United States v. Silverstein

• Decision Date: 12 March 1963
• Docket Number: No. 229,Docket 27886.,229
• Citation: 314 F.2d 789
• Parties: In the Matter of UNITED STATES of America, Petitioner-Appellee, v. Harry G. SILVERSTEIN, Respondent-Appellant.
• Court: U.S. Court of Appeals — Second Circuit

314 F.2d 789 (1963)

In the Matter of UNITED STATES of America, Petitioner-Appellee, v. Harry G. SILVERSTEIN, Respondent-Appellant.

No. 229, Docket 27886.

United States Court of Appeals Second Circuit.

Argued December 13, 1962.

Decided March 12, 1963.

Jules Ritholz, New York City (Raymond Rubin, John H. Hammer, Corcoran, Kostelanetz, Gladstone & Lowell, and Lurie & Rubin, New York City, on the brief), for respondent-appellant.

Anthony H. Atlas, Asst. U.S. Atty., So. District of New York (Robert M. Morgenthau, U. S. Atty., on the brief), for petitioner-appellee.

Before WATERMAN, MOORE, and SMITH, Circuit Judges.

J. JOSEPH SMITH, Circuit Judge.

This is an appeal from an order of the District Court for the Southern District of New York, Harold R. Tyler, Jr., Judge, granting the motion of the United States pursuant to 26 U.S.C. §§ 7402(b) and 7604 for an order enforcing an Internal Revenue summons duly served upon the appellant. We have held such orders appealable. In re Albert Lindley Lee Memorial Hospital, 209 F.2d 122 (2 Cir., 1953), cert. denied Cincotta v. United States, 347 U.S. 960, 74 S.Ct. 709, 98 L.Ed. 1104. United States v. Thomas McDonald, 2 Cir., 1963, 313 F.2d 832. This summons directed appellant to produce enumerated books and records of New York limited partnerships of which he was a general partner, in connection with an investigation of his tax liabilities for prior years. At the time of the issuance of the summons, there were five such partnerships (one is now defunct but this is not claimed to influence decision) each owning rental real estate. There are three general partners in each: appellant, his son, and his son-in-law. The limited partners number from about 25 to 147. The partnerships, plus a management company, are housed in a single office under the complete control of the three general partners. Capitalization for the four presently existing partnerships totals upwards of five million dollars. Appellant claims that the order directing him to comply with the summons is an invasion of his constitutionally-protected right to decline to give evidence against himself, and must be reversed. Though we find the question not free from difficulty, we cannot agree that the personal privilege has been invaded and we affirm the order.

An appearance before a Special Agent is in the nature of an appearance in a criminal investigation, in which a claim of privilege against a summons directing production of individual papers would be sustained. See Russo v. United States, 241 F.2d 285, 286 n. 1 (2 Cir., 1957). On the other hand, it is now settled that one who holds corporate papers in a representative capacity may not successfully claim privilege when required to produce them. Hale v. Henkel, 201 U.S. 43, 26 S.Ct. 370, 50 L.Ed. 652 (1906); Wilson v. United States, 221 U.S. 361, 31 S.Ct. 538, 55 L.Ed. 771 (1911). This refusal to extend the historic scope of the privilege beyond direct individual protection is grounded on an assumption that in granting the corporation limited liability, the state confers upon it a quasi-public character, reserving to itself among other rights a right of visitation and inspection of corporate papers. Moreover, the individual is said to hold the papers in a "representative capacity" rather than personally, so that the claim of the personal privilege against self-incrimination is not available. In the unusual case, however, these rationalia may be inapplicable. See Application of Daniels, 140 F.Supp. 322 (S.D.N.Y.1956). Appellant presents us with the intermediate case of one who seeks to interpose his personal privilege against a direction to produce papers of a limited partnership, in his possession as general partner.

Although the original decision establishing the applicability of the constitutional protection to the papers and records of the individual, Boyd v. United States, 116 U.S. 616, 6 S.Ct. 524, 29 L.Ed. 746 (1886), in fact dealt with a subpoena requiring the production of partnership papers, the problem here presented has never been discussed by the Supreme Court. A consistent approach does not emerge from the decisions of other federal courts. The following cases have held that a partner holding records to which a subpoena is directed may claim privilege. United States v. Linen Service Council, 141 F.Supp. 511 (D.N.J. 1956); United States v. Lawn, 115 F. Supp. 674 (S.D.N.Y.1953); In re Subpoena Duces Tecum, 81 F.Supp. 418 (N. D.Cal.1948); United States v. Brasley, 268 F. 59 (W.D.Pa.1920). In the next group of cases, the privilege was not thought to invalidate the subpoena. United States v. Wernes, 157 F.2d 797 (5 Cir., 1946); United States v. Onassis, 133 F.Supp. 327 (S.D.N.Y.1955); United States v. Onassis, 125 F.Supp. 190 (D.D. C.1954). However, applicable legal principles can be found in other decisions by the Supreme Court dealing with the validity of the defense of privilege when raised by those holding the documents of other types of unincorporated associations. It has several times been held that the records of such an association may be possessed in a representative capacity, as with a corporation, so that a claim of personal privilege is unavailable. See McPhaul v. United States, 364 U.S. 372, 81 S.Ct. 138, 5 L.Ed.2d 136 (1960) (Civil Rights Congress); Rogers v. United States, 340 U.S. 367, 71 S.Ct. 438, 95 L.Ed. 344 (1951) (Communist Party); United States v. Fleischman, 339 U.S. 349, 70 S.Ct. 739, 94 L.Ed. 906 (1950) (Joint Anti-Fascist Refugee Committee). A particularly applicable discussion of the problem may be found in United States v. White, 322 U.S. 694, 64 S.Ct. 1248, 88 L.Ed. 1542 (1944), a decision dealing with an assertion of privilege by an officer of a labor union local concerning papers he held. The Court succinctly ...