UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
March 12, 1969
United States of America, Petitioner,
Albert Shlom, Respondent
Cannella, District Judge.
The opinion of the court was delivered by: CANNELLA
CANNELLA, District Judge:
Motion by the petitioner pursuant to the general authority contained in 26 U.S.C. § 7402(b) to compel compliance with a summons issued by the Internal Revenue Service, is granted.
The summons in question, in the form of a subpoena dated April 20, 1968, was duly issued and served upon the respondent who is an attorney at law and represents two taxpayers, Columbus Hardware, Inc. and Albert Danowitz. The subpoena directs the production of certain records of Columbus Hardware, Inc. The only document in dispute is Item #12 in the subpoena.
Columbus Hardware, Inc. and Albert Danowitz, as intervenors, contend that Item #12 is not a corporate record of Columbus Hardware, Inc., but is a personal record of Albert Danowitz. The sole issue before the Court is whether the document described in Item #12 is a corporate or personal record.
The Court held a hearing on March 4, 1969 at which evidence was presented in the form of affidavits, documents and the testimony of certain witnesses. The parties were able to stipulate to a great deal of the factual background in the case. After establishing that the subpoena was duly served upon the Respondent, as attorney for the taxpayers, Morris Goldman, the accountant for Columbus Hardware, Inc. and Albert Danowitz, was called. He testified, in substance, that he prepared the corporate and individual returns of the taxpayers and never saw nor relied upon Item #12 in the preparation of the returns. Mr. Goldman indicated that he felt he had sufficient records for the compilation of the tax returns of Columbus Hardware, Inc. without said book. He stated that the book made no sense to him until Mr. Danowitz explained what the figures contained therein meant.
Albert Danowitz, the sole stockholder and the only compensated officer and director of Columbus Hardware, Inc., testified that the book was not a corporate record, but was his own personal record. He indicated that he did not furnish the book to his accountant to aid in the preparation of either his corporate or individual returns. Mr. Danowitz' affidavit in support of the instant motion
stated the book was his personal property and "merely contains figures which serve as an incentive and guide to your deponent." This statement was explained by Mr. Danowitz at the hearing. He indicated that the figures in the book represented the amounts taken in on cash sales and certain collections of Columbus Hardware, Inc. In assembling the Lincoln Center complex, this and other businesses were dislocated. The book in question was kept. It made a distinction between local and non-local, sometimes referred to as transitory, customers and it was intended to aid in the decision of whether to keep Columbus Hardware, Inc. in the same general location or move it to another. He testified that only he knew of the book, but that the other officers of the corporation were his wife and other relatives.
It seems clear to the Court that the book was intended to furnish documentary support or assistance for a determination of the best location for Columbus Hardware, Inc. While the book can be characterized broadly as a "personal" document since it belonged to Mr. Danowitz alone, when viewed in relation to the surrounding facts and circumstances, the book relates to the corporate affairs of Columbus Hardware, Inc. The Court finds that the figures in the book were intended to furnish information upon which a decision as to corporate business location could be made and as such sufficiently related to the corporate business of Columbus Hardware, Inc. to be produceable under the subpoena.
The motion to compel is granted and the defendant is ordered to comply with all aspects of the summons.