Mauch v. Commissioner of Internal Revenue

• Decision Date: 29 June 1940
• Docket Number: No. 7252.,7252.
• Citation: 113 F.2d 555
• Parties: MAUCH et al. v. COMMISSIONER OF INTERNAL REVENUE.
• Court: U.S. Court of Appeals — Third Circuit

113 F.2d 555 (1940)

MAUCH et al. v. COMMISSIONER OF INTERNAL REVENUE.

No. 7252.

Circuit Court of Appeals, Third Circuit.

June 29, 1940.

Everett Kent, of Bangor, Pa., and Milton J. Goodman, of Bethlehem, Pa., for petitioners.

Samuel O. Clark, Jr., Asst. Atty. Gen., and Sewall Key and Howard D. Pack, Sp. Assts. to Atty. Gen., for respondent.

Before BIGGS, CLARK, and JONES, Circuit Judges.

CLARK, Circuit Judge.

The petitioner-appellant¹ is an officer of this court and at one time served as District Attorney of the County of Northampton in the state of Pennsylvania. He was accused of income tax fraud by way of indictment (October 18, 1933) and by way of jeopardy assessments under 26 U.S.C.A.Int.Rev.Code, § 293 (March 13, 1933). The first proceeding ended in a directed verdict of acquittal (February 13, 1935) and the second in a decision of the Board of Tax Appeals, March 10, 1937, imposing the 50% fraud penalty. The docket entries of the District Court trial and the record here indicate that the same witnesses testified at both the criminal and civil trials. Petitioner questions the latter decision on two grounds. He advances, first, the notion that the Board should disregard a controlling and, incidentally, unanimous decision of the United States Supreme Court, and second, the thought that the confidential relationship of attorney and client may be used not only to protect a client in his right to seek counsel but also to shield the source of such advice.

The indictment of an eminent banker for income tax fraud will be remembered as one of the unpleasant aftermaths of the financial boom and collapse. He was acquitted by a jury but was subsequently sued for deficiencies and fraud penalties under the statute applicable here, Mitchell v. Commissioner of Internal Revenue, 2 Cir., 89 F.2d 873, 875. Both the defendant in that case and the petitioner herein made use of the plea of autrefois acquit. There is this difference in their positions. At the time of the rule in Mitchell's case, the law on the point was in some confusion, Hanby v. Commissioner of Internal Revenue, 4 Cir., 67 F.2d 125,² and he was, therefore, in the language of the United States Supreme Court rule (Rules of Practice and Procedure in Criminal Cases, rule 6, 28 U.S.C. § 723a, 28 U.S.C.A. § 723a), raising a "substantial question". So substantial, in fact, that he persuaded the Court of Appeals for his Circuit, Mitchell v. Commissioner of Internal Revenue, above cited. Now the law has that crystal clarity which goes with Mr. Justice Brandeis' touch, Helvering v. Mitchell, 303 U.S. 391, 395, 58 S.Ct. 630, 82 L.Ed. 917. It would be presumptuous, then, for us to even outline that confusion and its subsequent clarification. Suffice it to say, both depend upon a concept of jeopardy (or even res judicata) and the nature of the sanctions applied and intended.³

The petitioner's interpretation of a rule that does much to make his profession possible is equally unsound. The government shows that sums in the amount of $20,000, more or less, in each of the years 1929 and 1930 were deposited in the taxpayer's bank accounts and were not included in his income tax returns. He quite concedes this and states his position thus. Let it appear from his own mouth: "I will not state the source or the names of the persons from whom the funds were received. * * * They were clients. I will not state what clients. I will not state what the business relations between me and my clients were relative to those funds because I am not permitted as an attorney, as I understand the law with respect to my profession, to disclose confidential relationships between attorney and client." Mauch, Record p. 69. The text writers, and especially Professor Wigmore, explain the logic of this one of the privileged communications, 8 Wigmore on Evidence, 3d Ed., §§ 2290-2329. Like so many others, it is a rule of balance. Some truth is suppressed so that the general process of administering truth may be furthered. Our circumstance, the identities, rather than the sayings, of clients, is at the fulcrum. The record discloses no offer by the petitioner to obtain the permissible waiver from his anonymous clients. The absence of such offer may very well dispense with any necessity for a present determination of where the scale should come down.

If we assume, however, a refusal to waive, the authorities are almost unanimous in excluding bare identity from the scope of the privilege. They are collected in two thorough notes, Annotation — Evidence: privilege of attorney against revealing identity of client, L.R.A.1916C, 602; Annotation — Disclosure of name, identity, address, occupation, or business of client as violation of attorney-client privilege, 114 A.L.R. 1321; Devich v. Dick, 177 Mich. 173, 143 N.W. 56; 10 Ency. of Evidence 2288. Their reasoning is rather too general and not impressive, based as it is on some idea that the privilege does not apply to the creation of the relation, 28 R.C.L. § 153. If litigation is actually pending, a particular consideration governs. A party sued or suing is entitled to know who his opponent is,⁴ 8 Wigmore on Evidence, 3d Ed., § 2313. Quite aside from this, it is clear that clients may desire freedom to as much as freedom of consultation.

The former freedom may well suffer from prying eyes and gossiping tongues. Jane Doe may object to her neighbors knowing that she has been in to consult Dodson & Fogg, attorneys and counsellors at law; Thornton, Attorneys and Counsellors at Law, sec. 124. She will object much more to their...