Foster v. Kenny

139 A.D. 769, 124 N.Y.S. 667, 1910 N.Y. App. Div. LEXIS 2298

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: July 29, 1910
• Status: Published

Opinion

Burr, J.:

Prior to January 23, 190.9, William George Foster and William J. K. Kenny were cojjartnérs,. doing' business under the firm name 'of William George Foster. Oh that date; the firm was-dissolved.. ' On February 10, 1909,. in an action brought in the Supreme Court in Kings county for- a settlement of the partnership accounts, Hamilton Holt was appointed receiver of the copartnership property during the pendency of said action, and the parties thereto were, directed to deliver to him “ all partnership booliSj books of account, journals, ledgers,, .check books, ■ papers and other effects.” The order provided that the said receiver should hold these “open to the inspection of the parties hereto, their attorneys and accountants, at all reasonable times, but not to any other person without the further instruction of this court, given upon notice to the parties hereto.” On the 1st day of June, 191Ó, a paper purporting to be a subpoena duces tecum, issued by Raymond B. Fosdick, commissioner of accounts of the city of Hew York, was served upon Holt. By its terms he was required to attend before the said commissioner on the third day of June, to he examined under oath, and to bring with him and produce at the time and place aforesaid all canceled checks and vouchers and all check stubs of said firm held by him as such receiver, and all other books, deeds, evidences and writings which he had in his custody and power. On the second day of June the receiver obtained an order to show cause, directed to the parties to said action, why the order of February 10, 1909, above referred to, should not be amended so as to permit him to obey the said subpoena. Thereafter, on the motion of said receiver and against, the opposition of William G. Foster, an order was. made entitled in said action, modifying said order sq that it read as follows: ■ “ Ordered that the order of Mr. Justice Thomas- in the action of William George Foster against William J. K. Kenny, entered in the office of the clerk of this court on the 1.0th day of February, 1909, be and the same hereby is modified to the extent of allowing the said receiver to comply with any order or direction of this court or any justice thereof without any further notice to the parties except that a copy of said order or direction must not only be served on the receiver, Hamilton Holt, but also on William G. Foster or his attorney, Edward M. Grout, at least forty-eight (48) hours before the return day or the date it is to take effect.” From this order Foster appeals.

Without determining its precise effect, we have no doubt that the order was improperly made, for the reason that the receiver had no standing in said action to apply for the relief granted. He is not a party to it, nor does he stand in the shoes of the copartners who are the sole parties thereto. (Bogert v. Turner, 135 App. Div. 530.) He was a mere chancery, or, as it is sometimes called, a common-law receiver, as distinguished from a statutory one. (Stokes v. Hoffman House, 167 N. Y. 554; Brooklyn Improvement Co. v. Lewis, 136 App. Div. 361.) . .Doubtless lie .was entitled to apply to the court for instructions as to whether he should Obey the subpoena served upon him. But it was no part of his duty to-interfere in an action to which lie.-was .not a party, and seek- a modification of. the court’s order in respect to a matter which did not concern him in the least. So much of the order of June 20, 1910, as grants this relief must be reversed.

At the same time that the: receiver moved in the action of Foster v. Kenny to modify the order appointing him,-Foster-applied to the same court for an order vacating the subpoena' duces tecum served upon the receiver, which motion was granted, and from the order entered in accordance with such decision the commissioner of accounts brings an appeal. Several objections based upon the form of the subpoena and the regularity of the proceedings connected with the issue thereof, have been urged upon .us. It 'may be that, ■ as the. order modifying the order of February 10, 1909, has been reversed-, the subpoena issued by the commissioner of accounts is: powerless, and that the receiver, the witness, is forbidden by the terms of that; order from obeying it. We do not propose to consider or determine these questions. We think that the situation is one which calls for treatment upon broader grounds. We propose to consider, first, whether the statute under which the commissioner assumes to act authorizes him to compel the production before him, as this'subpoena attempts to do, of all the privatecbooks and papers of • an individual, irrespective; of tlieif relation to transactions with any- official or employee of the city or any of the departments thereof; and, second, whether the' validity of said -subpoena may be attacked in the manner here adopted.

- In determining the scope of a statute a study of its history is often of assistance. In 1873'an iact was passed' entitled “An Act to reorganize the local government of the. city of New York.” (Laws of 1873, chap. 335:, § 106.) This provided for the appointment .of commissioners of accounts. Their duties were two-fold: First, to examine all vouchers and accounts in the offices of - the- comptroller ■ and the chamberlain, and; second,, to make an examination of the expenses of the several departments and officers of the city government. The purpose of the former examination was to enable them to make and publish “a.detailed statement of the financial condition of'the city,” and of the latter to enable them to make recommendation^ to the board of apportionment and other officers, particularly with reference to salaries and duties. This act was re-enactéd verbatim in the Consolidation Act (Laws of 1882, chap. 410, § 110).-In 1884 (Laws of 1884, chap. 516) this section of the Consolidation Act was amended. As amended it read as follows: “ The mayor shall appoint and remove at pleasure two persons who shall be commissioners of accounts. It shall be their duty once in three months to make an examination of the receipts and disbursements in the offices' of the comptroller and chamberlain in connection with those of all the departments and offices making returns thereto, and report to the mayor a detailed and classified statement of the financial condition of the city as shown by such examinations. They shall also make such special examinations of the accounts and methods of the departments and offices of the city and county government as the mayor may from time to time direct, and report to the mayor the results thereof, and such other examinations as the said commissioners may deem for the best interests of the city and county. For the purpose of ascertaining facts in connection with.these examinations they shall have full power to compel the attendance of witnesses, to administer oaths and to examine such persons as they may . deem necessary.” Without substantial change as to scope and the power of the commissioners this statute was re-enacted in the charter of Greater Hew York (Laws of 1897, chap. 378, § 119), and also in the revised charter (Laws of 1901, chap. 466, § 119). By the amendment above referred to the powers of the commissioners were greatly enlarged. While in the first instance their duties were largely advisory, and their powers limited in extent to an examination of what appeared in the public offices, the manifest purpose of the amendment was to give them powers of investigation outside of those things which were matters of record therein. As amended the purpose of the act was to enable the commissioners of accounts to investigate not only into the accuracy of the bookkeeping in the various offices and departments of the city government, but also by the examination of witnesses to ascertain the fairness and honesty of the transactions therein recorded. (Matter of Hertle [In re Ahearn], 120 App. Div. 717; affd., 190 N. Y. 531.) But, while this may be so, the commissioners must proceed according to legal methods, and the individual rights and constitutional privileges of the citizen must not be subverted. The charter itself prescribes no method by which the attendance of witnesses can be secured. Standing alone, it may be doubted whether its provisions would be enforcible. The learned corporation counsel contends that the provisions of this section of the charter must be read in connection with section 854 of the Code of Civil Procedure: The relevant provisions of the Code are as follows: “ When a judge * * * or other person * * * has been heretofore or is hereafter expressly authorized by law * * * to do any * * * act in an official capacity, in relation to which proof may be taken, or the attendance of a person as ¡a witness may be required, * * * a subpoena may be issued by and under the hand of the * ■ * * other person * * * requiring the person to attend; and also, in a proper case, to bring with him a book or a paper. * * * This section does not apply to a matter arising, or an act to be done in an action in a court of record.” That they should be read together was decided in Matter of McAdam (5 N. Y. Supp. 387; affd., 7 id. 454). We think, therefore, that under these sections in a proper case, a subpoena duces tecum may issue. But do the words “ in a proper case ” contemplate such a subpoena as was here issued ?

Of a similar character to the right-belonging to the individual to require due process of law before he is deprived of life, liberty or property, to the right in a criminal case to stand, mute and not be a witness against himself, is his right to be secured in his person, houses, papers and effects against unreasonable searches and seizures. This right may not be wholly secured by the constitutional provisions respecting due process of law, or that he shall not be compelled in a criminal case-to be a witness'against himself. On oral examination he may object if the question addressed to him violates his natural or constitutional.right, and he may then plead the protection secured to him. The testimony of a written instrument is given as soon as the eye falls upon it and the mind thereby becomes possessed of its contents. For this reason the Federal Constitution by a separate provision seeks to secure protection to the citizen against infringement of this right. (U. S. Const. 4th Amendt.) The scope of this provision has been many times considered. As was said by Mr, Justice McKenna in Hale v. Henkel (201 U. S. ), the Fourth and Fifth Amendments to the Federal Constitution, the former relating to the unreasonable seizure of papers,and the latter to compelling a person in a criminal case to be a witness against himself, “ are the complements of each other, directed against the different ways by which a man’s immunity from giving evidence against himself may be violated.” The high character of this right was early recognized in England, and in 1765, in the famous case of Entick v. Carrington (19 How. St. Tr. 1030), Lord Chief Justice Camden said: “ Papers are the owner’s goods and chattels; they are his dearest property ; and are so far from enduring a seizure, that they will hardly bear an inspection; and though the eye cannot by the laws of England be guilty of a trespass, yet where private papers are removed and carried away, the secret nature of those goods will be an aggravation of the trespass, and demand more considerable damages in that respect. Where is the written law that gives any magistrate such a power? I .can safely answer, there is none; and, therefore, it is too much for us without such authority to pronounce á practice legal which would be subversive of all the comforts of society.” It is worthy of notice that immediately following the delivery of this opinion the House of Commons adopted a resolution expressly declaring the seizure of private papers in case of a criminal libel (it was a case of such character that Lord Camden was considering) to be illegal. (See 19 How. St. Tr. 1074.)

In Boyd v. United States (116 U. S. 616) Mr. Justice Bbadley, speaking of the provisions of the Federal Constitution, said : “ Any compulsory discovery by extorting the party’s oath, or compelling the production of his private books and papers, to convict him of crime, or to forféit his property, is contrary to the principles of a free government. It is abhorrent to the instincts-of an Englishman ; it is abhorrent to the instincts of an American. It may suit the purposes of despotic power, but it cannot abide the pure atmosphere of political liberty and personal freedom.”

In Interstate Commerce Comm. v. Brimson (154 U. S. 447) the court said: “ The principles that embody the essence of constitutional liberty and security forbid all invasions on the part of the government and its employes of the sanctity of a man’s home and the privacies of his life,” and quote with approval the language of

Mr. Justice Field in Matter of Pacific Railway Commission (32 Fed. Rep. 241); 'where lie says;: “Of all the rights .of. the-citizen, few are .of greater importance or more essential to his peace and happiness than the right of personal security, and. that involves,not merely protection of his person from assault, but exemption of his private affairs, books and papers from the" inspection and scrutiny of others. .Without the enjoyment of this right all other rights would lose half their value.” We are aware that it: seems still to-be an-Open question in- the United States-Supreme Court whether the Fourteenth Amendment to the Constitution of the United States made the Fourth and Fifth Amendments thereof privileges, and immu-. nitiés of the citizens of the United States of which they may not be deprived by the action of the States. (Adams v. New York, 192 U. S. 585; Consolidated Rendering Co. v. Vermont, 207 id. 541, 553.) In view of its hesitation, it becomes us to be diffident. If the provisions of the Federal Constitution "are applicable, we'.have no hesitation-in saying that,’if ■ the statute-is capable of such construction as would warrant such seizure, then the statute -is "void for conflict therewith."’ Although our" State Constitution contains no precisely similar provision, the same principle is embodied in our Civil Bights Law. (Consol. Laws, chap. 6 [Laws, of 1909; chap. 14], § 8 ; 1 Consol. Laws [Birdseye, C. & G. ed.], 619, § 8.) It is quite true that tlie Federal Constitution and the statute both relate, only, to unreasonable search and seizure; and the distinction between that which is reasonable and unreasonable is, snggésted by Mr. Justice Cullen in People v. Coombs (36 App. Div. 284, 293; affd., 158 N. Y. 532). In Matter of Davies (168 N. Y. 89, 105) our Court of Appeals, referring to the provisions of our State Constitution respecting personal rights.(Const. art. 1, § 6), say: “ The woi’d 'liberty,’ as thus used; has a broad meaning. It- includes liberty of action,--which is interfered with-by a command to lay aside, all business and excuses . and appear at a designated place and give testimony.. It embraces the right to-"keep secret one’s books and papers, his business methods and his knowledge of his own, affairs. Yet these constitutional rights may all be interfered with by due process of law. when the general good requires it.” But the spirit of the provision of the Federal Constitution (and that of the statute must be the spue) has been well expressed in the cases above cited. If, then; the Federal Constitution has no application, in view of the history of the struggle for personal liberty in the mother country and here, in view of the clear and forcible provisions of the Civil Bights Law of this State above referred to so consonant with every principle thereof, in view of the great care with which the Legislature has circumscribed even the power of the Supreme Court in compelling diseovery, we should hesitate to hold that by this charter provision it ' was the intention of the Legislature to repeal by implication the beneficent provisions of this statute against unreasonable search and seizure, and to confer upon the commissioners, of accounts of the city of Few York a power far in excess of that conferred upon any tribunal or official — a power so extreme as to be despotic in its character. The extreme care manifested in the language of the Interstate Commerce Act (24 IT. S. Stat. at Large, 379, chap. 104, as amended), the Anti-Monopoly Act of this State (Gen. Business Law [Consol. Laws, chap.'20; Laws of 1909, chap. 25], §§ 340-346 ; 2 Consol. Laws [Birdseye,' C. & G. ed.], 1876-1879, §§ 340-346), and the procedure' prescribed for taking depositions within this State to be used in another State (Code Civ. Proc. §§ 914, 915.; General Buies of Practice, rule 17), all calculated' to protect the 'right of the citizen against unlawful interference with his private books and papers, are strong arguments against the intent of the Legislature to confer upon the commissioners of accounts of the city of Few York such absolute power. Fot only do we think that there was ho intent to repeal .the Civil Bights Law, and to confer upon the said officials such despotic power, but the words of the charter, read in connection with the provisions -of the Code of Civil Procedure, indicate just the contrary. The words of the section relied upon are : “in a proper case ” the production of a book or paper may be compelled. (Code C.iv. Proc. § 854.) To constitute “ due process of law ” and “ a proper case,” it must somewhere and at some time be made to appear that the books and papers sought for have some materiality or relevancy to the matter lawfully under consideration. Fo inquisitorial officer should be permitted, of his own' volition, arbitrarily and without any check or safeguards-upon the rights of the citizen, to compel him to producé and submit to his scrutinizing gaze all his books and papers of the most private and confidential character. But who is to determine what is'“ a proper case?” Was it intended that the commissioners should exercise this function, judicial in character? But it was held in the Ahearn Case (supra) that the commissioners of accounts possessed no judicial powers. Inasmuch as all proceedings to make the commissioners’ subpoena effective confessedly must be taken ■ under the. Code provisions; or not at all, it may be- that-the judge to whom application is made to enforce obedience to it (Code; Civ. Broe,. §§ 855, 856) may be called upon to decide respecting the same. If not, then the provisions of section 119 of the Greater Hew York charter and the provisions of section 854 of the Code of Civil Procedure, so. far as they relate to the power of the commissioners of accounts, are unenforcible at the present time.

In opposition to the motion to set aside this subpoena, the learned . corporation counsel introduced áffidavits from which he asked the . court to determine that the examination-sought was not an unrea- • sonable one. If the court has power to pass upon the question at this' time, it is our opinion that not the slightest justification is shown for the extraordinary demand, of - the commissioner of accounts, as expressed in. the subpoena issued by him. It is. no ' answer to say that a-subpoena dtices tecum, does not partake of the character of a search or seizure.' In Hale v. Henkel (201 U. S. 43) the court, in condemning the practice of issuing a general subpoena ' deuces tecum to produce all the contracts, books and papers of a firm, said (pp. 76, 77): “ An order for the production pf books and papers may constitute an unreasonable search and- seizure within the Fourth Amendment.'- * * * Some necessity should be Shown, * * * or sóme evidence, of 'their materiality .produced, to :justify ail order for the -production of such a mass of papers. ..A general subpoena of this description is equally indefensible as a ' search warrant would be if couched in similar terms.”

Nor is it any answer to say that this examination is -not sought in any criminal proceedings. In the absence of a-full and .complete statute of indemnity, a person should not be. compelled, when- acting as a witness in any investigation, to- give evidence .which may tend to imperil his constitutional privilege. (Counselman v. Hitchcock, 142 U. S. 547.) Quoting again from the. opinion of Air. Justice . Field- (Matter of Pacific Railway Commission, supra), he says: “The language thus used.had reference, it is true, to the compulsory production of papers as a foundation for criminad proceedings, but it is applicable to any such production of the private books and papers of a party otherwise than in the course of judicial proceedings, or a direct suit for that purpose. It is the forcible intrusion into, and compulsory exposure of, one’s private affairs and papers, without judicial process, or in the course of judicial proceedings, which is contrary to the principles of a free government, and is abhorrent to the instincts of Englishmen and Americans. * * * Compulsory process to produce such papers, not in a judicial proceeding, hut before a commissioner of inquiry, is as subversive of ‘all the comforts. of society’as their seizure under the general warrant condemned in that case.”

Our conclusion, therefore, is that the statute does not warrant the commissioner of accounts in issuing the subpoena duces tecum, the-validity of which is attacked in this case, and to sustain such exercise of power upon his part would be subversive of every well-established principle of personal liberty intended to be- secured to the citizens of this State and country. ¡

It only remains to consider whether the validity of this subpoena may be attacked by Foster, and in this proceeding. The fact that the papers are temporarily in the custody of the receiver of the firm does not affect his right. They are still his papers, and he is entitled to guard and protect them from improper attack. Nor does the fact that the papers relate to copartnership transactions, and that Foster’s copartner consents to their inspection, militate against his right. Members of a firm do not hold the firm assets as tenants in common. “The corpus of the effects is joint property, and neither partner separately has anything in that corpus.” (Menagh v. Whitwell, 52 N. Y. 146.)

A more troublesome question arises. as to the regularity of the practice adopted by Foster in making the motion to set aside the subpoena. The practice usually followed in such cases seems to have been to disobey the subpoena and await the institution of proceedings to punish for contempt. But in this case the witness subpoenaed is Holt, while the real party. to the proceeding is not the witness Holt, but Foster, whose rights are being invaded. In view of the fact that if a subpoena is ever to become' effective, it is by virtue of the provisions of the Code of Civil Procedure, which contemplated a judicial proceeding to .punish for-contempt if it was disobeyed, we think that a party whose rights are invaded- by such-process may apply to the court, whose duty it is to enforce it, to set aside such process if it is invalid. The regularity of such procedure seems-to be suggested, although not necessarily involved; in the determination of the cases of Matter of Dittman (65 App. Div. 343, 346) and Matter of Randall (90 id. 192, 194).

The order of the Supreme Court setting aside the subpoena issued by the commissioner of accounts should be affirmed.

Hirsohberg, P. J., Woodward, Thomas and High,. JJ., concurred.

'. Order [of June 20,1910], in so far as appealed.from reversed, with ten dollars costs and disbursements, and motion denied, with costs.

Order setting aside subpoena, duces tecum affirmed, with ten dollars costs and disbursements. - . . '