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BRASWELL v. UNITED STATES

decided: June 22, 1988.

BRASWELL
v.
UNITED STATES



CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT.

Rehnquist, C. J., delivered the opinion of the Court, in which White, Blackmun, Stevens, and O'Connor, JJ., joined. Kennedy, J., filed a dissenting opinion, in which Brennan, Marshall, and Scalia, JJ., joined, post, p. 119.

Author: Rehnquist

[ 487 U.S. Page 100]

 CHIEF JUSTICE REHNQUIST delivered the opinion of the Court.

This case presents the question whether the custodian of corporate records may resist a subpoena for such records on the ground that the act of production would incriminate him in violation of the Fifth Amendment. We conclude that he may not.

From 1965 to 1980, petitioner Randy Braswell operated his business -- which comprises the sale and purchase of equipment,

[ 487 U.S. Page 101]

     land, timber, and oil and gas interests -- as a sole proprietorship. In 1980, he incorporated Worldwide Machinery Sales, Inc., a Mississippi corporation, and began conducting the business through that entity. In 1981, he formed a second Mississippi corporation, Worldwide Purchasing, Inc., and funded that corporation with the 100 percent interest he held in Worldwide Machinery. Petitioner was and is the sole shareholder of Worldwide Purchasing, Inc.

Both companies are active corporations, maintaining their current status with the State of Mississippi, filing corporate tax returns, and keeping current corporate books and records. In compliance with Mississippi law, both corporations have three directors, petitioner, his wife, and his mother. Although his wife and mother are secretary-treasurer and vice-president of the corporations, respectively, neither has any authority over the business affairs of either corporation.

In August 1986, a federal grand jury issued a subpoena to "Randy Braswell, President Worldwide Machinery Sales, Inc. [and] Worldwide Purchasing, Inc.," App. 6, requiring petitioner to produce the books and records of the two corporations.*fn1 The subpoena provided that petitioner could deliver the records to the agent serving the subpoena, and did not require petitioner to testify. Petitioner moved to quash the subpoena, arguing that the act of producing the records would incriminate him in violation of his Fifth Amendment privilege against self-incrimination. The District Court denied the motion to quash, ruling that the "collective entity doctrine" prevented petitioner from asserting that his act of producing the corporations' records was protected by the

[ 487 U.S. Page 102]

     Fifth Amendment. The court rejected petitioner's argument that the collective entity doctrine does not apply when a corporation is so small that it constitutes nothing more than the individual's alter ego.

The United States Court of Appeals for the Fifth Circuit affirmed, citing Bellis v. United States, 417 U.S. 85, 88 (1974), for the proposition that a corporation's records custodian may not claim a Fifth Amendment privilege no matter how small the corporation may be. The Court of Appeals declared that Bellis retained vitality following United States v. Doe, 465 U.S. 605 (1984), and therefore, "Braswell, as custodian of corporate documents, has no act of production privilege under the fifth amendment regarding corporate documents." In re Grand Jury Proceedings, 814 F.2d 190, 193 (1987). We granted certiorari to resolve a conflict among the Courts of Appeals.*fn2 484 U.S. 814 (1987). We now affirm.

There is no question but that the contents of the subpoenaed business records are not privileged. See Doe, supra; Fisher v. United States, 425 U.S. 391 (1976). Similarly, petitioner asserts no self-incrimination claim on behalf of the corporations; it is well established that such artificial entities are not protected by the Fifth Amendment. Bellis, supra. Petitioner instead relies solely upon the argument that his

[ 487 U.S. Page 103]

     act of producing the documents has independent testimonial significance, which would incriminate him individually, and that the Fifth Amendment prohibits Government compulsion of that act. The bases for this argument are extrapolated from the decisions of this Court in Fisher, supra, and Doe, supra.

In Fisher, the Court was presented with the question whether an attorney may resist a subpoena demanding that he produce tax records which had been entrusted to him by his client. The records in question had been prepared by the client's accountants. In analyzing the Fifth Amendment claim forwarded by the attorney, the Court considered whether the client-taxpayer would have had a valid Fifth Amendment claim had he retained the records and the subpoena been issued to him. After explaining that the Fifth Amendment prohibits "compelling a person to give 'testimony' that incriminates him," 425 U.S., at 409, the Court rejected the argument that the contents of the records were protected. The Court, however, went on to observe:

"The act of producing evidence in response to a subpoena nevertheless has communicative aspects of its own, wholly aside from the contents of the papers produced. Compliance with the subpoena tacitly concedes the existence of the papers demanded and their possession or control by the taxpayer. It also would indicate the taxpayer's belief that the papers are those described in the subpoena. Curcio v. United States, 354 U.S. 118, 125 (1957). The elements of compulsion are clearly present, but the more difficult issues are whether the tacit averments of the taxpayer are both 'testimonial' and 'incriminating' for purposes of applying the Fifth Amendment. These questions perhaps do not lend themselves to categorical answers; their resolution may instead depend on the facts and circumstances of particular cases or classes thereof." Id., at 410.

[ 487 U.S. Page 104]

     The Court concluded that under the "facts and circumstances" there presented, the act of producing the accountants' papers would not "involve testimonial self-incrimination." Id., at 411.*fn3

Eight years later, in United States v. Doe, supra, the Court revisited the question, this time in the context of a claim by a sole proprietor that the compelled production of business records would run afoul of the Fifth Amendment. After rejecting the contention that the contents of the records were themselves protected, the Court proceeded to address whether respondent's act of producing the records would constitute protected testimonial incrimination. The Court concluded that respondent had established a valid Fifth Amendment claim. It deferred to the lower courts, which had found that enforcing the subpoenas at issue would provide the Government valuable information: By producing the records, respondent would admit that the records existed, were in his possession, and were authentic. 465 U.S., at 613, n. 11.

Had petitioner conducted his business as a sole proprietorship, Doe would require that he be provided the opportunity to show that his act of production would entail testimonial self-incrimination. But petitioner has operated his business through the corporate form, and we have long recognized that, for purposes of the Fifth Amendment, corporations and other collective entities are treated differently from individuals. This doctrine -- known as the collective entity rule -- has a lengthy and distinguished pedigree.

[ 487 U.S. Page 105]

     The rule was first articulated by the Court in the case of Hale v. Henkel, 201 U.S. 43 (1906). Hale, a corporate officer, had been served with a subpoena ordering him to produce corporate records and to testify concerning certain corporate transactions. Although Hale was protected by personal immunity, he sought to resist the demand for the records by interposing a Fifth Amendment privilege on behalf of the corporation. The Court rejected that argument: "[W]e are of the opinion that there is a clear distinction . . . between an individual and a corporation, and . . . the latter has no right to refuse to submit its books and papers for an examination at the suit of the State." Id., at 74. The Court explained that the corporation "is a creature of the State," ibid., with powers limited by the State. As such, the State may, in the exercise of its right to oversee the corporation, demand the production of corporate records. Id., at 75.

The ruling in Hale represented a limitation on the prior holding in Boyd v. United States, 116 U.S. 616 (1886), which involved a court order directing partners to produce an invoice received by the partnership. The partners had produced the invoice, but steadfastly maintained that the court order ran afoul of the Fifth Amendment. This Court agreed. After concluding that the order transgressed the Fourth Amendment, the Court declared: "[A] compulsory production of the private books and papers of the owner of goods sought to be forfeited . . . is compelling him to be a witness against himself, within the meaning of the Fifth Amendment to the Constitution . . . ." Id., at 634-635 (emphasis added). Hale carved an exception out of Boyd by establishing that corporate books and records are not "private papers" protected by the Fifth Amendment.

Although Hale settled that a corporation has no Fifth Amendment privilege, the Court did not address whether a corporate officer could resist a subpoena for corporate records by invoking his personal privilege -- Hale had been protected by immunity. In Wilson v. United States, 221 U.S. 361

[ 487 U.S. Page 106]

     (1911), the Court answered that question in the negative. There, a grand jury investigating Wilson had issued a subpoena to a corporation demanding the production of corporate letterpress copybooks, which Wilson, the corporation's president, possessed. Wilson refused to produce the books, arguing that the Fifth Amendment prohibited compulsory production of personally incriminating books that he held and controlled. The Court rejected this argument, observing first that the records sought were not private or personal, but rather belonged to the corporation. The Court continued:

"[Wilson] held the corporate books subject to the corporate duty. If the corporation were guilty of misconduct, he could not withhold its books to save it; and if he were implicated in the violations of law, he could not withhold the books to protect himself from the effect of their disclosures. The [State's] reserved power of visitation would seriously be embarrassed, if not wholly defeated in its effective exercise, if guilty officers could refuse inspection of the records and papers of the corporation. No personal privilege to which they are entitled requires such a conclusion. . . . [T]he visitatorial power which exists with respect to the corporation of necessity reaches the corporate books without regard to the conduct of the custodian." Id., at 384-385.

". . . When [Wilson] became president of the corporation and as such held and used its books for the transaction of its business committed to his charge, he was at all times subject to its direction, and the books continuously remained under its control. If another took his place his custody would yield. He could assert no personal right to retain the corporate books against any demand of government which the corporation was bound to recognize." Id., at 385.

In a companion case, Dreier v. United States, 221 U.S. 394 (1911), the Court applied the holding in Wilson to a Fifth

[ 487 U.S. Page 107]

     Amendment attack on a subpoena addressed to the corporate custodian. Although the subpoena in Wilson had been addressed to the corporation, the Court found the distinction irrelevant: "Dreier was not entitled to refuse the production of the corporate records. By virtue of the fact that they were the documents of the corporation in his custody, and not his private papers, he was under the obligation to produce them when called for by proper process." 221 U.S., at 400.

The next significant step in the development of the collective entity rule occurred in United States v. White, 322 U.S. 694 (1944), in which the Court held that a labor union is a collective entity unprotected by the Fifth Amendment. There, a grand jury had issued a subpoena addressed to a union requiring the production of certain union records. White, an assistant supervisor of the union, appeared before the grand jury and declined to produce the documents "'upon the ground that they might tend to incriminate [the union], myself as an officer thereof, or individually.'" Id., at 696.

We upheld an order of contempt against White, reasoning first that the Fifth Amendment privilege applies only to natural individuals and protects only private papers. Representatives of a "collective group" act as agents "[a]nd the official records and documents of the organization that are held by them in a representative rather than in a personal capacity cannot be the subject of the personal privilege against self-incrimination, even though production of the papers might tend to incriminate them personally." Id., at 699. With this principle in mind, the Court turned to whether a union is a collective group:

"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. If so, the privilege cannot be invoked

[ 487 U.S. Page 108]

     on behalf of the organization or its representatives in their official capacity. Labor unions -- national or local, incorporated or unincorporated -- clearly meet that test." Id., at 701

In applying the collective entity rule to unincorporated associations such as unions, the Court jettisoned reliance on the visitatorial powers of the State over corporations owing their existence to the State -- one of the bases for earlier decisions. See id., at 700-701.

The frontiers of the collective entity rule were expanded even further in Bellis v. United States, 417 U.S. 85 (1974), in which the Court ruled that a partner in a small partnership could not properly refuse to produce partnership records. Bellis, one of the members of a three-person law firm that had previously been dissolved, was served with a subpoena directing him to produce partnership records he possessed. The District Court held Bellis in contempt when he refused to produce the partnership's financial books and records. We upheld the contempt order. After rehearsing prior precedent involving corporations and unincorporated associations, the Court examined the partnership form and observed that it had many of the incidents found relevant in prior collective entity decisions. The Court suggested that the test articulated in White, supra, for determining the applicability of the Fifth Amendment to organizations was "not particularly helpful in the broad range of cases." 417 U.S., at 100. The Court rejected the notion that the "formulation in White can be reduced to a simple proposition based solely upon the size of the organization. It is well settled that no privilege can be claimed by the custodian of corporate records, regardless of how small the corporation may be." Ibid. Bellis held the partnership's financial records in "a representative capacity," id., at 101, and therefore, "his personal privilege against compulsory self-incrimination is inapplicable." Ibid.

The plain mandate of these decisions is that without regard to whether the subpoena is ...


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