U.S. v. Beattie

• Decision Date: 18 August 1975
• Docket Number: No. 1305,D,1305
• Parties: 75-2 USTC P 9673 UNITED STATES of America and Donald M. Cerra, Special Agent of the Internal Revenue Service, Appellees, v. John L. BEATTIE, Jr., Appellant. ocket 75-6041.
• Court: U.S. Court of Appeals — Second Circuit

Page 267

522 F.2d 267

75-2 USTC P 9673

UNITED STATES of America and Donald M. Cerra, Special Agent of the Internal Revenue Service, Appellees, v. John L. BEATTIE, Jr., Appellant.

No. 1305, Docket 75-6041.

United States Court of Appeals Second Circuit.

Argued July 17, 1975.

Decided Aug. 18, 1975.

Sidney R. Rubin, Rochester, N. Y. (Rubin, Levey & Battaglia, Rochester, N. Y., of counsel), for appellant.

Robert E. Lindsay, Atty., Tax Div., Dept. of Justice, Washington, D. C. (Scott P. Crampton, Asst. Atty. Gen., Washington, D. C., Richard J. Arcara, U. S. Atty., W. D. N. Y., Buffalo, N. Y., Gilbert E. Andrews, Atty., Tax Div., Dept. of Justice, Washington, D. C., of counsel), for appellees.

Before MOORE, FRIENDLY and VAN GRAAFEILAND, Circuit Judges.

FRIENDLY, Circuit Judge:

This is an appeal by John L. Beattie, Jr. (sometimes hereafter the taxpayer) from an order of the United States District Court for the Western District of New York pursuant to 26 U.S.C. § 7402(b) and § 7604(a), enforcing an Internal Revenue Service summons issued under 26 U.S.C. § 7602 despite Beattie's claim of self-incrimination.

The summons, dated September 13, 1974, required Beattie to appear before Special Agent Donald M. Cerra in Rochester, New York, and to bring with him and produce for examination All original workpapers of Arthur Robeson, C.P.A. which are in your possession and were used in the preparation of Form 1040 U.S. Individual Income Tax Return of John L. Beattie, Jr. and Margaret Beattie for the years 1968, 1969, 1970, 1971 and 1972 consisting of but not limited to the following: trial balances, balance sheet, adjusting entries, closing entries, workpapers, notes, memorandums and any correspondence used in the preparation of the aforementioned returns.

The petition for enforcement and an accompanying affidavit of Special Agent Cerra alleged that Beattie had appeared but had refused to produce the documents. It is not disputed that the principal purpose of Cerra's investigation was to determine whether to recommend that a criminal prosecution be initiated against Beattie with respect to his tax returns for 1968-72.

Beattie filed an answer and affidavits of his present attorney, of Robeson, and of himself. Beattie's affidavit stated that Cerra had informed him of the investigation on or about January 9, 1974, and had advised him of his constitutional rights to remain silent and to retain counsel. The affidavit went on to say that "On or about January 18, 1974, James W. Richards, Esq., acting as my attorney and on my behalf, and with my knowledge and consent, requested that my accountant, Arthur W. Robeson, deliver to Mr. Richards, for delivery to me, various work papers, trial balances, and schedules which Mr. Robeson had prepared as the accountant for me and for my business, Canteen Vending Company of Rochester, a sole proprietorship"; that on or about the same day attorney Richards had delivered the papers to Beattie; that the papers had been in his continuous possession thereafter; and that his refusal to produce them for the special agent's examination was based on the privilege against self-incrimination conferred by the Fifth Amendment to the Constitution. The accountant's affidavit confirmed that attorney Richards had requested delivery of "certain work papers which I had prepared for Mr. Beattie and said business" and had stated his intention to turn them over to Beattie. The accountant added that since Beattie "had paid me for my accounting services, including the preparation of these papers, I felt that he was entitled to have them if he so desired," that the accountant had no need for the papers, and that accordingly he turned them over to attorney Richards.

The petition was orally argued. No one sought an evidentiary hearing, such as was held in United States v. Fisher, 500 F.2d 683 (3 Cir. 1974) (En banc ), Cert. granted, 420 U.S. 906, 95 S.Ct. 824, 42 L.Ed.2d 835 (1975) and the court conducted none. After holding the matter for some months, apparently in anticipation of the Supreme Court's review of Fisher and a companion case, ¹ the court entered an order overruling Beattie's claim of privilege, without further explanation, and enforcing the summons. ² This court granted a stay pending an expedited appeal.

The Supreme Court has granted certiorari to resolve the conflict between two other circuits involving a taxpayer's claim of privilege with respect to his accountant's workpapers, United States v Fisher, 500 F.2d 683 (3 Cir. 1974) (En banc ), denying the claim, and United States v. Kasmir, 499 F.2d 444 (5 Cir. 1974), sustaining it. However, in both those cases the taxpayer, after obtaining the workpapers from the accountant had transferred possession to his attorney, evidently believing although perhaps mistakenly, that two claims of privilege would be better than one. It is possible that the Court may dispose of the cases on the ground that, as in Couch v. United States, 409 U.S. 322, 93 S.Ct. 611, 34 L.Ed.2d 548 (1973), compulsory process did not run against the person claiming the privilege, without reaching the question whether the taxpayer could have sustained the claim of privilege if he had retained possession. ³ We therefore deem it best to render a decision so that the Supreme Court may have this variation before it when it decides Fisher and Kasmir.

I.

We speedily reject taxpayer's argument that Couch v. United States, supra, demands an almost automatic reversal. The holding in Couch was that the taxpayer's privilege did not attach even to his own records when these were in the possession of his accountant. It scarcely follows that the taxpayer's privilege does attach to the accountant's workpapers when these are in the possession of the taxpayer. The significance of Couch for the present case is in the language of the opinion, not in its holding.

We will be in a better position to evaluate this if we first review other decisions relating to the privilege and the considerations of policy that underly it.

We begin by noting that nothing turns on the fact that the self-incrimination clause of the Fifth Amendment provides that a person shall not "be compelled in any criminal case to be a witness against himself" whereas many state constitutions, including those of most of the original colonies, phrased the privilege in terms of compelling a person to give "evidence" against himself. Schmerber v. California, 384 U.S. 757, 761-62, n. 6, 86 S.Ct. 1826, 16 L.Ed.2d 908 (1966), citing Counselman v. Hitchcock, 142 U.S. 547, 584-85, 12 S.Ct. 195, 35 L.Ed. 1110 (1890) and 8 Wigmore, Evidence § 2252 (McNaughton rev. 1961). However, recognition that the protection of the self-incrimination clause is not confined to the compulsion of oral testimony by the accused is still a considerable way from a conclusion that the clause protects against the production of evidence representing the statements of another person which are in the accused's possession. The Schmerber decision is an important datum against so much of taxpayer's argument as depends on a premise that the self-incrimination clause protects against compelling an accused to do anything that may assist the state in proving his guilt. As was there noted, "both federal and state courts have usually held that it offers no protection against compulsion to submit to fingerprinting, photographing, or measurements, to write or speak for identification, to appear in court, to stand, to assume a stance, to walk or to make a particular gesture," 384 U.S. at 764, 86 S.Ct. at 1832. The Court went on to hold that the clause afforded no protection against requiring a defendant to allow his skin to be punctured so that the police could perform a blood test, as it was later to hold that the clause did not protect an accused from being forced to exhibit his person and use his voice, United States v. Wade, 388 U.S. 218, 221-23, 87 S.Ct. 1926, 18 L.Ed.2d 1149 (1967), or to give exemplars of his handwriting, Gilbert v. California, 388 U.S. 263, 265-67, 87 S.Ct. 1951, 18 L.Ed.2d 1178 (1967).

Recognizing that the enforced blood test sustained in Schmerber violated certain policies of the privilege against self- incrimination, Mr. Justice Brennan justified the decision on the ground that "the privilege has never been given the full scope which the values it helps to protect suggest. History and a long line of authorities in lower courts have consistently limited its protection to situations in which the State seeks to submerge those values by obtaining the evidence against an accused through 'the cruel, simple expedient of compelling it from his own mouth . . .' ", 384 U.S. at 762-63, 86 S.Ct. at 1831. ⁴ What "the protection of the privilege reaches" is "an accused's communications, whatever form they might take, and the compulsion of responses which are also communications, for example, compliance with a subpoena to produce one's papers, Boyd v. United States, 116 U.S. 616, 6 S.Ct. 524, 29 L.Ed. 746." 384 U.S. at 763-64, 86 S.Ct. at 1832.

The test, then, in cases relating to the production of papers, is whether the state is seeking to compel incriminating "responses which are also communications." ⁵ A subpoena demanding that an accused produce his own records is taken to be the equivalent of requiring him to take the stand and admit their genuineness, see Curcio v. United States, 354 U.S. 118, 125, 77 S.Ct. 1145, 1 L.Ed.2d 1225 (1957); 8 Wigmore, Evidence, § 2264, at 380 (McNaughton rev. 1961). ⁶ While, as stated by Wigmore, "testimonial acts" of this sort (that is, the implicit assurance that the articles produced are the ones demanded) "are not typical of the sort of disclosures which are caught in the main current of history and sentiments giving vitality to the privilege," nevertheless "they are within the borders of its protection." 8 Evidence § 2264 at 380. A good reason for this is that if an accused is forced to produce his own papers, with the...