The opinion of the court was delivered by: ROSENBERG
This action came on for final hearing. It is a proceeding by which the United States of America and its Special Agent in Internal Revenue Service, Joseph R. Lawlor, seek to judicially enforce a summons issued by the plaintiff Lawlor to procure for inspection the books, records and other detailed business data for the years 1961, 1962 and 1963, relating to the operation of the American Standard Remodeling Corporation (American Standard) including operations conducted by that corporation under the name and style of U.S. All Steel Furnace and Construction Company.
This action is brought by authority of the 1954 Internal Revenue Code, § 7402(b).
The plaintiffs' authority to issue the summons was premised on § 7602.
Actually, there is no great dispute as to the facts or any issue as relates to the facts. I find that Joseph R. Lawlor, Special Agent for the Internal Revenue Service, sought to examine records as they related to tax returns for the years 1961 and 1962, and for the tax liability for the year 1963; that a summons named James P. Shaw, as President of American Standard; that another business entity known as U.S. All Steel Furnace and Construction Company (U.S. All Steel) also existed and did the same kind of business at the place of the corporation; that the income and operational results of U.S. All Steel were reported, or included, in the Federal Income Tax Returns filed on behalf of the corporation, American Standard Co., for the years in question; that the individual tax returns of James P. Shaw did not include the results of the operation of the proprietorship; that James P. Shaw did not file a Schedule C with his individual tax return to report the income or operational results of U.S. All Steel; that James P. Shaw was the owner of the fictitious name entity, U.S. All Steel; that James P. Shaw also owned all of the stock of the corporation; that he acquired the fictitious entity, U.S. All Steel, and control of American Standard by purchase - although it is not indicated when this occurred; and that a fictitious name certificate was filed in accordance with the laws of the Commonwealth of Pennsylvania
indicating that James P. Shaw was the owner of the fictitious entity, U.S. All Steel, as of March 25, 1963. These facts are not disputed.
The defendants' contention, as it was emphasized at the trial, is simply that the summons addressed to James P. Shaw "as President" precluded service upon James P. Shaw as the owner of the fictitious name entity, U.S. All Steel.
The Government's contention is that it provided broadly for notice to James P. Shaw in whatever capacity he stood, either as an officer of the corporation, or as the owner, shareholder or individual, as the case may be, when it included the words "including operations conducted by that corporation under the name and style of U.S. All Steel Furnace and Construction Company . . ."
The only definite evidence in this case upon which the defendant may base any argument that U.S. All Steel was a separate enterprise is the filing of the fictitious name certificate in March, 1963. Prior to that time, in accordance with Pennsylvania law, no one could have been presumed to know the ownership of U.S. All Steel. It was only by the filing of the certificate that the public was informed. The purpose of the Fictitious Names Act was to protect those who deal with persons carrying on a business under an assumed name, and to enable them to know with whom they do business. Rowland v. Canuso, 329 Pa. 72, 79, 196 A. 823 (1938); White v. Rairdon, 52 Pa. D. & C. 558 (1945); Wise v. Levin, 42 Pa. D. & C. 354 (1941); Wolf v. William Goldman Theatres, Inc., 26 Pa. D. & C. 616 (1936).
Therefore, for any business which may have been conducted by an individual owner as such business was blended with, made a part of, or non-segregated from the corporation business, it could not have been the function of the plaintiff or his duty to know that the business was a fictitious entity or owned by an individual person, or that it was in any way segregated or separated from the corporation. For this alone, the plaintiff was entitled to examine the books of the corporation in order to determine its affiliation or connection with any other business with which it may have been associated or connected, and by which records could have or should have been maintained from which information may have been had and calculations made for income tax purposes. This would have also been projected into the year 1963, at least up until March, 1963, when the fictitious name certificate was filed. Thus, for the year 1963, it was well within the surmise and within the limited bounds of authority of the plaintiff to inquire into all of the records relating to the corporation's operations.
Since U.S. All Steel, the fictitious entity, had been interconnected with, and its functions and business blended with the corporation, the plaintiff was entitled by law to make research and inquiry of any interconnected or associated records in the name of U.S. All Steel as it did business at the place of business of the corporation during these years.
The statute dealing with the examination of books of taxpayers and witnesses by the Secretary of Internal Revenue should receive liberal construction. See Falsone v. United States, 205 F.2d 734, C.A. 5, 1953, where the terms of the subpoena were interpreted to be broad enough to require the accountant to which it was addressed to produce his work papers and notes as they related to his client's tax liability.
It is also proper here to mention what the court said in Brody v. United States, 243 F.2d 378, C.A. 1, 1957, at page 384:
"We do not read § 7604(b) as narrowly as appellant asks us to do. The power of the enforcing court is stated in broad terms as a power 'to make such order as he shall deem proper' to enforce obedience to the requirements of the summons. In the situation presented to the district court in this case, we do not think the court should be powerless to promulgate an order, on request of the Revenue Service, embodying a reasonable modification of the original summons . . ."
The defendants cite Wright v. Detwiler, 241 F. Supp. 753 (D.C. Pa., 1964). In that case, Judge Willson of this Court, in refusing to order compliance with certain paragraphs of the summons there in question, held that the paragraphs were vague and indefinite, and in some respects called for personal records and data rather than corporate records. There was no question presented as to the nature of any particular records, whether they were in fact personal or corporate records.
Such is not the case here. The crucial question of fact presented in this case is whether the records desired and requested by the Government, the records of the operations of U.S. All Steel, are the records of American Standard on whose tax returns the financial operations are reported, or whether the records are those of James P. Shaw, ...