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United States v. Grunberger

decided: September 14, 1970.


Waterman, Moore and Kaufman, Circuit Judges.

Author: Waterman

WATERMAN, Circuit Judge:

Appellant Albert Grunberger appeals from a judgment of conviction entered in the United States District Court for the Eastern District of New York convicting him after a jury trial. He was convicted on three counts of having concealed, sold, and facilitated the transportation of illegally imported Swiss watch movements in violation of 18 U.S.C. ยง 545*fn1 and on one count of conspiracy to do so. Grunberger was tried on a six-count indictment. One count was dismissed by the trial court and the jury returned a not guilty verdict on another. He was sentenced to serve concurrent terms of imprisonment for a year and a day and to pay cumulative fines of $10,000 on two counts; on the remaining two counts he was given a suspended sentence and a two-year period of probation to commence after termination of the prison term.

Appellant urges that his conviction should be reversed on the grounds that (1) the evidence was insufficient to support a verdict of guilty; (2) he was unfairly prejudiced while on the witness stand by an excessive and improper examination of him by the trial judge; (3) the prosecutor while addressing the jury alluded to matters extraneous to the record by expressing his personal belief in defendant's guilt; and (4) the court improperly instructed the jury concerning an alleged admission. We find that the cumulative effect of errors committed at trial when viewed in the light of the trial posture of the case as a whole requires a reversal and a remand.

The United States Customs Bureau had for some time kept defendant, a German-born citizen seeking to immigrate to the United States, under surveillance. In their effort to implicate Grunberger as a dealer in smuggled goods the Customs Bureau officials acquired the cooperation of one Kalman Berger, who at the time his cooperation was secured was under indictment for possession of smuggled watch movements.*fn2 At Grunberger's trial Kalman Berger testified that he had come to this country from Hungary approximately 15 years prior to the trial and had continually been in the "watch importing business" during that period. According to Berger, he met with defendant on June 28, 1967, and arranged to buy Swiss watches and movements. On July 19, the defendant and Berger met at a restaurant in Brooklyn to consummate the deal. Berger there wrote the defendant a post-dated check for $12,000 with the name "Simeon" entered thereon as payee upon the understanding that he would receive 2500 assorted movements. After transferring only 2000 movements to Berger's rented car in a nearby parking lot, Grunberger told Berger that he would later deliver the balance of 500 movements, and gave him a key to a subway locker in which Berger was assured he would find some liquor. Berger, having taken leave of defendant, then met with a Customs agent to hand over what turned out to be 2000 "unsymboled"*fn3 Swiss watch movements. On Berger's way home he picked up a bag from the designated subway locker represented by defendant to contain liquor. After traveling some time en route home Berger unexpectedly discovered the bag contained 1000 unsymboled Swiss movements. These were later, according to Berger, also turned over to Customs officials.

Grunberger's version of the transaction varied from Berger's version in several major respects: He recounted that Berger had at one time purchased $50,000.00 worth of whisky futures from him as a broker, which, as it turned out, was a losing investment for Berger. Berger had subsequently pledged these whisky certificates as collateral for a loan of $12,000 Berger obtained from Jechiel Herstig, a watchmaker who did business with Berger.*fn4 At about this time Berger delivered to Herstig 2000 watch movements to have the name "Leica" on the watch dials removed and the name "Cova" substituted. Berger had testified in cross-examination that he employed the trade name "Leica," among others, on watches imported in his business. Disturbed by the declining value of his security, Herstig demanded payment of the loan. Berger, unable to pay, became embittered when Herstig consequently refused to return his watches. Grunberger was prevailed upon to mediate the dispute and, so acting, persuaded Herstig to cancel the interest due on the loan, to settle the obligation by accepting repayment of the principal only, and to return Berger's watches. Grunberger accordingly conducted the exchange of the 2000 watch movements and the whisky certificates for a $12,000 check. The check was then turned over to Herstig, who had designated that the name of the payee was to be "Simeon." Finally, Grunberger denied all knowledge of the watches Berger stated Berger had found in the subway locker instead of liquor.

Expert testimony and documentary evidence offered by the prosecution established that the allegedly smuggled watches Grunberger was charged with having sold to Berger for $12,000 were Swiss made and bore no symbols, that no record of the legal importation of watches marked "Cova" (the name appearing on the unsymboled movements in question) could be found among the records of legally imported unsymboled Swiss movements, and that there was no record of importation of any watches in the names of either Grunberger or Herstig.*fn5 Thus, proof that the watches were illegally imported was only circumstantial, but, of course, if no record could be found showing that the watches were legally imported, the jury could imfer that they were illegally imported.

The evidence also indicated, however, that unsymboled Swiss movements may be lawfully introduced into U.S. domestic commerce as a result of government sales after forfeitures, and, also, that, under certain circumstances, unsymboled Swiss watches may be legally imported from abroad. Expert testimony by a government witness also established that the identifying names on a watch dial, e. g., "Cova," may be removed and any name printed in its place. Indeed, the Government's expert witness indicated this practice was common in the trade and Berger testified it was his regular practice to have the trade names on dials of watches he imported changed by a chemical and stenciling process.*fn6

The only evidence which could be reasonably claimed to fortify the inference that the watches were illegal imports because of the absence of a record of legal importation is Berger's testimony that the word "smuggled" was used in a conversation with the defendant prior to the transfer of the watches.

The defendant would have this court reverse on the basis that the evidence of illegal importation, even when viewed in a light most favorable to the Government, as we must, e.g., United States v. Robbins, 340 F.2d 684, 687 (2 Cir. 1965) pointed as readily to innocence as to guilt. Although it is true that here a reasonable hypothesis that the watches may have been legally introduced into American commerce can be theorized from the facts, such an inference does not foreclose the jury from reaching the opposite conclusion. United States v. Ragland, 375 F.2d 471, 477 (2 Cir. 1967), cert. denied, 390 U.S. 925, 88 S. Ct. 860, 19 L. Ed. 2d 987 (1968); United States v. Aadal, 368 F.2d 962, 964 (2 Cir. 1966), cert. denied, 386 U.S. 970, 87 S. Ct. 1161, 18 L. Ed. 2d 130 (1967); United States v. Botsch, 364 F.2d 542, 550 (2 Cir. 1966), cert. denied, 386 U.S. 937, 87 S. Ct. 959, 17 L. Ed. 2d 810 (1967); United States v. Marchisio, 344 F.2d 653, 662 (2 Cir. 1965); United States v. Woodner, 317 F.2d 649, 651 (2 Cir.), cert. denied, 375 U.S. 903, 84 S. Ct. 192, 11 L. Ed. 2d 144 (1963); United States v. Ploof, 311 F.2d 544, 546 (2 Cir. 1963); United States v. Tutino, 269 F.2d 488, 490 (2 Cir. 1959); United States v. Moia, 251 F.2d 255, 258 (2 Cir. 1958); see Holland v. United States, 348 U.S. 121, 139, 75 S. Ct. 127, 99 L. Ed. 150 (1954). We do not agree with the contrary rule followed by the Fifth Circuit as stated in Battles v. United States, 388 F.2d 799, 801-802 & n. 3 (5 Cir. 1968) that, in order to sustain conviction, the inferences reasonably to be drawn from the evidence, when entirely circumstantial, must preclude every reasonable hypothesis other than guilt.

The would-be hypothesis that the defendant was not dealing in contraband involves the inference that inasmuch as dial names can be and often are changed by legitimate dealers, the watches introduced into evidence to prove defendant's guilt may have been so altered, and consequently, if so altered, would not have shown up in the Government's records of unsymboled legal imports or its records of unsymboled watches sold by the Government after forfeiture. Indeed, the prosecution made no effort to rebut Grunberger's testimony that the watch dial names had in fact been changed by Herstig and did not inquire of its expert witnesses whether the names on the watches in question were unaltered.

On the other hand, of the relatively small number of unsymboled watches which find their way legally into commerce as compared to those in commerce which have been illegally imported, there is a reasonable probability that the watches in question here were of the latter variety. The fact that Berger had dealt in smuggled watches, see note 2 supra, and the somewhat clandestine manner in which the watches were transferred fortifies the more reasonable hypothesis that the watches were illegal imports.

We must point out, however, that where the Government's case involves close factual issues*fn7 and its proof of an element of the crimes alleged leaves room for a reasonable inference inconsistent with guilt, we will scrutinize claimed error with particular care. Error which may be deemed relatively minor in other circumstances may reach prejudicial proportions in a close factual case such as this. Cf. United States v. Persico, 305 F.2d 534, 536 (2 Cir. 1962). Grunberger's primary defense was his claim that the 2000 watch movements were not his property or the property of Herstig, but, as pledged property being redeemed, they were being returned to their true owner, Kalman Berger, after the dial name "Leica" (admitted by Berger to be a trade name used by him) had been changed at Berger's request to "Cova," and that the $12,000 check was the repayment of the loan Berger owed to Herstig. Had the jury believed Grunberger's version of the transaction it would seem that he most likely would have been acquitted on all counts.*fn8

Appellant next contends that he did not receive a fair and impartial trial because the jury must have realized that the trial judge gave the greater credence to Berger's account of the facts from the contrasting manner in which ...

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