filed: April 11, 1994; As Corrected April 20, 1994.
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY. (D.C. Criminal No. 92-00480-01).
Before: Hutchinson, Cowen and Nygaard, Circuit Judges.
James Palmieri appeals from his conviction on one count of knowingly engaging in the business of dealing in firearms without being licensed to do so, in violation of 18 U.S.C. §§ 922(a), 924(a), and one count of knowingly possessing and transferring a machine gun, in violation of 18 U.S.C. §§ 922(o), 924(a)(2). He contends that the district court erred (1) by precluding a defense based on his license as a collector of curios and relics, (2) in responding to a jury question regarding licenses for selling firearms, (3) in charging the jury on the machine gun element of the second count, (4) by admitting lay opinion and hearsay testimony relating to this element, and (5) in charging the jury on the intent requirement for the second count. We conclude that these assertions of error are without merit and will affirm.
The facts are essentially undisputed. Palmieri met Ronald Lyman, an FBI special agent, and John Debenedictus, a paid informant, and sold Lyman three nine-millimeter semiautomatic pistols (a German Luger, a Belgium Browning and a French MAB) for $1,300. Although these weapons were manufactured during World War II, each was functional. The following week, Palmieri, Lyman and Debenedictus met again and Palmieri sold Lyman an M-1 carbine semiautomatic rifle for $400. This weapon was a remanufactured World War II vintage firearm, but it was also functional and could be converted to be fully automatic.
Two weeks later, Palmieri, Lyman and Debenedictus once again met, and Palmieri sold Lyman a 7.92 millimeter Chinese type 26 machine gun for $5,000.*fn1 Although at the time of sale, Palmieri stated that the machine gun was fully operational and fully automatic, when FBI special agent Robert W. Murphy later examined the weapon, it was not operational. The machine gun was designed to fire in a fully automatic mode, but it was missing a required breechblock. The government and Palmieri dispute whether the machine gun was operational when Lyman purchased it. The weapon did, however, have a frame or receiver which is defined as "that part of a firearm which provides housing for the hammer, bolt or breechblock and firing mechanism . . . ." 27 C.F.R. § 179.11 (1993). Palmieri met with Lyman and Debenedictus on several other occasions, but sold them no other firearms.
At trial, the government introduced tape-recorded offers by Palmieri to sell other weapons, store stolen goods and obtain counterfeit passports. Palmieri's response to this evidence was that these offers were puffery or were misconstrued. During the relevant time period, Palmieri held a license from the Bureau of Alcohol, Tobacco and Firearms ("ATF") as a collector of curios and relics. The jury found Palmieri guilty on one count of engaging in the business of dealing in firearms and one count of possessing and transferring a machine gun. The district court sentenced him to 27 months imprisonment on each count to be served concurrently.
Count one of the superseding indictment charged Palmieri with violating 18 U.S.C. § 922(a), which provides that:
(a) It shall be unlawful--
(A) except a licensed importer, licensed manufacturer, or licensed dealer, to engage in the business of importing, manufacturing, or dealing in firearms . . . .
18 U.S.C.A. § 922(a)(1)(A) (West Supp. 1993). The first element of a violation of § 922(a) is that the defendant "engaged in the business" which, as applied to a dealer in firearms, is defined as
a person who devotes time, attention, and labor to dealing in firearms as a regular course of trade or business with the principal objective of livelihood and profit through the repetitive purchase and resale of firearms . . . .
Although the definition explicitly refers to economic interests as the principal purpose,*fn2 and repetitiveness as the modus operandi, it does not establish a specific quantity or frequency requirement. In determining whether one is engaged in the business of dealing in firearms, the finder of fact must examine the intent of the actor and all circumstances surrounding the acts alleged to constitute engaging in business. This inquiry is not limited to the number of weapons sold or the timing of the sales. For example, the location of the sales, the time and conditions under which the sales occur, the defendant's behavior before, during and after the sales, the price charged for and characteristics of the firearms sold, and the intent of the seller are all potentially relevant indicators of whether one has "engaged in the business" of dealing.
A statutory exemption to the definition of "engaged in the business" is set forth in 18 U.S.C. § 921(a)(21)(C), which provides that it
shall not include a person who makes occasional sales, exchanges, or purchases of firearms for the enhancement of a personal collection or for a hobby, or who sells all or part of his personal collection of firearms . . . .
Id. § 921(a)(21)(C); see also id. § 922(a)(22) (objective of livelihood and profit contrasted with improving or liquidating a personal firearms collection). Hence, if Palmieri sold firearms to Lyman from his private collection, he had a defense under § 921(a)(21)(C) that these sales were "for the enhancement of a personal collection or for a hobby," or constituted the sale of "all or part of his personal collection of firearms." Once again, however, there is no bright-line rule. The fact-finder must determine whether the transactions constitute hobby-related sales or engagement in the business of dealing from the nature of the sales and in light of their circumstances.
Whereas the first element of a § 922(a) violation addresses the character of the conduct, the second element focuses on the status of the defendant, namely, whether he or she is a licensed dealer. A "dealer" is statutorily defined as "any person engaged in the business of selling firearms at wholesale or retail," id. § 921(a)(11)(A), and a "collector" is defined as "any person who acquires, holds, or disposes of firearms as curios or relics . . . ." Id. § 921(a)(13).*fn3 Section 922(a) requires inquiry into both the defendant's conduct and status. If the conduct constituted engaging in the business of dealing in firearms, then it is illegal unless the defendant is a licensed dealer. On the other hand, sales by a licensed or unlicensed collector from a personal collection in furtherance of a hobby are not illegal. Once the conduct is deemed equivalent to the business of dealing, however, collector status will not shield a defendant from liability under § 922(a).
The district court included the statutory exception to "engaged in the business," see § 921(a)(21)(C), and the definition of "with the principle objective of livelihood or profit," see id. § 921(a)(22), in its charge to the jury. It further instructed that:
In this case, you have heard testimony that during the time period covered by the indictment, the defendant, James Palmieri, was a licensed firearms collector. I instruct you as a matter of law, that the collector's license possessed by the defendant did not authorize him to sell any firearms, even firearms that have been classified as curios or relics. I further instruct you that what the defendant believed his collector's license authorized him to do is not an issue in this case, it is therefore, irrelevant to your determination of the charges in this case.
The instruction that the collector's license did not authorize any sales of firearms, although literally correct is potentially misleading. The collector's license is immaterial because any person can make occasional sales from his or her personal collection without violating 18 U.S.C. § 922(a), whether a licensed collector or not. Nonetheless, as stated above, a collector's license does not authorize its holder to engage in the business of dealing in firearms. Hence, the instruction that Palmieri's collector's license, in and of itself, did not authorize him to make the sales to Lyman is correct, albeit a bit truncated. Palmieri's status as a licensed collector was not dispositive, and he had no legally cognizable defense based on his collector's license alone. The jury was still required to determine the character of the transactions, either as occasional sales in furtherance of a hobby or as engagement in the business of dealing in firearms. See United States v. Hooton, 662 F.2d 628, 635 (9th Cir. 1981) (distinguishing intent to engage in business from intent to enhance a gun collection), cert. denied, 455 U.S. 1004, 102 S. Ct. 1640, 71 L. Ed. 2d 873 (1982).
Although Palmieri was precluded from arguing that the sales were authorized by his collector's license, the jury charge included the statutory exemption for sales from or to enhance a personal collection. It also distinguished between the intent of obtaining a livelihood and profit from the intent of liquidating a personal collection. Thus, the jury was given the option of finding that Palmieri's actions did not constitute engaging in the business of dealing, irrespective of his collector's license. We have reviewed the entire jury charge and conclude that it was sufficient to enable Palmieri to present the defense that his sales were in connection with his hobby. See Estelle v. McGuire, 116 L. Ed. 2d 385, 112 S. Ct. 475, 482 (1991) (considering challenged jury instruction "in the context of the instructions as a whole and the trial record"); United States v. McGill, 964 F.2d 222, 235 (3d Cir.) (determining "whether the charge, taken as a whole and viewed in the light of the evidence, fairly and adequately submits the issues in the case to the jury") (quoting Link v. Mercedes-Benz of North America, Inc., 788 F.2d 918, 922 (3d Cir. 1986)), cert. denied, 113 S. Ct. 664 (1992).*fn4
During their deliberations, the jury asked the following question: "Do you need a license to sell firearms under all circumstances?" The district court answered this question by telling the jury:
Ladies and gentlemen of the jury, counsel have seen your question, and I have reviewed it with them, and the best answer that I can give you to this is that that is not your concern as a jury. You do not need to know everything about under what circumstances a person could or could not do this. What you need to do, and I'm going to try to help you to do it by refocusing you on the instructions that you've been given, is you need to just bear in mind what we have told you about the law which is applicable to this case. And that is that you need to determine on Count One and I assume this question is directed at Count One, whether this individual, defendant, was engaged in the business of dealing in firearms without a license, without a federal dealer's license -- federal firearm dealer's license. Now, the language of that phrase is referred to in the jury instructions. The term "engaged in the business" is defined for you and it refers to certain activities and then it says, but the terms [sic] does not include and then you can see what that says. So I refer you to that page to focus on that definition of what is engaged in the business.
Furthermore, I refer you to the instruction that you received on the next page, which is I instructed you as a . . . matter of law that the collector's license possessed by the defendant did not authorize him to sell any firearms, and that whatever he believed his collector's license permitted him to do, authorized him to do, is not an issue in this case, and is not for you to consider.
Thirdly, I refer you to the instructions . . . on page 14, which defines [sic] licensed dealer, and which sets [sic] forth what the Secretary of the Treasury discovered through searching the records of that agency, namely, that in the period in question, there is no record that the defendant currently held a federal firearms dealer's license. So, the question, do you need a license to sell firearms under all circumstances? You don't need to answer that question. What you need to answer within the instructions that you've been given, is the question of guilt or not guilt on Count One and Count Two of this indictment.
The district court discussed with counsel how best to answer the jury's question before doing so. Defense counsel did not object to the proposed answer, and Palmieri's objection now that the district court should have specifically referred to the language in the statutes defining "engaged in the business" and "objective of livelihood and profit" does not constitute plain error. See Fed. R. Crim. P. 52(b); United States v. Young, 470 U.S. 1, 15, 105 S. Ct. 1038, 1046, 84 L. Ed. 2d 1 (1985) (explaining that plain errors are only those which undermine fundamental fairness and contribute to a miscarriage of Justice); Government of Virgin Islands v. Smith, 949 F.2d 677, 681 (3d Cir. 1991) (providing framework for plain error analysis).
The third issue focuses on the definition of "machine gun" for purposes of 18 U.S.C. § 922(o) which states in relevant part that: "It shall be unlawful for any person to transfer or possess a machinegun." 18 U.S.C.A. § 922(o) (West Supp. 1993). The term "machine gun" is statutorily defined in 26 U.S.C. § 5845 (b), which provides in part that:
Any weapon which shoots, is designed to shoot, or can be readily restored to shoot, automatically more than one shot, without manual reloading, by a single function of the trigger. The term shall also include the frame or receiver of any such weapon, any part designed and intended solely and exclusively, or combination of parts designed and intended, for use in converting a weapon into a machine gun, and any combination of parts from which a machine gun can be assembled if such parts are in the possession or under the control of a person.
26 U.S.C.A. § 5845(b) (West 1989) (emphasis added); see also 18 U.S.C.A. § 921(a)(23) (West Supp. 1993) (referring to 26 U.S.C. § 5845(b)). The district court charged the jury with the emphasized portion of the statute only, and the jury later asked the district court to "please complete the second sentence, which reads, 'The term shall also include the frame or receiver of any such weapon.'" The district court answered as follows: "There is no need to complete that sentence for purposes of this case, because it -- that sentence goes on and refers to things which are not relevant to this case, so you may consider that phrase to be the complete statement in that second sentence."
Palmieri contends that the second sentence of § 5845(b) should be interpreted as creating a three-pronged definition for the term "machine gun." In other words, a machine gun includes a (1) frame or receiver, in conjunction with (2) any part or combination of parts designed and intended to convert a weapon into a machine gun, and (3) any combination of parts from which a machine gun can be assembled. See United States v. Seven Miscellaneous Firearms, 503 F. Supp. 565, 575 (D.D.C. 1980) (reasoning that "frame or receiver" should not be contemplated in isolation since Congress used the conjunctive rather than disjunctive in the second sentence of § 5845(b)). An alternative interpretation is that the second sentence of § 5845(b) "reflects a purpose to include three new categories of weapons within the definition of a machine gun." United States v. Kelly, 548 F. Supp. 1130, 1133 (E.D. Pa. 1982).
We exercise plenary review over this question of statutory interpretation, see McGill, 964 F.2d at 235, and believe that the answer is found in the plain language of the statute itself which provides that machine gun "shall also include " items A, items B and items C. This language confutes Palmieri's argument and, indeed, includes three new categories within the definition of machine gun. Reading the statute in the conjunctive would lead to the unlikely result that both the parts for conversion into and the parts for assembly of a machine gun as well as a frame or receiver are required.
Alternatively, where the statutory language is susceptible to more than one interpretation, a court "appropriately may refer to a statute's legislative history to resolve statutory ambiguity." Patterson v. Shumate, 119 L. Ed. 2d 519, 112 S. Ct. 2242, 2248 (1992) (quoting Toibb v. Radloff, 501 U.S. 157, 111 S. Ct. 2197, 2200, 115 L. Ed. 2d 145 (1991)). In this case, the legislative history clearly indicates an intent to expand the definition of machine gun. The Senate Report provides in part that:
The second sentence [of § 5845(b)] is new. It provides three new categories as included within the term "machine gun": (1) the frame or receiver of a machine gun, (2) any combination of parts designed and intended for use in converting a weapon other than a machine gun into a machine gun; for example, so-called conversion kits, and (3) any combination of parts from which a machine gun can be assembled if such parts are in the possession of a person. This is an important addition to the definition of "machine gun" and is intended to overcome problems encountered in the administration and enforcement of existing law. It is intended that the three additional categories be subject to all the provisions of the chapter applicable to serviceable machine guns.
S. Rep. No. 1501, 90th Cong., 2d Sess. 45-46 (1968) (quoted in Kelly, 548 F. Supp. at 1133).
We believe that the statutory language in § 5845(b) and the legislative history mandate an interpretation that creates three new categories for machine guns. This Conclusion is supported by case law from other circuits. See, e.g., Thompson/Center Arms Co. v. United States, 924 F.2d 1041, 1047 (Fed. Cir. 1991) (finding that 1968 amendments to machine gun definition provided three new categories), aff'd, 119 L. Ed. 2d 308, 112 S. Ct. 2102 (1992); United States v. Bradley, 892 F.2d 634, 635 (7th Cir.) (asserting that parts may be machine guns without a frame or receiver), cert. denied, 495 U.S. 909, 110 S. Ct. 1935, 109 L. Ed. 2d 298 (1990); United States v. Griley, 814 F.2d 967, 975 (4th Cir. 1987) (finding that frame or receiver in conjunction with evidence at trial was sufficient to show that weapon was a machine gun); United States v. Campbell, 427 F.2d 892, 893 (5th Cir. 1970) (implicitly holding that parts may be machine guns without a frame or receiver), cert. denied, 402 U.S. 975, 91 S. Ct. 1673, 29 L. Ed. 2d 140 (1971).*fn5
Palmieri's fourth contention is that the district court erred by allowing certain testimony from government witnesses in relation to the second count, possession and transfer of a machine gun. For example, an FBI special agent who had not been qualified to testify as an expert witness described the fifth weapon that Palmieri sold to Lyman as a "fully automatic machine gun." Palmieri did not object, but now claims that this was both an impermissible opinion from a lay witness and a legal Conclusion. Another agent gave the following testimony as to the availability of a replacement breechblock: "I called one of the larger gun part stores in the country and asked them if I can get one and they told me that they knew of a few people who had them and I can get one if I wanted." Once again, Palmieri did not object, but he now asserts that this was hearsay. On two other occasions, Palmieri did object to opinion testimony by government witnesses who had not been qualified to testify as experts in the area of questioning. Federal Rule of Evidence 701 permits a lay witness to give an opinion which is: "(a) rationally based on the perception of the witness and; (b) helpful to a clear understanding of the witness' testimony or the determination of a fact in issue." Thus, a lay opinion is permissible when the witness has "firsthand knowledge of the factual predicates that form the basis for the opinion . . . [and] it would help the jury to resolve a disputed fact." Government of Virgin Islands v. Knight, 989 F.2d 619, 629-30 (3d Cir.), cert. denied, 126 L. Ed. 2d 457, 114 S. Ct. 556 (1993); see also Teen-Ed, Inc. v. Kimball Int'l, Inc., 620 F.2d 399, 403 (3d Cir. 1980) ("A lay witness in a federal court proceeding is permitted under Fed. R. Evid. 701 to offer an opinion on the basis of relevant historical or narrative facts that the witness has perceived."). Also, "testimony in the form of an opinion or inference otherwise admissible is not objectionable because it embraces an ultimate issue to be decided by the trier of fact." Fed. R. Evid. 704. Palmieri challenges the lay opinion testimony of three FBI special agents regarding machine guns. The agents' experience with machine guns, however, was developed during direct examination, and their testimony was subject to cross examination. Under these circumstances, we conclude that this testimony was admissible under Rule 701.
As to Palmieri's hearsay argument, Federal Rule of Criminal Procedure 52(a) provides that: "[any] error, defect, irregularity or variance which does not affect substantial rights shall be disregarded." The jury need not have been "totally unaware" of the error, rather a court must "find that error unimportant in relation to everything else the jury considered on the issue in question, as revealed in the record." Yates v. Evatt, 500 U.S. 391, 114 L. Ed. 2d 432, 111 S. Ct. 1884, 1893 (1991); see also United States v. Pavelko, 992 F.2d 32, 35-36 (3d Cir.) (considering "whether there was evidence of sufficient quality and quantity presented at trial to support the jury's verdict"), cert. denied sub nom. Kenney v. United States, 126 L. Ed. 2d 223, 114 S. Ct. 272 (1993). The testimony regarding a replacement breechblock was hearsay. Because, however, the evidence showed that the fifth weapon was, at a minimum, a frame or receiver, we conclude that its admission was harmless error.
Finally, Palmieri challenges the district court's jury instruction on the intent requirement for the second count. 18 U.S.C. § 924(a)(2) requires the government to prove knowing possession or transfer of a machine gun. The district court instructed the jury that:
Knowingly means, with knowledge, that is, voluntarily and intentionally and not because of mistake or accident or other innocent reason. The purpose of adding the word knowingly is to insure that no one would be convicted for an act done because of mistake or accident or other innocent reason. The Government is not required to prove that the defendant knew that his acts were unlawful.
Although Palmieri did not object then, he now contends that the district court's failure to instruct the jury that the government must prove that Palmieri knew the weapon was a machine gun or a firearm under 26 U.S.C. § 5845 constituted plain error.
In United States v. Freed, 401 U.S. 601, 91 S. Ct. 1112, 28 L. Ed. 2d 356 (1971), the Supreme Court discussed the knowledge requirement under an analogous statute, 26 U.S.C. § 5861(d), which prohibits receipt or possession of an unregistered firearm. The district court had dismissed the indictment because of the lack of a scienter allegation. But § 5861(d) has no statutory intent requirement, and the Freed Court reversed the dismissal. See id. at 607-10, 91 S. Ct. at 1117-18. It reasoned that § 5861 was "a regulatory measure in the interest of the public safety, which may well be premised on the theory that one would hardly be surprised to learn that possession of hand grenades [statutorily defined as firearms] is not an innocent act." Id. at 609, 91 S. Ct. at 1118. Although a violation of the statute at issue here does have a statutory knowledge requirement, we must define the scope of that requirement.
Ultimately, we are not persuaded by the argument that the government had to prove Palmieri knew that the fifth weapon he sold to Lyman was a machine gun or firearm within the meaning of 26 U.S.C. § 5845. The knowledge requirement for illegal possession of a machine gun has two potential components, knowledge that possession of the weapon was legally proscribed and knowledge that the weapon possessed the statutorily defined physical characteristics of a machine gun. In light of "the venerable principle that ignorance of the law generally is no defense to a criminal charge," Ratzlaf v. United States, 126 L. Ed. 2d 615, 114 S. Ct. 655, 663 (1994) (citations omitted), and the absence of a congressionally created exception for 18 U.S.C. § 922(o), we discard the proposition that Palmieri had to know that he was violating the law. Whether Palmieri knew that the weapon he possessed fit the definition of a machine gun under § 5845 presents a closer question.*fn6
In the context of receipt or possession of an unregistered firearm, some circuits have required knowledge that the weapon falls within the statutory definition.*fn7 However, the majority of circuits have set a lower threshold, requiring only knowledge that the weapon was a firearm in the general sense,*fn8 or mere knowledge that it was potentially dangerous and subject to regulation.*fn9 We agree with the common-sense approach of the latter position which requires a person possessing a regulated device to investigate the scope of his or her legal duties rather than blindly profess ignorance of the ...