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February 23, 1965


The opinion of the court was delivered by: Will, District Judge.

On December 16, 1963, 225 F. Supp. 45, this Court issued an order in the instant case directing the respondent, Jackson L. Boughner, to appear before the petitioner.

  "to give testimony relating to the tax liability of
  John Doe, the unknown taxpayer, or taxpayers, on
  whose behalf Jackson L. Boughner delivered to the
  Internal Revenue Service a cashier's check for
  $215,499.95, dated July 27, 1961, and drawn on the La
  Salle National Bank, Chicago, Illinois."

The United States Court of Appeals for the Seventh Circuit affirmed the order. 333 F.2d 515 (7 Cir. 1964). The Supreme Court denied the petition for certiorari filed in the action. 379 U.S. 913, 85 S.Ct. 260, 13 L.Ed.2d 184 (1964).

Having exhausted all avenues of appeal, the respondent appeared before the petitioner on December 8, 1964, answered some questions, but refused to give other testimony as required by the order; e.g., he refused to divulge the identity of the client on whose behalf he had delivered the aforementioned check. As a result, the petitioner has moved for an order requiring the respondent to show cause why the court should not hold him in contempt and invoke appropriate sanctions.

In the initial controversy before the Court, which was the subject of an opinion reported at 225 F. Supp. 45 (N.D.Ill. 1963), respondent limited his defense to challenging the validity of the summons issued by the petitioner pursuant to § 7602 of the Internal Revenue Code of 1954, 26 U.S.C. § 7602. The discussion between the Court and counsel prior to the entry of the order touched not only on the issue of the validity of the summons but also on whether the respondent was contending that the answers to the questions which would be asked under the summons might be privileged. The respondent, however, specifically did not urge this defense on the Court, counsel stating that he was not raising the defense of privilege "at this time." Accordingly, the second conclusion of law entered herein on December 16, 1963, reads as follows:

    "An individual whom the Commissioner has
  substantial reason to believe has knowledge relevant
  to an inquiry into the liability of a taxpayer for an
  internal revenue tax may be compelled, absent any
  claim of constitutional or other privilege, by a
  summons issued pursuant to § 7602 to testify with
  respect thereto." (emphasis added)

Respondent now seeks for the first time to raise the attorney-client privilege in defense of his refusal to answer certain questions asked him relative to the identity of the client for whom the $215,499.95 check was deposited. Were the attorney-client privilege applicable to this particular situation — and we will discuss below why we deem it not to be — the facts as we have them here clearly indicate a waiver of that defense. At the time respondent challenged the validity of the summons he was given ample opportunity to raise alternative defenses. He chose not to do so then, but now, having failed all the way to the Supreme Court with one defense, seeks to urge a second upon the Court.

Rule 12(h) of the Federal Rules of Civil Procedure provides that a party "waives all defenses and objections which he does not present either by motion as hereinbefore provided or, if he has made no motion, in his answer or reply," with certain exceptions not here applicable. Rule 12(g) requires a party making a motion to consolidate therein all defenses or objections then available to him to be raised by motion or be deemed to have waived them. It is, of course, well settled that a claim of privilege must be timely raised or it will be deemed to have been waived. La Moore v. United States, 180 F.2d 49, 12 Alaska 556 (9 Cir. 1950); Steen v. First National Bank, 298 F. 36 (8 Cir. 1924).

Under the circumstances hereinbefore set forth, the Court considers respondent's previous failure to raise the privilege claim as a waiver of that defense and all other defenses not then raised except those, like the defense of jurisdiction, which are not capable of being waived.

Not only has any claim of privilege been waived but, as a matter of substantive law, the attorney-client privilege is not applicable in the context here presented. The existence of an attorney-client relationship is not privileged nor is the identity of the parties engaged in such a relationship protected by the privilege. The privilege pertains to communications between the attorney and his client, not to the fact that the two parties are so associated. Behrens v. Hironimus, 170 F.2d 627 (4 Cir. 1948); Mauch v. Commissioner, 113 F.2d 555 (3 Cir. 1940).

It is generally recognized that the privilege against disclosure of information confidentially revealed to an attorney is personal to the client and may only be asserted by him. As was stated in Steen v. First National Bank, supra, 298 F. at p. 41,

    "But this privilege of preventing the disclosure of
  confidential communications is a personal one. It is
  not a right effective without claim or assertion. It
  is a mere privilege, that has no practical existence
  or effect, unless personally and timely claimed by
  its possessor. It must be presented and claimed by
  the owner when the subject matter of it is first

Counsel for the respondent concedes that Illinois law also requires the claim of attorney-client privilege to be raised by the client. In re Estate of Busse, 332 Ill.App. 258, 75 N.E.2d 36 (1947). The precise question of whether an attorney may refuse to divulge the identity of a client has apparently never been considered by the Illinois courts, but there is no basis to conclude that in Illinois the client's privilege may be asserted by the attorney as to the identity of the client when it is clear that it may not be so asserted with respect to any other disclosure.

Respondent's counsel urges that since the substantive information has already been disclosed, i.e., that some person admits that he owes at least $215,499.95 in federal income taxes, the attorney, under the attorney-client privilege, must be permitted to refuse to identify the client or else that information combined with the facts already disclosed may incriminate the unknown taxpayer. It may be noted in passing that the investigation pursuant to which the instant summons was issued relates to civil tax liability only. But even if a criminal investigation were involved, it is clear that voluntary disclosure of specific acts by an individual constitutes a waiver of the constitutional privilege against self-incrimination. Absent an immunity agreement, a person may not admit illegal conduct and then refuse to disclose his identity. The privilege must be invoked at the outset or it is waived. As was said by ...

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