People Ex Rel. Kenny v. Adams

Desmond, J. Relator, a stock broker, having been thrice indicted on various counts charging crimes of grand larceny and of conducting a “ bucket shop ”, sued out this writ of habeas corpus to test the validity of his detention in the City Prison, where he was awaiting trial on the indictments aforesaid. Relator’s petition sets out his claim that all the indictments áre based on data found by the prosecutor in relator’s books of account, which books, asserts relator, were taken from him by the Attorney-General under such circumstances as to confer immunity on relator, under the terms of section 359 of the General Business Law. The District Attorney, appearing for the respondent Prison Warden, maintains that relator has failed to bring himself within the immunity provisions of that statute, which is part of the so-called “ Martin Act ”. The issues raised by the petition and return were tried at Special Term. At the close of relator’s proof, Special Term dismissed the writ, holding that the books had hot passed from the possession of relator *68 to that* of the Attorney-General in obedience to any subpoena bnt that they bad been turned over to tbe Attorney-General by relator to avoid immediate arrest. Tbe Appellate Division affirmed unanimously but granted relator leave to appeal to this' court. According to tbe testimony relator, arriving one morning at bis place of business, was met there by two men who identified themselves as an Assistant Attorney-General of tbe State of New York and a New York City policeman. Tbe Assistant Attorney-General told relator that be bad a subpoena for relator’s books of account, banded relator a subpoena and demanded tbe books. That subpoena looms large in this case. Addressed to relator and signed- by tbe Assistant Attorney-General who presented it, it commanded relator to appear “ forthwith ’’-before tbe Attorney-General at tbe latter’s New York City office and to bring with him to that place bis books of account. Tbe subpoena contained also, among other things, a statement that for failure to attend at tbe time and place appointed, relator would “ be deemed guilty of a misdemeanor as provided in tbe General Business Law and other statutes of tbe State of New York.” Taking relator’s testimony as true for present purposes, it is plain that tbe Assistant Attorney-General presented tbe forthwith ’ ’ subpoena as warrant and justification for bis simultaneous oral demand for tbe immediate delivery up of tbe books. Relator, expressing bis reluctance to surrender bis records and bis concern as to bis legal rights, said that be wanted to talk to bis attorney. Failing in an effort to reach bis attorney by telephone, and then stating that be would not give up tbe books till be talked .to his attorney, relator was met by renewed demands for tbe books and by tbe Assistant Attorney-General’s threat that the police officer would arrest relator if be did not band oyer tbe books at once. Again relator telephoned to bis lawyer’s office. This time be reached bis legal adviser and by telephone described bis plight to tbe attorney who informed relator that “ they are not entitled to them (tbe books) ”, advised relator to assert bis constitutional rights, to refuse to surrender tbe books and to submit to arrest if necessary. After' this telephone talk matters were, at relator’s request, held in abeyance until tbe attorney reached tbe scene, a little later. Arriving, tbe lawyer again advised bis client to *69 hold on to the hooks, but later, being told of the threat of arrest, examined the subpoena, noted that it read “ forthwith ” and then advised relator “ if they are going to arrest you, then give them to them.” Relator handed over the hooks to the Assistant Attorney-G-eneral, taking the latter’s receipt therefor. Relator’s attorney then telephoned to another Assistant Attorney-General who seems to have been the person actually in charge of these procedures and asked the latter to change the return time, fixed by the subpoena, so as to make it returnable at three o’clock that afternoon instead of “ forthwith.” This request was complied with. The Assistant Attorney-General present at relator’s office made appropriate changes in the subpoena, handed the subpoena back to relator and then left the office, taking the books with him. That afternoon, at the Attorney-General’s office, the Assistant Attorney-General who had authorized the change in time on the subpoena, held a hearing. Relator, sworn as a witness thereat, testified to his name, address, ownership of the business et cetera, but refused to answer other questions on the ground that answers might incriminate him. At the hearing there was no mention of the books but the next morning relator’s attorney served on the Attorney-General a letter demanding that the books be returned. The Assistant Attorney-General in a replying letter dated that same day, wrote that the books were being examined by accountants and that time was needed to complete the audit. The books never were returned and it is not now denied that they contain records of the same transactions between relator and certain of his customers, which are charged in the indictments to have been criminal. On the whole picture, we do not think there is justification for the lower courts’ holdings that the acts of the Attorney-General’s assistants were a mere trick or ruse to get relator’s books by a fraudulent use of a subpoena. We hold that the occurrences at relator’s office amounted to this: the Assistant Attorney-General used the “ forthwith ” subpoena, and relator acted on it, as lawful process calling for the immediate production and surrender of relator’s account books. On the same basis we relate the Assistant Attorney-General’s threat of arrest to the provisions of section 352 of the General Business Law which section (subdivisions 1 and 4) makes it a misdemeanor for a stockbroker, in the course of one of these “ Martin *70 Act ” investigations, to refuse to attend or testify at a bearing wben subpoened, or to refuse to furnish to the Attorney-G-eneral “ such other data and information as he may deem relevant We are not in accord with the holding of the Special Term Justice that the episode at relator’s office shows only an unlawful seizure and not testimonial compulsion, nor do we think that relator’s claim of testimonial compulsion, and resulting immunity under the statute, is destroyed by the showing that, at the afternoon hearing at the office, there was no use of or reference to, relator’s books. We think the evidence, necessarily taken as true on the motion dismiss, bears out relator’s contention that he became entitled to immunity under the terms of the statute. To succeed here, relator had to establish two things: first, that the methods by which his books were taken from him amounted not to an unlawful seizure (see People v. Richter’s Jewelers, Inc., 291 N. Y. 161) but to testimonial compulsion and second, that the procedures made use of by the Attorney-General’s assistants were such as lead to a grant of immunity under -section 359 of the General Business Law. As to testimonial compulsion, we think that People ex rel. Ferguson v. Reardon (197 N. Y. 236) is sufficient authority that relator was compelled “ to submit to an investigation of books and papers kept in his private business, for the purpose of furnishing evidence which might be used against him as a basis for criminal prosecution or suits to recover penalties ” (p. 242). In the Ferguson case there was no subpoena and no hearing but only a demand made at relator Ferguson’s office by an agent of the State Comptroller, for an examination of relator’s books to ascertain whether relator had paid taxes on stock transfers. The pertinent statute required that persons like relator Ferguson keep records as to such matters which records were to “be subject .to the inspection of the comptroller, or any of his representatives The statute there, like section 359 of the General Business Law, made it a misdemeanor to refuse such an inspection. An agent of the Comptroller, armed with a certificate of authority, came to Ferguson’s office, demanded access to the books and was refused such, access, whereupon Ferguson was proceeded against criminally. Judge Hiscock, holding that an inspection of Ferguson’s books would have compelled Ferguson *71 to testify against himself, wrote: “ It seems to me that this kind of an inquisition and the attempt to secure from an individual evidence which may be used to convict him of a crime or to forfeit his property comes well within the principles which have been applied to the interpretation of the Constitution.” Some years later, in People v. Defore (242 N. Y. 13, 27) Judge Cardozo, while noting that the word “ witness ” is the keyword in the constitutional ban against self-incrimination, wrote that “ force accompanied by process aimed against a witness and compelling action on his part ” violated the constitutional privilege. The Ferguson case, wrote Judge Cardozo, “ went upon the theory that the inspection there permitted by a statute was in effect a proceeding for a discovery or an examination before trial.” No different label should, we think, be put upon those parts of the “ Martin Act ” which authorize the Attorney-Ceneral to demand any pertinent data or information from a stockbroker and make him guilty of a misdemeanor if he resists. So much for testimonial compulsion. Answer to the next question, as to immunity, turns on the meaning, under these circumstances, of the immunity grant found in section 359 of the General Business Law. If that enactment makes it a strict requirement for immunity, that there be a demand for the books at the Attorney-General’s hearing, that relator assert his constitutional privilege at that hearing, that the officer conducting the hearing issue to relator at the hearing a direction that relator produce his books and that relator at the hearing comply with such direction,- then relator has not brought himself within the section. But we are not here, we think, cribbed and confined by so literal a reading. The purpose and effect of section 359 is unmistakable. (Dunham v. Ottinger, 243 N. Y. 423, 438.) So that the sweeping grant of inquisitorial power in the “ Martin Act ” should not fail for unconstitutionality, it was necessary that its authorization of testimonial compulsion be linked up with a corresponding and equally broad grant of immunity. (See People ex rel. Lewisohn v. O’Brien, 176 N. Y. 253, 267; Boyd v. United States, 116 U. S. 616, 639.) We do no violence to section 359 when we read it as conferring a grant of - immunity sufficient to offset the deprivation of the privilege. Consider the situation here: an Assistant Attorney-General, armed with a “ forthwith ” *72 subpoena signed by himself, but obviously acting under the direction of his superior and in touch with the latter by telephone, so uses the subpoena that the books are produced for his inspection, and removed to the place of hearing. If the return time of the subpoena had not been changed from “ forthwith ” to three o’clock that afternoon, and if relator and the Assistant Attorney-General had walked together the few city blocks from relator’s office to the Attorney-General’s office, what difference would it have made whether relator or the Assistant Attorney-General carried the books? What essential difference does it make that relator’s counsel delivered the written demand for the return of the books, to the hearing officer on the morning after the hearing, instead of handing it up at the hearing? We think any such differences are insubstantial and determinative of nothing when an alleged deprivation of fundamental constitutional rights is under scrutiny. (See People ex rel. Taylor v. Forbes, 143 N. Y. 219, 227.) This is not a case where immunity results unexpectedly and unfortunately from an ill-advised action of a zealous but insufficiently informed peace officer. This is a case of duly authorized assistants to the Attorney-General, lawyers, seeking information deemed by them important and procuring it by the use of a subpoena. It is to be presumed that they knew the terms of the statutes and that they understood and weighed the consequences of their acts. Those consequences cannot now be escaped. The orders should be reversed and the matter remitted for a new hearing, without costs.