The opinion of the court was delivered by: BRYAN
The Government has moved for an order pursuant to sections 7402(b) and 7604 of the Internal Revenue Code of 1954, 26 U.S.C. §§ 7402(b) and 7604, directing respondent Harry G. Silverstein to produce books and records set forth in an Internal Revenue summons served upon him pursuant to section 7602 of the code, 26 U.S.C. § 7602. The summons was issued in connection with an investigation of Silverstein's tax liability and directed that he produce the books and records of nine real estate syndicates in which he was a participant.
Silverstein has already been directed by this court to produce the books and records of five of these syndicates, which were cast in the form of limited partnerships, and in each of which he was one of the three general partners who managed the partnership business. United States v. Silverstein, 210 F.Supp. 401 (S.D.N.Y.1962), aff'd, 314 F.2d 789 (2 Cir.), cert. den., 374 U.S. 807, 83 S. Ct. 1696, 10 L. Ed. 2d 1031 (1963). He has produced these books and records as well as those of two other syndicates listed in the summons. However, he has refused to produce the books and records of the two remaining syndicates Motel City B Associates and Motel City C Associates, which are cast in the form of general partnerships, and in both of which Silverstein was one of three 'managing partners.' The present motion is to compel him to produce the Motel City B and Motel City C books and records.
Silverstein asserts that he many not be required to produce these partnership papers because he has invoked his privilege against self-incrimination under the Fifth Amendment. The Government, on the other hand, takes the position that in substance the Motel City B and Motel City C syndicates are identical in all relevant respects to the five syndicates involved in its prior motion against Silverstein, and that the decision in that case governs here.
In the first Silverstein case the Court of Appeals held that the criteria to be applied to determine whether a real estate syndicate cast in partnership form is of such a nature as to afford fifth amendment privilege to one of its managing partners is that spelled out by the Supreme Court in United States v. White, 322 U.S. 694, 701, 64 S. Ct. 1248, 1252, 88 L. Ed. 1542 (1944):
'The test, * * * is whether one can fairly say under all the circumstances that a particular type of organization has a character so impersonal in the scope of its membership and activities that it cannot be said to embody or represent the purely private or personal interests of its constituents, but rather to embody their common or group interests only.'
As the Court of Appeals said in applying this test, 'the inquiry is, * * * essentially a factual one into the nature of the particular entity.' 314 F.2d at 791.
When this motion was first argued before me I found that the papers then submitted did not contain sufficient information about the nature, organization and operation of the Motel City B and Motel City C syndicates to enable me to apply the standard of the White case in the manner prescribed by the Court of Appeals. I therefore requested the parties to supply additional factual material, and they have done so. After consideration of all the material now before me I find no differences between the syndicates cast in the form of general partnerships involved here and the similar syndicates cast in the form of limited partnerships involved on the prior motion that are of significance in the context of the fifth amendment privilege here asserted.
Here, as in the prior case, through the partnership device 'the funds of many people have been gathered into common enterprises of considerable size.' 314 F.2d at 791.
Here, as there, Harry G. Silverstein, the respondent, Larry A. Silverstein, his son, and Bernard H. Mendik, his son-in-law, were the managing partners.
In the prior case the smallest syndicate had 25 limited partners and the largest 147. Here there are 17 general partners, denominated as 'non-managing' partners, in addition to the three managing partners.
The capitalization of the smallest of the syndicates on the prior motion was $ 225,000. Here the capitalization of Motel City B is $ 720,000 and of Motel City C $ 1,015,500.
As was the case before, the offices of Motel City B and Motel City C are in the same offices as Harry G. Silverstein & Sons from which respondent conducts his apparently extensive real estate operations.
The partnership books of all the syndicates are to be kept by the managing partners at the principal place of business of the syndicates with free access to all partners, limited or otherwise. N.Y. Partnership Law, McKinney's Consol. Laws, c. 39, §§ 41, 99.
The functions of the managing partners of Motel City B are described in the brochure issued to attract ...