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In re Grand Jury Proceedings of Joseph Guarino

Decided: October 15, 1986.

IN THE MATTER OF GRAND JURY PROCEEDINGS OF JOSEPH GUARINO


On certification to the Superior Court, Appellate Division.

For reversal and remandment -- Chief Justice Wilentz, and Justices O'Hern, Garibaldi and Stein. For affirmance -- Justices Clifford, Handler and Pollock. The opinion of the Court was delivered by Garibaldi, J. Handler, J., dissenting. Justices Clifford and Pollock join in this opinion.

Garibaldi

This appeal presents the questions whether, and to what extent, the voluntarily-prepared business records of a sole proprietor are privileged against compelled self-incrimination -- first, under the Fifth Amendment of the United States Constitution, U.S. Const., Amend. V, and second, under the laws of New Jersey.

I

The relevant facts in this case are undisputed. Since 1959, respondent, Joseph Guarino, has been doing business as a sole proprietor under the name of Green Acres Estates, a real estate concern. In 1984, a state Grand Jury began an investigation of

Green Acres Estates. During the course of that investigation, the Grand Jury served Guarino with a subpoena duces tecum. The subpoena directed him to produce the records listed on an attached schedule that read as follows:

For the period January 1, 1970 to present, the following records pertaining to real property sold by Joseph Guarino, doing business as Green Acres Estates.

1) all contracts for the sale of real estate (including conditional land sales contracts) by or on behalf of Joseph Guarino d/b/a Green Acres Estates, seller-grantor, in Burlington County and Cumberland County (regardless of whose signature appears on behalf of the seller);

2) cash receipts journal and general ledger recording all payments made by purchasers/grantees of property from Joseph Guarino d/b/a Green Acres Estates in Cumberland and Burlington Counties (whether payments are complete or ongoing; whether or not the deed has been transferred);

3) all payment coupons or other documentation which reflect and record payments made by purchasers/grantees of property from Green Acres Estates in Burlington and Cumberland Counties.

Guarino moved to quash the subpoena. The trial court ruled that the motion was untimely and ordered Guarino to appear before the Grand Jury.

In June 1984, Guarino did appear. Relying on his Fifth Amendment privilege against self-incrimination, he refused to produce the documents listed in the subpoena. Shortly thereafter upon application by the Attorney General, the trial court entered an order pursuant to N.J.S.A. 2A:81-17.3,*fn1 compelling Guarino to produce the documents and immunizing him from:

the use of the evidence against him of the act of production of said records in any proceeding or prosecution for a crime or offense, concerning matters arising out of the act of production of the records produced under order of the court pursuant to the provisions of N.J.S.A. 2A:81-17.3 (emphasis added.)

Guarino filed another motion to quash, arguing that use against him of the contents of the subpoenaed documents violated his privilege against self-incrimination under both the Fifth Amendment to the United States Constitution and the laws of New Jersey. Relying on the authority of the United States Supreme Court decision in United States v. Doe, 465 U.S. 605, 104 S. Ct. 1237, 79 L. Ed. 2d 552 (1984), the trial judge denied the motion. He stated that in the absence of a clear mandate from this Court he was reluctant to decide that the New Jersey privilege against self-incrimination was broader than that provided by the United States Constitution. He ordered Guarino to comply with the subpoena; however, that order was stayed pending appeal.

On March 28, 1985, the Appellate Division issued a per curiam decision reversing the trial court's order. We granted the State's petition for certification. 101 N.J. 306 (1985).

II

We first examine whether, and to what extent, the Fifth Amendment privilege against self-incrimination applies to voluntarily-prepared business records of a sole proprietor. The constitutional privilege against self-incrimination is "essentially a personal one, applying only to natural individuals." United States v. White, 322 U.S. 694, 698, 64 S. Ct. 1248, 1251, 88 L. Ed. 1542, 1546 (1944). "[A]n individual cannot rely upon the privilege to avoid producing the records of a collective entity which are in his possession in a representative capacity, even if these records might incriminate him personally." Bellis v. United States, 417 U.S. 85, 88, 94 S. Ct. 2179, 2183, 40 L. Ed. 2d 678, 683

(1974). Consequently, the privilege cannot be asserted by a collective group (such as a corporation or a union) or by a representative employee or agent of that collective group. See Wilson v. United States, 221 U.S. 361, 31 S. Ct. 538, 55 L. Ed. 771 (1911) (corporation and its officers); United States v. White, 322 U.S. 694, 64 S. Ct. 1248, 88 L. Ed. 1542 (1944) (labor union); McPhaul v. United States, 364 U.S. 372, 380, 81 S. Ct. 138, 143, 5 L. Ed. 2d 136, 143 (1960) (political organization); Rogers v. United States, 340 U.S. 367, 71 S. Ct. 438, 95 L. Ed. 344 (1951) (political party); and Bellis v. United States, 417 U.S. 85, 94 S. Ct. 2179, 40 L. Ed. 2d 678 (1974) (partnership).

Employing this principle, the Supreme Court in two recent cases, Fisher v. United States, 425 U.S. 391, 96 S. Ct. 1569, 48 L. Ed. 2d 39 (1976) and United States v. Doe, 465 U.S. 605, 104 S. Ct. 1237, 79 L. Ed. 2d 552 (1984), has substantially limited the application of the Fifth Amendment privilege to business records, including those possessed by sole proprietors. Since Boyd v. United States, 116 U.S. 616, 6 S. Ct. 524, 29 L. Ed. 746 (1886) but prior to Fisher, the Supreme Court in a series of opinions consistently had repeated the axiom that an individual's private papers were protected by the Fifth Amendment from compelled disclosure. See Fisher, 425 U.S. at 419-20, 96 S. Ct. at 1585-86, 48 L. Ed. 2d at 61 (Brennan, J., concurring.) The prevailing rule was that "the Fifth Amendment privilege against compulsory self-incrimination protects an individual from compelled production of his personal papers and effects as well as compelled oral testimony." Bellis, 417 U.S. at 87, 94 S. Ct. at 2182, 40 L. Ed. 2d at 683.*fn2 The protection of personal privacy, the fear that private thoughts recorded on paper might become the object of criminal sanctions, was the most prevalent

rationale for this rule. And the privilege was viewed quite expansively, applying to the business records of the sole proprietor or sole practitioner as well as to the personal documents containing more intimate information about an individual's private life. Bellis, 417 U.S. at 87, 94 S. Ct. at 2182, 40 L. Ed. 2d at 683; Note, "Organizational Papers and the Privilege Against Self-Incrimination," 99 Harv.L.Rev. 640 (1986).

In Fisher and then again in Doe, the Court departed from these precedents.*fn3 In Fisher, the Court held that a sole proprietor's tax records in the possession of his accountant were not protected. Justice White, writing in Fisher for himself and five other Justices, noted that "[s]everal of [the old] express or implicit declarations have not stood the test of time." Fisher, 425 U.S. at 407, 96 S. Ct. at 1579, 48 L. Ed. 2d at 54. He stated that "the prohibition against forcing the production of private papers has long been a rule searching for a rationale consistent with the proscriptions of the Fifth Amendment against compelling a person to give 'testimony' that incriminates him." Id.

No longer constrained by the old rule, the Fisher Court fashioned a new one. The Court focused on the precise words of the Fifth Amendment -- "[n]o person . . . shall be compelled in any criminal case to be a witness against himself.' Id. at 396, 96 S. Ct. at 1574, 48 L. Ed. 2d at 47 (emphasis in the original.) Rather than existing to shield certain private writings from discovery by the Government, the Fifth Amendment "applies only when the accused is compelled to make a testimonial

communication that is incriminating." Id. at 408, 96 S. Ct. at 1579, 48 L. Ed. 2d at 54 (emphasis added.) In effect, the focus of the Court shifted from privacy to the process of compulsion. See id. at 400, 99 S. Ct. at 1575-76, 48 L. Ed. 2d at 50; In re Grand Jury Empanelled Mar. 19, 1980, 680 F.2d 327, 332 (3d Cir.1982); Note, "The Rights of Criminal Defendants and the Subpoena Duces Tecum: The Aftermath of Fisher v. United States," 95 Harv.L.Rev. 683, 683 (1982).*fn4

Applying the new test to the facts of the Fisher case, the Court concluded that requiring a defendant-taxpayer to produce an accountant's workpapers in the taxpayer's possession would not violate the Fifth Amendment, regardless of how incriminating those papers might be to the taxpayer, because "the privilege protects a person only against being incriminated by his own compelled testimonial communications.' 425 U.S. at 409, 96 S. Ct. at 1580, 48 L. Ed. 2d at 55. (Emphasis added.)

The accountant's workpapers were therefore in no sense testimonial communications, according to the Court, because the workpapers were not prepared by the taxpayer. Nor were they compelled communications because they were voluntarily prepared. Id. at 409-10, 96 S. Ct. at 1580-81, 48 L. Ed. 2d at 55. The court wrote that:

A subpoena served on a taxpayer requiring him to produce an accountant's workpapers in his possession without doubt involves substantial compulsion. But it does not compel oral testimony; nor would it ordinarily compel the taxpayer to restate, repeat, or affirm the truth of the contents of the documents sought. Therefore, the Fifth Amendment would not be violated by the fact alone that the papers on their face might incriminate the taxpayer, for the

privilege protects a person only against being incriminated by his own compelled testimonial communications. [citations omitted.] The accountant's workpapers are not the taxpayer's. They were not prepared by the taxpayer, and they contain no testimonial declarations by him. Furthermore, as far as this record demonstrates, the preparation of all of the papers sought in these cases was wholly voluntary, and they cannot be said to contain compelled testimonial evidence, either of the taxpayers or of anyone else. (emphases added.)

The Court in Fisher recognized, however, that there were two situations where the act of producing evidence in response to a subpoena could have "communicative aspects of its own, wholly aside from the contents of the papers produced." Fisher, 425 U.S. at 410, 96 S. Ct. at 1581, 48 L. Ed. 2d at 56. First, the act of producing documents in some instances might amount to an admission of the existence of such documents and their possession or control by the taxpayer. Second, the act of production might resemble the act of testimonial self-incrimination if responding to a subpoena would in some sense "authenticate" the documents produced. See United States v. Beattie, 522 F.2d 267, 270 (2d Cir.1975) (Friendly, J.) ("[a] subpoena demanding that an accused produce his own records is . . . the equivalent of requiring him to take the stand and admit their genuineness"). Neither of these situations, however, was present in Fisher. Accordingly, the Court reiterated its conclusion that the Fifth Amendment did not prevent the Government from obtaining, through subpoena, an accountant's workpapers in the possession of a taxpayer or his attorney.

The Court subsequently employed the Fisher analysis in U.S. v. Doe, 465 U.S. 605, 104 S. Ct. 1237, 79 L. Ed. 2d 552 (1984), where the facts were virtually identical to those in this case. The respondent was a sole proprietor. He was served with five subpoenas during the course of a Grand Jury's investigation into corruption in the awarding of county and municipal contracts. The first two subpoenas demanded that he produce telephone records of several of his companies and all records pertaining to four of his banks. A third subpoena demanded

the production of a list of virtually all the business records of one of his companies.*fn5

Respondent filed a motion in federal district court seeking to quash the subpoenas. The district court granted the motion, quashing all of the subpoenas except those that sought documents and records required by law to be kept or disclosed to a public agency. The Third Circuit affirmed. In re Grand Jury Empanelled Mar. 19, 1980, 541 F. Supp. 1 (D.N.J.1981), aff'd, 680 F.2d 327 (3d Cir.1982), rev'd sub. nom. U.S. v. Doe, 465 U.S. 605, 104 S. Ct. 1237, 79 L. Ed. 2d 552 (1984).

In its opinion in Doe, the Supreme Court first stated that Fisher's rationale applied with equal force to a sole proprietor who prepared his own documents. As in Fisher, the Court found that a subpoena that demands the production of documents does not compel oral testimony. Doe did not contend, said the Court, that he prepared the documents involuntarily or that the subpoena would force him to restate, repeat, or affirm the truth of their contents. The fact that the records were in Doe's possession, as opposed to his accountant's, was irrelevant in determining whether the creation of the record was compelled. The Court, therefore reversed the Third Circuit in part and concluded that the contents of the records were not privileged.

The Court, however, continued to draw the distinction that it drew in Fisher between the contents of a document and the act of producing it. Doe, 465 U.S. at 612-13, 104 S. Ct. at 1242, 79 L. Ed. 2d at 560. But in Doe, unlike in Fisher, the Court had the explicit findings of the District Court that the act of producing the documents would invoke testimonial self-incrimination. Declining to overturn that finding because it rested on a determination of factual issues that had some support in the record, it affirmed the lower courts insofar as they found the act of production to be privileged. Id. at 614-15, 104 S. Ct. at 1243, 79 L. Ed. 2d at 561. The Court recognized that if the government wished to compel production of the documents, it could have sought a grant of use immunity with respect to the potentially incriminating evidence, pursuant to 18 U.S.C. ยงยง 6002-03. Id. at 614-15, 617-18, 104 S. Ct. at 1243, 1244-45, 79 L. Ed. 2d at 561, 563.

Following Doe, it is clear that the contents of business records, whether from a corporation, a partnership, or a sole proprietorship, are no longer privileged under the Fifth Amendment. The documents requested from the respondent in this case were far less extensive than those requested from Doe. The only request made of Guarino, doing business as Green Acres Estates, that was not made of Doe was for real estate contracts and documentation of real estate payments. Given the nature of Guarino's business, those contracts were clearly business, not personal, records, and they were related to the focus of the Grand Jury's investigation. Like Doe, Guarino does not contend that he prepared the requested records involuntarily or that the subpoena would force him to restate, repeat, or affirm the truth of the contents. Accordingly, under Doe the contents of respondent's business records are not protected by the Fifth Amendment privilege against self-incrimination. Furthermore, the prosecutors here, as the Supreme Court suggested in Doe, granted Guarino use immunity for producing the documents. Therefore, the production of the

documents did not violate his Fifth Amendment privilege against self-incrimination.

III

We turn now to an examination of whether under independent principles of state law we might extend the privilege against self-incrimination to Guarino, doing business as Green Acres Estates. It is undisputed that State common law may provide greater protection to individual rights than afforded under the United States Constitution. State v. Williams, 93 N.J. 39 (1983); State v. Hunt, 91 N.J. 338, 353 (1982). In the past, we have held that the New Jersey common law privilege against self-incrimination affords greater protection to an individual than that accorded under the federal privilege. See State v. Vinegra, 73 N.J. 484, 490 (1977) (recognizing that the New Jersey privilege as expressed in the "target doctrine seems to afford greater protection than that given by the Fifth Amendment."); State v. Deatore, 70 N.J. 100, 115-16 (1976) (holding as a matter of state law that a party's post-arrest silence could not be used to impeach his exculpatory alibi testimony at trial, even if federal law did not require this protection).

The privilege against self-incrimination "has been an integral thread in the fabric of New Jersey common law since our beginnings as a state." State v. Hartley, 103 N.J. 252, 286 (1986) (citing State v. Fary, 19 N.J. 431, 435 (1955)). See also In re Martin, 90 N.J. 295, 331 (1982); In re Ippolito, 75 N.J. 435, 440 (1978); State v. Vinegra, 73 N.J. 484, 488-89 (1977); State v. Zdanowicz, 69 N.J.L. 619, 622 (E. & A.1903). Although the privilege is expressly incorporated only in our rules of evidence, N.J.S.A. 2A:84A-17 to 84A-19 (Evid.R. 23, 24 and 25),*fn6 and is not written into our state constitution, "'the common

law doctrine, unaltered by legislation or by law practice is by us deemed to have its full force. In New Jersey, no person can be compelled to be a witness against himself.'" State v. Hartley, 103 N.J. at 286 (quoting State v. Zdanowicz, 69 N.J.L. at 622).

Central to our state common-law conception of the privilege against self-incrimination is the notion of personal privacy first embodied in 1886 in Boyd v. United States. While still a member of this Court, Justice Brennan wrote: the "wide acceptance and broad interpretation [of the privilege] rests on the view that compelling a person to convict himself of a crime . . . 'cannot abide the pure atmosphere of political liberty and personal freedom.'" In re Pillo, 11 N.J. 8, 15-16 (1952) (citing Boyd v. United States, 116 U.S. at 632, 6 S. Ct. at 533, 29 L. Ed. at 751.)* ...


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