Barnes v. Molino

Decision Date04 March 1980
Citation162 Cal.Rptr. 786,103 Cal.App.3d 46
CourtCalifornia Court of Appeals Court of Appeals
PartiesWillie R. BARNES, as Commissioner, etc., Plaintiff and Respondent, v. Paula MOLINO dba Telecom, Defendant and Appellant. Civ. 57743.

Kallen, Grant & Kosnett by James Victor Kosnett, Hollywood, for respondent and appellant.

George Deukmejian, Atty. Gen., Arthur C. de Goede, Asst. Atty. Gen., and David J. Pasternak, Deputy Atty. Gen., for petitioner and respondent.

COLE, Associate Justice. *

Paula Molino 1 appeals from an order of the Superior Court which compels her to comply with a subpoena duces tecum issued by the Commissioner of Corporations. 2 The order was issued in connection with an investigation by the Commissioner into the affairs of John Sheridan, "John" Mongello, Gold For Tax Dollars, and IME Corporation. The declaration of Charles Tady made a part of the subpoena duces tecum originally called for appellant to produce, for the period January 1, 1978, to September 21, 1978, "Deposit slips, invoices, contracts, Mailing Lists, correspondence and Accounts Receivable Journal relating to any transactions by and between Paula Molino, Doing Business As Telecom, and . . ." the above named individuals or organizations. The stated purpose was to assist the Commissioner in determining whether security interests in gold mines or mining interests were sold in violation of the Corporations Code.

Statutory Framework

It is helpful to a consideration of the issues to mention first the statutory framework for investigations by heads of executive departments, and to touch briefly on some of the California cases which discuss the scope of such investigations. Government Code section 11180 3 authorizes each department head to make investigations concerning all matters relating to the business activities and subjects under the jurisdiction of the department and to prosecute actions concerning violations. Section 11181 authorizes him to inspect books and records, hear complaints, and to issue subpoenas for the production of papers and the attendance of witnesses. Under section 11182 the department head may delegate the powers to an officer authorized to conduct the investigation or hearing. Provision is made for compelling the attendance of witnesses ( §§ 11184-11186), for securing enforcement orders ( §§ 11187-11188), and for taking depositions ( §§ 11189-11190).

Appellant appeared with counsel at the appointed time for the hearing but, stating that her answers may tend to incriminate her, refused to answer any questions or to produce any documents, beyond giving her name, residence address, birth date, and the fact that she was self-employed. In particular, she refused to answer questions asking whether she knew various named individuals or had heard of or was familiar with IME Corporation or a document headed Gold for Tax Dollars. Pursuant to section 11187, the Commissioner then petitioned the superior court setting forth the foregoing and asking for an order, under section 11188. The court held a hearing and issued the order now complained of. Its contents will be set forth below, as we discuss appellant's contentions. The arguments made in this matter are that the order, as signed, was inconsistent with and materially contradictory to the minute order of the court and the comments made by the court at the hearing; that the order violates appellant's constitutional guarantees against unreasonable search and seizure; and that the court erred in not ruling on appellant's claim that she was entitled to assert her privilege against self-incrimination.

We will determine that the order should be modified in one particular instance but that appellant's other contentions are without merit.


Before discussing the merits, another matter requires our attention. Each of the parties has assumed that the order made below under section 11188 is appealable. This assumption is understandable since in other cases involving section 11188 orders, appeals have been taken and decided on their merits. (In the Matter of the Investigation of: Ownership, etc. Younger v. Jensen, 26 Cal.3d 397, 161 Cal.Rptr. 905, 605 P.2d 813, appeal by Attorney General; Fielder v. Berkeley Properties Co. (1972) 23 Cal.App.3d 30, 99 Cal.Rptr. 791, appeal by both parties to order; Division of Medical Quality v. Gherardini (1979) 93 Cal.App.3d 669, 156 Cal.Rptr. 55; appeal by person subpoenaed.) In none of these cases, however, nor in any other of which we are aware, has the question of appealability actually been discussed and decided. The parties have been unable to refer us to any such case.

An order made under section 11188 is not one of the orders listed as appealable in Code of Civil Procedure section 904.1. It is not a judgment within the definition of Code of Civil Procedure section 577 ("A judgment is the final determination of the rights of parties in an action or proceeding") because it does not make a final determination of those rights see, e. g., Fielder v. Berkeley Properties Co., supra, 23 Cal.App.3d at pages 40 and 46, 99 Cal.Rptr. 791. The order does not fit the description of any of the other matters listed in Code of Civil Procedure section 904.1. We hold that the order is not appealable. We determine it proper, however, that the appeal be treated as a petition for writ of mandate and we will continue to refer to Paula Molino as "appellant." (Branham v. State Farm Mut. Auto. Ins. Co. (1975) 48 Cal.App.3d 27, 32, 121 Cal.Rptr. 304 appeal from nonappealable order to arbitrate treated as petition for writ of mandate; see Estate of Hearst (1977) 67 Cal.App.3d 777, 781, 136 Cal.Rptr. 821 appeal from nonappealable probate order treated as certiorari; People v. Cimarusti (1978) 81 Cal.App.3d 314, 320, 146 Cal.Rptr. 421 appeal from two nonappealable orders in civil litigation treated as certiorari.)

Accordingly, we proceed on that basis.

Scope of Investigation

With reference to the specific subject matter involved here, the Commissioner of Corporations has authority to conduct investigations to determine whether the corporate securities laws have been violated. (Corp. Code, § 25531.)

The scope of this kind of investigation was delineated by our Supreme Court in Brovelli v. Superior Court (1961) 56 Cal.2d 524, 529, 15 Cal.Rptr. 630, 633, 364 P.2d 462, 465, as follows:

"There is no constitutional objection to a system under which the heads of departments of government may compel the production of evidence for purposes of investigation, without instituting formal proceedings against the one from whom the evidence is sought or filing any charges against him. As has been said by the United States Supreme Court, the power to make administrative inquiry is not derived from a judicial function but is more analogous to the power of a grand jury, which does not depend on a case or controversy in order to get evidence but can investigate 'merely on suspicion that the law is being violated, or even just because it wants assurance that it is not.' (Citation.) Of course, department heads cannot compel the production of evidence in disregard of the privilege against self-incrimination or the constitutional provisions prohibiting unreasonable searches and seizures. It should be pointed out, however, in this connection that where, as here, the records of a corporation are the object of a subpoena, the situation differs from one where the private papers of an individual are sought. Neither the corporation nor a person having custody of its records can refuse to produce them on the basis of the privilege against self-incrimination. (Citations.) Insofar as the prohibition against unreasonable searches and seizures can be said to apply at all it requires only that the inquiry be one which the agency demanding production is authorized to make, that the demand be not too indefinite, and that the information sought be reasonably relevant. (Citations.)" (Emphasis added.)

Appellant contends that, on account of intervening developments in the law of privacy, the 1979 decision of a court of appeal in Division of Medical Quality v. Gherardini (1979) 93 Cal.App.3d 669, 156 Cal.Rptr. 55, has modified the Brovelli rule. It is clear that Division of Medical Quality did hold that considerations of privacy were applicable when an administrative subpoena of the type here involved sought to examine medical records of patients not otherwise involved in the administrative inquiry. But Division of Medical Quality in no way affects Brovelli otherwise. That is clearly indicated by the fact that the California Supreme Court, as recently as January 31, 1980, has quoted and relied upon the language of Brovelli which we have underscored above. (In the Matter of the Investigation, supra, 161 Cal.Rptr. pp. 905-909, 605 P.2d pp. 813-817.) Thus, while we recognize that in an appropriate case considerations of the right of privacy may play a role in the limitation of a subpoena, we continue to follow the command of the Supreme Court with respect to the "breadth of the power" (Id. at 161 Cal.Rptr., p. 909, 605 P.2d at p. 817) of executive investigation.

Inconsistency of Order With Ruling from Bench

The Tady declaration incorporated in the subpoena duces tecum called for described documents relating to transactions between appellant "doing business as Telecom" and the persons and organizations being investigated, without any attempt to limit those documents to securities transactions. At the hearing held below, the court's announced ruling was that the subpoena should be that as stated in the Tady declaration "excepting only that it is to relate to any transactions pertaining to the relationship between Paula Molion (Sic ), and, then, going on doing business as Telecom, John Sheridan, John Mongello, Gold for Tax Dollars and IME Corporation, And any security transactions . . . ." (Emphasis added.) The court ordered counsel for the Commissioner to...

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    ...order, which we dismissed on May 2, 1983, without prejudice to the right of the FTB to seek a writ of mandate. (Barnes v. Molino (1980) 103 Cal.App.3d 46, 51, 162 Cal.Rptr. 786.) The FTB filed a petition for writ of mandate on January 26, 1984 3 and on March 7, 1984, we issued an alternativ......
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