Earl Warren: Number 14, United States of America, Appellant, versus Lucille Aldine Dege. Mr. Feit.
Jerome M. Feit: Mr. Chief Justice, may it please the Court. This case is here on direct appeal from an order of the District Court for the Southern District of California, dismissing an indictment which charged appellees, who are husband and wife, with conspiracy to smuggle psittacine bird into this country from Mexico. The single issue on this appeal is whether or not husband and wife can conspire under the federal conspiracy statute. There is no additional evidentiary question as to whether one spouse may testify against the other nor as to whether confidential communications between husband and wife may be revealed, solely whether husband and wife are two separate individuals within the purview of a federal statute. The court below relying upon the ancient notion of marital unity found that husband and wife were not two persons but one and on this basis, dismissed the indictment. We think that ruling was incorrect. The federal conspiracy statute 18 U.S.C. 371 which is set forth at page 2 of our main brief punishes conspiracy between two or more persons. There is no limitation in that statute which says, "Two or more persons except if they're husband and wife." In present day terms it is clear, we think, that husband and wife are legally separate individuals. Plus in old states under the married women statutes, she may own her property separate and apart from her husband. She may sue and be sued in tort and in contract. She may contract with third parties. Her citizenship does not follow that of her husband and quite significantly, we think, in the overwhelming majority of jurisdiction she is deemed a separate legal person who can civilly contract with her husband. In our view, if man and wife are two separate individuals, two separate persons, for the purpose of contractual capacity, we certainly think that they are within reach and are two separate persons under the federal conspiracy statute.
Speaker: What impact does that do you think that this Court's decision (Inaudible)
Jerome M. Feit: Mr. Justice Harlan, I have read the Hawkins the decision. It deals with a rule of evidence which is based upon the notion, the present day notion that in order to protect the domestic relationship of husband and wife, neither spouse should be allowed to testify against the other. It does not in our view deal with this problem at all because on -- on the theory that it did, it would mean that husband and wife could not be convicted together of the subsequent of defense, which is certainly not the law. Again, if a third party joined the conspiracy it is clear that husband, wife and the third party, each to be separately tried and punished. We think that to say that the Hawkins case, applies here is to expand it beyond its purpose. It is in fact to say, that under all circumstances despite the evidence, despite the proof, husband and wife upon some outmoded fiction of unity cannot conspire. Turning to the criminal status, criminal independence, the criminal responsibility of a married woman present time is clear that in those jurisdictions, majority of jurisdictions which have dealt with the problem of whether one spouse may steal from another which derive from the same fiction of the unity the rule that neither spouse could steal from one another, is derived from the same fiction of unity which the District Court applied here to support this notion that they could not conspire together. The majority of jurisdictions in this country which have dealt with this problem have held husband and wife can steal from one another if they are separate and discreet individuals. Most recently in fact and I might point out this is noted at page three of our reply brief, the New York Court of Appeals in 1954 held in the case of People against Morton and it's cited to page two and three of our reply brief, held that a husband may steal from his wife but she was a separate person within the New York larceny statute. Again at the common law there was a presumption that a married woman who committed a crime in her husband's presence acted under his control and coercion. This presumption derived from perhaps a more realistic view of the legal relationship of husband and wife at common law. That is that the wife was subservient to and under the control of her husband, that she was under his dominance, nonetheless and at least 21 jurisdictions that we have been able to find this presumption has been overturned and in those jurisdictions in order to support the defense the married woman must show affirmatively that she was acting under the control of her husband.
Potter Stewart: And in that respect what is the presumption and was the --what is the way that the presumption if any in the Federal (Voice Overlap) --
Jerome M. Feit: In the Federal Court the presumption is very slight Mr. Justice.
Potter Stewart: Is this a matter of case law or legal --
Jerome M. Feit: This is a matter of case law and Federal Courts. In the State in some jurisdictions it is a matter of statute. The legislature had abolished the presumption. In a number of other states I believe six or seven, this is set out at page 21 of our main brief, page 21 and 22, in six or seven States, the -- the termination reputing any presumption was by judiciary.
Potter Stewart: So it does continue a presumption in the federal court in federal criminal cases and a weak resumption you tell us?
Jerome M. Feit: May I say, at least from reading the cases, if there is a presumption it is at -- of the weakest nature.
Potter Stewart: (Inaudible)
Jerome M. Feit: Exactly the point that I wanted to make was even in those states which retained the presumption, a slight showing that the wife was acting independently off her husband, revised it. At the -- again at the --
Potter Stewart: Could that be showing all in the federal court which he be entitled to the directed verdict of acquittal, if there were no showing the contract made by the constitution?
Jerome M. Feit: I -- I do not -- I do not think so. I think the trend. I might say the trend of recent decisions exemplified by United States against Anthony, a District Court case, would seem to indicate that the presumption is either hanging by a slim thread and ready to go, I think perhaps that federal court view would be following the -- the majority view I think in any recent cases -- any new case which might arise. Not only -- another example of this independent status to the married woman, was that, she could always be guilty and contrived with inciting her husband for the commission of a substantive offence. Certainly it seems as if a married woman can control and direct her husband's criminal action, criminal activity. She can be charged with agreeing with him in the commission of crime. What we think is that the ruling below was to read in to the federal conspiracy statute an exception which derives from an ancient notion, an ancient notion of marital unity which derived essentially from the writing of text writers from Hawkins and from thence into the case law. We think that in light of the present day realities which indicate that all circumstances, but civilly and criminally, a wife is legally distinct and separate from her husband but this Court may read that exception out and say that the District Court was wrong, it was improperly reading the federal conspiracy statute. In this recent New York case of People against Morton which is referred to at page two and three of our reply brief and this is a response to the claim by my opponent that we request the Court to indulge in judicial legislation. That same argument was made in the New York Courts with respect to this -- this concept that husband and wife cannot steal from one another, a concept which derived from the same fiction of unity as this conspiracy rational adopted by the court below. The District Court recognized -- I mean -- I'm sorry, the appellant division in New York recognized that this was an essential judicial function, that where legislature had not acted, the New York Courts very properly could view the larceny statute the word “another” as including a married woman. So here, we think it is a proper function of this Court to recognize that a vestige, an ancient vestige of the common law is no longer in force and at the conspiracy statute means what it says, that two or more persons, and not two or more persons, excluding husband and wife, but two or more persons who conspire can be charged and convicted. In 1913, Mr. Justice Holmes referred to this ancient notion for marital unity as now vanishing fiction. We certainly believe that this Court will recognize in the present day considerations and the present day conditions that this fiction has actually vanished. Moreover, we do not think that there are any present day policy considerations which would support the retention of this vestige, this notion that husband and wife are one and therefore cannot conspire together. Those that have been asserted in our view are essentially evidentiary rules which are adequately protected under existing rules of exclusion. So for example Mr. Justice Harlan, Hawkins decision announces this Court's view that either spouse could testify against one another. Certainly it is no reason we think to -- there is no reason to expand that decision, beyond its limits to say that under no circumstances apart from what evidence maybe adduced, husband and wife cannot conspire together. Similarly the argument deriving from the notion of marital confidences, there is a similar evidentiary rule which we do not challenge here and which is validly recognized, the confidential communications between husband and wife are not to be revealed. Certainly, that rule will be applied on trial, but again it is a -- there is no reason, no justification, we submit, for extending that rule so that it becomes an immutable substance of rule which carves out for husband and wife an area of immunity from criminal liability. Other individuals having a relationship of confidence certainly do not enjoy such a position in a law. Husband and wife can conspire with their children. Brothers and sisters can conspire together. Attorney and client have a confidential communication privilege relating to their confidences and certainly my opponent would not say that for that reason they're entitled to a rule precluding criminal responsibility if they conspire together. We recognize -- we think this is the essence of the matter that at a trial there maybe in any particular case difficulties in proof. But the question here is whether husband and wife can be charged under the federal statute. As we suggest in our main brief, it might be appropriate at the trial of any particular case for the trial judge to instruct the jury that associations between husband and wife certainly do not have the same -- do not -- would not have the same inference that perhaps association, clandestine association between strangers might have with respect to conspiracy. Again this presumption of rule which I had mentioned might be necessary to indicate to the jury that there was a presumption that one of the partners whether husband or wife was under the control of the other and they might indulge in that presumption, but this all goes to the question of proof?
Felix Frankfurter: In respecting all this your arguing first off what -- what I've heard, it goes to immediate question of evolution in the common law, isn't that affair (Inaudible) arguing?
Jerome M. Feit: Yes Mr. Justice.
Felix Frankfurter: But we are dealing with the statute here, and what I'd like to ask you is what do you think if this case could come up before this Court in 1868 the year after the statue was originally passed, do you think that if any of these (Inaudible) that would have been construed the way you want us now construe it or I'll give you a later date 1909 it was readopt -- adapted by the penal code, do you think then it would have been construed other than if you are one person and not being husband and wife but that -- that would have been the construction, wouldn't it?
Jerome M. Feit: I -- I would -- I would agree with that. The construction in 1868 or construction in 1909 would have been that.
Felix Frankfurter: So that the statute then in effect is presented as we're not say two or more persons not being husband and wife, you couldn't possibly (Inaudible)
Jerome M. Feit: Exactly. But --
Felix Frankfurter: What I'm suggesting is if that is the construction that unreasonably is attributed to that language either in 1867 or 1909 that does not probably now we need that reply qualification.
Jerome M. Feit: May I answer the question this way Mr. Justice. I agree that in 1867 and in 1909 such a construction would be proper because of this judicial theory which had been engrafted into -- in interpreting the federal conspiracy statue. We could have argued here that if by readapting the statute in 1948 as part of the re-adaption in Title 18 to positive of law and by not noting the exception at the time when husband and wife were clearly separate and discreet legal individuals. Congress indicated an intent to cover them in the Statute.
Felix Frankfurter: (Inaudible) could argued, but you won't?
Jerome M. Feit: No were not. But we argue which we think is the -- is the proper argument. This is a question of capacity. That this question as -- derives from a judicial rule which was read into the conspiracy statute. Certainly --
Felix Frankfurter: What if it's (Inaudible)
Jerome M. Feit: -- but certainly -- certainly with respect to the insanity rule for example, Congress did not intend to include in every criminal statute adopted any specific rule of insanity existing at any particular time. And certainly this Court would not say that a Statute is frozen if adopted in 1867 when -- when the rule might have been solely the difference between right and wrong.
Felix Frankfurter: That is merely of question of proof. That is not a qualification for taking control out of the focus of the statute.
Jerome M. Feit: Well, by the same --
Felix Frankfurter: What if -- I suppose when you're saying that this is not -- it didn't come up in 1867 --
Jerome M. Feit: Well, I -- I will let --
Felix Frankfurter: -- (Voice Overlap) 1909 and therefore there hasn't been a past law and this is 1959 that's your argument.
Jerome M. Feit: Yes Mr. Justice.
Potter Stewart: Now two Court appeals -- you represented to us and I agree with your position on that (Inaudible) the Court Appeals on the -- on appeals with Fifth Circuit?
Jerome M. Feit: Yes sir.
Potter Stewart: I appreciate that your opponent said that District Columbia court is perhaps just (Inaudible) local rule, but in any even when did -- when -- when those decisions with reference to any re-enactment of the federal statute?
Jerome M. Feit: Those decisions -- the District of Colombia decision was in 1946. The Fifth Circuit, the first Fifth Circuit decision was in 1955.
Potter Stewart: Right.
Jerome M. Feit: I believe it was 1955 Mr. Justice. They have been later Fifth Circuit decisions which we also know in 1958, but the District of Colombia Circuit decision was in 1946.
Potter Stewart: And then there was at least formal re-enactment of the statute in 1948.
Jerome M. Feit: In 1948 certainly when Title 18 was readopted --
Potter Stewart: (Voice Overlap) --
Jerome M. Feit: -- positive law, yes sir.
Felix Frankfurter: But when they re-enacted it in 1948, Title 18 re-enacted, didn't (Inaudible) state of change the law?
Jerome M. Feit: Yes, and the revises no -- it would so stay (Voice Overlap) --
Felix Frankfurter: (Voice Overlap) you don't need to state it unless we heard you say so. They don't need to change it unless we go straight, is that right?
Jerome M. Feit: That's right sir.
Felix Frankfurter: If you're drawing heavily on (Inaudible) to say that in 48 Congress enacted by implication the decision of the District Columbia Court of Appeals. That's it talking a little far --
Jerome M. Feit: I -- I --
Felix Frankfurter: Re-enacted --
Jerome M. Feit: We -- as I --
Potter Stewart: At least the law wasn't conflict as of that date.
Jerome M. Feit: The law was, yes. And I might mention that the decision --
Potter Stewart: (Voice Overlap) --
Jerome M. Feit: -- in California was in 1926 the first one in 43, the second one. We think then that this ancient notion of marital unity cannot support the reading of conspiracy statute which the District Court has given it nor do we think that there are any policy considerations which would warrant such a reading in the statute. We think therefore that this Court should reverse the order of the District Court and remand the case back to that Court for further proceedings under the indictment. Thank you.
Earl Warren: Mr. Whelan?
Thomas Whelan: Mr. Chief Justice, members of the Court. I hope the Court won't mind of my stating that this, on the occasion of my first appearance before the Court where I addressed the Court in a case that I say that I feel rather good about coming here from San Diego to represent clients who are -- what we might call just the average ordinary person to come here in a contest with the United States Government itself and to be heard by this Court, we have all of the right of these two individuals being as fully recognized and as fully protected as the rights of the Government itself. But on Saturday evening I received an advanced copy of the reply brief of the Government and today I received the printed copy from the reply brief. And in this printed reply brief there are about two points raised. One being, that some consideration ought to be given to the proposition that because in 1948 following the decision by the Circuit Court of the District of Colombia that the Congress didn't make any exception in favor of husband and wife with reference to this conspiracy statute. There are a few notes that I've had made in that regard. I'd like to call of Court attention that this conspiracy Statute was – as has been stated here, first inactive in 1867. Now, for a period of approximately 42 years after that the statute was not changed or re-enacted and during that period of time there were judicial decisions of State Courts which held that husband and wife alone could not be guilty of a crime of conspiracy. One of which was the Supreme Court of the State of California in the case of People versus Miller which is referred to inside and I think a brief the appellants as well as the appellees. Again, this statute was re-enacted in 1909 and there wasn't any change made in the first six lines at least of the -- first six words of the statute. Then in 1940 when the statute was re-enacted into the criminal code 18 U.S.C. why there had been at that time the decision in the case of Dawson versus the United States which is a decision by the Court of Appeals of the Ninth Circuit which unequivocally held that husband and wife could not because of their common law unity constitute the two persons who could conspire under the federal statutes. And in 1940 when Congress re-enacted the statute it again used the same first six words, "If two or more persons conspire". Now, under the familiar rule of legislative re-enactment without change operates as an adoption of the prior judicial construction given to statute, we feel that Congress clearly intended that the conspiracy statute as it re-enacted in 1940 should not include husband and wife alone and that husband and wife were to be accepted from the provisions of the conspiracy statute. Now, the next decision of any moment was in 1943 in the case of Gros versus The United States and again the -- the Ninth Circuit affirmed the holding that husband and wife alone could not be guilty of the crime of conspiracy against the United States. And the first decision of the Federal Court was this case for Johnson versus the United States decided by the Circuit Court of Appeals of the District and that is referred to in the brief but I won't comment further on it, but it seems to me that that leaves as sort of a situation where if there's going to be any change in the law, the change ought to be made by the Congress and not by the Court. Now, I --
Potter Stewart: Mr. Whelan so that I could understand your position is to what the law now is, would you concede that there could be a criminal conviction of Mr. and Mrs. Dege, how do you pronounce your --?
Thomas Whelan: Dege is the way you pronounce it Your Honor.
Potter Stewart: If -- if Lucille Dege and Ernest Dege and John Smith had been indicted of a criminal conspiracy, could all three of them convicted?
Thomas Whelan: I -- I think that's correct Your Honor. I think all three because I think that the two Deges constitute one person at least under as the way I understand the Federal construction in our Circuit at least John Smith would be the other person and therefore there would be two or more persons and I think that both of the Deges if they were charged in such an indictment could be convicted.
Potter Stewart: Well, and though -- you said the one person, but each separately could be convicted if --
Thomas Whelan: Well, if I -- I would -- I would think so your Honor.
Potter Stewart: And each sent to separate prisons.
Thomas Whelan: Well, there actually are two physical persons but as a matter of the law they're one identity. I think Dege alone could be charged in a conspiracy with John Smith or Mrs. Dege alone, but two of them together with John Smith but not the two themselves alone. I think -- I don't think the Honorable James Carter would be flattered by the statement that he decided this on an ancient notion of marital unity. I think his words were that he follow the Circuit and that's -- that's what he did, but the -- I think that the things that have been argued here have been discussed pretty generally in this brief which we filed. There is one more thing that was raised in this reply brief which is a reference to the case of People versus Morton, this New York case where a husband was indicted for larceny of his wife's property and before the married women's statute of New York, he couldn't have been indicted. And I think that's what the Court says in their opinion, but all that -- this case says is this, that the New York legislature has the right to pass statutes which change the status of married people as to property rights differentiating from their status prior to those statues by the common law. And therefore when the statute says that the husband doesn't have any property interest in his wife's property that it belongs to her, he can be prosecuted for -- for stealing that property and it doesn't have any effect upon the marital unity or the marital relationship itself, it just has to do with that particular question of property that's involved and we have the same situation in California I believe in the footnote here they cite the case of People versus Gros right in 59 Cal. App. 706 which I -- wherever I start in 19 -- and that's a case where the an indictment was returned charging a man -- woman with the investment of her husband's property and forgery of her husband's name to require that property. And the demurrer and the motion set aside the indictment or sustained by the trial court, but reversed by the District Court of Appeals saying that the -- because that the property rights of the husband and wife weren't separate, the wife could be prosecuted for stealing the husband's property or forging his name. But at the same time that the District Court of Appeals was affirming this doctrine that it stated in People versus Gros, some years later in this Macmillan case the District Court of Appeals says, that husband and wife can't commit conspiracy in California and the rule was laid down in People versus Miller, but says that Justice who wrote that opinion the Supreme Court ought to do something about that or the Legislature ought to do something about it. In other words, if there was to be a change in the law and it was recommended that the Supreme Court or the Legislature take some action to declare the status of husband and wife so that there would be a positive statement again whether they could or could not be guilty of conspiracy.
Potter Stewart: This reference is to a California Supreme Court and not the Legislature.
Thomas Whelan: That is correct and the California Supreme Court denied the petition for a hearing which was asked by the prosecution in that case. And the legislature of course never accepted the invitation to declare that husband and wife could be guilty of conspiracy. Now, I think from the language of the Government's brief here that they're asking this Court to not only reverse the ruling of the United States District Court, but they're asking this Court to lay down a series of rules of procedure in the -- and the changed rules of evidence that have been a long time in existence and it seems to me that all of the problems that they raise in their brief are matters that ought to be addressed to the Congress and not to this Court. Although counsel can see no difficulty because of a ruling in the Hawkins case if this -- if this case was to be reversed here, it seems to me like there would be nothing but difficulty, there would be nothing but questions of the rights in some cases of a defendant even testifying for herself or himself that depending upon the objection of -- of the other party if often this to be given effect, well, I don't know where husband and wife would be if they happen to be adverse to each other at the time of the trial. And it seems to me that the -- the reasoning behind the decision in the case of Dawson versus the United States and Gros versus United States are well-founded and sound and that the Congress must have had the Dawson case in mind at least in 1940 and that the Congress impliedly approved the rule in the Dawson case and therefore that's what the statute means. It means, if two or more persons accepting husband and wife and what according to Dawson that's what -- that's what the statute means and the legislature -- or the Congress must have meant the some things when they re-enacted the statute in 1940, but the Government wants this Court to say is this. “If two or more persons including husband and wife conspire” and now, we feel, I certainly feel as a matter of correct procedure that if the changes to be made in the statute that are not to be made by the Congress and we respectfully submit the matter --
Potter Stewart: I just -- before you sit you down. I -- I don't quite understand your concern about the effect of the Hawkins decision (Inaudible) in this situation.
Thomas Whelan: Well, lets take this situation. If the Government should indict a man and his wife for the crime of conspiracy and then should indict the man for two or three more substantiative offences relating to the conspiracy, but not indict the wife as to those substantiative offences. If the prosecution put on the case -- the Government put on the case and it was a sort of a thin line proposition, the wife who was actually not guilty of any crime wanted to take the stand in her own behalf and testify in exonerating herself she might implicate her husband. Therefore, if he objected to his wife of his testifying as he didn't – would have a right to do under Hawkins she'd be precluded it would seem to me from going ahead and testifying on her own behalf, exonerating herself because of the objection he made. And that's a complication that it seems to me could have occur and what is to be done about it.
Potter Stewart: Well now, how would any difficulties be present and that situation that would not be present if they were both indicted and being tried or substantive offences for the same -- commission of the same substantive offence or conversely have in any problems to be present in your hypothetical case it wouldn't be present if Mr. and Mrs. Dege or has a -- a codefendant John Smith. But you've conceded (Voice Overlap) --
Thomas Whelan: Well, I think if they had a codefendant that this privilege of -- in favor the husband wouldn't -- wouldn't control the admission of the evidence there if she could testify against John Smith and she could exonerate herself and I -- I don't see how in that case that the husband could prevent her from testifying in -- on her own behalf. There might be some rule of evidence that would provide that the evidence wouldn't be considered admissible against the husband. I don't know how that would work out but I think that she could testify if there was a third defendant but if it were just her husband alone I rather doubt that she could.
Potter Stewart: Well, there is certainly at least to be questioned to whether or not she could testify, if there is a third defendant it would be effective for her to testify it would be adverse to her husband under the profits decision that that there at least would be a question.
Thomas Whelan: There would be certainly a question but I don't think the question would be as great as that she and her husband were alone indicted. Supposing they were just indicted on the conspiracy charge and she wanted to testify and her husband didn't want her to, wouldn't that create a problem?
Potter Stewart: Well, is there any difficulty about having a severance and having separate trials for conspirators even though you know there are only two conspirators?
Thomas Whelan: Well, I would think that as a practical proposition you never get separate trial.
Potter Stewart: Why not is there any difficulty about it?
Thomas Whelan: Well, as a practical the proposition there is I'm defendant a lot of conspiracy issues and I think in every case that made a motion for a severance and I have normally --
Potter Stewart: Normally that's the advantage of the defendants, isn't it?
Thomas Whelan: To have a severance, yes. If it can be obtained, but it's very difficult to obtain one.
Potter Stewart: That wouldn't be very evidentiary testimony or problems that you suggest and I -- wouldn't they give a reason for a Court of (Voice Overlap) --
Thomas Whelan: Well, yes. It --
Potter Stewart: -- discretion to grant separate trail.
Thomas Whelan: If -- if there would be pronouncement from the Congress or some direction or suggestion by this Court that the Trial Courts ought to grant severances in such situation it probably would mean they were able -- the severance would be easier to get and it would be beneficial to defendants --
Potter Stewart: In other words am I right in understanding that she -- you're suggestion is not the pocket which controls the disposition of the problem in this case but that in view of Hawkins their would be practical difficulties in trying husband and wife together as co-conspirators, is that it?
Thomas Whelan: That's it, but I don't say that Hawkins doesn't control the decision in this case. Because it seems to me that Hawkins goes far enough to say that as a matter of public policy that marital unity ought to be preserved and for that reason husband and wife should not -- should not be permitted to testify against the other over objection. And if that's good reasoning then husband and wife should not be joined together as conspirators because in such a case is that very unlikely there would be a separation between husband and wife. One would blame the other and it would result in a widespread differences and the breaking up for that particular home and would have a tendency to -- to cause that effect in every case where two parties, husband and wife alone were conspirators, I think just as it would cause difficulty as set by the Supreme Court in Hawkins case where a wife testified against her husband or vice versa.
Earl Warren: Very well.


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: Thank you. 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. As we have mentioned, there was no evidentiary hearing, the court simply denied intervention and the case comes before this Court on a writ of certiorari to the Fifth Circuit. And we believe that the courts below have erred in three ways. First, we believe that under Rule 24 (a) of the Federal Rules of Civil Procedure, Donaldson had an interest which was not adequately represented or protected, and therefore, he should have been allowed to intervene under Rule 24 (a) (2). Secondly, this Court in its decision of Reisman versus Caplin, specifically approved taxpayer intervention in third party summonses enforcement proceedings in order to allow the taxpayer an opportunity to challenge and improper use of a Section 7602 summonses, and therefore, under the Reisman case, Donaldson was also a proper party to the enforcement proceedings. Finally, Section 7602, the Section of Internal Revenue Code under which this summonses is issued, does not authorize the use of an administrative summonses to conduct criminal investigations and therefore Donaldson would've had a proper defense had he been allowed into the District Court.
Byron R. White: What if he -- what if it had a, would you be here, would you still be wanting -- I suppose you would still be asserting that you would have a right (Inaudible)?
Robert E. Meldman: Yes Your Honor. I think we would. I believe that to determine the merits of a defense prior to allowing an individual to litigate his defense would be premature.
Byron R. White: Well, why do you urging here, (Inaudible) intervention point or that the -- or that if you are in then you would've had a defense?
Robert E. Meldman: Your Honor, the way this case came up, we had filed our petition for a certiorari on the intervention question. The court below, the Fifth Circuit had denied intervention because we could not have won even if we were allowed in. And at the suggestion of the Solicitor General, both the defense and the court itself has now raised as well as the intervention question. It's very difficult in this case to adequately discuss the defenses that could've been raised since we have no record, there is no evidentiary hearing, there?s no testimony whatsoever and we prepared our brief, we did it in an objective manner.
Byron R. White: Was your position that if he -- if you're right, if we think you're right on intervention, and hold your right on intervention, we should remand without reaching the other -- any other question or not?
Robert E. Meldman: Your Honor, I would hope that you would reach the second question in our case. However, if the Court chose not to --
Byron R. White: On whether the administrative summonses can be used when there's a criminal prosecution in the background?
Robert E. Meldman: Yes, Your Honor. As a practical matter or possibly, what we?re trying to say is true, if the Court does not reach the second issue intervention, maybe meaningless back in the District Court. However, I think there are other cases pending that this Court may review that to -- maybe better vehicles for decision on the improper purpose. As I was saying, we believe there's a number of ways we can reach the intervention question. The first would be under Rule 24 (a) of the Federal Rules of Civil Procedure. Under that rule where an individual claims an interest in the subject matter, disposition of the action may as a practical matter impair or impede his ability to protect that interest. And the existing party does not adequately represented his interest, he is to be allowed to intervene in a proceeding in the District Court. Now, recently Rule 24 (a) was amended so as to eliminate two requirements that previously existed. First, that the movement be bound by a decree in that action. And secondly, that he have either a legal or equitable claim in the property. I believe under Rule 24 (a) (2) as its now amended, this taxpayer meets the tests of the Rule. The subject to the Internal Revenue investigation is the taxpayer?s affairs, a matter I think in which every taxpayer has both the legitimate and substantial interest. This interest would clearly be impaired if improper investigative procedures are utilized to go about making an investigation. And finally, I think it?s clear even on the limited record we have here that the third parties who were participants in the District Court action had no interest in defending any of Mr. Donaldson?s rights nor challenging the summonses. They were willing to comply with whatever the court ruled, both in the District Court, Court of Appeals and it assumed from this Court. I think in the context of this test, they limit intervention where a taxpayer has a proprietary interest or a privilege relationship in the summonses material would be improper. Donaldson is protesting the procedures being used to investigate him and not the ownership of the documents that are sought by the Internal Revenue. In this case, we really only have two interested parties. We have Donaldson on the one hand who has attempted to prevent disclosure of information through improper procedures. The United States on the other hand, was trying to require disclosure of information under what they claim are proper procedures. The third party who was the litigant in the District Court really has no interest in which side wins. The second test I think --
Byron R. White: (Voice Overlap) Is it your suggestion that if United States is investigating a criminal case and it goes to some third parties who had some documents that belonged to them, but the documents are irrelevant to their investigation that have -- they shouldn?t be able to take those that -- those third party should not be permitted to voluntarily to hand over those documents to the United States unless you have some opportunity to litigate about it?
Robert E. Meldman: No, Your Honor, we would have no objection to a third party voluntarily turning the papers over. Our objection --
Byron R. White: In this case, if the third parties had simply said, if you want these papers, we?ll give them to you. You wouldn?t claim you would have a right to go in and get an injunction against turning the papers over?
Robert E. Meldman: Well, Your Honor, the way the request is made in Internal Revenue Service investigation is that the agent will make an oral request under Section 7602. He will use this as his guide.
Byron R. White: So you're really making a purely statutory argument --
Robert E. Meldman: Yes Your Honor.
Byron R. White: -- without any constitutional overtones at all?
Robert E. Meldman: No, Your Honor, I don?t believe there are any constitutional claims here. I think if you would have a situation where a Government agency would simply walk in and ask for some papers and the third party would voluntarily turn them over, I don?t think that we would have a situation where we?d have an objection. As we pointed out in our brief, we think that there are other means to get these records. We?re not really objecting to their investigation, but rather the means in which they?re going about it.
Speaker: Well, you did get an injunction here against the third parties turning them over?
Robert E. Meldman: Yes Your Honor we did.
Speaker: Or a restraining order.
Robert E. Meldman: Yes, it was a restraining order.
Speaker: The third party was perfectly willing to turn them over?
Robert E. Meldman: Yes, Your Honor. the request however again was made under the statutory authority.
Speaker: But it does ensure even though it?s a statutory argument, doesn?t your position go to the length of saying that any administrative summonses proceeding under these Sections, you have an automat -- a third party, the person whose records was invest -- who was a subject of investigation has a right to intervene at the threshold because his interest is not being protected?
Robert E. Meldman: Yes, Your Honor. I think that would be a correct statement.
Speaker: Yes. That?s what I thought. It?s the broad proposition you?re arguing?
Robert E. Meldman: Yes Your Honor. I believe this is --
Speaker: And these other subsidiary questions as to the construction of the Section itself and the -- are matters that are to be determined after you?ve once intervene?
Robert E. Meldman: Yes, Your Honor. I believe that would be correct to the view of our case.
Speaker: Yeah.
Robert E. Meldman: We believe that when this Court considered this issue which it did in the Reisman case that -- this was the interpretation that the courts had given. If the Court will recall in the Reisman case, a special agent had issued a summonses to a taxpayer?s accountant for a work papers and some documents. The taxpayer?s attorney brought an injunctive action against both the accountant and the Commissioner of Internal Revenue. Going to the District Court -- Court of Appeals? level, each level had a different theory for denying taxpayer the right to restraint. When it came before this Court, this Court simply said that what they're asking for is equitable relief. There's an adequate remedy at law, therefore, we dismissed the suit against the Commissioner of Internal Revenue and the accountants. However, the Court went further and I believe that the Court could have stopped at that point had they not wanted to examine the entire procedures under which summonses are issued in Internal Revenue investigations. And it's our believe and the Court of Appeals for the third the -- in the Sixth Circuit agree with us that upon this examination, the Court found that the proper procedure to be used would be for a taxpayer to intervene in an enforcement proceeding. Now, the Court went on there and said, ?Should you have a willing third party such as Peat Marwick, the accountant in the Reisman, obviously the taxpayer wouldn?t have no opportunity to raise any defenses if they voluntarily turn the records over.? So the Court suggested the procedure to be followed in a situation like that, was to restrain that third party and thereby triggering an enforcement proceeding into which the taxpayer could then intervene and have a -- have an adversary hearing and this is a procedure that we?ve attempted to follow in this particular case.
Warren E. Burger: But if the third party, Peat Marwick for example, delivered the documents or made them available on a simple request, the taxpayer would be denied the kind of protection you're arguing for, wouldn?t it?
Robert E. Meldman: Your Honor that maybe true, however --
Warren E. Burger: Peat Marwick might loose a client, but that would be the only sanction, wouldn?t it?
Robert E. Meldman: Your Honor, it?ll probably be so. As a practical mater the only reason than an accountant or a bank or anyone would turn these records over to the Internal Revenue Service is because of the statutory authority that has been built up and the exposure that it gets and an accountant is well aware of 7602 and its sanctions. There can be a contempt if there is a malicious refusal. This is the reason that these people turn the records over. There have been instances such as Your Honors has pointed out which we?d call a soft summonses where a special agent will come in and say, ?You know, I have the authority under the Internal Revenue Code to demand records with a summonses. Now, I won?t bother with this piece of paper, just give me the records, I?ll give you a receipt? and this is not an uncommon situation. Now, we don?t believe that the spirit of the law and the ruling of this Court can be simply pushed aside because the agent doesn?t mention a statute and I think as a practical matter this is what's happening.
Warren E. Burger: What do you do about the situation that I set up? Do you -- you would say there is any remedy?
Robert E. Meldman: Well, Your Honor I believe that this Court would find as we have urged them to do that Section 7602 summonses cannot be used in criminal investigations, that the matter would as a practical sense resolve itself since the special agents are the ones issuing this summonses, we have no objection to a summonses by a revenue agent in a civil audit and I don?t believe that there has ever been any controversy on that at all and I don?t think that any taxpayer ever objects to it.
Harry A. Blackmun: Where however do you draw the line, the moment the special agent steps into the picture?
Robert E. Meldman: Yes, Your Honor. I believe this would be the line. We base this on the fact that this is where the Internal Revenue Service has separated its civil and criminal investigations. For example in 1968, they made a public announcement that the purposes of the special agent were to investigate criminal tax fraud. That henceforth this special agent must issue Miranda warnings to the taxpayer upon his contact. Thirdly, their internal regulations separate the functions at this point in time. They say that all civil aspects of this case must stop when a special agent enters the case. For this reason, this is where we believe that the line should be drawn. We might -- may point out to the Court that in the past few months, the Internal Revenue Service has now turned to using regular search warrants by their special agents.
Harry A. Blackmun: Well, isn?t much of that though countered by Miranda and the new ruling? In a sense this is all new, special agents have been used for years and years and years and these arguments had never appeared before?
Robert E. Meldman: Your Honor, I believe that, as we have pointed out in our brief at page 29 in the green cover, the regulations that govern the functions of the special agents change. The case most prominently cited by the courts is Boren versus Tucker saying that there really is no distinction and the regulations existing in 1956 give a very at best grey area between their functions. However, the regulations were changed in 1966 and now under the regulations, the special agent has but one function, to investigate criminal cases. He is not responsible in any manner for either civil penalties or civil tax or civil determinations of any kind. And we have made a comparison at page 29 of our brief of the two regulations. I think this is a critical difference that has come about as you say within the last few years. I might also point out to the Court in this connection that there is a specific section of the Internal Revenue Code, Sections 7608 that authorizes the special agents to use a search warrant and he need not go outside of the scope of the Internal Revenue Code to find this. Now, we believe that an examination of the history of Section 7602 and the purposes for which it was issued makes it clear that this was meant to aid the Internal Revenue in determining correct tax liability, not to allow the Internal Revenue Service to conduct criminal investigations. There maybe instances during the pendency of a criminal case where a tax liability may be unnecessary element. However, we wish to the -- point out to the court that, for example in this case, where the investigation is for alleged failure to file that there is no need for a civil tax liability to be determined and we don?t feel that this is truly the function that the special agent here is meeting. The second alternative they?ve suggested, by the Solicitor General would be a suppression. He said, ?This maybe an adequate remedy. Allow the summonses to be enforced and then if and when there is a criminal prosecution, the taxpayer could then bring a suppression action.? I would like to point out two things to the Court on this point. First, I think suppression is a very drastic remedy. By its very nature can be employed only limited circumstances. The issuance of the summonses if it?s invalidly issued, I don?t think it would be proper under a Section ? a Rule 41 (e) motion. If it was issued for an improper purpose, this too may not be a proper 41 (3) motion for suppression. Secondly, we believe had this Court believed that the proper procedure to be followed was suppression that it could've done away with the entire scope of the Reisman opinion, simply denied that taxpayer of relief and stopped and said that any time a summonses is issued for any purpose whatsoever, let the summonses be complied with and let suppression be the remedy. However, I think it's a very impractical test to use. Many times as the Court well knows when you get to the suppression, evidence has been commingled and there's no way to marshal one from the other. I think if the Court determines and sets down a specific point in time when this summonses can no longer be used that the controversy that?s going on throughout the country will come to an immediate stop. And we will have no longer a problem if a special agent trying to use a civil summonses for the criminal case. Now, I think this is --
Byron R. White: You would take the same position if the third was summoned to give a testimony?
Robert E. Meldman: Yes, Your Honor. I think the same thing would be true.
Byron R. White: You would have them -- you would want to write and sit there and make sure they didn?t ask you to make a question which went beyond this -- the proper use of a -- of 7602?
Robert E. Meldman: Your Honor, I would believe whether we would request that at the administrative level, I don?t know. I would have to say as a practical matter, we?d have to go with the faith of the Government. The only determination we can ever make is that when a special agent comes in that they have now started a criminal case. There are rare instances where a civil agent is used to (Inaudible) but I think is a very rare instance and I think most taxpayers would take the position that if a Revenue agent wanted to question the third party, they?d have no objection at all.
Byron R. White: Yes, but if he wanted the summonses in, I mean, actually --
Robert E. Meldman: A Revenue agent wanted to summon a third party, I don?t think the taxpayer would object. If a special agent attempted to do this, then we think that what he?s doing is in essence usurping the power given to the grand jury.
Byron R. White: But you should think that at soon as a special agent does it, you should be there to listen to the questions?
Robert E. Meldman: Your Honor, I believe that if a special agent issues the summonses, the third party should not be complied -- compelled to comply with it.
Byron R. White: I see.
Warren E. Burger: We?ll take that up after lunch, if you want to enlarge your answer.
Robert E. Meldman: Thank you.
Warren E. Burger: Do you want to continue with your argument in chief or do you want to save the rest for rebuttal?
Robert E. Meldman: (Voice Overlap) --
Warren E. Burger: You have a -- let?s see how much, you?ve got 5 minutes left.
Robert E. Meldman: I?ll reserve it if I may.
Warren E. Burger: Fine, very well. Mr. Wallace.
Lawrence G. Wallace: Mr. Chief Justice and may it please the Court. This case case is here in the form of a denial of intervention affirmed by the Court of Appeals and we have briefed and are prepared to argue the issues involved partly with reference to general principles of the law of intervention. But the manner in which the case arose suggests that the substance of what is at issue is no ordinary question of intervention at all. This has been illuminated to some extent by questions from the bench but I believe that it will be helpful to make this analytical framework explicit. The court proceeding in which the petitioner seeks to intervene is in effect one that he himself created. There would have been no summonses enforcement proceeding in the District Court and indeed no judicial proceeding of any kind in which the petitioner or anyone else could seek to intervene had the petitioner not secured from the District Court a preliminary injunction restraining the witnesses summoned by the Internal Revenue Service from complying with the summonses until ordered by a court of competent jurisdiction to do so. The record shows they were willing to comply with the summonses and but for that preliminary injunction, there would have been no occasion for an enforcement proceeding. So the petitioner in one important sense understates the case when he contends that he is the real party in interest in the enforcement proceeding. There is simply is no issue in that proceeding other than the question whether the petitioner will be permitted to intervene. And if so, whatever issues, he will be allowed to raise. In other words, the case in substance involves nothing but an attempt by the petitioner to secure judicial interference with the conducting of an Internal Revenue Service investigation, an investigation relating to his tax liabilities, but directed in this instance only to third persons and to records that are not his and that do not embody any confidential communication, whose disclosure he claims, he is legally privileged to prevent. On this view of the case, it is difficult to see why the petitioner stands on any different footing from that of any other person who wishes to prevent or interfere with an investigation of third persons by Government officials because he fears that the investigation may eventuate in the bringing of civil or criminal proceedings against him.
Warren E. Burger: Mr. Wallace, are you suggesting that if the material is material which could be secured by a subpoena duces tecum in a tax fraud case or by other discovery processes, does that automatically mean its available under an administrative subpoena or summonses?
Lawrence G. Wallace: Well, there is an issue if indeed there are parties who have raised it here that the -- the first issue is whether there's any right and the petitioner intervene to raise this -- the 7602 issue. That that is the statutory issue under 7602 that I believe you would have posed.
Warren E. Burger: But I thought you?ve started out by saying that intervention is not the real issue here that lurking under this issue is --
Lawrence G. Wallace: It?s really a question of whether ? and this is in effect a form of his trying to enjoin the use of the summonses here. It comes to us in the form of an intervention, but in effect the proceeding was began by his application for the restraining order. There --
Warren E. Burger: I don?t know what his -- what your friend?s position would be on it, but he might answer the question I put to you by saying that even if, even if this would be available upon a subpoena served after they were in trial or just before a trial in a tax case, that doesn?t mean that its available for the investigation on preparation of the tax case against him. That?s the point I?m trying to address (Voice Overlap) --
Lawrence G. Wallace: Well, that is the contention that he is trying to make here, that it is not available in the investigatory stage and we answered that both in our brief and I propose answer it in the argument, but I think first, there is this preliminary question whether he has any right to raise it at all at this stage of the proceedings in his effort to enjoin pro tanto the investigation by preventing this particular summonses from being enforced.
Warren E. Burger: Well of course as a practical matter, if he can?t raise it now, raising it in any other occasion as somewhat academic, isn?t it, after the cat is on the bag?
Lawrence G. Wallace: Well, there is the question of whether the fruits can be introduced against him if and when a civil or criminal proceeding is ever brought against him. No such proceeding has ever been brought that this is an anticipatory suit on his part.
Warren E. Burger: Well --
Hugo L. Black: What is the issue to be decided in the hearing? You say there's a hearing?
Lawrence G. Wallace: He has thought a hearing --
Hugo L. Black: I?m not talking about in the court. I?m talking about when you take it before the Internal Revenue officer, what is the issue before him and do they take evidence?
Lawrence G. Wallace: Oh! In the summonses proceeding itself?
Hugo L. Black: Yes.
Lawrence G. Wallace: Yes. The witness is summoned to bring with him records to be produced which is what is at issue here and also he sometimes is asked questions, usually questions concerning those records. The witness is usually a bank or an employer or a corporate official who will have records bearing on the possible tax liability of a third person when the witness isn?t the taxpayer himself.
Hugo L. Black: Of course if it is a grand jury, he couldn?t hope to intervene but I -- what is the authority of the commissioner to hold a secret hearing which involves another man?s faith and decline to let him om, that is logical?
Lawrence G. Wallace: Well, the authority is in Section 7602, if there's a question of statutory authority. It is not very different from the authority of a police officer who just goes into a business office and questions someone to get information to see whether there may be a violation of law that --
Hugo L. Black: Yes, but here, because they issued a summon and have a secret hearing, do they?
Lawrence G. Wallace: Yes. The summonses, it?s a form of subpoena. That is a form administrative subpoena very similar to what the Securities and Exchange Commission issues and the Federal Trade Commission --
Hugo L. Black: I know, but did you give (Voice Overlap), does his complaint where he wants to intervene so that he is an object of investigation and that secret hearing?
Lawrence G. Wallace: Oh! Not only his complaint but the summonses itself says that the purpose of it is to get information relating to his tax liability. There's no dispute about that.
Hugo L. Black: And he asked to intervene?
Lawrence G. Wallace: He asked to intervene but in a judicial proceeding that he has brought in effect.
Hugo L. Black: Is this a judicial proceeding?
Lawrence G. Wallace: Well, he has brought a judicial proceeding.
Hugo L. Black: Well, in his judicial --
Lawrence G. Wallace: He hasn?t -- he never asked to intervene in an administrative proceeding. He asked that the records not be produced. He asked to interfere with it.
Hugo L. Black: Well, that -- not to (Voice Overlap) with the proceeding, isn?t it?
Lawrence G. Wallace: He didn?t asked to be present to question the witness. He asked that the witness be restrained from attending it at all. He said that the whole thing is improper and can?t be had.
Hugo L. Black: He didn?t ask to be permitted to be there?
Lawrence G. Wallace: No, he didn?t. That is not his request. He is not trying to intervene in an administrative proceeding. He is trying to prevent the summonses at all. He says that it can?t be issued, there can?t be any inquiry. That is his contention.
Hugo L. Black: On what ground?
Lawrence G. Wallace: On the ground that its unauthorized for the Internal Revenue Service to inquire about someone?s income, if the inquiry may lead to criminal proceedings later on if they find out that he is fraudulently understated his tax. That is his contention. Now, the courts have --
Speaker: However, but not yet with merits. Of course the (Inaudible)
Lawrence G. Wallace: Well, he upheld the denial of intervention --
Speaker: For the lack of standing?
Lawrence G. Wallace: For lack of standing but he did say that the standing question to some extent implicates whether what alleged in the motion to intervene would be any ground for refusing to enforce the summonses. He looked to see what interest was being alleged in deciding whether there was standing. It is a form of a standing question.
Hugo L. Black: What kind of proceeding is this at the moment, Internal Revenue Service, what -- how would you designate it?
Lawrence G. Wallace: Its just a subpoena that he wanted someone to produce records so he could examine them and that?s done by having the man bring the records to him and if he sees something there that he thinks is of importance, the Internal Revenue Service reproduces the record, makes a copy of it and then gives them back to him.
Hugo L. Black: (Voice Overlap) does a statute authorize that he bring in the witness in the secret hearing?
Lawrence G. Wallace: Well, that the statute doesn?t specify that and --
Hugo L. Black: Is that what the Government claim, that they have the right to do that?
Lawrence G. Wallace: Well, that?s not at issue here. We?re not resisting any effort of the taxpayer to attend the hearing. In fact, counsel for the taxpayer just said he didn?t want to attend the hearing. Just before lunch, he said that he had to rely on the good faith of the Government. So that?s not at issue here. The only thing that is at issue is whether the -- he can prevent the Government from subpoenaing the records at all. That?s his claim that the Government has no right to subpoena the records at all. Now, this is the kind of anticipatory challenge by someone not yet directly affected by an investigation that the courts have generally refused to entertain with regard to any kind of official investigation. The general rule in our view and we recognize that there are exceptions to it, but the general rule whether articulated in terms of standing or of ripeness or of adequate remedy at law has been that such challenges should be made in the form of a motion to suppress or in other proper objection to the use of the fruits of the investigation when and if civil or criminal proceedings are actually brought against the complainant. And one consideration underlying this general is the prejudice to the public interest that would result from unwarranted interruptions and postponements of official investigations. To cite only one example, statutes of limitations would continue to run while possibly protracted litigation might take place concerning the manner in which the officials were attempting to conduct their investigation. And this general rule is also intended to protect the courts against unnecessary impositions on their time by the bringing of anticipatory and piecemeal litigation by persons who may never be harmed and who will have adequate opportunities to assert their claims if and when they are directly affected. And indeed judicial economy is also a significant consideration in the law of intervention itself. For example, on pages 14 and 15 of our brief, there is a quotation from a recent thoughtful opinion of the Court of Appeals here in the District of Columbia on the subject of intervention. In Smuck against Hobson, and with the Court?s permission I?d like to read the first sentence of that quotation which says, ?The decision whether intervention of right is warranted does involve an accommodation between two potentially conflicting goals to achieve judicial economies of scale by resolving related issues in a single lawsuit and to prevent the single lawsuit from becoming fruitlessly complex or unending. But in the present case, both of these considerations are on the same side of the balance and the side opposing intervention. Instead of seeking to consolidated lawsuits, the petitioner here is attempting to proliferate them, not only by inducing the present summonses enforcement proceeding, but also as we show in our brief in footnote 8 on page 23, by inducing similar proceedings in the District Courts in the Eastern District of Louisiana and the Southern District of Illinois in which the same issues were raised in an attempt to intervene against subpoenas of other witnesses who have records bearing on Mr. Donaldson?s tax liabilities. If there are counterbalancing considerations favoring intervention or favoring standing which may be the more accurate way to put it, they must inhere and whatever interest of his that the petitioner claims would be adversely affected by compliance with the subpoenas. And we believe therefore that the Court of Appeals correctly analyzed this case as turning on the nature of the interests the petitioner is asserting and how those interests would be affected by compliance with the subpoenas and we contend that the court correctly concluded that the interests asserted are not sufficient to bring the petitioner within any proper exception to the general rule against interference with investigations of third persons.
Byron R. White: And this would be -- I take it your position is, it wouldn?t make any difference what they were investigating for except, let's assume admittedly they were pursuing a criminal investigation?
Lawrence G. Wallace: Well, if that is improper and if the fruits of that are ever sought to be used against him, that?s the time when he maybe permitted to raise that issue.
Byron R. White: Well, would you suggest that --
Lawrence G. Wallace: And fewer than half of these investigations --
Byron R. White: Would you suggest -- well, I know, but would you suggest that it would be improper?
Lawrence G. Wallace: No, our suggestion is quite the contrary that it?s an investigation into whether there has been fraudulent understatement of taxes which involves both civil and criminal implications. And --
Byron R. White: So you're saying it?d be quite alright for the Congress to arm the Internal Revenue Service with a invest -- with a coercive investigative powers in criminal tax cases that may not be available in other kind of criminal cases?
Lawrence G. Wallace: Well, this is not in the criminal case. There's no pending criminal case. It's just an investigation.
Byron R. White: I just asked you -- I know, well, I mean if -- but --
Lawrence G. Wallace: This is not unusual.
Byron R. White: What they're investigating is whether or not there is a criminal liability, assume that that?s their only --
Lawrence G. Wallace: As well as whether or not there's a civil liability or possibly no liability at all. It?s the same thing that the Securities and Exchange Commission investigates with their subpoenas, this is not unusual. It's -- there's Federal Trade Commission subpoenas.
Byron R. White: But you're quite willing --
Lawrence G. Wallace: This is the nature of investigation. You see --
Byron R. White: You're quite willing to take this position even though you say, ?Yes, we are investigating to see whether there is criminal liability or not, although we?re also investigating civil liability.?
Lawrence G. Wallace: Of course, that is the duty of the Internal Revenue agent to conduct the investigation, see what the investigation discloses and whether he should recommend a criminal prosecution or that a civil penalty be assessed or that no action be taken. Or possibly both the criminal prosecution and the civil assessment and then his recommendations are reviewed and sometimes overruled.
Byron R. White: But you would argue that if there was some objections to these records at the trial that they should be overruled if the only objection is that they were coercibly sought before any case was filed?
Lawrence G. Wallace: Each -- I agree with that contention. It should be overruled if that is the only basis for the objection, but I also say that that is the kind of objection that only someone with an interest of the rec -- in the record should have the standing to make at that stage in the first place, at the investigative stage in the first place.
Warren E. Burger: When you say an interest, do you really mean a proprietary interest, don?t you?
Lawrence G. Wallace: Or a privilege.
Warren E. Burger: Privilege or proprietary?
Lawrence G. Wallace: That is the kind of interest that was involved in Reisman against Caplin.
Warren E. Burger: He has a general interest certainly in this information, in a broad sense. He obviously has a general interest in not letting the Government see it, but what you mean is to narrow down proprietary or privileged interest.
Lawrence G. Wallace: That is an interest in the records themselves, yes, a proprietary or privileged interest in the records.
Warren E. Burger: Would Section 7602 in this process be the means by which internal revenue agents would go to a bank and find out the total amount of deposits that a taxpayer made and how much he paid in interest for example to see if he had a basis for his deductions?
Lawrence G. Wallace: That is very frequently the case. In fact, very often, the bank will supply such information upon informal request and if a summonses is issued at all, it is more or less simultaneously issued to be put in the files against the possibility of a future complaint that the bank needlessly turning over their -- the records to a government investigator. This is the method in which these investigations are made and it has been for a very long time. We?ve traced the genesis of Section 7602 in our brief and it has always been used in this manner and as Mr. Justice Blackmun suggested from the bench, this use has never been questioned until very recently. There were no cases under the 1939 Code when the provisions explicitly said that the summonses could be used for fraud investigations. We show that this has been consolidated now into one provision and it means the same thing, but there were no cases at all challenging this on the basis of a criminal purpose argument. The only issue that ever arose was the issue that this Court settled in the Powell case, that there need not be a showing of probable cause in order to obtain enforcement, but no one ever claimed that because of the possibility of criminal liability, this process couldn?t be used at all.
Speaker: Under view of the Rule 24, the intervention doesn?t come to play at all?
Lawrence G. Wallace: Well, it is a useful reference. I don?t think that the issue would be essentially different if we happen to be in a case in which the witness himself had interposed an objection and an enforcement proceeding had been brought and then the petitioner without having induced that proceeding tried to intervene in that proceeding, it just seems to me that the way this case arose highlights what's really involved here and that the operative consideration is the stage of the proceedings at which he is trying to assert his interest and the kind of interest he is trying to assert. And that it seems to me why Rule 81 says that the Rules are applicable in these proceedings to enforce a subpoena only insofar as in the discretion the District Court thinks the rule is a proper guideline in the case. We argue in terms of the rule, but the case is not really a conventional intervention case and I don?t think it?s a case about the Law of Intervention as such.
Hugo L. Black: I understand on his application, I have just read, he seems to be asking for more than that, I understood you to say. Didn?t he ask to intervene in the administrative proceeding where this witness was going to be examined?
Lawrence G. Wallace: No, he?s application was to intervene in the enforcement proceeding in the District Court, that?s his application --
Hugo L. Black: (Voice Overlap) --
Lawrence G. Wallace: To intervene in the enforcement proceeding and asked the judge not to enforce the summonses, not to let there be a subpoena.
Hugo L. Black: (Voice Overlap) he asked the District Court to protect him against the Government?s action in that subpoena, did he not?
Lawrence G. Wallace: He, I mean he first got a temporary restraining order telling the witness that he couldn?t comply with the subpoena until ordered by a court to do so. And then, the summonses enforcement proceeding was brought and that?s what he wanted to intervene in to prevent the court from ordering the witness to comply with the summonses. His whole contention is to try to get the witness not to comply with the summonses, that there cannot be any summonses.
Hugo L. Black: I thought his contention in his complaint was that he wanted to intervene in this place?
Lawrence G. Wallace: In the --
Hugo L. Black: To protect his interest.
Lawrence G. Wallace: No, that is not what he asserted. He said before lunch that he did not wanted to attend the administrative hearing as such, but that he?s never made that claim, Mr. Justice Black. He?s claiming only that its improper to have a summonses of this kind of a witness at all.
Hugo L. Black: Well, is it the Government?s position that an Internal Revenue collector has a right to summon somebody, make out a case against defendant and not let the person who is the contemplated defendant get into the hearing?
Lawrence G. Wallace: I frankly don?t know the answer to that question Mr. Justice because it is not at issue in this case and I -- I?ve never had any occasion to look into it.
Hugo L. Black: But it rather looks to me like it is, on the pleadings?
Lawrence G. Wallace: Well, that?s not the way we understand the case.(Voice Overlap) --
Hugo L. Black: Was he not --
Lawrence G. Wallace: That that isn?t what he?s asked to do.
Warren E. Burger: Was he offered an opportunity to --
Lawrence G. Wallace: Well, no one has ever offered an opportunity. No one has ever notified of a summonses. It's only through, sort of a haphazard situation that someone other than the witness knows that a summonses has been issued. This is true also if administrative procedure, subpoenas and the agencies. The Securities in Exchange Commission for example issues a subpoena to a bank, doesn?t notify anyone else about it and if the bank produces the records that are asked for, that?s that. This is not a hearing, all this is, is an investigation.
Hugo L. Black: I thought it was a hearing?
Lawrence G. Wallace: Oh! No. The summonses is nothing but an investigation.
Hugo L. Black: Well --
Lawrence G. Wallace: That?s not a hearing.
Hugo L. Black: Well, I don?t know how you define a hearing. But if you summon a witness to come up before a man who is not a lawyer, he is not a judge, he is not a notary public ex officio justice of the peace and you summon in that to take evidence pointed directly to some individual, is it the Government?s position that he has no right to be there or knowing about it?
Lawrence G. Wallace: Well, as I say, that?s not at issue in this case, I don?t know what our position is. I really -- I don?t feel I should take a position on the spur of the moment on that question. I think it would be improper for me to do so.
Hugo L. Black: Well, that?s alright. At the present time, it looks to me like that is at issue?
Warren E. Burger: From your point of view Mr. Wallace, is this different in any way from the Government agency whether Treasury or FBI or others, calling on a person, a third person, for example a gun shop, they asked the gun shop to disclose its records to see whether they have sold a .38 caliber Smith & Wesson to a man who is under investigation, is this fundamentally any different from that or is it just essentially the same?
Lawrence G. Wallace: I think it's essentially the same that this is the kind of thing that a policeman does everyday when he questions people.
Hugo L. Black: Well, where does a policeman have authority to summon people in and --
Lawrence G. Wallace: Well, not through a summonses, but --
Speaker: Well, I understand here there's a summonses?
Lawrence G. Wallace: Yes, but its -- very little different, our law is that he is going to ask these question. As a matter of fact, usually these summonses operates not by having the man come to the Internal Revenue man at all, but the Internal Revenue man goes to the office and says, he?d like to see these records and the custodian of the records says, alright, here are the -- why don?t you look at the records.
Hugo L. Black: That?s alright, that --
Lawrence G. Wallace: -- the police give me a summonses to put in my file.
Hugo L. Black: (Voice Overlap) quite different, isn?t it? The summoning of person to come before a man who is not a judge, has no judicial capacity to give evidence which is to be used to convict a man of a crime, that?s the different?
Lawrence G. Wallace: That -- this is an evidence that can be used in the criminal case --
Hugo L. Black: Well, may be it can (Voice Overlap) I don?t know.
Lawrence G. Wallace: The records, -- the records can be introduced and he has a chance to object to the introduction of the records at the time of the trial. But --
Hugo L. Black: Well, I?m talking about the witness who is summoned?
Lawrence G. Wallace: No, but he -- well, he has a right to confront a witness before his testimony can be used against him. That?s the same as if the policeman asked somebody on the street something about him, then you have to bring him into court and make him say it again then have him cross-examined.
Hugo L. Black: I can?t quite understand why you say it?s the same, simply meeting the man on the street and asking him a question. You summon him up before a United States officer and ask him question, does he put onto oath?
Lawrence G. Wallace: I don?t know the answer to that, I assume he is.
Hugo L. Black: And somebody finds out that they are investigating it to the extent that they want to be there to protect --
Lawrence G. Wallace: No, he wants to stop it altogether. He doesn?t want to be there. He just wants to stop it. He says it can?t be done, that?s what at issue here.
Hugo L. Black: Well, that maybe --
Lawrence G. Wallace: That?s the only thing he -- that?s the claim he made.
Hugo L. Black: (Voice Overlap) --
Lawrence G. Wallace: Is that it can?t be done.
Speaker: I hope you're ? (Inaudible) a chance, (Inaudible) to give your views about the reasonableness.
Lawrence G. Wallace: Well, the reason in Kayes, yes, however its pronounced, I don?t know how the general pronounces his name, that involved an attempt to get from the accountant the working papers of the taxpayer?s attorney. And in that situation, there was a proprietary interest being asserted by the attorney and a claim of privilege that the taxpayer might to assert and in that situation, the Court said that the general method that was used by the petitioner here is the appropriate way to assert those interests. Now it just used general language, but I don?t think that it forecloses the issue of whether when there is no comparable interest in the records being disclosed, there should be any kind of anticipatory way that a taxpayer can prevent the investigation from going ahead or the records from being turned over, produced by a third person who was willing to produce them. I don?t -- our view is that the case simply did not itself to that question and the Courts of Appeals have differed as to the implications of the case. As to that question, our position is that this kind of anticipatory cutoff of the investigation can take place only at the behest of summon with that kind of an interest.
Speaker: What you're saying, I take it is that the broad language, if there is a broad language, in the displacement, has to be read in context to what the particular issue, wasn?t it?
Lawrence G. Wallace: Well, if that -- it -- I think so. I think that was the taxpayer and that was the would-be intervener that the court was referring to. And there the court did keep talking about how to assert their interests and that was the kind of interest involved.
Warren E. Burger: Would you say that the materials sought in the Reisman case was nearer to be being the kind in which the taxpayer had a proprietary interest than in the present case or less so?
Lawrence G. Wallace: Oh! It was much nearer to it. I think the taxpayer had a claim of privilege that may or may not have been a valid claim. But what was involved there according to the complaint was that the working papers of the taxpayer?s attorney which the attorney had turned over to the accountant and the accountant was being asked to produce them in the investigation and the attorney wanted to enjoin that claiming a proprietary interest in those papers and the court said that the attorney could intervene to assert that interest in a summonses enforcement proceeding and that the taxpayer could intervene to assert his interest which would have been a privilege interest, an interest in what would be disclosed there other than an anticipatory interest about possible future use that might be made of it.
Harry A. Blackmun: Mr. Wallace, is it your position that this may actually accrue to the benefit of the taxpayer to with if your investigation turns up nothing that then no criminal prosecution will ever be instituted?
Lawrence G. Wallace: Well, that is true. I always hesitate to say what may accrue to someone else?s benefit when he is supposing my position, but it certainly is true that in fewer than half of the cases in which full scale fraud investigations are made by special agents, are criminal prosecutions ever brought and yet in many more of the cases, fraud penalties are collected.
Harry A. Blackmun: (Inaudible) to your answer to Mr. Justice Black?s question as to whether the witness would be under oath to be that you didn?t know?
Lawrence G. Wallace: I believe he would be under oath, but I just -- I am -- frankly, I?m not very knowledgeable about the proceedings at the summonses.
Warren E. Burger: If so, that?s something new in recent years because in former years, there were -- they were not, they were merely a question.
Lawrence G. Wallace: Well, then perhaps that?s what it is. I -- I?m sure there?d be no oath taken in the business office when the Internal Revenue agent goes there and --
Hugo L. Black: Would you mind giving us a memorandum on that, I understood they have a way?
Lawrence G. Wallace: Alright, I would be happy to furnish you with the memorandum, certainly Mr. Justice.
Hugo L. Black: Well, on that particular point.
Lawrence G. Wallace: Yes, on that point.
Hugo L. Black: Because I didn?t, Judge --Mr. Judge -- Justice Clark said in the Reisman case, that however the Government concedes that a witness or any interested party may attack the summonses before the hearing officer and was a man to whom who was required to appear a hearing officer?
Lawrence G. Wallace: No. I believe that reference in the Reisman opinion is to the hearing before the judge or before a magistrate as to whether -- as -- at the hearing, that?s right, as to whether the summonses would be enforced. I believe he?s referring to the summonses enforcement proceeding.
Hugo L. Black: That?s right. Well, the hearing officer, not before the judge?
Lawrence G. Wallace: Well, it can be brought before a magistrate, this kind of enforcement proceeding.
Hugo L. Black: (Inaudible)
Lawrence G. Wallace: Although it?s usually brought before a judge.
Hugo L. Black: Well, I imagine he knew the difference between a judge and the hearing officer and he said before a hearing officer, they have them note it.
Lawrence G. Wallace: Not in the Internal Revenue Service. No sir.
Hugo L. Black: (Inaudible)
Lawrence G. Wallace: No, there are no hearings in the Internal Revenue Service. It?s not an administrative agency; it?s a part of the executive.
Warren E. Burger: Very well, Mr. Wallace. You have about five minutes left counsel.
Robert E. Meldman: Thank you Mr. Chief Justice. If I may possibly I can clarify some of the questions that were left open. In response to a -- your inquiry Mr. Justice Black as to whether or not the individuals are put under oath. There -- as a practical matter two procedures are followed. When a summonses is served, if it is served that the place of business, an individual is not formally sworn under oath then asked to give the records over. However, under the Internal Revenue Code, any information given to an officer of the Internal Revenue Service is considered to be the equivalent of being given under oath, since it is subject to a perjury charge if it is false whether he be sworn actually or not sworn. The Section of the Internal Revenue Code provides specifically for perjury charges. The second type of practical application is where an individual will be served with a summonses and requested to appear at the Internal Revenue Office, in office there. The reference to the hearing officer in the Reisman case as is indicated in further on in the case is to the agent that issued the summonses. He in essence conducts a hearing. I think as Justice Black pointed out, it?s an informal grand jury if you would with a one man grand jury sitting there and he proceeds to gather evidence and information. I might point out to the court that on page 9 of our appendix in the brown cover, the summonses reproduced and the beginning of the summonses reads, ?Greeting. You are hereby summoned and required to appear before me, an officer of Internal Revenue Service,? and it goes on. In the same style that a subpoena would be given. The summonses on the bottom makes note of the fact that failure to comply with these summonses will render you liable to proceedings in the District Courts and on the backside of the summonses, it proceeds to tell you, you can be found of contempt and fined up to a thousand dollars and so on. It?s a very commanding thing given to an individual on the outside. Judge -- Chief Justice Burger had asked whether the United States in essence is really saying that, had something else been used, the taxpayer would not have objected if the same information could've been gotten by a subpoena duces tecum. Oh! Mr. Chief Justice, I think that this is the nub of our case. We say that there are grand jury proceedings. We say that there are search warrants. There are many remedies available to the Internal Revenue Service. What we are objecting to is the use of this adminaturn -- administrative internal coercive summonses to take this taxpayer or take this third party and bring him in.
Warren E. Burger: Well, are you conceding that a grand jury could get this information without any difficulty?
Robert E. Meldman: Yes, Mr. Chief Justice. We have never denied that. We are strictly --
Warren E. Burger: Are you then suggesting as part of your total argument that if -- that Congress has no power to get it in this way that that leaves the enforcement aspect to calling people before grand juries, that?s what -- that?s where it would leave them, would it not?
Robert E. Meldman: I don?t believe so Mr. Chief Justice. A search warrant is the other thing that can be used and the Internal Revenue Service is now beginning to use that. This is what all the other law enforcement agencies use, is a search warrant. As to the question whether this is criminal --
Hugo L. Black: (Voice Overlap) may I ask you one question?
Robert E. Meldman: Yes.
Hugo L. Black: Before whom did you ask to intervene, before what agency?
Robert E. Meldman: Mr. Justice Black, it is not in the record that came up here. Originally a letter was sent to the agent that had issued this summonses, the Internal Revenue agents. We had objected to the issuance of the summonses by the Revenue agent and asked to either confer ahead of -- have a hearing with him. Because of what had happened in the past, our letter read if we did not receive a reply within 20 days, we will assume that you have rejected our request, this is what happened.
Hugo L. Black: Well, do you concede that you were not seeking some kind of an order to intervene before the hearing officer here in order to present your views before him?
Robert E. Meldman: Well, Your Honor, we were objecting to the summonses and be it before the hearing officer or otherwise. If the hearing officer would seat in the position where he could make a determination, whether or not that summonses was valid, we would have sought a full hearing there. We made a token attempt to make an intervention there if you would.
Byron R. White: But your issue is that he -- they aren't entitled to get the records at all by this mode?
Robert E. Meldman: By this mode? Yes. This is correct.
Byron R. White: And it wouldn?t satisfy you if the ruling was that, yes, they can get them, but you can be present after they get them?
Robert E. Meldman: I think this would be a great step forward Mr. Justice White.
Byron R. White: And it wouldn't satisfy you, that isn?t your argument here.
Robert E. Meldman: No, it isn?t.
Byron R. White: Yes.
Robert E. Meldman: I may tell you that.
Harry A. Blackmun: In effect, does the result of your position if it is upheld that 7602 is nullified for all practical purposes?
Robert E. Meldman: No, I don?t believe so. 7602 is to be used in investigating civil tax liability and checking a man?s income tax return and it should be left and they should have this power to verify deductions to see if proper interest has been reported and so on. We have no quarrel with that. Our --
Warren E. Burger: But sometimes really we know as a practical matter, that if the agent went by this process under 7602 and found out that the deductions that a taxpayer has been claiming for interest for a long period past, as a regular practice had never been in fact paid, that civil inquiry would lead very likely to a criminal prosecution, would it not?
Robert E. Meldman: That?s true Mr. Chief Justice, however, we have not even objected to the summonses in that case. We?ve only objected to the use of the summonses by a special agent after a referral to the Intelligence Division when he is making a full-scale criminal investigation. Our objection is that virtually now, the only use of these summonses and the Government admits this at page 30 into their brief is in criminal cases and not for the statutory authority that they were originally granted.
Harry A. Blackmun: Well, if that is so, then your position does mean that 7602 is nullified?
Robert E. Meldman: If they continue to only make this -- use of the summonses, yes it would.
Potter Stewart: Well, what -- the way to enforce your position I suppose would be to say that whenever a 7602 summonses is issued and responded to the taxpayer then being investigated cannot be criminally prosecuted, that would be the sanction to enforce your position, would it not?
Robert E. Meldman: Yes Your Honor and there have been cases cited in the brief, I believe Hinsky (ph) versus Clark which did just that. The District Court enforce the summonses with the provision that they could not be used in a criminal case.
Potter Stewart: Right, alright.
Warren E. Burger: Thank you.
Potter Stewart: Thank you.
Warren E. Burger: The case is submitted.