United States v. Schoendorf, 18257.

• Decision Date: 28 December 1971
• Docket Number: No. 18257.,18257.
• Citation: 454 F.2d 349
• Parties: UNITED STATES of America and Roy R. Koch, Special Agent, Internal Revenue Service, Petitioners-Appellees, v. Joseph F. SCHOENDORF, Sr., and Joseph F. Schoendorf, Jr., Respondents, and Thomas J. Schoendorf, Intervenor-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

454 F.2d 349 (1971)

UNITED STATES of America and Roy R. Koch, Special Agent, Internal Revenue Service, Petitioners-Appellees, v. Joseph F. SCHOENDORF, Sr., and Joseph F. Schoendorf, Jr., Respondents, and Thomas J. Schoendorf, Intervenor-Appellant.

No. 18257.

United States Court of Appeals, Seventh Circuit.

December 28, 1971.

Robert E. Meldman, Milwaukee, Wis., for appellant.

Johnnie M. Walters, Asst. Atty. Gen., John P. Burke, Atty., Dept. of Justice, Washington, D. C., David J. Cannon, U. S. Atty., Milwaukee, Wis., for appellees.

Before SWYGERT, Chief Judge, HASTINGS, Senior Circuit Judge, and KILEY, Circuit Judge.

PER CURIAM.

This is an appeal from an order of the district court¹ granting enforcement of two Internal Revenue Service summonses issued to respondents herein on January 12, 1970, pursuant to Title 26 U.S.C.A. § 7602, Internal Revenue Code of 1954.²

The underlying facts, as found by the trial court, disclose that Joseph F. Schoendorf, Sr., and his two sons, Joseph F. Schoendorf, Jr. and Thomas J. Schoendorf, individually and independently practiced law out of the same office in Milwaukee, Wisconsin. In the course of a Collection Division delinquency investigation, IRS Officer Mallow determined that Thomas J. Schoendorf (intervening taxpayer) had failed to file federal income tax returns for the years 1965, 1966 and 1967. Mallow referred the matter to the Intelligence Division and thereafter was not concerned with the case. IRS Special Agent Ray R. Koch was assigned in August 1968 to conduct an investigation of the failure of taxpayer to file such tax returns and for any tax liabilities which might be due.

On October 10, 1968, the two subject summonses were issued by Koch, directing Joseph F. Schoendorf, Sr. and Joseph F. Schoendorf, Jr. to appear before him and produce records relating to the tax liabilities of taxpayer. The matter was stayed by court order until compliance was ordered by a court of competent jurisdiction. Thereafter, United States of America and Koch petitioned the district court to enforce the two summonses, pursuant to §§ 7402(b) and 7604(a).³

Taxpayer Thomas J. Schoendorf was granted leave to intervene and answer as a respondent. He appeared and answered the petition, pleading several affirmative defenses. His father and brother filed no answer or response to the petition. An evidentiary hearing was held in open court on March 26, 1969 and briefs were subsequently filed. Thereafter, the district court filed its written memorandum opinion and subsequent orders directing respondents Schoendorf, Senior and Junior, to appear before Koch and testify and produce the records demanded of them by the IRS summonses in issue. The orders were then stayed pending this appeal. Taxpayer Thomas J. Schoendorf alone has appealed.

The two summonses in question were identical in their requirements to produce:

"Cancelled checks paid to or on behalf of Attorney Thomas J. Schoendorf for services rendered by him for you during the period January 1, 1965 through December 31, 1967, together with supporting documents such as check stubs, ledger account, etc. Also cancelled checks and related documents pertaining to gifts or loans made to Thomas J. Schoendorf during this period."

At the hearing respondent Schoendorf, Sr. did not testify because of ill health. Respondent Schoendorf, Jr. testified, inter alia, that he and his father were asserting no affirmative defense in opposition to the summonses. The district court's findings and conclusions were adverse to taxpayer on each of his several affirmative defenses. All of such rulings were raised as issues on this appeal.

On oral argument of this appeal, appellant conceded that the intervening opinion and decision by the Supreme Court in Donaldson v. United States, 400 U.S. 517, 91 S.Ct. 534, 27 L.Ed.2d 580 (1971), settled all but one issue raised by appellant in this appeal. Thus, the sole issue remaining for present consideration is whether the district court erred in concluding as a matter of law that under the facts of this case the privilege against self-incrimination under fourth and fifth amendments did not bar the production of the requested documents for use in the investigation of taxpayer's federal income tax liabilities and which, in addition, might later lead to a recommendation of criminal prosecution, no such charge having yet been filed.

In addition to certain findings by the trial court hereinbefore set out, the trial court further found, inter alia, that taxpayer practiced law individually and independently with his father and brother out of the same office; that their relationship admittedly was not a partnership and has not been represented to be a partnership in any income tax return or for any purpose; that the summonses sought canceled checks and other records from a bank checking account in the name of Schoendorf, Sr. and...