Benes v. Canary, 12531.

• Citation: 224 F.2d 470
• Decision Date: 20 July 1955
• Docket Number: No. 12531.,12531.
• Parties: Elmer J. BENES, Appellant, v. Sumner CANARY, as United States Attorney, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

224 F.2d 470 (1955)

Elmer J. BENES, Appellant, v. Sumner CANARY, as United States Attorney, Appellee.

No. 12531.

United States Court of Appeals Sixth Circuit.

July 20, 1955.

William Patrick Clyne, Cleveland, Ohio, on brief, for appellant.

Sumner Canary, Even H. Cockley, Cleveland, Ohio, on brief, for appellee.

Before SIMONS, Chief Judge, MILLER and STEWART, Circuit Judges.

MILLER, Circuit Judge.

Appellant by this action sought to enjoin the United States Attorney for the Northern District of Ohio from using before the United States Commissioner, or the Grand Jury, or in any criminal proceeding, certain books and records of the appellant individually and of the E. J. Benes & Company, a corporation of which he was president, which appellant claims were illegally obtained by government agents. He asked that such documents be suppressed as evidence.

The claimed illegality is that appellant, relying upon the "voluntary disclosure" policy of the Secretary of the Treasury then in existence, filed amended income tax returns for E. J. Benes & Company for the fiscal years ending May 31, 1947, 1948, 1949 and 1950 and that an agent of the Internal Revenue Department thereafter came to the office of the corporation and under the scheme and subterfuge of verifying the disclosures contained in the amended tax returns for tax purposes only without criminal liability, examined the files and records in the office, through which he obtained the evidence which the Government is now planning to use in criminal prosecutions against him. As a second and independent ground of illegality, appellant claims that the agent, without the consent of the appellant or any other officer or agent of the corporation, and without a search warrant, searched through appellant's personal files and records as well as those of the corporation in violation of the Fourth Amendment of the U. S. Constitution, thereby obtaining the evidence which appellant now seeks to suppress.

Appellant's complaint alleges that thereafter a criminal complaint was filed with the U. S. Commissioner charging appellant with violation of the Internal Revenue Code, 26 U.S.C.A. § 1 et seq., with respect to his personal income tax return for the year 1947; that the U. S. Attorney intends and will present to the Grand Jury evidence to obtain indictments against appellant with respect to the filing of income tax returns by him personally and as principal officer of the corporation for the years 1947, 1948, 1949 and 1950; and that unless restrained from so doing will use the documents and information obtained by the Internal Revenue Agent in the examination above referred to.

After the granting of a temporary restraining order by the District Judge a hearing was held where the issues were fully developed by testimony. Thereafter the District Judge dissolved the temporary restraining order and sustained appellee's motion to dismiss the complaint. This appeal followed.

The District Judge in an opinion in support of the ruling expressed doubt that the Treasury policy granting immunity from criminal prosecution if a taxpayer made a voluntary disclosure of omission or other misstatement in his income tax return would be binding upon the Government without Congressional sanction. It will be noted that the declaration of policy said: "The Commissioner of Internal Revenue does not recommend criminal prosecution * * *." (Italics added.) However, he recognized that a careful and full compliance with such a publicly stated policy by a taxpayer might under some circumstances create a situation calling for moral forbearance or present a potential defense to a later prosecution, and did not rest his ruling upon that ground. He found as a fact that the filing of the amended returns under the circumstances presented by the evidence did not constitute a voluntary disclosure within the meaning of the Commissioner's proclamation in that the evidence failed to sustain appellant's contention of reliance upon the Commissioner's policy in filing the amended returns. He also held that the evidence failed to sustain appellant's contention that the Internal Revenue agent examined the files and records of the corporation without permission.

We are of the opinion that while the issue of unlawful search and seizure is properly raised by this proceeding and before us on this review, the competency or incompetency of the evidence obtained through appellant's claimed reliance upon the Treasury's "voluntary disclosure" policy should not be determined in a pre-indictment proceeding of this kind. Rule 41(e), Rules of Criminal Procedure, 18 U.S.C.A.; Centracchio v. Garrity, 1 Cir., 198 F.2d 382, certiorari denied 344 U.S. 866, 73 S.Ct. 108, 97 L.Ed. 672; Chieftain Pontiac Corp. v. Julian, 1 Cir., 209 F.2d 657; White v. United States, 5 Cir., 194 F.2d 215; United States v. Thompson, 251 U.S. 407, 413-415, 40 S.Ct. 289, 64 L.Ed. 333. The reasons for such a...