Glotzbach v. Klavans

• Decision Date: 04 August 1961
• Docket Number: Misc. 3671.
• Parties: C. W. GLOTZBACH, District Director of Internal Revenue for the District of Virginia, Petitioner, v. Arthur P. KLAVANS and P. A. Agelasto, Jr., Respondents.
• Court: U.S. District Court — Eastern District of Virginia

196 F. Supp. 685

C. W. GLOTZBACH, District Director of Internal Revenue for the District of Virginia, Petitioner, v. Arthur P. KLAVANS and P. A. Agelasto, Jr., Respondents.

Misc. 3671.

United States District Court E. D. Virginia, Norfolk Division.

August 4, 1961.

Roger T. Williams, Asst. U. S. Atty., Norfolk, Va., for petitioner.

P. A. Agelasto, Jr., Norfolk, Va., for respondents.

WALTER E. HOFFMAN, District Judge.

In proceedings requesting a writ of attachment against the respondents, the District Director of Internal Revenue seeks the entry of an order directing that certain books and records of the respondent, Klavans, be turned over to Internal Revenue agents. Klavans is a sole proprietor of a jewelry business operating under the name of Art Jewelers.

During the spring of 1960, Wado, a revenue agent, visited Klavans at his place of business and advised that he was making a routine audit. Upon a preliminary examination certain irregularities were discovered and Wade then advised Klavans that an audit would have to be made. On September 26, 1960, Wade, accompanied by Special Agent Warburton, again called upon Klavans. Following formal introductions, Warburton told Klavans that he was there to make an investigation, and that Klavans was not required to make any statement or give any information, and any statement made by him could be used against him. Warburton did not advise Klavans of any right to counsel. Klavans was put under oath and then agreed that certain records pertaining to his jewelry business could be examined by the agents. Wade had previously noted that the excise taxes had been reported on an installment basis and that cards indicating taxable items had been altered by erasures. The agents worked on the records during the afternoon of September 26, 1960, but did not finish.

On September 27, 1960, pursuant to agreement with Klavans, the two revenue agents returned. Klavans had made a room available and the agents spent the entire day examining the records covering a period of six months from January to July, 1958. They did not complete their examination by closing time and left after telling Klavans that they would return to resume their duties on the following day. At no time up to this moment had Klavans failed to cooperate and the records were turned over to the agents without objection. Indeed, Klavans had initially indicated a willingness to permit the records to be removed from his office, but as some of these records were required in the day-to-day business operation, he asked the agents if they could remain in his establishment.

Early the following morning the respondent, Agelasto, an attorney, telephoned Warburton and advised that the records were in his custody and would not be surrendered because of the attorney-client relationship and that such action would be forcing Klavans to testify against himself. On December 13, 1960, the agents went to Agelasto's office and were told that he was working on the records and would not produce them. Thereafter a summons was issued against both respondents and, while they appeared, they refused to produce the records. Warburton admits that there is a possibility of a criminal prosecution against Klavans.

It is conceded by the respondent, Agelasto, that if his client, Klavans, may be compelled to produce his records, Agelasto may likewise be required to deliver them. This appears to be the general principle of law in such cases. Grant v. United States, 227 U.S. 74, 33 S.Ct. 190, 57 L.Ed. 423; Falsone v. United States, 5 Cir., 205 F.2d 734; Gretsky v. Miller, D.C.Mass., 160 F.Supp. 914.

The issue is, therefore, where a party has clearly and knowingly waived his rights and permitted an examination of certain of his records for a period of two days, may he thereafter withdraw such permission and terminate the examination? The Government contends that it is a single proceeding and that Klavans, having voluntarily made his records available with full knowledge of his constitutional rights, has waived his immunity under the Fifth Amendment and cannot now invoke it insofar as the examination is concerned. The Government does not urge that Klavans is estopped from invoking his immunity in a possible subsequent proceeding. Respondents argue that Klavans was permitted to assert his immunity privilege at any time, thereby stopping the investigation.

The question presented is a novel one, and perhaps of first impression. It differs from the ordinary situation in which a witness voluntarily takes the stand, testifies as to matters which incriminate him and thereafter refuse to go further into these matters, claiming his constitutional immunity. In Brown v. Walker, 161 U.S. 591, 597, 16 S.Ct. 644, 647, 40 L.Ed. 819, it is said:

"Thus, if the witness himself elects to waive his privilege, as

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