In re Rivera

• Decision Date: 02 July 1948
• Citation: 79 F. Supp. 510
• Parties: In re RIVERA.
• Court: U.S. District Court — Southern District of New York

79 F. Supp. 510

In re RIVERA.

District Court, S. D. New York.

July 2, 1948.

John F. X. McGohey, U. S. Atty., of New York City (Roy M. Cohn, Asst. U. S. Atty., of New York City, of counsel), for the United States.

Shearman & Sterling & Wright, of New York City (John A. Wilson and William F. Hamilton, both of New York City, of counsel), for respondents.

COXE, District Judge.

This is a motion by respondents to vacate and set aside a summons issued by a Special Agent of the Bureau of Internal Revenue under the authority of Section 3614 of the Internal Revenue Code, 26 U.S.C.A., and served upon John C. Macy, Assistant Cashier, National City Bank of New York, requiring him to appear to give testimony in the matter of the tax liability of Dr. Luis Rivera or Luis R. Feliciano, and to produce certain books and papers; and also to vacate and set aside an order of this court requiring him to comply with the said summons, issued pursuant to Section 3633(a).

The summons required him to produce

"All accounts with the San Juan, Porto Rico, Branch of the National City Bank of New York pertaining to Dr. Luis Rivera, also known as Luis R. Feliciano, under his name or under whatever names or designations entered, for the years 1942 to 1946, both inclusive, together with deposit tickets relative to the accounts for the same years. Photostats or transcripts of these records will be accepted in lieu of the originals, if more convenient to you."

The motion is made upon the ground that the books and papers are not in the possession, or under the control, of Macy, or of the head or home office of the National City Bank of New York, or of any person or persons in the head or home office, and are not within the State of New York, or the jurisdiction of this court or of the Bureau of Internal Revenue. No objection is made that Macy was not a proper person to be served with the summons on behalf of the Bank.

The National City Bank of New York (hereafter referred to as "the Bank") is a national banking association organized under the laws of the United States, with its principal or home office in the City of New York. In June 1918, it established a branch at San Juan, Porto Rico, as authorized by Section 25 of the Federal Reserve Act, Chap. 6, 38 Stat. 273-274, as amended by the Act of September 7, 1916, Chap. 461, 39 Stat. 755, now Section 601, 12 U.S.C.A. This section provided that national banking associations might obtain authority from the Federal Reserve Board to "establish branches in foreign countries or dependencies or insular possessions of the United States for the furtherance of the foreign commerce of the United States." The Bank now has 48 such branches.

It is well settled that a person cannot be compelled to produce, under a subpoena, a document which is neither in his possession nor under his control. The physical location of the document is unimportant. Basically, the test is control. Munroe v. United States, 1 Cir., 216 F. 107; In re National Public Utility Investing Corporation, 2 Cir., 79 F.2d 302; In re Harris, D.C.S.D.,N.Y., 27 F.Supp. 480; In re Grand Jury Subpoenas Duces Tecum, D.C.S.D.,N.Y., 72 F.Supp. 1013. And there is a "presumption that a corporation is in the possession and control of its own books." In re Ironclad Manufacturing Co., 2 Cir., 201 F. 66, 68.

Section 604 of the Federal Reserve Act, 12 U.S.C.A., provides as follows:

"Every national banking association operating foreign branches shall conduct the accounts of each foreign branch independently of the accounts of other foreign branches established by it and of its home office, and shall at the end of each fiscal period transfer to its general ledger the profit or loss accrued at each branch as a separate item."

The government contends that the moving papers in support of the motion show that the home office of the Bank has general supervision and control over the affairs of the San Juan branch, and, therefore, can obtain and produce the required records. The Bank contends that the San Juan branch is a separate entity and that under the decision in In re Harris, supra, it cannot be compelled to produce any records of the branch.

The By-Laws of the Bank provide that

(1) "The Board of Directors shall have power to manage and administer the business and affairs of the Association,"

(2) "The Board of Directors shall appoint a Cashier, who * * * shall be custodian of the corporate seal, records, documents and papers of the Association,"

(3) "The Board of Directors may appoint a Manager Overseas Division who shall have supervision and control of all foreign branches of the Bank. He shall have general executive powers with respect to said branches,"

(4) "The Board of Directors shall have plenary power to establish, to discontinue, or, from time to time, to change the location of, any branch in a foreign country or in a dependency of the United States of America, subject to such limitations as from time to time may be provided by law,"

(5) "Subject to the general supervision and control of the Board of Directors the affairs of the foreign branches shall be under the immediate supervision and control of the Manager Overseas Division, and subject to...