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Murray Mort. Inv. v. Gulf Atlantic Ins. Co.

Colorado Court of Appeals. Division III
Oct 26, 1978
594 P.2d 583 (Colo. App. 1978)

Opinion

No. 78-445

Decided October 26, 1978. Rehearing denied November 24, 1978. Certiorari granted May 7, 1979. Certiorari dismissed by motion to dismiss June 18, 1979.

In a proceeding in which party to Texas civil action sought to take depositions of certain Colorado residents, the district court ruled that corporation secretary was not under a duty to produce various corporate records that were in his custody. Appeal was taken.

Order Reversed

1. CORPORATIONSCorporate Secretary — Not Decline — Consent — Production — Corporate Documents — Fifth Amendment Grounds — Trial Court — Refusal to Order — Execution of Consent — Error. Where party to civil action requested only that witness, as corporate secretary, provide written consent to the Internal Revenue Service for production of certain corporate documents, the witness may not decline to do so on the basis of any Fifth Amendment privilege, and the witness made no showing that he lacked authority as secretary to the corporation to execute the requested written consent; hence, it was error for the trial court not to have ordered the witness to execute that consent.

2. CONSTITUTIONAL LAWTaxpayer — Furnish Documents — Internal Revenue Service — Waives — Fifth Amendment Privilege — Subsequent Civil Proceedings. Where a taxpayer furnishes documents to the Internal Revenue Service for purposes of establishing tax liability, the taxpayer waives any Fifth Amendment privilege as to the documents, and that waiver extends to subsequent proceedings including subsequent civil actions in which the documents are relevant.

Appeal from the District Court of the City and County of Denver, Honorable Joseph N. Lilly, Judge.

Fairfield Woods, Patrick F. Kenney, James L. Stone, for third-party defendant-appellant.

Drexler Wald, P.C., Stanley L. Drexler, Michael J. Abramovitz, Chester J. Stern, for witness-appellee.


This proceeding was initiated by Otero Savings and Loan Association pursuant to § 13-90-111, C.R.S. 1973, to take the depositions of certain Colorado residents in conjunction with a civil action which is now pending in Dallas, Texas. Otero appeals from an order of the Denver District Court determining that the witness, Ben Bozeman, was not under a duty to produce certain documents. We reverse.

The relevant facts are not in dispute. Murray Mortgage Investors initiated a civil action in Texas alleging, among other things, that Otero was liable to Murray for damages in conjunction with a loan made to El Pinal, Inc., because Otero refused to participate in the loan. Bozeman is the corporate secretary and a shareholder in El Pinal. As a defense, Otero asserts negligent supervision of the loan by Murray.

In seeking evidentiary support for this defense, Otero obtained a commission from the clerk of the district court in Texas to take the deposition of Bozeman. Otero also secured a subpoena duces tecum from the Denver District Court directing Bozeman to produce: (1) Certain financial records of El Pinal; (2) financial records of "Bozeman and Longway"; and (3) financial records of Bozeman. The records of El Pinal had been furnished to the United States Internal Revenue Service by its president in conjunction with proceedings to establish the tax liability of El Pinal. The other records were also furnished to the IRS, subsequently returned to Bozeman, but the IRS retained copies. Otero therefore requested that the trial court order Bozeman to execute consents to the IRS for production of the documents in the possession of the IRS. However, the trial court agreed with Bozeman that, because of his Fifth Amendment privilege against compulsory self-incrimination, he could not be compelled to consent to production of his records or the records of Bozeman and Longway. The court also concluded that Bozeman should not be required to consent to production of the El Pinal records because he was not the custodian of any of those records. I. Records of El Pinal

The parties agree that the custodian of corporate books and records may not decline to produce those records on the grounds that the custodian might be incriminated. See Curcio v. United States, 354 U.S. 118, 77 S.Ct. 1145, 1 L.Ed.2d 1225 (1957). However, Bozeman asserts that the trial court correctly determined that he was not the custodian because those records were surrendered to the IRS by the president of El Pinal. We need not determine the issue of custody.

[1] Otero requests only that Bozeman provide written consent to the IRS for production of the requested documents as corporate secretary for El Pinal. Bozeman may not decline to do so on the basis of any Fifth Amendment privilege. Curcio, supra; Wilson v. United States, 221 U.S. 361, 31 S.Ct. 538, 55 L.Ed. 771 (1911). And Bozeman has made no showing that he lacks authority as secretary of El Pinal to execute a written consent. See § 7-5-115, C.R.S. 1973. Hence, it was error for the court not to have ordered Bozeman to execute that consent.

II. Bozeman's Records

We will assume, as Bozeman contends, that the records of Bozeman and Longway which Otero seeks to inspect must be considered as the personal records of Bozeman because Bozeman and Longway was not a formal law partnership. See Bellis v. United States, 417 U.S. 85, 94 S.Ct. 2179, 40 L.Ed.2d 678 (1974). Nevertheless, we conclude that the trial court must order Bozeman to execute the required consents for release of both his records and the records of Bozeman and Longway.

[2] Where, as here, a taxpayer furnishes documents to the IRS for purposes of establishing tax liability, the taxpayer waives any Fifth Amendment privilege as to those documents. United States v. Ponder, 444 F.2d 816 (5th Cir. 1971); Nicola v. United States, 72 F.2d 780 (3d Cir. 1934). However, Bozeman contends that the waiver does not extend to a subsequent proceeding such as the civil action between Murray Mortgage and Otero. We find no merit in this contention.

Generally, "once a person waives his right not to testify against himself, his privilege as to the use of that testimony is ordinarily waived for subsequent proceedings." People v. Downer, 192 Colo. 264, 557 P.2d 835 (1976); see also Keener v. People, 194 Colo. 244, 572 P.2d 463 (1977). This rule also applies with reference to information supplied by a taxpayer to the IRS. Garner v. United States, 424 U.S. 648, 96 S.Ct. 1178, 47 L.Ed.2d 370 (1976).

In Garner, the defendant was convicted, among other things, of a conspiracy to violate federal statutes barring use of interstate transportation and communication facilities to transmit bets and "fix" sporting contests. In support of its contention that the defendant's relationship with other conspirators was not an "innocent one," the government introduced in evidence the defendant's tax returns for various years in which he reported his occupation as "professional gambler" and in which he reported substantial income from "gambling" or "wagering." The court ruled that the tax returns were properly admitted in evidence, stating:

"The information revealed in the preparation and filing of an income tax return is, for purposes of Fifth Amendment analysis, the testimony of a 'witness,' . . . .

. . . .

[S]ince [the defendant] made disclosures instead of claiming the privilege on his tax returns, his disclosures were not compelled incriminations. He therefore was foreclosed from invoking the privilege when such information was later introduced as evidence against him in a criminal prosecution."

The order is reversed and the cause remanded to the trial court for entry of orders compelling Bozeman to execute consents for release of the requested documents consistent with the views expressed in this opinion.

JUDGE PIERCE and JUDGE VAN CISE concur.


Summaries of

Murray Mort. Inv. v. Gulf Atlantic Ins. Co.

Colorado Court of Appeals. Division III
Oct 26, 1978
594 P.2d 583 (Colo. App. 1978)
Case details for

Murray Mort. Inv. v. Gulf Atlantic Ins. Co.

Case Details

Full title:Murray Mortgage Investors, acting by its Trustees, Ray M. Antrim, Jack E…

Court:Colorado Court of Appeals. Division III

Date published: Oct 26, 1978

Citations

594 P.2d 583 (Colo. App. 1978)
594 P.2d 583

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