Butcher v. Bailey

• Decision Date: 11 January 1985
• Docket Number: 84-5135,Nos. 84-5134,s. 84-5134
• Citation: Butcher v. Bailey, 753 F.2d 465 (6th Cir. 1985)
• Parties: , 11 Collier Bankr.Cas.2d 1229, 12 Bankr.Ct.Dec. 943, Bankr. L. Rep. P 70,205, 17 Fed. R. Evid. Serv. 254 Jacob F. BUTCHER, Debtor-Appellant-Cross-Appellee, v. John H. BAILEY, III, Trustee, Trustee in Bankruptcy-Appellee-Cross-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 465

753 F.2d 465

53 USLW 2357, 11 Collier Bankr.Cas.2d 1229,

12 Bankr.Ct.Dec. 943, Bankr. L. Rep. P 70,205,

17 Fed. R. Evid. Serv. 254

Jacob F. BUTCHER, Debtor-Appellant-Cross-Appellee, v.John H. BAILEY, III, Trustee, Trustee in Bankruptcy-Appellee-Cross-Appellant.

Nos. 84-5134, 84-5135.

United States Court of Appeals Sixth Circuit.

Argued Nov. 12, 1984.

Decided Jan. 11, 1985.

James F. Sanders, William T. Ramsey(argued), Neal & Harwell, Nashville, Tenn., for debtor-appellant-cross-appellee.

J.O. Bass, Jr.(argued), Bass, Berry & Sims, Nashville, Tenn., for trustee in bankruptcy-appellee-cross-appellant.

Before KENNEDY and WELLFORD, Circuit Judges, and WEICK, Senior Circuit Judge.

CORNELIA G. KENNEDY, Circuit Judge.

This case involves cross-appeals from an order of the United States Bankruptcy Court for the Eastern District of Tennessee requiring Jacob F. Butcher(debtor) to turn over to John H. Bailey(trustee) some, but not all, of debtor's records relating to the property of his estate.38 B.R. 785.

In 1983 debtor was adjudicated a bankrupt, under Chapter 7, in an involuntary proceeding brought pursuant to 11 U.S.C. Sec. 303.Consequently, 11 U.S.C. Sec. 521 required that he"surrender to the trustee all property of the estate and any recorded information, including books, documents, records, and papers, relating to property of the estate...."Debtor, however, claiming that much of the recorded information might tend to incriminate him, invoked a fifth amendment privilege not to produce certain records.Trustee demanded all the records, arguing that the fifth amendment privilege does not excuse a bankrupt from surrendering records relating to the property of a bankrupt estate.

The Bankruptcy Court unconditionally ordered debtor to produce all nonpersonal records relating to property of the estate, specifically: records of any corporate or noncorporate collective entity; records having public aspects and which were required by law to be kept; and accountant or other third-party workpapers known by trustee to exist and requiring no authentication by the debtor or his attorneys.The court also ordered debtor to turn over all personal records relating to property of the estate, unless the contents of those records would be incriminating or the act of producing the records would be incriminating.Trustee appeals from the portion of the order which allows debtor to claim a privilege with regard to certain personal records.Debtor appeals from the portion of the order requiring him to turn over nonpersonal records without regard to possible incrimination.Jurisdictional problems require us to dismiss debtor's appeal.With respect to that portion of the order from which trustee appeals, we affirm in part, reverse in part and remand to the Bankruptcy Court for further proceedings.

I

We turn first to trustee's appeal from that portion of the Bankruptcy Court's order which allows debtor to withhold production of any personal records, relating to property of the estate, if the contents of the records are incriminating or the production of the records would be incriminating.¹Trustee asserts that the fifth amendment privilege is less protective in a bankruptcy proceeding than in other proceedings.He relies upon the bankruptcy code's unequivocal requirement that debtor turn over the documents as part of the estate.This result, trustee argues, is supported by several Supreme Court decisions which, according to trustee, decline to erect a fifth amendment barrier to the production of a bankrupt debtor's records.

Trustee refers us to a recent amendment to section 521 of the Bankruptcy Code(11 U.S.C. Sec. 521) which would require debtor to turn over the records, "whether or not immunity is granted under section 344 of this title."²While trustee concedes that the amendment, which is not retroactive, became law too late for application to this case, he urges us to heed the legislative history which characterizes it as a "clarifying amendment."Trustee's approach, however, would lead us to an untenable conclusion.Immunity is available under section 344 only where a fifth amendment privilege has been legitimately invoked.The constitutional privilege cannot be legislatively nullified, whether in bankruptcy or any other situation.We do not read the unamended section 521 as attempting any such nullification, despite the subsequent "clarifying amendment."³

Trustee asserts that his reading of section 521 is supported by four decisions of the Court: Dier v. Banton, 262 U.S. 147, 43 S.Ct. 533, 67 L.Ed. 915(1923);In Re Fuller, 262 U.S. 91, 43 S.Ct. 496, 67 L.Ed. 881(1923);Johnson v. United States, 228 U.S. 457, 33 S.Ct. 572, 57 L.Ed. 919(1913);andIn Re Harris, 221 U.S. 274, 31 S.Ct. 557, 55 L.Ed. 73(1911).

All four cases involved bankrupts who sought to prevent the disclosure of certain incriminating documents.Dier, Johnson, and Fuller all differ from the instant case in an important respect: in each of these three cases, the bankrupt had already turned over the incriminating records to a trustee or a receiver, and sought to prevent the trustee or receiver from turning the records over to the government.In all three cases, the Court ruled that the debtor's fifth amendment privilege could not be interposed between the government and the third-party in possession of the records.

Dier, Johnson, and Fuller each implicitly recognized the viability of the privilege in situations where the records are still in the possession of the bankrupt.SeeFuller, 262 U.S. at 93, 43 S.Ct. at 497(fifth amendment privilege "is that of refusing himself to produce, as incriminating evidence against him, anything which he owns or has in his possession and control; but his privilege in respect to what was his and in his custody ceases on a transfer of the control and possession which takes place by legal proceedings and in pursuance of the rights of others, even though such transfer may bring the property into the ownership or control of one properly subject to subpoena duces tecum")(emphasis added);Dier, 262 U.S. at 149-50, 43 U.S. at 533-34("the right of the alleged bankrupt to protest against the use of his books and papers relating to his business as evidence against him ceases as soon as his possession and control over them pass from him")(emphasis added);Johnson, 228 U.S. at 458-59, 33 S.Ct. at 572("a party is privileged from producing the evidence, but not from its production....[he may not] keep the protection from the introduction of documentary evidence that he would have had while he retained it, after the title and possession have gone to someone else")(emphasis added).

Only Harris, the oldest of the cases, approved of an order to the bankrupt to turn over his records.At the time Harris was decided, however, the Court had not yet come around to the view that the act of production itself could be testimonial.That view, implicit in the later cases of Dier, Johnson, and Fuller, has more recently been expressly recognized.See, e.g., United States v. Doe, --- U.S. ----, 104 S.Ct. 1237, 1242, 79 L.Ed.2d 552(1984);Fisher v. United States, 425 U.S. 391, 410-11, 96 S.Ct. 1569, 1580-81, 48 L.Ed.2d 39(1976).Because Harris is inconsistent with this subsequent development, we believe that it is no longer controlling.

We therefore conclude that nothing in the bankruptcy code or prior case law requires that a bankrupt debtor turn over personal records to the trustee regardless of a valid claim of fifth amendment privilege.We now turn to whether the Bankruptcy Court's order was limited to protecting a valid fifth amendment privilege.

The Bankruptcy Court ruled that the fifth amendment privilege would apply to any records the contents of which might be incriminating or the production of which might be incriminating.Contents and production require separate analysis.

The view that the fifth amendment privilege extends to the contents of documents originated in Boyd v. United States, 116 U.S. 616, 6 S.Ct. 524, 29 L.Ed. 746(1886).Since Boyd, the protection afforded contents has been largely eroded.Most recently, the Court has refused to extend the privilege to the contents of accountant's workpapers, seeFisher, supra, or the contents of the business records of a sole proprietor, seeDoe, supra.Although we do not read either of these cases as holding that the contents of private papers are never privileged, it is evident from the dialogue between Justice Marshall and Justice O'Connor, in their concurring opinions in Doe, 104 S.Ct. at 1245-46, that if contents are protected at all, it is only in rare situations, where compelled disclosure would break "the heart of our sense of privacy."Doe, 104 S.Ct. at 1246 n. 2(Marshall, J., concurring in part)(quotingCouch v. United States, 409 U.S. 322, 350, 93 S.Ct. 611, 626, 34 L.Ed.2d 548(1972)(Marshall, J., dissenting)).

The records at issue in the instant case are personal records, but only those personal records which relate to property of the bankrupt's estate.Information relating to property of the estate is not so intimately personal as to evoke serious concern over privacy interests, particularly in bankruptcy where the trustee has a strong interest in knowing the nature and scope of the estate's holdings.We reverse that portion of the Bankruptcy Court's order which allows debtor to withhold records the contents of which might tend to incriminate him.

Aside from the contents of the records, the act of producing them--if it is compelled, testimonial and incriminating--may, in itself be privileged.SeeDoe, 104 S.Ct. at 1242.In the instant case, compulsion is obviously present.We must look closer, however, to determine whether production would be testimonial and incriminating.

Production of documents may be testimonial in any of three ways: by acknowledging that the documents exist; by acknowledging that they are in the control of the...