United States v. Birrell

• Decision Date: 11 June 1965
• Citation: 242 F. Supp. 191
• Parties: UNITED STATES of America, v. Lowell M. BIRRELL, Defendant.
• Court: U.S. District Court — Southern District of New York

242 F. Supp. 191

UNITED STATES of America, v. Lowell M. BIRRELL, Defendant.

United States District Court S. D. New York.

June 11, 1965.

COPYRIGHT MATERIAL OMITTED

Robert M. Morgenthau, U. S. Atty. for Southern District of New York, Gerald Walpin, Paul R. Grand, Otto G. Obermaier, Asst. U. S. Attys., of counsel, for United States of America.

William B. Pennell, New York City, Menahem Stim, New York City, William B. Pennell, New York City, of counsel, for defendant.

WYATT, District Judge.

Defendant Lowell M. Birrell has moved, in each of the six criminal proceedings designated by the six file numbers shown above and based on six indictments handed up to this Court:

a. for the return of property secured by an alleged unlawful search and seizure and also to suppress that property for use as evidence (Fed.R. Crim.P. 41(e));

b. under Fed.R.Crim.P. 12(b) (4) — perhaps more properly to be made under Fed.R.Crim.P. 41(e) itself — for a hearing to take evidence on the motion to suppress; and

c. for an order directing the United States Attorney to produce at the hearing asked under (b) "the filing cabinets, cartons and other containers * * * seized * * *".

Defendant Birrell has further moved:

d. under Fed.R.Crim.P. 12 for orders dismissing the six indictments on the asserted ground that evidence illegally seized was produced before the grand juries; and

e. under Fed.R.Crim.P. 6(e) for an order granting him inspection of the minutes of the several grand juries, this "in aid of" the motion described in (d) above.

The caption of the motion papers, as also used above, shows only movant Birrell as "Defendant". In fact, in each of the indictments, others than movant Birrell were named as defendants along with him.

The indictments charge a variety of offenses, the details of which are presently irrelevant. In general, the offenses include violations of the Securities Act of 1933 (15 U.S.C. § 77a and following), the Securities Exchange Act of 1934 (15 U.S.C. § 78a and following), the mail fraud statute (18 U.S.C. § 1341), and transportation of stolen property in interstate commerce (18 U.S.C. § 2314). It may be noted that the earliest indictment (C 159-275) was dismissed by the United States Attorney by leave of Court on March 24, 1965 — after this motion had been argued and submitted.

I.

The property which is the subject of this motion (together sometimes for convenience referred to as the "seized property") consists of

(1) certain records, including some of Echo Falls Farm and Bucks County Farms, Inc., obtained on July 24, 1959 by the District Attorney of New York County from premises on Sugar Bottom Road, Furlong, Bucks County, Pennsylvania;

(2) certain files, records and information seized at premises on Sugar Botton Road, Furlong, Bucks County. Pennsylvania on August 22, 1959 by a Deputy United States Marshal for the Eastern District of Pennsylvania under a search warrant issued that day by a United States Commissioner in the Eastern District of Pennsylvania; and

(3) certain files, records and information seized at premises (known as the "Schulberg Farm") on Old York Road near Ingham Spring Road, New Hope, Bucks County, Pennsylvania on August 24, 1959 by a Deputy United States Marshal for the Eastern District of Pennsylvania under a search warrant issued that day by a United States Commissioner in the Eastern District of Pennsylvania.

As will be later explained, all of the seized property, except that obtained on July 24, 1959, is presently in the custody of the Clerk of this Court under an order of Judge Palmieri filed on October 26, 1959.

II.

The moving and opposing papers give the general background for the obtaining and the seizure of the property which is the subject of this motion. It is believed proper for the Court judicially to notice some further background facts, in order that the relevant events may better appear in context.

The facts, which appear without substantial dispute from the moving and opposing papers as supplemented by some facts judicially noticed, appear to be as follows:

Birrell was admitted to the New York Bar in January, 1930, and for many years thereafter practiced law or engaged in business or both in the City of New York.

A subpoena was issued by this Court requiring Birrell to appear on October 7, 1957 to testify in Securities and Exchange Commission v. Swan-Finch Oil Corporation, et al., Civil 119-232. He did not appear (13 A.D.2d 220, 215 N.Y. S.2d 293, 1st Dept., 1961) and sometime in October 1957 left this country (N.Y. Times, April 24, 1964, page 52).

One of the enterprises with which Birrell was associated was Equitable Plan Company ("Equitable"), a California corporation. On March 17, 1958 certain creditors of Equitable filed in the United States District Court for the Southern District of California a petition for the reorganization of Equitable under Chapter X of the Bankruptcy Act (11 U.S.C. § 501 and following; see §§ 526, 530, 531). By order filed May 29, 1958 the petition was approved by the District Court and a Trustee appointed (11 U.S.C. § 556). The District Court also referred the proceeding to Referee in Bankruptcy Brink "to hear and determine" etc. (11 U.S.C. § 517).

The Trustee of Equitable thereafter retained a law firm in New York City to represent him in this District and a member of that firm, Edward C. Kalaidjian, became active here for the Equitable Trustee.

The District Court in California authorized the Trustee of Equitable to institute ancillary proceedings in this District "for the purpose of conducting examinations and investigations". On petition of the Trustee, an order of this Court "for ancillary examination of witnesses" was made by Judge Dimock and filed on December 2, 1958. This order directed a number of persons, including Birrell "and such other witnesses as may * * * appear necessary" to appear before a Referee in Bankruptcy to be examined concerning the property, financial condition, etc. of Equitable and the acts of its former management; the order directed that "subpoenae" issue for the appearance of the witnesses and production of papers, etc. The order referred the proceeding to Referee Loewenthal "to hear and determine the time, place and manner of such examinations * * *".

This order of Judge Dimock was clearly proper because while ancillary proceedings are generally "unnecessary" in reorganization proceedings under Chapter X and "inconsistent" with its "context and objective" (6 Collier on Bankruptcy (14th ed.) 602), nevertheless they may be employed, on the authority of 11 U.S.C. § 11, sub. a(7), "in aid of reorganization decrees where necessary or convenient". Mar-Tex Realization Corp. v. Wolfson, 145 F.2d 360, 364 (2d Cir. 1944).

Before Birrell left the country in October 1957, he apparently deposited the seized property for storage with Jonathan D. Dunn, a Pennsylvania lawyer who was an attorney for Birrell. I say "apparently" because although Birrell's affidavit gives the strong impression of a representation that he deposited the property with Dunn before October 1957, he does not actually say so and the affidavit of Dunn is that he (Dunn) was attorney for Birrell only from "early 1959".

In any event by July 1959 the seized property was in the custody of Dunn, being held in storage for Birrell.

Dunn occupied as his home premises on Sugar Bottom Road, Furlong, Bucks County, Pennsylvania and seems to have had (a little away from his house) a combination garage and office there. (His listing in Martindale-Hubbell Law Directory for 1959 and later years is under Doylestown, Pennsylvania). Much of the seized property was stored at the Sugar Bottom Road premises in the combination garage and office. Much was also stored in the barn on the Schulberg Farm on Old York Road, which farm (according to Dunn's affidavit) was under his "control and management".

Birrell states in his affidavit that the seized property stored by him with Dunn is his "private, personal and business papers" which had been in his "possession and control for many years" and which were stored with Dunn when Birrell "closed" his "personal business office and law office". Birrell in his affidavit refers also to "originals or copies of corporate books and records" which he states had been in his "possession and control for many years". He does not state the names of any corporations whose "corporate books and records" are among the seized property. He does not claim to own the "corporate books and records" and could scarcely make such a claim, since "corporate books and records" would belong to the corporation or its successor or representative (such as receiver, trustee and the like). It is assumed, therefore, that some of the seized property consists of personal and business papers belonging to Birrell and some of it consists of corporate papers not belonging to Birrell but which had been in his possession and control.

In 1959, Hallisey, an Assistant District Attorney of New York County, was investigating alleged fraud involving (among others) Birrell and Swan-Finch Oil Corporation. In response to a request Joseph A. De Risi appeared at the office of Hallisey on July 24, 1959 and was interviewed. The precise status of De Risi cannot be determined on the present papers. An affidavit of Hallisey states that, according to De Risi, he (De Risi) was employed by Birrell "as a bookkeeper" and was "an officer and employee of Bucks County Farms, Inc." and worked "on these books and records" at the Sugar Bottom Road premises. A letter from Dunn to the District Attorney refers to De Risi as "my employee and accountant" and as an officer "of Echo Falls Farm and Bucks County Farms, Inc." There is no affidavit from De Risi and he is not mentioned in Birrell's affidavit.

At the interview on July 24, 1959 Hallisey gave De Risi a subpoena. According to the Hallisey affidavit, the subpoena "called for the delivery of the records of those companies he had agreed to...