Petro-Lewis Corp. v. District Court, Fourth Judicial Dist., El Paso County

• Decision Date: 14 October 1986
• Docket Number: PETRO-LEWIS,No. 85SA185,85SA185
• Citation: 727 P.2d 41
• Parties: CORPORATION, Petitioner, v. DISTRICT COURT, FOURTH JUDICIAL DISTRICT, EL PASO COUNTY, Colorado, and the Honorable William E. Rhodes, one of the judges thereof, Respondents.
• Court: Colorado Supreme Court

Page 41

727 P.2d 41

PETRO-LEWIS CORPORATION, Petitioner, v. DISTRICT COURT, FOURTH JUDICIAL DISTRICT, EL PASO COUNTY Colorado, and the Honorable William E. Rhodes, one of the judges thereof, Respondents.

No. 85SA185.

Supreme Court of Colorado En Banc.

Oct. 14, 1986.

Holme Roberts & Owen, Richard R. Young, Lawrence Ponoroff, Colorado Springs, for petitioner.

Tegtmeier & Sears, P.C., Richard L. Tegtmeier, Colorado Springs, for respondents.

ERICKSON, Justice.

In this original proceeding, we issued a rule to show cause why Donna Stewart, defendant in the action below, should not be compelled to comply with certain requests for discovery. We now make the rule absolute and remand for further proceedings consistent with this opinion.

I.

Defendant Western Hydrocarbons and Development Corporation (Western) is a Colorado corporation with its principal place of business in Colorado Springs, Colorado. Plaintiff Petro-Lewis Corporation (Petro-Lewis) is a Colorado corporation with its principal place of business in Denver, Colorado. Between January 1984 and November 1984, Petro-Lewis sold butane and isobutane on credit to Western for an agreed price of $1,391,445.68. Western in turn sold the butane and isobutane to Elgin Petroleum Limited (Elgin) for an amount in excess of $1.3 million. Western made no payments on its account with Petro-Lewis, and in November 1984 Petro-Lewis sued Western for the amount due.

After the action against Western was commenced, Jack D. Doyle, vice-president and half-owner of Western, testified by affidavit that Clifford Stewart, Western's president, had surreptitiously deposited the proceeds of the Elgin sale into an account on which he was the only signatory. Doyle further testified that Stewart used this account to transfer substantially all of the Elgin proceeds to his wife, Donna Stewart, to his brother, Raymond Stewart, and to himself.

In light of Doyle's affidavit, Petro-Lewis amended its complaint to join Clifford, Donna and Raymond Stewart as defendants. Petro-Lewis alleged in pertinent part: (1) that Western improperly transferred property to Clifford, Donna and Raymond Stewart; (2) that those transfers were in fraud of Western's creditors and therefore void; and (3) that Clifford, Donna and Raymond Stewart were personally liable to the extent they transferred, diminished, or placed the funds received from Western beyond the reach of Petro-Lewis. In May of 1985, Petro-Lewis again amended its complaint, alleging (1) that Clifford, Donna and Raymond Stewart conspired to defraud Petro-Lewis, rendering each jointly and severally liable for the entire debt, and (2) that Petro-Lewis was entitled to real property purchased by Donna Stewart with funds fraudulently obtained from Western.

In her answer, Donna Stewart denied all liability to Petro-Lewis. She admitted on deposition that she was an officer for Western, but denied that she had performed any services for the company.

On February 11, 1985, Petro-Lewis served interrogatories, request for admissions, and request for production of documents on Donna Stewart. Petro-Lewis' discovery was directed primarily to the acts and conduct of Mrs. Stewart, and her relationship with Western and third parties. Eighteen of the twenty-one requests for admission seek admissions involving eight checks Donna Stewart received that were drawn on Western's account. Two requests seeks confirmation that Donna Stewart maintained two specific bank accounts. The final request for admission (No. 21) is the only discovery request that directly mentions Donna Stewart's husband by name, and it requests an admission that Donna Stewart received a certain check drawn on a bank account maintained by her husband.

Many of Petro-Lewis' requests and interrogatories to Donna Stewart may seek information about her husband, but only by implication. Most of these seek information about certain financial transactions and the names of persons who were involved in those transactions. The following interrogatories are typical examples:

10. [W]ith respect to each item of precious jewelry ... identify the person from whom you received such item of jewelry or gem.

19. State whether or not you have ever borrowed money from defendant Western Hydrocarbons and Development Corp. and ... identify the person who negotiated such loan....

21. Please state your current residential address and whether you are (individually or jointly with another person) the record owner of such property, and, if not, identify the person who owns such property and describe the basis upon which you are entitled to possession thereof.

The request for production of documents primarily seeks documents related to the transactions mentioned in the other discovery requests.

Mrs. Stewart refused to comply with Petro-Lewis' discovery, asserting that the requested information was privileged under section 13-90-107(1)(a), 6 C.R.S. (1985 Supp.), which provides:

A husband shall not be examined for or against his wife without her consent, nor a wife for or against her husband without his consent; nor during the marriage or afterward shall either be examined without the consent of the other as to any communications made by one to the other during the marriage....

(Emphasis added.)

After exhausting informal steps to resolve the matter, Petro-Lewis moved for an order to compel Mrs. Stewart to respond to its discovery. The motion to compel was denied by the trial court. Petro-Lewis now seeks mandamus in this court to compel the trial court to grant the motion.

We hold that a party may be compelled to comply with all proper requests for discovery which pertain to that party's liability, even though some responses may be adverse to the party's spouse. Discovery when the marital privilege is invoked would not extend to matters that relate solely to Mr. Stewart's individual liability. We decline to rule on the extent to which Mrs. Stewart may be examined at trial. Discovery, where the marital privilege is in issue, must be determined on an ad hoc basis.

II.

C.R.C.P. 26(b)(1) permits discovery "regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action...." Mrs. Stewart does not claim that Petro-Lewis' discovery is not relevant. Rather, Mrs. Stewart contends that the matters into which Petro-Lewis seeks discovery are subject to the marital privilege set forth in section 13-90-107(1)(a). Because Petro-Lewis has not sought disclosure of confidential marital communications between Clifford and Donna Stewart, we need not consider here whether such communications are discoverable by Petro-Lewis. ¹ We address only whether compliance by Donna Stewart with Petro-Lewis' interrogatories, requests for admissions and requests for production of documents is tantamount to testimony against her spouse without his consent.

The testimonial provisions of the marital privilege are designed to protect the sanctity and tranquility of the marital relationship from the disruption attendant to adverse spousal testimony. Archina v. People, 135 Colo. 8, 24-25, 307 P.2d 1083, 1092 (1957); McAllister v. McAllister, 72 Colo. 28, 32, 209 P. 788, 790 (1922). The testimonial privilege applies to in-court testimony, as well as depositions, interrogatories, requests for admissions, and other forms of testimonial discovery. ² See Frey v. Superior Court, 237 Cal.App.2d 201, 46 Cal.Rptr. 747 (1965); Forman v. Andersen, 181 Neb. 528, 149 N.W.2d 525 (1967). Cf. Clark v. District Court, 668 P.2d 3, 8 (Colo.1983) (physician-patient and psychologist-client privileges prohibit not only in-court testimonial disclosures but also pretrial discovery of information within the scope of the privilege).

Although the marital testimonial privilege has existed for centuries, it has been severely criticized. It has been described as the "merest anachronism in legal history, and an indefensible obstruction to truth in practice." 8 J. Wigmore, Evidence § 2228 at 221 (1961). It has been called a rule which "grant[s] to every man a license to commit all sorts of wickedness, in the presence and with the assistance of his wife." 5 J. Bentham, Rationale of Judicial Evidence 340 (1827). The Supreme Court has called it a contravention of "the fundamental principle that 'the public ... has a right to every man's evidence.' " Trammel v. United States, 445 U.S. 40, 50, 100 S.Ct. 906, 912, 63 L.Ed.2d 186 (1980) (quoting United States v. Bryan, 339 U.S. 323, 331, 70 S.Ct. 724, 730, 94 L.Ed. 884 (1950)). Finally, we have held that the privilege obstructs the rightful search for truth, and must be strictly limited. Keeler v. Russum, 68 Colo. 196, 198, 189 P. 255, 256 (1920).

Not surprisingly, the testimonial privilege has been eroded over the years. In 1980, the Supreme Court in Trammel v. United States, 445 U.S. 40, 100 S.Ct. 906, 63 L.Ed.2d 186 (1980), held that in federal criminal prosecutions the testimonial privilege could be asserted only by the testifying spouse. The court noted:

[Testimonial privileges] must be strictly construed and accepted "only to the very limited extent that permitting a refusal to testify or excluding relevant evidence has a public good transcending the normally predominant principle of utilizing all rational means of ascertaining truth." Elkins v. United States, 364 U.S. 206, 234 [80 S.Ct. 1437, 1453, 4 L.Ed.2d 1669] (1960) (Frankfurter, J., dissenting).

....

[T]he existing rule should be modified so that the witness-spouse alone has a privilege to refuse to testify adversely; the witness may be neither compelled to testify nor foreclosed from testifying. This modification--vesting the privilege in the witness-spouse--furthers the important public interest in marital harmony without unduly burdening legitimate law enforcement needs.

Id. at 50, 53, 100 S.Ct. at 912, 913.

Other courts have recognized an exception to the privilege where the disputed testimony concerns a fraud perpetrated by both...