Palmisano v. United States

• Decision Date: 30 December 1963
• Docket Number: Civ. No. 9143.
• Citation: 226 F. Supp. 562
• Parties: Frank PALMISANO and Anthony S. Dontino, Plaintiffs, v. UNITED STATES of America, R. H. Reichel, District Director of Internal Revenue, George Fitzgerald, Special Agent, Internal Revenue Service and Honorable Justin J. Mahoney, United States Attorney, Northern District of New York, Defendants.
• Court: U.S. District Court — Northern District of New York

226 F. Supp. 562

Frank PALMISANO and Anthony S. Dontino, Plaintiffs, v. UNITED STATES of America, R. H. Reichel, District Director of Internal Revenue, George Fitzgerald, Special Agent, Internal Revenue Service and Honorable Justin J. Mahoney, United States Attorney, Northern District of New York, Defendants.

Civ. No. 9143.

United States District Court N. D. New York.

December 30, 1963.

Williams & Ray, Utica, N. Y., Kenneth P. Ray, Utica, N. Y., of counsel, for plaintiffs.

Justin J. Mahoney, U. S. Atty., Albany, N. Y., George B. Burke, Asst. U. S. Atty., of counsel, for defendants.

BRENNAN, District Judge.

This pre-indictment proceeding has taken the form of a declaratory judgment action in which plaintiffs seek to suppress documentary evidence consisting of books and records obtained from plaintiffs in the course of an investigation by agents of the Internal Revenue Bureau. An injunction is sought prohibiting the use of such evidence either before a grand jury or upon the trial of any indictment involving the plaintiffs.

On June 14, 1963 this court denied defendants' motion to dismiss the complaint and directed that the action proceed to trial. A five page decision was filed and reference to same is made as a background for the present status of the proceeding and for the determination made below.

This court held in the above decision that it had jurisdiction to entertain the action upon the theory that it possessed inherent disciplinary power over its officers. Decisions, so holding, were cited including that of Balistrieri v. United States, 7 Cir., 303 F.2d 617 which expressed some doubt as to the jurisdictional problem. After indicating that practical considerations require that preindictment proceeding should be sanctioned only in rare instances and that the sufficiency of the complaint was questionable, the court held that it would be more practical to direct the trial of the action. The trial has now been held and the evidence has been taken and the issues are before the court for decision.

Before discussing the evidence upon which the findings must be based, sufficient reference to reported decisions will be made which create a measure of uncertainty in the mind of the court as to whether or not jurisdiction, if it exists, should have been declined.

The plaintiffs are businessmen. No arrest has been made; no complaint filed and no indictment found. The complaint contains an allegation upon information and belief that the books and records involved or items of information obtained therefrom have been transmitted to the United States Attorney with the recommendation that the matters involved be submitted to a Federal Grand Jury for its consideration. The action is equitable in its nature and seems to be based upon words and actions of government agents which are alleged to be violative of the Fourth and Fifth Amendments.

It is generally agreed that interference with criminal proceedings at the preindictment stage should be rarely allowed. A civil action, therefore with its attendant delay in trial and in civil pretrial proceedings is a potential instrument for delay which is destructive of the prompt disposition of criminal charges. The well considered opinion in Rodgers v. United States, D.C., 158 F.Supp. 670 seems to authorize the court to decline jurisdiction under such circumstances. See also Toscano v. Olesen, D.C., 184 F.Supp. 296; Eastus v. Bradshaw, 5 Cir., 94 F.2d 788; Eccles v. Peoples Bank, 333 U.S. 426, at 431, 68 S.Ct. 641, at 644, 92 L.Ed. 784; dissenting opinion in Austin v. United States, 4 Cir., 297 F.2d 356, at 364 and cases cited. On the other hand an inference that such an action is maintainable prior to indictment is found in Lapides v. United States, 2 Cir., 215 F.2d 253 and Grant v. United States, 2 Cir., 282 F.2d 165. The decision in DiBella v. United States, 369 U.S. 121, 82 S.Ct. 654, 7 L.Ed.2d 614, is primarily concerned with appellate jurisdiction but it seems to equate an independent action before indictment with a motion under Rule 41, F.R.Crim.P. as far as finality is involved either in the trial court or for purposes of appeal. The above reference is made to indicate the desirability of authoritative guidance in the expanding area of preindictment proceedings.

Whether or not jurisdiction should have been declined or whether the action should be considered as a motion under Rule 41(e), F.R.Crim.P., a trial having been held, it would seem more practical at this point in the proceeding to decide the merits.

The essential facts are not seriously disputed. The plaintiffs are mature men engaged at the pertinent times as partners in the conduct of a restaurant at Utica, New York. Dontino was not acquainted with the details of the operation of the business which was under the personal supervision of Palmisano. Dontino took no significant part in either the conferences or events referred to below. On July 11, 1960, two special agents of Internal Revenue Service called at the home of Palmisano. They were met by Palmisano's wife. The agents expressed a desire to see her husband and upon her inquiry, they advised that there was "nothing wrong". After a short interval, Palmisano appeared. The agents introduced themselves as special agents, showed their identification and made inquiry as to tax returns. Palmisano testifies and the agents, or one of them, stated in effect that their activity was "a routine check". The agents have no recollection of the...