Petition — Brancato v. United States

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MCHREL KOvAN, IN., CI ENI

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In the Supreme Court of the United States

OCTOBER TERM, 1975

No. 7 o- 51 8

JASPER M. BRANCATO and ZAIRA BRANCATO,

Petitioners,

*

VS.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

Rospert G. DUNCAN

2700 Kendallwood Parkway

Kansas City, Missouri 64119

RICHARD M. SHTEAMER

916 Walnut Street Building

Kansas City, Missouri 64106

Counsel for Petitioners

E. IL. Menpennaus, Inc., 926 Cherry Street, Kansas Citv, Mo. 64106, 421-8030

TABLE OF CONTENTS

. **

Reasons for Granting the Writ—

1. The Decision Below Conflicts With the Decision

of Another Court of Appeals ͤͤͤ»P

2. The Decision Below Involves an Important Ques-

tion of Federal Law Which Should Be Settled by

I .

3. The Court of Appeals Below Has So Far De-

parted From the Accepted and Usual Course of

Judicial Proceedings So As to Call for the Exer-

cise of This Court’s Power of Supervision

. rr

Appendix

A. Final Judgment, United States District Court,

Western District of Missouri, Western Division

B. Opinion, United States Court of Appeals for the

D xx.

C. Order, United States Court of Appeals for the

r ⁊ↄ¼———ʃ

14

II

Table of Authorities

CASES

Boyd v. United States, 116 U.S. 616, 6 S.Ct. 524, 29

————T———ͤͤ— 9, 11-12

Couch v. United States, 409 U.S. 322, 93 S.Ct. 611, 34

e 8, 9, 11, 12, 13, 14

Schwimmer v. United States, 232 F.2d 855 (8th Cir.

%% ͤA—A—A— AAA 8, 9, 10, 11, 12

Sewell v. United States, 406 F.2d 1289 (8th Cir. 1969) 11

United States v. Guterma, 272 F.2d 344 (2nd Cir.

SD “adie eked 9, 12, 13

CONSTITUTIONAL PROVISIONS,

RULES AND STATUTES

Constitution of the United States—

01 AGO MEMAOIE ...n..ncccccccccccceccececesss 3, 9, 11, 12, 13, 14

Fifth Amendment 4, 10, 11, 12, 13, 14

Title 28, Federal Rules of Civil Procedure, Rule 52 (a)

f/ A A RTE EE 4, 11. 15

/ e 2

,,, wm 2

In the Supreme Court of the United States

OCTOBER TERM, 1975

No.

JASPER M. BRANCATO and ZAIRA BRANCATO,

Petitioners,

VS.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

The petitioners, Jasper M. Brancato and Zaira Bran-

cato, respectfully pray that a Writ of Certiorari issue to

review the judgment and opinion of the United States

Court of Appeals for the Eighth Circuit entered in this

proceeding on July 11, 1975, and the denial of their peti-

tion for rehearing or rehearing by the Court en Banc en-

tered on August 4, 1975.

OPINIONS BELOW

Final Judgment Granting Motion for Return of 42

Boxes of Records, Registration Cards, and Guest Folios

and Suppressing Their Use in Evidence, filed January 8,

1975, in Civil Action No. 73CV608-W-3, in the United

States District Court for the Western District of Missouri,

Western Division, in cause entitled “In The Matter Of

The Application Of Jasper M. Brancato And Zaira Bran-

cato For The Return Of Seized Property”, not reported,

appears as Appendix “A” hereto.

The Opinion of the United States Court of Appeals

for the Eighth Circuit in Cause Ng. 75-1139 therein, not

yet reported, appears as Appendix “B” herein.

Order of the United States Court of Appeals for the

Eighth Circuit dated August 4, 1975, denying the petition-

ers’ Petition for Rehearing and Petition for Rehearing en

Banc, appears as Appendix “C” herein.

JURISDICTION

The judgment of the Court of Appeals for the Eighth

Circuit was entered on July 11, 1975, and a Petition for

Rehearing or Rehearing in the Court en Banc timely filed,

was denied on August 4, 1975; this Petit. n for Writ of

Certiorari was mailed to be filed within ninety (90) days

of that date. This Court’s jurisdiction is invoked under

18 U.S.C. §1254(1), and is timely filed under the provi-

sion of 28 U.S.C. §2101(c).

QUESTIONS PRESENTED

1. Whether the motel business records of prior owners

left at the motel for storage by the prior owners were

constitutionally and lawfully seized from the new own-

ers by means of a grand jury subpoena.

A. Whether petitioners, the prior owners, were

in constructive possession of said business records.

B. Whether the use of the grand jury subpoena

violated the petitioners’ privilege against unreasonable

searches and seizures.

C. Whether the petitioners’ privilege against self-

incrimination was denied.

2. Whether the Court of Appeals erred in making its own

findings of fact without finding that the findings of

fact by the District Court were clearly erroneous.

CONSTITUTIONAL AND STATUTORY PROVISION

AND RULES INVOLVED

United States Constitution

Fourth Amendment

“The right of the people to be secure in their persons,

houses, papers, and effects, against unreasonable searches

and seizures, shall not be violated, and no warrants shall

issue, but upon probable cause, supported by oath or af-

firmation, and particularly describing the place to be

searched, and the persons or things to be seized.”

Fifth Amendment

“No person . . shall be compelled in any criminal

case, to be a witness against himself, nor be deprived of

life, liberty, or property, without due process of law; nor

shall private property be taken for public use without just

compensation.”

Title 28, Federal Rules of Civil Procedure

Rule 52(a)

“In all actions tried upon the facts without a jury. .,

the Court shall find the facts specifically and state sepa-

rately its conclusions of law thereon, and judgment shall

be entered pursuant to Rule 58; . . . requests for findings

are not necessary for purposes of review. Findings of

fact shall not be set aside unless clearly erroneous, and

due regard shail be given to the opportunity of the trial

court to judge of the credibility of the witnesses . . . If

an opinion or memorandum of decision is filed, it will be

sufficient if the findings of fact and conclusions of law

appear therein. . .”

STATEMENT OF THE CASE

This 1s a joint petition for Writ of Certiorari presented

by Jasper M. Brancato and Zaira Brancato. Petitioners

originally filed a motion in the United States District

Court for the Western District of Missouri seeking the

return of 42 boxes of business records which were seized

by means of a grand jury subpoena. They also sought to

suppress from the use in evidence said records and all

evidence leading therefrom, in any criminal or civil ac-

tion. The United States District Court for the Western

5

District of Missouri entered a judgment and order sustain-

ing their m-tion and ordering the return to them of said

42 boxes of motel business records, and suppressing their

use in evidence. The United States Court of Appeals for

the Eighth Circuit reversed the District Court, and peti-

tioners now seek certiorari.

The petitioners are husband and wife, and are the

former owners of the Ramada Inn, 5000 East Linwood,

Kansas City, Missouri. Both are presently charged by

indictment and are awaiting trial in the United States Dis-

trict Court for the Western District of Missouri on two

indictments; the first charging mail fraud arising out of

the filing of allegedly fraudulent Missouri State sales tax

returns, and the second indictment charges income tax

evasion.

Petitioners owned and operated, as individuals and

not as a corporation, said Ramada Inn, from 1966 through

1973. The records in question included registration cards,

guest folios, and other usual business records. These rec-

ords were not necessary to the contiuued operation of the

motel by the new owners, and were for the period of opera-

tion by the petitioners while they were owners and opera-

tors of the motel.

The records in question were seized by an Internal

Revenue agent pursuant to a subpoena duces tecum issued

by the Clerk of the United States District Court for the

Western District of Missouri on the application of the

United States, on or about October 17, 1973, after the

movants had been indicted by a federal grand jury on the

first indictment previously referred to, on October 11,

1973. The subpoena was directed to Larry D. Fransen, or

his designee, Ramada Inn, 5000 East Linwood, Kansas City,

Missouri, directing him to produce before the United

States Grand Jury, all business records of the Ramada Inn,

5000 East Linwood, “within your possession, custody or

control”, relating to the income and expenses of such busi-

ness for the calendar years 1970 and 1971. The subpoena

was apparently altered by one of the serving agents to in-

clude the designation, “for the years 1968-1969, and 1972”.

The petitioners, on November 13, 1973, filed a civil motion

for the return and suppression of these records. It is this

civil proceeding that gives rise to the present petition.

The records in question were the records of the peti-

tioners made by them or under their care while they were

the owners and operators of the Ramada Inn, and prior to

the sale to the new owners. The sale was in conformity

with a formal agreement of sale with the Griffin Inns of

Minneapolis, which company took possession of the Ra-

mada Inn through its agents and employees on July 7,

1973. The Ramada Inn continued to be operated by Grif-

fin Inns’ designee, the Kansas City Inn, a limited partner-

ship.

An evidentiary hearing was held in the District Court

below, The Honorable William H. Becker, District Judge,

presiding. During the hearing James C. Harris, the new

general manager of the Ramada Inn, testified that on the

day that he took possession on behalf of Griffin Inns from

the petitioners, that the petitioners took some of the motel

records with them without objection from him, for the

reason that the records were not necessary for the con-

tinued operation of the motel. Mr. Harris further testified

that approximately 40 boxes of records were stored in a

third floor linen room which was kept locked, and that

the only people who had keys were the housekeeper, Ellen

Dick, and himself. Mr. Harris further testified that neither

he nor any of the other employees of Griffin Inns ever

looked at the 42 boxes on any occasion. When the records

were seized by the Internal Revenue Service agents Mr.

7

Harris made no attempt to notify the petitioners of the

seizure. The petitioners at that time were outside of the

United States temporarily. Approximately six boxes of

records were not seized pursuant to the subpoena, and

were subsequently picked up by the petitioners when they

returned from Europe, after they were made aware of the

seizure. The contract of sale included a customer list and

Harris testified that when the property changed hands the

petitioners left with him a box which contained an alpha-

betical listing of guests who stayed at the motel regularly,

and that this was considered to be the customer list.

Ellen Dick, the housekeeper, testified that she was

familiar with the records being stored in the third floor

linen room for “many years”. She testified that near the

end of September, 1973, the petitioners returned to the

motel, and that Harris told her to take the Senator (the

petitioner, Jasper M. Brancato, is a Senator in the Missouri

Legislature) up to get his records. Mrs. Dick also testified

that on that occasion approximately a dozen boxes of rec-

ords were removed, and that the petitioner advised that

he would return to pick up the remainder of the records,

but that it would be necessary for him to get a truck in

which to haul them. Mrs. Dick testified that Mr. Harris,

the general manager, advised her that the petitioners

would be by to pick up their things and records. Senator

Brancato testified that he had had a discussion at the time

of the sale with the accountant for the new owners, and

that it was understood that all the new owners wanted

was a customer list, and that a number of representatives

and agents of the new owners were present when he took

18 to 19 boxes of records from the motel premises on the

date that possession was changed, July 6, 1973. Senator

Brancato further testified that he first learned of the seiz-

ure of the records by the Internal Revenue Service after

he had returned from Europe and when he had returned

to the motel to pick up his mail, some of which was still

being sent to the motel. The seizure was slightly over

three months after the sale and transfer of possession.

Mr. Harris, the general manager for the new owners,

when served with the subpoena was advised by the agents

that he would be excused from appearing before the grand

jury if he would deliver the records to the Internal Rev-

enue agent. He, in turn, made the records available to the

agents who returned at a later time and removed them.

It was between the first visit by the agents and the time

when the agents returned to remove the records that the

subpoena had been changed by interlineation. This change

was initialed by Internal Revenue Agent Broderick. The

petitioners at no time consented to this voluntary de-

livery of the documents to the Internal Revenue agents.

It was this that the District Court below found to be an

unlawful search and seizure, relying on the Eighth Circuit

Court of Appeals decision in Schwimmer v. United States,

232 F.2d 855 (8th Cir. 1956), and upon this Court’s deci-

sion in Couch v. United States, 409 U.S. 322, 93 S.Ct. 611,

34 L.Ed.2d 548 (1973).

Despite the findings of fact by the District Court, the

Court of Appeals below found different findings of fact

and held that its prior decision in the Schwimmer case was

not in point.

—

REASONS FOR GRANTING THE WRIT

1. The Decision Below Conflicts With the Decision

of Another Court of Appeals.

Not only does the Opinion below conflict with a de-

cision of this Court in Couch v. United States, 409 U.S. 322,

93 S.Ct. 611, 34 L.Ed.2d 548, and with a decision of the

Second Circuit Court of Appeals in United States v. Gut-

erma, 272 F.2d 344 (2nd Cir. 1959), but conflicts with a

prior decision of the Eighth Circuit Court of Appeals itself

in Schwimmer v. United States, 232 F.2d 855 (8th Cir.

1956).

In Schwimmer, supra, an attorney was under investi-

gation by a grand jury for tax evasion and for official cor-

ruption. He had ceased active practice of law and had

placed his files in storage with the Dean Rubber Manu-

facturing Company, and had left the United States for

Puerto Rico. Two subpoenas were issued to Dean Rubber

Company to produce Schwimmer’s files. When Schwim-

mer learned of these subpoenas he returned to the United

States and filed a motion to quash based upon his Fourth

Amendment privilege against unreasonable searches and

seizures. The Court of Appeals there, relying on Boyd

v. United States, 116 U.S. 616, 6 S.Ct. 524, 29 L Id. 746,

held that the Fourth Amendment privilege against unrea-

sonable searches and seizures applies to the compulsory

production of a person’s private books and papers through

a subpoena duces tecum.

In Schwimmer, as here, the government argued that

the Fourth Amendment protection did not apply since the

petitioner was not in possession of the records, but in

Schwimmer the Eighth Circuit Court of Appeals held that:

10

“The law recognizes no distinction between con-

siructive possession with control, and physical posses-

sion, as a basis for subpoena to compel production, so

that such process directed to and served upon an

owner, who is in constructive possession and control, is

as legally capable of commanding the production of

his books and papers as is one against a third party,

who is in physical possession of them for him.”

The Eighth Circuit then held that both persons thus would

have a right to suppress the unlawful seizure of such rec-

ords, and held, at page 861:

“Schwimmer legally had such possession, control,

and unrelinquished personal rights in the books and

papers as not to enable the question of unreasonable

search and seizure to be escaped through the mere

procedural device of compelling a third party naked

possessor to produce and deliver them.”

In Schwimmer the Court was not faced with a Fifth

Amendment self-incrimination privilege contention as is

presented also in the present case. The Court of Appeals

below in our present case did not pass upon the issue of

self-incrimination. In our present case the trial court who

heard the testimony found that the petitioners were in

constructive possession with control of the records in ques-

tion, and that Griffin Inns, the new owners of the Ramada

Inn, were merely custodians thereof. It is quite obvious

from the evidence that the new owners of the Ramada Inn

had given up any right to ownership and had never exer-

cised any other right, to the records in question, but were

merely storing them, as custodians, for the petitioners, un-

til the petitioners had the opportunity and means with

which to remove the records in question. True, the new

owners of the Ramada Inn had the keys to the room in

11

which the records were locked, but in Schwimmer, the

Dean Rubber Company had the keys to the building in

which the records were kept. The Eighth Circuit below

did not apply the proper standard for review of the find-

ings of the District Court. See Rule 52, Federal Rules of

Civil Procedure, Title 28.

The Eighth Circuit Court of Appeals has defined con-

structive possession, see Sewell v. United States, 406 F.2d

1289 (8th Cir. 1969), as being:

“A person who, although not in actual possession,

knowingly has both the power and intention at a given

time to exercise dominion or control over a thing,

either directly or through another person or persons,

is then in constructive possession of it.”

In Couch v. United States, supra, this Court had before

it a situation where the petitioner was the owner of a

restaurant, and she had, for some years, given her bank

statements, payroll records, and other records, to her ac-

countant for the purpose of preparing a federal income

tax return. The Internal Revenue Service commenced an

investigation of Ms. Couch and an Internal Revenue Ser-

vice summons was served on her accountant to examine

and seize her records. The accountant refused to let the

Internal Revenue agents see the records. When the agent

returned on the return date of the summons, the accountant

had already delivered the documents to Ms. Couch’s attor-

ney. The Internal Revenue Service then petitioned the

district court for enforcement of the summons, and Ms.

Couch intervened, asserting her ownership of the records

warranted a Fifth Amendment claim against self-incrimina-

tion. and that enforcement of the summons would violate

her Fourth Amendment right to be secure from unreason-

able searches and seizures. This Court in Couch, cited Boyd

12

v. United States, supra, for the proposition that: “Any

forcible and compulsory extortion of a man’s own testi-

mony, or of his private papers, to be used as evidence to

convict him of crime” is in violation of the Fourth and

Fifth Amendments. This Court in Couch did reject the

use of ownership as circumscribing the perimeters of the

Fifth Amendment self-incrimination privilege. The Court

stated that possession “bears the closest relationship to the

personal compulsion forbidden by the Fifth Amendment“.

This Court, however, went on to say, page 620 n.20:

„. .. We do not indeed attach constitutional im-

portance to possession, but only because of its close

relationship to those personal compulsions and intru-

sions which the Fifth Amendment forbids. Yet, con-

trary to any intimation in the dissent, we do not adopt

any per se rule.”

The Court said further, at page 618:

“We do indeed believe that actual possession of

documents bears the most significant relationship to

Fifth Amendment protections against governmental

compulsions upon the individual accused of crime. Yet

situations may well arise where constructive posses-

sion is so clear, or the relinquishment of possession

is so temporary and insignificant as to leave the per-

sonal compulsions upon the accused substantially in-

tact.”

This Court, in Couch, then cited with approval, two Court

of Appeals’ decisions where constructive possession ra-

tionale was employed. These two cases were Schwim-

mer v. United States, supra, and United States v. Guterma,

272 F.2d 344 (2nd Cir. 1959). It is obvious under the facts

in this case that the petitioners had a reasonable expecta-

tion of privacy in their records, and that the records were

13

only temporarily left with the new owners for lack of

sufficient means with which to move them.

The Second Circuit Court of Appeals in United States

v. Guterma, had before it a situation where the taxpayer

in question stored his personal records in a safe in offices

of a corporation in which the taxpayer was serving as

chairman of the board. There the corporation had no

access to the safe and only the taxpayer and one other per-

son had the combination to the safe. The Second Circuit

Court of Appeals upheld the taxpayer’s assertion of Fifth

Amendment privilege as to his personal records in face of

a grand jury subpoena directed to the corporation.

It is certainly not an unusual situation where a seller

of property may temporarily leave his personal property

at the premises for later transportation and where the new

owner foregoes, expressly or otherwise (and here it was

expressly), any right to ownership or control over the

items so left, it should not be said that the old owners are

not in sufficient possession to be able to exert their privi-

lege against unreasonable searches and seizures and self-

incrimination as guaranteed by the Fourth and Fifth

Amendments of the United States Constitution. The ques-

tion may arise in other cases, of the effect of constructive

possession over items that are left with a custodian with

the intention that the custodian have access to the informa-

tion contained in the papers. Couch refrained from ruling

upon that distinction, but it is not present in petitioners’

case, for here, by agreement, the new owners were satis-

fied with the particular records, as being the customer

list referred to in the sales contract, and it was neither

the new owners’ nor the petitioners’ intention that the new

owners have access to the information contained in the

records. It was the intention of all parties that the Bran-

14

catos remove, at their convenience, the records in ques-

tion.

The Court of Appeals below misinterpreted this Court’s

decision in Couch, saying, at page 5 of the Opinion that

“Even a casual analysis of the facts in Couch

reveals that the taxpayer herein had far greater right

to possession and control of the documents than do

the taxpayers before us.”

In Couch, the books and records were delivered to a third

person over a long period of time, and for the purpose of

allowing the custodian access to the records in the prepara-

tion of Couch’s tax returns. Certainly that was not the

situation in our present case.

2. The Decision Below Involves an Important

Question of Federal Law Which Should Be Settled

by This Court.

Two of the very most important constitutional rights

of individuals is their privilege against self-incrimination,

and their right to be protected from unreasonable searches

and seizures, rights guaranteed by the Fourth and Fifth

Amendments to the United States Constitution. These

rights continually confront law enforcement officers, at-

torneys, and the courts, and this Court should set forth in

its decision, guidelines to the courts below, appellate and

trial, and to law enforcement officers as well as individuals

as to what those rights are. In our present case we have

the question of the exerting of those rights by a former

owner of property over the seizure from the new owners of

personal items that were left on the premises temporarily

pending their being removed. This question has never

been, to petitioners’ knowledge, directly passed upon by

this Court.

15

3. The Court of Appeals Below Has So Far De-

parted From the Accepted and Usual Course of

Judicial Proceedings So As to Call for the Exercise

of This Court’s Power of Supervision.

The District Court made specific findings of fact in

its “Final Judgment Granting Motion for Return of 42

Boxes of Records, Registration Cards, and Guest Folios,

and Suppressing Their Use in Evidence”, including a find-

(App. B, p. 28):

ing (App. A, p. 18), “The carefully drawn written agree-

ments (for the sale of the Ramada Inn) .. establish as a

matter of fact and law that the movants owned, individually,

the 42 (rather than 41) boxes of documents seized under the

grand jury subpoena”, and that certain personal property

of the movants, including the 42 boxes in question “were,

by agreement, stored on the premises of the Inn in store-

rooms as property of the movants .. .”. The Court of

Appeals in its Opinion, however, made different findings

of fact, including (App. B, p. 26), “Although the evidence on

the ownership of the seized records is somewhat equivocal,

the language of the contract clearly places ownership in

the purchaser.” There was no finding by the Court of

Appeals that the findings of fact by the District Court was

clearly erroneous, nor any indication that the Court of

Appeals gave due regard to the opportunity of the trial

court to judge the credibility of the witnesses. The Court

of Appeals merely decided the subject, without actually

seeing and observing the witnesses, anew, and decided it,

apparently, upon the written word of a contract, without

consideration for the testimony of the parties regarding

an oral modification of that contract after it was executed.

Federal Rules of Civil Procedure, Rule 52(a), provides in

part, that in all actions tried upon the facts without a jury

where the trial court, by its opinion, memorandum, or de-

cision, makes findings of fact, that such findings of fact,

16

“shall not be set aside unless clearly erroneous, and due

regard shall be given to the opportunity of the trial court

to judge of the credibility of the witnesses.” The Court of

Appeals has departed from the rules of civil procedure set

down by this Court and approved by Congress, and

this Court should, therefore, exert its supervisory power

and reverse the decision of the Court of Appeals and

reinstate the decision of the District Court made in con-

formity to its proper findings of fact.

CONCLUSION

For these reasons, a Writ of Certiorari should issue to

review the judgment and opinion of the Eighth Circuit

Court of Appeals.

Respectfully submitted,

Rosert G. DUNCAN

2700 Kendallwood Parkway

Kansas City, Missouri 64119

RIcHARD M. SHTEAMER

916 Walnut Street Building

Kansas City, Missouri 64106

Counsel for Petitioners

17

APPENDIX

APPENDIX A“

IN THE

UNITED STATES DISTRICT COURT FOR THE

WESTERN DISTRICT OF MISSOURI

WESTERN DIVISION

Civil Action No. 73CV608-W-3

IN THE MATTER OF THE APPLICATION OF

JASPER M. BRANCATO AND ZAIRA BRAN-

CATO FOR THE RETURN OF SEIZED PROP-

ERTY

Final Judgment Granting Motion for Return of 42

Boxes of Records, Registration Cards, and Guest

Folios and Suppressing Their Use in Evidence

(Filed January 8, 1975)

Jasper M. Brancato and Zaira Brancato (movants)

initiated this independent civil action by filing a motion

for return of 41 boxes of records, registration cards, and

guest folios relating to the operation of a Ramada Inn

from 1968 through 1972, formerly operated by movants

as individuals. The movants alleged that these records

were unlawfully seized by agents of the Internal Reve-

nue Service; that the seizure was made pursuant to a sub-

poena duces tecum issued by the Clerk of this Court on

or about October 17, 1973, on application of the United

States, after movants had been indicted by a grand jury;

that the subpoena duces tecum was directed to Mr. Larry

D. Fransen or his designee, Ramada Inn, 5000 East Lin-

wood, Kansas City, Missouri, directing him to produce

18

before the United States Grand Jury on October 23, 1973,

all business records of the Ramada Inn, 5000 East Lin-

wood, “within your possession, custody or control” relat-

ing to income and expenses of the business of the Ramada

Inn for the years 1970 and 1971; and that the subpoena

was apparently altered (and initialed “M.J.B.”) by one

of the agents serving the subpoena to include insertion

of the phrase “for the years 1968-1969-and 1972.” After

response to the motion by the Government, a plenary evi-

dentiary hearing was held.

The evidence established beyond doubt that the Ra-

mada Inn was operated by the movants as individual co-

owners until a formal agreement of sale thereof to “Grif-

fin Inns” of Minneapolis (GI) which took possession on

July 7, 1973, through its agents and employees.

The carefully drawn written agreements contained in

the Proof File of Kansas City Inn, a Limited Partnership

(D.Ex.2), and the Restated Agreement for Sale and Pur-

chase of Ramada Inn (D.Ex.1) establish as a matter of

fact and law that the movants owned individually the 42

(rather than 41) boxes of documents seized under the

grand jury subpoena, although other current records nec-

essary for continuance of the business became the prop-

erty of the purchaser Griffin and its designee Kansas City

Inn, a limited partnership. Some personal property of

movants and a number of other records including those

in the 42 boxes in question belonging to movants, were

by agreement stored on the premises of the Inn in store-

rooms as property of the movants, who removed some of

the records before October 17, 1973.

On October 17, 1973, Internal Revenue Agent Brode-

rick served the grand jury subpoena duces tecum (P.Ex.2)

on James C. Harris, general manager for the purchaser

— ———— —

19

of the Ramada Inn. At this time no effort was made by

Harris or any other agent of the purchaser in possession

to notify movants who had been accurately reported in

the news to be outside the United States.

Harris, on being advised that his appearance before

the grand jury would be excused if he delivered the rec-

ords, elected to deliver the records rather than to appear.

The records were made available to the agents of the In-

ternal Revenue Service who removed them later. When

the subpoena duces tecum was first served on Harris it

did not contain the interlineations in manuscript that called

for records for the additional years. These interlineations

were made and initialed by agent Broderick after the ini-

tial service, and apparently after he had ascertained the

scope of the stored records at the Inn.

No consent of movants was sought or secured by any-

one for the delivery of the records to agents of the In-

ternal Revenue Service. The movant Jasper Brancato

learned of the delivery of records when he went to the

Inn, on his unscheduled return to Kansas City from his

trip on October 18, 1973, because of his indictment on

October 11, 1973. He surrendered on October 19, 1973,

and learned about a week later of the prior delivery of

his papers to the Government from the housekeeper at

the Inn.

If a subpoena duces tecum to appear with documents

before a grand jury is properly and in good faith issued

and served on the custodian of documents who is owner

of the documents, or who has lawful possession of the

documents, or who has the express or implied consent of

the owner to voluntarily deliver the documents, the cus-

todian may voluntarily agree to surrender possession of

the documents to the Government to secure excuse from

20

appearance before the grand jury with the documents as

required by the subpoena duces tecum.

If however, an individual under investigation, who

owns and has the exclusive right of possession to the

documents, does not consent to voluntary delivery of the

documents by another on whom such a subpoena duces

tecum has been served, the subpoenaed person may not

lawfully deliver possession to Government agents to avoid

appearance before the grand jury. Such a transaction re-

sults in an unlawful search and seizure of papers of the

owner.

These principles were enunciated by the Court of Ap-

peals for the Eighth Circuit in the following language in

Schwimmer v. United States, 232 F.2d 855, 860-861 (8th

Cir. 1956):

“The compelled production of one’s private books

and papers through a subpoena duces tecum, for use

against him in a criminal proceeding, is, of course, as

much within the guaranty of the Fourth Amendment

against unreasonable searches and seizures as is a

reaching of them by means of a warrant. Boyd v.

United States, 116 U.S. 616, 622, 6 S.Ct. 524, 29 L.Ed.

746.

“The term ‘criminal proceeding’, within this rule,

includes the investigation of a grand jury, since such

a body is merely an adjunct or ‘appendage’ of the

court, and the things it does represent an incident or

process in the part played by the judicial system in

criminal law enforcement. 24 Am.Jur., Grand Juries,

§ 2.

“Refusal of the District Court to quash, as an

unreasonable search and seizure, a subpoena duces

tecum issued in a grand jury investigation is a final

— — —

21

or appealable order. Perlman v. United States, 247

US. 7, 12, 13, 38 S.Ct. 417, 62 L.Ed. 950.

“Such a motion to quash is entitled to be made

by the owner of books and papers, in relation to a

grand jury investigation of him, as to a subpoena

duces tecum issued against a third party, in whose

possession the books and papers are, but who is merely

a custodian, without personal right in the books and

papers as such, and with constructive possession and

control of them thus remaining in the owner. The

law recognizes no distinction between constructive

possession, with control, and physical possession, as

a basis for a subpoena to compel production, so that

such process directed to and served upon an owner,

who is in constructive possession and control, is as

legally capable of commanding the production of his

books and papers as is one against a third party, who

is in physical possession of them for him. The ques-

tion of whether to issue a subpoena against the owner

or against the third party thus ordinarily is in such a

situation merely one of procedural choice and con-

venience. Substantively, each involves, except as to

the task of appearing and making delivery, the same

aspects of reach, deprivation and seizure-effect against

the owner.

“We are accordingly unable to see any merit in

the argument made by the Government here that,

since the books and papers of the Dean Rubber Manu-

facturing Co. and the subpoenas involved were issued

against it, Schwimmer had no basis for claiming un-

reasonable search and seizure against him and so could

not make a motion to quash on that ground. We think

that Schwimmer legally had such possession, control

22

and unrelinquished personal rights in the books and

papers as not to enable the question of unreasonable

search and seizure to be escaped through the mere

procedural device compelling a third-party naked

possessor to produce and deliver them.

“The constitutional safeguard against unreason-

able searches and seizures is more than a reach at

mechanics in process. It is concerned with intrinsic

as well as extrinsic aspects, and its look is at reality,

not theory, in respect to the whole of what is being

done. In general terms, the test to be applied under

it is whether the thing done or attempted to be done,

in the sum of its form, scope, nature, incidents and

effect, impresses as being fundamentally unfair or un-

reasonable in the specific situation, when the imme-

diate end sought is considered against the private

right affected. But since, as emphasized, the ques-

tion of reasonableness or unreasonableness in search

is one of realistic and not theoretical approach, the

test stated is of course merely a principle and not a

rule, and so is of subjective value only, and not of

objective force, in the making of specific appraisal.”

The holding in the Schwimmer case was recently cited by

the United States Supreme Court in the case of Couch v.

United States, 409 U.S. 322, 333, 93 S.Ct. 611, 34 L.Ed.2d

548, 557 (1973), in support of the conclusion that “. . . situ-

ations may well arise where constructive possession is so

clear or the relinquishment of possession is so temporary

and insignificant as to leave the personal compulsions upon

the accused substantially intact.”

Under these circumstances, it is concluded that the

42 boxes of records were unlawfully seized and should be

returnec to the movants.

23

For the foregoing reasons, it is therefore

ORDERED and ADJUDGED that the motion herein

for the return of seized property and the suppression of

evidence be, and it is hereby, granted. It is further

ORDERED and ADJUDGED that the United States

return to Jasper Brancato and Zaira Brancato the 42

boxes containing records, registration cards, and guest

folios relating to the operation of the Ramada Inn, 5000

East Linwood, Kansas City, Missouri, possession of which

was secured in lieu of appearance in response to a nd

Jury subpoena duces tecum issued October 17, 1973, re-

quiring appearance of Larry D. Fransen or his designee

before a grand jury on October 23, 1973.

/s/ William H. Becker

William H. Becker

Chief Judge

Kansas City, Missouri

Date: 1-8-75

24

APPENDIX “‘B”’

UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

No. 75-1139

IN RE: GRAND JURY PROCEEDINGS

JASPER M. BRANCATO, et al.,

Appellees,

v.

UNITED STATES OF AMERICA,

Appellant.

Appeal from the United States District Court

for the Western District of Missouri.

Submitted June 11, 1975

Filed: July 11, 1975

Before BRIGHT, Circuit Judge, KILKENNY, Senior Cir-

cuit Judge,* and WEBSTER, Circuit Judge.

KILKENNY, Circuit Judge.

The United States appeals from a judgment granting

appellees’ motion to suppress and to return 42 boxes of

records produced in response to a federal grand jury sub-

poena duces tecum.

»The Honorable John F. Kilkenny, United States Senior

Circuit Judge for the Ninth Circuit, sitting by designation.

25

Factual Background.

The records in question consist of registration cards

and guest folios relating to the operation of a Ramada Inn

from 1968 through 1972. The subpoena was directed to

the manager of the Inn and required the production be-

fore the grand jury, in a tax-related matter, of all busi-

ness records of the Inn “* * within [appellees’] pos-

session, custody or control * * *” pertaining specifically

to the income and expenses of the business of the Inn for

the years 1968, 1969, 1970, 1971, and 1972. It is undis-

puted that the Inn was operated by appellees during the

years in question and that they were the individual co-

owners until they sold to the present owners, who took

possession on July 7, 1973. The final agreement for the

sale and purchase of the Inn between appellees and the

purchaser contained the following provisions pertinent to

our inquiry:

8 o *

2. DESCRIPTION OF PROPERTY. The prop-

erty being purchased is the land and buildings and

other improvements thereon commonly known and

designated as Ramada Inn, 5000-5100 East Linwood,

Kansas City, Missouri 64128, hereinafter referred to

as the ‘Property’. The Property includes:

D. Complete copies of all customer lists avail-

able and business records prepared, accumulated or

compiled by Sellers and/or any operating company

retained by the Sellers (hereinafter called ‘Operating

Company’) in the management and operation of the

Property * * *. [Emphasis supplied. ]

26

5. CLOSING. * * * Sellers shall execute and

deliver to Purchaser the following, which shall be in

form and substance satisfactory to counsel for the

Purchaser:

C. Copies of all customer lists and business rec-

ords, and an assignment of all licenses, rights and per-

mits (held by Sellers which may lawfully be trans-

ferred to Purchaser) necessary or appropriate for the

operation of the Property, all as described in Section

2D hereof * * .

* * *

The record is clear that at the time of the service of

the subpoena on October 17, 1973, the appellees had been

out of possession of the property for approximately three

and one-half months and had no ownership or possessory

interest in the premises, nor any actual possession of the

subject records. It is undisputed that Mr. Harris, the Inn

manager upon whom the subpoena was served, and the

Inn’s housekeeper were the only persons who had access

to the locked linen closet on the third floor of the Inn in

which the boxes of records were stored. Although the

evidence on the ownership of the seized records is some-

what equivocal, the language of the contract clearly places

ownership in the purchaser. The evidence on actual pos-

session is uncontroverted.

The lower court, in granting the motion to suppress,

relied principally upon Schwimmer v. United States, 232

F.2d 855 (8th Cir. 1956). Our analysis of Schwimmer leads

us to the conclusion that it is not in point as the facts are

clearly distinguishable from those in the instant case.

There, a lawyer had placed his office files in storage with

27

the corporation upon which the subpoena duces tecum was

served. It was clear in Schwimmer that the corporation

was a mere custodian, without personal rights in the books

and papers as such, while constructive possession and con-

trol of them remained in the owner. Here, the corpora-

tion upon whom the subpoena was served had an abso-

lute right to possession of, at least, copies, if not the

originals, of the documents which were the subjects of

the subpoena. The contract between the parties can be

interpreted in no other manner. Beyond that, the cor-

poration had the only key to the room in which the rec-

ords were stored.

Likewise, United States v. Guterma, 272 F.2d 344 (2d

Cir. 1959), upon which appellees rely, is readily distin-

guishable. There, the subpoenaed personal records of the

taxpayer were stored in a safe within the offices of the

corporation for which he served as chairman of the board.

Only the taxpayer and an indicted co-defendant knew the

combination of the safe, and the corporation had no ac-

cess whatsoever to its contents. Recognizing the secure

nature of the safe, the Guterma court emphasized that

even if the safe itself were delivered to the grand jury room,

it would still be the taxpayer who would have to deliver

his own papers by opening the safe.

The Schwimmer and Guterma cases were placed in

proper perspective by the United States Supreme Court

in Couch v. United States, 409 U.S. 322 (1973). In Couch,

the sole owner of a restaurant had delivered her books

and records to an accountant for the purpose of preparing

her income tax returns. A subpoena duces tecum was

served on her accountant, who then had possession of the

documents. The restaurant owner intervened in the sub-

sequent enforcement proceeding initiated by an agent of

the Internal Revenue Service to compel production of the

28

instruments pursuant to the summons. While conceding

that the taxpayer had full ownership of the records and

that the accountant was entrusted with their possession

only for the limited purpose of preparing tax returns, the

Supreme Court nevertheless affirmed the decisions of the

lower courts requiring production of the documents. Since

the owner in Couch had effectively surrendered posses-

sion of the documents to her accountant, the Court held

she had no protectable interest in them and could not

prevent their production. Even a casual analysis of the

facts in Couch reveals that the taxpayer therein had a far

greater right to possession and control of the documents

than do the taxpayers before us.

In resolving the problem, the Couch Court put to rest

any theory that ownership, in itself, is sufficient to ex-

empt documents from use by the government without the

taxpayer’s consent. By way of a footnote, it employed

the following pertinent language from United States v.

Cohen, 388 F.2d 464, 468 (9th Cir. 1967):

* * * But it is possession of papers sought by the

government, not ownership, which sets the stage for

exercise of the governmental compulsion which it is

the purpose of the privilege to prohibit. * * *

Quoted in 409 U.S. at 330 n.12. In the same tenor, the

Couch Court quoted from Perlman v. United States, 247

U.S. 7, 15 (1918), as follows:

But Perlman insists that he owned the exhibits

and appears to contend that his ownership exempted

them from any use by the Government without his

consent. The extent of the insistence is rather elusive

of measurement. It seems to be that the owner of

property must be considered as having a constructive

possession of it wherever it be and in whosesoever

29

hands it be, and it is always, therefore, in a kind of

asylum of constitutional privilege. And to be of avail

the contention must be pushed to this extreme. It is

opposed, however, by all the cited cases. They, as

we have said, make the criterion of immunity not the

ownership of property but the “physical or moral

compulsion” exerted, [Emphasis supplied.]

Quoted in 409 U.S. at 332, 333.

Although the district judge thought otherwise, the

fact that the possession of the records by the accountants

had stretched over many years was not the controlling

factor in the decision. That is made clear by the court’s

assertion that actual possession of the documents bears

the most significant relationship to Fifth Amendment pro-

tections against governmental compulsions upon the in-

dividual accused of crime.

While stating the general rule as above, the Court in

Couch recognized that situations would arise where con-

structive possession was so clear or the relinquishment of

possession so temy rary and insignificant as to leave the

personal compulsion on the taxpayer substantially intact.

As typical examples of these situations, the Court ex-

pressly cites the Schwimmer and Guterma cases. Id. at

333, 334 n.16.

In re Horowitz, 482 F.2d 72 (2d Cir. 1973), cert. de-

nied, 414 U.S. 867, firmly supports our view that Couch

is controlling on these facts. Our factual background is

much stronger in support of the government’s position

than it was in Horowitz. Nor do we find anything in

United States v. Kasmir, 499 F.2d 444 (5th Cir. 1974), cert.

granted. U.S., 43 U.S.L.W. 3412 (January 27,

1975), to be in conflict with the view that the summons

before us should be enforced.

Conclusion.

We hold that the principles stated in Couch v. United

States, supra, control on the record before us and that the

judgment of the district court must be reversed.

It is so ordered.

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS,

EIGHTH CIRCUIT.

31

APPENDIX C“

UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

September Term, 1974

75-1139

In Re: Grand Jury Proceedings

Jasper M. Brancato, et al.,

Appellees,

vs,

United States of America,

Appellant.

Appeal from the United States District Court

for the Western District of Missouri

The Court having considered petition for rehearing

en banc filed by counsel for appellees and, being fully

advised in the premises, it is ordered that the petition for

rehearing en banc be, and it is hereby, denied.

Considering the petition for rehearing en banc as a

petition for rehearing, it is ordered that the petition for

rehearing also be, and it is hereby, denied.

August 4, 1975