Donaldson v. United States/Concurrence Douglas

by William O. Douglas

United States Supreme Court

400 U.S. 517

Donaldson  v.  United States

 Argued: Nov. 19, 1970. --- Decided: Jan 25, 1971

Mr. Justice DOUGLAS, concurring.

The petitioner is the subject of an investigation by the Intelligence Division of the Internal Revenue Service which seeks to obtain information regarding financial transactions between the petitioner-taxpayer and the Acme Circus Operating Co. Summonses have been served on Acme and its accountant, Mr. Mercurio, in order to obtain testimony and to review records relating to petitioner. The petitioner is attempting to prevent Acme and Mercurio from complying with the summonses and to prevent the Federal District Court from enforcing those summonses. He sought to intervene in the enforcement proceedings, alleging that he has a vital interest in the litigation and that the summonses are not enforceable because they were issued improperly, to gather information for a criminal prosecution. The Government challenged his right to intervene. The District Court denied his motion to intervene and enforced the summonses but stayed its mandate. The Court of Appeals affirmed but continued the stay pending disposition by this Court. As yet there has been no hearing before the special agent, and this Court rules only that such a hearing may proceed on the summonses issued.

On these facts, I concur with the Court's decision. There is nothing in the language of § 7602 to limit the issuance of summonses to civil investigations. Therefore, even though petitioner is the subject of a criminal investigation, that is no bar to the issuance of the summonses. It is true that a person who is summoned may object that the production of records or testifying would violate his rights under the Fourth or Fifth Amendments. And a taxpayer would clearly have standing to raise a claim of violation of his constitutional rights if a third party were ordered to produce records belonging to the taxpayer. United States v. Kordel, 397 U.S. 1, 7, 90 S.Ct. 763, 766-767, 25 L.Ed.2d 1; Reisman v. Caplin, 375 U.S. 440, 445, 84 S.Ct. 508, 511-514, 11 L.Ed.2d 459. But it is difficult to see how the summoning of a third party, and the records of a third party, can violate the rights of the taxpayer, even if a criminal prosecution is contemplated or in progress. There is no right to be free from incrimination by the records or testimony of others.

The taxpayer may, however, protect his interests in any hearings held pursuant to § 7602. The Internal Revenue Service is clearly conducting a criminal investigation of the petitioner. That is the function of special agents. ^[1] The purpose of the summonses is to gather evidence for a criminal prosecution. At such 'investigations' the summoned party may or may not be put under oath, at the discretion of the agent. He does have the right to be accompanied by counsel or an accountant. But the Internal Revenue Service has taken the position that the taxpayer who is being investigated is not entitled to be present at such 'ex parte investigations.' ^[2] Moreover, he normally is not given notice of the issuance of the summons to the third party. Our decisions, however, make clear that the taxpayer has the right to be present at the hearing and to confront and cross-examine witnesses and inspect evidence against him.

The traditional federal method for gathering such information is the grand jury. Before that body there is no right to counsel and confrontation, but other protections are present, none of which exist here. The Court in a five-to-four decision relied on the analogy to the grand jury in In re Groban, 352 U.S. 330, 333, 77 S.Ct. 510, 513, 1 L.Ed.2d 376, ruling that a person has no right to counsel when ordered to testify before a fire marshal. Mr. Justice Black stated, I think, the correct view, in his dissent:

'(A)ny surface support the grand jury practice may lend disappears upon analysis of that institution. The traditional English and American grand jury is composed of 12 to 23 members selected from the general citizenry of the locality where the alleged crime was committed. They bring into the grand jury room the experience, knowledge and viewpoint of all sections of the community. They have no axes to grind and are not charged personally with the administration of the law. No one of them is a prosecuting attorney or law-enforcement officer ferreting out crime. It would be very difficult for officers of the state seriously to abuse or deceive a witness in the presence of the grand jury. Similarly, the presence of the jurors offers a substantial safeguard against the officers' misrepresentation, unintentional or otherwise, of the witness' statements and conduct before the grand jury. The witness can call on the grand jurors if need be for their normally unbiased testimony as to what occurred before them.

'(T)he Fire Marshal's interrogation is, and apparently was intended to be, an important and integral part in the prosecution of the persons for arson or a similar crime. The rights of a person who is examined in connection with such crimes should not be destroyed merely because the inquiry is given the euphonious label 'administrative." 352 U.S., at 346 347, 349, 77 S.Ct., at 510, 520, 521.

In Anonymous v. Baker, 360 U.S. 287, 79 S.Ct. 1157, 3 L.Ed.2d 1234, another five-to-four decision, the Court upheld the power of a judge in New York, acting as a one-man grand jury, to interrogate a witness without benefit of counsel, again relying on the distinction between investigation and prosecution. Id., at 294, 79 S.Ct. at 1161. Mr. Justice Black again stated the correct view in his dissent that this procedure allowed a state official to lay the groundwork for a future prosecution without the protection of the presence of counsel.

In Hannah v. Larche, 363 U.S. 420, 80 S.Ct. 1502, 4 L.Ed.2d 1307, registrars who were accused of racial discrimination asked to be allowed to confront and cross-examine witnesses appearing before the Commission on Civil Rights. A majority found no such right because the Commission did not 'adjudicate' or 'issue orders' but only found facts. That criminal prosecutions might follow was 'purely conjectural.' The Solicitor General relies on this case for approval of the procedures adopted by the Internal Revenue Service.

'There is * * * only one way the Chief Executive may move against a person accused of a crime and deny him the right of confrontation and cross-examination and that is by the grand jury.' 363 U.S., at 497, 80 S.Ct., at 1548.

'(The grand jury is) the only accusatory body in the Federal Government that is recognized by the Constitution. I would allow no other engine of government, either executive, or legislative, to take (its) place-at least when the right of confrontation and cross-examination are denied the accused as is done in these cases.' Id., at 499, 80 S.Ct. at 1549.

In Jenkins v. McKeithen, 395 U.S. 411, 89 S.Ct. 1843, 23 L.Ed.2d 404, the Court dealt with another state investigative commission. There, however, the authority of the commission was limited to ascertaining facts regarding violations of criminal law and reporting its findings for criminal prosecution. There was no right to cross-examination for nonwitnesses and the right was limited for witnesses. The Court held that the commission exercised an accusatory function and was empowered to brand people as criminals. Id., at 427-428, 89 S.Ct., at 1851-1852. Therefore, due process required the commission to afford a person being investigated the right to confront and cross-examine the witnesses against him.

Given the identity of purpose of the investigations in Jenkins and this case, the rule of Jenkins clearly applies to the taxpayer in this suit. The requirements of procedural due process do not become more lax when federal rather than state criminal investigations are involved.

The proceeding contemplated in the summonses served on Acme and Mercurio is a criminal investigation. The result will be a determination of whether to bring criminal charges. The special agent will perform the function traditionally reserved to the grand jury in our Federal Government. The teaching of the Jenkins case is that such a proceeding may not be held without affording the taxpayer an opportunity to attend, to cross-examine, and to rebut.

Notes

1. Though the Solicitor General argues that an investigation by a special agent might have civil as well as criminal results, and the final decision to prosecute is not made until after an investigation, and approval by a regional counsel, he admits that the special agent is only assigned to the case 'as a result of some allegation or indication of criminal conduct.' Indeed the Intelligence Division 'enforces the criminal statutes * * * by developing information concerning alleged criminal violations thereof * * *.' Internal Revenue Service Organization and Functions § 1118.6, 35 Fed.Reg. 2454.
2. An exception is made where the taxpayer asserts a privileged relationship with the person summoned, such as attorney-client.