United States v. Troupe, 20570.
| Decision Date | 10 March 1971 |
| Docket Number | No. 20570.,20570. |
| Parties | UNITED STATES of America and Arthur R. Ryan, Special Agent, Internal Revenue Service, Petitioners-Appellees, v. William J. TROUPE, as Partner of Troupe, Kehoe, Whiteaker & Kent, Respondent, and Carl Civella, Intervenor-Respondent-Appellant. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Robert W. Brown, Kansas City, Mo., made argument for appellant.
Johnnie M. Walters, Asst. Atty. Gen., Joseph M. Howard, John M. Brant, Attys., Tax Division, Dept. of Justice, Washington, D. C., for appellee; Bert C. Hurn, U. S. Atty., of counsel.
Before VAN OOSTERHOUT, GIBSON and LAY, Circuit Judges.
This is an appeal by an intervenor-taxpayer from the district court's order, 317 F.Supp. 416, directing compliance with an Internal Revenue summons issued under 26 U.S.C.A. § 7602. The summons was directed to William J. Troupe, an accountant, to produce accounting records and information relating to a corporate taxpayer, the B & C Meat Company, Inc. (hereinafter B & C Meat). The district court, over the government's objection, allowed the intervention of Carl Civella, who is a shareholder and an employee of B & C Meat, 317 F.Supp. 414. Civella challenged the issuance of the summons on the ground that it was issued to harass him, was vague and excessively broad, and that it had as its purpose criminal investigation of the intervenor himself. The intervenor also complained of limitations placed on his pretrial discovery by the district court. The district court held a full hearing. The court required the government to answer all interrogatories by oral testimony and allowed examination of government witnesses the intervenor wished to depose. The court concluded that the summons was issued for a legitimate purpose and entered its order of enforcement.
The primary argument presented on appeal is that the district court erred in its interpretation of Reisman v. Caplin, 375 U.S. 440, 84 S.Ct. 508, 11 L.Ed.2d 459 (1964),1 in requiring a showing that the sole purpose of investigation be criminal in nature before a challenge to the summons can be made. Intervenor contends that the present investigation is being carried on by special agent of the Intelligence Division, Department of Internal Revenue, acting as a criminal investigator rather than by the Audit Division, which traditionally investigates civil liability. The record demonstrates that an investigation was commenced because Civella was on a list of alleged underworld members and had reported income on his returns as "miscellaneous income." The government argues that it is necessary to investigate the B & C Meat records to determine whether any of this income came from the corporation and was properly reported on the corporate returns and whether Civella reported it accurately on his returns.
After oral argument in this court the Supreme Court handed down the decision of Donaldson v. United States, 400 U.S. 517, 91 S.Ct. 534, 27 L. Ed.2d 580 (1971). We find it controlling and dispositive of the substantive issues raised here. The Supreme Court held that there is no "meaningful line of distinction, for civil as compared with criminal purposes, at the point of a special agent's appearance." Id. at 535, 91 S.Ct. at 544. The Court further found authorization for "the use of the summons in investigating what may prove to be criminal conduct." Ibid. (Emphasis ours.) The Donaldson case makes it clear that the summons can be successfully challenged only when a criminal prosecution has been instituted and is pending at the time of the issuance of the summons or when criminal prosecution has been recommended. Thus, it is only when the sole purpose of the summons is for a criminal investigation that a challenge to the summons can be made.
Since it is undisputed that there is no related criminal prosecution...
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