Reif, Matter of

Decision Date11 December 1991
Docket NumberNo. 17360,17360
Citation478 N.W.2d 815
PartiesIn the Matter of the Refusal of Gary REIF and Bradley Reif to Comply With Lawful Subpoena. STATE of South Dakota, ex rel. Ronald J. SCHREINER, Secretary of Revenue, Petitioner and Appellee, v. Gary REIF and Bradley Reif, Respondents and Appellants.
CourtSouth Dakota Supreme Court

David D. Wiest, Asst. Atty. Gen., Pierre, for petitioner and appellee; Mark Barnett, Atty. Gen., Pierre, on brief.

Reed C. Richards of Richards & Richards, Deadwood, for respondents and appellants.

AMUNDSON, Justice.

Gary and Bradley Reif (Reifs) appeal the decision of the trial court entering a judgment of contempt for failure to comply with a subpoena duces tecum issued by the Secretary of the State Department of Revenue (Department). We affirm.

FACTS

Gary Reif and Bradley Reif are residents of Lawrence County, South Dakota. As a result of an audit of a third party, Department's auditor discovered payments made by third party to Reifs as consideration for construction services performed by them. Department's auditor mailed a notice of intent to audit to both Gary and Bradley Reif on April 7, 1989. In order to commence the audit, the auditor requested that Reifs provide their books and records relating to their business activities for an audit in regards to the contractor's excise tax imposition on gross receipts. SDCL ch. 10-46A. Reifs refused to provide any records to Department.

After Reifs' refusal to permit any inspection and audit of their books and records, the Secretary of Department (Secretary) issued subpoenas duces tecum to both Reifs. These initial subpoenas were issued on June 21, 1989, and required Reifs to present business records to representatives of Department no later than July 12, 1989. Reifs failed to comply with the initial subpoenas and Department again issued subpoenas duces tecum on January 9, 1990. The second subpoenas required Reifs to present business records to Department no later than January 26, 1990. Again, Reifs refused to comply with the subpoenas. Department was subsequently informed by Reifs' attorney that his clients would provide none of the requested documentation unless they were granted immunity from any possible criminal prosecution based upon the production of their business records.

Following Reifs' refusal to comply with the subpoenas duces tecum, Department attempted unsuccessfully to determine Reifs' tax liability by alternate means. Department found it difficult to isolate Reifs' excise taxable receipts from other sources of income, and thus determined that without Reifs' records, Department could not calculate their tax liability with any reasonable degree of certainty.

The trial court held two separate hearings on Department's order to show cause for contempt and struck part of the original subpoenas, which striking modified the subpoenas 1 so that they provided for the production of the following records:

(1) All bank records for all business accounts used during the period covered by said Subpoena, including bank statements, deposit slips, cancelled checks, and deposits from loan proceeds and advancements;

(2) All bank records for all personal accounts if any business income was deposited directly therein or any business expenses were paid directly therefrom;

(3) Billing invoices to customers for work performed and all written contracts, including change orders for work performed;

(4) Purchase invoices for equipment, materials, repairs to equipment and any other tangible personal property, or services purchased. Any documentation, memoranda or other written evidence of the value of any owner furnished materials installed in the completion of any jobs or projects;

(5) All ledgers or books of record showing income, expenses and other disbursements and depreciation schedules; and

(6) All contractors' exemption certificates or other documentation to show reduction or exemption of gross receipts from taxation.

The trial court ordered Reifs to produce the above subpoenaed documents or be held in contempt.

Reifs acknowledged to the trial court that they were in possession of at least some of the subpoenaed documents and had present ability to comply with the trial court's order. Reifs refused, however, to comply with the trial court order, claiming it violated their rights against self-incrimination provided under the constitutions of South Dakota (Article VI, Section 9) and the United States of America (Fifth Amendment).

The trial court entered a judgment of contempt which was stayed pending the outcome of this appeal. The trial court also required the subpoenaed documents to be placed under seal with the court pending determination of an appeal.

ISSUES

1. Whether the State's Subpoenas Duces Tecum violate Reifs' constitutional rights against self-incrimination?

2. Whether SDCL 10-45-45 is unconstitutionally vague?

3. Whether the trial court had the authority to order all subpoenaed records submitted to the court and sealed as a condition of the stay of execution pending appeal?

4. Whether the trial court erred in not making an in-camera inspection of the subpoenaed records?

ANALYSIS
1. Self-incrimination

We first examine Reifs' claim that Department's subpoenas duces tecum violate their constitutional right against self-incrimination. They assert Department's request would compel them to produce documents which might tend to incriminate them.

Reifs do not dispute that they have performed services which are subject to contractors' excise tax and use tax imposed by SDCL chs. 10-46A and 10-46. By performance of such services, Reifs engaged in a taxable business and were thus required to maintain records, receipts and invoices relating to the conduct of this business pursuant to SDCL 10-45-45. This statute also authorizes Department's inspection of records, providing:

Every person subject to tax under this chapter shall keep records and books of all receipts and sales, together with invoices, bills of lading, copies of bills of sale, and other pertinent papers and documents. Such books and records and other papers and documents shall, at all times during business hours of the day, be subject to inspection by the secretary of revenue or his duly authorized agents and employees to determine the amount of tax due. Such books and records shall be preserved for a period of three years unless the secretary of revenue, in writing, authorized their destruction or disposal at an earlier date. 2 (Emphasis added.)

In light of the fact that Reifs were required by SDCL 10-45-45 to maintain business records, we believe our holding in Carr v. S.D. Dept. of Labor, Unempl. Ins., 355 N.W.2d 10 (S.D.1984), is dispositive. 3 In Carr, the Department of Labor sought information concerning employees of Carr for the purposes of computing unemployment insurance tax. Carr was required to maintain such information pursuant to SDCL 61-3-2. Carr refused to cooperate with the Department of Labor and the department subpoenaed the information.

Carr refused to comply with the subpoena and the Department of Labor sought judicial enforcement. This court addressed Carr's self-incrimination argument as follows:

In Wilson v. United States, 221 U.S. 361, 31 S.Ct. 538, 55 L.Ed. 771 (1911), Mr. Justice Hughes, after noting that public officials are not protected from producing public records by constitutional privilege against self-incrimination, stated:

The principle applies not only to public documents in public offices, but also to records required by law to be kept in order that there may be suitable information of transactions which are the appropriate subjects of governmental regulation.... There the privilege which exists as to private papers, cannot be maintained.

Carr, 355 N.W.2d at 12 (citation omitted). We found Carr was required, under SDCL 61-3-2, to keep and preserve the records sought and eventually produced. Carr, 355 N.W.2d at 12. We also stated in Carr, "SDCL 61-3-2 also states that the type of records involved here 'shall be open to inspection ... by the secretary [of Labor] or his authorized representatives....' They were not protected by Carr's Fifth Amendment rights against self-incrimination." Id.

In the present case, Department is seeking Reifs' records to determine their tax liability, if any. The subpoenaed records are clearly required to be preserved pursuant to SDCL 10-45-45. Because these are records required by law to be kept by the taxpayer, pursuant to our holding in Carr, they are not records in which a taxpayer may claim the privilege of self-incrimination.

2. Vagueness

We next turn to Reifs' claim that SDCL 10-45-45 is unconstitutionally vague. When this court reviews the constitutionality of a law, it will be upheld unless it is clearly and unmistakably unconstitutional. AFSCME Local 1922 v. State, 444 N.W.2d 10 (S.D.1989); State v. Big Head, 363 N.W.2d 556 (S.D.1985); State v. Morrison, 341 N.W.2d 635 (S.D.1983).

It is settled law in this jurisdiction that statutes are presumed constitutional. Cert. of Question From U.S. Dist. Court, 372 N.W.2d 113 (S.D.1985). All presumptions are in favor of the constitutionality of a statute and continue so until the contrary is shown beyond a reasonable doubt. Big Head, 363 N.W.2d at 559; Independent Community Bankers Ass'n v. State, 346 N.W.2d 737 (S.D.1984); Crowley v. State, 268 N.W.2d 616 (S.D.1978).

This court has previously set the standard of a void for vagueness claim as follows:

Defendant contends that the statute is void for vagueness and therefore violates his right to due process. Statutes violate due process when the prohibited act or omission is expressed in terms so vague that reasonable people of ordinary intelligence might apply them differently....

Big Head, 363 N.W.2d at 559. We thus examine the statute to ascertain if a reasonable person or person of common intelligence would understand the statute's meaning.

We...

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4 cases
  • Maynard v. Heeren
    • United States
    • South Dakota Supreme Court
    • 27 Marzo 1997
    ... ... authority "to do all things that are reasonably necessary for the administration of justice within the scope of [its] jurisdiction," In re Reif, 478 N.W.2d 815, 819 (S.D.1991), the trial court may order that the inadmissible contents of any records be sealed 9 and that the adversarial party ... Bean v. Best, 76 S.D. 462, 80 N.W.2d 565 (1957). SDCL 15-6-26(b) provides, "Parties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action ... " A broad construction of the discovery rules is ... ...
  • State v. Asmussen
    • United States
    • South Dakota Supreme Court
    • 20 Agosto 2003
    ... ... prohibited act or omission is expressed in terms so vague that reasonable people of ordinary intelligence might apply [it] differently ... " Matter of Reif, 478 N.W.2d 815, 818 (S.D. 1991) (citing State v. Big Head, 363 N.W.2d 556, 559 (S.D.1985)). A statute will be held unconstitutional for ... ...
  • Donat v. Johnson
    • United States
    • South Dakota Supreme Court
    • 25 Marzo 2015
    ... ... (quoting In re Reif, 478 N.W.2d 815, 818 (S.D.1991)). If the statute is not sufficiently defined with definiteness and certainty[,] id. (quoting State v. Big Head, ... ...
  • Smith v. State
    • United States
    • Indiana Appellate Court
    • 26 Marzo 1992
    ... ... Stroger (1984), 97 N.J. 391, 406-407, 478 A.2d 1175). The South Dakota Supreme Court, in the recent decision of State of South Dakota v. Reif (S.D.1991), 478 N.W.2d 815, also held the production of required records does not constitute self-incrimination on the part of the taxpayer required ... ...

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