In re Horowitz

• Decision Date: 08 June 1973
• Docket Number: Docket 73-1570.,No. 943,943
• Citation: 482 F.2d 72
• Parties: In re Grand Jury Subpoena Served Upon Simon HOROWITZ.
• Court: U.S. Court of Appeals — Second Circuit

482 F.2d 72 (1973)

In re Grand Jury Subpoena Served Upon Simon HOROWITZ.

No. 943, Docket 73-1570.

United States Court of Appeals, Second Circuit.

Argued May 1, 1973.

Decided June 8, 1973.

Certiorari Denied October 9, 1973.

Martin D. Minsker, Washington, D. C. (Herbert J. Miller, Jr., Miller, Cassidy, Larrocca & Lewin, Washington, D. C., and Michael A. Lacher, New York City, of counsel), for appellants, Alexander and Elizabeth Kasser.

John W. Nields, Jr., Asst. U. S. Atty. (Whitney North Seymour, Jr., U. S. Atty., S. D. N. Y., of counsel), for appellee.

Before FRIENDLY and HAYS, Circuit Judges, and JAMESON,^* District Judge.

Certiorari Denied October 9, 1973. See 94 S.Ct. 64.

FRIENDLY, Circuit Judge:

Attorneys for Alexander and Elizabeth Kasser¹ appeal from an order of the District Court for the Southern District of New York which refused, save in certain respects hereafter indicated, to quash a subpoena duces tecum requiring the Kassers' accountant, Simon Horowitz, to produce before a federal grand jury "the contents of all three file cabinets at 248 Lorraine Avenue, Upper Montclair, N.J., Office No. 4."

Although the record is exceedingly meagre, the factual background seems to be substantially as follows:

The case springs from a plan of the Manitoba Development Fund (MDF) to encourage the building of a huge complex, including sawmills, pulp mills and paper mills, at an area in northern Manitoba known as The Pas, in order to make commercial use of its undeveloped forests. Early in 1966, MDF entered into an agreement with Alexander Kasser and others, acting under the name of Churchill Forest Industries, Ltd. (CFI), representing an assortment of Canadian and foreign enterprises, to construct this complex with MDF financing. When construction fell behind and a $1,500,000 interest payment was defaulted, a Canadian court, on the request of the Manitoban Government, appointed a receiver to complete the project, and the Royal Canadian Mounted Police began an investigation to determine whether any of the funds loaned by MDF had been misapplied. Allegedly the investigation developed evidence that sums up to $20,000,000 had been diverted into the hands of various corporations, including Canequip Exports Ltd., a Canadian corporation, and of Kasser and other individuals. After seizure of Canequip's records in Montreal pursuant to a search warrant on July 14, 1971, some $220,000 was allegedly drawn from Canequip's bank account with the Royal Bank of Canada in Montreal, deposited to Canequip's account in a bank in New York City and later wired to an account in Switzerland. A grand jury in the Southern District of New York is investigating whether this transaction and others violated United States criminal laws, particularly 18 U.S.C. § 2314, which prohibits the interstate or foreign transportation of funds obtained through fraud.

Among the many Kasser corporations involved in The Pas project was one known as Technopulp, Inc., having its offices in northern New Jersey. Shortly after the seizure of Canequip's records in Montreal, Kasser, who was about to sell his house in New Jersey and leave for parts unknown, communicated with his New York City accountant, Simon Horowitz, and directed that, in order to avoid a seizure of corporate and personal records at the offices of Technopulp, these should be removed. These records, contained in three locked filing cabinets, were first deposited in the New Jersey home of Kasser's son, Michael, and then moved into a room at an office building at 248 Lorraine Avenue, Upper Montclair, N.J. Some files that were temporarily in Horowitz' office for use by him in connection with tax audits, as well as some records that Kasser had kept at his home, were also placed there. The lease ran to Joel Mallin, Kasser's New York lawyer, who has paid the rent but has been reimbursed by checks signed by Horowitz on one of Kasser's bank accounts. Mallin has never been in the Lorraine Avenue office. One of the two keys to the office is in the possession of Michael Kasser, who has never used it; the other is in the possession of Horowitz, who has. There are also two keys to the filing cabinets; Horowitz has one and the other has been left in the office. From time to time Horowitz has gone to the office, unlocked the filing cabinets, and made extensive use of the records in his work as accountant for the Kassers and the corporations.

Before learning of the existence of the Lorraine Avenue office, the Assistant United States Attorney in charge of the grand jury investigation of Kasser served on Horowitz, on July 26, 1972, a subpoena duces tecum requiring him to produce before the grand jury seven categories of records. After learning from Horowitz' testimony before the grand jury about the office and Kasser's scheme for concealing records there, a second subpoena duces tecum was served two days later, which was evidently intended to supplant the first. This required Horowitz to produce the entire contents of all three file cabinets in the Lorraine Avenue office. Pursuant to agreement between Horowitz and the Assistant United States Attorney, the three file cabinets were brought to the latter's office, where they were to remain unopened pending the outcome of the contemplated motion to quash. After completing an inventory of their contents, Horowitz moved to quash the subpoena in October, 1972. For reasons not stated, no action was taken with respect to this motion for nearly six months. Meanwhile, in March, 1973, Kasser and his wife, through their attorneys, also moved to quash, on the three bases of overbreadth of the subpoena, violation of the attorney-client privilege with respect to letters between Kasser and his lawyers, and, if the motion is read charitably, violation of the Kassers' privilege against self-incrimination.

The motions to quash were brought on for hearing on March 28, 1973. Testimony was taken on that day and again on April 9. At the end of the latter hearing Judge Pollack delivered an oral opinion declining to quash the subpoena except with respect to four items specified in his order of April 12, 1973.² He stayed execution of the subpoena until April 19; a panel of this court extended the stay pending an expedited hearing on May 1, and we extended it until determination of the appeal.

I. Overbreadth

The notion that a subpoena duces tecum may constitute a search forbidden by the Fourth Amendment owes its birth to the famous case of Boyd v. United States, 116 U.S. 616, 621-622, 630, 6 S. Ct. 524, 29 L.Ed. 746 (1886), where Mr. Justice Bradley reached this result enroute to holding that the court-ordered production of a person's "private papers" violated the Fourth as well as the Fifth Amendment.³ The Fourth Amendment portion of the Boyd decision was surely not based on the overbreadth of the Government's demand; the Government sought only a single invoice of unquestionable relevance.⁴

Twenty years later the Supreme Court had occasion to reconsider this portion of the Boyd holding in the almost equally famous case of Hale v. Henkel, 201 U.S. 43, 26 S.Ct. 370, 50 L.Ed. 652 (1906). See also ICC v. Baird, 194 U.S. 25, 44-47, 24 S.Ct. 563, 48 L.Ed. 860 (1904). By the time Hale v. Henkel was decided, the composition of the Court had almost entirely changed; of the Boyd court only Mr. Justice Harlan remained. Mr. Justice Brown wrote the majority opinion, representing the views of five Justices. They thought "it quite clear that the search and seizure clause of the 4th Amendment was not intended to interfere with the power of courts to compel, through a subpoena duces tecum, the production upon a trial in court, of documentary evidence." 201 U.S. at 73, 26 S.Ct. at 378. On the other hand, such a subpoena might constitute a for-bidden search if its terms were "unreasonable", and the majority, regarding the subpoena duces tecum at issue requiring the production of books and records of the MacAndrews & Forbes Company, which was being investigated under the Sherman Act, held that it was "far too sweeping in its terms," 201 U. S. at 76, 26 S.Ct. at 380. The majority asserted, in what seems to have been a bit of hyperbole, that "If the writ had required the production of all the books, papers and documents found in the office of the MacAndrews & Forbes Company, it would scarcely be more universal in its operation or more completely put a stop to the business of that company" and that it was "difficult to say how the corporation's business could be carried on after it had been denuded of this mass of material. . . ." 201 U.S. at 77, 26 S.Ct. at 380. While ultimately production of many of the documents might be properly required, "some necessity should be shown, either from an examination of the witnesses orally, or from the known transactions of these companies with the other companies implicated, or some evidence of their materiality produced, to justify an order for the production of such a mass of papers." Id. On the other hand, since Hale, an officer of MacAndrews & Forbes, was not justified in refusing to answer oral questions propounded to him, the order remanding him for contempt was affirmed.

Three other opinions were written. Mr. Justice Harlan concurring, although agreeing, in more moderate terms, "that the subpoena duces tecum was too broad and indefinite," 201 U.S. at 78, 26 S.Ct. at 380, thought that Hale had no standing to assert the company's rights and also that a corporation was not protected by the Fourth Amendment. Mr. Justice McKenna, also concurring, echoing the point made by Mr. Justice Miller in his dissent in Boyd, see note 3 supra, agreed that a properly limited subpoena was not within the Fourth Amendment but could not believe that a subpoena could "lose this essential distinction from a search warrant by the generality or specialty of its terms." 201 U.S. at 80, 26 S.Ct. at 381. Mr. Justice Brewer, joined by Chief Justice Fuller, dissented; they challenged ...