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SUMMARY: The petitioner was indicted
by a grand jury on a charge of wilfully attempting to evade payment of income
taxes; the indictment was based solely upon the evidence of government witnesses
having no firsthand knowledge of the transactions upon which they based their
computations showing that the petitioner and his wife had received far greater
income than they had reported. The petitioner was convicted and challenged his
conviction on the ground that the indictment was based solely on hearsay
evidence and for that reason should have been dismissed. The Supreme Court
unanimously held that the indictment was valid.
In an opinion by Black, J., six members of the Court rested the decision on the
ground that neither the Fifth Amendment, in making a grand jury indictment a
prerequisite of a federal trial for a capital or otherwise infamous trial, nor
justice and the concept of a fair trial, required that indictments be open to
challenge on the ground that there was inadequate or incompetent evidence before
the grand jury.
Burton, J., concurred in the result, but expressed the view that indictments
made without substantial or rationally persuasive evidence should be quashed.
Clark and Harlan, JJ., did not participate.
LEXIS
HEADNOTES - Classified to U.S. Digest Lawyers' Edition:
INDICTMENT, INFORMATION, AND COMPLAINT §98
objections -- hearsay evidence. --
Headnote: [1]
A defendant may be required to stand trial in a federal court and his conviction
will be sustained, even though only hearsay evidence was presented to the grand
jury which indicted him.
EVIDENCE §662
opinion evidence -- summarizations -- income tax evasion. --
Headnote: [2]
Summarizations by government witnesses whose investigations have produced the
evidence used against the defendant at the trial of evidence already heard and
their computations showing, if correct, that the defendant and his wife received
far greater income than they reported, are admissible in a prosecution for
income tax evasion based on the net worth theory.
GRAND JURY §1
nature -- history. --
Headnote: [3]
The grand jury referred to in the provision of the Fifth Amendment which makes
an indictment of a grand jury a prerequisite of a federal trial for a capital or
otherwise infamous crime was intended to operate substantially like its English
progenitor, whose basic purpose was to provide a fair method for instituting
criminal proceedings against persons believed to have committed crimes.
INDICTMENT, INFORMATION, AND COMPLAINT §98
objections -- insufficiency of evidence. --
Headnote: [4]
The Fifth Amendment, in making an indictment of a grand jury a prerequisite of a
federal trial for a capital or otherwise infamous crime, does not require that
indictments be open to challenge on the ground that there was inadequate or
incompetent evidence before the grand jury.
INDICTMENT, INFORMATION, AND COMPLAINT §1.5
return -- trial of charge. --
Headnote: [5]
An indictment returned by a legally constituted and unbiased grand jury, like an
information drawn by the prosecutor, if valid on its face, is enough to call for
trial of the charge on its merits.
CONSTITUTIONAL LAW §836
INDICTMENT, INFORMATION, AND COMPLAINT §98
SUPREME COURT OF THE UNITED STATES §9
supervisory power -- indictment -- insufficiency of evidence. --
Headnote: [6]
Neither justice nor the concept of a fair trial requires that the Supreme Court,
in exercise of its power to supervise the administration of justice in federal
courts, establish a rule permitting defendants to challenge indictments on the
ground that they are not supported by adequate or competent evidence.
CRIMINAL LAW §46
rights of accused. --
Headnote: [7]
In a criminal trial on the merits, defendants are entitled to a strict
observance of all the rules designed to bring about a fair verdict.Point from
Separate Opinion
GRAND JURY §11
bias. --
Headnote: [8]
An indictment is open to challenge on the ground of bias or prejudice. [From
separate opinion by Burton, J.]
SYLLABUS:
A defendant in a criminal case in a federal court may be required to stand trial
and his conviction may be sustained where only hearsay evidence was presented to
the grand jury which indicted him. Pp. 359-364.
(a) An indictment based solely on hearsay evidence does not violate the
provision of the Fifth Amendment that "No person shall be held to answer
for a capital, or otherwise infamous crime, unless on a presentment or
indictment of a Grand Jury . . . ." Pp. 361-363.
(b) In the exercise of its power to supervise the administration of justice in
the federal courts, this Court declines to establish a rule permitting
defendants in criminal cases to challenge indictments on the ground that they
are not supported by adequate or competent evidence. Pp. 363-364.
221
F. 2d 668, affirmed.
COUNSEL: Osmond K. Fraenkel
and
Morris Shilensky argued the cause for petitioner. With them on the
brief were
Joseph Leary Delaney and
George Wolf.
Marvin E. Frankel argued the cause for the United States. With him on the
brief were
Solicitor General Sobeloff, Assistant Attorney General Holland
and
Joseph M.Howard.
JUDGES: Warren, Black, Reed,
Frankfurter, Douglas, Burton, Minton; Clark and Harlan took no part in the
consideration or decision of this case.
OPINIONBY: BLACK
OPINION: [*359]
[**406] MR. JUSTICE BLACK delivered the
opinion of the Court.
[1]
We granted certiorari in this case to consider a single question: "May a
defendant be required to stand trial and a conviction be sustained where only
hearsay evidence was presented to the grand jury which indicted him?"
350
U.S. 819.
[***3] [2]
Petitioner, Frank Costello, was indicted for wilfully attempting to evade
payment of income taxes due the
[*360] United
[**407] States for the years 1947, 1948 and
1949. n1 The charge was that petitioner falsely and fraudulently reported less
income than he and his wife actually received during the taxable years in
question. Petitioner promptly filed a motion for inspection of the minutes of
the grand jury and for a dismissal of the indictment. His motion was based on an
affidavit stating that he was firmly convinced there could have been no legal or
competent evidence before the grand jury which indicted him since he had
reported all his income and paid all taxes due. The motion was denied. At the
trial which followed the Government offered evidence designed to show increases
in Costello's net worth in an attempt to prove that he had received more income
during the years in question than he had reported. n2 To establish its case the
Government called and examined 144 witnesses and introduced 368 exhibits. All of
the testimony and documents related to business transactions and expenditures by
petitioner
[***4] and his wife. The prosecution
concluded its case by calling three government agents. Their investigations had
produced the evidence used against petitioner at the trial. They were allowed to
summarize the vast amount of evidence already heard and to introduce
computations showing, if correct, that petitioner and his wife had received far
greater income than they had reported. We have held such summarizations
admissible in a "net worth" case like this.
United
States v. Johnson, 319 U.S. 503.
- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -
n1 The indictment was based on § 145 (b) of the Internal Revenue Code of 1939.
53 Stat. 63. There was also a count in the indictment for the year 1946 but
petitioner was found not guilty of this charge.
n2 For discussions of the "net worth method," see
Holland
v. United States, 348 U.S. 121; Friedberg
v. United States, 348 U.S. 142; Smith
v. United States, 348 U.S. 147; and
United
States v. Calderon, 348 U.S. 160.
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -
[***5]
[*361] Counsel for petitioner asked each
government witness at the trial whether he had appeared before the grand jury
which returned the indictment. This cross-examination developed the fact that
the three investigating officers had been the only witnesses before the grand
jury. After the Government concluded its case, petitioner again moved to dismiss
the indictment on the ground that the only evidence before the grand jury was
"hearsay," since the three officers had no firsthand knowledge of the
transactions upon which their computations were based. Nevertheless the trial
court again refused to dismiss the indictment, and petitioner was convicted. The
Court of Appeals affirmed, n3 holding that the indictment was valid even though
the sole evidence before the grand jury was hearsay. n4 Petitioner here urges:
(1) that an indictment based solely on hearsay evidence violates that part of
the Fifth Amendment providing that "No person shall be held to answer for a
capital, or otherwise infamous crime, unless on a presentment or indictment of a
Grand Jury . . . ." and (2) that if the Fifth Amendment does not invalidate
an indictment based solely on hearsay we should now lay down
[***6]
such a rule
[**408] for the guidance of
federal courts. See
McNabb
v. United States, 318 U.S. 332, 340-341.
- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -
n3
221
F. 2d 668. The Court of Appeals reversed petitioner's conviction on the 1947
count on grounds not material here.
n4 Varying views have been expressed concerning whether indictments may be
challenged because based in whole or in part on incompetent evidence. See,
e.
g., Chadwick
v. United States, 141 F. 225; United
States v. Violon, 173 F. 501; Nanfito
v. United States, 20 F. 2d 376, 378; Brady
v. United States, 24 F. 2d 405; Banks
v. United States, 204 F. 2d 666; Zacher
v. United States, 227 F. 2d 219. See also cases collected in 62
Harv. L. Rev. 111; 38 Yale L.J. 680; 71 Cent. L.J. 9; Joyce, Indictments (2d
ed., Blakemore, 1924), 166-168; Note,
24
A.L.R. 1432.
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -
[***7] [3]
The Fifth Amendment provides that federal prosecutions for capital or otherwise
infamous crimes must be
[*362] instituted by
presentments or indictments of grand juries. But neither the Fifth Amendment nor
any other constitutional provision prescribes the kind of evidence upon which
grand juries must act. The grand jury is an English institution, brought to this
country by the early colonists and incorporated in the Constitution by the
Founders. There is every reason to believe that our constitutional grand jury
was intended to operate substantially like its English progenitor. The basic
purpose of the English grand jury was to provide a fair method for instituting
criminal proceedings against persons believed to have committed crimes. Grand
jurors were selected from the body of the people and their work was not hampered
by rigid procedural or evidential rules. In fact, grand jurors could act on
their own knowledge and were free to make their presentments or indictments on
such information as they
[***8] deemed
satisfactory. Despite its broad power to institute criminal proceedings the
grand jury grew in popular favor with the years. It acquired an independence in
England free from control by the Crown or judges. Its adoption in our
Constitution as the sole method for preferring charges in serious criminal cases
shows the high place it held as an instrument of justice. And in this country as
in England of old the grand jury has convened as a body of laymen, free from
technical rules, acting in secret, pledged to indict no one because of prejudice
and to free no one because of special favor. As late as 1927 an English
historian could say that English grand juries were still free to act on their
own knowledge if they pleased to do so. n5 And in 1852 Mr. Justice Nelson on
circuit could say "No case has been cited, nor have we been able to find
any, furnishing an authority for looking into and revising the judgment of the
grand jury upon the evidence, for the purpose of
[*363]
determining whether or not the finding was founded upon sufficient proof . . .
."
United
States v. Reed, 27 Fed. Cas. 727, 738. n6
- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -
n5 1 Holdsworth, History of English Law (1927), 323.
[***9]
n6 As to the development of the grand jury as an institution here and in
England, see
Hale
v. Henkel, 201 U.S. 43, 59; Blair
v. United States, 250 U.S. 273, 282; McGrain
v. Daugherty, 273 U.S. 135, 157; United
States v. Johnson, 319 U.S. 503; 4 Blackstone Commentaries 301
et seq.; 1 Pollock and Maitland, History of English Law (1895), 130; 1
Holdsworth, History of English Law (1927), 312-323; Morse, A Survey of the Grand
Jury System, 10 Ore. L. Rev. 101, 217, 295.
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -
[4]
[5]
In
Holt
v. United States, 218 U.S. 245, this Court had to decide whether an
indictment should be quashed because supported in part by incompetent evidence.
Aside from the incompetent evidence "there was very little evidence against
the accused." The Court refused to hold that such an indictment should be
quashed, pointing out that "The abuses of criminal
[***10]
practice would be enhanced if indictments could be upset on such a ground."
218
U.S., at 248. The same thing is true where as here all the evidence before
the grand jury was in the nature of "hearsay."
If
indictments were to be held open to challenge on the ground that there was
inadequate or incompetent evidence before the grand jury, the resulting delay
would be great indeed. The result of such a rule would be that before trial on
the merits a defendant could always insist on a kind of preliminary trial to
determine
[**409] the competency and adequacy
of the evidence before the grand jury. This is not required by the Fifth
Amendment. An indictment returned by a legally constituted and unbiased grand
jury, n7 like an information drawn by the prosecutor, if valid on its face, is
enough to call for trial of the charge on the merits. The Fifth Amendment
requires nothing more.
- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -
n7 See,
e. g., Pierre
v. Louisiana, 306 U.S. 354.
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -
[***11]
[6]
[7]
Petitioner urges that this Court should exercise its power to supervise the
administration of justice in federal
[*364]
courts and establish a rule permitting defendants to challenge indictments on
the ground that they are not supported by adequate or competent evidence. No
persuasive reasons are advanced for establishing such a rule. It would run
counter to the whole history of the grand jury institution, in which laymen
conduct their inquiries unfettered by technical rules. Neither justice nor the
concept of a fair trial requires such a change.
In
a trial on the merits, defendants are entitled to a strict observance of all the
rules designed to bring about a fair verdict. Defendants are not entitled,
however, to a rule which would result in interminable delay but add nothing to
the assurance of a fair trial.
Affirmed.
MR. JUSTICE CLARK and MR. JUSTICE HARLAN took no part in the consideration or
decision of this case.
[***12]
CONCURBY: BURTON
CONCUR: MR. JUSTICE BURTON,
concurring.
[8]
I agree with the denial of the motion to quash the indictment. In my view,
however, this case does not justify the breadth of the declarations made by the
Court. I assume that this Court would not preclude an examination of grand-jury
action to ascertain the existence of bias or prejudice in an indictment.
Likewise, it seems to me that if it is shown that the grand jury had before it
no substantial or rationally persuasive evidence upon which to base its
indictment, that indictment should be quashed. To hold a person to answer to
such an empty indictment for a capital or otherwise infamous federal crime robs
the Fifth Amendment of much of its protective value to the private citizen.
Here, as in
Holt
v. United States, 218 U.S. 245, substantial and rationally
persuasive evidence apparently was presented to the grand jury. We may fairly
assume that the evidence before that jury included much of the
[*365]
testimony later given at the trial by the three government agents who said that
they had testified before the grand
[***13]
jury. At the trial, they summarized financial transactions of the accused about
which they were not qualified to testify of their own knowledge. To use Justice
Holmes' phrase in the
Holt case, such testimony, standing alone, was
"incompetent by circumstances" (
supra, at 248), and yet it
was rationally persuasive of the crime charged and provided a substantial basis
for the indictment. At the trial, with preliminary testimony laying the
foundation for it, the same testimony constituted an important part of the
competent evidence upon which the conviction was obtained.
To sustain this indictment under the above circumstances is well enough, but I
agree with Judge Learned Hand that "if it appeared that no evidence had
been offered that rationally established the facts, the indictment ought to be
quashed; because then the grand jury would have in substance abdicated."
221
F. 2d 668, 677. Accordingly, I concur in this judgment, but do so for the
reasons stated in the opinion of the Court of Appeals and subject to the
limitations there expressed. See also, Notes, 62 Harv. L. Rev. 111; 65 Yale L.J.
390.
Constitutional
Law : Procedural Due Process : Grand Jury Requirement