United States v. Hodgson, 73-1525.

• Decision Date: 07 March 1974
• Docket Number: No. 73-1525.,73-1525.
• Citation: 492 F.2d 1175
• Parties: UNITED STATES of America and E. C. Talley, Special Agent, Internal Revenue Service, Petitioners-Appellants, v. Paul R. HODGSON, Respondent-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

492 F.2d 1175 (1974)

UNITED STATES of America and E. C. Talley, Special Agent, Internal Revenue Service, Petitioners-Appellants, v. Paul R. HODGSON, Respondent-Appellee.

No. 73-1525.

United States Court of Appeals, Tenth Circuit.

March 7, 1974.

Charles E. Brookhart, Atty., Tax Div., Dept. of Justice (Scott P. Crampton, Asst. Atty. Gen., Meyer Rothwacks and John P. Burke, Attys., Tax Div., Dept. of Justice; Nathan G. Graham, U. S. Atty., and Robert P. Santee, Asst. U. S. Atty., of counsel, on the brief), for petitioners-appellants.

James R. Hays, Tulsa, Okl., for respondent-appellee.

Paul M. Vassar, Gen. Counsel, Chandler, Okl., Oklahoma Bar Ass'n, for amicus curiae.

Before BREITSTEIN, McWILLIAMS and DOYLE, Circuit Judges.

BREITENSTEIN, Circuit Judge.

The district court denied judicial enforcement of an Internal Revenue Service summons issued pursuant to 26 U.S. C. § 7602. We reverse.

Talley, an IRS special agent in the Intelligence Division, was investigating the federal income tax liability of Leroy Dale Hines for the years 1967-1971. On October 16, 1972, he issued a summons to Paul Hodgson, a lawyer, requiring him to produce records of all charges to or in behalf of Hines during the years 1966-1971 for legal services and records of all moneys received from, or credited to, Hines for such services. The requested records included amounts, payment dates, names of those making payment or causing credit to be made, and the manner in which payments or credits were made. The wording of the summons was broad enough to cover services other than legal but it is agreed that the services which Hodgson performed for Hines were the result of an attorney-client relationship.

Hodgson responded to the summons, declined to produce the records or to testify, and asserted the attorney-client privilege. The United States and the special agent then petitioned for enforcement. See 26 U.S.C. §§ 7402(b) and 7604(a). Hodgson's answer, supported by his affidavit, admits possession of records reflecting receipts from Hines, and alleges that those records would disclose the general nature of the services rendered. The answer affirmatively says that the special agent was conducting a criminal investigation of Hines for the years in question and asserts the attorney-client privilege as a justification for refusal to respond. After two hearings at which the special agent was the only witness, the district court denied enforcement on the ground that the records and information sought were protected by the claimed privilege.

The question is whether the attorney-client privilege extends to the records and information sought from attorney Hodgson. In the area of federal income tax investigation the claim of privilege is controlled by federal law. United States v. Finley, 5 Cir., 434 F.2d 596, 597, and cases there cited. As said in Colton v. United States, 2 Cir., 306 F.2d 633, 637, cert. denied 371 U.S. 951, 83 S.Ct. 505, 9 L.Ed.2d 499 "the privilege extends essentially only to the substance of matters communicated to an attorney in professional confidence." Matters relating to receipt of fees from a client are not usually privileged, Ibid. at 638, and United States v. Ponder, 5 Cir., 475 F.2d 37, 39. The reason is that the payment of a fee is not normally a matter of confidence or a communication. Absent confidentiality, the privilege does not apply. Securities and Exchange Commission v. First Security Bank of Utah, 10 Cir., 447 F.2d 166, 167, cert. denied 404 U.S. 1038, 92 S.Ct. 710, 30 L.Ed.2d 729. The records sought are the property of, and in the possession of, the summoned lawyer. This is not a case like Tillotson v. Boughner, 7 Cir., 350 F.2d 663, 665-666, where response to the summons would have revealed the identity of an unknown client. Here the client is named in the summons.

Attorney Hodgson made a blanket claim of the privilege. A general refusal to cooperate is not enough. He must normally raise the privilege as to each record sought and each question asked so that at the enforcement hearing the court can rule with specificity. United States v. Cromer, 9 Cir., 483 F. 2d 99, 102; United States v. Roundtree, 5 Cir., 420 F.2d 845, 852, n. 18; and Colton v. United States, supra, 306 F.2d at 639-640. The lawyer's duty to his client is satisfied when he calls the matter of privilege to the attention of the court and requests a ruling on it. See In re Wasserman, D.C.D.C., 198 F.Supp. 564, 566-567. In the circumstances of the case at bar the records and information sought were not protected by the attorney-client privilege. The Fifth Amendment claim asserted by the attorney is not persuasive. Couch v. United States, 409 U.S. 322, 336, 93 S.Ct. 611, 34 L.Ed.2d 548.

In Donaldson v. United States, 400 U.S. 517, 536, 91 S.Ct. 534, 27 L. Ed.2d 580, the Supreme Court said that an internal revenue summons may be issued under § 7602 "in aid of an investigation if it is issued in good faith and prior to a recommendation for criminal prosecution." In United States v. Billingsley, 10 Cir., 469 F.2d 1208, 1209, we said that "the recommendation referred to in Donaldson occurs, at the earliest, when the Internal Revenue Service forwards a case to the Department of Justice for criminal prosecution." The allegation in the response to the petition for enforcement that the summons was issued in connection with a criminal investigation is supported by a...