Couch v. United States

PETITIONER:Couch
RESPONDENT:United States
LOCATION:Pennsylvania State Capital Building

DOCKET NO.: 71-889
DECIDED BY: Burger Court (1972-1975)
LOWER COURT: United States Court of Appeals for the Fourth Circuit

CITATION: 409 US 322 (1973)
ARGUED: Nov 14, 1972
DECIDED: Jan 09, 1973

ADVOCATES:
John G. Rocovich, Jr. – for petitioner
Lawrence G. Wallace – argued the cause for the United States et al

Facts of the case

Question

Audio Transcription for Oral Argument – November 14, 1972 in Couch v. United States

Warren E. Burger:

We will hear arguments next in number 71-889, Couch against the United States.

Mr. Rocovich, you may proceed whenever you are ready.

John G. Rocovich, Jr.:

Mr. Chief Justice, may it please the court.

The facts surrounding this case are both clear and undisputed.

During the summer of 1969, a Field Revenue Agent commenced an investigation of the returns of the petitioner for the years 1964 through 1968.

Petitioner informed him that her records were temporarily in the possession of her accountant, whereupon the Field Agent proceeded to the accountant’s office for the records and made available for his examination.

Now the records in question were primarily canceled checks and working papers which were made by the petitioner in her own handwriting for purposes of keeping records for her sole proprietorship restaurant.

The Field Agent examined the records for several days.

During the course of his examination he apparently suspected that criminal fraud was involved and he requested and received the assignment of a Special Revenue Agent.

The Trial Court found as matter of fact that the Special Agent in his capacity as such was conducting a joint investigation with the Field Revenue Agent for the purposes of ascertaining the correctness of the income tax return, plus the purpose of ascertaining whether there was any criminal tax fraud in the case.

The Special Agent, once he came to the case, proceeded to the accountant’s offices, observed the petitioner’s records, and thereupon went to the petitioner’s house where he introduced himself, showed his credentials and gave a standard Miranda warning which included a statement that she did not have to produce any information and she was entitled to seek a lawyer’s counsel before she responded to any questions.

And the special agent proceeded to question the petitioner and then proceeded to the petitioner’s accountant’s office to seize or copy the records.

In the meantime, petitioner heeded the special agent’s advice and had contacted her accountant and lawyer, and advised the accountant to turn the records over to no one but her attorney.

When the special agent arrived at the accountant’s office, the accountant refused to turnover the records.

The special agent at that point issued a summons to the accountant directing him to turn the records over.

From the special agent’s return to the accountant’s office on the return date, he discovered that the accountant had already turned the records over to me as the petitioner’s attorney.

The government then instituted a proceeding to judicially enforce the summons under 7402(a) and 7604(b) of the Internal Revenue Code.

This action arises from an order of the District Court for the Western District of Virginia affirmed by the Fourth Circuit Court of Appeals directing me to turnover the books and records in question.

The central question we believe in this case is, whether or not the privileges against self-incrimination and unreasonable search and seizure prevents the government from seizing petitioner’s personal books and records whenever they are out of her actual physical possession.

By way of background I think the government has never denied that the records in the hands of the accountant were the property of the petitioner.

In fact in their brief to the Fourth Circuit Court of Appeals they conceded that the records in question had they been in the hands of petitioner would have been protected by the privilege.

Thus the question becomes I think whether records created and owned by the petitioner somehow lose their privileged status when they are out of a actual physical possession.

William H. Rehnquist:

Mr. Rocovich, does the record show whether these records were of a nature that the taxpayer would turn them over to her accountant say for a few days each year and then get them back or whether on the other hand they were more or less permanently in the custody of her accountant?

John G. Rocovich, Jr.:

Well, I believe the accountant testified that the records had been delivered to him over a period of years, 55 on to for the purpose of preparing tax returns.

As a matter of fact, some records were at the petitioner’s home and some records were at the accountant’s office and she delivered the balance of the records to the accountant for the purpose of facilitating the sub-investigation.

I don’t think there is any evidence to the effect that the records were owned by the accountant.

In fact, the petitioner has always asserted through the proceedings below that they were clearly her records and owned by her and the government has conceded it.

William H. Rehnquist:

How about year in year out custody or possession of records, does the record of this proceeding indicated who had that?

John G. Rocovich, Jr.:

I don’t believe it does indicate that in complete, no sir.

The petitioner believes that the test of whether she may rely on the Fifth and Fourth Amendment privileges is whether she possesses substantial instance of ownership in the records.

John G. Rocovich, Jr.:

And we submit that this test of course, would be subject to the condition at where a taxpayer voluntarily and knowingly and intentionally published the records then they would lose this privilege.

In essence, I believe the test is from what source did the records originate.

If they originated with the petitioner, they should be protected.

If they did not then they should not.

The government —

Harry A. Blackmun:

You are giving a constructive possession theory, so far as the accountant is concerned, Mr. Rocovich.

John G. Rocovich, Jr.:

Yes I am.

The cases which we cite in our brief are a series of cases which state that possession is not the test, it is ownership and as long as the petitioner had the right to demand or the taxpayer had the right to demand the records back, that possession was not the key as to whether or not they were privileged.

Harry A. Blackmun:

You are asserting no Accountant-Client Privilege?

John G. Rocovich, Jr.:

No we do not assert an Accountant-Client Privilege, we will concede there is none.

Harry A. Blackmun:

How do you characterize the relationship between the accountant and the petitioner, agent?

John G. Rocovich, Jr.:

Yes sir.

Harry A. Blackmun:

He is a independent contractor?

John G. Rocovich, Jr.:

Actually either agent or bailee, since regarded an agent for the specific purpose–

Harry A. Blackmun:

How is he compensated, by the month, or by the job?

John G. Rocovich, Jr.:

Well, he was actually just compensated by the job.

I think, he prepared the petitioner’s tax returns every year and maybe the withholding trust fund tax deposit forms.

He actually did very little work for the petitioner but this was his function with her, he is not a Certified Public Accountant but more in the line of a bookkeeper type.

Harry A. Blackmun:

He gets similar wage or allowance?

John G. Rocovich, Jr.:

Yes.

This was his full-time job.

He had been doing this for 20 years or so.

I think the importance — so we believe that the ruling question that we submit is the really only practical and workable rule which this Court that can adopt.

If that is not the rule and if the government’s test is adopted, I think the alternatives aren’t satisfactory.

We could return to the case of Burdeau v. McDowell by this Court, I think in 1921, where records were turned over to prosecutor which had been obtained by a party breaking into a man’s office, blasting the safe up with a part of dynamite, smashing his desk on axe and turning the records over to prosecutor.

Certainly that type of evidence should not be permitted.

They introduced in the evidence that we agree with the dissent of Justice’s Holmes and Brandeis and they said, “What could be more shocking to our sense of decency and fair play than that?”

Actually the Court’s decision did not go off on the point of possession or ownership, they merely said, this Court merely said, “Well it was obtained by government compulsion so it must be okay.”

But I think the dissent, there has to be the proper rule in that case.

Another alternative from a practical and policy standpoint is, what is an informed tax attorney to advice to his accounting firm clients if the government’s test is adopted.

John G. Rocovich, Jr.:

He advised them to lease their file storage room to all of their clients, so that even though they are working on their personal handmade records, there will be some kind of constructive possession theory that they rely on to prevent waiving their privileges.

I don’t know what else an informed attorney could advice and what about for instance, your particular taxpayer class.

You advise them to only permit their accountant to work on their personal records in the privacy of their own home and in the same room with them, with door bolted, preventing Internal Revenue Agent from intruding with the summons and grasping whatever record might happen to be in the accountant’s hand at that moment.

Lewis F. Powell, Jr.:

I think that this is all premised on the assumption that seizing from a taxpayer, say his sales and purchase records would probably (Inaudible).

John G. Rocovich, Jr.:

Yes, it is.

These are sales records made in his personal hand and the government however has conceded that these —

Lewis F. Powell, Jr.:

Made in his personal hand?

John G. Rocovich, Jr.:

These were made in her personal handwriting for her sole proprietorship restaurant.

Lewis F. Powell, Jr.:

But your position, does it depend on whether it’s made in her personal hand, for her own use?

John G. Rocovich, Jr.:

No she could have typed it or something of that nature or I suggest the same would prevail if her —

Lewis F. Powell, Jr.:

What about if an employee has made a fault, what about invoices sent to her from sources?

John G. Rocovich, Jr.:

Well the government can obtain those —

Lewis F. Powell, Jr.:

How about seizing them from her?

John G. Rocovich, Jr.:

We would concede that they could seize them but those are not —

Lewis F. Powell, Jr.:

How about bills that she sent out to her customers.

John G. Rocovich, Jr.:

No, she is (Voice Overlap).

Lewis F. Powell, Jr.:

So they could seize those from her?

John G. Rocovich, Jr.:

Yes sir.

Lewis F. Powell, Jr.:

So what category of material do you say is protected by the Fifth Amendment from seizure from her?

John G. Rocovich, Jr.:

Well, I think in this case as an example we had the gross daily receipt worksheet where she noted each one of her three shifts at the restaurant.

She took that to cash register.

Lewis F. Powell, Jr.:

But anyways if you figure those out from the other documents that you say could be seized?

John G. Rocovich, Jr.:

No.

I don’t think so because in this case the — she doesn’t really sent any bills, it’s a cash business, a cash register at the restaurant.

We don’t believe that the government’s test —

Lewis F. Powell, Jr.:

Couldn’t you seize if the waitress gives a check to somebody in the restaurant?

John G. Rocovich, Jr.:

Yeah.

Lewis F. Powell, Jr.:

She presents that to the cashier, the cashier puts it somewhere — I suppose you would say, you could seize that, wouldn’t you?

John G. Rocovich, Jr.:

Yes.

I think you could.

John G. Rocovich, Jr.:

I don’t have any — part of that, all of that’s actually owned by the restaurant.

The customer just has in his hand to notify him what he is supposed to pay and returns immediately to the restaurant owner with his check.

But we don’t have any difficulty seizing that either Your Honor.

Mr. Rocovich we have had the income tax now for almost 60 years.

John G. Rocovich, Jr.:

Yes sir.

Income Tax.

Why do you think issues like this are coming up in 1972 rather than 1923 or 1933 or 1943 or 1953?

John G. Rocovich, Jr.:

Well, Your Honor I think the reason is that the Miranda case is that, the Miranda case in Escobedo did not come up until the mid 60s and that started this whole chain of cases when taxpayers discovered they had rights that they never realized they had before.

And there are many cases starting immediately after Miranda, there is a long string of these cases.

Well, has it ever been really judicially determined here anyway that Miranda warnings have to be given?

John G. Rocovich, Jr.:

Well this Court has a —

Or is it a separate part of the IRS?

John G. Rocovich, Jr.:

In the matter of this case, this Court went so far to say that tax prosecution were not immune from Miranda decision and the case you decided, the Donaldson case, I believe, two years ago, you specifically stated that the Court was not deciding on this question.

And you specifically denied a certiorari along with the test back in the circuits.

John G. Rocovich, Jr.:

Yes.

And lawfully we have the weight of the circuits, Your Honor.

I think —

William H. Rehnquist:

What would you say is the leading case from this Court that supports your answer to Justice White’s question that there is a class of records which can not be subpoenaed from the taxpayer?

Put one case.

John G. Rocovich, Jr.:

I am hard pressed to think of just one case —

Are there several then?

John G. Rocovich, Jr.:

Well, I think all the cases such as Reisman v. Caplin for instance —

William H. Rehnquist:

That case didn’t — that wasn’t a holding, was it?

John G. Rocovich, Jr.:

There was a strong inference that —

William H. Rehnquist:

Are there any holdings of this Court?

John G. Rocovich, Jr.:

Holdings on what documents are privileged and what aren’t?

William H. Rehnquist:

Yeah.

That there is a class of documents that cannot be subpoenaed from the taxpayer in a tax situation like this, if she raises the Fifth Amendment.

John G. Rocovich, Jr.:

I can’t — we are going back to Boyd v. United States in 1886, where a man had prepared his own records and invoices.

They said that this class, this Court stated that this class of documents in general could not be seized in the possession of the taxpayer and that was followed by Counselman v. Hitchcock, and cited hundreds of times since, so I think that’s the place to start Your Honor, it’s Boyd v. Untied States in 1886.

Warren E. Burger:

But then when Mr. Justice Holmes decided the tax returns were admissible and there were a chain of cases that had followed that right up to Donaldson.

John G. Rocovich, Jr.:

We don’t contest the admission of tax returns.

They have been given —

Warren E. Burger:

And documents related to them.

John G. Rocovich, Jr.:

Yes all of this is on schedules.

The tax returns also should be admissible.

Potter Stewart:

I suppose — what would you say about work papers in support of the tax return?

John G. Rocovich, Jr.:

In accounts, working papers I think are admissible too.

I think —

Byron R. White:

What about the taxpayer’s working papers?

John G. Rocovich, Jr.:

I think the records prepared about taxpayer for purpose of making his return should be privileged.

Because they are prepared by him for his own benefit in his own hand and they are not part of the tax return.

Those are personal records.

The government goes so far as to contend and I believe with their theory if any time it’s out of your physical possession it is subject to subpoena.

Justice White, if I were helping you across Constitution Avenue by carrying your briefcase, the government holds that they could hand you a summons in the middle – hand me a summons in the middle of Constitution Avenue and seize your documents to use against you in a criminal trial.

I don’t think that can be the law and I tend to agree with Justice Holmes and Brandeis, it’s certainly shocking to our sense of fair play.

Warren E. Burger:

Getting back to these records, what about canceled checks that cover items claimed as deductions.

Will they be privileged?

John G. Rocovich, Jr.:

Well the canceled checks can be secured from the bank.

I would feel that the —

Warren E. Burger:

How can they be secured from the bank?

John G. Rocovich, Jr.:

The bank keeps a copy of them.

Most banks keep copies of all the checks that they clear.

That’s the normal method of preparing a networth case in Tax Court.

Warren E. Burger:

What about the specific canceled check of the taxpayer in the tax payer’s handwriting?

John G. Rocovich, Jr.:

I would – although the government has been so kind as to concede that that would be privileged I would doubt that a canceled check could be, would be privileged.

What we are talking about a personal payroll records, personal worksheets of receipts and expenditure and things of that nature made by the proprietor for her own purposes.

Warren E. Burger:

Will that be similarly true under the Wage and Hour Case?

John G. Rocovich, Jr.:

Well, I think when you get into Wage Hour cases and Office of the Price Administration cases or persons where the records are specifically required to be kept by law for the benefit of an agency or a tax payer enters into a contract with the government to provide the goods, where he is — the records he is keeping are essentially public records to start with and differ substantially from these records that are used to prepare the tax return.

Another policy consideration I think that demands attention is the fact that I believe and I think it was noted in the Stuart case from the Fifth Circuit that the Internal Revenue Service will have an increasingly difficult time enforcing revenue laws if the government’s test is adopted.

John G. Rocovich, Jr.:

The Congress has legislated the Internal Revenue Court appointed it’s brilliant comprehensible to the average person and even to the average attorney and most taxpayers today, I think, find it necessary to enlist the aid of experts such as accountants and tax consultants to assist them in the preparation of their returns.

I submit that the taxpayers do this not intending to give up either ownership or privileges under the Fourth and Fifth Amendment.

Byron R. White:

Mr. Rocovich, may I ask you, have you yet addressed yourself to why Donaldson doesn’t pretty much answer the questions presented by this appeal?

John G. Rocovich, Jr.:

Well, in the Donaldson case we had a situation where the government was subpoenaing, he was given the summons rather to, I believe, as a corporate employer for the corporate employer’s records.

We have the case of a former employee coming in and saying, well I want to suppress that because it incriminates.

In that case the ownership of the records —

Well, what I was addressing myself really was to here as I understand it there wasn’t recommendation for prosecution at the time this summon was issued.

John G. Rocovich, Jr.:

In the Couch — in the case before the Court?

In this case, yes.

John G. Rocovich, Jr.:

That’s correct.

The special agent was just coming in to investigate.

I am just wondering in that circumstance were there any Fifth Amendment or other problems in the light of Donaldson?

John G. Rocovich, Jr.:

Well, the problem comes, if a person prepared documents which could likely contain incriminating evidence.

Yes but the fact that — as I understand it, when this summon was issued there had neither been — certainly there wasn’t any recommendation made nor any determination that any recommendation would be made.

Is that right?

John G. Rocovich, Jr.:

Yes that’s right but as the special agent testified on the trial, his principal purpose of his job is to ascertain criminal tax fraud and the purpose I think in the Miranda case, I think, that the point is reached when I say when the focal point of the investigation changes from a civil rather to a criminal investigation, at that point the defendants and the have the right to exercise it —

Did Donaldson answer that to the contrary?

John G. Rocovich, Jr.:

No Donaldson specifically —

Left it open.

John G. Rocovich, Jr.:

Specifically — well the efforts in Donaldson is in favor of the taxpayer.

I thank they stated it, this do not have to do with records whereas the taxpayers had no proprietary interest of any kind, which were owned by the third person or in his hands and which relate to his business transactions and may cite it with approval Reisman v. Caplin in which case, they said that the court had deemed the possession to be the same as if they were in the possession of the taxpayer himself.

I think, the inference of Donaldson favors —

You are saying the agent that carried out the initial orders asked for these papers to look at it?

John G. Rocovich, Jr.:

Yes, we cooperated and delivered the papers.

Constitutionally he could require (Inaudible).

John G. Rocovich, Jr.:

Yes.

Even though they might obtain incriminating evidence and even though they might be in the taxpayer’s handwriting.

John G. Rocovich, Jr.:

Yes sir, that’s correct for Civil purposes, but at the point where his investigation shifts to a criminal one, at the point he suspects fraud, at that point, we contend he must warn the taxpayer for rights and at that point he loses his right to see those records.

William H. Rehnquist:

Your case is so much stronger for you than Donaldson, I would take it in view of the fact that Donaldson, it was the Circus’s record that was subpoenaed and then the Circus was perfectly willing to give them.

Whereas, here it’s claimed at least that it’s your clients records and neither she nor her accountant are willing.

John G. Rocovich, Jr.:

Yes sir, the ownership I believe was at test in Donaldson, the government is going after the corporation with their records.

The taxpayer had no rights whatsoever to those records, his only connection was they were incriminated.

Here in our record, we own them and they are in the hands of our agent with the right to getting back immediately.

It’s our content with the mere naked possession by one’s agent does not wave the rights and question.

That’s the basis of the rule we suggest to this court.

And now that I have got the key to your argument is just as soon as they suspected for it, however reasonable may have been the basis for the suspicion, just as soon as they brought in that element of IRS and then everything followed that you are ought to be following.

John G. Rocovich, Jr.:

Yes and that’s the — there are many cases prior to the issuance of revenue ruling, IR 949 I think it is, this is the government procedure.

There are many cases and finally adopted the procedure that once they suspect fraud, the special agent will be brought in, it will give them Miranda warning.

Warren E. Burger:

When did you give the Miranda warning here?

John G. Rocovich, Jr.:

When the special agent was brought in, his first act was to proceed to the taxpayer’s home and give this Miranda warning.

We can see that they did this properly.

We can see that after we had gotten a warning, we would be entitled to heed it however and direct our agent who is a mere naked possessor or a bailee could refuse to turn it over.

The most recent case which has come up, since our brief and is noted in our supplemental brief is the District Court opinion of U.S v. Sakuno & Eto(ph) which is identical to the facts of the series of cases we cite in our favor where the records under possession of the accountant and they belonged to the taxpayer and the government handed a summons to the accountant and the court specifically rejected the Fourth Circuit opinion in Couch and the several other opinions and relying heavily on the Donaldson case and Reisman versus Caplin found in favor of the taxpayer in that case who said the government could not —

Warren E. Burger:

I understood through your answer to Mr. Justice Powell’s question that this man was an independent contractor who was paid on a job basis.

Each time he did some work, he was separately paid.

John G. Rocovich, Jr.:

But he was not a salaried employee, as opposed to common law employee versus independent contractor, he was an independent contractor, yes sir, over long period of years.

I think, for a moment it might be worthwhile examining the three cases the government relies on.

I mentioned the Burdeau v. McDowell case where a man used dynamite and hatchet to obtain the evidence, I think that clearly cannot be the law any longer, they also rely on the Perlman case and the Johnson case.

Mr. Johnson took bankruptcy and conveyed his records to the trustee in bankruptcy.

This was a voluntary act, he transferred ownership and he transferred possession and he published his records by making it a matter of public record with the court.

So this case is not related to the one before the court and neither is the case entitled Perlman v. the United States where we had a man who invented a pneumatic wheel and obtained a patent and he was himself in a patent litigation, he introduced the wheel and exhibits and diagrams and documents and there he conveyed title to the Equity Court, he conveyed possessions to the Equity Court, he published the records.

So I think that court is, that case is not in point, he was subsequently prosecuted for perjury and he tried to suppress this information but since you have transfer of possession and ownership and publication, I don’t — those cases seem to me to be correct but not in point to the case before us.

We believe that the government has not cited any public policy reason or accepted a case law for their conclusion that possession is the test of the whether you waive the Fifth and Fourth Amendment privileges.

On the contrary, we suggest that the policy reasons which I have cited plus the numerous cases citing the brief, which don’t bear going into at this time, should be the basis of adopting our test of ownership as being the key rather than the location or possession.

If I may, I would like to save the balance of my time for above.

Warren E. Burger:

Very, well.

Byron R. White:

Mr. Rocovich certainly your possession would carry you a step beyond Donaldson, wouldn’t it?

John G. Rocovich, Jr.:

No, sir, I think Donaldson was purely the case of — in Donaldson, you’ve said, as I recall, that ownership was the test, but since the corporation owned the records that a former employee had no rights to them in the them, and since ownership was the test, that he could not suppress the evidence.

Byron R. White:

Well, on the other point in Donaldson, I thought that something was said about the recommendation of prosecution as a dividing point and certainly, do I not understand you to say here that this case had not reached that point?

John G. Rocovich, Jr.:

No, this case had already reached the point where the Criminal Fraud Investigator entered the picture and gave the warning, there had been no recommendation to prosecute.

Byron R. White:

Where the special agent showed up.

John G. Rocovich, Jr.:

Yes.

Byron R. White:

Of course, many times when the special agent shows up, there never is any recommendation for prosecution.

John G. Rocovich, Jr.:

Yes, that’s correct, Your Honor.

As I recall the statistics prepared by Professor Charles Blaine(ph) that roughly 90% of all convictions obtained by the Justice Department obtained are on the self-incrimination of the taxpayer.

There are many that are —

It’s the whole tax system is so (Inaudible)

Warren E. Burger:

Mr. Wallace.

Lawrence G. Wallace:

Mr. Chief Justice and may it please the Court.

In this case, as in Donaldson against the United States, a joint investigation by a Revenue Agent and a Special Agent is proceeding prior to any recommendation for a prosecution, and we believe that the issue of the statutory authorization for the issuance and enforcement of the summons in this situation was decided by the Court in Donaldson.

It’s true that in Donaldson, the taxpayer seeking to intervene and the summons enforcement proceeding there had, no proprietary interest and asserted no proprietary interest whatsoever in the corporate records of its former employees, that were the subject of the summons.

And because of that, the Court unanimously held that the taxpayer had no right to intervene in such a summons enforcement proceeding. Here by contrast, the taxpayer was permitted to intervene, indeed the government did not oppose the taxpayer’s intervention because the taxpayer was asserting proprietary interest in the records.

But all of the discussion in the Donaldson opinion about the lack of the proprietary interest in the records was in the context of the initial issue, the intervention issue in Donaldson and two Justices of the Court expressed the view that that was all of the Court should decide in Donaldson, that the taxpayer had no right to intervene.

Seven Justices however proceeded in Donaldson to decide the issue that the taxpayer was seeking to raise through his intervention since the issue had been fully argued and was an important issue in the administration of the tax laws.

And in the Court’s opinion, that issue was expressed as follows, Donaldson however strenuously urges in addition that an Internal Revenue summons proceeding may not be utilized at all in aid of an investigation that has the potentiality of resulting in a recommendation that a criminal prosecution be instituted against the taxpayer.

There is no reference in this part of the Court’s opinion who has a proprietary interest in the records.

Indeed, what the opinion does is explained the meaning of the Court’s holding in Reisman which was the case in which the taxpayer was asserting a proprietary interest in the records.

The Dictum.

Lawrence G. Wallace:

That is correct, the Dictum in Reisman, what the court did was explain the meaning of the Dictum in Riesman and interpret the statute with respect to the issuances of internal revenue summons, whether to the taxpayer, to those dealing with the taxpayer or in the particular case to former employers and we did not regard you the matter that has been decided only two terms ago and it was fully briefed in the Donaldson brief in our case on pages 24 through 38 of our brief.

In Donaldson in our view that issue has been decided and the new issue presented in this case as we view it, the principle the issue is rather the issuance and enforcement of the summons here, are inconsistent with the taxpayers Fifth Amendment privilege that no person shall be compelled in any criminal case to be a witness against himself.

We will turn to that.

Now in one, perhaps attenuated sense of that language an accused is compelled to be a witness against himself, whenever a third person discloses in a proceeding what the accused has communicated to it.

When the third person is required to disclose it.

Whether that communication was oral or written? Of course the Fifth Amendment has never been extended to that extreme and should not be in light of its historical purpose.

If it were extended to that extreme, all communications instead of just a few specific categories if communications would be privileged communications.

Now as we understand it the petitioner here is not contending that communications to an accountant are privileged under Federal law and the case is uniformly holding or not and nor is it contended that the accountant cannot constitutionally be required to disclose communications the taxpayer made to him which may tend to incriminate the taxpayer, so long as the disclosure is in the form of oral testimony by the accountant of what the taxpayer communicated to him, or in the form of the production of records or documents owned by the accountant.

So a claim here is that if the taxpayer owns the paper in the accountant’s possession on which the information is written, the Fifth Amendment protects the taxpayer against the production of those records by the accountant, even though the information disclosed to the accountant is not privileged.

Well, Mr. Wallace, suppose this were after recommendation of prosecution, you would still take the same position, if the summon is issued after a recommendation?

Lawrence G. Wallace:

Well, there might be a statutory problem about whether a summons would be the proper form of procedure.

On the constitutional issue our position would be the same, out position is that there is no Fifth Amendment privilege when the compulsion is on a third person.

Just because the papers are in the possession of the accountant.

Lawrence G. Wallace:

And it’s the accountant who is being compelled to produce them rather than the taxpayer.

The accountant does not claimed that he may tend to be incriminated by their production.

Now for decades in Fourth Amendment litigation —

Byron R. White:

What about the role of the taxpayer?

The taxpayer has the records in there and (Inaudible) and the Fifth Amendment pointed that, what’s your answer to that?

Lawrence G. Wallace:

Well, in response to a summons the taxpayer has been claiming the fifth amendment privilege.

The Internal Revenue Service has been honoring that claim with respect to the taxpayer’s production of records.

We think that’s what the holding of Boyd implies and Boyd has not been a rule in that respect.

And as a rule recommendation or not has no relevance.

Whether there has been a recommendation or not —

Lawrence G. Wallace:

That is correct Your Honor.

Any kind of IRS inquiry.

Lawrence G. Wallace:

That is when the taxpayer is being asked to produce the records, I think a different issue would be raised by an attempt under a search warrant to reach the records, if they are not been asked to produce them himself.

But what he is being asked by summons to produce them himself.

As I understand it if he asserts the privilege that’s respected right?

Lawrence G. Wallace:

The Internal Revenue Service is complying with what it understands to be the holding of Boyd as more recently explained in the Schmerber opinion of this court that production of records is compelling a response which is also a communication.

Now the McNaughton addition of Wigmore explains that as meaning that when the taxpayer or other individual has to come forward in response to the production order he is in effect testifying that these are the records requested in the order that this is an authentication from him, an identification of these as the records requested and Wigmore for that reason distinguishes this situation from the situation under a search warrant.

Potter Stewart:

What about the search warrant, could these very papers be seized under a search warrant?

We don’t have any precedence of that?

Lawrence G. Wallace:

I think we would be willing to argue that but that really isn’t an issue in this case and I can’t say we have explored it for purposes of this case.

I think the rationale of Boyd as it fits into subsequent cases of this court indicates that the search warrant situation is a very different one.

Potter Stewart:

That’s the whole notion of the Fourth and Fifth to run together.

Lawrence G. Wallace:

That is correct Your Honor.

You just mentioned Boyd in your brief, as I recall you stated that this case is distinguishable from Boyd because the taxpayer here did not have possession of the records —

Lawrence G. Wallace:

And was not being compelled to produce them.

The compulsion is not on the taxpayer in this case.

Talk a little about where you draw the line on this issue of possession.

The cases that come to mind and some of them have been mentioned here today already, suppose when secretary had the records, suppose when had an accountant in his office who had had the records, suppose when he had an employee or here we have an independent contractor.

Where do you suggest the line should be drawn?

Lawrence G. Wallace:

In the Internal Revenue Service practice, so long as the taxpayer has retained possession of the records and they are being used only by his full time employees or others on the taxpayer’s premises after the taxpayer having relinquished possession and control of the records, we ordinarily in those situations issue the summons to the taxpayer because it’s the taxpayer who has the dominion over the records and the authority to return the summons and if the taxpayer chooses to plead the privilege against self-incrimination that’s up the taxpayer.

It’s when the tax–

Would it be location primarily or the power to control an employee?

Lawrence G. Wallace:

Well after the relinquishment of possession, when the taxpayer has turned over the possessory right to someone else so that he has the power to comply with the summons and the summon is issued to him and the compulsory process is on him.

When he is in rightful possession, it need not be the permanent possession and it certainly need not carry title in our view.

I would say that’s the way we draw the line in the Internal Revenue Service practice.

Thurgood Marshall:

What about the accountant in the office, carrying them home in his briefcase?

Lawrence G. Wallace:

Well, I think there could be —

Thurgood Marshall:

(Voice Overlap) when you finish that, I am going to have him going to the Virgin Islands on his vacation.

Lawrence G. Wallace:

Well, I think the crucial question is whether the taxpayer has relinquished possession.

There are some cases where this question is difficult to answer Mr. Justice and I am not sure I can tell you what our position would be about these particular hypothetical.

Thurgood Marshall:

Now it’s very difficult.

Lawrence G. Wallace:

But it seems clear us here that records that were given to this accountant from 1955 on remained in his continuous possession up until the fall of 1968 when this summons was issued, were out of the possession in control of the taxpayer whether the taxpayer technically retained title to them or not.

Thurgood Marshall:

She hadn’t abandoned them yet.

Lawrence G. Wallace:

She had given them already to someone else’s possession, she didn’t abandon her proprietary interest.

Thurgood Marshall:

Right, right.

Lawrence G. Wallace:

Well, that gets me back to the principle contention in this case that the application of the Fifth Amendment privilege should depend on proprietary interest.

For decades and in Fourth Amendment litigation, this Court and other Federal Courts have struggled to apply concepts of property rights, concepts of who has superior proprietary interest in the particular property that gave rise to the Mere Evidence rule and to its exceptions and this effort as the Court well knows came to grief because it deflected analysis away from the true meaning and purpose of the Fourth Amendment protection against unreasonable searches and seizures.

Potter Stewart:

But surely Mr. Wallace, my effects are protected by the Fourth Amendment wherever they maybe located, are they not?

That’ what Fourth Amendment says.

That is they are protected — to the extent they are protected —

Lawrence G. Wallace:

To the extent they are protected.

Potter Stewart:

They are protected from unreasonable searches and seizures, wherever they may be, they are my effects.

Lawrence G. Wallace:

The limits of the Fourth Amendment protection are not coextensive with your retaining possession over your own effects, although the protection becomes more attenuated.

I am just trying to draw an analogy here between the experience the court had with a focus on proprietary interest as the controlling consideration in Fourth Amendment litigation which in Warden against Hayden and in Katz against the United States, the court rejected as having proved unsatisfactory.

I am trying to draw an analogy here for purposes of Fifth Amendment litigation.

In Fifth Amendment litigation which we are concerned with here, the court for many years has refused to fall into a similar fallacy of giving controlling significance to questions of property rights and perhaps this was avoided because it was clear at the outset that the Fifth Amendment privilege is even less concerned with property interest than is the Fourth Amendment right.

The great historic purpose of the Fifth Amendment privilege is to protect the individual against forcible extraction of testimony by the government from the lips of the accused, and the principle issue in Fifth Amendment litigation is whether the accused is being compelled to testify to be a witness against himself.

Warren E. Burger:

But you are saying that the taxpayer has conceded here that this accountant could have been called into the courtroom or in pretrial and give testimony as to the contents of all these documents, even if the documents themselves couldn’t have been.

Lawrence G. Wallace:

That is correct Your Honor, the man has conceded that if the accountant had made his own work papers or his own Xerox copies that are already here in these documents, that those would be subject to production, which to us highlights what seems to be the inadequacy of saying that the great Fifth Amendment privilege turns on who happens to have the title to the pieces of paper on which the information is written.

Potter Stewart:

Does this point you are drawing Mr. Wallace mean that you in turn are conceding that the government could not have summoned this material, had it been in the petitioner’s possession without violating the Fifth Amendment?

Lawrence G. Wallace:

Well, as I have previously said, we would honor a claim if we had asked Mrs. Couch in the summons to produce this material on the theory that she could get it back from her accountant and to comply with the summons and she had pleaded the privilege against self-incrimination.

As far as I am aware we would honor that plea.

Potter Stewart:

Fine.

Do you think you would be constitutionally compelled to do so?

Lawrence G. Wallace:

Well, I think it’s more questionable when she didn’t have possession of the records but still the compulsion would be on the accused who are the individual who was worrying about incriminating herself.

Potter Stewart:

Like the decision of this court in Boyd?

Lawrence G. Wallace:

Boyd is the only decision in point as Boyd has been interpreted as meaning that the response is also a communication in that by producing the individual is authenticating these as the records that were requested.

As I said, that rationale of Boyd, it seems to me applies to a subpoena production order but not to a search and seizure pursuant to a to a search warrant based upon probable cause.

In Warden against Hayden, the court specifically reserved decision on the question whether there are any categories of papers or other materials that are immune from reasonable search warrants.

And I don’t think the court has since decided the issue, nor has it presented in this case.

This case involves a production order and not to the individual who is concerned about self-incrimination.

I don’t know how the government views the accountant here, was he an independent contractor in your estimation?

Lawrence G. Wallace:

The record implies that, the record doesn’t show how he was compensated.

Does it make any difference to your case whether he is, or he is merely an employee?

Lawrence G. Wallace:

The thing that matters is whether the taxpayer relinquished possession of records to him so that the compulsion could be on him rather than on the taxpayer for their production.

I think that’s the thing that matters, and we think the record adequately shows that and that has not been disputed.

The petitioner’s reliance is solely on who has the title to the papers.

Warren E. Burger:

I understood Mr. Rocovich to tell us that this man was an independent contractor who was paid on in effect piecework basis.

Lawrence G. Wallace:

But I don’t believe that the record shows that Your Honor. I learned it for the first time when he cited it.

And as far as I know that is accurate but I have — I could say I have a reason to believe that it’s accurate from what I have been told by the Internal Revenue Service but I don’t dispute it.

Byron R. White:

Did you say that if the taxpayer had an employee that came to his office worked all day and then particularly — records pulled at night or around the weekend and the government just has to subpoena the records from the hands of the employee while he hasn’t, what’s your concern?

Warren E. Burger:

It’s a harder case.

Lawrence G. Wallace:

Well, that would be a much more difficult case for us, rather we could say that the taxpayer could relinquish possession there.

Here it’s clear that possession has been turned over to someone who has a separate office and these records have been in that office for many years.

Byron R. White:

So you are suggesting that it might be difficult for the government if the person was acting against the nation?

Lawrence G. Wallace:

So far as I know the reason those cases don’t arise, it’s because in those cases we issue the summons to the employer.

Of course, if the employer is a corporation, there is no Fifth Amendment privilege to worry about.

So it states that the petitioner could have had no reasonable expectations that these documents would have been kept private.

I assume you must be and only with respect to the government you are saying that — do not suggest that the accountant would be free to show them to friends and neighbors.

Do you?

Lawrence G. Wallace:

Well, I think that’s what we have to (Inaudible) Your Honor private with respect to the claim that’s being made here but the government cannot have access to them.

This is in response to the Fourth Amendment claim which is essentially prior the Fifth Amendment claim on the facts of this case so far as we read the claims.

Would this case be different Mr. Wallace if rather than an accountant?

All the other facts precisely the same if this had been a lawyer?

Lawrence G. Wallace:

We have taken the position that when information is given to the lawyer solely for the purpose of preparation of income tax returns, that is not a confidential communication to the lawyer.

Those materials are given to the lawyer to be synthesized as the lawyer sees it fit to be communicated onto the government and therefore those communications are not within the attorney-client privilege.

When the information is turned over to the lawyer for purposes of seeking his legal advice, I think it is the Attorney-Client privilege.

In that former situation there isn’t with any court?

Lawrence G. Wallace:

Yes, We had Court of Appeals holdings on that point, they are cited in our brief.

And do they support the position that you just –?

Lawrence G. Wallace:

Yes, they do sir.

They are on page 18 of our brief at the top.

The constitutional issue would be the same though in the case.

Lawrence G. Wallace:

Under the Fifth Amendment, yes I think there would be a Sixth Amendment issue, about the Attorney-Client privilege.

There maybe some basis for the Attorney-Client privilege when legal advice is sought in the Sixth Amendment, when there has been a confidential communication to the attorney.

Warren E. Burger:

I think that you would agree that if a Certified Public Accountant distinguish him from just some tax – some fellow who makes tax return, if a Certified Public Accountant were to give these private records to a newspaper reporter for example then he would be subject to disciplinary proceedings within his own profession.

There is some expectation of privacy in that sense.

Isn’t there?

Lawrence G. Wallace:

Well I presume.

Warren E. Burger:

That certainly would be a private matter first between the principle and the Certified Public Accountant and then between the Certified Public Accountant and perhaps his professional organization.

Lawrence G. Wallace:

I think that is correct Your Honor.

There might possibly be some civil remedy between the accountant and his client for breach of professional duty if they are recognized by state law, I think this would be a question of state law and I frankly have not looked into it.

Now we have cited and discussed in our brief, on pages 14 through 16, the decisions of this Court which have held that the issue is not proprietary, interest of proprietary rights.

When a Fifth Amendment claim is raised with respect to the compelled production of records and the compulsion operates on a third person.

The petitioner seeks to distinguish these cases in various ways, but if the distinction is really overlooked the rationale of the cases, which is pretty well summarized in the quotation on page 15 at the end of the quotation, on the Perlman case, where reliance was placed solely on a claim of title, which the court didn’t even decide because it considered unnecessary to decide, because as the court said, the criterion of immunity is not the ownership of property but the physical or moral compulsion exerted.

Based on the reasoning of the epigram of Justice Holmes in the leading case, Johnson against United States that a party is privileged from producing the evidence, but not from its production, it is true that in the case involving the introduction of the stolen records Justices Holmes and Brandeis dissented from the holding that that dissent was not based on the view that the Fifth Amendment privilege have been violated by the introduction of the records and evidence.

Indeed, it was premised very explicitly on the proposition that no constitutional provision had been violated and that they were accepting as true, the majorities holding that the papers could have been subpoenaed from the faith.

But, the dissenting opinion said, that there are principles of decency and fair play which lead them to the conclusion that the evidence should not be accepted in this case, for all that’s written in the opinion, this is not a constitutional holding, but a rule of evidence in their view that Congress could have overturned.

The dissent is not at all premised on the idea that there had been a Fifth Amendment violation nor has any other case in this Court held that the Fifth Amendment is violated when someone else is compelled to produce evidence created by or owned by the person attempting to claim the privilege who is not himself being compelled to be a witness against himself.

Warren E. Burger:

Thank you Mr. Wallace, do you have anymore Mr. Rocovich?

We have about three minutes remaining.

Let me ask you at the outset, suppose the taxpayer here, your client had been in Europe or some distant place, the time the subpoena was served on the accountant and the accountant is then confronted with this situation, what kind of compulsion is there being exerted on the taxpayer herself?

Taxpayer might not even know about the existence of the subpoena.

John G. Rocovich, Jr.:

Yes sir, that’s correct.

Warren E. Burger:

And isn’t the thrust of the Fifth Amendment, the compulsion on the principle —

John G. Rocovich, Jr.:

Well, Your Honor, we believe and contend that the rights and questions are personal, the human civil type rights to protect one’s documents and the compulsion, directed against one’s agent who is holding one’s papers on his behalf is equivalent to directing that same compulsion against the person himself I think, essentially a principle agency.

I don’t see why a man’s privileges should all be waived just by delivering his records to a temporary bailee, a mere naked possessor.

It would appear to me that that would be no firm basis for waiving these privileges.

We take the position here and look in for a moment at when this recommendation for criminal prosecution is raised or at what point it becomes a criminal matter.

Justice Brennan it seems to me if the taxpayer was not in jeopardy then why would the government for instance issue a Miranda warning telling her that she was in jeopardy.

If in fact, at the point the Special Agent comes in, we have at District Trial Court level and at the Fourth Circuit Court of Appeals, a volunteer to produce these records as the government will obtain immunity for us under Murphy v. Waterfront Commission, that line of cases.

The government steadfastly returns to grant immunity in this situation.

So they must be interested in this point in securing evidence for criminal prosecution otherwise they wouldn’t give them the Miranda warning, nor would they refuse to grant us immunity if they are not interested in a criminal prosecution.

We don’t – my opponent has cited the problem with of the Fourth Amendment following a line of cases on title, we suggest to test instants of ownership of these records that should be to test and rather than sticking to a strict title situational, although most of the cases cited in the government’s brief in Perlman and Burdeau and Johnson and several other cases like that, they return on the title and ownership concept, and I suggest a careful reading of Justice Blackmunn’s opinion in the Donaldson case were surely this court clearly set this particular question aside and did not decide in that case and the inference in that case and in Reisman v. Caplin, that these records are personal records and should be protected wherever they are, just as in the Fourth Amendment, I mean the Fourth Amendment search and seizure situation which we contend this falls under it too, because I think of necessity, of necessity documents that are subject to the Fifth Amendment privilege, any search and seizure by the government would be an unreasonable search and seizure.

So I think that line of thought necessarily falls over in this area.

Warren E. Burger:

Would the Fourth Amendment help you if subpoena summons were issued and it was properly grounded?

Would that be a reasonable or an unreasonable search then?

John G. Rocovich, Jr.:

Well, if your summon was properly granted, I think you assuming the problem, our position is the location or naked possession of these document is not the test as who owns them and against whom is this directed.

Warren E. Burger:

We are just getting into your Fourth Amendment argument, if there is a valid warrant or a valid subpoena, the Fourth Amendment probably goes away.

Doesn’t it?

John G. Rocovich, Jr.:

Yes sir, but we don’t think that subpoena can be valid if it’s directed toward the documents owned by the taxpayer.

Warren E. Burger:

Thank you gentleman.

The case is submitted.