U.S. v. Mellon Bank, N. A.

Decision Date07 December 1976
Docket NumberNo. 76-1661,76-1661
Citation545 F.2d 869
Parties77-1 USTC P 9103 UNITED STATES of America, Appellee, v. MELLON BANK, N. A., and Milton F. Meissner, Intervenor Respondent-Appellant.
CourtU.S. Court of Appeals — Third Circuit

Scott P. Crampton, Gilbert E. Andrews, Jr., Carleton D. Powell, Tax Div., Dept. of Justice, Washington, D. C., Jeffrey S. Blum, Blair A. Griffith, Pittsburgh, Pa., for appellee.

R. Kenly Webster, Kennedy & Webster, Washington, D. C., Edward C. Schmidt, Rose, Schmidt & Dixon, Pittsburgh, Pa., for appellant.

Before SEITZ, Chief Judge, and HUNTER and GARTH, Circuit Judges.

JAMES HUNTER, III, Circuit Judge:

Milton F. Meissner appeals from an order of the United States District Court for the Western District of Pennsylvania staying an action for levy and seizure of a safe deposit box, pending the outcome of criminal proceedings against Meissner in the Southern District of New York. Alternatively, Meissner asks us to regard his appeal as a petition for a writ of mandamus ordering the district court to vacate the stay. The Mellon Bank, which leased the safe deposit box to Meissner, is a mere stakeholder and is not involved in this appeal. Treating Meissner's appeal as a petition for a writ of mandamus, we must dismiss it.

I.

Meissner allegedly was linked to various securities and tax frauds involving Robert Vesco and Investors Overseas Services. On April 9, the Internal Revenue Service entered a jeopardy assessment against Meissner and his wife, 1 who now reside in Costa Rica. On April 10, 1974, the Government served notice of levy and seizure on the Mellon Bank, which had leased a safe deposit box to Meissner and his wife. 2 The Bank refused to permit the Government to break into the box, which remains sealed.

On July 26, 1974, the Government petitioned the court below for an order directing the opening of the box. 3 Meissner was granted leave to intervene in that proceeding and opposed the attempted seizure. In September of 1974, he initiated a suit in the Tax Court to contest the jeopardy assessment.

Meissner opposed the seizure of the contents of the safe deposit box on several constitutional and other legal grounds. Primary among them was his contention that the Government had no genuine tax purpose for the seizure proceeding, that it wanted to examine the contents of the box merely to gather evidence for the criminal investigation of Meissner then in progress. He sought discovery of certain Government documents that would, he claimed, support this charge of bad faith.

The district court held that it lacked jurisdiction to consider Meissner's claims and denied his discovery motion. This court reversed, United States v. Mellon Bank, N. A., 521 F.2d 708 (3d Cir. 1975) (Mellon Bank I ). In the meantime, Meissner had obtained a stay of his Tax Court proceeding, alleging that it might jeopardize his fifth amendment rights with respect to criminal investigations then occurring.

On remand, the district court granted Meissner access to the documents he had requested. He maintains that several of these are sufficient to demonstrate the Government's bad faith in bringing the seizure action. Nevertheless, on January 16, 1976, two days after he was indicted for tax evasion in the Southern District of New York, Meissner sought further discovery in the seizure proceeding. This time he requested the following Government materials:

All documents relating to:

a. Any investigation of Dr. and/or Mrs. Meissner by any section or division of the Internal Revenue Service, including, but not limited to, the Audit Section, Collection Section, and Intelligence section;

b. Any investigation by any agency or department of Petitioner, U.S. Government, including, but not limited to the Internal Revenue Service, Securities and Exchange Commission and the Department of Justice in connection with any violations of law by Investors Overseas Services, and other related businesses and/or companies, Robert Vesco and/or any other individuals connected with IOS and/or related businesses and/or companies which relate to Dr. or Mrs. Meissner.

The court did not act on the motion. Instead, in an order of February 17, 1976, it granted the government's motion to continue the proceedings until final disposition of the criminal matter in the Southern District of New York. The court grounded this order on the finding that "substantial matters of the same nature exist in both the criminal and civil proceedings." Meissner appeals from that order.

II.
A.

At the outset, we are met with the Government's claim that a stay is not an appealable order, because it is not "final" under 28 U.S.C. § 1291. 4 In Rodgers v. United States Steel Corp., 508 F.2d 152, 159 (3d Cir.), cert. denied, 423 U.S. 832, 96 S.Ct. 54, 46 L.Ed.2d 50 (1975), this Court established three requisites for a "final order":

(1) It must be a final rather than a provisional disposition of the issue;

(2) it must not be merely a step toward final disposition of the merits;

(3) and the rights asserted must be threatened with irretrievable loss if review is postponed.

Irretrievable loss could certainly be found if the stay order had "the practical effect of a dismissal of the proceedings." In re Grand Jury Proceedings, 525 F.2d 151, 155 (3d Cir. 1975). Meissner declares that it does have this effect, because the Government, which seems unable to extradite him from Costa Rica, will never be in a position to conclude the criminal proceeding in New York. Therefore, says Meissner, the civil action will remain similarly unresolved, and he will forever be denied access to his safe deposit box. 5

We are unwilling, however, to permit the appealability of the district court's order to turn on matters so peculiarly within the control of one of the parties. The stay effects a permanent forfeiture of the box's contents only if Meissner allows it to do so. If he is genuinely concerned that the failure to resolve the criminal proceeding may work a denial of his rights in the civil case, he can submit to the jurisdiction of the Southern District of New York and see that the criminal matter is closed. Cf. Cotler v. Inter-County Orthopaedic Ass'n, 526 F.2d 537 (3d Cir. 1975) (stay pending resolution of state proceedings not final order, even though claim might be "old and feeble" after state proceeding concluded).

Alternatively, he could abandon his motion for additional discovery and proceed on the basis of the documents obtained on his first discovery motion. These, Meissner tells us, are already sufficient to prove the Government's bad faith in the seizure proceeding. 6 The Government has acknowledged its willingness to move to vacate the stay, if Meissner would agree to drop the burdensome request for additional documents.

A third alternative for the ultimate resolution of Meissner's rights in the safe deposit box is the reopening of his Tax Court proceeding, which will either confirm or disprove the existence of the deficiency upon which the levy and seizure are premised. 7 Thus, Meissner himself has at least three approaches to rendering the stay order genuinely non-final. We cannot say with assurance that he will choose not to avail himself of any of them, nor do we know for certain that the Government will prove unable to extradite him from Costa Rica. In any event, we see no reason to allow Meissner to create for himself an appeals as of right, depending only upon his refusal to take any steps toward the ultimate resolution of his rights in the usual channels. Otherwise, our appellate jurisdiction would be at the mercy of anyone in Meissner's admittedly unusual position.

B.

Although the stay in this case is not an appealable, final order, we do have discretionary power to review interlocutory orders of the district court under the All Writs Act, 28 U.S.C. § 1651. 8 La Buy v. Howes Leather Co., 352 U.S. 249, 77 S.Ct. 309, 1 L.Ed.2d 290 (1957); Texaco, Inc. v. Borda, 383 F.2d 607 (3d Cir. 1967); 9 J. Moore, Federal Practice P 110.26, at 286-88 (2d ed. 1975). This supervisory control, however, is limited to cases of clear abuse of the district court's discretion, La Buy, supra at 257, and the writ of mandamus is reserved for "the exceptional, unusual case," 9 J. Moore, supra at 286.

The question before us, then, is not whether the district judge's interlocutory order "was a correct exercise of his discretion but whether this situation is an appropriate instance for the use of the extraordinary writ of mandamus." Securities and Exchange Commission v. Stewart, 476 F.2d 755, 756 (2d Cir. 1973). The Stewart court explained the importance of this distinction:

While such an issue may seem technical, it is not, for it raises grave questions of the continued strength of the salutary final judgment rule in the federal courts and the propriety of appellate interference with the trial process in an early stage of the proceedings . . ..

Id.

We find no abuse of discretion in the case sub judice. It was clearly within the power of the district court to balance "competing interests" and decide that judicial economy would best be served by a stay of civil proceedings. Texaco, Inc. v. Borda, 383 F.2d at 609. The court found, and Meissner does not contend otherwise, that the civil matter before it and the criminal case in New York involved "substantial matters of the same nature." Hence, it might well have been that resolution of the criminal case would moot, clarify, or otherwise affect various contentions in the civil case. See id. at 608-09. Furthermore, the similarity of the issues left open the possibility that Meissner might improperly exploit civil discovery for the advancement of his criminal case. See notes 5, 6 & 7 supra; Campbell v. Eastland, 307 F.2d 478, 487-88 (5th Cir. 1962), cert. denied, 371 U.S. 955, 83 S.Ct. 502, 9 L.Ed.2d 502 (1963). Against these considerations in favor of the stay, the district court had to balance the...

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