Chapman v. Goodman

• Decision Date: 04 April 1955
• Docket Number: No. 13904.,13904.
• Parties: Charles K. CHAPMAN, Appellant, v. Norman GOODMAN, Special Agent of the Bureau of Internal Revenue, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

219 F.2d 802 (1955)

Charles K. CHAPMAN, Appellant, v. Norman GOODMAN, Special Agent of the Bureau of Internal Revenue, Appellee.

No. 13904.

United States Court of Appeals, Ninth Circuit.

February 11, 1955.

Rehearing Denied April 4, 1955.

Charles K. Chapman, Long Beach, Cal., in pro. per.

Laughlin E. Waters, U. S. Atty., E. H. Mitchell, Edward R. McHale, Asst. U. S. Attys., Los Angeles, Cal., for appellee.

Before STEPHENS and CHAMBERS, Circuit Judges, and McLAUGHLIN, District Judge.

CHAMBERS, Circuit Judge.

Norman Goodman, special agent of the Bureau of Internal Revenue, wants to conduct an examination of voluminous files and papers in the possession of Charles K. Chapman, a Long Beach attorney. He also desires that the attorney answer questions concerning the papers and certain transactions. All this is incident to an investigation of income tax liability of one Thomas A. Gregory, president of the Long Beach Federal Savings & Loan Association, who is a client of Chapman's.

Essentially, this case began on October 20, 1952, when Goodman (now appellee) issued an administrative summons to Chapman (now appellant) to appear before him to testify and to bring papers "relating to financial transactions between Charles K. Chapman and Thomas A. Gregory." Chapman responded to the subpoena and appeared. He brought no papers and he refused to be sworn. His appearance consisted of "standing on his rights." He insisted that the information sought by Goodman was within the privilege ordinarily granted to lawyer and client.¹

Temporarily stymied, Goodman filed in the United States District Court for the Southern District of California a petition for an order to compel Chapman to attend and give testimony and to produce books and records. An order was issued ex parte by a district judge on November 26, 1952, granting Goodman's petition for enforcement.

It is appropriate that certain relevant sections of the code be set forth:

26 U.S.C.A. § 3633:

"(a) To enforce summons. If any person is summoned under the internal revenue laws to appear, to testify, or to produce books, papers, or other data, the district court of the United States for the district in which such person resides shall have jurisdiction by appropriate process to compel such attendance, testimony, or production of books, papers, or other data.

"(b) * * *."

26 U.S.C.A. § 3800:

"The district courts of the United States at the instance of the United States shall have such jurisdiction to make and issue, both in actions at law and suits in equity, writs and orders of injunction, and of ne exeat republica, orders appointing receivers, and such other orders and process, and to render such judgments and decrees, granting in proper cases both legal and equitable relief together, as may be necessary or appropriate for the enforcement of the internal revenue laws. The remedies hereby provided are in addition to and not exclusive of any and all other remedies of the United States in such courts or otherwise to enforce such laws."

And Rule 81(a) (3), Fed.Rules Civ. Proc. 28 U.S.C.A. provides:

"In proceedings under Title 9, U.S.C., relating to arbitration or under the Act of May 20, 1926, c. 347, § 9 (44 Stat. 585), U.S.C., Title 45, § 159, relating to boards of arbitration of railway labor disputes, these rules apply to appeals, but otherwise only to the extent that matters of procedure are not provided for in those statutes. These rules apply (1) to proceedings to compel the giving of testimony or production of documents in accordance with a subpoena issued by an officer or agency of the United States under any statute of the United States except as otherwise provided by statute or by rules of the district court or by order of the court in the proceedings, and (2) to appeals in such proceedings. As amended Dec. 27, 1946 and Dec. 29, 1948, effective Oct. 20, 1949." (Amendment of December 27, 1946, italicized.)

The order of the district judge, above referred to, directed that Chapman appear before Goodman on December 11, 1952, "to give testimony in the matter of the tax liability of Thomas A. Gregory for the years 1947 to 1950, inclusive, and * * * to bring * * * all records, books, papers, or documents relating to financial transactions between Charles K. Chapman and Thomas A. Gregory."

The service of the order of November 26th provided a violent reaction on the part of lawyer Chapman.

Within two weeks he had filed in the same matter which had started ex parte the following:

1. Answer to agent\'s petition;

2. Cross-claim for injunction and declaratory relief 3. Motion to bring in indispensable, necessary and proper parties; and

4. Motion to quash, vacate, and annul ex parte order.

These pleadings of Chapman when set forth in the transcript on appeal occupy 112 printed pages. An inkling of the breadth of Chapman's counterattack may be gathered from the cross-claim's designation of cross-defendants as:

"Norman Goodman, Individually, and as Special Agent, Thomas A. Gregory, Long Beach Federal Savings and Loan Association, John Doe, 1 to 1,000 Inclusive; Jane Doe, 1 to 1,000 Inclusive; Roe and Doe, 1 to 1,000 Inclusive, Co-Partnerships; Black and Company, 1 to 1,000 Inclusive, Corporations; XYZ Associations, 1 to 1,000 Inclusive, Unincorporated Associations; Doe National Bank Associations, 1 to 1,000 Inclusive; Receiver, Conservator, Executor, Administrator, Guardian, Trustee, or Other Representatives, Does, 1 to 1,000 Inclusive; Public Official Does, 1 to 1,000 Inclusive."

The pleadings of attorney Chapman are so prolix that the court should have stricken them on the ground they were not "short and plain" or not "simple, concise and direct." Among other things they relate stories of various alleged abuses against Chapman and his clients by different government officials. If true, some of the accounts are shocking but legally irrelevant to the proposed tax inquiry of Goodman as to Gregory.

Upon various grounds set forth in motions of agent Goodman, lawyer Chapman's answer and cross-claim were stricken by the district court. All motions of Chapman were denied.

The district court on March 13, 1953, made a new order for lawyer Chapman to appear. Pertinent paragraphs thereof are as follows:

"3. That Charles K. Chapman appear before Norman Goodman, Special Agent of the Bureau of Internal Revenue at Charles K. Chapman\'s office at the Ocean Center Building, Long Beach, California, on the 26th day of March, 1953, at 10:30 a. m., to give testimony under oath in the matter of the tax liability of Thomas A. Gregory for the years 1947 to 1950, inclusive, and there produce all records, books, papers, or documents in his possession, custody or control relating to financial transactions between Charles K. Chapman and Thomas A. Gregory;"

"5. That if, at said hearing, any question is asked of respondent, which calls for an answer which respondent deems to violate the confidential relationship of attorney and client, the attorney may refuse to answer such question, upon those grounds, and the matter may be, in Petitioner\'s discretion, thereafter referred to this Court for determination of the propriety of respondent\'s refusal to answer."

Before proceeding further, it is well to summarize the burden of lawyer Chapman's principal contentions and his pleadings, if we can distill them. They revolve around two points. First: the papers which he seeks to hold inviolate are protected by an attorney-client privilege. Second: the revenue agent's desire to investigate the Chapman-Gregory papers is motivated by a base desire to get information for use in pending litigation against Gregory, and by a desire to harass and destroy Gregory and his company.

What has the court done? First, it would appear that the district court has decided correctly that Gregory and the United States are not...