Reisman v. Caplin

• Decision Date: 07 February 1963
• Docket Number: No. 16690.,16690.
• Citation: 317 F.2d 123
• Parties: Samuel REISMAN et al., Appellants, v. Mortimer M. CAPLIN et al., Appellees.
• Court: U.S. Court of Appeals — District of Columbia Circuit

317 F.2d 123 (1963)

Samuel REISMAN et al., Appellants, v. Mortimer M. CAPLIN et al., Appellees.

No. 16690.

United States Court of Appeals District of Columbia Circuit.

Argued October 8, 1962.

Decided February 7, 1963.

Certiorari Granted June 17, 1963.

Messrs. Hans A. Nathan and Warren E. Magee, Washington, D. C., for appellants.

Mr. Richard M. Roberts, Attorney, Department of Justice, for appellee Caplin. Asst. Atty. Gen. Louis F. Oberdorfer, Messrs. Lee A. Jackson and Joseph M. Howard, Attorneys, Department of Justice, were on the brief for appellee Caplin. Mr. David C. Acheson, U. S. Atty., also entered an appearance for appellee Caplin.

Robert S. MacClure and Edward H. Harney, Co-partners, and all other Co-partners of Robert S. MacClure, as a class, d/b/a Peat, Marwick, Mitchell & Co. (a co-partnership) filed a brief pro se.

Before Mr. Justice BURTON, retired,^* and FAHY and BURGER, Circuit Judges.

Certiorari Granted June 17, 1963. See 83 S.Ct. 1873.

FAHY, Circuit Judge.

This appeal is from an order of the District Court dismissing a complaint for a declaratory judgment and injunction against Mortimer M. Caplin, who is the Commissioner of Internal Revenue, and others, and denying plaintiffs' motion for a preliminary injunction. The plaintiffs are attorneys. They set forth in their complaint that they represent certain persons, (a man and his wife), to whom we shall refer as the taxpayers, in controversies of a substantial character which are pending in regard to income tax liabilities to the United States. As such attorneys, they further allege, they employed the services of a firm of expert accountants, Peat, Marwick, Mitchell and Company, particularly defendants MacClure and Harney of the firm, to assist in the preparation for trial of cases pending in the Tax Court against taxpayers, and also to enable plaintiffs better to advise taxpayers in connection with a criminal investigation the defendant Commissioner was threatening to institute. The Tax Court cases were set for October 1961. On June 30, 1961, the Commissioner caused to be served on the accountants at their offices in both Chicago and New York summonses issued by him under the purported authority of § 7602 of the Internal Revenue Code of 1954. The summonses call upon the accountants to give testimony relating to the tax liability of the husband taxpayer and/or certain businesses and to bring with them all books, documents and records in the custody or control of Peat, Marwick, Mitchell and Company which pertained to the taxpayer and other named entities.

Plaintiffs allege that the accountants advised them they would produce the requested documents, located in Chicago, New York or Los Angeles, so as not to risk contempt proceedings for failure to do so. Plaintiffs further allege that to avoid premature disclosure of their defense strategy, reflected in the documents, with loss of ability effectively to assist taxpayers as counsel if their work product were prematurely disclosed to their opponents, they filed the complaint, joining the accountants as defendants.

The essence of the complaint is that the summonses called for the production of privileged matter, including the work product of counsel, and were not issued for the purpose of assessing taxes or of ascertaining the correctness of any return, but to obtain evidence for use in pending tax cases or to prosecute taxpayers criminally.

Plaintiffs moved for a temporary restraining order to prevent the Commissioner from attempting to enforce the summonses directed to the accountants and to restrain the latter from turning over to the Commissioner any of the papers in their possession. The restraining order was issued. Motion for preliminary injunction was also made. The Commissioner opposed this and moved for dismissal of the complaint. The defendants Harney and MacClure, as representatives of the accounting firm, answered, admitting the essential allegations of the complaint and joining in its prayers for relief, which included a prayer that the summonses be quashed.

On the basis of the complaint, an affidavit of one of the plaintiffs in support of the motion for temporary restraining order and preliminary injunction, the answer of defendant accountants, and plaintiffs' answer to interrogatories, the District Court, after hearing argument, granted defendant Caplin's motion to dismiss, entering findings of fact and conclusions of law.¹ The court rejected plaintiffs' contentions that the corporate books, documents and records sought by the summonses constituted the work product of plaintiffs, holding that the work papers and audit reports prepared by the accounting firm were the work product of the accountants and not of plaintiffs. The court also held that the original books, documents, records, work papers and audit reports prepared by the accountants and listed in the summonses were not within the attorney-client privilege.

We think the complaint was properly dismissed, but for a different reason, namely, that it is not within the court's jurisdiction because it is in substance a suit against the United States to which it has not consented. In terms, as well as actually, it is against the Commissioner in his official capacity, seeking to bind him in that capacity, as well as his successors in office and his agents. The statute under which the summonses were issued is not claimed to be unconstitutional; and since the Commissioner has acted within authority delegated by the statute his action may not be considered personal. The suit accordingly seems to us to be an effort to restrain the United States, and therefore to fall within the sovereign immunity doctrine. Larson v. Domestic and Foreign Commerce Corp., 337 U.S. 682, 69 S.Ct. 1457, 93 L.Ed. 1628 (1949); Malone v. Bowdoin, 369 U.S. 643, 82 S.Ct. 980, 8 L.Ed.2d 168 (1962). While those cases concerned suits over property, where it is more readily seen they were against the United States notwithstanding United States v. Lee, 106 U.S. 196, 1 S.Ct. 240, 27 L.Ed. 171 (1882), the immunity is not limited to cases involving property. It extends as well to those where the relief sought would "interfere with the public administration," as stated in Land v. Dollar, 330 U.S. 731, 67 S.Ct. 1009, 91 L.Ed. 1209 (1947), though that case itself did involve property, or where it appears that "by obtaining relief against the officer, relief" would, "in effect, be obtained against the sovereign." Larson v. Domestic and Foreign Commerce Corp., supra at 688, 69 S.Ct. at 1460. And see Wells v....