committee matter or before the Supreme Court; and "when so produced" all such records shall "remain confidential" and shall not be disclosed in a way that would violate the attorney-client privilege.
This provision does not apply to the bank account, but to the records called for by R.1:21-6(b). It does not create any privilege; it requires disclosure in ethics proceedings and says that despite such disclosure whatever was privileged is to remain privileged. In this respect it reflects the principle of N.J.Ev.Rule 37, namely that "a disclosure which is itself privileged or otherwise protected by the common law, statutes or rules of court of this State, or by lawful contract, shall not constitute a waiver under this section." See also, the last sentence of proposed F.Ev.Rule 511 (1972), not adopted.
The answer to the third question clearly is that no privilege is involved. Schulze v. Rayunec, 350 F.2d 666, at 668-9 (CA7, 1965), the companion case to Tillotson, mentioned below, dealing with an IRS summons to produce bank records. These are obviously third-party disclosures which are not part of a "confidential communication between attorney and client." Also pertinent is Harris v. U.S., 413 F.2d 316, at 320 (CA9, 1969), holding that when an attorney acts as a transmitter of funds, he stands in the same position as a banker, and no confidential relationship arises; and also SEC v. First Security, etc., 447 F.2d 166 at 167 (CA10, 1971) and cases there cited.
When the unidentified taxpayer went to the Port Newark office of FNSB to arrange to buy the two cashier's checks which are the subject of the summons, the transaction and any conversation that took place could not have been a privileged communication between attorney and client.
IRS has a perfectly lawful objective in seeking out by investigation the identity of the undisclosed taxpayer. On the civil side alone, it is entitled to verify that the amount paid for taxes and interest is the correct amount; it may be entitled to claim civil penalties as well. And it is entitled to check these and other questions without delay to avoid the bar of the statute of limitations for any taxable year, which normally arises on April 15 of each year.
Gannet's major argument rests on two federal decisions: Baird v. Koerner, 279 F.2d 623, 95 ALR 2d 303 (CA9, 1960); and Tillotson v. Boughner, 350 F.2d 663 (CA7, 1965). Both cases involved a situation in which an attorney sent IRS a cashier's check on behalf of an unidentified client to pay a tax obligation. In both cases, an IRS summons was issued to the attorney calling on him to disclose the client's identity.
In Baird, the Court of Appeals conceived that the point was governed by California law, which it determined to embrace the identity of the client within the privilege. In Tillotson, the Court of Appeals noted that Illinois law was silent on the point, and relied on Baird as reflecting federal law (which it did not).
Baird cannot apply because of F.Ev.Rule 501. Tillotson was in error, overlooking the fact that Baird was grounded on California law. Neither case is controlling here, since the Court of Appeals for the Third Circuit has ruled the other way (and in accordance with the weight of authority) in both Semel and Mauch, supra.
The application for an order directing FNSB to respond to the summons is granted, and no stay pending appeal will be allowed except as may be ordered by the Court of Appeals. Gannet is ordered to be confined until he is ready to answer the questions he refused to answer; that confinement is stayed until the Court of Appeals grants or denies a stay on the order enforcing the summons. The motion to quash the summons is denied.
In the first of these consolidated cases, the court directed FNSB, as a condition of stay pending application to the Court of Appeals, that it deposit with the court in a sealed envelope, such documentation in response to the summons as it had gathered by 4 PM of Monday, December 1, 1975.
At the hearing of February 23, 1976, the court stated that it would continue to hold these sealed papers until the Court of Appeals had either granted or denied a stay pending appeal of the order to enforce the summons. That stay having been denied on March 8, 1976, the sealed papers will now be turned over to IRS.
Since these papers may or may not provide the name of the taxpayer, IRS may apply ex parte for a bench warrant for Gannet's arrest and confinement until he is ready to answer the questions listed above. On the return of the warrant and before confinement, he will be given another opportunity to answer.
The stay of the confinement which was granted was to last only until the Court of Appeals had acted on the motion for stay of the order enforcing the summons. Since that motion has been denied, the confinement order is now in full force and effect.
s/ Vincent P. Biunno, U.S.D.J.
SUPPLEMENT TO OPINION
Since filing the above opinion, the Court has learned that on March 11, 1976, by a divided vote, the Court of Appeals granted a stay of the Order of Summary Confinement pending disposition of the Appeal, and until the further Order of the Court. Consequently, application for a bench warrant will not be entertained at this time.
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