Oklahoma Tax Commission v. Clendinning

By decision of the majority, a writ of prohibition will issue out of this court to suppress evidence sought to be adduced before a grand jury in Tulsa county for the determination of whether there are any violations of the state income tax law cognizable within that jurisdiction. A like writ of prohibition will issue to restrain contempt proceedings directed against Honorable J. Frank Martin, Chairman of the Tax Commission, who personally appeared before the grand jury but refused to testify concerning, or to adduce in evidence for the grand jury's consideration of income tax violations, certain income tax returns in his possession and under his control.

On October 16, 1943, the county attorney of Tulsa county made request to the Oklahoma Tax Commission for information and evidence as to the income tax returns of 50 citizens (one of whom resides or maintains a place of business in Tulsa county), in order to ascertain whether there are any violations of the state income tax laws cognizable in that jurisdiction. The request was refused.

On October 18, 1943, process issued out of the district court of Tulsa county and was served upon the Oklahoma Tax Commission for the production of said records for the purpose aforesaid, and particularly as to payment of, failure to pay, or failure to file any return or payment of state income tax for the years 1937 to 1941, inclusive, on the part of certain designated citizens.

On October 20, 1943, the Tax Commission and Honorable J. Frank Martin, in person, appeared before the district court of Tulsa county, sought and failed to have vacated the process aforesaid, and Honorable J. Frank Martin appeared before the grand jury, but declined and refused to adduce the evidence requested or to testify concerning it. Whereupon, complaint was made to Honorable S.J. Clendinning, as district judge, presiding over the court of which the grand jury was a part, and in a proceeding for contempt directed against the said J. Frank Martin for his refusal to adduce evidence or testify as to the said income tax returns before the grand jury of said court then in session, after hearing, he was found guilty of contempt, but judgment and sentence was reserved until Friday, October 22, 1943, or as soon thereafter as the matter could by the court be properly pronounced.

This original action was promptly filed and in it is questioned the jurisdiction, together with the exercise of judicial powers, of said court to (1) issue the orders and process of October 18, 1943; (2) overrule the motion to vacate that order; (3) adjudge Honorable J. Frank Martin guilty of contempt for his refusal to adduce the evidence aforesaid or to testify before the grand jury as to that matter then under consideration.

The statutory authority for the prosecution of offenses in violation of the income tax law by complaint or information indorsed by the attorney for the commission "to the same effect as by the other methods of criminal prosecutions provided by law" (68 O. S. 1941 § 902d) evidences a mere cumulative method of procedure against violators of the income tax law. Hinz v. Hunt, District Judge, 96 Okla. 285, 221 P. 1022. And while a certain character of confidence and privilege obtains as to individual income tax returns, the records and files of the commission are by no means a secret (68 O. S. 1941 § 1454), but these records and files may be furnished to "(f) . . . any official person or body of any other state or of the United States, who shall be concerned with the administration of any . . . tax in that state or the United States"; and nothing contained in the tax law under consideration "shall be construed to prevent: . . . (d) The disclosing of information or evidence to the Attorney General or any county attorney when such information or evidence is to be used by such officials to prosecute violations of the criminal provisions of any state tax law or of this act." The State Examiner and Inspector or his duly authorized agents have access to the records and files for examination (par. (c) Id.); so have all divisions of the Tax Commission (par. (e) Id.); and likewise the taxpayer and his authorized representatives (par. (a) Id.). But no one charged with the custody of any such record or files shall be required by any court of this state to produce any of them "except when the records or files or the facts shown thereby are directly involved in an action or proceeding under the provisions of this act, or of the state tax law affected . . ." Thus the records and files constitute a privileged communication and the underlying reason for the statutory privilege is the constitutional immunity against self-incrimination (sec. 21, art. 2, Const.), together with the personal right to be secure in "papers and effects" against unreasonable search and seizure (sec. 30, art. 2, Const.); but the rights afforded by statute and Constitution merely create a privilege in court whereby income tax returns are not admissible in evidence in any prosecution against such a person making the return except for violations of the law pertaining to state tax law. The immunity of the law as to self-incrimination and as to security in "papers and effects" in no wise excuses any person from "giving testimony or producing evidence, when legally called upon so to do," which may "tend to establish the guilt of any other person" charged or to be charged with an offense against the laws of the state (sec. 27, art. 2, Const.).

The Oklahoma Tax Commission and Honorable J. Frank Martin, as petitioners, construing the provisions of Title 68 Ohio St. 1941 § 1454[68-1454](d) most favorably in aid of its own privilege, and in self-appreciation of the confidential nature of duties enjoined upon the commission by law (68 O. S. 1941 §§ 902 and 1454(a) and (b)), which confidence and privilege is likewise enjoined upon "any person who may have secured information therefrom" from divulging or disclosing "any information obtained from the said records or files or from any examination or inspection of the premises or property of any person," except in the manner provided by law and with the exceptions noted in subdivisions (a), (b), (c), (d), (e), and (f), Idem, urges the necessity of a finding by the Oklahoma Tax Commission from its "examination of the returns in question and/or from information furnished it by said county attorney . . . that said . . . evidence can and will be used . . . in the prosecution of a violation of paragraph (b) of said section 902." Such is not the law. Section (b) of the law concerns the making of "false or fraudulent returns," and the venue of prosecutions arising under subsection (b), Idem, is in "either the county where such return was verified or in Oklahoma county, where such return shall have been filed." It is noteworthy that the inquisitorial nature of the duties performed by a grand jury or by any county attorney does not constitute prosecution of any person, and no such prosecution ensues, unless and until a complaint and indictment is made, returned, and filed; but such duties consist only of the performance of that by law enjoined upon any such official and such an institution as a grand jury, and that duty is to protect the innocent and to accuse the guilty.

And while it is the primary duty of a grand jury to inquire into public offenses committed or triable within the particular county (22 O. S. 1941 §§ 324, 325", it cannot be said that the grand jury of Tulsa county is not performing that exact duty nor that the income tax returns sought may not be used as affidavits, since they are required by law to be verified, or documents for the accusation of other persons separate and apart from the maker who may be charged or accused with violations of the income tax law or "of any state tax law" (sec. 1454(d), Idem), where the venue applicable is in Tulsa county.

The result and effect of the construction by the petitioner urged upon us is that the Oklahoma Tax Commission would become the sole arbiter to determine upon violations of the tax laws and that its determination of that issue, vital to the welfare of the state, may be based upon its examination of returns of individuals making the returns who may not be sought to be charged. Moreover, such determination by the commission would be from information furnished the Tax Commission without a particular examination on its part aliunde. Whereas, under subdivision (a) of section 902, supra, it is contemplated that "any taxpayer subject to the provisions of this act" may wholly fail or refuse to make any return at all, in which case the venue to prosecute such a taxpayer would be "(c) . . . either the county in which the taxpayer resides or wherein is maintained, by such taxpayer, a place of business"; and it is possible in such cases that the commission would know nothing of such a taxpayer's return and as to the business of such a taxpayer the commission might know nothing. In this connection it may be suggested that the Tax Commission, like all other officers, will be presumed to have done its duty, and that its duty has been performed in such a manner as to secure for the state all moneys in the form of taxes due and owing; that it has investigated all possible sources of income, both as to items and persons; and that as a result thereof the presumption will be indulged that there are no violations of the tax laws of the state; wherefore the county attorney's and the grand jury's investigation is in fact "much ado about nothing." Nevertheless, it must be remembered to be the solemn duty of the grand jury to investigate violations of all criminal laws, including violations of the income tax laws, and the construction urged upon us would relieve all the county attorneys of the state, and the Attorney General, and grand juries from the performance of a duty imposed by law. Likewise, that duty is by law enjoined upon the Governor of the state, and his duty, comparable to that of the President of the United States, is to take care that the laws are faithfully executed. Such interpretation would result in too much of an assumed exclusive responsibility of a bureau, it would leave enforcement of the particular law to the whim, fancy, indulgence, or diligence, or lack thereof, of individuals comprising a bureau, it would impose judicial power upon those who may not be trained at law and who have no direct responsibility to the people. Such power so vested is ruinous to the financial affairs of a state, detrimental to the enforcement of law, and horrendous to our conception of government. It is thought that the enforcement of the income tax law in its criminal aspect is vested in all officers and agencies of the state charged with the enforcement of law, and that of necessity and by the terms of the act such agencies of the state, and particularly those agencies required "to investigate and return indictments for all character and grades of crime" (sec. 18, art. 2, Const.), including misdemeanors, transferable in proper cases to the county court (Antonelli v. State, 3 Okla. Crim. 580, 107 P. 951), which are within the class of officials and persons entitled and allowed by law to view for themselves and receive in evidence pertinent facts pertaining to violations, if any, of the state tax laws.

The law plainly says:

"Nothing herein contained shall be construed to prevent: . . . (d) The disclosing of information or evidence to the Attorney General or any county attorney when such information or evidence is to be used by such officials to prosecute violations of the criminal provisions of any state tax law or of this Act."

However, the commission interprets its powers so as to require, as a condition precedent to its furnishing of such evidence requested or subpoenaed, knowledge on the part of the Tax Commission that such information or evidence will be used and that it can be so used. In other words, the commission thinks its duty is to find actual existence of good faith on the part of other officials charged by law with the enforcement of law and to pass upon the materiality and admissibility of the evidence sought for ascertainment of the violation of the tax laws by persons consisting of individuals and corporations that it may "wot not of" except by names furnished to it in connection with the request and subpoena. Such an interpretation of law would make the Tax Commission an adjunct of the district court and a supervisor of morals and legal abilities possessed by prosecuting officers and courts. The proposition ought not to require more to refute its soundness than the mere statement of it.

Power of the grand jury is not dependent, after being convened, upon the court, but it is original and complete, and its duty is to inquire into all offenses committed or triable within the county, whether from its own knowledge, that of its members, or that of the court, state's attorney, or from any source, including documents and affidavits. The court cannot limit the scope of the investigation of the grand jury. People ex rel. Ferrill v. Graydon, 333 Ill. 429, 164 N.E. 832; People v. Sheridan, 349 Ill. 202, 181 N.E. 617, 106 A.L.R. 1383.

The scope of a grand jury's inquiry is not to be narrowly limited by forecasts of the probable result of the investigation, even by a court. Carroll v. United States,16 F.2d 951; writ of certiorari denied, 273 U.S. 763, 71 L. Ed. 880; O'Connell v. United States, 40 F.2d 201; writ of certiorari dismissed, 75 L. Ed. 1472; People v. Doe, 247 A.D. 324, 286 N.Y.S. 343.

If there was logical relevancy between the object sought and the testimony demanded, it was the duty of Honorable J. Frank Martin to give it. Re National Window Glass Workers, 287 F. 219; United States v. Invader Oil Corp., 5 F.2d 715; Re Black, 47 F.2d 542; Re Grand Jury Proceedings, 4 F. Supp. 283.

The mere fact that the grand jury had not entered upon the investigation of some particular and specific charge afforded no reason for holding that a subpoena for records should be quashed. United States v. Invader Oil Corp., supra. Nor does the statute of limitations limit the scope of a grand jury's investigation, for offenses may be found to exist within the statute of limitations. State v. Kasherman, 177 Minn. 200,224 N.W. 838; certiorari denied, 280 U.S 02, 74 L. Ed. 647, 50 S. Ct. 85.

It would not be presumed that the grand jury considered or acted upon any matter not properly before it (People v. Sheridan, supra), or that no chargeof a criminal offense was involved (Idem). "The inquisitorial power of the grand jury is the most valuable function which it possesses today and, far more than any supposed protection which it gives to the accused, justifies its survival as an institution. As an engine of discovery against organized and far-reaching crime, it has no counterpart. Policy emphatically forbids that there should be any curtailment of it except in the clearest cases." Re Grand Jury Proceedings, supra. So that even secrecy of the ballot box enjoined by law is to be revealed to a grand jury. Miller v. Price, 260 Ky. 488, 86 S.W.2d 152. And laws providing special investigating bodies for particular offenses do not limit the power of the grand jury to make investigations as to such offenses or to divest it of such power. State v. Larson, 10 N.J. Misc. R. 384, 160 A. 556; Hinz v. Hunt, supra. The people are protected from vicious reports of grand juries not amounting to indictments or presentments by the court's control over its journals and through the medium of motions to expunge from the official court records. Re Report of Grand Jury, 152 Md. 616, 137 A. 370.

There is involved herein the contempt charged upon Honorable J. Frank Martin, and as to that matter the majority have authorized the issuance of a writ of prohibition, but it will be erroneously issued. Whether the contempt charged to have been committed constitutes direct or indirect contempt of court is wholly immaterial. However that matter may be viewed, a refusal to testify before a grand jury is, in fact, a refusal to testify before a district court presiding over a grand jury because the grand jury is an integral part of the court and the whole consists of all the parts.

No deliberative body can maintain their dignity or respect without power to protect itself or without power somewhere imposed to enforce obedience to its commands uttered and issued in connection with its proper functions.

Our attention is called to Moss v. Arnold, 63 Okla. Crim. 343,75 P.2d 491, wherein an application for writ of prohibition was filed in the Criminal Court of Appeals, and it was sought to prohibit punishment of a contempt committed by one Moss in the presence of the district court of Oklahoma county. Therein the trial court adjudged a contempt to exist by reason of Moss' tampering with the jury, but the judge, the Honorable Ben Arnold, did not see the tampering. Therein a writ of prohibition was denied, but the Criminal Court of Appeals apparently adhered to its erroneous view expressed in Ex parte Owens, 37 Okla. Crim. 118, 258 P. 758, that contempt of court is a crime. The Supreme Court has adjudged that it is not. State ex rel. Attorney General v. Owens, 125 Okla. 66, 256 P. 704, 52 A.L.R. 1270, and the federal courts have held that the Supreme Court is supreme. Idem, Ann.

However, the writ of habeas corpus issued by the Criminal Court of Appeals in the Owens Case was by certiorari brought before the Supreme Court, and it was held for nought. Likewise, it was adjudged that the Criminal Court of Appeals is an inferior court, created by law under permissive sections of the Constitution, and vested only with criminal appellate jurisdiction; that it is without power to issue any character of a writ except in aid of the appellate criminal jurisdiction by law conferred upon it. It has no jurisdiction to issue either the writ of prohibition or habeas corpus in an original action, for the application for such writs constitutes special proceedings.

The Constitution (sec. 25, art. 2) empowers the Legislature to pass laws defining contempts. The Legislature has performed that duty (21 O.S.A. § 565) by dividing contempts of court into two classes, direct and indirect contempts. Within the statutory definition of direct contempts falls: "The unlawful and willful refusal of any person to be sworn as a witness andthe refusal to answer any legal or proper question." By the provision of the Constitution, supra, the Legislature has power to enact laws "regulating the proceedings and punishments in matters of contempt." It is Hornbook law that the right to a trial by jury is not a matter of procedure. It is a substantive right, existing or not existing according to the law of the land. At common law no right of trial by jury existed in cases of contempt of court, nor does such right pertain today in cases involving domestic relations, bankruptcy, or industrial court matters and the like. State v. Owens, supra.

By an act of the Territorial Legislature of February 6, 1895 (Wilson's Rev. and Ann. St. 1903, sec. 2127), trial by jury was provided "in all cases of indirect contempt," but the Supreme Court of the Territory declared the provisions of the statute invalid. Smith v. Speed, 11 Okla. 95, 66 P. 511, 55 L.R.A. 402.

The Territorial Court held that the equitable and common-law jurisdiction granted to courts was a part of due process of law guaranteed to every citizen as a protection of his life, liberty, and property, and that the jurisdiction of these courts was as much due process of law as is the right of trial by jury. That the power to punish for contempt was inherent in the courts, necessary for their preservation, and a part of the law of the land, for the protection of the citizenship and of their instrumentalities. Wherefore, the Legislature "has no power to take away from the courts . . . the right to punish a contempt . . . or to cause the matter to be submitted to a trial by jury."

Since, by force of the Constitution, the common law obtains in this jurisdiction in aid of lawful statutes, the wisdom of the territorial decision, supra, is as sound and applicable today as it was in the good year 1901.

The Criminal Court of Appeals has persisted in asserting that "the punishment imposed [in a proceeding for contempt of court] is a sentence in a criminal case." Deskins v. State,62 Okla. Crim. 314, 71 P.2d 502. And this erroneous adjudication by an inferior court, without jurisdiction in the subject matter, should not go unnoticed so as to corrupt the law. "In no case shall a penalty or punishment be imposed for contempt, until opportunity to be heard is given." Section 25, art. 2, Const. And a hearing in American jurisprudence contemplates a written accusation with right to adduce witnesses in defense and to be represented by counsel of choice. It is also provided by the Constitution that disobedience, not in the presence or hearing of a court, of an order of injunction or restraint may only be punished by contempt after a trial to a jury (if one is demanded) as to the guilt or innocence of the accused. Section 25, art. 2, Const. The inference is that in no other such case, whether direct or indirect, is the accused in a contempt proceeding entitled to a trial by jury. State v. Owens, supra. That inference is resolved by the law of the land, for "The constitutional provision. . . . merely affirm a pre-existing power. Without the power, courts could not fulfill their responsible duties for the good of the public." Moss v. Arnold, supra.

The Legislature has power by law to regulate "punishment" in matters of contempt. Section 25, art. 2, Const. It is within the proper province of the Legislature to provide by statute reasonable limitations upon punishments for contempt.

In 6 Rawle C. L. 492, the view obtains that a direct contempt committed "in the presence of the court" may consist of a contempt against any constituent part of the court engaged in the business of the court, according to law. For by the law, there the court is present, and the court consists "not of the judge, the courtroom, the jury, or the jury room, but of all of these combined"; and that any behavior constituting a contempt committed in any one of the constituent parts of the court while engaged in the business devolved upon it by law must be a contempt committed in the immediate view and presence of the court. And disobedience to the judicial authority of the court is a contempt unless the party accused can show sufficient cause to excuse it.

In the light of these authorities, it is clear that a contempt committed in the grand jury room, before the grand jury of the district court of Tulsa county, by the refusal of Honorable J. Frank Martin to testify or produce pertinent evidence to the matters under consideration, towit, possible violations of Income Tax Laws or other tax laws, was committed "in the presence of the court," and it is preposterous to hold that such a contempt must be committed within the ocular view or range of vision of the person who may happen to be judge of that court. The person of the judge of that court is no more a part of that court than is the inquisitorial instrumentality represented by the grand jury.

Ignorance of the law, if any, on the part of Honorable J. Frank Martin is no defense, although the present confused state of the law may constitute mitigating circumstances that ought to be taken into consideration in fixing punishment for the contempt by the administrator committed.

For the reasons stated, I again respectfully dissent, and am authorized to say that Mr. Justice ARNOLD concurs herein.