Opinion ID: 1472494
Heading Depth: 1
Heading Rank: 1

Heading: Unlawful Search and Seizure.

Text: The indictment was returned on August 4, 1927. The plea in abatement was filed November 7, 1927. An amended plea in abatement was filed in April, 1928. The government contends these pleas came too late, neither the plea nor the amended plea stating any reason for delay. We realize that such an argument can be based on Agnew v. United States, 165 U. S. 36, 17 S. Ct. 235, 41 L. Ed. 624, but serious constitutional rights being here involved we prefer to pass on the merits of the question raised. Three sets of circumstances are involved in the alleged unlawful search and seizure. First, that, following an invasion of the banking rooms of the Kansas City bank in December, 1925, by agents of the government holding commissions as land bank examiners and accompanied by secret service men, certain books, papers, and records of the bank disappeared, later reappeared in the files of the Treasury Department in Washington, and finally were sent back to the office of the United States District Attorney in Kansas City for the purpose of being used in procuring an indictment against these defendants. Second, that on the night of April 24, 1927, a room on the second floor of the building in which the land bank had its offices was entered by land bank examiners accompanied by secret service operatives and agents of the Department of Justice, and books, papers, and records, including some private papers of defendant Cravens, seized. These records and documents were removed the following day, after the issuance of a subpna duces tecum. Third, that throughout the months following December, 1925, the books, papers, and records still remaining in the land bank were being examined and milled over by agents of the Department of Justice, acting primarily with the purpose in view of bringing an indictment against these defendants. The Federal Farm Loan Board has complete authority under the statutes to bestow commissions as land bank examiners upon whomsoever it will, title 12 USCA § 951, and the powers of such examiners are not diminished by the fact of their being accompanied in their operations by representatives of another department of the government. So long as they act within their own powers, evidence secured by them may be diverted to officers of the Department of Justice, cf. United States v. Cooper (D. C. N. D. Iowa) 288 F. 604-611, reversed on other grounds 9 F.(2d) 216 (C. C. A. 8). It is provided by statute that the Secretary of the Treasury is hereby authorized to direct and use the Secret Service Division of the Treasury Department to detect, arrest, and deliver into custody of the United States marshal having jurisdiction, any person or persons violating any of the provisions of this section. Title 12 USCA § 986. One of the very purposes of periodic bank examinations is to detect illegality, and such examinations are not made illegal by the mere presence of agents of the Department of Justice commissioned as land bank examiners and secret service operatives charged along with bank examiners with the duty to enforce the banking laws. Joint-stock land banks as such are subject to the widest of inquisitorial powers, provided by the very act by which the banks themselves are created. Title 12 USCA § 952; title 12 USCA §§ 481, 484. This does not of course mean that bank examinations are beyond the pale of the Fourth Amendment, but it does mean that a bank which is really a public institution, cf. Cooley v. Bergin (D. C. Mass.) 27 F.(2d) 930, 931, 933, owes a positive duty to co-operate in its own examination. It is seldom that a complaint of a violation of the Fourth Amendment arising out of such examination arises. In Federal Trade Commission v. American Tobacco Co., 264 U. S. 298, 306, 44 S. Ct. 336, 337, 68 L. Ed. 696, 32 A. L. R. 786, Mr. Justice Holmes conceded, with regard to a limitation the Supreme Court had imposed on the inquisitorial powers of the Federal Trade Commission over ordinary private corporations, that the question is a different one where the State granting the charter gives its Commission power to inspect. We have been able to discover but one case of a prosecution under the national banking laws where the question of unlawful search and seizure was so much as raised, and in that case, Bacon v. United States (C. C. A. 8) 97 F. 35, the search and seizure complained of had occurred while the bank in question was a state institution. We entertain considerable doubt as to whether there was any real illegality in any of the circumstances complained of in the instant case, so far as the books, papers, or records of the land bank are concerned. Certainly there was no taint of illegality about the third set of circumstances complained of, viz., the examining of records which was carried on at the bank itself. Conceding however some irregularity to the sending of the bank's books, papers, and records to the Treasury Department in Washington, and to the seizure made on the night of April 24, 1927, there are reasons why defendants are thereby afforded no ground of reversal. Defendants of course could raise the question of illegal search with reference to their own private papers (referred to later), but whether they could raise it with respect to the papers and records of the bank is not so clear. The rule is well settled that the only ones who can object to the use of evidence illegally procured are those whose property rights therein have been invaded. Cooper et al. v. United States (C. C. A. 8) 9 F.(2d) 216; Fuller v. United States (C. C. A. 2) 31 F.(2d) 747; Wida et al. v. United States (C. C. A. 8) 52 F.(2d) 424; United States v. Hoyt (D. C. S. D. N. Y.) 53 F.(2d) 881; Occinto v. United States (C. C. A. 8) 54 F. (2d) 351; Kelley v. United States (C. C. A. 8) 61 F.(2d) 843 (opinion filed October 31, 1932); Hale v. Henkel, 201 U. S. 43, 26 S. Ct. 370, 50 L. Ed. 652; Wilson v. United States, 221 U. S. 361, 31 S. Ct. 538, 55 L. Ed. 771, Ann. Cas. 1912D, 558; Wheeler v. United States, 226 U. S. 478, 33 S. Ct. 158, 57 L. Ed. 309; Grant v. United States, 227 U. S. 74, 33 S. Ct. 190, 57 L. Ed. 423; Essgee Co. of China v. United States, 262 U. S. 151, 43 S. Ct. 514, 67 L. Ed. 917. Under the authority of Silverthorne Lumber Co. v. United States, 251 U. S. 385, 40 S. Ct. 182, 64 L. Ed. 319, 24 A. L. R. 1426, there may be doubt as to whether the bank records and papers could be used against defendants, they being apparently in the control and possession of the bank and its records as managing officers thereof. That case however does not overrule the doctrine of Wilson v. United States, 221 U. S. 361, 31 S. Ct. 538, 55 L. Ed. 771, Ann. Cas. 1912D, 558, as applicable to situations under the Fourth Amendment. It is unnecessary however to determine this question, in view of this record. Assuming that it can be raised by defendants, it appears from the only evidence introduced upon the question that none of the books, papers, or records, as to the seizure of which illegality is charged, was made use of in any way in the procuring of the indictment against these defendants. The only testimony dealing with what records were used, or were not used, in the procuring of the indictment, is that of Mr. Nugent Dodds, Special Assistant to the Attorney General, who had charge of the preparation of the case and was instrumental in the prosecution of defendants, and Mr. S. C. Bennetts, accountant of the Department of Justice who assisted Mr. Dodds. It seems necessary to set out considerable of Mr. Dodds' evidence. In answer to the question of what records were used before the grand jury he replied: The books and records of The Kansas City Joint Stock Land Bank, the general ledgers, check registers, disbursement journals, and such general books of account of the Land Bank were used before the grand jury and were the basis of this indictment. He testified also that the records we took before the grand jury were the books and records of The Kansas City Joint Stock Land Bank, namely the ledgers of the bank, general ledger, each of the papers mentioned in the individual counts in the counts of the indictment, such as checks, and one thing and another, that were taken from the files of the Land Bank the day that the grand jury  or a few days before, I believe  they were never over here that I know anything about; certain cancelled checks; the check register of the Land Bank; the individual mortgage records; record books; various of them, of the Land Bank receipts and disbursement journals, all being books in possession of the receiver of the Land Bank when he took the bank over. When asked when he came into possession of the records that were used before the grand jury he replied: I went to the Land Bank and examined them. They were there at all times until the grand jury was called.    The records we used for the grand jury were records taken by subpna from the receiver of the bank, I believe, and had always remained in the bank. The ledgers and check registers and such books as that. With reference to records that were not used, the following colloquy occurred between Mr. Dodds and the examining counsel, Mr. Conrad: Q. Did you use any other records, to your knowledge? A. No, sir, I don't believe any other records were used, except records of the Land Bank. Q. No Missouri Hydro-Electric records were used? A. No, I don't believe the Missouri Hydro-Electric records were used; but I would want to consult with some of my assistants before I could be sure. Q. You have read the plea in abatement? A. Yes. Q. Was the records of any of the corporate entities mentioned in the plea in abatement used before the grand jury? A. No, sir, I don't believe that they were. The Court: None of the records referred to in the plea in abatement you say were used? A. They have here an exhibit attached to the plea in abatement in which they named a great many records. I have looked that over and I can't remember that any record, document or paper was used before the grand jury, and I am satisfied it wasn't. Mr. Dodds added: May I make myself clear on this, that as to these papers that I saw here none of them were ever introduced before the grand jury nor did I ever use any of them myself in getting the data for these cases. They are disconnected and I have no memory of there ever being any connection between them and the indictment in question whatsoever. I am satisfied there wasn't. At the conclusion of all the testimony directed to the question of unlawful search and seizure, Mr. Dodds again took the stand and made the following statement: When I testified this morning, if the court please  since I testified this morning, I have looked over and tried to refresh my recollection as to the use of divers of the documents that are mentioned in the plea in abatement, in the amended plea in abatement. I would say this to the court: The accountants here, in the matters upon which the August 4th indictment is based, had been working under my immediate direction and guidance in order to develop the matters that are contained in that indictment, both before the indictment was brought and afterwards. I do not believe and I am as morally certain as anyone could be, Your Honor, that nothing whatsoever among the papers that are listed in the amended plea in abatement had anything to do with the development of the matters that are contained in the August 4th indictment. The investigation that brought out the facts that are covered by the August 4th indictment was the investigation of the books, records and documents of the Land Bank that were in the Land Bank.    None of the books, records or documents that were taken from the room on the second floor were actually used before the grand jury and I don't believe that there was anything in any of those books, records or documents on the second floor that had any bearing upon or furnished any clews or leads to the matters that are contained in the indictment. The matters that are contained in the indictment were covered by documentary evidence taken from the bank itself under subpna and in each instance made, as I remember it, a prima facie case as to the count as to which each of the documents referred.    There was no count  I kept track of it through the case and through the presentation to the grand jury  I followed the schedule in the first place and kept track of it in the second place, as the proof went in and there was no essential element of proof that was missing and, may it please the court, entirely independent of documents seized from the second floor and the documents that came here from Washington and, as I have stated before, I know of no lead or clews of any kind that developed from either of those sets of documents. The examiners who examined the Land Bank were, in so far as I know, always authorized by the Federal Farm Loan Bank, as Mr. Sheehan and Mr. Madland and the last witnesses and all the previous witnesses spoken of were and their commissions were put in evidence this morning. With respect to any private papers of defendant Cravens that may have been taken, Mr. Dodds testified as follows: The day those records were taken, Mr. Brewster called me up and told me they had included some unlabeled boxes, two unlabeled boxes that contained personal letters of Mr. Cravens and Mr. Brewster asked me whether I would be willing to return those letters if he should convince me they were Mr. Cravens' property. I told him I would gladly do it. The government had no interest in Mr. Cravens' private affairs. Mr. Brewster came to the Federal Building and opened two boxes in my presence and held up a couple of papers and showed me they were personal papers of Mr. Cravens and I don't know whether we made any further examination than that but, anyway, he assured me they were Mr. Cravens' personal papers and we closed and locked the boxes and we gave them to Mr. Brewster and he took them away. Outside of that I have never seen a letter or personal paper that belonged to him that was his personal papers. When Mr. S. C. Bennetts, accountant of the Department of Justice who assisted Mr. Dodds in preparing the indictment, took the stand, the following colloquy occurred between him and Mr. Dodds as examining counsel: Q. And I will ask you whether when that matter was presented to the grand jury on August 4th, to your knowledge, whether any books, records and paper we got that night were used at all? A. So far as the documents, books, records and papers that I personally testified about to the grand jury, not a single one. Q. In the preparation of our case in the August 4th indictment, I will ask you whether we had any occasion to use those papers and books and records that were procured by that subpna, that were found there that night in the bank room? A. No, sir. Q. They didn't have anything to do with our August 4th case? A. No. Q. And whether or not on August 4th, anything was worked up entirely from the books, records and documents of the bank which you examined there assisted by Mr. Tull? A. Every count in the indictment is on that basis. Q. And the books, records and documents  you attempted to bring them over for the grand jury? A. I think Mr. Miller and I brought them, if I remember right. Q. You and I agreed in advance what we were going to use before the grand jury? A. I didn't get that. Q. We prepared the case together? A. Yes. Q. Do you know of having gotten any clews or leads from that evidence that was subpnaed at that time that had anything to do with the August 4th case? A. No, I do not. Q. Do you know of having gotten, or did you get any evidence or leads or clews from the papers that came to you from the Treasury Department upon which any accounts of the August 4th case were based? A. Not from the Treasury Department. Q. So that neither of the bunches of documents that counsel has mentioned here today were the basis of our August 4th indictment or of the former indictment for that matter, were they? A. No. In the light of the above testimony we are unable to disturb the finding by the District Court that is implied in its overruling of the defendants' plea in abatement to the indictment, viz., that none of the books, papers, or records concerning the seizure of which there was the least taint of illegality was used in any way in the procuring of the indictment against the defendants. Furthermore, in the light of former rulings by this court, it would not have been material had such books, papers, or records been so used, so long as there was competent additional evidence, legally procured, and without taint, on which to base the indictment. In United States v. Cooper (D. C. N. D. Iowa) 288 F. 604, internal revenue agents in the course of an investigation had come upon evidence of criminal conduct and had turned such evidence over to officers of the Department of Justice, who proceeded to have an indictment brought against the defendants. The evidence so seized, and all of which was used in procuring the indictment, consisted in part of corporate records, which the court held to have been lawfully seized, and in part of the private books, papers, and records of the several defendants, which the court held to have been unlawfully seized, in violation of the Fourth Amendment. The court nevertheless overruled the plea in abatement to the indictment, saying, at page 611 of 288 F.: In view of the conclusions reached the demurrers to the pleas in abatement must necessarily be sustained as the pleas concede that a very substantial part of the evidence used before the grand jury was made up of evidence other than the private books, papers and documents of the defendants. In support of the above ruling the court cited, among other authorities, the case of Anderson v. United States (C. C. A. 8) 273 F. 20, 29, where it was claimed illegal evidence was used before the grand jury. The court said: There may have been other sufficient and competent evidence supporting the action of the grand jury in finding the indictment. It therefore becomes, as we think, unnecessary to decide the question as to whether the seized papers could appropriately be used at the inquest. We understand the rule to be that an indictment cannot be set aside or avoided on such an objection unless it affirmatively appear that there was no evidence of the commission of the offenses presented to the grand jury, or unless all of the evidence which it heard on the inquiry was unlawfully procured in violation of some fundamental right of the party indicted, and which would be barred on the trial as incompetent and inadmissible against him. While United States v. Cooper, supra, was reversed by this court in Cooper v. United States (C. C. A. 8) 9 F.(2d) 216, the reversal went only to the sufficiency of the evidence to sustain the conviction and not to the District Court's ruling with regard to the plea in abatement to the indictment. Such ruling in the latter regard was in fact expressly sustained in the following language of this court at page 220 of 9 F.(2d): At the threshold it is claimed that the indictment should have been quashed because of the alleged submission to the grand jury of certain private books and papers of the defendants unlawfully seized, in violation of the Fourth Amendment, and that at the trial such evidence, and information elicited from clues derived therefrom, were introduced, contrary to the provisions of the Fifth Amendment. To this contention it may be answered that there was no such search and seizure as is contemplated by the constitutional prohibition. Government officers, under the applicable revenue law, demanded access to the books and papers of the corporation, in order to verify or discredit the returns it had made, and neither force, threats, nor other objectionable methods were employed. The corporation, without objection, answered and complied with the demand for inspection and examination and aided and participated therein. It was compelled by law to make the disclosures that were made, and could not, of course, make this objection in any case; nor can plaintiffs in error, as officers of that corporation, plead it in their own behalf. Information thus gleaned may always be used in the prosecution of individuals responsible for the violation. Besides, there was before the grand jury other substantial evidence conceded to be competent and free from taint. Therefore, under general authority, the indictment is not vulnerable on this ground. See, also, Radford v. United States (C. C. A.) 129 F. 49; McGregor v. United States (C. C. A.) 134 F. 187; McKinney v. United States (C. C. A.) 199 F. 25; Chadwick v. United States (C. C. A.) 141 F. 225; Holt v. United States, 218 U. S. 245, 31 S. Ct. 2, 54 L. Ed. 1021, 20 Ann. Cas. 1138. It is urged in argument that some of those alleged to have been engaged in the claimed illegal search were armed, and that the janitress of the building was coerced to open the doors of the room connected with a part of the bank. We find no evidence of any coercion of the janitress. Miss Todd did testify that some of the men were armed but did not claim any coercion. Just who was armed is not very clear in the record, but there was no attempt to coerce any one by force or threats. No question seems to be made in the instant case with any seriousness at least, of the use of illegally procured evidence at the trial. We have found nothing in the record to indicate that any of the documents sent to Washington or seized on the night of April 24, 1927, were among the documents introduced in evidence at the trial. There being in our judgment ample legal evidence on which to base the indictment procured against the defendants, it is unnecessary to determine the actual validity of the seizure of evidence which not only was not needed, but was actually not used in the securing of the indictment. The burden was on defendants to show that the indictment was based on illegal evidence. That has not been shown. We conclude herein, as we did in Cooper v. United States, supra, that there is no reason for us to disturb the judgment on the ground of the alleged unlawful seizure of evidence preliminary to the indictment.