In a contempt proceeding for failure to comply with a court
order to enforce a subpoena
duces tecum issued by the
Securities and Exchange Commission in aid of an investigation
pursuant to § 20(a) of the Securities Act of 1933, 48 Stat. 74, a
district court adjudged the defendant guilty of contempt and
imposed an unconditional fine, but refused to grant any coercive
relief designed to force him to produce the subpoenaed documents.
He paid the fine and took no appeal. The Commission filed a notice
of appeal in the district court and subsequently a statement of
points challenging as error the court's action in imposing the fine
instead of a remedial penalty to make him produce the documents.
The circuit court of appeals held that the district court erred in
imposing the fine, and directed that the defendant be ordered
imprisoned until he produced the documents.
Held:
1. The appeal was in a suit of a civil nature, and was properly
taken, under Rule 73(a) of the Rules of Civil Procedure, by filing
a notice of appeal with the district court. Pp.
330 U. S.
589-591.
Page 330 U. S. 586
(a) Where a Rule of Civil Procedure conflicts with a prior
statute, the Rule prevails. P. 589,
330 U. S. 5.
(b) The application of the Commission for enforcement of its
subpoena posed a problem in civil, not criminal, contempt.
United States v. United Mine Workers, 330 U.
S. 258. P.
330 U. S.
590.
(c) The order of denial, being final, was appealable, and the
right to appeal was not dependent on an appeal from the imposition
of the fine. P.
330 U. S.
591.
2. The district court abused its discretion in refusing to grant
remedial relief, and the circuit court of appeals did not err in
granting it. Pp.
330 U. S.
591-595.
3. The fact that an unconditional fine had been imposed and paid
did not exhaust the jurisdiction of the district court or deprive
the circuit court of appeals of authority to reverse the judgment
which imposed the fine and substitute a term of imprisonment
conditioned upon the continuance of the contempt. Pp.
330 U. S.
593-594.
(a) Assuming
arguendo that § 268 of the Judicial Code
authorizing federal courts "to punish, by fine or imprisonment at
the discretion of the court, contempts of their authority" governs
civil as well as criminal contempt proceedings, it is no barrier to
the imposition of both a fine as a punitive exaction and
imprisonment as a coercive sanction. P.
330 U. S.
594.
(b) When a court imposes a fine as a penalty, it is punishing
yesterday's contemptuous conduct. When it adds the coercive
sanction of imprisonment, it is announcing the consequences of
tomorrow's contumacious conduct. In that situation, the two
offenses are not the same. P.
330 U. S.
594.
4. Not having appealed from the adverse judgment in the contempt
proceedings in the district court, the defendant may not now raise
objections going to the merits of that judgment. P.
330 U. S.
594.
5. Assuming that the portion of the order of the circuit court
of appeals which set aside the unconditional fine is here for
review, that court was correct in setting aside the unconditional
fine, since it was imposed in a civil contempt proceeding. P.
330 U. S.
595.
157 F.2d 65, affirmed.
In a contempt proceeding for failure to comply with an order
enforcing a subpoena
duces tecum issued by the Securities
and Exchange Commission under the Securities Act of 1933, 48 Stat.
74, a district court adjudged the defendant
Page 330 U. S. 587
guilty of contempt and imposed an unconditional fine. On appeal
by the Commission, the Circuit Court of Appeals reversed, set aside
the fine, and directed that the defendant be imprisoned until he
produced the documents. 157 F.2d 65. This Court granted certiorari.
329 U.S. 706.
Affirmed, p.
330 U. S.
595.
MR. JUSTICE DOUGLAS delivered the opinion of the Court.
The Securities and Exchange Commission, acting pursuant to its
authority under § 20(a) of the Securities Act of 1933, 48 Stat. 74,
86, 15 U.S.C. § 77t, issued orders directing an investigation to
determine whether Penfield Company had violated the Act in the sale
of stock or other securities. In the course of that investigation,
it directed a subpoena
duces tecum to Young, as an officer
of Penfield, requiring him to produce certain books of the
corporation covering a four-year period ending in April, 1943.
See § 19(b) of the Act. Upon Young's refusal to appear and
produce the books and records, the Commission filed an application
with the District Court for an order enforcing the subpoena.
[
Footnote 1] After a hearing,
the court ordered
Page 330 U. S. 588
Young, as an officer of Penfield, to produce them. [
Footnote 2] Young persisted in his
noncompliance. The Commission then applied to the District Court
for a rule to show cause why Young should not be adjudged in
contempt -- a proceeding which, as we shall see, was one for civil
contempt. The District Court delayed action on the motion until
after disposition of a criminal case involving Young, Penfield, and
others. When that case was concluded, the court, after hearing,
adjudged Young to be in contempt. It refused, however, to grant any
coercive relief designed to force Young to produce the documents,
but instead imposed on him a flat, unconditional fine of $50.00,
which he paid. [
Footnote 3]
Page 330 U. S. 589
That was on July 2, 1945. On September 24, 1945, the Commission
filed a notice of appeal in the District Court and subsequently a
statement of points challenging as error the action of the District
Court in imposing the $50.00 fine instead of a remedial penalty
calculated to make Young produce the documents. The Circuit Court
of Appeals reversed, holding that the District Court erred in
imposing the fine and directing that Young be ordered imprisoned
until he produced the documents. 157 F.2d 65. The case is here on a
petition for a writ of certiorari filed by Penfield Co. and Young.
Neither the District Court nor the Circuit Court of Appeals
rendered judgment against Penfield. Nor is any relief sought by or
against it here. Accordingly, the writ is dismissed as to
Penfield.
First. It is argued that, since no application for an
allowance of an appeal was made, the Circuit Court of Appeals had
no jurisdiction to entertain it. [
Footnote 4] If the appeal was in a suit of a civil nature,
the filing of the notice of appeal with the District Court was
adequate under the Federal Rules of Civil Procedure. [
Footnote 5]
Page 330 U. S. 590
It is the nature of the relief asked that is determinative of
the nature of the proceeding.
Lamb v. Cramer, 285 U.
S. 217,
285 U. S. 220.
This was not a proceeding in which the United States was a party
and in which it was seeking to vindicate the public interest.
See Gompers v. Bucks Stove & Range Co., 221 U.
S. 418,
221 U. S. 445.
The contempt proceedings were instituted as a part of the
proceedings in which the Commission sought enforcement of a
subpoena. The relief which the Commission sought was production of
the documents, and the only sanction asked was a penalty designed
to compel their production. Where a fine or imprisonment imposed on
the contemnor is "intended to be remedial by coercing the defendant
to do what he had refused to do,"
Gompers v. Bucks Stove &
Range Co., supra, p.
221 U. S. 442,
and remedy is one for civil contempt.
United States v. United
Mine Workers, 330 U.S. pp.
330 U. S. 258,
330 U. S. 303.
Then "the punishment is wholly remedial, serves only the purposes
of the complainant, and is not intended as a deterrent to offenses
against the public."
McCrone v. United States,
307 U. S. 61,
307 U. S. 64.
One who is fined, unless by a day certain he produces the books,
has it in his power to avoid any penalty. And those who are
imprisoned until they obey the order, "carry the keys of their
prison in their own pockets."
In re Nevitt, 117 F. 448,
461. Fine and imprisonment are then employed not to vindicate the
public interest, but as coercive sanctions to compel the contemnor
to do what the law made it his duty to do.
See Doyle v. London
Guarantee Co., 204 U. S. 599;
Oriel v. Russell, 278 U. S. 358;
Fox v. Capital Co., 299 U. S. 105;
McCrone v. United States, supra.
The Act gives the Commission authority to require the production
of books and records in the course of its investigations.
Page 330 U. S. 591
And, in absence of a basis for saying that its demand exceeds
lawful limits (
Oklahoma Press Publishing Co. v. Walling,
327 U. S. 186), it
is entitled to the aid of the court in obtaining them. [
Footnote 6] A refusal of the court to
enforce its prior order for the production of the documents denies
the Commission that statutory relief. The issue thus raised poses a
problem in civil, not criminal, contempt. [
Footnote 7]
Where a judgment of contempt is embodied in a single order which
contains an admixture of criminal and civil elements, the criminal
aspect of the order fixes its character for purposes of procedure
on review.
Union Tool Co. v. Wilson, 259 U.
S. 107. But there was no such admixture here. The
District Court refused to grant any remedial relief to the
Commission. The denial of that relief was the ground of the
Commission's appeal. The order of denial, being final, was
appealable,
Lamb v. Cramer, supra, pp.
285 U. S.
220-221, and the right to appeal from it was in no way
dependent on an appeal from the imposition of the fine.
Second. The question on the merits is two-fold: (1)
whether the Circuit Court of Appeals erred in granting the
Commission remedial relief by directing that Young be required to
produce the documents, and (2) whether that court exceeded its
authority in reversing the judgment which imposed the fine and in
substituting a term of imprisonment conditioned on continuance of
the contempt.
As we have already noted, the Act requires the production of
documents demanded pursuant to lawful orders of the Commission and
lends judicial aid to obtain them. There is no basis in the record
before us for saying that
Page 330 U. S. 592
the demand of the Commission exceeded lawful limits. There is,
however, a suggestion that the District Court was warranted in
denying remedial relief since the contempt hearing came after a
criminal trial of petitioners in another case, during the course of
which many of Penfield's books and records were examined. The
thought apparently is that the Commission had probed enough into
Penfield's affairs. But the District Court did not hold that the
Commission's request had become moot, that the documents produced
satisfied its legitimate needs, or that the additional ones sought
were irrelevant to its statutory functions. [
Footnote 8] We agree with the Circuit Court of
Appeals that at least in absence of such a finding, the refusal of
the District Court to grant the full remedial relief which the Act
places behind the orders of the Commission was an abuse of
discretion. The records might well disclose other offenses against
the Securities Act of 1933 which the Commission administers. The
history of this case reveals a long, persistent effort to defeat
the investigation. The fact that Young paid the fine and did not
appeal indicates that the judgment of contempt may have been an
easy victory for him. On the other hand, the dilatory tactics
employed suggest that, if justice was to be done, coercive
sanctions were necessary.
When the Circuit Court of Appeals substituted imprisonment for
the fine, it put a civil remedy in the place of a criminal
punishment. For the imprisonment authorized would be suffered only
if the documents were not produced or would continue only so long
as Young was recalcitrant. On the other hand, the fine imposed by
the District Court, unlike that involved in
Fox v. Capital
Co.,
Page 330 U. S. 593
supra, 299 U.S. at
299 U. S.
106-107, was unconditional and not relief of a coercive
nature such as the Commission sought. It was solely and exclusively
punitive in character.
Cf. Nye v. United States,
313 U. S. 33,
313 U. S.
42-43.
As already noted, Young did not appeal from the order holding
him in contempt and subjecting him to a fine. Young maintains,
however, that, once the fine was imposed and paid, the jurisdiction
of the court was exhausted; that the Circuit Court of Appeals was
without authority to substitute another penalty or to add to the
one already imposed and satisfied. That argument rests on the
statute granting federal courts the power to punish contempts of
their authority, Judicial Code § 268, 28 U.S.C. § 385, and the
decisions construing it. The statute gives the federal courts power
"to punish, by fine or imprisonment at the discretion of the court,
contempts of their authority," including violations of their lawful
orders. At least in a criminal contempt proceeding both fine and
imprisonment may not be imposed since the statute provides
alternative penalties.
In re Bradley, 318 U. S.
50. Hence, if a fine is imposed on a contemnor and he
pays it, the sentence may not thereafter be amended so as to
provide for imprisonment. The argument here is that, after a fine
for criminal contempt is paid, imprisonment may not be added to, or
substituted for the fine, as a coercive sanction in a civil
contempt proceeding. If that position is sound, then the statutory
limitation of "fine or imprisonment" would preclude a court from
imposing a fine as a punitive measure and imprisonment as a
remedial measure, or vice versa.
The dual function of contempt has long been recognized -- (1)
vindication of the public interest by punishment of contemptuous
conduct; (2) coercion to compel the contemnor to do what the law
requires of him.
Gompers v. Bucks Stove & Range Co.,
supra, pp.
221 U. S. 441
et seq.; United States v. United Mine Workers, supra, p.
330 U. S.
302.
Page 330 U. S. 594
As stated in
Bessette v. W. B. Conkey Co., 194 U.
S. 324,
194 U. S. 327,
"The purpose of contempt proceedings is to uphold the power of the
court, and also to secure to suitors therein the rights by it
awarded."
We assume,
arguendo, that the statute allowing fine or
imprisonment governs civil as well as criminal contempt
proceedings. If the statute is so construed, we find in it no
barrier to the imposition of both a fine as a punitive exaction and
imprisonment as a coercive sanction, or vice versa. [
Footnote 9] That practice has been approved.
Kreplik v. Couch Patents Co., 190 F. 565, 571.
And see
Phillips Sheet & Tin Plate Co. v. Amalgamated Assn., 208
F. 335, 340. When the court imposes a find as a penalty, it is
punishing yesterday's contemptuous conduct. When it adds the
coercive sanction of imprisonment, it is announcing the
consequences of tomorrow's contumacious conduct. At least in that
situation, the offenses are not the same. And the most that the
statute forbids is the imposition of both fine and imprisonment for
the same offense.
Young raises objections that go to the merits of the judgment of
contempt. These were considered and determined against him by the
District Court. Since he did not appeal from the adverse judgment,
he is precluded from renewing the objections at this stage.
Le
Tulle v. Scofield, 308 U. S. 415,
308 U. S.
421-422;
Helvering v. Pfeiffer, 302 U.
S. 247,
302 U. S.
250-251.
Page 330 U. S. 595
There is a difference of view among us whether the portion of
the order of the Circuit Court of Appeals which set aside the
unconditional fine of $50 imposed on Young is here for review. But,
if we assume that it is, a majority of the Court is of the opinion
that the Circuit Court of Appeals was correct in setting it aside,
since the fine was imposed in a civil contempt proceeding.
See
Gompers v. Bucks Stove & Range Co., supra.
Affirmed.
[
Footnote 1]
Sec. 22(b) provides:
"In case of contumacy or refusal to obey a subpoena issued to
any person, any of the said United States courts within the
jurisdiction of which said person guilty of contumacy or refusal to
obey is found or resides, upon application by the Commission, may
issue to such person an order requiring such person to appear
before the Commission, or one of its examiners designated by it,
there to produce documentary evidence if so ordered, or there to
give evidence touching the matter in question, and any failure to
obey such order of the court may be punished by said court as a
contempt thereof."
[
Footnote 2]
That order was affirmed by the Circuit Court of Appeals. 143
F.2d 746.
[
Footnote 3]
The request of the Commission and the ruling of the court are
made clear by the following colloquy:
"MR. CUTHBERTSON: So far as the punishment which the Court might
see fit to impose, that is up to the Court. We are still anxious to
get a look at these books and records, so I suggest to the Court,
if he be so disposed, whatever punishment the Court might see fit
to impose would be in connection with or so long as he refuses to
produce his books and records for our inspection."
"THE COURT: I don't think that I am doing to be disposed to do
anything like that. I sat here for six weeks and listened to books
and records. The Government produced people from all over the
United States in connection with the Penfield matter."
"MR. CUTHBERTSON: I might say, your Honor, that we have in mind
that these books and records may disclose certain acts other than
those charged in the indictment. We don't propose to go over the
same matter that the Court went over in connection with the
criminal case."
"THE COURT: The Court can take judicial notice of its own books
and records, and, in that trial, the evidence was clear and
definite and positive from all of the Government's witnesses that,
during one period of time, this defendant had nothing whatsoever to
do with the Penfield Company. Whether that period of time is
covered by what the Securities and Exchange Commission seeks or
not, I don't know."
"The judgment and sentence of the Court is that the defendant
pay a fine of $50, and stand committed until paid."
[
Footnote 4]
Section 8(c) of the Act of February 13, 1925, 43 Stat. 936, 940,
as amended, 28 U.S.C. § 230, provides:
"No . . . appeal intended to bring any judgment or decree before
a circuit court of appeals for review shall be allowed unless
application therefore be duly made within three months after the
entry of such judgment or decree."
See Alaska Packers Assn. v. Pillsbury, 301 U.
S. 174;
Georgia Hartford Lumber Co. v.
Compania, 323 U. S. 334.
[
Footnote 5]
Rule 73(a) provides in part:
"When an appeal is permitted by law from a district court to a
circuit court of Appeals and within the time prescribed, a party
may appeal from a judgment by filing with the district court a
notice of appeal."
Where a Rule of Civil Procedure conflicts with a prior statute,
the Rule prevails. 48 Stat. 1064, 28 U.S.C. § 723b.
[
Footnote 6]
See § 22(b),
supra, note 1
[
Footnote 7]
This thus disposes of the further contention that the appeal was
not timely under the Criminal Appeals Act, 18 U.S.C.Supp. II § 682.
United States v. Hawk, 320 U. S. 531.
[
Footnote 8]
As will be seen from
note 3
supra, the court, immediately prior to rendering its
sentence, noted that there was one period during which Young was
not connected with Penfield Co. But the court added: "Whether that
period of time is covered by what the Securities and Exchange
Commission seeks or not, I don't know."
[
Footnote 9]
Some rules governing criminal contempts are, of course,
different from those governing civil contempts.
Gompers v.
Bucks Stove & Range Co., supra, pp.
221 U. S. 444,
221 U. S.
446-449. If those differences are satisfied and if, as
in
In re Swan, 150 U. S. 637;
Matter of Christensen Engineering Co., 194 U.
S. 458;
In re Merchants' Stock & Grain Co.,
223 U. S. 639;
Farmers & Mechanics Nat. Bank v. Wilkinson,
266 U. S. 503, the
criminal penalty and the remedial relief are segregated, no problem
of the adequacy of the order for purposes of appellate review is
presented. No question is raised here as to the propriety of
combining civil and criminal contempt in the same proceeding.
MR. JUSTICE RUTLEDGE, concurring.
But for the decision in
United States v. United Mine
Workers, 330 U. S. 258, I
should have no difficulty in concluding with the Court that this
contempt proceeding was exclusively civil in character and that,
consequently, no criminal penalty could be imposed, coercive relief
alone being allowable in such a case.
Gompers v. Bucks Stove
& Range Co., 221 U. S. 418.
[
Footnote 2/1] That decision held
that the imposition of criminal punishment in a civil contempt
proceeding "was as fundamentally erroneous as if in an action of
"
A v. B, for assault and battery," the judgment entered
had been that the defendant be confined in prison for twelve
months." 221 U.S. at
221 U. S.
449.
By every test applied in the
Gompers case, this
proceeding was civil, not criminal, in character. Here, as there,
the proceeding was entitled, instituted, and conducted as
collateral to civil litigation. It sought only remedial relief --
namely, the production of specified books and records. [
Footnote 2/2]
Page 330 U. S. 596
And issuance of the citation was grounded upon disobedience of
the court's lawful order for their production. [
Footnote 2/3]
This act, like the act of disobedience in the
Gompers
case, constituted conduct which would have sustained either civil
or criminal penalty in appropriate proceedings. But the unequivocal
ruling of that case was that criminal penalties cannot be applied
in civil contempt proceedings. 221 U.S. at
221 U. S. 444,
221 U. S. 449,
221 U. S.
451-452. Not only the result, but the whole tenor of the
opinion, was of the effect that the character of the proceeding as
a whole, whether as civil or criminal, must be correlated with the
character of the penalty imposed, and that the two cannot be
scrambled, regardless of the fact that the conduct constituting the
contempt would support the imposition of either type of relief in a
proceeding appropriate to the kind of relief given. [
Footnote 2/4] Not simply the remedy sought,
but the character of the proceeding in which it is pursued, it was
held, determines the validity of the relief afforded. [
Footnote 2/5]
Page 330 U. S. 597
This ruling, as I have previously maintained, was one not only
of historical grounding, but of constitutional compulsion.
[
Footnote 2/6] Moreover, it
recently has been reinforced by Rule 42(b) of the Federal Rules of
Criminal Procedure, requiring that the notice prescribed for
instituting the proceeding "shall state the essential facts
constituting the
criminal contempt charged and
describe it as such." [
Footnote 2/7] (Emphasis added.)
Hence, under the rule of the
Gompers case and others
following it, it is clear that the district judge had no power in
this case to impose the criminal penalty of a flat $50 fine, and it
is equally clear, on the record, [
Footnote 2/8] that he exceeded
Page 330 U. S. 598
his power in denying the Commission civil coercive relief
altogether. [
Footnote 2/9]
Moreover, I think it is clear that both of these problems are
presented for our determination on the state of the record here. It
is true that Young did not appeal from the District Court's
judgment to the Circuit Court of Appeals, and that he paid the
fine. But the Commission appealed from that judgment in its
entirety, as it had a right to do, [
Footnote 2/10] unless the payment of the fine exhausted
all judicial power to deal further with the proceeding. This indeed
is a basis upon which Young maintains that the Circuit Court of
Appeals had no power to reverse the District Court's judgment.
[
Footnote 2/11]
Page 330 U. S. 599
But clearly, as the Court holds, such power could not be
wanting, if the litigation was exclusively civil in character. On
the contrary, the action of the Circuit Court of Appeals was
exactly in accordance with the ruling in the
Gompers case
and was required by it. In both cases, the proceedings were wholly
civil in character. In both a criminal penalty was imposed. And in
both, the judgment laying it was reversed, and the cause was
remanded to the trial court for further proceedings looking only to
the giving of civil relief.
The only difference is that, in the
Gompers case, the
contemnors had not entered upon the service of the void criminal
sentence of imprisonment, but appealed from it, while here, Young
paid the fine and did not appeal. That action on his part, however,
cannot oust the Commission of its statutory right of appeal and
review or of its right to civil relief. [
Footnote 2/12] If the contempt proceeding were criminal
in character, a different question might be presented. [
Footnote 2/13] But compliance with a void
criminal penalty, void because imposed in a wholly civil
proceedings, cannot
Page 330 U. S. 600
make it valid or oust either the courts of their civil
jurisdiction in matters of relief or opposing parties of their
rights in that respect.
In short, the Commission was forced to appeal from the judgment
rendered, if it was not to acquiesce in what the court had done,
and thereby suffer unauthorized thwarting of its statutory
investigating power. That judgment was rightfully taken in its
entirety to the Circuit Court of Appeals, was reviewed by that
court, and was reversed not partially, but completely. [
Footnote 2/14] Our action in granting
certiorari brought here for review the entire judgment of the
Circuit Court of Appeals, including its reversal of the criminal
judgment rendered by the District Court as well
Page 330 U. S. 601
as its mandate for civil relief. [
Footnote 2/15] Hence, in my opinion, we are forced to
take action upon the judgment as a whole, in both civil and
criminal phases.
Since I am in agreement with the Court's view that the Gompers
ruling and others in accord with it are controlling in this case, I
think the judgment of the Circuit Court of Appeals should be
affirmed, though with modification in one respect. [
Footnote 2/16] I find it difficult,
however, to reconcile the action taken here with what was done in
the
Mine Workers decision . A majority there held, as I
thought, contrary to the
Gompers ruling, that civil and
criminal contempt could be prosecuted in a single contempt
proceeding conducted according to the rules of procedure applicable
in equity causes, [
Footnote 2/17]
and that both types of relief, civil and criminal, could be imposed
in such a mixed proceeding. It was also held that, on review, the
appellate court is free to substitute its own judgment concerning
the nature and extent of both types of relief for that of the trial
court, and therefore that, in remanding the cause for further
proceedings, there was no necessity to leave room for the further
exercise of the trial court's discretion in relation to either type
of relief.
If, in that case, a single mixed proceeding could suffice
without regard to the requirements of Rule 42(b) and the
Page 330 U. S. 602
Gompers line of decisions concerning procedures to be
followed in instituting and conducting contempt proceedings, for
the imposition of both civil and criminal penalties, I see no valid
reason why the same thing could not be done in this cause, or why
both the criminal fine imposed by the District Court and the civil
relief given by the Circuit Court of Appeals should not be allowed
to stand.
It is true that, if the proceeding is to be taken as having been
both civil and criminal, a serious question would be presented on
the terms of § 268 of the Judicial Code whether imposition and
payment of the fine here did not exhaust judicial power to deal
further with the proceeding, more especially in its criminal phase.
[
Footnote 2/18] But that question
too, I take it, necessarily would be settled if the
Mine
Workers ruling were to govern here.
It is also true that, in this case, the United States was not a
party by that name, as it was in the
Mine Workers case, to
the civil litigation in which the contempt proceeding arose or to
the contempt proceeding itself. But the Commission was the moving
party in both, representative as such of the public interest, as
the trial court pointed out. [
Footnote 2/19] And, in view of the vast liberality
allowed by the
Mine Workers decision concerning matters of
procedure and relief in contempt proceedings, it hardly can be a
solid ground for distinguishing the cases that in one the public
interest was represented, as to the criminal phase,
eo
nomine United States, in the other under the name of the
Securities and Exchange Commission.
Cf. 318 U.
S.
Page 330 U. S. 603
318 U. S. 50.
Notwithstanding these difficulties, since the Court rests the
decision in this cause upon the
Gompers rule, which, in my
opinion, represents the settled law, I join in the affirmance of
the judgment of the Circuit Court of Appeals, both insofar as it
reversed the District Court's judgment because of the denial of
coercive relief and in relation to its reversal of the criminal
penalty imposed by the District Court.
But, while there can be no question of the Court of Appeals'
power in proper cases to review and revise civil relief given in
the District Court, in this case, no such relief had been awarded.
In my opinion, the question of the character and scope of that
relief was a matter, in the first instance, for the District
Court's judgment, rather than for the Court of Appeals.
Accordingly, I would modify the judgment of reversal in the civil
phase so that the cause would be remanded to the District Court
with directions to exercise its discretion in framing the relief
adequate and appropriate to make effective the Commission's right
to disclosure. [
Footnote
2/20]
[
Footnote 2/1]
See In re Fox, 96 F.2d 23;
Norstrom v. Wahl,
41 F.2d 910.
[
Footnote 2/2]
The application in contempt was made by affidavit setting forth
the facts alleged to constitute the violation. The contempt
proceeding was entered upon the civil docket, being cause "No.
2863, Civil, Securities and Exchange Commission v. Penfield Company
of California." Young was first commanded to appear and show cause
why a further order should not be made directing him "to show cause
why an order should not be made holding said A.W. Young in contempt
of this Court and to be dealt with accordingly." The order of
citation followed in the same terms. At the hearing, counsel for
the Commission maintained consistently and urgently that the
proceeding was exclusively civil, not criminal, in character. Not
until pronouncement of judgment was any step taken indicating the
proceeding to be criminal in nature.
[
Footnote 2/3]
The validity of the order for production was sustained on
appeal. 143 F.2d 746.
[
Footnote 2/4]
See the Court's discussion in
Gompers v. Bucks
Stove & Range Co., 221 U. S. 418,
particularly at
221 U. S.
444-449,
221 U. S. 451
ff.;
see also discussion in
United States v. United
Mine Workers, 330 U. S. 258,
330 U. S. 263,
dissenting opinion, p.
330 U. S. 363,
Part III.
[
Footnote 2/5]
The
Gompers opinion, as I understand it, does not hold
that the character of the relief sought is exclusively the
criterion of the character of the proceeding. It was said to be a
factor to be taken into account. But, in view of the Court's stress
upon other factors, including the private or public character of
the complainant, whether or not the contempt proceeding arises in
and as corollary to civil litigation, and the necessity for
observing distinct procedural requirements in the course of trial,
the case seems clearly to rule that the character of the proceeding
determines the nature of the relief which can be given, rather than
the reverse.
[
Footnote 2/6]
See the references cited in
330
U.S. 585fn2/4|>note 4,
supra, and see 330
U.S. 585fn2/5|>note 5.
[
Footnote 2/7]
"A criminal contempt, except as provided in subdivision (a) of
this rule, shall be prosecuted on notices. The notice shall state
the time and place of hearing, allowing a reasonable time for the
preparation of the defense, and shall state the essential facts
constituting the criminal contempt charged and describe it as such.
The notice shall be given orally by the judge in open court in the
presence of the defendant or, on application of the United States
attorney or of an attorney appointed by the court for that purpose,
by an order to show cause or an order of arrest. . . ."
Rule 42(b), Federal Rules of Criminal Procedure.
See United
States v. United Mine Workers, 330 U.
S. 258,
330 U. S. 372,
dissenting opinion, p.
330 U. S. 372,
and note 45.
The rule did not become effective until March 21, 1946, hence
was not applicable to the present proceeding, which was instituted
and concluded in the trial court prior to that date.
[
Footnote 2/8]
See text
infra. The record does not show that
the function of the subpoena had been exhausted at the time of the
judgment in contempt, although this was Young's contention,
accepted, apparently, by the District Court. The contrary, in fact,
affirmatively appeals. The subpoena did not purport to be issued
exclusively in connection with and for the purposes of the criminal
trial which transpired in the District Court between its issuance
and the time of the judgment in contempt. Counsel for the
Commission expressly stated that the subpoena was not limited to
that matter, and the court said, after referring to the period of
the criminal suit: "Whether that period of time is covered by what
the Securities and Exchange Commission seeks or not I do not
know."
The court made no finding that the subpoena's function had been
exhausted. The only reason assigned for refusing civil relief was
that the court had sat in the criminal trial for six weeks, during
which it had "listened to books and records," as well as witnesses
produced "from all over the United States in connection with the
Penfield matter." Taking judicial notice of its own proceedings,
the court said:
". . . in that trial, the evidence was clear and definite . . .
that, during one period of time this defendant [Young] had nothing
whatsoever to do with the Penfield Company."
These grounds, of course, were not the equivalent of finding
that the records covered by the subpoena had been produced, or that
the Commission had no power or valid reason for pursuing its
statutory investigation through the subpoena beyond the confines of
the closed criminal trial.
[
Footnote 2/9]
See 330
U.S. 585fn2/8|>note 8.
And see text
infra
preceding
330
U.S. 585fn2/20|>note 20.
[
Footnote 2/10]
28 U.S.C. § 225;
see Clarke v. Federal Trade
Commission, 128 F.2d 542;
Lamb v. Cramer,
285 U. S. 217,
285 U. S.
220.
[
Footnote 2/11]
The principal contention in this respect is based on § 268 of
the Judicial Code, 28 U.S.C. § 385, and the decision in
In re
Bradley, 318 U. S. 50. The
Bradley case, however, was one in criminal contempt and
the decision was that in such a case § 268 forbids imposition as
penalty of both fine and imprisonment. The penalties being
alternative by the section's terms, it was held that payment of the
fine exhausted the court's power.
The
Bradley case therefore presented no question of the
applicability of § 268 in civil contempt proceedings or of its
effect if applicable.
Compare the majority and concurring
opinions in
In re Sixth & Wisconsin Tower, Inc., 108
F.2d 538. It cannot be taken as having ruled that the court's
invalid imposition of criminal punishment in civil contempt
proceedings or satisfaction of such a void sentence exhausts either
the trial court's power or that of an appellate court on review to
deal with the civil contempt by affording civil relief or to avoid
the invalid criminal judgment.
Whether or not § 268, if applicable to a so-called mixed
civil-criminal contempt proceeding, would forbid the imposition of
relief both by way of fine and imprisonment, one punitive, the
other coercive and remedial, need not be considered in view of the
holding that this proceeding was exclusively civil in
character.
[
Footnote 2/12]
See notes
330
U.S. 585fn2/10|>10,
330
U.S. 585fn2/14|>14.
[
Footnote 2/13]
See 330
U.S. 585fn2/11|>note 11
supra.
[
Footnote 2/14]
The opinion of the Circuit Court of Appeals states:
"Young did not appeal from the order holding him in contempt.
That decision is final, and the only question before us is the
extent of the remedy to which the Commission is entitled."
157 F.2d 65, 66. Ruling that the cause did not become moot by
reason of Young's payment of the fine, the court further held the
District Court had abused its "discretion" in not granting the full
relief sought by the Commission. The concluding paragraph of the
opinion stated:
"The order imposing the fine is reversed, and the case remanded
to the district court for an order requiring Young's imprisonment
to compel his obedience to the order to produce the documents in
question."
The opinion concluded: "The order of the district court is
reversed," 157 F.2d at 67, and the formal order for judgment
entitled "decree" directed
"that the order of the said District Court in this cause be, and
hereby is, reversed, and that this cause be, and hereby is remanded
to the said District Court for further proceedings in accordance
with the opinion of this Court."
The notice of appeal filed in the District Court is not set
forth in the printed record here. But the "Statement of Points on
Which the Appellant Intends to Rely," filed in the Court of
Appeals, specifies that
"the District Court erred in ordering Young to pay a fine of
$50.00 instead of imposing a remedial penalty calculated to coerce
Young to produce or allow inspection of the books and records. . .
."
In this state of the record, it cannot be taken that the appeal
and the judgment of the Court of Appeals did not comprehend the
criminal penalty.
[
Footnote 2/15]
This Court's action in granting certiorari, 329 U.S. 706, was
not limited to any question or phase of the Court of Appeals'
action, but brought up the judgment in its entirety. Since that
court's judgment comprehended the reversal of the criminal penalty
imposed by the District Court, that phase of the Court of Appeals'
judgment is necessarily here for review and determination.
[
Footnote 2/16]
See text at
330
U.S. 585fn2/20|>note 20.
[
Footnote 2/17]
See United States v. United Mine Workers, 330 U.
S. 258,
330 U. S. 363,
dissenting opinion, p.
330 U. S. 363,
Part III. The rule to show cause issued in that case provided:
"IT IS FURTHER ORDERED that the accused, and each of them,
shall, unless waived by them, be tried upon said charges
of contempt by the court
with an advisory jury to be
empaneled by this court."
(Emphasis added.) The advisory jury was waived.
[
Footnote 2/18]
See 330
U.S. 585fn2/11|>note 11
supra, and text.
[
Footnote 2/19]
The court inquired of Commission counsel, in response to
argument that the proceeding was exclusively civil, since it arose
in the course of civil litigation and sought only remedial relief
for one of the parties, and not as an independent proceeding in the
public interest to vindicate the court's power: "The Securities and
Exchange Commission does not operate for itself, does it? I mean,
it operates in the public interest doesn't it?"
[
Footnote 2/20]
E. Ingraham Co. v. Germanow, 4 F.2d 1002, 1003.
MR. JUSTICE FRANKFURTER, with whom concurs MR. JUSTICE JACKSON,
dissenting.
Beginning with the Interstate Commerce Act in 1887, it became a
conventional feature of Congressional regulatory legislation to
give administrative agencies authority to issue subpoenas for
relevant information. Congress has never attempted, however, to
confer upon an administrative agency itself the power to compel
obedience to such a subpoena. It is beside the point to
consider
Page 330 U. S. 604
whether Congress was deterred by constitutional difficulties.
That Congress should so consistently have withheld powers of
testimonial compulsion from administrative agencies discloses a
policy that speaks with impressive significance.
Instead of authorizing agencies to enforce their subpoenas,
Congress has required them to resort to the courts for enforcement.
In the discharge of that duty, courts act as courts, and not as
administrative adjuncts. The power of Congress to impose on courts
the duty of enforcing obedience to an administrative subpoena was
sustained precisely because courts were not to be automata carrying
out the wishes of the administrative. They were discharging
judicial power with all the implications of the judicial function
in our constitutional scheme.
Interstate Commerce Commission v.
Brimson, 154 U. S. 447;
155 U. S. 155 U.S.
3. Accordingly, an order directing obedience to a subpoena by the
Securities and Exchange Commission, like a subpoena of any other
federal agency, does not issue as a matter of course. An
administrative subpoena may be contested on the ground that it
exceeds the bounds set by the Fourth Amendment against unreasonable
search and seizure; that the inquiry is outside the scope of the
authority delegated to the agency; that the testimony sought to be
elicited is irrelevant to the subject matter of the inquiry; that
the person to whom it is directed cannot be held responsible for
the production of the papers.
See Interstate Commerce
Commission v. Brimson, supra, at
154 U. S. 479
and
154 U. S. 489;
Harriman v. Interstate Commerce Commission, 211 U.
S. 407;
Ellis v. Interstate Commerce
Commission, 237 U. S. 434;
Smith v. Interstate Commerce Commission, 245 U. S.
33;
Federal Trade Commission v. American Tobacco
Co., 264 U. S. 298;
Oklahoma Press Publishing Co. v. Walling, 327 U.
S. 186.
And see Lilienthal, The Power to Compel
Testimony, 39 Harv.L.Rev. 694.
Page 330 U. S. 605
In this case, the Securities and Exchange Commission issued a
subpoena to Young, as officer of the Penfield Company, for the
production of books and records of the company covering the period
May 1, 1939, to April 9, 1943. Upon Young's failure to comply, the
Commission applied to the District Court, on April 13, 1943, for an
order compelling obedience. From this order, an appeal was taken to
the Circuit Court of Appeals, which affirmed the order on June 30,
1944, 143 F.2d 746, its mandate being spread on the record of the
District Court on December 7, 1944. Young having persisted in his
refusal to comply, the Securities and Exchange Commission, on
January 24, 1945, applied for a rule to show cause why he should
not be cited for contempt. The District Court postponed final
hearings on the order to show cause pending, apparently, the
completion of a criminal trial of Young and the Penfield Company
then before the Court, on an indictment growing out of the inquiry
for which the subpoena had been issued. It was not until July 2,
1945, after the petitioners had been acquitted in the criminal
proceeding, that the rule to show cause was heard.
The District Court found petitioner Young guilty of contempt of
court for disobedience of its order of June 1, 1943, requiring the
production of records called for by the subpoena issued by the SEC.
But the Court refused the Government's request to impose a
contingent punishment to secure production of the records. Instead,
it sentenced Young to the payment of a fine of $50. Without
objection, Young paid this fine, and consistently thereafter
maintained that, by such payment, judicial power had exhausted
itself.
See In re Bradley, 318 U. S.
50. The Government appealed from this disposition by the
District Court on the ground that the District Court, having
adjudged Young to be in contempt, erred in ordering Young to pay a
fine of $50 and stand committed until the fine was paid, instead of
imposing
Page 330 U. S. 606
a remedial penalty, calculated to coerce Young to produce or
allow inspection of the books and records of the Penfield Co.,
pursuant to the order of June 1, 1943. On the basis of this appeal,
which challenged what the District Court did and what it refused to
do, the Circuit Court of Appeals, one judge dissenting, reversed
the order of the lower court:
"The order imposing the fine is reversed, and the case remanded
to the district court for an order requiring Young's imprisonment
to compel his obedience to the order to produce the documents in
question."
157 F.2d 65, 67. This Court then granted certiorari, the
petition for which asked this Court to "reverse the judgment and
order of the Circuit Court of Appeals in this case." There was thus
properly before the Circuit Court of Appeals the judgment imposing
the fine of $50 and refusing to give coercive remedy, and there is
accordingly before us the correctness of the judgment of the
Circuit Court of Appeals setting aside the $50 fine and ordering
coercive decree.
The judgment immediately before us is that of the Circuit Court
of Appeals setting aside the fine imposed by the District Court and
reversing its refusal to issue a coercive order. The ultimate
question is the correctness of what the District Court did -- not
what it refused to do. It is essential, therefore, to focus
attention on the precise circumstances in which the District Court
acted as it did. This is what the record tells us:
"Mr. Cuthbertson: So far as the punishment which the Court might
see fit to impose, that is up to the Court. We are still anxious to
get a look at these books and records, so I suggest to the Court,
if he be so disposed, whatever punishment the Court might see fit
to impose would be in connection with or so long as he refused to
produce his books and records for our inspection. "
Page 330 U. S. 607
"The Court: I don't think that I am going to be disposed to do
anything like that. I sat here for six weeks and listened to books
and records. The Government produced people from all over the
United States in connection with the Penfield matter."
"Mr. Cuthbertson: I might say, your Honor, that we have in mind
that these books and records may disclose certain acts other than
those charged in the indictment. We don't propose to go over the
same matter that the Court went over in connection with the
criminal case."
"The Court: The Court can take judicial notice of its own books
and records, and, in that trial, the evidence was clear and
definite and positive from all of the Government's witnesses that,
during one period of time, this defendant had nothing whatsoever to
do with the Penfield Company. Whether that period of time is
covered by what the Securities and Exchange Commission seeks or
not, I don't know."
"The judgment and sentence of the Court is that the defendant
pay a fine of $50, and stand committed until paid."
Bearing in mind that the District Court was not an automaton
which must unquestioningly compel obedience to a subpoena simply
because the Commission had issued it, we must consider whether the
District Court had abused the fair limits of judicial discretion.
If a District Court believes that howsoever relevant a demand for
documents may have been at the time it was made, circumstances had
rendered the subpoena obsolete, it is entitled to consider the
merits of the subpoena as of the time that its enforcement is
sought, and not as of the time that it was issued. The above
colloquy means nothing unless it means that Judge Hall was of the
view that events had apparently rendered needless the call from
Young for the
Page 330 U. S. 608
documents. He may have been wrong in that belief. At all events,
it was the view of a judge who had presided for six weeks over a
trial in which these matters were canvassed. The Circuit Court of
Appeals did not have before it, nor have we, the knowledge or the
basis for knowledge that Judge Hall had, and so neither court can
say with any confidence that he did not have ground for thinking
that the change in circumstances revealed in the course of the
trial obviated the need for the demand that was made upon Young. We
surely ought not to reverse the action of the district judge on the
abstract assumption that papers ordered to be produced as relevant
to an inquiry at the time the subpoena issued continued relevant
several months later. We ought not to assume that a subpoena was
proper months later when a proceeding lasting more than six weeks
before the judge who had approved the subpoena in the first
instance persuaded him that the circumstances no longer called for
carrying out the terms of the subpoena. When the trial judge stated
his understanding that the intervening circumstances had rendered
inappropriate the use of his coercive powers, counsel for the
Government did not gainsay the judge's view. The failure of
Government counsel to contradict the interpretation of facts by the
Court does not present any technical ground of not allowing a point
to be raised on appeal to which no exception was taken. The
significance of counsel's silence is its confirmation of the
judge's interpretation of the circumstances. At least in the
absence of contradiction, the interpretation of the facts by the
trial judge was a proper basis for the exercise of his judicial
discretion.
On the record before us, Judge Hall exercised allowable
discretion in finding that the subpoena had spent its force, and in
concluding not to compel obedience to it. At the same time, he was
justified in finding that, because Young had disobeyed the subpoena
while it was still alive, he
Page 330 U. S. 609
should be fined and made to feel that one cannot flout a court's
authority with impunity.
The question, then, is whether the Court could impose what
constituted a fine for criminal contempt -- that is, to vindicate
the law as such -- without a formal pleading charging Young with
such disobedience. We do not think Judge Hall had to direct the
clerk to issue an attachment against Young to inform him of that
which he obviously knew, and which the proceedings had made
abundantly clear to him. The true significance of our opinion in
United States v. United Mine Workers, 330 U.
S. 258, as we understand it, is that contempt
proceedings are
sui generis, and should be treated as such
in their practical incidence. They are not to be circumscribed by
procedural formalities or by traditional limitations of what are
ordinarily called crimes, except insofar as due process of law and
the other standards of decency and fairness in the administration
of federal justice may require. On this record, we find not the
faintest denial of any safeguard or of appropriate procedural
protection.
We think the judgment of the Circuit Court of Appeals should be
reversed, and that of the District Court reinstated.