Luther F. Grant and Sirrka v. Grant v. United States

282 F.2d 165, 3 Fed. R. Serv. 2d 1056, 6 A.F.T.R.2d (RIA) 5380, 1960 U.S. App. LEXIS 3932

• Court: Court of Appeals for the Second Circuit
• Decided: July 28, 1960
• Docket: 344, Docket 26183
• Status: Published

Opinions

FRIENDLY, Circuit Judge.

Luther F. Grant and his wife Sirrka V. Grant are physicians practicing in Liberty, New York. Luther applied on their joint behalf to the District Court for the Northern District of New York, pursuant to Fed.R.Crim.Proc. 41(e), 18 U.S.C., for an order suppressing as evidence records and papers that he had made available to agents of the Internal Revenue Service. He alleged that the records had been obtained in violation of the Fourth and Fifth Amendments and that the United States attorney was about to present to a grand jury information relating to petitioners’ tax liability derived from them.

Upon this application, Judge Foley, sitting in Albany, signed an ex parte order dated February 26, 1960, requiring the United States attorney to show cause on the judge’s next scheduled motion day at Albany, March 21, 1960, why petitioners should not be granted the relief sought. The order stayed the United States attorney and all other agents and representatives of the United States “from submitting any evidence or information to a Grand Jury or from taking any other or further proceedings in relation to the above captioned petitioners pending the determination of this application * * * ”. At the same time the judge signed an order, also ex parte, granting petitioners leave under Fed.R. Civ.Proe. 26(a), 28 U.S.C., to serve notice of the taking of depositions of four revenue agents prior to the expiration of 20 days after the commencement of the action on the ground “that their testimony is desired for use at the hearing of petitioners’ motion to suppress illegal evidence * ,* *, and that it is essential that their testimony be taken prior to such hearing.” Pursuant to such leave petitioners served notice that the depositions would be taken on March 8, 1960 and a subpoena commanding a special agent to bring copies of the manuals and instruction to revenue agents and special agents, “all documents, papers, books, records, memoranda, reports, diaries and objects maintained or obtained” by two agents, and “copies or extracts of books and papers made by them as a result of examinations or investigations” relating to the tax affairs of the petitioners.

When Judge Foley arrived in Syracuse on March 1, 1960, to commence a trial term, an assistant United States attorney asked him to vacate the order of February 26. The judge declined to do this but signed an order, supported by affidavits of the United States attorney and two revenue agents, requiring the petitioners to show cause on March 7 “why an order should not be made dissolving the injunction and vacating the order to show cause granted by this Court on the 26th day of February 1960.” Petitioners submitted answering affidavits on the return day. After considering the affidavits and hearing counsel, Judge Foley, on March 8, 1960, made a Memorandum-Decision and Order, 186 F.Supp. 418, refusing to dissolve the stay (although modifying it to permit the institution of a complaint before a United States Commissioner under 6531 of the Internal Revenue Code of 1954, 26 U.S.C. § 6531, to toll the statute of limitations) and reserving decision as to vacating the original order to show cause until the hearing. From this the United States appeals'.

We meet at the outset the question, not discussed by the parties, whether the order is appealable. Manifestly the order was not final; hence it is not appealable under 28 U.S.C. § 1291. However, the order of February 26 contained language of restraint, and we must consider whether the order of March 8 is an interlocutory order “refusing to dissolve or modify injunctions” and therefore appealable within 28 U.S.C. § 1292(a)(1).

If appealability were governed by 28 U.S.C. § 1292(a)(1), we would be required to determine whether the February 26 order was a temporary restraining order or a preliminary injunction. For “In a civil action a restraining order qua restraining order is non-appealable,” 7 Moore, Federal Practice, j[ 65.07, at 1649 (2d ed. 1955); Sehainmann v. Brainard, 9 Cir., 1925, 8 F.2d 11, whereas a preliminary injunction is. However, “the label put on the order by the trial court is not decisive; instead the courts look to such factors as the duration of the order, whether it was issued after notice and hearing, and the type of showing made in obtaining the order.” 3 Barron & Holtzoff, Federal Practice and Procedure, § 1440, at 509 (Wright ed. 1958). The authors aptly add, “Application of these tests is not easy to fathom.” Fed.R.Civ.Proc. 65(b) provides that any temporary restraining order granted without notice “shall expire by its terms within such time after entry, not to exceed 10 days, as the court fixes, unless within the time so fixed the order, for good cause shown, is extended for a like period * . * * ” Sims v. Greene, 3 Cir., 1947, 160 F.2d 512, held that an order originally issued on December 2,1946, extended on December 20 without objection until January 14, 1947, and thereafter continued from time to time until February 3, during which time a long evidentiary hearing was held, had ceased to be a temporary restraining order and had become a preliminary injunction subject to appeal under what is now 28 U.S.C. § 1292(a)(1). On the other hand, Connell v. Dulien Steel Products, Inc., 5 Cir., 1957, 240 F.2d 414, 415, certiorari denied, 1958, 356 U.S. 968, 78 S.Ct. 1008, 2 L.Ed.2d 1074, held that an order labelled a “temporary restraining order” did not cease to be one because it restrained pending decision on a motion for a preliminary injunction which was scheduled to be heard 28 days thence, see 71 Harv.L.Rev. 550 (1958). And the Third Circuit has decided similarly with respect to a stay that was to remain in effect until the application for the temporary injunction was heard, when the appeal was taken prior to the expiration of 20 days. Pennsylvania Motor Truck Ass’n v. Port of Philadelphia Marine Terminal Ass’n, 1960, 276 F.2d 931. Here the minimum period of restraint was 24 days, only four more than the 20 permitted by Rule 65(b), a period that might have been accepted by consent under the express terms of the rule or would undoubtedly have been shortened had the court been requested to do so; the order was issued without notice and hearing; and the judge had not made the preliminary determination of the rights of the parties required for issuance of a temporary injunction. On the other hand, as demonstrated by the order permitting petitioners to take depositions, the hearing scheduled for March 21 was evidently intended to be the final hearing, so that the stay may be said to have performed the traditional office of an injunction pendente lite, “to preserve the status quo pending final determination of the action after a full hearing.” 7 Moore, Federal Practice, T 65.04, at 1625 (2d ed. 1955).

The difficulty in resolving these conflicting considerations suggests that we may not be asking the right question and that we ought examine a more basic one, namely, whether 28 U.S.C. § 1292(a) (1) applies at all to preliminary stays in summary proceedings to suppress illegally obtained evidence. This in turn requires analysis of the nature of a motion to that end made before any criminal proceeding is pending.

Fed.R.Crim.Proc. 41(e) provides that “A person aggrieved by an unlawful search and seizure may move the district court for the district in which the property was seized for the return of the property and to suppress for use as evidence anything so obtained” on various grounds therein specified. It directs that “The judge shall receive evidence on any issue of fact necessary to the decision of the motion.” The rule embodies a practice which long antedated it but whose jurisdictional character, at least in those cases where the motion precedes the criminal proceeding to which the evidence relates, has been little discussed. We have said that such a motion “was in effect a complaint initiating a civil action,” Lapides v. United States, 2 Cir., 1954, 215 F.2d 253, 254; Russo v. United States, 2 Cir., 241 F.2d 285, 287, certiorari denied, 1957, 355 U.S. 816, 78 S.Ct. 18, 2 L.Ed.2d 33, and so it is in the sense with which the Court was there mainly concerned, namely, its independence from the later criminal proceeding and the consequent appealability of a final order therein under 28 U.S.C. § 1291. However, the jurisdictional grants in 28 U.S.C. §§ 1331-1358 will be searched in vain for any rubric under which such a motion falls, in the absence of any allegation of jurisdictional amount that would bring it under § 1331, see Centracchio v. Garrity, 1 Cir., 1952, 198 F.2d 382, 385, certiorari denied, 1952, 344 U.S. 866, 73 S.Ct. 108, 97 L.Ed. 672. The classical exposition of the nature of such a motion is Judge Hough’s statement in United States v. Maresca, D.C. S.D.N.Y.1920, 266 F. 713, 717:

“Whenever an officer of the court has in his possession or under his control books or papers, or (by parity of reasoning) any other articles in which the court has official interest, and of which any person (whether party to a pending litigation or not) has been unlawfully deprived, that person may petition the court for restitution. This I take to be an elementary principle, depending upon the inherent disciplinary power of any court of record.

“Attorneys are officers of the court, and the United States attorney does not by taking office escape from this species of professional discipline. Thus power to entertain this motion depends on the fact that the party proceeded against is an attorney, not that he is an official known as the United States attorney. It is further true that the right to move does not at all depend on the existence of this indictment; it might be made, were no prosecution pending.”

See also Go-Bart Importing Co. v. United States, 1931, 282 U.S. 344, 355, 51 S.Ct. 153,75 L.Ed. 374; Foley v. United States, 5 Cir., 64 F.2d 1, 3, certiorari denied, 1933, 289 U.S. 762, 53 S.Ct. 796, 77 L.Ed. 1505.

When motions under Rule 41(e) or the practice preceding it are independent of a criminal proceeding, the courts entertain appeals from final orders denying the return of papers, Perlman v. United States, 1918, 247 U.S. 7, 38 S.Ct. 417, 62 L.Ed. 950; Essgee Co. v. United States, 1923, 262 U.S. 151, 43 S.Ct. 514, 67 L.Ed. 917; Go-Bart Co. v. United States, supra, or granting such return, Burdeau v. McDowell, 1921, 256 U.S. 465, 41 S.Ct. 574, 65 L.Ed. 1048. In contrast, when the motion is made after indictment, neither its denial, Cogen v. United States, 1929, 278 U.S. 221, 49 S.Ct. 118, 73 L.Ed. 275, nor its grant, Carroll v. United States, 1957, 354 U.S. 397, 77 S.Ct. 1332, 1 L.Ed.2d 1442, is appealable. We have found no case sustaining appellate jurisdiction from any order in such a proceeding save a final one.

We do not think an order, made in the exercise of “the inherent disciplinary power” of the court, directing one of its own officers to refrain from using books and papers claimed to have been unlawfully taken until the court can determine his right to use them, is an order “granting, continuing, modifying, refusing or dissolving injunctions, or refusing to dissolve or modify injunctions” within 28 U.S.C. § 1292(a)(1), even if the stay runs beyond the 20-day period permitted for temporary restraining orders by Fed.R.Civ.Proc. 65(b) and we should assume that the Rule is fully applicable.¹ Section 1292(a)(1) stems from § 7 of the Evarts Act, c. 517, 26 Stat. 828, providing, by way of exception to the requirement of finality, “That where, upon a hearing in equity in a district court, or in an existing circuit court, an injunction shall be granted or continued by an interlocutory order or decree, in a cause in which an appeal from a final decree may be taken under the provisions of this act to the circuit court of appeals, an appeal may be taken from such interlocutory order or decree granting or continuing such injunction to the circuit court of appeals”; orders denying such injunctions were first added in 1895, c. 96, 28 Stat. 666. The section as it appeared in the Judicial Code of 1911, § 129, 36 Stat. 1134, continued to be prefaced by the words “Where upon a hearing in equity in a district court,” and the omission of the words “in equity” in the Act of February 13, 1925, 43 Stat. 937, “was not intended to remove that limitation.” Schoenamsgruber v. Hamburg American Line, 1935, 294 U.S. 454, 457, fn. 3, 55 S.Ct. 475, 477, 79 L.Ed. 989; see Baltimore Contractors, Inc. v. Bodinger, 1955, 348 U.S. 176, 180, fn. 6, 75 S.Ct. 249, 99 L.Ed. 233. Whatever might be the ease when a person seeking the return of property alleged to have been illegally seized proceeds by a plenary action under an appropriate jurisdictional statute, see Goodman v. Lane, 8 Cir., 1931, 48 F.2d 32; cf. Eastus v. Bradshaw, 5 Cir., 94 F.2d 788, certiorari denied, 1938, 304 U.S. 576, 58 S.Ct. 1045, 82 L.Ed. 1539, such language is hardly apt to describe a preliminary step in a special proceeding where, in the course of exercising its “disciplinary powers” “summarily to determine” what one of its own officers should do, Go-Bart Co. v. United States, supra, 282 U.S. at page 355, 51 S.Ct. at page 157 the court instructs him, ex parte, not to take action pending the determination that might impair the court's ability to grant full relief. Such a proceeding normally would not have the three stages — temporary restraining order, preliminary injunction, and final decree — characteristic of “a hearing in equity”; the first evidentiary hearing would usually be the last and the proceeding would generally be determined before an appeal from an interlocutory order could be heard.

The Baltimore Contractors case itself teaches that not every request for an order containing words of restraint is one for an injunction within § 1292(a) (1). So does Fleischer v. Phillips, 2 Cir., 264 F.2d 515, 516, certiorari denied, 1959, 359 U.S. 1002, 79 S.Ct. 1139, 3 L.Ed.2d 1030, where we said, also dealing with” officers of the court, that “the prayers for injunctive relief add nothing to the orders denying the motions and render neither of them automatically appealable under 28 U.S.C. § 1292(a)(1).” And United States v. Rosenwasser, 9 Cir., 1944, 145 F.2d 1015, 156 A.L.R. 1200, held that an order suppressing evidence and restraining the United States from using copies of the seized records or information derived therefrom in any proceeding of any kind, which was not appealable as final because it was sought only after the information had been filed, could not be appealed as an interlocutory order granting an injunction although literally it assuredly was.

Our holding that the order here sought to be reviewed is not appeal-able does not mean that district judges have unlimited discretion to stay the government or its agents from presenting evidence to a grand jury pending a hearing on a motion to suppress. Fed.R. Crim.Proc. 41(e) requires that evidence be taken on “any issue of fact necessary to the decision of the motion.” It follows that evidentiary hearings should not be set as a matter of course, but only when the petition alleges facts which if proved would require the grant of relief. We find it somewhat hard to see how the petition here met this test, since the constitutional guarantees are not violated when taxpayers’ books and records, voluntarily turned over to Treasury agents for examination, are found to contain evidence leading the government to assert criminal .liability, Russo v. United States, supra; United States v. Sclafani, 2 Cir., 265 F.2d 408, certiorari denied 1959, 360 U.S. 918, 79 S.Ct. 1436, 3 L.Ed. 2d 1534; Centracchio v. Garrity, supra; the fact that one of the agents was a special agent (whose presence, petitioners allege, shows an intent to develop facts leading to criminal prosecution) has been held irrelevant, Turner v. United States, 4 Cir., 222 F.2d 926, 930, certiorari denied 1955, 350 U.S. 831, 76 S.Ct. 65, 100 L.Ed. 742; and the only affirmative misrepresentation alleged as to the nature of the investigation postdated the voluntary delivery of the records. In those cases where an evidentiary hearing is required, the court should proceed in an expeditious manner consonant with the summary character of the remedy and with a recognition that “It is no less important to safeguard against undue interruption the inquiry instituted by a grand jury than to protect from delay the progress of the trial after an indictment has been found.” Cobbledick v. United States, 1940, 309 U.S. 323, 327, 60 S.Ct. 540, 542, 84 L.Ed. 783. The possible expiration of a period of limitations is, of course, highly relevant to the exercise of the court’s discretion. Abuses of discretion in ordering a hearing or in the scope or duration of a stay can be corrected by courts of appeals through the issuance of mandamus. 6 Moore, Federal Practice, flj 54.10 [4], at 87 (2d ed. 1955). Here, however, appellant has not requested such relief, see Zamore v. Goldblatt, 2 Cir., 1953, 201 F.2d 738, the stay was to continue only until the next motion day of the court in Albany, and the issue would doubtless have been settled long ago if the government had complied with the order to show cause instead of taking this appeal.

The appeal is dismissed for lack of appellate jurisdiction.

1 . The ease for applicability is that the ■ action is “of a civil nature,” Fed.R.Civ. Proc. 1, since “Whether an action is civil or criminal by nature is determined by the sanctions sought to be imposed,” 7 Moore, Federal Practice H 81.02, at 4431 (2d ed. 1955); see United States v. Stangland, 7 Cir., 1957, 242 F.2d 843, 846, and does not come within any of the exclusions of Rule 81. In Russo v. United States, supra, 241 F.2d at pages 287-288, we held Rule 26(a) applicable in a proceeding like the present. However, since the Federal Rules of Civil Procedure were “primarily designed for plenary litigation,” 7 Moore, Federal Practice If 81.06, at 4442 (2d ed. 1955), it does not necessarily follow that they must be literally applied to proceedings under Fed.R.Crim.Proe. 41(e) which are summary in character, even when these are pre-indictment. Cf. Goodyear Tire & Rubber Co. v. N.L.R.B., 6 Cir., 1941, 122 F.2d 450, 451, 136 A.L.R. 883.