United States of America and Albert Rodriguez, Jr. v. George W. Meeks, as President of St. George Company

JERRE S. WILLIAMS, Circuit Judge:

On February 10, 1981, 642 F.2d 732, this Court vacated an order of the United States District Court for the Western District of Texas adjudging appellant George W. Meeks in contempt of court for failure to produce records of the St. George Corporation or to explain why he could not produce them, and ordering his confinement until he purged himself of contempt. The brief opinion by the Court issued on that date indicated that an explanation of the decision of the Court would follow, and this opinion is that explanation.

Appellant George W. Meeks was the president and one of two stockholders of the St. George Corporation which was under investigation by the Internal Revenue Service in the spring of 1979. On June 12, 1979, the Court ordered Meeks to produce records of the corporation. In response to this order Meeks appeared in person before an IRS agent on June 22, 1979. At that time he indicated he had access to a great many corporate records, that there were boxes and boxes of records, and he made inquiry concerning and requested transactional immunity. Immunity was not granted.

On August 21, 1979, the district court ordered him to appear before the IRS on September 13 and produce the records. It further ordered that if he failed to appear he was directed to appear in the district court to show cause why he had failed to comply. Meeks did appear before IRS agent Albert Rodriguez, Jr. on September 13, 1979. He produced some twenty docu*734ments which were of little or no use in the tax investigation. He then told the agent that he did not have and could not locate other corporate records. He indicated that possibly some records might be reconstructed and that a substantial amount of the records might have been destroyed because of difficulty with the computer in which they had been entered.

At the show cause hearing later in the month of September 1979, Meeks made various motions, and the show cause portion of the hearing was finally set for October 30, 1979. On that date the district court denied all of Meeks’ motions and issued an order requiring him to produce the documents on November 16,1979. Three days before that scheduled court appearance he filed a notice of appeal from the October 30 order and a motion for stay. The stay was granted.

On March 11, 1980, the Court of Appeals dismissed Meeks’ appeal for want of prosecution and for failure to file his brief. Over five months later, on August 22, 1980, the IRS filed a motion for an order to enforce the summons for the documents. The district court ordered Meeks to produce the records on October 6,1980. He appeared on October 6 but refused to answer any specific questions about the whereabouts of its records on the ground that the answers might tend to incriminate him.

At a show cause hearing on November 25, 1980, Meeks refused to testify but submitted a declaration to which he was willing to swear that he had provided the IRS with all of the records which he had in his possession which were covered by the order. He refused to answer any further questions concerning the documents on the ground the answers might tend to incriminate him. The court refused to accept the declaration. It found that the records did then exist or, in the alternative, had been in existence prior to the June 12, 1979, summons. It further found that Meeks had failed to submit acceptable proof of his claimed inability to comply, and adjudged him in civil contempt. His confinement was ordered until he purged himself of the contempt by complying with the summons either by producing the records or testifying to explain why he could not produce them. This is the order which was appealed.

There is some evidence in the record which can justify a finding of fact that the records were in existence at the time of the original summons. As to evidence that they did not exist at the time Meeks was sentenced to civil contempt, he has said over and over again that they do not exist and in his submitted statement which was to be sworn this was indicated. In addition, in his talk with agent Rodriguez on September 13, 1979, he stated that the documents were not in existence or at least were not in his possession and that he could not locate them.

It is the position of the IRS that the only way Meeks could purge himself of contempt was to produce the records or to explain why he could not produce them. Further, it is asserted the burden was on Meeks to prove that he could not produce the records. To the contention by Meeks that explaining what had happened to the records would require him to sacrifice his claim of privilege against self-incrimination, the IRS is unmoved. The Service asserts that Meeks’ proof that he cannot comply with the summons is inadequate.

In United States v. Hankins, 565 F.2d 1344 (5th Cir. 1978); 581 F.2d 431 (5th Cir. 1978), this Court upheld a civil contempt order with an indefinite period of confinement in a case with similar facts. In that case, Hankins was ordered to turn over partnership records. He claimed the privilege against self-incrimination as against the obligation to produce the documents. This claim obviously was not effective because these were business documents and not personal documents. It is elementary that the claim of the privilege is a personal one and does not extend to the activities of a business entity, including a partnership, of which the person subpoenaed is or was a part. Bellis v. United States, 417 U.S. 85, 94 S.Ct. 2179, 40 L.Ed.2d 678 (1974).

At a contempt hearing Hankins offered to testify as long as he was not cross-exam*735ined and this offer was refused. It is important, however, to note that he made no claim of the privilege against self-incrimination as it related to testimony as to what happened to the missing ledger pages which were involved in the order. United States v. Hankins, supra at 565 F.2d 1344.

In the Hankins case a motion for rehearing en banc was then denied by the Court, but the Court wrote a clarifying opinion. The Court confirmed that the records involved were business records and that Han-kins could not claim the privilege with respect to them. This was the basic thrust of the revised opinion. United States v. Hankins, 581 F.2d 431 (5th Cir. 1978), cert. denied, 440 U.S. 909, 99 S.Ct. 1218, 59 L.Ed.2d 457 (1979). In a footnote the Court opinion made clear that it saw Hankins’ attempt to justify his refusal to respond to the summons actually was an attempt to relitigate the district court’s earlier specific finding based upon lawful evidence that Hankins did have the records when the Court ordered the summons enforced.

There are three significant distinctions between the Hankins case and the case before the Court. In Hankins, the claim of the privilege against self-incrimination was made against the production of documents on the erroneous ground that a person could claim the privilege against the production of the papers of a business entity. There is no indication in the case that Hankins made a specific claim of the privilege against self-incrimination as against a governmental inquiry of what he personally might have done with the documents to make them no longer available. In contrast, in the Meeks case the only claim of privilege was the claim made when Meeks was asked to explain what happened to the documents. Meeks never claimed the privilege against the obligation to supply business documents but only against an inquiry as to his personal role with respect to unavailability of the documents.

Further, in Meeks it is claimed that as in Hankins there is no proof to show that Meeks could not at the time of the show cause hearing produce the documents because his submitted statement to this effect was not accepted. But we also have the testimony of IRS agent Rodriguez that Meeks told him in the official meeting on September 13, 1979, that Meeks could not produce the documents.

Third, contrary to Hankins, there was no specific finding by the court before the claim of privilege that at the time of the show cause order he could produce the documents.

Strong support for the position of Meeks in this appeal is found in Curcio v. United States, 354 U.S. 118, 77 S.Ct. 1145, 1 L.Ed.2d 1225 (1957). In that case the Supreme Court reversed a criminal contempt conviction of an individual for invoking the privilege against self-incrimination in refusing to testify as to the whereabouts of corporate records which he had been ordered to produce. The Court in Hankins distinguished Curdo on the ground that Curdo did not involve a refusal to testify at a contempt proceeding. Further, Hankins can be distinguished because Hankins never made clear that his claim of privilege was directed solely against explaining what role he might have played in' the fact that records were no longer available rather than a general claim that the records within themselves might incriminate him.

Meeks had a sound reason to decline to offer more than sworn testimony that he did not then have the records and to claim the privilege rather than be forced to explain what might have happened to the records. His was a valid fear that he would be waiving his privilege if he testified that he did not have the records. His concern was confirmed in the third Hankins case in this Court, Hankins v. Civiletti, 614 F.2d 953 (5th Cir. 1980). In a habeas corpus proceeding, Hankins had submitted affidavits in the district court asserting his inability to comply with the production order. The Court rejected these affidavits. He then took the stand at the habeas corpus hearing and testified he had complied to the full extent of his current and future abilities. Upon cross-examination he then refused on the grounds of the claim of privi*736lege against self-incrimination to explain what he knew about the missing papers.

In its per curiam opinion this Court concluded, “Clearly, Hankins has waived his fifth amendment privilege with regard to matters relevant to his direct testimony.” Hankins v. Civiletti, supra at p. 955. This holding stands firmly for the proposition that if Meeks had testified that he could not produce the records, he would have waived the claim of privilege as to any possible role he might have played in making it impossible to produce them.

The position of the government in this case pushes Meeks into an untenable position. If he does not explain what happened to the records, he must remain in prison. The only key to his release is his explanation. This is the thrust of the civil contempt order. The only way he can be released from prison would be for him to yield his constitutional privilege against self-incrimination.

Stated in terms of the common explanation of civil contempt, the person who is in custody must have the “key to the jail” in his pocket. He must be free to release himself from confinement by complying with the order of the Court. But the only way that Meeks can comply with the order of the Court in this case is to sacrifice a personal constitutional right. The civil contempt order forces Meeks to remain in jail until he testifies against himself as to matters which might tend to incriminate. This is in direct and specific contravention of the fifth amendment privilege. As the Supreme Court said in Ullmann v. United States, 350 U.S. 422, 76 S.Ct. 497, 100 L.Ed. 511 (1956): “[T]he sole concern (of the privilege) is, as its name indicates, with the danger to a witness forced to give testimony leading to the infliction of penalties affixed to the criminal acts.” Id. at 438, 76 S.Ct. at 506. See also the reversal of the civil contempt order for refusing to give testimony in Malloy v. Hogan, 378 U.S. 1, 84 S.Ct. 1489, 12 L.Ed.2d 653 (1964).

Since Meeks could not comply with the court order without sacrificing his properly asserted constitutional right, this Court directed that the civil contempt order be vacated. As we pointed out in our brief opinion on February 10, 1981, the vacating of this order does not bar proceedings undertaken to determine if appellant should be adjudged guilty of criminal contempt and confined for a fixed term for failure to obey the order of the court to produce the records. But a conviction of criminal contempt could not be grounded upon an assertion of the privilege against self-incrimination by Meeks when asked to explain why he cannot now produce such records. Curcio v. United States, 354 U.S. 118, 77 S.Ct. 1145, 1 L.Ed.2d 1225 (1957).

This opinion is filed in support of the decision of this Court of February 10, 1981, vacating the order of confinement of George W. Meeks for civil contempt. Judge Reavley dissented from that decision and dissents from this opinion.