Peters v. Sjoholm

• Citation: 25 Wn.App. 39,604 P.2d 527
• Decision Date: 27 December 1979
• Docket Number: No. 3435-II,3435-II
• Parties: Gene M. PETERS, Appellant, v. Les N. SJOHOLM and "Jane Doe" Sjoholm, husband and wife; and Puget Sound National Bank, Respondents.
• Court: Court of Appeals of Washington

Page 39

25 Wn.App. 39

604 P.2d 527

Gene M. PETERS, Appellant, v. Les N. SJOHOLM and "Jane Doe" Sjoholm, husband and wife; and Puget Sound National Bank, Respondents.

No. 3435-II.

Court of Appeals of Washington, Division 2.

Dec. 27, 1979.

Richard F. DeJean, Sumner, for appellant.

Gregory Montgomery, Asst. Atty. Gen., Olympia, W. Gerald Lynch, Tacoma, for respondents.

PETRIE, Judge.

Gene M. Peters appeals from a summary judgment dismissing his complaint which had contended that defendant Sjoholm, as an agent of the Department of Revenue of the State of Washington, and defendant Puget Sound National Bank violated his federal and state constitutional right to be free from unreasonable searches and seizures when the bank, in compliance with a notice and order to withhold and deliver issued by the department and served upon the bank, paid $89.98 from his account to the department. He also contends that the department has no authority to establish and to attempt collection of his tax liability without first having that determination made by the judiciary through a jury trial. We disagree with both contentions, and affirm the judgment of the trial court.

On October 6, 1975, the department audited Peters' business and discovered that his excise taxes (I. e., use tax on inventory) were delinquent in the amount of $1,501.14. The department issued a tax assessment for the delinquency, and a copy was mailed to Peters. When he failed to remit the amount assessed, the department issued a tax warrant against him, commanding an agent of the department (1) to file a copy with an appropriate county clerk and (2) to levy upon personal property of the taxpayer. See RCW 82.32.210 and .230. Subsequent to the issuance of this warrant, Peters petitioned the department for a conference on the question of his tax liability. Notwithstanding the tardiness of the request, the department granted it, and, after a hearing, chose to abide by its original determination. Accordingly, the compliance division was directed to proceed with collection under the tax warrant.

Thereafter, the tax warrant was filed in Superior Court for Lewis County, creating a judgment of record and a lien upon the Peters' property. State v. Hi-Lo Foods, Inc., 62 Wash.2d 534, 383 P.2d 910 (1963); Weitz v. Electrovation, Inc., 48 Wash.2d 604, 295 P.2d 728 (1956). Then, utilizing an alternative collection process under the authority of RCW 82.32.235, ¹ the department, through defendant Sjoholm, one of its compliance agents, served a notice and order to withhold and deliver upon the bank. The notice indicates on its face both the tax warrant number and the Lewis County judgment number. The bank delivered to the department a check in the amount of $89.98, representing the funds in Peters' account. Peters then commenced this action.

First, Peters claims that the delivery of the funds in his bank account to the department, and the department's use of that statutory procedure, violated his rights under the fourth amendment to the United States Constitution, ² and article 1, section 7 of the Washington State Constitution. ³ He relies principally on a statement in State v. McCray, 15 Wash.App. 810, 551 P.2d 1376 (1976), in which the court agreed with the basic premise of United States v. Miller, 500 F.2d 751 (5th Cir. 1974), and Burrows v. Superior Court, 13 Cal.3d 238, 529 P.2d 590, 118 Cal.Rptr. 166 (1975), that "(a) person's bank account Is protected against unwarranted searches and seizures by our federal and state constitutions." State v. McCray, supra, 15 Wash.App. 814, 551 P.2d 1379.

In Miller, a government agent viewed microfilm copies of all the checks in Miller's account at a bank, and took copies of one deposit slip and one or two checks. The prosecution introduced several of these copies at trial to help prove three of the overt acts charged against Miller in furtherance of a conspiracy. The United States Court of Appeals held that obtaining these copies with a faulty subpoena constituted an unlawful invasion of Miller's privacy. In Burrows, the California court followed the reasoning of Miller in holding that any bank statements or copies thereof obtained without the benefit of legal process were acquired as the result of an illegal search and seizure.

However, the United States Supreme Court has reversed the fifth circuit's holding in Miller. United States v. Miller, 425 U.S. 435, 96 S.Ct. 1619, 48 L.Ed.2d 71 (1976). In Miller at 442-43, 96 S.Ct. at 1623-24, the Supreme Court stated:

Even if we direct our attention to the original checks and deposit slips, rather than to the microfilm copies actually viewed and obtained by means of the subpoena, we perceive no legitimate "expectation of privacy" in their contents. The checks are not confidential communications but negotiable instruments to be used in commercial transactions. All of the documents obtained, including financial statements and deposit slips, contain only information voluntarily conveyed to the banks and exposed to their employees in the ordinary course of business. The lack of any legitimate expectation of privacy concerning the information kept in bank records was assumed by Congress in enacting the Bank Secrecy Act, the expressed purpose of which is to require records to be maintained because they "have a high degree of usefulness in criminal, tax, and regulatory investigations and proceedings." 12 U.S.C. § 1829b(a)(1). Cf. Couch v. United States, supra, at 335, 93 S.Ct. (611), at 619, 34 L.Ed.2d (548), at 558.

The depositor takes the risk, in revealing his affairs to another, that the information will be conveyed by that person to the Government.

In view of the reasoning of the United States Supreme Court, the court's statement in McCray, that a person's bank account is protected against unwarranted searches and seizures, is of doubtful validity insofar as those protections are guaranteed by the federal constitution. Nevertheless, a state may impose a higher standard on searches and seizures than is required by the federal constitution, State v. Hehman, 90 Wash.2d 45, 578 P.2d 527 (1978); however, the McCray court did not expressly state or imply that it was imposing a higher standard than was guaranteed by the fourth amendment to the United States Constitution. Neither do we impute any greater protection or significance to article 1, § 7 of the Washington State Constitution than we are obliged to provide under the fourth amendment to the United States Constitution.

Peters also asserts, however, that this case can be distinguished from Miller because the case at bench involved the seizure of Funds rather than a search and seizure of his checks, deposit slips, and bank statements. The assertion raises the question of whether a person has a reasonable expectation of privacy in the funds in his account. We are convinced that he does not.

In Miller, the United States Supreme Court found no reasonable expectation of privacy in the defendant's checks and deposit slips, even though it is very likely that they revealed much about Miller's activities, associations, and beliefs. We know that they helped prove the conspiracy charge.

In the case at bench, the department received a check for $89.98 from the bank, representing the funds in Peters' account. This would merely reveal that he had such a sum in his account and nothing more. Furthermore, once money is deposited in a general account it actually becomes the property of the bank, and the bank and the depositor assume the legal relation of debtor and creditor. Carlson v. Kies, 75 Wash. 171, 134 P. 808 (1913); Allied Sheet Metal Fabricators, Inc. v. Peoples Nat'l Bank, 10 Wash.App. 530,...