Peters v. Sjoholm

Brachtenbach, J.

(concurring) — While I agree with the result of the majority, my analysis differs. I conclude that the government's levying of private bank accounts constitutes a "search and seizure" for the purposes of the fourth amendment of the United States Constitution and a "disturbance" or "intrusion" in Const, art. 1, § 7 terms.2 These constitutional provisions were not violated, however, because the government actions were reasonable under the circumstances of this case. Petitioner also was accorded all rights owed him under the due process clause.

As a preliminary matter, note the context in which the challenged conduct occurred. Funds from Peters' personal checking account were transferred to the Department of Revenue as required by a notice to withhold and deliver to satisfy a delinquent tax assessment. RCW 82.32.235. The government's taking of the money was not to gather evidence, remove instrumentalities or return fruits of a crime. Nor was the subject tax warrant issued by a neutral magistrate, but by the Department of Revenue. RCW 82.32.210. In addition, the petitioner does not seek the exclusionary remedy. Because these circumstances are atypical, the standard search and seizure tests should be applied dis-criminately, in light of the values underlying the governing principles.

I

The history, purpose and applications of the Fourth Amendment require its application to government levies under RCW 82.32.235.

Among the provisions of the Bill of Rights, the Fourth Amendment's history is richest and most revealing of its *879intended effect. J. Landynski, Search and Seizure and the Supreme Court 19 (1966). The abuses of tax collectors and customs officers in England and colonial America were of central concern to the framers of our federal constitution. Their intrusions under the power of general warrants and writs of assistance were particularly despised. T. Taylor, Two Studies in Constitutional Interpretation 41 (1969). The writs in this country were used to search for and seize goods smuggled to evade the revenue laws. Taylor, at 35. Like the RCW 82.32.210 tax warrant in the present case, they were: (1) issued by executive, not judicial, authority, (2) indefinite as to the time or place of seizure, and (3) silent as to which assets were subject to attachment.

The amendment received little judicial attention before the landmark decision in Boyd v. United States, 116 U.S. 616, 29 L. Ed. 746, 6 S. Ct. 524 (1886). The issue before that court was whether the government could require production of documents by defendants in a forfeiture proceeding. While declaring that the Fourth Amendment scrutinizes such nonliteral "seizures", the underlying principles of the protection were announced:

It is not the breaking of [a person's] doors, and the rummaging of his drawers, that constitutes the essence of the offence; but it is the invasion of his indefeasible right of personal security, personal liberty and private property, where that right has never been forfeited by his conviction of some public offence, . . .

Boyd, at 630; United States v. Chadwick, 433 U.S. 1, 11 n.6, 53 L. Ed. 2d 538, 97 S. Ct. 2476 (1977).

In Katz v. United States, 389 U.S. 347, 19 L. Ed. 2d 576, 88 S. Ct. 507 (1967) the court again went beyond the conceptual traditions of Fourth Amendment law in extending coverage to prevent warrantless eavesdropping on conversations in a public phone booth. Because "the Fourth Amendment protects people, not places", the court reasoned that it therefore protects "what [an individual] seeks to preserve as private, even in an area accessible to the public". Katz, at 351. Because the Katz rule has been mod*880ified somewhat to emphasize "legitimate expectations" arising from interests in property, Rakas v. Illinois, 439 U.S. 128, 58 L. Ed. 2d 387, 99 S. Ct. 421 (1978), the underlying concept more clearly applies.

For example, the Supreme Court has extended the amendment's coverage to possessions which are stored for safety and security outside of an individual's premises. In United States v. Chadwick, supra, federal. authorities removed and subsequently opened a locked footlocker from the scene of a drug arrest at a public train station. The court ruled that the owner's Fourth Amendment privacy interests were implicated.

By placing personal effects inside a double-locked footlocker, respondents manifested an expectation that the contents would remain free from public examination. No less than one who locks the doors of his home against intruders, one who safeguards his personal possessions in this manner is due the protection of the Fourth Amendment Warrant Clause.

United States v. Chadwick, supra at 11.

Similarly, citizens manifest an important expectation of privacy by depositing their money in the local bank. Because they alone can control the disposition of their funds, people rely on this security, just as they would if the cash were stashed in their own mattresses. By moving money to the bank for the purpose of security, it cannot be said that "[t]he right of the people to be secure in their persons, houses, papers, and effects, ..." (U.S. Const, amend. 4) and the protection of privacy due therefrom, evaporates.

Katz exemplified what is at times the functional specific protection of the amendment. Katz was protected against unreasonable "seizure" of his voice through eavesdropping, but was unprotected against visual observance through the glass walls of the booth. Katz, at 352. So too should bank depositors be secure that their money will not be removed unreasonably, that they will maintain exclusive control over its disposition, while the information regarding its presence *881and value can be disseminated by the bank without implicating the amendment. United States v. Miller, 425 U.S. 435, 48 L. Ed. 2d 71, 96 S. Ct. 1619 (1976).

In United States v. Miller, supra, the court ruled that bank depositors have no legitimate expectation of privacy in copies of their checks, deposit slips and bank statements. Therefore, there was no Fourth Amendment search and seizure when the bank revealed this information to federal authorities. The decision was based on: (1) the absence of an ownership or possessory interest in the items seized, (2) the public character of the information, after being passed through commercial channels, and (3) the voluntary nature of the disclosure of this information. Miller is distinguishable from this case. Its much criticized rationale should not be extended to erode protections against government removal of private funds in bank accounts. See Miller, at 447-56 (Brennan, J., and Marshall, J., dissenting); 1 W. LaFave, Search and Seizure 411 (1978); Huf-stedler, Invisible Searches for Intangible Things: Regulation of Governmental Information Gathering, 127 U. Pa. L. Rev. 1483 (1979); Comment, A Bank Customer Has No Reasonable Expectation of Privacy of Bank Records: U.S. v. Miller, 14 San Diego L. Rev. 414 (1977); Comment, Government Access to Bank Records in the Aftermath of United States v. Miller and the Tax Reform Act of 1976, 14 Hous. L. Rev. 636 (1977).

Money in a bank account might be an individual's most important possession. In exchange for it all goods and services necessary to live are commonly procured. Technical characterization of the funds as a "debt" for purposes of banking law should not affect the constitutional protection one is given as the majority and Miller suggest. Katz specifically rejected traditional rules regarding ownership as boundaries of Fourth Amendment scrutiny. Katz, at 352-53. Cf. Rakas v. Illinois, supra at 142 (tort and property law characterizations rejected as a boundary for Fourth Amendment rights). In any event, depositors have a significant property interest as a demand creditor, Aberdeen v. *882National Sur. Co., 151 Wash. 55, 275 P. 62, 65 A.L.R. 794 (1929), and the Fourth Amendment clearly protects more than tangible property. Warden v. Hayden, 387 U.S. 294, 304, 18 L. Ed. 2d 782, 87 S. Ct. 1642 (1967), Wong Sun v. United States, 371 U.S. 471, 484-86, 9 L. Ed. 2d 441, 83 S. Ct. 407 (1963). Most importantly, the characterization is irrelevant because it is reasonable to expect that this property, which is so intimately tied with one's identity and welfare, will be under one's exclusive control. This power to exclude others can give rise to a "legitimate expectation of privacy" which warrants protection. Rakas v. Illinois, supra at 144 n.12.

The funds were not made public thereby destroying its private nature as were the checks and bank records in Miller. While the bank is a public reporting vehicle of deposit information, Miller, at 442-43, it performs no such function of appropriating funds.

People often have little choice but to place their money in a bank. The California State Supreme Court has stated:

For all practical purposes, the disclosure by individuals or business firms of their financial affairs to a bank is not entirely volitional, since it is impossible to participate in the economic life of contemporary society without maintaining a bank account. ... To permit a police officer access . . . merely upon his request, without any judicial control as to relevancy or other traditional requirements of legal process . . . opens the door to a vast and unlimited range of very real abuses of police power.

Burrows v. Superior Court, 13 Cal. 3d 238, 247, 529 P.2d 590, 118 Cal. Rptr. 166 (1974); See Comment, Government Access to Bank Records, 83 Yale L.J. 1439 (1974). That court confronted the same issue posed in Miller, but unanimously ruled that individuals do have a protected privacy interest in their bank account records. Division One of our Court of Appeals agrees. State v. McCray, 15 Wn. App. 810, 551 P.2d 1376 (1976) (decided before Miller).

The majority suggests that once a tax assessment and levy are made, the government becomes a co-owner of the property, thereby extinguishing the depositor's legitimate *883expectations of privacy. Because the RCW 82.32.210 levy power is created before any piece of property is identified, does that mean that a delinquent taxpayer cannot expect privacy in any of his/her assets? Does the government become co-owner of everything he/she owns? McCray held that one who knowingly passed bad checks should legitimately expect less privacy in that checking account. Here the account had no relation to the basis for the government’s claim against the taxpayer.

Even if one's "expectations of privacy" were somewhat diminished, it would be misleading to focus too narrowly on this phrase. Katz specified that the Fourth Amendment protects more than just one's "right to privacy". Katz, at 350. Neither are expectations always an accurate gauge of Fourth Amendment protections. For example, in a high crime area citizens may have no reasonable expectation that their new cars parked on the street will remain unmolested. Should the Fourth Amendment offer any less protection against the police breaking into those cars because their owners expected no better? Do Fourth Amendment protections diminish as perceptions of revenue agent intrusion and abuses become widespread? The central question becomes one of values.

It is whether, if [seizure of taxpayer's bank funds by revenue agents before a judicial determination of liability] is permitted to go unregulated by constitutional restraints, the amount of privacy and freedom remaining to citizens would be diminished to a compass inconsistent with the aims of a free and open society.

Amsterdam, Perspectives on the Fourth Amendment, 58 Minn. L. Rev. 349, 403 (1974).

Many persons' social security, pension, and welfare checks are mailed to and deposited in their bank accounts on a regular basis. Their survival would be jeopardized if those funds were unreasonably seized. Because of the centrality of the bank account in our lives, it is entirely consistent with Fourth Amendment traditions and values to hold that unreasonable government searches and seizures *884thereof are forbidden.

II

Once it is determined that the Fourth Amendment applies " [o]ur fundamental inquiry ... is whether or not a search or seizure is reasonable under all the circumstances. Cooper v. California, 386 U. S. 58 (1967)", United States v. Chadwick, supra at 9. Delaware v. Prouse, 440 U.S. 648, 653-54, 59 L. Ed. 2d 660, 99 S. Ct. 1391 (1979); State v. Henneke, 78 Wn.2d 147, 470 P.2d 176 (1970). In most cases a warrant is required to insure that a search and seizure is reasonable. G.M. Leasing Corp. v. United States, 429 U.S. 338, 352-53, 50 L. Ed. 2d 530, 97 S. Ct. 619 (1977).

In this case there were two stages at which a neutral magistrate might have scrutinized the Department of Revenue's actions if a warrant were required. First, a magistrate could have demanded that tax authorities show that the taxes assessed to Peters were legitimately owed. Second, a magistrate could have required a showing of probable cause that Peters' assets were in the bank to which the notice and order to withhold and deliver was directed.

The determination of the existence of a tax liability is the most crucial stage for the taxpayer. In this case Peters was notified of the deficiency, RCW 82.32.050, and given an administrative conference to review the assessment decision. RCW 82.32.160. Peters also had the opportunity to seek review of the administrative determination in court, although after payment of his tax. RCW 82.32.180. By interposing a magistrate into the tax assessment and collection procedure before the seizure the taxpayer would gain little additional protection. Where the government tax assessment gains the force of a judgment by filing the tax warrant with the clerk of court, RCW 82.32.220, a magistrate, would have no basis upon which to reject a warrant application. United States v. One 1975 Pontiac Lemans, 621 F.2d 444, 453 (1st Cir. 1980). To require a judicially authorized warrant in such cases, therefore, would serve no useful function.

*885A warrant might require a showing that the assets claimed by the government are in a particular bank. The summary collection statute already requires the Department to have "reason to believe that there is in the possession of such person" assets owed the taxpayer. RCW 82.32.235. Requiring a detached magistrate to insure that such belief exists would not affect this taxpayer's Fourth Amendment interests. If no probable cause exists and no assets are present, Peters' privacy is undisturbed. If by chance his assets are in the bank to which notice is given, the taxpayer is no worse off.3 Requiring a judicial warrant at this stage, under these facts, would create a worthless administrative burden. As the Supreme Court has said in the context of

noncriminal inventory searches, where probable cause to search is irrelevant, search warrants are not required, linked as the warrant requirement textually is to the probable-cause concept." South Dakota v. Opper-man, 428 U. S. 364, 370 n. 5 (1976). This is so because the salutary functions of a warrant simply have no application in that context; the constitutional reasonableness . . . must be determined on other bases.

United States v. Chadwick, 443 U.S. 1, 10 n.5, 53 L. Ed. 2d 538, 97 S. Ct. 2476 (1977).

The standard for judging the reasonableness of a war-rantless search and seizure is to balance "the need to search [or seize] against the invasion which the search [or seizure] entails." Camara v. Municipal Court, 387 U.S. 523, 537, 18 L. Ed. 2d 930, 87 S. Ct. 1727 (1967). See United States v. Ramsey, 431 U.S. 606, 616-19, 52 L. Ed. 2d 617, 97 S. Ct. 1972 (1977).

The government has a strong interest in the efficient collection of taxes which has long been recognized by the judiciary. Phillips v. Commissioner, 283 U.S. 589, 596-97, 75 L. Ed. 1289, 51 S. Ct. 608 (1931); G.M. Leasing Corp. v. United States, supra; State ex rel. Mulhausen v. Superior *886Court, 22 Wn.2d 811, 817, 157 P.2d 938, 160 A.L.R. 692 (1945). This interest is specifically enunciated in the "power to lay and collect taxes". U.S. Const, art. 1, § 8. See Const, art. 7. While the government did not need to collect the $89 immediately, it already had given the taxpayer years to satisfy the deficiency voluntarily.

Because money in bank accounts is fungible, there is no damage to the specific property taken. While removing assets from a checking account without warning could cause outstanding checks to be returned for insufficient funds or otherwise cause cash flow hardships, this plaintiff knew months in advance of his tax deficiency so could have protected against this possibility. As previously stated, plaintiff was given an administrative hearing at which time he presented evidence in his behalf. This preseizure hearing is, in fact, more meaningful than an ex parte warrant proceeding before a neutral magistrate would be. In addition, because the levy occurred away from plaintiff's home or office, the intrusion into his security and privacy is somewhat lessened. Payton v. New York, 445 U.S. 573, 63 L. Ed. 2d 639, 100 S. Ct. 1371 (1980). In balance, the levy was reasonable.

By removing Peters' bank funds the Department also effected a taking of property, subject to Fifth and Fourteenth Amendment due process protection. It is recognized that in the context of tax seizures away from the taxpayer's premises, the constitutional balances for determining due process and Fourth Amendment protection are similar. G.M. Leasing Corp. v. United States, supra at 352 n.18.

I concur with the majority's finding that the Department's procedures comported with due process. See Commissioner v. Shapiro, 424 U.S. 614, 630-33, 47 L. Ed. 2d 278, 96 S. Ct. 1062 (1976).

*887III

Finding that the Fourth Amendment applies while offering no protections beyond those already required by due process, questions are legitimately raised as to the import of the holding.

First, the Fourth Amendment's warrant requirement should be understood as a preventative mechanism for protecting Fourth Amendment rights rather than a limitation on the coverage of the amendment. The fact that the probable cause/neutral magistrate requirement has little meaning in the context of an administrative determination filed with the court which is given a presumption of correctness, should not dictate the bounds of the interests protected against unreasonable search and seizure.

Second, because bank accounts are centrally tied to persons' welfare, unreasonable tampering could give rise to a constitutional action in tort, as in Bivens v. Six Unknown Named Agents, 403 U.S. 388, 29 L. Ed. 2d 619, 91 S. Ct. 1999 (1971). The Fourth Amendment would protect against an RCW 82.32.235 notice to withhold and deliver which exceeded the amount of the claimed deficiency, cf. United States v. Dionisio, 410 U.S. 1, 35 L. Ed. 2d 67, 93 S. Ct. 764 (1973) (condemning grand jury subpoena's too sweeping in its terms "to be regarded as reasonable").

The Fourth Amendment's standard of "reasonableness" might provide more protection before a search and seizure than the due process clause, which allows government seizure of taxpayers' assets without a preseizure hearing. Fuentes v. Shevin, 407 U.S. 67, 92, 32 L. Ed. 2d 556, 92 S. Ct. 1983 (1972). Because of the orientation of the Fourth Amendment towards preventing unreasonable searches and seizures before they occur, as evidenced by its usual warrant requirement, the provision might require a prior administrative hearing as was given Peters.

Therefore, an unreasonable denial of an assessment conference, RCW 82.32.160 might give rise to a Fourth Amendment violation. Without this hearing at which he appeared and presented evidence, levying Peters' bank *888account without the involvement of a neutral magistrate might have been unreasonable and in violation of the constitution.

Rosellini, J., concurs with Brachtenbach, C.J.

Although these provisions "vary slightly in language, [they] are identical in purpose and substance", State v. Miles, 29 Wn.2d 921, 926, 190 P.2d 740 (1948); State v. Smith, 88 Wn.2d 127, 559 P.2d 970 (1977), and will be discussed as one in this opinion.

Whether or not the Fourth Amendment rights of the bank or other parties might be compromised is a separate issue.