FLOURNOY v. EPSTEIN

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Court of Appeal, Second District, Division 3, California.

Houston I. FLOURNOY and Richard J. Barnet, Petitioners, v. SUPERICR COURT of the State of California FOR the COUNTY OF LOS ANGELES, Respondent; Beatrice EPSTEIN et al., Real Parties in Interest.

Civ. 42313.

Decided: October 03, 1973

Myron Siedorf, Walter H. Miller, Richard J. Barnet, Los Angeles, for petitioners. Wilbur E. Quint, Los Angeles, for real parties in interest, Beatrice Epstein and Gladys Lavin.

Petitioners seek a writ of mandamus or prohibition to require the superior court of Los Angeles County to vacate its order denying a motion to quash a subpoena duces tecum directing petitioners to appeal at trial with certain records and documents from the files of the Inheritance Tax Division of the California State Controller's office. The question involved in this case is whether an inheritance tax declaration, Form IT–22, and a joint declaration are subject to disclosure pursuant to a subpoena duces served on the Inheritance Tax Division by the persons who executed the declarations where the documents are sought for use at a trial which does not involve enforcement of inheritance tax law.

The Thrust of petitioners' argument is that they may expose themselves to felony prosecution under Revenue and Taxation Code section 14813 if they produce the declarations in obedience to the subpoena duces tecum and that the declarations are unconditionally privileged by Evidence Code section 1040. We do not agree with either of these arguments. Section 14813 provides as follows:

‘All information and records acquired by the Controller, the inheritance tax attorney, or any subordinate inheritance tax attorney are confidential in nature, and, except in so far as may be necessary for the enforcement of this part or as may be permitted by this article, shall not be disclosed by any of them.

Except in so far as may necessary for the enforcement of this part or as may be permitted by this article, any former or incumbent Controller, inheritance tax attorney, or subordinate inheritance tax attorney who discloses any information acquired by any inspection or examination made pursuant to this article is guilty of a felony, and upon conviction shall be imprisoned in the State prison for not more than five years.' (Emphasis added.)

This section is contained within article 5, chapter 12, of the Inheritance Tax law which consists of sections 14811 to 14814, inclusive. Section 14811 concerns the authority for and procedure by which the Controller or inheritance tax attorneys may acquire information necessary to enforce the inheritance tax law or to collect the full amount of tax that may be due and provides as follows:

‘Whenever the Controller has reasonable cause to believe that a tax is due under this part upon any transfer, and that any person, firm, institution, company, association, or corporation has any information or the possession, custody, or control of any books, records, accounts, papers, or documents relating to or evidencing the transfer, the Controller, the inheritance tax attorney, or any subordinate inheritance tax attorney may, for the purpose of acquiring any information deemed necessary or desirable by the Controller, the inheritance tax attorney, or the subordinate inheritance tax attorney for the proper enforcement of this part or for the collection of the full amount of tax that may be due:

(a) Inspect or take a copy of the books, records, accounts, papers, or documents.

(b) Administer an oath to and examine any such person or any officer or agent of any such firm, institution, company, association, or corporation.'

It is only information obtained pursuant to this section with which article 5 is concerned, not information submitted to the Inheritance Tax Department routinely by a decedent's personal representative or survivor on Form IT–22 and related declarations or affidavits pursuant to California Administrative Code title 18, Regulations 14501–14515(a) and (b) and Government Code section 11370 et seq. We have not been referred to, nor are we aware, of any specific statutory prohibition against its disclosure.

Section 1040 of the Evidence Code provides:

‘(a) As used in this section, ‘official information’ means information acquired in confidence by a public employee in the course of his duty and not open, or officially disclosed, to the public prior to the time the claim of privilege is made.

(b) A public entity has a privilege to refuse to disclose official information, and to prevent another from disclosing such information, if the privilege is claimed by a person authorized by the public entity to do so and:

(1) Disclosure is forbidden by an act of the Congress of the United States or a statute of this state; or

(2) Disclosure of the information is against the public interest because there is a necessity for preserving the confidentiality of the information that outweighs the necessity for disclosure in the interest of justice; but no privilege may be claimed under this paragraph if any person authorized to do so has consented that the information be disclosed in the proceeding. In determining whether disclosure of the information is against the public interest, the interest of the public entity as a party in the outcome of the proceeding may not be considered.'

The information sought by the subpoena is ‘official information’ to which attached the conditional privilege described in subdivision (b)(2). In discussing the nature of the privilege granted by section 1040 it was said in People v. Superior Court (Biggs), 10 Cal.App.3d 522 at 526, 97 Cal.Rptr. 118 at 120:

‘The facts will possess heightened significance against the backdrop of the governing statutes. Evidence Code section 1040 establishes a governmental privilege barring evidence of official information whose disclosure is against the public interest.1 The privilege is conditional in the sense that the court must weigh the necessity for preserving the confidentiality of the information against the necessity for disclosure in the interest of justice. (See Witkin, Cal.Evidence (2d ed. 1966) §§ 865–867.) A procedure for judicial inquiry is supplied by Evidence Code section 915, subdivision (b), which provides for a hearing in the judge's chambers attended only by the judge and representatives of the public agency asserting the privilege.2’ (Fns. omitted.)

‘The judge must determine in each instance the consequences to the public of disclosure and the consequences to the litigant of nondisclosure and then decide which outweighs the other. He should, of course, be aware that the public has an interest in seeing that justice is done in the particular cause as well as an interest in the secrecy of the information.’ (Comment of Assembly Committee on the Judiciary; see also Richards v. Superior Court, 258 Cal.App.2d 635, 637, 65 Cal.Rptr. 917.)

Turning to the case at bench we cannot say that the court below abused its discretion in refusing to quash the subpoena duces tecum. Following a hearing on a motion to quash made by the Controller the following order was made: ‘Submitted. Later: The persons who executed the returns are the ones who are now seeking their productions at trial. This request would constitute a waiver of any privilege. No other written, formal grounds in support of the motion are advanced and none can be orally entertained. Motion denied.’ We do not subscribe to the statement that ‘This request would constitute a waiver of any privilege.’ The privilege involved is one belonging to the Controller and not subject to waiver in the manner indicated. Nevertheless it appears from the application for subpoena duces tecum that the information sough was furnished to the Controller by the persons now seeking its disclosure for use in connection with a material issue (forgery) in an action the which the state is not a party. There is no showing that the disclosure would be against the public interest because of a necessity for preserving confidentiality that outweighs the necessity for disclosure in the interest of justice. The order denying the motion to quash the subpoena was proper.

The stay order issued by this court June 1, 1973, is vacated, the order to show cause heretofore issued is discharged, and the petition is denied.

ALLPORT, Associate Justice.

FORD, P. J., and COBEY, J., concur.