RESPONDENT: United States
LOCATION: Arizona Dept of Public Welfare
DOCKET NO.: 65
DECIDED BY: Burger Court (1970-1971)
LOWER COURT: United States Court of Appeals for the Fifth Circuit
CITATION: 400 US 517 (1971)
ARGUED: Nov 19, 1970
DECIDED: Jan 25, 1971
Facts of the case
Media for Donaldson v. United States
Audio Transcription for Oral Argument - November 19, 1970 in Donaldson v. United States
Warren E. Burger:
We?ll hear arguments in Number 65, Donaldson against the United States.
Mr. Meldman you may proceed, whenever you're ready.
Robert E. Meldman:
Mr. Chief Justice and may it please the Court.
This case involves two issues relating to administrative summonses.
The first issue concerns the right of intervention in summonses enforcement proceedings.
Intervention under Rule 24 (a) of the Federal Rules of Civil Procedure, an intervention under this Court?s 1964 decision in Reisman versus Caplin.
The second issue relates to the use of administrative summonses in criminal investigations.
Petitioner moved to intervene in an enforcement proceeding in the District Court and was denied intervention.
There was no evidentiary hearing and there has been no written opinion by the trial court.
However, the court below when it considered petitioner?s intervention, determined that intervention should be governed solely by this Court?s decision in Reisman versus Caplin.
And the Fifth Circuit narrowly construed the Reisman decision to require that a proprietary interest or a privilege relationship be established by the proposed intervener before he should be allowed to intervene in the case.
Secondly, the Fifth Circuit held that the intervener must show that if he would be allowed to intervene, he could successfully defend in the summonses enforcement proceeding.
The Court of Appeals found that petitioner had not met their requirements and therefore denied intervention.
I believe that the facts in this case are basically undisputed.
In 1968, the Internal Revenue Service began conducting an investigation of Mr. Donaldson concerning his alleged failure to file federal income tax returns.
In connection with this investigation, special agents of the Internal Revenue Service issued administrative summonses to various third parties with whom Mr. Donaldson had transactions.
The respondents in this action, Acme Circus Operating Company Inc. and its accountant Joseph J. Mercurio were such third party witnesses to receive summonses.
Acme and Mercurio are not active parties in this appeal.
In September of 1968, when Donaldson learned that a special agent had inquired at the Acme Circus Company and requested certain information and certain documents, Acme informed Mr. Donaldson that they would comply with any request made by the Internal Revenue Service.
But Donaldson believing that the procedures being used to investigate him were not proper and sought to prevent involuntary compliance by the Acme Circus.
Following the guidelines set down by this Court in the Reisman case, Mr. Donaldson petitioned the District Court for a temporary restraining order enjoining this third party, Acme Circus from complying with any request through summonses by the Internal Revenue.
The District Court granted the temporary restraining order and the third parties were then restrained.
About seven weeks later the United States then commenced an independent action on petition and order to show a cause to enforce the administrative summonses that had been issued to the Acme Circus.
The summonses required that Acme and Mercurio furnish information concerning their financial dealings with the taxpayer.
In the Government?s petition, it alleged that these summonses issued by the special agent were to obtain information necessary for a determination of Donaldson?s correct tax liability.
Donaldson was not named a party to the summonses enforcement action and therefore moved to intervene under Rule 24 (a) (2) of the Federal Rules of Civil Procedure, intervention of right.
Donaldson alleged that he had an interest in this action and he would be bound by the decision of this action and that he was not adequately represented by the existing parties.
He also filed proposed answers in which he alleged that the purpose for which the special agent had issued these summonses was not in fact determination of correct tax liability but rather to gather evidence for use in a criminal prosecution.
Donaldson also alleged that Section 7602 of the Internal Revenue Code, the statute under which these summonses is issued, did not authorize the use of the summonses for criminal investigations.