United States v. Walter Secor, 476 F.2d 766, 2d Cir. (1973)

476 F.
2d 766
73-1 USTC P 9342
UNITED STATES of America, Petitioner-Appellee,

v.
Walter SECOR, Respondent-Appellant.
No. 476, Docket 72-2161.
United States Court of Appeals,

Second Circuit.
Argued Feb. 26, 1973.
Decided April 4, 1973.
Joseph I. Stone, New York City, for respondent-appellant.

Dennis J. Helms, Asst. U. S. Atty. (Whitney North Seymour, Jr., U. S.
Atty., S. D. N. Y., of counsel), for petioner-appellee.
Before KAUFMAN, ANDERSON and MANSFIELD, Circuit Judges.
MANSFIELD, Circuit Judge:
Upon this appeal from a judgment of contempt for failure to comply with two
orders of the United States District Court for the Southern District of New York
directing appellant, Walter Secor, to comply with a summons issued by the
Internal Revenue Service ("IRS") pursuant to 26 U.S.C. Sec. 7602,1 the sole
error claimed by Secor is that the summons directing him to appear at the IRS
offices and to turn over certain records violated his Fifth Amendment privilege
against self-incrimination. That issue, however, had been raised earlier in a
proceeding instituted in the district court pursuant to 26 U.S.C. Secs. 7402(b)
and 7604(a)2 to enforce compliance with the IRS summons and had been
adjudicated against Secor by a decision and order of the district court from
which no appeal had been taken within the time prescribed by law.
Accordingly, since Secor is barred by the doctrine of res judicata from raising
the issue, we affirm the judgment of the district court.
The history of the government's efforts to interrogate Secor and of the legal
proceedings which followed is undisputed. Pursuant to Sec. 7602 the IRS on

June 9, 1971, served upon Secor a summons directing him to appear at its
offices on June 30, 1971, to testify regarding his tax liability for the year ended
December 31, 1968, and to bring with him specified books and records. The
Revenue Agent in charge of the matter, Charles Faletty, was informed by
Secor's attorney that he had advised Secor, who failed to appear, to invoke his
constitutional privilege against selfincrimination and not to answer any
questions.
3
On December 13, 1971, the district court, acting upon a petition of the IRS,
issued to Secor an Order to Show Cause why he should not be compelled to
comply with the IRS summons served upon him in June. On December 30,
1971, Secor appeared in court and furnished an affidavit of the same date
prepared by his counsel, which reiterated his refusal to testify in response to the
summons, stating that he was contesting IRS assessments against him for the
years 1964-1967, that a tax deficiency had been assessed against him for the
year 1968 after he had refused to answer questions with respect to earlier
orders, and that he had been convicted in 1966 for failure to register and pay the
federal wagering tax. The conviction was set aside pursuant to the subsequent
decision in Marchetti v. United States, 390 U.S. 39, 88 S.Ct. 697, 19 L. Ed.2d
889 (1968), which held unconstitutional the wagering tax as violative of the
Fifth Amendment. Secor's affidavit requested that he be permitted the right to
invoke his constitutional privilege against self-incrimination, that the order to
show cause be dismissed, and that the summons issued by the IRS be cancelled.
With the issue thus joined, Judge Pierce in a memorandum opinion entered on
February 10, 1972, denied Secor's application, stating "The Court is not aware
that anyone has suggested criminal prosecution of respondent based on any
alleged gambling activities. . . . If such a situation eventuates, respondent may
then urge that his constitutional claims be measured against the Marchetti
case." Secor was ordered by the court "to obey the mandate contained in the
Internal Revenue Service summons which had been served upon him."
Secor neither obeyed the court's order nor took an appeal therefrom. On June
27, 1972, the court, upon the written application of the United States Attorney,
a copy of which was served on Secor's attorney, issued a second order directing
Secor to comply with the IRS summons by appearing at the IRS offices, this
time on July 10, 1972, and by producing the documents and records referred to
in the summons. Again Secor neither obeyed the court's order nor took an
appeal.
On August 22, 1972, the government moved pursuant to 26 U.S.C. Sec.
7604(b)3 for an order holding Secor in contempt because of his failure to obey
the court's two earlier orders. An evidentiary hearing was held in which the
only witness called by Secor was Revenue Agent Faletty; Secor also offered a
limited amount of documentary evidence. Secor's position was that he was not
guilty of contempt because he had been justified in refusing to obey the
summons on the ground that interrogation pursuant to it would violate his Fifth
Amendment rights.
7
By decision dated September 13, 1972, Judge Pierce adjudged Secor to be in

contempt for his refusal to obey the orders of the court. Imposition of sentence
was suspended and Secor was fined $25 per day thenceforth for each day upon
which he should fail to comply with the IRS summons. Pending appeal the
sentence was stayed. On September 18, 1972, Secor filed a notice of appeal
from the district court's judgment holding him in contempt.
Upon this appeal Secor asks us to reverse the judgment of contempt on the
ground that interrogation of him pursuant to the IRS summons would violate
his Fifth Amendment rights. However, we must first determine whether we are
precluded from determination of that issue, interesting though it may be, by
Secor's failure to take a timely appeal from the district court's earlier orders
directing him to comply with the IRS summons. The government urges that
when his time to appeal from the February 10, 1972 order expired the district
court's decision in this proceeding became res judicata as to the sole issue
which he now seeks to raise and that that order cannot now be collaterally
attacked. We agree.
The final and appealable nature of a district court's order enforcing an IRS
summons in a proceeding instituted pursuant to 26 U.S.C. Secs. 7402(b) and
7604 (a) was firmly established by the Supreme Court in Reisman v. Caplin,
375 U.S. 440, 84 S.Ct. 508, 11 L.Ed.2d 459 (1964). There the Court, affirming
the denial of declaratory and injunctive relief sought by attorneys for the
taxpayers against an IRS summons issued under Sec. 7602, held that the
taxpayers' constitutional rights were fully protected for the reason that in order
to enforce the IRS summons the government would be required to institute an
adversary proceeding in the district court (as it did here) for an order enforcing
the summons, in which the taxpayer could assert and litigate his constitutional
rights and appeal as a matter of right from an adverse decision and enforcement
order.
10 the Secretary or his delegate wishes to enforce the summons, he must proceed
"If
under Sec. 7402(b), which grants the District Courts of the United States jurisdiction
'by appropriate process to compel such attendance, testimony, or production of
books, papers, or other data.'

11 enforcement action under this section would be an adversary proceeding
"Any
affording a judicial determination of the challenges to the summons and giving
complete protection to the witness.
******
12
***
13
14
"Furthermore, we hold that in any of these procedures either before the district
judge or United States Commissioner, the witness may challenge the summons
on any appropriate ground. This would include, as the circuits have held, the
defenses that the material is sought for the improper purpose of obtaining
evidence for use in a criminal prosecution, Boren v. Tucker, 239 F.2d 767, 772773, as well as that it is protected by the attorney-client privilege, Sale v.
United States [8 Cir.] 228 F.2d 682. . . . Finally, we hold that such orders are
appealable. See O'Connor v. O'Connell, 253 F.2d 365 (C.A. 1st Cir.); In re
Albert Lindley Lee Memorial Hospital, [209 F.2d 122 (C.A. 2d Cir.)]; Falsone
v. United States, [205 F.2d 734 (C.A. 5th Cir.)]; Bouschor v. United States, 316
F.2d 451 (C.A. 8th Cir.); Martin v. Chandis Securities Co., 128 F.2d 731 (C.A.
9th Cir.); D. I. Operating Co. v. United States, 321 F.2d 586 (C.A. 9th Cir.).
Contra, Application of Davis, 303 F.2d 601 (C.A. 7th Cir.). It follows that with
a stay order a witness would suffer no injury while testing the summons."
Reisman v. Caplin, 375 U.S. at 445-446, 449, 84 S.Ct. at 512-513.
15
Accord, Daly v. United States, 393 F.2d 873, 876 (8th Cir. 1968) ("The order of
the trial court in enforcing the summons of the revenue agent became an
appealable order upon its proper entry. . . . [t]he order entered was similar to a
final judgment in any other case"); see McGarry's Inc. v. Rose, 344 F.2d 416
(1st Cir. 1965); Tillotson v. Boughner, 327 F.2d 982 (7th Cir. 1963).
16
Since the district court's February 10, 1972, decision and enforcement order
represented a final adjudication of Secor's Fifth Amendment defense, he cannot
now turn back the hands of the clock and retry an issue that was litigated on the
merits in an adversary proceeding where due process requirements were fully
observed. To permit such a collateral attack would be to make a mockery of the
well settled doctrine of res judicata. See Oriel v. Russell, 278 U.S. 358, 49 S.Ct.
173, 73 L.Ed. 419 (1929); Baldwin v. Iowa State Traveling Men's Association,
283 U.S. 522, 51 S.Ct. 517, 75 L.Ed. 1244 (1931); Durfee v. Duke, 375 U.S.
106, 83 S.Ct. 509, 9 L.Ed.2d 496 (1963); Daly v. United States, 393 F.2d 873
(8th Cir. 1968). The situation here is in all legally significant respects the same
as that before the Supreme Court in Oriel, supra, where it held, in a contempt
proceeding for violation of a bankruptcy court turnover order, that the bankrupt
was precluded from relitigating defenses raised and tried in the earlier turn-over
proceeding itself, resulting in a final order from which no appeal had been
taken.
17 would be a disservice to the law if we were to depart from the longstanding rule
"It
that a contempt proceeding does not open to reconsideration the legal or factual basis
of the order alleged to have been disobeyed and thus become a retrial of the original
controversy. The procedure to enforce a court's order commanding or forbidding an
act should not be so inconclusive as to foster experimentation with disobedience.
Every precaution should be taken that orders issue, in turnover as in other
proceedings, only after legal grounds are shown and only when it appears that
obedience is within the power of the party being coerced by the order. But when it
has become final, disobedience cannot be justified by re-trying the issues as to
whether the order should have issued in the first place." Maggio v. Zeitz, 333 U.S.
56, 69, 68 S.Ct. 401, 408, 92 L.Ed. 476 (1948). See also 9 J. Moore, Federal Practice
p 110.13 at 168-69 (2d ed. 1972).
18
These principles apply with equal force here, where we are not confronted with
any contention that Secor was denied due process in the enforcement
proceeding or that he was barred from raising his Fifth Amendment claims on a
question-by-question basis before the IRS. The latter procedure might have
represented at least an effort to furnish non-incriminatory information to the
IRS and have permitted the court to rule on specific questions claimed to be
incriminatory. But Secor simply refused on Fifth Amendment grounds to
submit to any interrogation.
19
Since Secor is thus barred by res judicata from raising again the issue of
whether he properly invoked his privilege against self-incrimination, we need
not consider on the merits his claim that enforcement of the IRS summons
would violate the Fifth Amendment.4
20
Although Secor does not raise the issue, we note that there was ample evidence
in the record to support the district court's finding of contempt. His conduct in
refusing to comply with the district court's February 10, 1972 enforcement
order was not free of contumacy. Upon the entry of that order he faced the
choice of complying or taking an appeal. Instead of following either course, he
deliberately defied the order. Four months later, when the court entered its
second enforcement order in the hope that Secor might comply, he adhered to
his course of disobedience. The order holding him in contempt was fully
justified and is affirmed.
26 U.S.C. Sec. 7602 provides:

"For the purpose of ascertaining the correctness of any return, making a return
where none has been made, determining the liability of any person for any
internal revenue tax or the liability at law or in equity of any transferee or
fiduciary of any person in respect of any internal revenue tax, or collecting any
such liability, the Secretary or his delegate is authorized"(1) To examine any books, papers, records, or other data which may be
relevant or material to such inquiry;
"(2) To summon the person liable for tax or required to perform the act, or any
officer or employee of such person, or any person having possession, custody,
or care of books of accourt containing entries relating to the business of the
person liable for tax or required to perform the act, or any other person the
Secretary or his delegate may deem proper, to appear before the Secretary or
his delegate at a time and place named in the summons and to produce such
books, papers, records, or other data, and to give such testimony, under oath, as
may be relevant or material to such inquiry; and
"(3) To take such testimony of the person concerned, under oath, as may be
relevant or material to such inquiry."
26 U.S.C. Sec. 7402(b) provides:

"(b) To enforce summons.-If any person is summoned under the internal
revenue laws to appear, to testify, or to produce books, papers, or other data,
the district court of the United States for the district in which such person
resides or may be found shall have jurisdiction by appropriate process to
compel such attendance, testimony, or production of books, papers, or other
data."
26 U.S.C. Sec. 7604(a) provides:
"(a) Jurisdiction of district court.- If any person is summoned under the internal
revenue laws to appear, to testify, or to produce books, papers, records, or other
data, the United States district court for the district in which such person resides
or is found shall have jurisdiction by appropriate process to compel such
attendance, testimony, or production of books, papers, records, or other data."
26 U.S.C. Sec. 7604(b) provides:
"(b) Enforcement.-Whenever any person summoned under section 6420 (e)(2),

6421(f)(2), 6424(d)(2), or 7602 neglects or refuses to obey such summons, or to
produce books, papers, records, or other data, or to give testimony, as required,
the Secretary or his delegate may apply to the judge of the district court or to a
United States commissioner for the district within which the person so
summoned resides or is found for an attachment against him as for a contempt.
It shall be the duty of the judge or commissioner to hear the application, and, if
satisfactory proof is made, to issue an attachment, directed to some proper
officer, for the arrest of such person, and upon his being brought before him to
proceed to a hearing of the case; and upon such hearing the judge or the United
States commissioner shall have power to make such order as he shall deem
proper, not inconsistent with the law for the punishment of contempts, to
enforce obedience to the requirements of the summons and to punish such
person for his default or disobedience."
4
On this issue we do note that claims of self-incrimination in IRS civil

investigatory proceedings have been approached differently by different courts.
Compare United States v. Roundtree, 420 F.2d 845, 852 (5th Cir. 1969), with
United States v. White, 301 F.Supp. 1129, 1131 (D.R.I.1969). See also United
States v. Hatch, 31 AFTR2d p 73-465 (D.C. Idaho, Civ. No. 472-16, June 28,
1972); United States v. Runte, 1973 CCH U.S. Tax Cases p 9265 (W.D.La.,
Civ. No. 18514, Jan. 18, 1973). United States v. Kordel, 397 U.S. 1, 90 S.Ct.
763, 25 L.Ed. 2d 1 (1970), relied on by Secor, did not rule upon the issue which
he seeks to raise on this appeal. There the Supreme Court held that where a
defendant did not invoke his privilege against selfincrimination in a civil
condemnation proceeding instituted by the government, testimony given by
him in that proceeding could be used against him in a subsequent criminal
prosecution. To the extent that the Court implied that the defendant could have
invoked his privilege in the civil proceeding it should be noted that, unlike the
present case, the criminal prosecution was not only contemplated at the time of
the civil proceeding but was "nearly contemporaneous" with it
We, of course, intimate no views at this time on the question whether the
pendency of a criminal prosecution is an essential prerequisite for invocation of
the Fifth Amendment privilege in a civil proceeding.

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476 F.

UNITED STATES of America, Petitioner-Appellee,

United States Court of Appeals,

Joseph I. Stone, New York City, for respondent-appellant.

proceedings which followed is undisputed. Pursuant to Sec. 7602 the IRS on

On August 22, 1972, the government moved pursuant to 26 U.S.C. Sec.

By decision dated September 13, 1972, Judge Pierce adjudged Secor to be in

books, papers, or other data.'

26 U.S.C. Sec. 7602 provides:

26 U.S.C. Sec. 7402(b) provides:

26 U.S.C. Sec. 7604(b) provides:

"(b) Enforcement.-Whenever any person summoned under section 6420 (e)(2),

On this issue we do note that claims of self-incrimination in IRS civil

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