Moyer v. Brownell

• Decision Date: 05 January 1956
• Docket Number: Civ. A. No. 19659.
• Parties: John MOYER v. Herbert BROWNELL, W. Wilson White and Robert Lees.
• Court: U.S. District Court — Eastern District of Pennsylvania

137 F. Supp. 594

John MOYER v. Herbert BROWNELL, W. Wilson White and Robert Lees.

Civ. A. No. 19659.

United States District Court E. D. Pennsylvania.

January 5, 1956.

COPYRIGHT MATERIAL OMITTED

Robert M. Taylor, Philadelphia, Pa., and Robert Margolis, Bethlehem, Pa., for plaintiff.

Robert Lees, Asst. U. S. Atty., Philadelphia, Pa., for defendants.

VAN DUSEN, District Judge.

The amended complaint in this case seeks equitable relief from alleged contemplated institution by the defendants of criminal proceedings against plaintiff for violation of 18 U.S.C. § 1001¹ in the form of a perpetual injunction restraining the defendants, and all persons acting by, through, from or under them, from presenting to any Grand Jury a financial statement filed by plaintiff with officials of the Internal Revenue Service in November 1951 or any other evidence (most of which was oral) obtained from plaintiff by representatives of the Internal Revenue Service between November 1953 and June 1954² in the course of the investigation of certain of his federal income tax returns.³

The answer filed by the defendants raises at least four separate defenses. Although the hearing judge holds that the defendants are entitled to have the complaint dismissed under Rule 41 of Federal Rules of Civil Procedure, 28 U.S.C., for the reasons stated in their First, Second, Third and Fifth Defenses, such holdings can be reached most adequately after consideration of the testimony, as well as the facts admitted in the pleadings.⁴ For this reason, Findings of Fact will be made so that the appellate court can enter such judgment or order as it deems appropriate in the event that it should find errors of law in the action taken by the hearing judge.⁵

Specific Findings of Fact

1. The plaintiff, John Milton Moyer, resides at 2139 Freemansburg Avenue, Easton, Northampton County, Pa., and has resided there since 1911. He is 66 years of age. He is a certified public accountant.

2. The plaintiff was employed as an internal revenue agent by the Internal Revenue Service (formerly Bureau of Internal Revenue) from September 13, 1920, until his retirement on January 15, 1954. The Internal Revenue Service is part of the Treasury Department of the United States of America. Plaintiff had his office in the Easton, Pennsylvania, office of the Internal Revenue Service from 1951 until his retirement. This Easton, Pennsylvania, office was part of the Scranton District in 1953 and 1954.

3. Plaintiff had worked a good many fraud cases, about 100, during his period of service as an Internal Revenue Agent. A fraud case is one where there is either a penalty imposed or criminal prosecution recommended. Plaintiff was fully aware of the duty of every agent to report any evidence of fraud he might find. He was also aware of the duty of a revenue agent to report the commission of a crime if he knew of it.

4. He is now receiving a federal retirement pension of $261 per month, which would terminate if he was convicted of a felony (paragraph 5 of Complaint as admitted by the Answer).

5. On or about October 19, 1951, the Commissioner of Internal Revenue, John Dunlap, issued a mimeograph order (P1) to all Internal Revenue Service personnel requiring each of them to file a financial statement (Treasury Department Form 1361 — P2). Said mimeograph stated, inter alia, "The questionnaires will be held strictly confidential."⁶

6. "COM:DI," as used in paragraph 4 of P1, refers to Commissioner, Director of Inspection Service.

7. Form 1361(P2) was filed by all Enforcement Revenue employees in November 1951, either with their Group Chiefs or with the Commissioner, Director of Inspection Service.

8. Plaintiff's Form 1361 was dated November 26, 1951, signed by him, filed with his Group Chief, Mr. Gilbert, forwarded by Mr. Gilbert to the Internal Revenue Agent in Charge, Philadelphia, and from there sent to Washington, D. C., where it was received by the Director, Inspection Service, on November 30, 1951.

9. Form 1361 filed by plaintiff showed 10 stocks having a total value of $8,900.

10. There is no evidence in the record indicating either that the plaintiff had committed any crime prior to November 30, 1951, when his Form 1361 was received in Washington or that the information on Form 1361 tended in any way to incriminate him as guilty of action previously taken constituting a criminal offense. Plaintiff had no reasonable ground to apprehend danger of criminal prosecution from filing the Form 1361 if the information contained on it was accurate.

11. Plaintiff testified that, although he felt the filing of Form 1361 (P2) was an invasion of his privacy and personal liberty, he filed the form because he thought he would lose his job if he did not file it.⁷ He understood why these forms were required by the Secretary of the Treasury. He had no fears in filing the statement. He also did not think the filing of the form was important enough to justify his consulting counsel or writing the Department to determine his rights. Plaintiff certified on the form (P2) that the questionnaire was answered correctly to the best of his knowledge and belief. On cross-examination, plaintiff testified that the information on the Form 1361 filed by him was accurate in every detail but one item, which he got from his wife, and that item was not quite correct. He does not believe he committed a crime in filing the form, apparently, because of his belief that any errors were minor.

12. It was the policy of the Internal Revenue Service to audit all Internal Revenue Agents' returns for the years 1948 to 1951, inclusive. It was not the policy to audit 1952 federal income tax returns of all such agents.

13. On November 10, 1953, correspondence was sent from the Chief of Collection Division at Scranton to the Chief of Audit Division, Scranton District, concerning plaintiff's federal income tax returns.

14. In November 1953, plaintiff received a letter from his current group chief, Mr. Davis, stating that he wanted to see him on an appointed day that month to go over plaintiff's 1951 and 1952 federal income tax returns. On the appointed day, Mr. Davis told plaintiff his dividend income was incorrectly reported on these returns and plaintiff agreed to pay any additional tax resulting from a corrected computation of his dividend income. At or about the time Mr. Davis called on plaintiff to point out the mistakes in his income tax returns, plaintiff submitted an application for retirement on pension.

15. Plaintiff testified that he assumes that approximately $800 in dividends and interest was omitted from his 1951 joint federal income tax return and plaintiff admitted that approximately $1,100 in dividends was omitted from his 1952 joint federal income tax return.⁸

16. The Inspection Service of the Internal Revenue Service investigates complaints concerning conduct of employees of the Internal Revenue Service and investigates any violations of Federal statutes by members of that Service. The Inspection Service commenced a conduct case investigating plaintiff on December 8, 1953, as the result of correspondence from the District Director of Internal Revenue dated 11/24/54. This case concerned incorrect 1952 income tax returns filed by plaintiff. The Inspection Service requested plaintiff's Form 1361 (P2) from Washington on December 10, 1953. No representative of the Inspection Service was present at any of the conferences attended by plaintiff which were subjects of testimony in this case. The investigation of the Inspection Service was entirely independent of that made by the Audit Division and that made by the Intelligence Service. Mr. Kratenmaker of the Inspection Service did talk to Mr. Brownell, Mr. Davis and Mr. Lawlor (Director of Internal Revenue) on December 14, 1953. In many cases investigated by the Inspection Service, no criminal prosecution results and a letter of reprimand may be recommended. Plaintiff's Form 1361 was received from Washington in the Office of the Regional Inspector on or about January 17, 1955.

17. On or about December 16, 1953 (see P4), plaintiff received a letter from R. P. Brownell, Chief of Audit of the Scranton District of the Internal Revenue Service, asking him to come to Scranton on December 17, 1953, to discuss his income tax returns and to bring a copy of the financial statement on Form 1361 (P1). Mr. Davis and Mr. Brownell were both present at this conference in Scranton. Plaintiff was asked to prepare a list of his securities and the dividends declared on them since 1946. He was asked to bring this data to Scranton so that the investigation could be completed prior to plaintiff's contemplated retirement date of 12/31/53. This list was subsequently either sent or taken to Mr. Brownell at Scranton. Plaintiff testified that Mr. Brownell informed him at that meeting, after looking at his Form 1361, for a few minutes, "that it (P1) looks pretty good to me."

18. Shortly before Christmas 1953, Mr. Davis and Mr. Feldman (a revenue agent) came to plaintiff's office in Easton. Mr. Feldman spent the whole day (and possibly part of another day) going over plaintiff's federal income tax returns for the calendar years 1948-1952, inclusive. At this time, plaintiff gave Mr. Feldman his bank book. Also, Mr. Feldman submitted to plaintiff a net worth statement which he said indicated plaintiff owed additional income tax. Plaintiff stated that he would prepare some figures to show he owed nothing on a net worth basis. Plaintiff emphasized that he volunteered to prepare these net worth figures which were to be submitted as soon as they were prepared. Plaintiff testified that Mr. Davis returned late in the day and said "Don't worry, John. Everything will be all right."

19. Between Christmas and January 14, plaintiff took the net worth statement prepared by him, showing his net worth as of the end of each year from 1948 to 1952, inclusive, to a conference at Scranton at which...