Finance Commission of City of Boston v. McGrath

• Decision Date: 12 March 1962
• Parties: FINANCE COMMISSION OF the CITY OF BOSTON v. John J. McGRATH.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 808

180 N.E.2d 808

343 Mass. 754

FINANCE COMMISSION OF the CITY OF BOSTON v. John J. McGRATH.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued Feb. 8, 1962.

Decided March 12, 1962.

Arthur M. Gilman, Boston (Charles S. McLaughlin, Boston, with him), for John J. McGrath.

Gael Mahony, Boston, for Finance Commission of City of Boston.

Before WILKINS, C. J., and SPALDING, WHITTEMORE, CUTTER and KIRK, JJ.

CUTTER, Justice.

On October 11, 1961, the Finance Commission of Boston (St.1909, c. 486, §§ 17-21 ¹) began an investigation announced by the commission's chairman at the opening hearing as 'called to study certain allegations against the official conduct of John J. McGrath, auctioneer of the city * * * more specifically * * * questions * * * as to * * * [his] conduct' relating to 'about 1,350,360 square feet of land' in Hyde Park. The transcript ² of these hearings, which took place on October 11, 16, 17, 18, 19, 20, 23, 24, and 25, covers 1,108 typewritten pages. The commission heard a number of witnesses including McGrath, who on 'various days up to and including October 20, 1961 * * * appeared * * * voluntarily.'

On October 20, McGrath was served with a subpoena duces tecum, which gives rise to this controversy. The second paragraph of this subpoena (which showed the title of the proceedings as 'In the matter of an investigation of the official conduct of John J. McGrath, city auctioneer') required production of 'all records of every description including bank statements and cancelled checks in connection with checking accounts, pass books for accounts in savings banks, savings and loan associations, cooperative banks and similar savings institutions, with respect to accounts in the names, individually or jointly, of John J. McGrath, Mary A. McGrath, or of any person acting as your nominee during the period from 1950 to 1961 inclusive; and * * * copies of your personal income tax returns, both federal and state, for the years 1950 to 1961, inclusive.'

On October 23, McGrath (through his counsel) informed the commission that 'he would not produce the records called for by the subpoena and * * * left the hearing, refusing to testify further.' A bill in equity was brought by the members of the commission to compel McGrath's attendance and the production of the records. After hearing, a Superior Court judge denied McGrath's 'motion to dismiss' the bill. He also made a report of material facts and filed an order for a decree. On November 2, 1961, a final decree, entitled 'order,' was entered directing McGrath to appear before the commission on November 15, and then to 'produce all records of every description pertaining to such matters as are now being investigated by the * * * [commission], including bank statements and cancelled checks in connection with checking accounts, passbooks for accounts in savings banks, savings and loan associations, co-operative banks and similar institutions, with respect to accounts in the names, individually or jointly, of John J. McGrath, Mary A. McGrath or of the Richview Trust during the period from 1950 to 1961 inclusive.' Both the commission and McGrath appealed from the final decree. McGrath also filed a bill of exceptions. All matters raised by the bill of exceptions are presented by the appeals, if they are properly before us. The evidence is reported.

1. The bill is brought under St.1908, c. 562, § 3, which reads, 'If any person so summoned [before the commission] * * * shall refuse to attend * * * or to answer any question, or to produce any book, contract, document or paper pertinent to the matter of inquiry * * *, a justice of the supreme judicial court or of the superior court, in his discretion, upon application by the commission * * *, may issue an order requiring such person to appear before the commission, and to produce his books, contracts, documents and papers and to give evidence touching the matter in question. Any failure to obey such order of the court may be punished by such court as a contempt thereof' (emphasis supplied).

This is a special statutory proceeding. One application of this general character (under a legislative resolve) seems to have been dealt with on the equity side of the Superior Court (Cabot v. Corcoran, 332 Mass. 44, 52, 123 N.E.2d 221). Resort also has been had to the law side of the court. See Attorney General v. Brisenden, 271 Mass. 172, 175, 171 N.E. 82. See also First Nat. Bank of Chicago v. Graham, 175 Mass. 179, 55 N.E. 991; Massachusetts Bonding & Ins. Co. v. Commissioner of Ins., 329 Mass. 265, 279, 107 N.E.2d 807; Wigmore, Evidence (McNaughton rev.) § 2195 et seq. The foregoing cases do not discuss the issue whether the statutory proceedings were equitable or legal.

The 1908 statute does not state the nature of the proceeding. There is no occasion to restrict its usefulness by confining it within the scope of any particular prexisting remedy. The Legislature, by implication, has left the courts free reasonably to assimilate the special statutory proceeding to any appropriate established procedures. There is, perhaps some resemblance between this statutory procedure and an equitable bill for discovery in aid of another proceeding. See MacPherson v. Boston Edison Co., 336 Mass. 94, 98-103, 142 N.E.2d 758. In some cases applications for enforcement may involve some element of declaratory relief, which in most cases is granted on the equity side of the court. See G.L. c. 231A (inserted by St.1945, c. 582, § 1). Applications for enforcement of administrative process also are likely to be met with assertions of personal constitutional rights and immunities of a character involving careful balancing of public and private interests. Each such interest can be more effectively protected by the flexible procedures and remedies and the broader appellate review available in equity than by a proceeding at law. All relevant considerations thus make it appropriate for us to treat the proceeding as governed by equitable procedure and principles, so far as reasonably applicable.

The 'motion to dismiss,' treated as a demurrer (see Maltzman v. Hertz, 336 Mass. 704, 705, 147 N.E.2d 767), was properly overruled. The only grounds stated in the motion were (a) that the petition could only be brought at law, a matter dealt with above; and (b) that the proceeding before the commission was 'invalid' and the subpoena 'a nullity.' The allegations of the bill were sufficient to establish jurisdiction in the commission to make investigation of at least some of McGrath's activities.

2. The following statement of parts of the evidence before the commission is based upon the trial judge's summaries, supplemented by a few references to the testimony itself.

(a) On August 10, 1950, McGrath 'sold to John J. Ellis, his straw, for $5,500, while acting in his official capacity as [c]ity [a]uctioneer' a parcel of foreclosed tax title land in Hyde Park containing 1,350,360 square feet. For this McGrath made a cash deposit of $500 with his then superior, one Carp, chairman of the city's board of real estate commissioners, 'the only other person present at the sale. [The b]alance of the * * * price was to be paid by September 9, 1950; but was not paid until March 7, 1952. ³ On March 26, 1952, a deed' to Ellis was recorded. '[T]he property remained in his name until November 20, 1957, when a deed, dated November 16, 1954, was recorded, revealing * * * [McGrath] as the owner.' Revenue stamps on this deed indicated a sale by Ellis to McGrath for $25,000 'although no money had been passed. On December 11, 1958 * * * [McGrath] caused to be recorded a mortgage' to the trustees of the 'Richview Trust, ⁴ to secure what purported to be a $75,000 note which * * * did not exist.' In 1960, the metropolitan district commission took about 298,000 square feet of the Hyde Park land. McGrath refused the appraised price of $15,000, and has had offers of $15,000 to $60,000 for the entire lot.

McGrath's counsel refused to permit him to testify before the commission about using Ellis as 'straw' in any other transaction. Although counsel allowed McGrath to give testimony about applications to the Boston assessors for abatement of taxes upon the Hyde Park property, McGrath did not testify about appeals from the assessors to the Appellate Tax Board. After the service of the subpoena, McGrath's counsel told the commission that he was 'withdrawing * * * [his] client as a witness' and that the commission should 'proceed with a court adjudication of * * * [its] rights.'

(b) In November, 1950, the Boston housing authority applied for Federal funds to take a parcel of land on Popes Hill Street, Dorchester. This action 'was unknown to the general public.' On March 14, 1951, the parcel was conveyed to Ellis for $4,500. On November 27, 1951, a taking of the property by the housing authority was recorded. About a year later, the authority secured an option to purchase the property for $13,300. A check for $13,147.87 was sent to Ellis at McGrath's office on April 15, 1953. On April 9, 1953, papers had been passed by the authority and Ellis, who was then accompanied by one Swinderman. There was a bookkeeper and stenographer named Swenderman in McGrath's office. Ellis was an elevator operator of limited means. An officer of the bank upon which the check for $13,147.87 was drawn was unable to furnish information about its cashing or disposition. ⁵

McGrath contends that, in large measure, the commission is investigating McGrath's individual activities rather than his official conduct; and that the commission is exceeding its statutory scope of inquiry. In particular, McGrath objects to any inquiry about tax appeals, relating to the Hyde Park land, before the Appellate Tax Board and to questions about the Dorchester land which the Boston housing authority has acquired.

Section 18 of the 1909 statute (see footnote 1, supra) gives the commission authority 'to investigate...