Oklahoma Tax Commission v. McInnis

JACKSON, Vice Chief Justice.

This is an application to this court to assume original jurisdiction and grant a writ of prohibition preventing the District Judge of Oklahoma County from enforcing by contempt proceedings her order requiring the Oklahoma Tax Commission, through the Assistant Director of its Income Tax Division, to submit the income tax returns of Mr. Whit Pate for the years 1960 and 1961, to the Oklahoma County Grand Jury now in session, in obedience to a subpoena duces tecum issued at the request of said grand jury.

No question is raised as to the empaneling of the grand jury or its authority to act as such, and no procedural question is raised as to the issuance and service of the subpoena duces tecum.

The basic question presented is as follows: whether under the facts in this case and the applicable law, the Tax Commission was required to submit, and the grand jury and the Attorney General entitled to receive and examine, the income tax returns requested.

The pertinent facts are that the grand jury of Oklahoma County and the Attorney General of Oklahoma, who was assisting it, caused to be issued a subpoena duces tecum to the chairman of the Tax Commission, requiring him to appear at the time designated and bring with him the income tax returns of Mr. Pate. By agreement the Assistant Director of the Income Tax Division of the Commission, Mr. S. D. Howell, was later substituted in place of the chairman. Mr. Plowell appeared before the grand jury and, on advice of Commission counsel, refused to produce the Pate income tax returns; he thereafter repeated such refusal to the respondent District Judge, although ordered by her to do so. It is agreed that, if the District Judge was acting within her jurisdiction and authority, Mr. Plowell is amenable to proceedings in direct contempt of court.

The Tax Commission bases its refusal to produce the returns upon the provisions of 68 O.S.Supp.1965, Sec. 205, and Oklahoma Tax Commission v. Clendinning, 193 Old. 271, 143 P.2d 143, 151 A.L.R. 1035. Sec. 205 was formerly codified as 68 O.S.1961, Sec. 1454. The Clendinning case was a proceeding similar in many respects to the one now before this court in which the provisions of this section were construed.

68 O.S.Supp.1965, Sec. 205(a) specifically provides that the records and files of the Commission are confidential and privileged. Section 205(b) specifically provides that the Commission shall not be required by any court to produce such files and records for inspection of any person, or for use in any action or proceeding, except when the records or files or the facts shown thereby are directly involved in an action or proceeding under the provisions of State tax law affected, or when the information contained therein constitutes evidence of the violation of any State tax law.

68 O.S.Supp.1965, Sec. 205(b) (4) authorizes the disclosure of information or evidence to the Attorney General or any County Attorney when such information or evidence is to be used by such officials to prosecute violations of the criminal provisions of any State tax law. Such information when received by the Attorney General or any County Attorney shall be kept confidential by them and not be disclosed except when presented to a court in a prosecution for violation of the tax laws of this state. In oral argument in this case the Attorney General stated specifically and unequivocally that the requested tax returns would be used solely for the investigation and enforcement of the tax laws of this state.

*357The Legislature undoubtedly intended that the confidential and privileged character of an individual’s income tax files and records should yield in favor of criminal proceedings conducted in good faith when necessary to determine whether a crime involving income tax laws has been committed and when necessary to determine the guilt or innocence of the person charged or under investigation. Unless the Legislature intended that an individual’s income tax returns may be seen by the Attorney General, a County Attorney, and a grand jury, where it is apparent that they are acting in regard to an alleged tax crime occurring within their territorial jurisdiction, then the Oklahoma Tax Commission has become the sole investigator, prosecutor, and judge of whether a crime has been committed, whether the individual should be prosecuted, and whether he should be convicted. We are certain that the Legislature did not so intend and equally certain that the Commission has no desire to assume such all inclusive powers.

In Scribner v. State, 9 Okl.Cr. 465, 132 P. 933, the Court of Criminal Appeals had occasion to determine whether under our constitutional provisions a grand jury investigation of a crime comes within the term “charged with an offense”. Therein it was said:

“Looking to the meaning, purpose, and spirit of the Constitution, we are of the opinion that a grand jury investigation of a crime comes within the purview of the term ‘charged with an offense,’ as used in section 27 of the Bill of Rights of the Constitution of Oklahoma.”

In Commonwealth v. Dean, 172 Pa.Super. 415, 94 A.2d 59, it was said:

“Without question, the word ‘proceeding’, standing alone, is broad enough to cover each step or all steps in a criminal action from commencement to final termination.”

In Lindsay v. Allen, 113 Tenn. 517, 82 S.W. 648, 649, it was said:

“ * * * Thus, ‘proceeding’ and ‘investigation’ relate to proceedings and investigations before a grand jury when the state is proceeding by indictment or presentment; * * * but in all cases the state contemplates some sort of criminal proceeding against a person offending.”

See also Marcus v. United States, 310 F.2d 143 (Third Circuit), wherein it was held that a grand jury proceeding is a proceeding for purposes of the statute there under consideration.

In 68 O.S.1961, Sec. 919 (68 O.S.Supp. 1965, Sec. 2325) it is provided that anyone who files a tax return which is false in a material item or particular, is guilty of a felony. 68 O.S.Supp.1965, Sec. 205(d) provides that offenses defined in 68 O.S.1961, Sec. 919, supra, shall be reported to the appropriate County Attorney by the Tax Commission as soon as said offenses are discovered by the Commission or its employees, and further provides:

“Any other provision of law to the contrary notwithstanding, the Commission shall make available to the appropriate County or District Attorney or the authorized agent of said County or District Attorney its records and files pertinent to such prosecutions, and such records and files shall be fully admissible in evidence for the purpose of such prosecutions.”

Under Art. 2, Sec. 18, Okla. Constitution, a grand jury is authorized to investigate and return indictments for all character and grades of crime, and under 22 O.S.1961, Sec. 335, when the grand jury believes other evidence is available, they may order such evidence to be produced, and the State’s Attorney shall cause process to issue for such witnesses.

Looking to the exceptions which the Legislature intended would outweigh the confidential and privileged character of an individual’s income tax returns we are convinced that the Legislature intended that *358such returns might be used by appropriate officials in a grand jury proceeding in the enforcement of the State tax laws against the individual who made and filed the tax return.

It is to be noted, however, that such records and files continue to be confidential and privileged when viewed and examined by the Attorney General, County Attorney, and grand jury, for Sec. 205(b) (4), supra, provides severe penalties if these individuals use such returns for any purpose other than in the prosecution of tax law violations. Necessity is obviously the reason for the exceptions and in practical application the exceptions should not be extended beyond that which is necessary in the enforcement of the tax laws. It must be presumed, in the absence of proof to the contrary, that the Attorney General, the County Attorney, and grand jury perform their official duties and that their official acts are regular. Griggs v. Reeser Motor Co., 159 Okl. 279, 16 P.2d 252.

The Commission earnestly contends that our decision in Oklahoma Tax Commission v. Clendinning (1943) 193 Okl. 271, 143 P.2d 143, 151 A.L.R. 1035, provides the complete answer to the questions presented herein. Particular attention is invited to paragraph four of the syllabus therein where it was held:

“Neither the grand jury nor its presiding district judge can compel a witness to testify as to communications or transactions which are expressly declared by statute to be confidential and privileged. And the witness refusing to make such a disclosure may not be proceeded against for contempt.”

This is a correct statement of the law in the Clendinning case because the tax returns sought in that case were, as to the Tulsa county authorities, confidential and privileged for lack of venue in Tulsa County. Commission’s contention overlooks the facts as set forth in the opinion and other paragraphs of the syllabus in the Clendin-ning case. For instance, in paragraph two of the court’s syllabus, it was held that “[b]y express provision of the law, it is the duty of a grand jury to investigate law violations in its own county, and it has no duty to investigate transactions or acts occurring wholly outside its county, not connected with law violations in its county, or triable therein.” In paragraph three of the syllabus it was held that a county attorney has no right for any purpose to inspect individual income tax returns made by citizens who resided and had their place of business and verified their returns in other counties of the state.

The reasons supporting the foregoing paragraphs of the syllabus are clear when the facts as disclosed in the body of the opinion are taken into consideration. In the body of the opinion it is shown that the fifty Oklahoma residents under investigation suspected for income tax violations all resided outside of Tulsa county. They had no offices in Tulsa county and did not verify their tax returns in that county. Under these circumstances no crimes involving the filing of income tax returns could have occurred in Tulsa county. If the Tulsa county grand jury had discovered that crimes involving income tax returns were committed outside of Tulsa County, the courts in Tulsa county would not have had venue to try any indictments that might have been returned. Thus we simply held, in effect, in paragraphs 2, 3, and 4 of the syllabus that income tax returns are confidential and may not be used or seen by a grand jury or a county attorney when the suspected crimes, if any, occurred outside of their territorial jurisdiction. We did not hold that these income tax returns would not be available to the county attorney and grand jury of Tulsa county if any of those under suspicion resided in Tulsa county or verified their returns in that county. In the body of the opinion we said:

“Final briefs herein indicate the possibility that one of the fifty named *359citizens may have resided in Tulsa County or had some place of business therein. If the county attorney contends that said taxpayer did so reside or engage in business, and wishes to predicate thereon a right to see that particular return, we will hear him further on the particular point.”

In paragraph 8 of the syllabus in Bennett v. District Court of Tulsa county, 81 Okl.Cr. 351, 162 P.2d 561, that court held:

“A grand jury is an inquisitorial body pertaining alone to offenses committed within the county, or that could be prosecuted in the county and has no power to inquire concerning offenses committed beyond the county’s boundaries.”

In the instant case it is undisputed that Whit Pate resided in Oklahoma County in 1960 and 1961. It is not contended that his income tax returns for the years 1960 and 1961 were prepared in any county other than Oklahoma county. The Attorney General asserts in his response that Whit Pate filed these returns in Oklahoma county, and this assertion is not disputed either in pleadings or in the evidence. Therefore under the second paragraph of the syllabus in Clendinning, supra, and by express statutory law (as quoted in the body of that opinion), it is the duty of the Oklahoma county grand jury to investigate law violations in its own county.

This court has stated that the law of a case is contained in the syllabus. Corbin v. Wilkinson, 175 Okl. 247, 52 P.2d 45. However, we have also said that the facts and reasoning of the court in the body of a decision is an aid to a correct interpretation of the law as announced in the syllabus. Corbin v. Wilkinson, supra, and 1942 Chevrolet Automobile v. State ex rel. Cline, 192 Okl. 555, 136 P.2d 395, 397. In interpreting the law as announced in a syllabus by this court this court may not close its eyes to the facts as shown in the body of the opinion and may not ignore other paragraphs of the same syllabus. The legal effect of a syllabus by the court in Oklahoma is considered in an article written by Fred R. Harris and appears in 7 Oklahoma Law Review at page 116.

In one of its briefs the Commission submits five questions for our consideration and suggests that if we overrule, modify or distinguish the Clendinning case that we should establish some guide lines for the future action of the Commission. Our decision herein answers some of those questions. In City of Shawnee v. Taylor, 191 Okl. 687, 132 P.2d 950, we said that this court does not give advisory opinions or answer hypothetical questions.

Pursuant to our order of November 22, 1965, and as of that date, the application for writ of prohibition is denied.

HALLEY, C. J., and WILLIAMS, BLACKBIRD and IRWIN, JJ., concur. DAVISON and- LAVENDER, JJ., dissent.