Before BIGGS, Chief Judge, and GOODRICH and HASTIE, Circuit Judges.
An information of two counts was filed against Kahriger. The first count charged that he engaged in the business of accepting wagers as defined in 26 U.S.C. § 3285, and willfully failed to pay the special occupational tax imposed by 26 U.S.C. § 3290, in violation of 26 U.S.C. §§ 3294 and 2707 (b). The second count charged that Kahriger engaged in the business of accepting wagers as defined in 26 U.S.C. § 3285, and willfully failed to register for the special occupational tax relating to wagering as required by 26 U.S.C. § 3291, in violation of Secs. 3294 and 2707 (b). In short, Count I charged him with willful failure to pay the tax; Count II charged him with willful failure to register to pay the tax.
Kahriger first made an attack on the constitutionality of the statute and succeeded in the court below. See D.C., 105 F.Supp. 322. The Supreme Court reversed, three Justices dissenting.See United States v. Kahriger, 345 U.S. 22, 73 S. Ct. 510, 97 L. Ed. 754. On remand he was tried to the court below without a jury and largely on a stipulation of facts, though he did testify. The substance of Kahriger's factual defense was that he could not register in the terms required by Form 11-C without incriminating himself, and, since the Collector would not permit him to pay the tax unless he registered, he, therefore, could not pay the tax. The contents of the stipulation and his testimony are set out at a later point in this opinion. At appropriate times Kahriger moved for a judgment of acquittal. The court denied the motions and found him guilty as charged on both counts and he has appealed.
Kahriger makes several contentions. He asserts that the application of the statute to him by means of Form 11-C, the "Special Tax Return and Application for Registering - Wagering", is unconstitutional, saying that the registration requirements would require him to incriminate himself despite the prohibition of the Fifth Amendment. The short answer to this contention is that Form 11-C precisely follows the terms of the statute and since the latter has been held constitutional by the Supreme Court, the constitutional question raised by Kahriger is no longer open to us.*fn1
Kahriger next asserts that a willful failure to register for the special occupational tax is not made a criminal offense by the statute.*fn2 But Section 3291, 26 U.S.C., provides that he who is liable to pay the special tax must register. Section 3294 (c) states that the penalties imposed by Section 2707 "with respect to the tax imposed" by Section 2700 shall apply with respect to the tax imposed by Section 3290. On this record it is clear that Kahriger falls within the class of persons described by Section 3290 and that registration is required of him by Section 3291. Section 3294 does not prescribe in express words a penalty for a willful failure to register. Section 2707 (b) of the so-called "Firearms Act", referred to in Section 3294, provides that any person required to "pay any tax" or to "make a return" or to "supply any information," who willfully fails to do so, shall be liable to the penalties prescribed by the subsection. The question then becomes: did Kahriger's failure to register fall within the language of Section 2707 (b)?
Kahriger contends that certain designated failures to conform with the provisions of the special occupational tax act relating to wagering, such as failure to pay the tax or post the stamp, specifically are made subject to penalty by Section 3294. From this he seems to argue that we must look only to Section 3294 for the imposition of penalties. But this is not so. If the failure to register prescribed by Section 3291 is the equivalent of failure to supply information under Section 2707 (b), a penalty has been prescribed. Having in mind that this is a criminal statute and therefore must be construed strictly, we conclude nonetheless that the phrase to "supply any information" in Section 2707 (b) is in substance identical with the requirement of registration required by Section 3291. This is clearly demonstrated by the provisions of the subdivisions of that section and the point need not be labored further. We are of the opinion, therefore, that a willful failure to register is a criminal offense and was adequately described in Count II. Other arguments made by Kahriger as to the scope of the statute need not be discussed here.
An additional point, however, is urged by Kahriger, viz., that the evidence does not sustain the charge of a willful failure to register and a willful failure to pay the occupational tax. On this ground we find it necessary to reverse the judgments of conviction and to direct the court below to enter judgments of acquittal on both counts. Our reasons follow. It will be observed that the word "willfully" is used in both counts. 26 U.S.C. § 3294 (c) by its terms provides that the penalties prescribed by Section 2707 of Title 26 with respect to the tax imposed by Section 2700 shall apply with respect to the tax imposed by the subchapter insofar as "Willful Violations" are concerned. No minimum penalty is provided by Section 2707, but Section 3294 (a) prescribes a penalty, a fine of not less than $1,000 and not more than $5,000 to be imposed on any person who does an act which makes him liable for the special tax without having paid such tax. See 65 Stat. 531. The word "willfully" is not used in Section 3294 (a)
In United States v. Murdock, 1933, 290 U.S. 389, 54 S. Ct. 223, 78 L. Ed. 381, the Supreme Court passed upon the validity of convictions for violations of Section 1114 (a) of the Revenue Act of 1926 and of Section 146 (a) of the Revenue Act of 1928. See 44 Stat. 116 and 45 Stat. 835. The statutes referred to made it a misdemeanor for a taxpayer "willfully" to fail to supply information in regard to his income. Murdock refused to give the information lest he incriminate himself, claiming the privilege of the Fifth Amendment. At that time the law upon the point was unsettled. The Supreme Court held that the taxpayer's fear was a reasonable one and that on trial, after the issue of self-incrimination had been settled unfavorably to Murdock, he was nonetheless entitled to an instruction to the jury as to his good faith in refusing to answer the questions which he feared would be self-incriminating.*fn3
There is no substantial difference in the wording of Section 2707(b) of Title 26 U.S.C. and Section 1114 (a) of the Revenue Act of 1926.*fn4 In the instant case the issue of instructions to the jury is not before us for Kahriger was tried to the court, but all the proof or evidence offered or received in the case consisted of an oral stipulation*fn5 and a little testimony offered by Kahriger.*fn6
It was stipulated that Kahriger on or before November 26, 1951, at Philadelphia, was engaged in the business of accepting wagers and did accept wagers as defined in Title 26, Sec. 3285, and failed to pay the special tax imposed by Section 3290 because the Collector of Internal Revenue would not accept payment of this tax unless Kahriger first registered by furnishing completely the information required on a form specified as Form 11-C; that Kahriger refused to do this because he contended that it would have incriminated him of Federal and State offenses. Kahriger did not bring any additional pertinent information into the record upon his brief examination in chief. There was no cross-examination.
The circumstances of the instant case are very similar to those of Murdock. The undisputed evidence is that Kahriger refused to fill out the required registration form because the questions on Form 11-C if answered required him, in his opinion, to incriminate himself of Federal and State offenses. He claimed his privilege under the Fifth Amendment. While the privilege was found to be legally insufficient by the Supreme Court, nonetheless he was able to convince three Justices that he might incriminate himself if he complied with the statute. See Kahriger, 345 U.S. at pages 36-40,*fn7 73 S. Ct. 510, 97 L. Ed. 754. The decision of the Supreme Court in the instant case, United States v. Kahriger, supra, was the first time that the issue of self-incrimination posed by the statute had ever been adjudicated by that Tribunal. Under the circumstances, it cannot be said that Kahriger's attitude was unreasonable. Cf. United States v. Martell, 3 Cir., 1952, 199 F.2d 670, and Hatfried, Inc. v. Commissioner of Internal Revenue, 3 Cir., 1947, 162 F.2d 628.
The testimony given by Kahriger goes no further than the stipulation and was indeed but the echoing of it. The United States was conclusively bound on the facts stated in the stipulation as indeed, under the circumstances, was the court below. There is nothing in the record, no scintilla of proof, that Kahriger refused the information willfully, that is to say that he refused to register because of "bad faith" or "evil intent". True his failure to register was "voluntary", but that is not sufficient. See United States v. Murdock, 290 U.S. at pages 397-398, 54 S. Ct. 223, 78 L. Ed. 381. In our opinion the United States has completely failed to meet the burden of proof imposed upon it under the circumstances.
It follows that the court below was in error in finding Kahriger guilty as charged in the information, viz., guilty of willful violations of the statute. That the court did so is demonstrated by the fact that it imposed a penalty of only $500 to be paid by Kahriger on each count as required by Section 2707 (b). Had the court found him guilty of failure to pay the tax under Section 3294 (a), this subsection not requiring proof of willfulness, the fine on Count I would have to have been at least $1,000. The offense proscribed by Section 3294 (a) is in all probability a lesser one than that defined by Section 3294 (c) which, as has been pointed out, relates to willful violations.*fn8 We do not have to decide this question and the possible application of Rule 31 (c), Fed.Rules Cr.Proc.,*fn9 for the case was tried by the United States on the theory of willful violations and so went to the trier of the facts. The record in the trial court is devoid of any suggestion that a penalty should have been imposed for a non-willful failure to pay the tax under Section 3294 (a). The issue of possible application of Rule 31 (c) was not raised by the parties in this court. We have adverted to it sua sponte to the end that possible future confusion may be ...