H. Hentz & Co. v. Lefkowitz

Per Curiam. The Attorney-General of the State of New York appeals from an order of Special Term enjoining him from proceeding with an examination of a witness subpoenaed in an investigation 'being conducted under the Martin Act (General Business Law, art. 23-A)—unless the witness is permitted to appear with counsel of his own choice. The investigation being conducted by the Attorney-General concerned alleged fraudulent practices in certain transactions occurring in the commodities market in 1963, including inquiry [476] into whether there existed a plan to effect a manipulation of the market to the detriment of the public. Upon the return date of the subpoena, the witness— petitioner herein—appeared with an attorney, who was a member of a law firm which had represented the witness for many years. Before the return date, that same firm of attorneys had represented three other witnesses in the same investigation. The Assistant Attorney-General conducting the investigation informed the attorney for petitioner that he would not be permitted to remain and represent the witness. The reason assigned by the Attorney-General for excluding petitioner’s counsel was that it was the policy of the Attorney-General that no one firm of attorneys would be allowed to represent more than a single witness in an investigation under the Martin Act since such an attorney might find himself in a conflict of interest, and would entail a violation of the nondisclosure provisions of the Martin Act. (General Business Law, § 352, subd. 5.) The witness refused to be examined in the absence of counsel of his own choice; the hearing was adjourned, and the instant proceeding was commenced to test the validity of the conflicting claims. It is not necessary to reach the question of the right of a witness subpoenaed under the Martin Act to the presence of counsel in the hearing room.1 It is the general practice of the Attorney-General to permit any witness appearing under the Martin Act to have counsel present in the hearing room. This case must, therefore, be decided in the light of that admitted practice and not upon any theoretical right to counsel. There is no merit to the Attorney-General’s attempt to justify his determination not to permit the same counsel—who represented other witnesses — to appear for petitioner on the ground that such procedure would be inconsistent with the requirement that examinations be secret and confidential. (General Business Law, § 352, subd. 5.) Unauthorized disclosure of information obtained by a witness at such an inquiry is made a misdemeanor. The same counsel appeared for three other witnesses and there [477] is no proof submitted that the attorney in any way has violated the restrictions of the statute against disclosure. Since a witness, under the practice of the Attorney-General, is allowed counsel, the sole question is whether the Attorney-General may circumscribe that right by rejecting the witness’ choice of counsel. The precise issue was presented in Backer v. Commissioner of Internal Revenue (275 F. 2d 141 [C. A. 5th]) where an accountant, who had assisted a taxpayer with the preparation of tax returns, was subpoenaed to appear before a Special Agent of the Internal Revenue Service. It was there held that the accountant, over the objection of the Special Agent, could be represented by the same counsel who had appeared for the taxpayer. The court there said (p. 144): “ The term ‘ right to counsel ’ has always been construed to mean counsel of one’s choice [citing cases].” We hold that since petitioner was afforded the right to counsel or at least the privilege of counsel, it follows that he had the right to counsel of his own choice. Unless cogent évidence is produced to indicate that counsel of a witness’ choice is impeding or hindering the course of an investigation, the Attorney-General should not be permitted to veto a choice of counsel. To be effective, the right to counsel must include the right to a free and untrammeled choice of counsel. We have alluded to the lack of substance to the objection of the Attorney-General that to permit petitioner’s choice of counsel would be inconsistent with the purpose of keeping the examinations secret and confidential. Equally untenable is the claim of a possible conflict of interest. If there were such a conflict of interest, it would have been apparent to petitioner’s counsel, who would then be duty bound to disqualify himself or on a proper record on application he could be disqualified. The attorney, as an officer of the court, will, on the present record, not be presumed to have violated his professional obligation. Under the circumstances of this case, Special Term properly held that petitioner-respondent was entitled to appear at the investigation with counsel of his own choice. The order should therefore be affirmed, but without costs or disbursements. Footnotes [1] We note however that in Matter of Groban (352 U. S. 330 — a 5 to 4 decision) upon which the Attorney-General relies — a witness, subpoenaed before an Ohio Fire Marshal investigating the cause of a fire on premises owned by the witness, was denied the right to counsel. The Attorney-General is given power under section 358 of the General Business Law to institute criminal prosecutions against persons suspected of fraudulent securities practices, or for any other crimes disclosed in the course of an investigation under the Martin Act (see People v. Bradick, 16 Misc 2d 1080). Whether Escobedo v. Illinois (378 U. S. 478) will have any impact on the continued vitality of Groton, remains to be determined. (See 49 Minn. L. Rev. 47, 75-76.)