United States District Court, Northern District of Illinois, E.D
July 10, 1963
ALLEN M. DORFMAN AND MARILYNNE DORFMAN, PLAINTIFFS,
VINCENT J. ROMBS, INDIVIDUALLY, AND AS A PARTNER OF A PARTNERSHIP DOING BUSINESS AS MILLER, MANDELL & COMPANY, MELDON J. SMITH, SPECIAL AGENT, INTERNAL REVENUE SERVICE, AND EUGENE C. COYLE, JR., DISTRICT DIRECTOR OF INTERNAL REVENUE, DEFENDANTS.
The opinion of the court was delivered by: Campbell, Chief Judge.
The plaintiffs have brought this action seeking an
injunction against an accountant and Internal Revenue Service
agents, to restrain the disclosure by the accountant to
Internal Revenue Service, of material and information
presently sought by an Internal Revenue Service subpoena.
The defendants have filed a motion to dismiss alleging
failure to state a claim upon which relief can be granted.
The issues are solely legal in nature.
Plaintiff's complaint is based upon the following three
1) The information sought is privileged by
virtue of the State (Illinois) Accountant
privilege (Chapter 110 1/2 § 51).
2) The information sought is protected by the
4th and 5th Amendments to the Constitution of
the United States.
3) The Internal Revenue Service purpose is to
obtain evidence for other pending litigation
— and thus the information sought need not be
Considering these contentions in reverse order I find the
Contention (3) is founded upon a reliance on Application of
Myers, D.C., 202 F. Supp. 212, a 1962 case from the Eastern
District of Pennsylvania. The factual situations are far from
analogous — in Myers a criminal trial was scheduled. The
government in issuing its summons was not interested in a
proper administration of the revenue laws, but rather, sought
to obtain otherwise unavailable pre-trial discovery. An evasion
of the Federal Rules of Criminal Procedure was clear. Such is
not the allegation or the apparent fact in this case.
Apparently related to this issue the government has sought
to file an affidavit. I am of the opinion that this affidavit
is unnecessary to a determination of this, or for that matter
the other issues before me. Therefore, in order properly to
consider this as a motion to dismiss the complaint for failure
to state a cause of action and not as a motion for summary
judgment, I exclude the government's affidavit.
Plaintiff's constitutional claims are equally without merit.
The subpoena in question is addressed to a defendant in this
action — not to the plaintiff who would now claim the
privilege. The 5th Amendment privilege against self
incrimination is personal in nature; it can only be claimed by
an individual as to information or things sought from him. A
person may not force another to claim the privilege in his
As to the 4th Amendment's prohibition against unreasonable
search and seizure, assuming but not deciding that enforcement
of the instant subpoena would constitute such unlawful search
or seizure, still the claimant must be a "* * person aggrieved
by an unlawful search and seizure * * *" properly to have
"standing" for a claim of the Amendment's protection. (Rule
41, Federal Rules of Criminal Procedure.) Plaintiff has not
claimed, nor on the basis of the facts before me can he claim,
either an ownership or possessory right to the property
As to plaintiff's claim of the Illinois Accountant
privilege, plaintiff has cited and places prime reliance on
the 9th Circuit's decision in Baird v. Koerner, 279 F.2d 623
(1960). The Court was there presented with an attorney client
privilege claim — not an accountant privilege claim as I have
here. As I read the Baird case the court did follow the law of
the state relative to the attorney client privilege, reasoning
that the status of attorneys was regulated and controlled by
the state, and additionally, as the court observed, federal law
also supported its decision. Assuming, for purposes of deciding
this motion, the correctness of the Baird decision, it is in
any event quite distinguishable from the instant action. We are
not dealing here with the attorney client privilege, nor for
that matter are we dealing with a privilege which is supported
by federal law or the common law.
Plaintiff also cites our own 7th Circuit in Palmer v.
Fisher, 228 F.2d 603 (1955). Plaintiff's brief accurately
states that the court in Palmer recognized the Illinois
accountant privilege — and permitted an accountant to claim the
privilege in the federal court. I should observe,
parenthetically, that plaintiff's brief is not quite as
accurate in representing the decision to have been by an
unanimous Court. For although it could not properly be termed a
dissent, Judge Finnegan did "* * * disagree with the
majority * * *" and did not join in the opinion, but rather,
stated his belief that the appeal was not properly before the
court. In any event the majority opinion in Palmer predicated
its decision upon the applicability of the Erie Doctrine, Erie
R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188:
the court held that state laws creating privileges are
substantive in nature, and that as such federal courts are, in
compliance with Erie, bound to honor them.
However, jurisdiction of this court in the instant action is
not founded on diversity of citizenship. Rather, jurisdiction
is predicated, in the words of plaintiff's own complaint, on
§ 1340 — an Act of Congress concerning civil actions relating
to internal revenue. Thus, the Erie Doctrine upon which the
Palmer decision was based is not present in this case.
The government in support of its present motion relies on
the 7th Circuit's decision in F.T.C. v. St. Regis Paper Co.,
304 F.2d 731. The Court in St. Regis unequivocally denied a
claimant the right to claim the instant Illinois Accountant
privilege where, if granted, it would result "* * * in a
frustration of the Federal Government's performance of a
necessary investigatory function." Admittedly the case is
somewhat distinguishable from the facts before me in that the
claimant in St. Regis was a trade association and not, as
here, an individual. Also, the subpoena there was issued by
the F.T.C. rather than the Internal Revenue Service. However,
the court cited with approval and ostensibly followed a
decision by the 5th Circuit in Falsone v. United States,
205 F.2d 734. The facts in Falsone were almost identical to the
I would now also add a thought of my own in relation to the
issue before me. In Radiant Burners, Inc. v. American Gas
Ass'n et al., D.C., 209 F. Supp. 321, I had occasion to comment
briefly on the Illinois Accountant privilege. Advisedly I
refer to it as an accountant privilege and not an accountant
client privilege. I did so then, and I do so now because of
the obvious language of the privilege. Chapter 110 1/2 § 51 of
the Illinois Rev. Stat. states the privilege in one sentence:
"A public accountant shall not be required by any
court to divulge information or evidence which
has been obtained by him in his confidential
capacity as a public accountant."
The statute does not even mention the term client. There
having been no accountant client or accountant privilege at
common law the statute must speak for itself: and if indeed it
does so speak for itself, then it is clear that what the
Illinois Legislature did in fact create was an accountant
privilege, a privilege whose benefit was to inure to, and
which could only be claimed by, an accountant. To this extent
such a privilege would more closely resemble the attorney
"work product" privilege and not the right of a client as
founded in the attorney client privilege. This being the case
it is difficult for me to find merit in the present action
wherein the client and not the accountant is making claim to
Accordingly, on the basis of the decision of this circuit in
the St. Regis case, which factually presents a closer
resemblance to this case than any of the authorities cited by
the plaintiff, I grant the defendant's motion and herewith
dismiss the complaint in this cause for failure to state a
claim upon which relief could be granted.
Cause dismissed at plaintiff's costs.
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