Smith v. United States

Decision Date25 February 1966
Docket NumberCiv. A. No. 1066-65.
Citation250 F. Supp. 803
PartiesCharles SMITH and Irene Smith, Petitioners, v. UNITED STATES of America and David M. Satz, Jr., United States Attorney for the District of New Jersey, Respondents.
CourtU.S. District Court — District of New Jersey

David M. Satz, Jr., U. S. Atty., by Matthew J. Scola, Asst. U. S. Atty., for respondents.

Herbert L. Zuckerman, Newark, N. J., for petitioners.

WORTENDYKE, District Judge.

Federal income taxpayers, husband and wife, have filed their verified petition in this Court seeking a return of what they denominate "evidence illegally taken from the petitioners. * * *" They invoke this Court's jurisdiction in equity, and seek relief by mandatory injunction for the return of the evidentiary material, and to prevent respondent United States Attorney from presenting the evidence so secured to a Federal Grand Jury for the purpose of securing a criminal indictment. On October 1, 1965 the Court ordered that the respondents Show Cause why the petitioners should not be afforded the relief which they seek.

Upon its return, the Order to Show Cause was discharged and the petition dismissed; but the Court undertook to embody in a written opinion the grounds for its decision. This memorandum embodies such grounds.

The facts are contained in the affidavit of petitioner Charles Smith, annexed to the petition, and in what purports to be a partial transcript of his testimony given at the office of the Intelligence Division, Internal Revenue Service, on April 3, 1963. It is therein disclosed that on April 3, 1963 he was asked by a Special Agent of the Intelligence Division of the Internal Revenue Service to appear before him to answer questions about his income tax matters for 1959 and 1960. At this questioning there were present, besides the Special Agent, Hoffman, a reporter and a Revenue Agent, Gadek. Smith produced no representative at the hearing. He states that, at the beginning of the questioning, the Special Agent informed him that he, Smith, had the right to refuse to answer any question which might tend to incriminate him, and then proceeded to question him respecting the subject matter stated in the notice which produced his attendance. Smith further states that in the Spring of 1964 he employed an Attorney to accompany him to the same office where he had been questioned for the purpose of procuring a copy of the "Question and Answer Statement given by me about one year before. At this time I signed a copy of such a statement, made some corrections and initialed each page." Smith adds that annexed to his affidavit is a copy of page 1 of the transcript of the interrogation of April 3, 1963. It appears therefrom that the Special Agent on that occasion propounded to Smith the following questions and received from him the following answers.

"1. Q. Mr. Smith, you have been requested to appear at this office in connection with your income tax liabilities for the years 1959 and 1960. Are you willing to answer my questions under oath? A. Yes.
2. Q. Mr. Smith, it is my duty to advise you that under the Constitution of the United States you have the right to refuse to answer any question which may tend to incriminate you under the laws of the United States, and to inform you that anything you say, or any evidence that you produce at this hearing, may be used against you in any proceeding, criminal or otherwise, which may hereafter be undertaken by the United States Government. Do you fully understand this? A.
Yes. I will answer these questions to the best of my ability and my knowledge that I can recall all the way through. I have nothing to hide whatsoever."

Petitioners contend that the interrogation complained of violated petitioners' Federal Constitutional Right under the Sixth Amendment which provides that "in all criminal prosecutions, the accused shall enjoy the right * * * to have the Assistance of Counsel for his defence."

The Court has also been furnished with a copy of a transcript of further proceedings at the office of the Internal Revenue Service on April 15, 1965, attended by Smith, his Attorney, Murray M. Weinstein, Esq., A. William Furst, Special Agent, Internal Revenue Service, Alexander Dombrowski, Special Agent, Internal Revenue Service, and Dorothy T. Bielecki, as Reporter. That transcript discloses that after having read his question and answer statement of April 3, 1963, Smith expressed the desire to make certain additions and corrections to his answers given on that prior occasion. These questions and answers were taken up seriatim by the Special Agent with Smith, and he was afforded the opportunity to modify the answers which he had previously given to each of the questions which had been asked. At the conclusion of his review of those questions and answers, and the acceptance by the Special Agent of the modifications of his previous answers thereto, Smith was asked whether there was anything further which he desired to add to the statement. He answered that there was "nothing else that I can say."

Respondents contend that:

1. Subject-matter jurisdiction is precluded by reason of the sovereign immunity of respondents;
2. Charles Smith intelligently and effectively waived any Sixth Amendment Rights;
3. The decisions in Escobedo v. State of Illinois, 1964, 378 U.S. 478, 84 S.Ct. 1758, 12 L.Ed.2d 977, and in U. S. ex rel. Russo v. State of New Jersey, 3 Cir. 1965, 351 F.2d 429, are inappropriate because such evidence as may have been obtained from Smith on April 3, 1963 did not tend to incriminate either of the petitioners.

Annexed to the Government's brief is a copy of the letter containing the request to Smith to appear for the interrogation complained of. That letter, which was dated March 26, 1963 and signed by the Chief of the Intelligence Division of the Internal Revenue Service, reads as follows:

"In connection with an official investigation concerning your income tax liability for the years 1959 and 1960, you are being afforded an opportunity to appear for an interview by Special Agent Harry E. Hoffman at the office of the Chief, Intelligence Division, 1060 Broad Street, Room 634D, Newark, New Jersey, on Wednesday, April 3, 1963 at 1:00 p. m.
You may appear with counsel, if you so desire, or with any other person who may have knowledge of the facts in your case whom you wish to be present.
Please bring with you all your records in support of your income tax returns for the years 1959 and 1960."

Respondents represent and petitioners do not deny that additional conferences between Charles Smith and Agents of the Internal Revenue Service were held on April 21 and 24, 1964 and on May 18, 1965; the last conference being at the office of the Department of Justice in Washington, D. C. At each of these conferences, counsel for the petitioners was present.

Upon the question of jurisdiction and the contention of the respondents that it is lacking by reason of their sovereign immunity, petitioners rely upon Smith v. Katzenbach, 351 F.2d 810 (D.C.Cir. 1965). The respondents rely upon Larson v. Domestic and Foreign Corp., (1949), 337 U.S. 682, 69 S.Ct. 1457, 93 L.Ed. 1628.

The proceeding complained of was a fact-finding, non-adjudicative investigation by an administrative agency. The right of petitioners to counsel on the first interrogation, if that right existed, was not a constitutional right. If, as the uncontradicted facts disclose, petitioners waived the right or privilege of having counsel on that occasion, the source of the right or privilege becomes immaterial.

This is not a case in which petitioners may properly invoke the protections of the Sixth Amendment of the United States Constitution. The Sixth Amendment is specifically limited to "criminal prosecutions." "There is no criminal prosecution here, no accused, not even a hearing, only an investigatory fact-finding proceeding." C. I. R. v. Backer, 178 F.Supp. 256, 257 (M.D.Ga. 1959) citing Torras v. Stradley, 103 F. Supp. 737, 739 (N.D.Ga.1952). C. I. R. v. Backer, supra, reversed on other grounds, 275 F.2d 141 (5 Cir. 1960). Tax investigations, such as the one conducted here, are authorized by 26 U.S.C. §§ 7601, 7602, and 7605 (similar provisions having been provided in the 1939 Internal Revenue Code). These investigations are of a fact-finding, non-adjudicative nature. In re Albert Lindley Lee Memorial Hospital, 209 F.2d 122, 123 (2 Cir. 1953); United States v. Summe, 208 F.Supp. 925, 926 (E.D. Ky.1962). They are not judicial proceedings. In re Albert Lindley Lee Memorial Hospital, supra. The petitioners' right to counsel in this case, if it exists at all, is founded upon the Administrative Procedure Act, 5 U.S.C. § 1005(a), and not upon the Sixth Amendment guarantee of the United States Constitution. United States v. Smith, 87 F.Supp. 293, 294 (D.Conn. 1949); Backer v. C. I. R., supra, 275 F.2d at 144; In re Neil, 209 F.Supp. 76, 77 (S.D.W.Va.1962); See also F. C. C. v. Schreiber, 329 F.2d 517, 524 (9 Cir. 1964). In all the cases immediately above cited, the witnesses were under compulsion to appear, and the right to counsel pursuant to the Administrative Procedure Act was sustained. However, in the present case the taxpayer was not under compulsion to appear but rather appeared voluntarily pursuant to "* * an opportunity to appear for an interview * * *" as set forth in a letter to him from the Intelligence Division, dated March 26, 1963. In this situation, where the taxpayer appears voluntarily, there is a question as to whether there is any right to counsel at all. See F. C. C. v. Schreiber, supra, 329 F.2d at 535, footnote 32, paragraph 2. Indeed, as to persons compelled to appear, the Supreme Court has not decided the question as to whether the Administrative Procedure Act affords the right to counsel in a fact-finding non-adjudicative investigation. F. C. C. v. Schreiber, supra, 329 F.2d at 526; ...

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