In re Fahey
| Decision Date | 01 February 1961 |
| Docket Number | Civ. A. No. 4037. |
| Citation | 192 F. Supp. 492 |
| Parties | In the Matter of James E. FAHEY. |
| Court | U.S. District Court — Western District of Kentucky |
William B. Jones, U. S. Atty., Louisville, Ky., pro se.
David W. Gray, Louisville, Ky., for James E. Fahey.
This civil contempt proceeding was instituted by the United States Attorney, pursuant to Section 7604 of Title 26 U.S.C., to enforce a summons requiring the production of certain documents for examination by agents of the Internal Revenue Service. Section 7602 of Title 26 U.S.C., authorizes agents of the Internal Revenue Service to examine documents which may be relevant and material to the tax liability of any individual, and to summon anyone having possession of such documents and require such person to produce them.
Subsequent to the issuance of the Court's order to show cause why the summons should not be enforced entered on September 9, 1960, the respondent, James E. Fahey, entered his response to the order and moved the Court to quash the summons. A hearing was had before the Court on September 23, 1960, at which it was stipulated that the Internal Revenue Service is conducting an investigation of the tax liability and federal tax returns filed by Roderick G. Cooper and Dorothy M. Cooper, his wife. Testimony of witnesses for the respondent was heard and counsel for the parties were directed by the Court to file briefs. September 26, 1960, the respondent filed a motion for an order of the Court filing the affidavit of Roderick G. Cooper and tendered the affidavit, to which the United States filed its objections.
The action is now before the Court on respondent's motion to quash the summons requiring the production of certain documents for examination by the agents of the Internal Revenue Service and respondent's motion to file the affidavit of Cooper.
From the stipulation, the testimony introduced at the hearing, and the briefs submitted by counsel, the Court makes the following findings of fact:
1. Roderick G. Cooper and Dorothy M. Cooper, his wife, residing on Wolf Pen Road, Prospect, Kentucky, also maintain a residence in Gulf Hills, Ocean Springs, Mississippi. Although residing part-time in the State of Mississippi, the joint federal income tax returns of Mr. and Mrs. Cooper for the years 1950-1958, inclusive, were filed with the District Director of Internal Revenue at Louisville, Kentucky.
2. S. E. Powell, a Certified Public Accountant of Biloxi, Mississippi, was employed by Mr. Cooper to prepare their federal income tax returns for the years 1957 and 1958. In the course of his employment, he was furnished various papers, statements, correspondence, and other material by the taxpayers to be used in the preparation of their returns. In preparing the returns Mr. Powell made certain compilations and summaries, which are known as an accountant's work papers. The work papers, copies of the returns, and information and material furnished by the Coopers were kept on file in Mr. Powell's office until October 6, 1959.
3. During the year 1959, agents of the Internal Revenue Service at Louisville, Kentucky, began an investigation of the tax liability and federal tax returns filed by Roderick G. Cooper and Dorothy M. Cooper for the years 1950-1958, inclusive.
4. October 1, 1959, after Mr. and Mrs. Cooper learned of the Internal Revenue Service's investigation, they employed Paul M. Newton, an attorney of Hattiesburg, Mississippi, to represent them before the Treasury Department in connection with their federal income tax for the years in question. On October 28, 1959, the firm of Skaggs, Hays & Fahey, Louisville, Kentucky, of which James E. Fahey is a member, was retained by the taxpayers as additional legal counsel in connection with the investigation.
5. October 6, 1959, at the request of Mr. Cooper, S. E. Powell delivered to Mr. Cooper and Mr. Newton all documents in his possession used in the preparation of the Coopers' 1957 and 1958 tax returns, including his work sheets. This file received from Powell was delivered to Fahey by Newton on November 10, 1959, and has remained in Fahey's possession since that date.
The respondent contends that Powell, at the time he delivered the file to Cooper and Newton, had no intention of retaining any interest in it or of endeavoring to recover it; that Cooper is the owner of the documents, and that Cooper or his attorneys have had the file in their possession continuously since ...
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