First Nat. Bank of Mobile v. United States

• Court: U.S. Court of Appeals — Fifth Circuit
• Writing for the Court: McCORD, WALLER, and LEE, Circuit
• Citation: First Nat. Bank of Mobile v. United States, 160 F.2d 532 (5th Cir. 1947)
• Decision Date: 28 March 1947
• Docket Number: No. 11757.,11757.
• Parties: FIRST NAT. BANK OF MOBILE et al. v. UNITED STATES.

160 F.2d 532 (1947)

FIRST NAT. BANK OF MOBILE et al. v. UNITED STATES.

No. 11757.

Circuit Court of Appeals, Fifth Circuit.

February 15, 1947.

Rehearing Denied March 28, 1947.

Chas. C. Hand and Charles B. Arendall, Jr., both of Mobile, Ala., for appellants.

Muriel S. Paul, Sewall Key, and A. F. Prescott, Sp. Assts. to the Atty. Gen., Douglas W. McGregor, Asst. Atty. Gen., and Albert J. Tully, U. S. Atty., of Mobile, Ala., for the United States.

Before McCORD, WALLER, and LEE, Circuit Judges.

WALLER, Circuit Judge.

26 U.S.C.A. Int.Rev.Code, § 3614, contains the following provisions that are pertinent to this case: "§ 3614. Examination of books and witnesses.

"(a) To determine liability of the taxpayer. The Commissioner, for the purpose of ascertaining the correctness of any return or for the purpose of making a return where none has been made, is authorized, by any officer or employee of the Bureau of Internal Revenue, including the field service, designated by him for that purpose, to examine any books, papers, records, or memoranda bearing upon the matters required to be included in the return, and may require the attendance of the person rendering the return or of any officer or employee of such person, or the attendance of any other person having knowledge in the premises, and may take his testimony with reference to the matter required by law to be included in such return, with power to administer oaths to such person or persons." (Emphasis added.)

Upon petition of an agent of the Commissioner of Internal Revenue, and purportedly in pursuance of the foregoing provision of the statute, the Court below made an order directing John D. Terrell, Vice-President and Cashier of the Bank, to appear before the revenue agent at a day named "then and there to testify in the matter of the tax liability of Gulf Coast Tobacco Company, Joseph Mitchell, Rebecca F. Mitchell, Samuel J. Ripps and Anne M. Ripps, for the years 1940 to 1945, inclusive, and then and there to produce for inspection and examination by the duly authorized agents and employees of the Bureau of Internal Revenue any and all books, papers and records of whatever nature, irrespective of whether such records also pertain to similar transactions with other persons or firms during the said years 1940 to 1945, inclusive, which pertain to or reflect the issuance of cashier's checks, bills of exchange, certificates of deposit, drafts or checks on other banks, in order that said agents of the Bureau of Internal Revenue may select therefrom such items and transactions to and for the firm or to and for any of the individuals hereinabove named as they deem relevant and pertinent to the tax liability of the above named firm and individuals."¹ (Emphasis added.)

We think the order is broader than the statute in that it requires the bank to produce for inspection and examination by the revenue agent "any and all books, papers and records of whatever nature, irrespective of whether such records also pertain to similar transactions with other persons or firms during the said years 1940 to 1945, inclusive," whereas the statute authorizes the examination of books, papers, etc., bearing upon the "matters required to be included in the return" and to take testimony of other persons with reference to the "matter required by law to be included in such return, * * *".

We do not think that the statute is broad enough to require the Bank to produce for inspection and run on its Recordak machine over six million items involving transactions for a period of five years unless the records to be exhibited bear upon the matters required to be included in the return of the parties named in the petition whose tax matters are being investigated. A third party should not be called upon to produce records and give evidence under the statute unless such records and evidence are relevant to, or bear upon, the matter being investigated, which, in this case, was the income tax return of Gulf Coast Tobacco Company, Joseph Mitchell, Rebecca F. Mitchell, Samuel J. Ripps, and Anne M. Ripps.

The order appealed from is hereby amended by striking out the following language: "irrespective of whether such records also pertain to similar transactions with other persons or firms during the said years 1940 to 1945, inclusive, which pertain to or reflect the issuance of cashier's checks, bills of exchange, certificates of deposit, drafts or checks on other banks, in order that said agents of the Bureau of Internal Revenue may select therefrom such items and transactions to and for the firm or to and for any of the individuals hereinabove named as they deem relevant and pertinent to the tax liability of the above named firm and individuals." and inserting in lieu thereof the following: "which pertain to or reflect the issuance of cashier's checks, bills of exchange, certificates of deposit, drafts or checks on other banks, during the years 1940 to 1945, inclusive, which bear upon, or have reference to, the federal tax liability of the above-named firm and individuals, and to allow the agents of the Bureau of Internal Revenue of the United States to select from such documents such items and transactions to and for the firm or to and for any of the individuals above named as they deem relevant and pertinent to the tax liability of the above-named firm and individuals."

The order of the Court below, as herein modified and amended, is

Affirmed.

On Petition for Rehearing.

Before an agent of the Bureau of Internal Revenue is entitled, under § 3614 of the Internal Revenue Code, 26 U.S.C.A. Int.Rev.Code, § 3614, to have a court require a third party to produce records, the agent must specify with sufficient precision for their identification the documents desired to be inspected. His demands must be within the scope of the statute. He must also allege that such documents "bear upon the matters required to be included in the return" in question. His demands will not be complied with if they are too general, too wanting in specification, as to indicate that they are merely exploratory fishing expeditions. He is not entitled in this case to have the Bank produce all its records merely in order for him to go through them for the purpose of ascertaining whether or not the Bank possesses any records which may or may not be relevant to the tax returns under investigation. He may first obtain information as to what papers or documents are within the Bank's possession relevant to the inquiry by interrogating, under oath, an appropriate officer of the Bank. Upon a satisfactory showing by the agent that certain pertinent records or documents have a bearing upon matters required to be included in the return under investigation, the Bank would be required to produce them for the inspection of the agent,...