Shotwell Manufacturing Company v. United States/Opinion of the Court

This case is here for the second time in consequence of the remand that was ordered at the 1957 Term. United States v. Shotwell Mfg. Co., 355 U.S. 233, 78 S.Ct. 245, 2 L.Ed.2d 234.

In 1953 petitioners were convicted after a jury trial in the United States District Court for the Northern District of Illinois of willful attempted evasion of federal income taxes of the Shotwell Manufacturing Company for the years 1945 and 1946. Int.Rev.Code of 1939, § 145(b), 53 Stat. 63, 26 U.S.C.A. § 145(b). The individual petitioners, Cain and Sullivan, were officers of Shotwell, a candy manufacturer. The charge was that the company's tax returns for these years had not reported substantial income, received from one Lubben, on sales of candy above OPA (Office of Price Administration) ceiling prices-so-called black-market sales.

On appeal the convictions were reversed and a new trial ordered by a divided Court of Appeals on the ground that the District Court should have ordered suppressed certain evidence, used at the trial, which petitioners had furnished the Government in reliance on the Treasury's then 'voluntary disclosure policy.' 225 F.2d 394. In substance that policy amounted to a representation by the Treasury that delinquent taxpayers could escape possible criminal prosecution by disclosing their derelictions to the taxing authorities before any investigation of them had commenced. See 355 U.S., at 235, note 2, 78 S.Ct., at 248; pp. 348-352, infra.

The evidence held subject to suppression consisted of tabulations purporting to show the amount of unreported black-market income received by Shotwell from Lubben during the two tax years in question, and offsetting black-market payments by Shotwell for the purchase of raw materials which almost matched the black-market receipts. Concluding that petitioners' disclosure had been a genuine one (contrary to the District Court's finding) and that it had been made before any investigation of Shotwell's tax returns had started and was thus timely (a question not reached by the District Court, 355 U.S., at 236, 78 S.Ct., at 248;), the Court of Appeals held that the disclosure was valid and that the Government could not, consistently with the Fifth Amendment, use the disclosed material at petitioners' trial.

The matter then came here for review on the Government's petition for certiorari, during the pendency of which the then Solicitor General moved to remand the case to the District Court for further proceedings on the suppression issue-an issue which both sides recognized had properly been one for the court and not for the jury. 355 U.S., at 244, 78 S.Ct., at 252; see United States v. Lustig, 2 Cir., 163 F.2d 85, 88-89, cert. denied, 332 U.S. 775, 68 S.Ct. 88, 92 L.Ed. 360. The motion was based on the claim that newly discovered evidence in possession of the Government would show that the Court of Appeals' decision as to the bona fides and timeliness of the alleged disclosure was the product of a tainted record, involving an attempt on the part of these petitioners 'to perpetrate a fraud upon the courts.' 355 U.S., at 241, 78 S.Ct., at 250. Without reaching any of the questions decided by the Court of Appeals we vacated the judgment of that court and remanded the case to the District Court with instructions to reexamine the disclosure episode in light of the parties' additional evidence and that already in the record, to decide anew the suppression issue, and depending upon its decision to enter a new judgment of conviction or an order for a new trial, as the case might be. 355 U.S., at 245-246, 78 S.Ct., at 253.

The District Court, after a full evidentiary hearing, again denied suppression, finding that 'no honest, bona fide voluntary disclosure' had ever been made and that fraud had 'permeated' the petitioners' disclosure showing at both suppression hearings and at the trial. These ultimate findings rested primarily on subsidiary findings that although Shotwell's black-market receipts had not in themselves been misrepresented, the claim that they had been almost entirely offset by payments for the purported purchase of black-market supplies was false-the truth being (contrary to what petitioners Cain and Sullivan had testified in the earlier proceedings) that most of Shotwell's black-market receipts, 'totaling between three and four hundred thousand dollars,' had found their way into the pockets of Cain, Sullivan and Huebner, all Shotwell officers. The District Court also denied motions for a new trial and overruled challenges, made for the first time in July 1957, to the original grand and petit jury arrays.

The Court of Appeals, sustaining these findings and rulings and overruling other challenges to the remand and original trial proceedings, has now affirmed these convictions, 287 F.2d 667. The case is again before us on certiorari. 368 U.S. 946, 82 S.Ct. 386, 7 L.Ed.2d 342. We affirm the judgment below.

The principal contention is that notwithstanding the finding that Shotwell's disclosure of black-market receipts was fraudulently contrived, the Self-Incrimination Clause of the Fifth Amendment barred the Government's trial use of any of the disclosed material.

Preliminarily we reject as specious petitioners' suggestion that the District Court's finding of fraud is infirm because the falsity of Shotwell's black-market payments, on which that finding principally rested, was an immaterial consideration in view of the Commissioner's then ruling that black-market payments were not includible in the cost of goods sold-in other words, that Shotwell's tax liability would have remained the same whether or not such expenditures were truthfully represented. The fact is that at the time the disclosure was made the Commissioner's ruling was even then in litigation, and some six months thereafter was rejected by the Tax Court, Sullenger v. Commissioner, 11 T.C. 1076, as it also was later by several of the Courts of Appeals. See Commissioner of Internal Revenue v. Weisman, 197 F.2d 221 (C.A.1st Cir.); Commissioner of Internal Revenue v. Guminski, 198 F.2d 265 (C.A.5th Cir.); Commissioner of Internal Revenue v. Gentry, 198 F.2d 267 (C.A.5th Cir.); Jones v. Herber, 198 F.2d 544 (C.A.10th Cir.).

Indeed, the record here shows that petitioners, despite the administrative ruling, attempted to negotiate a settlement reflecting a substantial allowance of such expenditures, and that in making their disclosure they reserved the right to contest the ruling by way of a suit for refund, in whole or in part, of the additional taxes to be assessed in respect of the unreported black-market income. Beyond this, had petitioners been able to convince the Treasury that Shotwell's failure to report the black-market receipts had been due to an honest, though mistaken, belief that such income could be offset by black-market expenditures, it might well have borne importantly on their liability for civil fraud penalties. Int.Rev.Code, 1939, § 293(b). In short, in making their suppression contention petitioners cannot escape the consequences of the finding that their disclosure was fraudulent.

It is of course a constitutional principle of long standing that the prosecution 'must establish guilt by evidence independently and freely secured and may not by coercion prove its charge against an accused out of his own mouth.' Rogers v. Richmond, 365 U.S. 534, 541, 81 S.Ct. 735, 739, 5 L.Ed.2d 760. We have no hesitation in saying that this principle also reaches evidence of guilt induced from a person under a governmental promise of immunity, and where that is the case such evidence must be excluded under the Self-Incrimination Clause of the Fifth Amendment. See Bram v. United States, 168 U.S. 532, 542-543, 18 S.Ct. 183, 187, 42 L.Ed. 568; Hardy v. United States, 186 U.S. 224, 229, 22 S.Ct. 889, 891, 46 L.Ed. 1137; Ziang Sung Wan v. United States, 266 U.S. 1, 14, 45 S.Ct. 1, 3, 69 L.Ed. 131; Smith v. United States, 348 U.S. 147, 150, 75 S.Ct. 194, 196, 99 L.Ed. 192. The controlling test is that approved in Bram: "a confession, in order to be admissible, must be free and voluntary: that is, * *  * not *  *  * obtained by any direct or implied promises, however slight *  *  * ." Bram v. United States, supra, 168 U.S. at 542-543, 18 S.Ct. at 187. Evidence so procured can no more be regarded as the product of a free act of the accused than that obtained by official physical or psychological coercion. But in this instance we find nothing in the circumstances under which the challenged evidence was procured that would run afoul of these jealously guarded constitutional principles.

A coerced confession claim, whether founded on a promise of immunity or otherwise, always involves this question: did the governmental conduct complained of 'bring about' a confession 'not freely self-determined'? Rogers v. Richmond, supra, 365 U.S. at 544, 81 S.Ct. at 741. Under any tenable view of the present situation we think it clearly did not.

The inapplicability here of the constitutional principles relied on by petitioners inheres in both the essential character of this offer of immunity and the particular response of these petitioners to that offer. The offer was nothing more than part of a broad administrative policy designed to accomplish the expeditious and economical collection of revenue by enlisting taxpayer cooperation in clearing up as yet undetected underpayments of taxes, thereby avoiding the delays and expense of investigation and litigation. The Treasury's 'voluntary disclosure policy,' addressed to the public generally and not to particular individuals, was not an invitation aimed at extracting confessions of guilt from particular known or suspected delinquent taxpayers. Petitioners' position is not like that of a person, accused or suspected of crime, to whom a policeman, a prosecutor, or an investigating agency has made a promise of immunity or leniency in return for a statement. In those circumstances an inculpatory statement would be the product of inducement, and thus not an act of free will. No such inference, however, is allowable in the context of what happened here. Petitioners' response, it is true, might not have been made in the absence of the Treasury's offer, but that in itself is not the test. The voluntary disclosure policy left them wholly free to disclose or not as they pleased. In choosing to act as they did, petitioners, far from being the victims of that policy, were volunteers for its benefits.

Moreover, petitioners were not simply volunteers. Plainly the offer of immunity contained in the voluntary disclosure policy presupposed, at the very least, that a delinquent taxpayer would make a full 'clean breast of things.' 355 U.S., at 235, note 2, 78 S.Ct., at 248. Nothing less satisfies the basic reason for the policy-'taking a sensible step to produce the revenue called for by law with the minimum cost of investigation' (emphasis added) and its most recent official expression at the time this disclosure was made. And the record indeed shows that petitioners could not have understood otherwise. Given these factors the matter then parses down to this: granting that in deciding whether to disclose or run the risk of prosecution petitioners were initially justified in relying on the Treasury's general offer of immunity, once a fraudulent disclosure had been determined upon they must be deemed to have recognized that such offer had in effect been withdrawn as to them or, amounting to the same thing, that they were no longer entitled to place reliance on it. Petitioners are thus in legal effect left in no better position than they would have been had the Treasury formally withdrawn its offer of immunity before their disclosure figures were furnished. The case, then, is not merely one of volunteers but also one in which the facts disclosed were deliberately misrepresented. Under no acceptable stretch of the Bram test can petitioners' disclosure in these circumstances be regarded as the product of unlawful inducement. Its admission into evidence did not offend the Self-Incrimination Clause of the Fifth Amendment.

Finally, relevant cases in the lower federal courts confirm the view that must be reached on principle. In the comparable situation of a disclosure by a taxpayer made only after he knew an investigation of his tax returns had commenced, such courts have consistently, and correctly we think, refused to suppress the Government's use of disclosed evidence on the ground that the disclosure could not have been induced by the offer of immunity where the offer had lapsed. United States v. Lustig, 163 F.2d 85, 88-89 (C.A.2d Cir.), cert. denied, 332 U.S. 775, 68 S.Ct. 88, 92 L.Ed. 360; White v. United States, 194 F.2d 215, 217 (C.A.5th Cir.), cert. denied, 343 U.S. 930, 72 S.Ct. 760, 96 L.Ed. 1340; Bateman v. United States, 212 F.2d 61, 65-66 (C.A.9th Cir.) (suppression also denied because disclosure not 'full and complete'); United States v. Weisman, 78 F.Supp. 979 (D.C.Mass.), Similarly a dishonest disclosure cannot be deemed to have been so induced.

Petitioners rely on Rex v. Barker, (1941) 2 K.B. 381, 3 All Eng. 33 (more fully reported there), a decision of the King's Bench Division holding inadmissible in a criminal trial documents, in part fraudulent, which the defendant had produced under a similar British disclosure policy. But that case does not support their position. For though the defendant there had first made only a partial and misleading disclosure, he had then followed it up with a full and honest one, after further discussions with the Iland Revenue and in reliance on its disclosure policy. In the case before us no full and honest disclosure was ever made.

Since no element of coercion or inducement, in any true sense of those terms, attended petitioners' disclosure, no inroad whatever upon constitutional rights is wrought by our rejection of this suppression claim. On the contrary, to sustain the claim would amount to turning an important constitutional principle upside down. For what we have here is not a case of incriminatory evidence having been induced by the Government, but one in which petitioners attempted to hoodwink the Government into what would have been a flagrant misapplication of its voluntary disclosure policy.

Claiming that it appeared at the second suppression hearing that Lubben, whose transactions with Shotwell formed the basis of the charges in the indictment, had testified falsely at the trial respecting the amount of his black-market payments, petitioners contend that the District Court should have ordered a new trial of the entire case. The Court of Appeals made short shrift of this contention (287 F.2d, at 675), and we too find no substance in it.

The cornerstone of petitioners' argument is a statement made by the District Court in the course of its suppression opinion: ' * *  * that Lubben may have exaggerated the amounts of the payments that he and his confederates made to Shotwell is entirely probable.' This statement is sought to be portrayed as a euphemism for a finding that Lubben's trial testimony was perjurious. Were that so a new trial might well be in order, as the Government acknowledges, for Lubben was undoubtedly a crucial government witness. But the record both demonstrates the hollowness of that contention and affords no other basis for disturbing the conclusions of the two lower courts that these petitioners are not entitled to a new trial.

Far from constituting a finding of perjury, the District Court's remark respecting Lubben's trial testimony was nothing more than part of a general observation that the passage of time and the absence of any contemporary records of the Shotwell-Lubben transactions made difficult the pin-pointing of the exact amount of Shotwell's unreported black-market income and the amount thereof that was personally kept by one or another of the Shotwell officers. The suppression record makes clear that the District Court did not initially address itself to the question whether Lubben's trial testimony was perjurious, and that it was not asked to do so until after its opinion denying suppression had come down.

To the contrary, the District Court had not considered it important to determine the precise amounts of Lubben's black-market payments or of the moneys that were retained by Huebner, Sullivan and Cain. It was enough that 'the evidence is overwhelmingly clear that not only were' some $300,000 to $400,000 of black-market payments made to Shotwell by Lubben in the period 1944-1946, but also that 'the greater part' of this money 'was appropriated by Cain, Huebner and Sullivan for their own personal use.'

Petitioners' motion for a new trial, and its denial, followed the filing of the suppression opinion. In their argument before the District Court defense counsel urged, among other things, that the court had 'euphemistically' found Lubben's trial testimony to have been perjurious and, more broadly, that the second suppression hearing and trial versions of the disclosure episode differed so widely as to entitle petitioners to a new jury trial of the main case. In denying the motion the district judge observed that he had simply said in his suppression opinion 'that the amount that Lubben said he paid may have been exaggerated,' and that he would grant a new trial if he thought there 'was a miscarriage of justice,' but that he did 'not so find.' A careful study of the record satisfies us that the District Court did not abuse its discretion in thus ruling.

Petitioners' argument on this score centers largely around the variances they claim to find between the testimony of Huebner (who had not testified in the earlier proceedings) at the second suppression hearing and Lubben's trial testimony as to the amount of Shotwell's black-market receipts. Huebner testified to some 16 or 17 occasions on which Black-market money had been received from Lubben, all of which he said had been divided between himself, Cain and Sullivan. These payments aggregated $272,000 in 1945 and 1946, the years involved in the indictment, as compared with $454,000, Lubben's total trial figure. But the indicated disparity of $182,000 is more apparent than real, for, apart from the fact that Huebner was not the only person in the Shotwell organization who had received Lubben money, and the fact that he was never asked to say whether these were the only Lubben payments he himself had received, there must be added to this $272,000 total some $125,000 to $150,000 that the defense asserted had gone into a 'corn box' (safe deposit box) and was actually used for the purchase of black-market supplies of corn. Hence, viewing things most favorably to the petitioners, the variance of which they make so much is at best no more than from $32,000 to $57,000.

We think the District Court was fully justified in finding that Huebner's testimony 'at the supplemental hearing is reasonably consistent and compatible with the testimony given by the government witnesses at the trial regarding these (black-market) payments,' and that it 'tends to corroborate Lubben's testimony.' Such findings, made as they were in connection with what in effect was a motion for a new trial on newly discovered evidence, must 'remain undisturbed except for most extraordinary circumstances.' United States v. Johnson, 327 U.S. 106, 111, 66 S.Ct. 464, 466, 90 L.Ed. 562. We find none here. This is not a case, as were Mesarosh v. United States, 352 U.S. 1, 77 S.Ct. 1, 1 L.Ed.2d 1, and Communist Party of United States v. Subversive Activities Control Board, 351 U.S. 115, 76 S.Ct. 663, 100 L.Ed. 1003, where a conviction may be regarded or is conceded to have rested on perjured testimony. To overturn the denial of a new trial in this case by the two lower courts would be tantamount to saying that any subsequently discovered inaccuracy in the testimony of an important trial witness, which might have affected his credibility in the eyes of the jury, would entitle a convicted defendant to a new trial. We cannot so hold.

Petitioners next argue that the remand proceedings were the product of fraud and other gross improprieties on the part of the Government and that they should therefore be held for naught The contention has three aspects: (1) that the Government did not disclose to this Court that the testimony of three witnesses proffered in support of its motion to remand was contrary in some respects to that which they had given, or failed to give, on previous occasions; (2) that the Government failed to establish on remand that there had been any perjury on the part of the defense at the original suppression hearing, and itself suborned three of its remand witnesses to testify falsely; and (3) that the prosecution utilized the delay occasioned by the motion to remand (355 U.S. 236-237, note 6, 78 S.Ct. 248) to dragoon witnesses into testifying in support of the Government's view of things. We find no truth in any of these serious charges.

The most that could possibly be claimed respecting the absence of any reference in the remand papers to prior inconsistent statements by the proffered witnesses is that it was a mistake of judgment on the part of the Government not to include such a reference. But, without minimizing the unqualified duty of scrupulous candor that rests upon government counsel in all dealings with this Court, to characterize this episode as amounting to a fraud upon the Court is, to say the least, utterly extravagant.

The issue tendered by the motion to remand was of course not whether the Government's new evidence was true or false, but whether it warranted a reexamination of the suppression issue by the District Court. The evaluation of this evidence, including the credibility of the three witnesses in question, was as this Court recognized (355 U.S., at 241, 244-245, 78 S.Ct. at 250, 252-253) a matter for the District Court. In these circumstances it is understandable that the Government might have considered that if a remand were ordered the District Court was the appropriate forum in which to make available any impeaching material in its possession. Cf., e.g., Jencks v. United States, 353 U.S. 657, 77 S.Ct. 1007, 1 L.Ed.2d 1103; United States v. Zborowski, 2 Cir., 271 F.2d 661. In any event the Government having fully disclosed all such material in the trial court, and that court having taken it into account in making its findings, infra, p. 360, it would be captious to hold that the failure to advert to it in this Court now vitiates the remand.

The claim that the remand should be set aside because no perjury was found in connection with the petitioners' original testimony relating to the disclosure both misconceives the terms of the remand and misportrays the record. Our remand did not have the narrow compass attributed to it, but broadly directed the District Court to reexamine the whole disclosure episode (355 U.S., at 245-246, 78 S.Ct., at 253-254)-a direction to which the proceedings below were entirely responsive. And the District Court plainly found that the course and nature of the disclosure had been deliberately misrepresented by petitioners in significant respects at the earlier suppression hearing. On the other side of the coin the District Court. after full and painstaking consideration, found that the facts, except in one particular, were as anticipatorily represented in the Government's remand papers, and that Huebner, Graflund and Lima (note 19) had testified honestly. It is certainly not for us to reassess their credibility.

Finally, as to the Government's alleged dragooning of these witnesses, it appears that in connection with a new grand jury investigation that was conducted from April 1956 to February 1957 into these same black-market transactions (resulting in a further indictment against these individual petitioners and others), Graflund Huebner, and Lima, among some 64 witnesses, were called for questioning on more than one occasion. But there is nothing in this record to indicate that these repetitive appearances were oppressive or that any of their questioning was attended by improper methods of interrogation. And the District Court, after elaborate exploration, found the charges of prosecutorial overreaching baseless.

We now leave the remand proceedings and turn to the only two challenges pressed here with respect to the main case itself.

In March 1958, more than four years after the trial, petitioners filed amended motions attacking the grand and petit jury arrays. These motions, predicated on 'newly discovered evidence,' alleged that both juries were illegally constituted because the jury commissioner delegated his selection duties to one of his private employees; volunteers were permitted to serve on the juries; and the Clerk of the District Court failed to employ a selection method designed to secure a cross-section of the population.

We think, as the two lower courts did, that petitioners have lost these objections by years of inaction. Rule 12(b)(2) of the Federal Rules of Criminal Procedure, 18 U.S.C.A. provides: 'Defenses and objections based on defects in the institution of the prosecution or in the indictment or information other than that it fails to show jurisdiction in the court or to charge an offense may be raised only by motion before trial. * *  * Failure to present any such defense or objection as herein provided constitutes a waiver thereof, but the court for cause shown may grant relief from the waiver.' Petitioners concede, as they must, that this Rule applies to their objection to the grand jury array, but deny that it applies to their objection to the petit jury array. On the latter point we do not agree. In Frazier v. United States, 335 U.S. 497, 503, 69 S.Ct. 201, 205, 93 L.Ed. 187, this Court stated that a challenge to the method of selecting the petit jury panel comes too late when not made before trial. And the lower federal courts have uniformly held that an objection to the petit jury array is not timely if it is first raised after verdict. See, e.g., Hanratty v. United States, 5 Cir., 218 F.2d 358, 359, cert. denied, 349 U.S. 928, 75 S.Ct. 770, 99 L.Ed. 1259; United States v. Klock, 2 Cir., 210 F.2d 217, 220; Higgins v. United States, 81 U.S.App.D.C. 371, 160 F.2d 222, 223, cert. denied, 331 U.S. 822, 67 S.Ct. 1304, 91 L.Ed. 1839; United States v. Peterson, D.C., 24 F.Supp. 470.

Petitioners have not advanced any reasons for overturning this settled course of decision. Rather they argue that when public officials violate constitutional rights by actions whose illegality is not readily noticeable by the litigants or their counsel, sufficient cause has been shown to warrant relief from application of the Rule. Ballard v. United States, 329 U.S. 187, 67 S.Ct. 261, 91 L.Ed. 181, is said to stand for the broad proposition that technical rules of procedure do not prevent this Court from considering the merits of a basic challenge to the method of jury selection.

In the circumstances of this case, petitioners' contentions are without foundation. In denying the motions the District Court found that the facts concerning the selection of the grand and petit juries were notorious and available to petitioners in the exercise of due diligence before the trial. The same method of selecting jurors in the district had been followed by the clerk and the jury commissioner for years. Inquiry as to the system employed could have been made at any time. Indeed, the acceptance of volunteers for the juries had received publicity in the newspapers, and their presence on the petit jury could have been ascertained at the time it was constituted. And Ballard lends no support to petitioners' position, for in that case the challenge to the jury panel had been timely made and preserved. See 329 U.S., at 190, 67 S.Ct., at 262.

Finally, both courts below have found that petitioners were not prejudiced in any way by the alleged illegalities in the selection of the juries. Nor do petitioners point to any resulting prejudice. In Ballard it was said (at p. 195, 67 S.Ct. at p. 265) that 'reversible error does not depend on a showing of prejudice in an individual case.' However, where, as here, objection to the jury selection has not been timely raised under Rule 12(b)(2), it is entirely proper to take absence of prejudice into account in determining whether a sufficient showing has been made to warrant relief from the effect of that Rule.

We need express no opinion on the propriety of the practices attacked. It is enough to say that we find no error in the two lower courts' holding that the objection has been lost.

Petitioner Sullivan contends that he was denied a fair trial in two respects: (1) the only specific evidence against him was an alleged admission which Lubben testified Sullivan made to him testimony which Lubben, it is asserted, later recanted; and (2) the trial judge's instructions allowed the jury to consider evidence that had not been admitted against him.

At one point in the trial Lubben testified that, to the best of his recollection, he had a conversation with Sullivan on or about February 14, 1946, concerning the advisability of paying the black-market overages by check. According to Lubben: Sullivan asked 'Are you sure this (the payment) is not appearing on your books any place?' Sullivan then proceeded to state: 'Well, Dave, you know how it is. You have a place in New Jersey, a farm in New Jersey. This money I have been using in my farm. * *  * I am getting a new driveway *  *  * put in. * *  * That is the only way I can do it today, with the tax situations the way they are.' When the trial resumed the following day, Lubben volunteered a correction of his previous testimony, stating that the conversation had taken place as described but not on February 14, 1946; it had occurred, he thought, 'some time around September or October of 1946.' It is apparent, therefore, that the substance of the testimony was not recanted.

There was, moreover, additional testimony against this petitioner. Sullivan himself admitted at the trial that he had knowledge of the Shotwell black- market receipts, maintaining, however, that the money was used solely for the purchase of black-market supplies. But Roeser, comptroller of Shotwell, testified that, when directed, he turned over cash moneys received from Lubben to Cain, Huebner, and Sullivan. Ericson, shipping superintendent of Shotwell in 1945 and 1946, stated that although his memory was not clear as to the particular officials present when the devious method of shipping black-market candy to Lubben was inaugurated, he would not have shipped in this way without instructions from Cain, Sullivan, or Huebner. And Sullivan's own answers on cross-examination respecting his knowledge of the necessity for keeping the Lubben black-market transactions off Shotwell's books were, to say the least, highly equivocal.

The foregoing evidence, coupled with Sullivan's status as executive vice-president of Shotwell and his general prominence at the policy level of the company's affairs, was amply sufficient to carry the case as to him to the jury and to support its verdict of guilt.

The trial judge repeatedly cautioned the jury throughout the trial that certain evidence, particularly the disclosure documents turned over to the Treasury, was not being admitted against Sullivan and should not be considered against him. It is claimed, however, that the court's instructions nevertheless allowed the jury to consider such evidence. The allegedly erroneous portion of the charge states:

'You have heard the testimony regarding Cain's alleged     admission as to the falsity or incompleteness of these tax      returns, and his explanation as to why, in his opinion, at      the time he assumed they were false and inaccurate.

'There has also been received in evidence work sheets and     data compiled by Mr. Busby, and certain data compiled by Mr. Cain with respect to an alleged tentative compilation of the     overages, and the disposition of such receipts by Shotwell,      for raw materials, and the nature and character of the      disposition, which was allegedly made.

'All of the testimony should be considered by you, that is,     all that testimony should be considered by you in view of the      circumstances, and understanding of the parties in so far as      it may bear upon any intent of the parties to wilfully      violate the income tax laws or their good faith, or lack of      good faith in the matter.'

This instruction must be read in context. Shortly after it was given, the court proceeded to charge:

'Any statement or act of any of the defendants not in the     presence of another defendant is not binding upon the absent      defendants, even though one or more of the defendants were      mentioned in the converstaion, nor are such matters competent      evidence against any other defendant not present. I have limited, you will observe, certain evidence during the trial,     from time to time, as being competent only as to certain      defendant or defendants, that is, by way of example, what Mr. Huebner, or Mr. Cain may have said or done in the absence of     Mr. Sullivan, would not be binding or competent as to Mr.      Sullivan.'

This limiting instruction is clear. It must be presumed that the jury conscientiously observed it. United States v. Harris, 7 Cir., 211 F.2d 656, 659, cert. denied, 348 U.S. 822, 75 S.Ct. 34, 99 L.Ed. 648. Surely it would have been impracticable for the trial judge, as he discussed the evidence in his final instructions, to have reminded the jury with respect to each of the many items of proof mentioned that it had been admitted only against certain named defendants and should not be considered against the others. We find no error in the charge.

The judgment of the Court of Appeals as to all petitioners must be affirmed.

Affirmed.

Mr. Justice BLACK, with whom THE CHIEF JUSTICE and Mr. Justice DOUGLAS concur, dissenting.