United States v. Judson

• Court: U.S. Court of Appeals — Ninth Circuit
• Writing for the Court: JERTBERG and DUNIWAY, Circuit , and FOLEY, Senior
• Citation: United States v. Judson, 322 F.2d 460 (9th Cir. 1963)
• Decision Date: 30 July 1963
• Docket Number: No. 18010.,18010.
• Parties: UNITED STATES of America, Appellant, v. Harold JUDSON, Appellee.

322 F.2d 460 (1963)

UNITED STATES of America, Appellant, v. Harold JUDSON, Appellee.

No. 18010.

United States Court of Appeals Ninth Circuit.

July 30, 1963.

Francis C. Whelan, U. S. Atty., Timothy M. Thornton, Asst. U. S. Atty., Chief, Special Prosecutions Section, and Robert E. Hinerfeld, Asst. U. S. Atty., Los Angeles, Cal., for appellant.

Harold Judson, Los Angeles, Cal., in pro. per.

Before JERTBERG and DUNIWAY, Circuit Judges, and FOLEY, Senior District Judge.

JERTBERG, Circuit Judge.

Harold Judson, Esq., an attorney practicing in the above entitled District Court, after having been served with a subpoena duces tecum, by authority of Rule 17(c), Federal Rules of Criminal Procedure, 18 U.S.C.A., filed a motion to quash the subpoena on the grounds that the subpoena is unreasonable and oppressive. The subpoena directed Appellee to produce before the Grand Jury the following items:

"1 All paid checks and bank statements of the commercial accounts of Miriam Y. Stacher at the Bank of America, Main Office, Beverly Hills, California, covering the periods November 6, 1952 through December 16, 1954, and March 14, 1958 up to and including the present date;

"2 All paid checks and bank statements of the commercial accounts of Miriam Stacher at the Beverly Hills National Bank, 9600 Santa Monica Boulevard, Beverly Hills, California, for the period June 18, 1952 through November 20, 1952;

"3 All paid checks and bank statements of the commercial accounts of Miriam Stacher at Bank of America, Palm Springs, California, for the period February 7, 1952 through June 28, 1952; and

"4 All work papers, memoranda, computations, and other accounting work sheets, prepared by I. George Goldstein, accountant, of Newark, New Jersey, which were made by him during his visit to Los Angeles in September, 1961, and which pertain to the financial transactions of Joseph Stacher."

At the hearing on Appellee's motion to quash, the following undisputed facts were developed. During the summer of 1961, Joseph Stacher learned that he and his wife, Miriam, were under investigation by the Intelligence Division of the Internal Revenue Service for possible charges of tax evasion. In July, 1961, he retained appellee to represent him and his wife in the pending investigation. Appellee advised Stacher that he required a net worth statement of the Stacher's affairs, in order to carry on an adequate representation.

Stacher then retained the services of two accountants, Goldstein and Pally, to prepare the net worth statement appellee had requested. Goldstein, Pally, Stacher and appellee met from time to time in September of 1961. Data used in preparing the statement included the documents mentioned in Items 1, 2 and 3 of the subpoena. When the net worth statement was completed, it and the other documents in question were placed in the hands of appellee for use in rendering the specific professional services requested by his clients. On January 17, 1962 appellee was served with the subpoena duces tecum set out above, which directed him to produce forthwith before the Grand Jury the items mentioned therein.

After the hearing, the District Court, on March 19, 1962, orally granted the motion to quash. On April 6, 1962, the Court filed a written Order granting the motion to quash, incorporating therein the grounds stated by the Court in its oral ruling of March 19, 1962.

On April 17, 1962, Appellant, United States of America, filed a notice of appeal from the oral Order of March 19, 1962, quashing the subpoena and on the same day filed a notice of appeal from the written Order of April 6, 1962.

The reasons given by the Court as the basis for its ruling appear in the oral Order of March 19, 1962. They were as follows:

"The subpoena duces tecum, while having four different numbered items, actually relates to two things different in nature: One of them is groups of checks and bank statements, and the other, Item 4 is all the work papers.

"The motion to quash the subpoena is granted as to Item No. 4, all of the work papers, memoranda, computations and other accounting work sheets prepared by I. George Goldstein during his visit to Los Angeles, * * *, on the ground that it would be a violation, not only of the attorney-client privilege in that these are part of the attorney\'s work papers, but also on the further ground that it would be a violation of the Fifth Amendment. * * *

"Here all of the evidence is to the effect that these things were gathered together and put in Mr. Judson\'s hands as the lawyer for the Stachers, for one thing, in connection with the possible violation of the income tax law. So I think that Mr. Judson is (in) the position under the cases to raise the Fifth Amendment on behalf of his clients, and on that ground I grant the motion to quash Items 1, 2 and 3."

It is clear that Item 4 of the subpoena calls for the production of the net worth statement and the various preliminary memoranda which culminated in the net worth statement. This statement was prepared at the attorney's request, in the course of an attorney-client relationship, for the purpose of advising and defending his clients. The accountants' role was to facilitate an accurate and complete consultation between the client and the attorney about the former's financial picture. The lower court was correct in determining that these documents constituted confidential communications within the attorney-client privilege. United States v. Kovel, 296 F.2d 918 (2nd Cir., 1961); City & County of San Francisco v. Superior Court, 37 Cal.2d 227, 231 P.2d 26, 25 A.L.R.2d 1418 (1951).

The cancelled checks and bank statements are not within the attorney-client privilege. These items were negotiable instruments in commerce and were never confidential from the time of their creation. Their transfer from the client to the attorney did not constitute a confidential communication. Colton v. United States, 306 F.2d 633 (2nd Cir., 1962).

Therefore, disclosure of Items 1, 2 and 3 of the subpoena could be declined only upon the basis of some other privilege. The only other privilege invoked below was the Stachers' Fifth Amendment privilege against self-incrimination. It is undisputed that the Fifth Amendment was not invoked by either of the Stachers, but by appellee on their behalf. It is also undisputed that these items are of such character that they would not be compellable of either Joseph or Miriam Stacher if an attempt to do so were made and the privilege asserted. However, appellant challenges the standing of appellee to invoke his clients' privilege and to suppress the items on the basis of that privilege.

At issue in this case is the effective exercise of the privilege by one who is clearly entitled to its protection. We are called upon only to consider the method whereby the privilege-holder makes known his desire to assert the privilege.

Appellant tells us that the privilege must be invoked by the privilege-holder himself for the reason that the privilege is "personal." Appellant borrows the phrase "personal privilege" from many cases, the holdings of which we do not question. We do question whether the connotation of "personal" in those cases has much bearing on this problem.

The cases cited by appellant all look for support to three Supreme Court decisions: Hale v. Henkel, 201 U.S. 43, 26 S.Ct. 370, 50 L.Ed. 652 (1905); Wilson v. United States, 221 U.S. 361, 31 S.Ct. 538, 55 L.Ed. 771 (1910); and United States v. White, 322 U.S. 694, 64 S.Ct. 1248, 88 L.Ed. 1542 (1943). These cases develop the doctrine that the Fifth Amendment privilege does not extend its protection to corporations (Hale), or to corporation officials when compelled to produce corporate documents which tend to incriminate themselves (Wilson). These principles also apply in situations involving certain unincorporated associations (White).

In developing the rationale of these doctrines, the Supreme Court placed considerable emphasis upon a distinction between "personal" and "representative." The government argues here that since appellee is the "representative" of the taxpayer, he has no more standing to raise his principal's claim of privilege than did the "representatives" in those cases. This conclusion is a nonsequitur.

The rationale which the Supreme Court developed is that the State and Federal governments have a reserved visitorial power over the conduct of certain organizations, and that such power is not impeded by the fact that the organizations' activities are carried on by persons acting in a non-personal, official and public capacity. Their personal privileges do not embrace activities performed in their non-personal capacities. In United States v. White, supra, the Court said, 322 U.S. at 698-700, 64 S.Ct. at 1251-1252, 88 L.Ed. 1542:

"The constitutional privilege against self-incrimination is essentially a personal one, applying only to natural individuals. * * * Since the privilege against self-incrimination is a purely personal one, it cannot be utilized by or on behalf of any organization, such as a corporation. * * * Moreover, the papers and effects which the privilege protects must be the private property of the person claiming the privilege, or at least in his possession in a purely personal capacity.

Boyd v. United States, 116 U.S. 616 6 S.Ct. 524, 29 L.Ed. 746. But individuals, when acting as representatives of a collective group, cannot be said to be exercising their personal rights and duties nor to be entitled to their purely personal privileges. * * * In their official capacity, therefore, they have no privilege against self-incrimination. And the official records and documents of the organization that are held by them in a representative rather than in a personal capacity cannot be the subject of the personal privilege against self-incrimination, even though production of the papers might tend to incriminate them personally. * * *

"The reason underlying the restriction of this

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