is simply petit cash, isn't it? A. At times, at times it isn't petit.
"Q. How long had you been keeping cash in your safe deposit box? A. A great many years.
"Q. In 1928 what was the largest amount you kept in your safe deposit box? A. I couldn't say offhand.
"Q. Give us a rough idea? A. I couldn't.
"Q. Was it $25,000? A. I couldn't tell.
"Q. $200,000? A. I don't think I had that.
"Q. Did you ever have $160,000 there at a time? A. Yes, I think so.
"Q. And $50,000 at a time? A. Yes, sir.
"Q. And then you would take it out? A. Take it out from time to time as I needed it.
"Q. How often did you go to this safe deposit box to take out cash? A. I couldn't say, I don't keep any records.
"Q. I know you don't; how often did you go, a few times a year to draw down cash from your safe deposit box? A. Perhaps three or four times a month.
"Q. Remember what you did with it? A. No.
"Q. Have no recollection? A. No, sir.
"Q. You said you kept the cash in drawers; did you mean that or do you mean you kept it in the safe deposit box? A. We kept money in the office.
"Q. The money that you kept in the office is money that is covered by a specific check for cash, petit cash? A. No, sir, I have a personal box.Page 883
"Q. How much do you keep in the office? A. In my room from $1000 to $15,000, or $20,000.
"Q. And beyond that, the big money is kept in the safe deposit box? A. Yes, sir."
At one time he put part of his inability to recall whether he had invested any of this money on the fact that some of his personal books had been sent to Boston and were kept there to prevent their production before an investigating committee of the New York Legislature referred to both as the Hofstadter Committee and as the Seabury Committee. He promised to produce these books at the next session of the grand jury.
On May 12, 1932, the appellant next appeared as a witness. He was asked immediately how many times he went to his safe deposit box to draw cash and replied, "I didn't go there over perhaps three or four times a year," and at a subsequent hearing testified that he had no recollection of ever going to his safe deposit box to get any money.
He said that he had cashed these checks in order to have plenty of money available for any emergency in his business, and, when asked if he was thinking that the banks might collapse, replied, "I was thinking something about that." He was asked if he had been afraid the Chase Bank, on which these checks were drawn, might collapse, and replied, "I wouldn't say collapse." And, when asked, "Is it the Bank you were afraid of?" replied, "I was afraid — we were in a very hazardous work and if anything happened on the job and my accounts got tied up or trusteed against them, we had no money to carry on business." Then he said that his lawyer in Boston had advised him to keep plenty of ready money in his drawer or in the safe. After testifying that he thought it was not a good idea to carry this cash in his personal bank account his examination proceeded:
"Q. What did you do with the money? A. Spent it.
"Q. Tell us how? A. It isn't all spent yet.
"Q. You still have the cash? A. Still have some.
"Q. Where is it? A. In my safe.
"Q. Not in the safe deposit box? A. No, sir.
"Q. You as a business man, who has handled millions of dollars, kept your cash in the safe and not in the safe deposit box? A. I did not.
"Q. How many years have you been doing that? A. Over 30.
"Q. As a matter of fact, you paid it back according to the books? A. I am not denying it; I said I wasn't sure.
"Q. How much cash have you around now? A. Around in the safe?
"Q. The safe or the deposit box, out of this $380,000? A. I think between nine and eleven thousand dollars.
"Q. When did it get to be as low as that? A. Might be yesterday.
"Q. Not what might be; when was it $100,000? When was it $50,000, or thereabouts? A. I couldn't say.
"Q. What was it a year ago? A. I don't know."
He again resorted to vague replies to indicate gifts to charity and to members of his family.
It appeared that shortly after the check for $160,000 was cashed that amount was redeposited in the bank, and about two months later the same amount was drawn in cash by the appellant. He professed to be unable to explain why this had been done except "perhaps at that time to meet business emergencies — the bank balances were pretty high and we thought it good business policy to do so."
Upon being asked again about where he had kept the cash he received on these checks, he said that if he had stated that he kept it in the safe deposit box he wished to correct that, and testified that he kept it in his safe in his office, explaining the change in his testimony by saying "that he had had time to think it over and refresh his memory." His attention was called to the check of April 5, 1929, for $50,000, and, after saying that Miss Boyce cashed it, he testified:
"Q. What did she do with the cash? A. Gave it to me.
"Q. What did you do with it? A. Took some out, put the rest in an envelope and put it in my box in the safe.
"Q. How much did you take out? A. I don't know.
"Q. $10,000? A. Might take ten or twenty.
"Q. What did you do with the twenty thousand? A. Spent it.
"Q. Whom did you give it to? A. I can't tell you any more than I told you, but I gave some to my family.
"Q. Did you carry it around in your pocket? A. Yes.
"Q. Ten or twenty thousand? A. I may have that at times.Page 884
"Q. From this check you carried ten or twenty thousand? A. I didn't say from that check.
"Q. If you put thirty in the safe, what did you do with the other twenty? A. I didn't say I put thirty in the safe, I put forty-five in the safe.
"Q. And kept $5,000 in your pocket? A. I don't know.
"Q. Have you any recollection of any of the money? A. Not of the amounts.
"Q. You tell us now the reason you did that, withdrew this cash, was to have available cash around, is that right? A. One of the reasons.
"Q. The purpose was to keep the cash around in case of some terrible calamity in the business? A. Yes.
"Q. Then why did you spend it? A. Because it was my money and I paid taxes on it.
"Q. You drew it for a purpose, to keep it around in case anything happened to the business. A. If anything happened to the business, it was going back to the business.
"Q. Suppose you had spent it. A. I owed it to the corporation.
"Q. Are you going to tell us now that although on April 5, 1929, you drew this check of $50,000 for the purpose of keeping cash around in case anything happened in the business, you immediately took some of it out to spend and the rest you spent from time to time? A. I might have."
He testified that Mr. Hubbard cashed the check of June 5, 1928, for $70,000 for him, and that either Miss Boyce or the appellant put the money in the safe. He said he could not recollect one person outside of his own family to whom he had given any of the $380,000, that he might have had certain obligations, and when asked to give one obligation on which he had paid this money replied "Card debts." He could not tell how much he had lost at cards, but it was not less than $5,000 or more than $50,000. He could not say whether he had given his family $100,000 from this fund or not; he could not tell whether he gave his wife a regular allowance, but he gave her money from this $380,000 whenever she needed it and he did not happen to have funds in his pocket. He said he drew these five checks for no purpose other than he had stated.
On May 20, 1932, the appellant was recalled and examined at length concerning the same matters with especial reference to his previous testimony, but nothing definite was disclosed. He said he wanted to explain his duties, and this occurred:
"Q. In the corporation? A. In the corporation.
"Q. All right, I will be glad to have you. A. In the last seven years, gentlemen, we have done over ninety million dollars worth of work. That ninety million dollars worth of work or the major part of it was the most hazardous that was ever done in this country or in any other country. The general supervision of that ninety million dollars worth of work came under my care and I was personally responsible for the conduct and for the safety of lives and property, and the hazards were great. Many times we were facing disaster, catastrophe, for days and months at a time. And to think that I can carry things that happened four years ago in my mind, it is utterly impossible for me to do so and I want to state once a little further, last November we were very apprehensive about the unemployment in New York City, the past winter. We got together a fund of over $125,000 of which I personally put in over $60,000. I make this statement, gentlemen, to show you how many matters I am now concerned with and it is impossible for me to say that I can know what I done with money two months ago. That's the least of my concern, where this is lives, men's lives at stake; I couldn't bother much about detail until I can see that we are safe and out of the woods.
"Q. Is that all? A. That's all, sir."
He did not explain more clearly the use to which he had put the money.
With reference to his former testimony, after he had stated that he had acted on advice of counsel, he was asked and answered:
"Q. You answered a great number of questions here and denied all knowledge. Now, those denials were false, is that right, or isn't it? A. I was mistaken about those.
"Q. You were mistaken five separate times after each one of the preceding four before you finally decided you wouldn't testify, is that right? A. I think I made statements there, statements about checks; I haven't made statements about money, I didn't say I didn't receive the money.
"Q. You said you had no recollection? A. I haven't that is true; I state now I did receive the money; I intended stating it at that time.
"Q. That testimony was false then that you had no recollection as to whether you received the money or not? A. It's my bestPage 885recollection that I didn't say I didn't receive the money.
"Q. You said you didn't know, is that right? You were asked about those five separate checks five separate times so you were mistaken five separate times. A. I was mistaken about checks but not about moneys.
"Q. I just read you the testimony, Mr. McGovern; there can be no question of that. Now the first time you were examined you were finally instructed by the court that you had to testify? A. Yes, sir.
"Q. And among other things you were asked, `Where do you keep this money, in a drawer? A. In a drawer in the bank. Q. Safe deposit box? A. Yes, sir. Q. Which bank? A. Chase National Bank.' Was that testimony true or false? A. I was mistaken about that testimony and I corrected it the last time I was here.
"Q. There is no question but you understood the questions? A. I was mistaken about the questions; I think I corrected that the last time I was here.
"Q. You clearly understood the nature of those questions as to where you kept the proceeds of those five checks, didn't you? A. I didn't remember where I did keep them.
"Q. You clearly understood the question? A. I did.
"Q. You clearly testified that you kept that money in your safe deposit box in the Chase National, that's what you testified to, wasn't it? A. Well, I was mistaken about it.
"Q. You were also asked, `How often did you go, a few times a year to draw down cash from your safe deposit box? A. Perhaps three or four times a month.' That testimony also was clearly and indubitably false, wasn't it? A. I was mistaken about it.
"Q. You have so much concern about lives and property, Mr. McGovern, that you will testify clearly and unequivocably that you put the proceeds of five checks totaling $380,000 in your safe deposit box and remember the particular bank, and then you will testify that you go there three or four times a month and the whole story is absolutely false? A. I was mistaken about those statements.
"Q. That's right. Now, the reason you were mistaken perchance, Mr. McGovern, was that between the first and second times you learned that we had subpœnæd the records of your files to your safe deposit box and ascertained the falsity of your testimony? A. I certainly did not.
"Q. What was it that refreshed your recollection from this perfectly clear and definite testimony to a clear reversal? A. Because I got to thinking about the matter after I was down here on the first visit and had it cleared up somewhat to me.
"Q. And all of these specific visits to the bank which you then remembered you finally found never existed, is that it? A. I was mistaken about those visits, yes; I think I corrected that at my last time I was down there.
"Q. Just want to get it clear as to how much of this testimony is false. Now, you were asked at your first hearing, `How much do you keep in the office? A. In my room from a thousand to fifteen thousand or twenty thousand dollars. Q. And beyond that the big money is kept in a safe deposit box? A. Yes, sir.' That was false too, wasn't it? A. I was mistaken about that too, yes, sir.
"Q. You were also mistaken when you testified that you kept up to fifteen and twenty thousand, is that right? A. That is right, I had more than that.
"Q. In other words, you were clearly wrong on that too? A. I was mistaken about that statement.
"Q. The fact is that you kept $150,000.00 to $300,000 in your box in your own office. A. That's true.
"Q. And you are so occupied with lives and property that you can't tell the difference between fifteen thousand and three hundred thousand — A. In other words, there was never at one time that there was $300,000 there.
"Q. How much would you say there was there? A. Oh, at times my best guess would be and it would be only a guess that it would be only a couple of hundred thousand dollars.
"Q. In your safe in your office? A. Yes.
"Q. How big a safe is that, Mr. McGovern? A. That space there.
"Q. What safe did you keep the money in? A. In two safes.
"Q. Two separate safes? A. Yes.
"Q. In what kind of a box in that safe? A. In a box that long.
"Q. That's about 18 inches long? A. Maybe two feet long.
"Q. Two feet long; how wide? A. 8 inches or 10 inches.
"Q. How deep? A. I'd say about 10 inches.Page 886
"Q. What kind of currency did you keep that money there in? A. Bills.
"Q. Big bills or little bills? A. I couldn't say; the bills I had say would run from hundreds down to fives and tens.
"Q. You mean you had in there as much as $200,000 in tens and twenty dollar bills? A. That's my best guess.
"Q. That's your best recollection? A. Yes.
"Q. Weren't there any bigger bills in there — you mean to say you would take out of a bank as much as $160,000 in bills of $100 and less? A. I couldn't state what size the bills were.
"Q. You handled the money? A. I handled the money, yes.
"Q. You know the difference between a $100 bill and a $1,000 and $20,000 bill, don't you? A. Yes, sir.
"Q. Didn't you even notice whether the bills were big or little? A. I did not."
More evidence of inability to remember more definitely what he had done with the money was followed by:
"Q. When did you start spending this money, Mr. McGovern, of this $380,000? A. I suppose — I don't know; I haven't any recollection when the date was.
"Q. Did you start spending it immediately or some time later? This was a brand new thing, you didn't do it during all of 1927 according to the evidence right here in the record. You didn't do it until June 5, 1928. You hadn't drawn a single penny that way for a year and a half and then you suddenly drew $50,000. Now, how did you get along during that year and a half without any funds to get cash from for spending money? A. I don't remember the incident in that.
"Q. I am not asking you about an incident. I am asking how did you get along for a year and a half without funds and suddenly drew $50,000? A. I might have owed the corporation at that time.
"Q. How did you get the cash that you used for the spending money during that year and a half? A. Borrowed it from the corporation, I guess.
"Q. This new idea came along in June 5th, 1928. A. I wouldn't call it a new idea.
"Q. When did you begin to spend this money which you got in this new manner which you hadn't done for a year and a half at least? A. I don't remember the date; of course it was after — I don't know how long after.
"Q. Was it a week or six months? A. I couldn't say.
"Q. Now, Mr. McGovern, it passes all belief that you can't tell us whether this new device which you invented started working a week or a year after it started? A. Well, inside a year, perhaps several months.
"Q. Why did you leave the money in there for several months? A. For the same purpose that I testified to before, for the protection of myself and the corporation.
"Q. If it was for that purpose, then, Mr. McGovern, why did you start spending it in large sums in cash? A. It was my money; I was responsible for it and I felt as though I could do what I pleased with it when I paid taxes on it; it was my funds.
"Q. Now, you testified on page 87 as follows: `With regard to the cash procured on Exhibit 4, what did you do with it? A. Took some out, put the rest in an envelope and put it in my box in the safe. Q. How much did you take out? A. I don't know. Q. $10,000? A. I might take $10,000 or $20,000. Q. What did you do with the $20,000? A. Spent it. Q. Whom did you give it to? A. I can't tell you any more than I told you but I gave some to my family. Q. Did you carry it around in your pocket? A. Yes. Q. Ten or twenty thousand? A. I may have that at times.' Now, according to that testimony, Mr. McGovern, you immediately started spending the money the minute you got it. A. No, I didn't; I didn't start spending that money the minute I got it; I am very sure of that.
"Q. Then this testimony also is false? A. It depends entirely on what date that is.
"Q. That date is April 5th, 1929, that's the last of these five checks. A. Does it give the date in my testimony there when I had that $10,000 or $20,000 in my pocket or $5,000 or $1,000?
"Q. It doesn't give the date; we showed you the exhibit. Now your testimony is that after you once started spending money from these funds, then as soon as you got the funds from these checks you began spending it right off on the later checks? A. No, I don't think I did.
"Q. Then you were mistaken when you said you took some out, ten or twenty thousand dollars and put the rest in the box? A. I might have done that some time during the four years.
"Q. I am talking about that, on the day the check was cashed. A. I don't think I said so in my testimony.Page 887
"Q. You were asked, `Miss Boyce cashed this check for you — I am referring to Government's Exhibit 4? A. I think so.' Then you were asked, `What did she do with the cash? A. Gave it to me. Q. What did you do with it? A. Took some out, put the rest in an envelope and put it in my box in the safe.' Then you were asked, `How much did you take out? A. I don't know. Q. Ten thousand dollars? A. Might take ten or twenty.' Then later on the same page you were asked, `If you put thirty in the safe, what did you do with the other twenty? A. I didn't say I put thirty in the safe, I put forty-five in the safe. Q. And kept $5,000 in your pocket? A. I don't know.' Well, now did you or did you not immediately begin spending the money or at least take it out when you got the proceeds of these checks? A. I can't — it's not clear in my mind how soon after I got my money.
"Q. Mr. McGovern, it is pretty clear that you either took this money out for protection as you told us you did or you spent the money. If you took it out for protection why didn't you leave it there? A. I left it there the major part of it for a good while.
"Q. And you spent part of it? A. Yes, sir I did.
"Q. And you took four years to spend it, is that it? A. Yes.
"Q. And you still have between nine and eleven thousand in your box? A. I think I have."
After testifying to the effect that he employed no licensed engineers on cage hoists as that was not engineers' work and did not pay the men he did employ for that purpose union wages and that he did not employ union men to work the electric pumps, he testified:
"Q. Did Patrick J. Commerford make a demand upon you that union men be employed on those pumps or did he not? A. I have no recollection of such a demand.
"Q. The day you were down here with Mr. Medalie before your first examination, as I remember it, you stated clearly that he did make such a demand during your negotiations. A. He made a demand for the cage hoists as I remember it and he also made a demand for apprentices."
Recalled on May 25, 1932, the appellant testified that the $380,000 in cash which he obtained on the five checks represented loans from his corporation to himself, that they were the only loans to him from the corporation, and that according to his best recollection these checks were the only ones drawn by the corporation to his order on which he got the cash. It was then that he testified that he had not put the proceeds of the five checks in his safety deposit box and had no recollection of ever going to that box to get money out of it, that he was sure none of it had been used in any way that would incriminate him, and that he had previously refused to testify on his claim of privilege because he did not then understand that what he was asked had no connection with his controversy with the government about income taxes. He was again examined at length as to how he had spent the money, and again answered only in general terms of charities, entertainment, personal expenses, and gifts to members of his family, without shedding any further light on the disposition he had made of the money.
On this day the appellant was presented for contempt. He appeared before a District Judge with his counsel. The government was represented by the district attorney who made an oral statement of the charges, of which the gist appears in the following quotation:
"It is stated by the Grand Jury, through me, that this witness McGovern in his examination concerning income tax law violations, that is, evasion of income taxes and non-filing of returns, and the other penal provisions of the law with respect to income taxes, that McGovern in giving testimony concerning the receipt by him of $380,000 represented by five checks from the Patrick McGovern, Inc., by him, refused and failed to give truthful testimony concerning the purposes for which that money was given to him, and the manner in which he disposed of it, but instead that he gave false and evasive testimony, wilfully and knowingly, and with intent to prevent the discovery of the truth."
The district attorney further stated that he desired to submit to the court all of the testimony given by the appellant, and counsel stipulated "that the minutes as submitted to the court and served on counsel, constitute a true and correct statement of all of the questions and all of the proceedings during Mr. McGovern's appearance before the Grand Jury." After some discussion between court and counsel, during which the minutes of appellant's testimony at every session but the last, which had not yet been transcribed, were introduced and the examination by appellant's counsel of exhibits received by the grand jury arranged for, the matter was adjourned to May 31, 1932. OnPage 888that date, the court had before it all of the evidence, heard counsel at length, and on June 3d adjudged the appellant in contempt.
Exhibit 1 was a collection of questions and answers entitled specifications. The opening paragraph read:
"The answers set forth below, among others, in the record of the testimony of Patrick McGovern before the April, 1932, Afternoon Federal Grand Jury, for the Southern District of New York, are hereby specified as the answers which it is charged were evasive, contumacious, contemptuous and obstructive of due process of the Federal Court and the administration of justice."
At the hearing May 31st, when the exhibit was offered, the following occurred:
"Mr. Cohalan: I have no objection to that, but I would ask for a bit of elucidation on the statement `among others the answer set forth below,' I suppose that is part of the record as it was served upon us.
"Mr. Medalie: Your Honor, I understood, of course, that the entire record was offered, if not in exact language the entire record has been specified as evidencing and containing the contemptuous and contumacious conduct of the witness and we desire to specify that now in the presence of the witness and his counsel.
"The Court: You did that, didn't you?
"Mr. Medalie: I understood that I did.
"The Court: Then the specifications are — what is the purpose of them?
"Mr. Medalie: It calls attention to the more flagrant contemptuous answers but it does not preclude us, I take it, from relying on the entire record.
"Mr. Cohalan: There is no objection, if your Honor please, except for this, that we want the recital to appear clearly on the record that it is simply not only in these particular specifications but also in that part of the record which was sent us last Friday.
"Mr. Medalie: That is correct. * * *"
George Z. Medalie, U.S. Atty. (Thomas E. Dewey, David Paley, and Murray I. Gurfein, Asst. U.S. Attys., all of New York City, of counsel), for the United States.
Before MANTON, L. HAND, and CHASE, Circuit Judges.
The power of the court to punish for contempt committed in its presence "or so near thereto as to obstruct the administration of justice" rests upon Judicial Code, § 268 (28 USCA § 385). The power extends to witnesses before a grand jury. O'Connell v. United States, supra.
What a grand jury may investigate or the scope of its inquiry cannot be questioned by a witness before it. Blair v. UnitedPage 889States,250 U.S. 273, 39 S. Ct. 468, 63 L. Ed. 979. All persons within its jurisdiction, upon being lawfully summoned before it, are bound to disclose what they know in answer to questions asked to discover the truth concerning the matters being investigated. Neither the competency of their testimony or its relevancy is their concern. Nelson v. United States,201 U.S. 92, 26 S. Ct. 358, 50 L. Ed. 673. As no formal charge against any one need have been made before a witness can be compelled to testify before a grand jury, Hale v. Henkel,201 U.S. 43, 26 S. Ct. 370, 50 L. Ed. 652, it is obvious that a witness can rarely, if ever, know whether his testimony is relevant or not. Indeed, the purpose of the grand jury's inquiry is to get at facts which will enable it to determine whether formal charges should be made against some one and not to try offenders. Hendricks v. United States,223 U.S. 178, 32 S. Ct. 313, 56 L. Ed. 394. As the investigation proceeds, whatever leads may be developed must be run down to find as accurately as possible what the truth is, and any false testimony which impedes and hampers the course of the investigation is material in the sense that it has a tendency to affect the ultimate action of the grand jury. Carroll v. United States (C.C.A.)16 F.2d 951. Evasions and half truths which hinder and mislead stand the same. A wiley witness who avoids the danger of a blunt refusal to answer by mere lip service to his duty and conceals the truth by the use of words may be as obstructive as his fellow of less mental agility who simply says nothing. When the answers of a witness amount to the crime of perjury, the offender may be guilty of contempt, provided there is also some obstruction of justice in addition to the necessary elements of that crime. Ex parte Hudgings,249 U.S. 378, 39 S. Ct. 337, 63 L. Ed. 656, 11 A.L.R. 333. But the power to punish for contempt does not reside in the court to compel a witness to testify in accord with the court's conception of the truth. On the other hand, a witness who obstructs the course of justice by so acting that the court's performance of its duty is frustrated is not beyond the reach of the contempt power because he chooses false swearing as the means to his end in so doing. Of course, the contempt power does not afford an alternative method for trying an accused for perjury. No deprivation of the right of one charged with that crime to a trial by jury can be sanctioned. Perhaps the best way to put it is that, where the court is justified in believing, and does believe, that a witness has obstructed the administration of justice, the witness may be adjudged in contempt whether he has sworn falsely or not, but, where the court is not justifiably convinced that the performance of its duties has been obstructed, it cannot act under the contempt power even though perjury has been committed.
When this test is applied to the conduct of the appellant, it is plain that he was properly adjudged in contempt if (1) his failure to disclose with substantial accuracy what use he had made of the $380,000, he drew in cash was obstructive and (2) he could have done so.
However resentful he may have been of what he may have considered an invasion of his right, as he conceived it, to keep his knowledge to himself, it was not for him to determine what the grand jury ought to know. Cases supra. His claim of privilege may well have been based on an ill-advised notion of his right to privacy in his own affairs. That matters not now, for he subsequently answered that he never paid Commerford or McConville or Huddell anything. If that was the fact, it is impossible to credit him with an honest belief, when he refused to testify, that he would incriminate himself by his answers. No sane business man could think that he would incriminate himself by disclosing the fact that he had paid those men nothing. That, too, is of slight importance now. But, after his claim of privilege had turned out to be but a sham, the grand jury was not bound, any more than they ever would have been, to accept his answers as the quietus of their investigation so far as he was concerned. Despite the fact that he said he never paid those three men anything directly or indirectly, the grand jury very properly sought to pursue the matter far enough to decide for itself whether this was so. The obvious thing was to find out what he had done with the money which he had been at pains to take to himself in cash, and draw their own conclusions from the facts rather than accept the appellant's interpretation of whatever the facts were as summed up in his denial that he had paid these men directly or indirectly. Then he told of his fear of banks collapsing; of the dangers inherent in his business; of the need to safeguard the future by having this money at hand; of keeping it in his safe deposit box; of being mistaken about that, when his story was checked up; of keeping it in his safe; of losing some of it at cards; of giving some of it to his family; of using it for charity; and, in short, of being so immersed in his affairs that he could not rememberPage 890except in a vague general way what he had done with it. A man who was so fearful that his business might suffer from untoward happenings in the future that he would provide a fund in cash to be kept in his safe by himself alone and would continue to replenish the fund over a period from June 5, 1928, when the first check was drawn to April 5, 1929, would hardly have been expected to have no definite knowledge of what had become of the money when asked about that in 1932. That he should fritter it away or risk it at cards while holding it against business emergencies is preposterous. Equally so is the thought that he was unable to tell with reasonable accuracy what he had done with it. He was no callow youth with the irresponsibility of the young spendthrift, but a successful business man in control of a large organization. He said the money was loaned to him. He said the spent it as he pleased. And he said he held it to protect his business. That one can read his testimony and be blind to his palpable concealment of the knowledge he had and was asked to disclose seems beyond reason. The handy talk of cash in safe places without knowing, with even an approach to something definite, what became of it can have its appeal only for the most credulous.
Having had ample opportunity to answer the questions asked him concerning a subject which the grand jury was properly investigating and plainly having resorted persistently to subterfuge and evasion, if not to deliberate falsifying, to prevent a disclosure of what knowledge he had and was asked to give, he was guilty of obstructing the grand jury in performing its duties, and was properly held in contempt.
Judgment affirmed.