McDonough v. Lambert, 3309.

• Decision Date: 15 February 1938
• Docket Number: No. 3309.,3309.
• Parties: McDONOUGH v. LAMBERT, Special Agent.
• Court: U.S. Court of Appeals — First Circuit

94 F.2d 838 (1938)

McDONOUGH v. LAMBERT, Special Agent.

No. 3309.

Circuit Court of Appeals, First Circuit.

February 15, 1938.

John J. Walsh, Jr., of Boston, Mass., for appellant.

Henry M. Leen, Asst. U. S. Atty., of Boston, Mass. (Francis J. W. Ford, U. S. Atty., of Boston, Mass., on the brief), for appellee.

Before BINGHAM, WILSON, and MORTON, Circuit Judges.

BINGHAM, Circuit Judge.

This is an appeal from an order of the federal District Court for Massachusetts denying appellant's motion to vacate an order directing that a subpoena duces tecum issue, and to stay the subpoena if issued.

M. McDonough, the respondent, is treasurer of the M. McDonough Company, a Massachusetts corporation, George A. Lambert, the petitioner, is a Special Agent of the Bureau of Internal Revenue designated to investigate the income tax return of the M. McDonough Company for the fiscal year ending February 29, 1936.

It appears that, on July 13, 1937, Lambert, as Special Agent of the Bureau, served a summons duces tecum on M. McDonough, treasurer of the M. McDonough Company, requiring him to appear before the agent at a place and time designated, to give testimony in the matter of the tax liability of the M. McDonough Company and others for the years 1935 and 1936, and requiring him to bring a check No. 34375, dated December 24, 1935, issued by the M. McDonough Company for $15,000; a book entitled "Cash Payments 1935" of the M. McDonough Company; and all other papers, documents, etc., of the M. McDonough Company, pertaining to the payment of $10,000 charged to legal expenses on the books of the corporation; that M. McDonough, the treasurer, refused to appear and testify, although the check in question was produced; that, thereafter, on July 24, 1937, Lambert, as Special Agent, filed a petition in the District Court, in which he set forth that he was "a Special Agent in the United States Bureau of Internal Revenue; that on the thirteenth day of July, in the year nineteen hundred and thirty-seven, in accordance with the provisions of section 1104 of the Revenue Act of 1926, as amended by section 618 of the Revenue Act of 1928 26 U.S.C.A. § 1514, he did issue a summons to M. McDonough, * * * whereby the said M. McDonough was summoned and required to appear before the said George A. Lambert, at Room 1805, Federal Building, Boston, Massachusetts, on the thirteenth day of July, in the year nineteen hundred and thirty-seven, at eleven o'clock in the forenoon, to give testimony in the matter of a tax liability of the M. McDonough Company, a Massachusetts corporation with offices at 821 Broadway, Saugus, Massachusetts, and others of Massachusetts, for the years 1935 and 1936; and the said M. McDonough was directed to bring with him check No. 34375 dated December 24, 1935, issued by M. McDonough Company for fifteen thousand (15,000) dollars; book entitled `Cash Payments 1935' of M. McDonough Company, and all other papers, documents, etc., of M. McDonough Company pertaining to the payment of ten thousand (10,000) dollars charged to legal expenses on the books of the corporation." It was further alleged in the petition that the summons was duly served early in the forenoon of the 13th of July, 1937, but said M. McDonough neglected to comply with the summons "and has refused and still refuses to appear and testify and to produce the documents as therein mentioned."

This petition was allowed on July 27, 1937, at which time the court ordered that a subpoena duces tecum issue. On July 28, 1937, a subpoena duces tecum issued, directed to the marshal of the District, wherein it was stated:

"You are hereby required to summon M. McDonough, of Saugus, Massachusetts, if he may be found in your District, to appear before George A. Lambert, special agent in the United States Bureau of Internal Revenue, at Room 1805, Federal Building, Boston, Massachusetts, forthwith, in his proper person to give testimony in the matter of a tax liability of the M. McDonough Company, a Massachusetts corporation with offices at 821 Broadway, Saugus, Massachusetts, and others of Massachusetts, for the years 1935 and 1936; and warn the said witness to bring with him check No. 34375 dated December 24, 1935, issued by M. McDonough Company for fifteen thousand dollars ($15,000); book entitled `Cash Payments 1935' of M. McDonough Company, and all other papers, documents, etc., of M. McDonough Company, pertaining to the payment of ten thousand (10,000) dollars charged to legal expenses on the books of the corporation; that for default and nonappearance he will have to abide the pains and penalties of the law in that behalf made and provided."

This subpoena was duly served on the 29th day of July, 1937.

On July 28, 1937, the respondent filed a motion to vacate the order of July 27, 1937, and suspend the subpoena issued July 28, 1937, assigning the following reasons, among others:

"3. That the request for the attendance of said M. McDonough and the production of the said records is not for the purpose of ascertaining the correctness or verifying the return of M. McDonough Company for the taxable year 1935.

"4. That the United States Government has issued a tax waiver showing that the said M. McDonough Company was not liable for any tax for the taxable year 1935.

"5. That the above mentioned records and evidence pertaining thereto is immaterial for the purpose of ascertaining the correctness of the return of M. McDonough Company for the taxable year 1935, or for the purpose of verifying the same."

Upon this motion a hearing was had before the District Court on August 10, 1937, at which time the check in question dated December 24, 1935, the book entitled "Cash Payments 1935," and other papers of the M. McDonough Company pertaining to the payment of the $10,000 were produced, and Lambert, the Special Agent, was sworn as a witness and testified, "that, on July 1, 1937, he proceeded to verify the income tax return of M. McDonough Company for the taxable year 1935; that it was his purpose, among other things, to verify the said income tax return; that the return appeared to be non-taxable by $126,682.26; that an examination of the cash book of M. McDonough Company disclosed that on December 24, 1935, check No. 34375 in the amount of $15,000, payable to cash, was issued by the M. McDonough Company, $5,000 of which was charged to the...