Defendant appeals from an order denying his motion for a new trial.
This action, to have the defendant perpetually enjoined from further engaging in the unauthorized practice of law and to have him adjudged in contempt of court therefor, was brought by the plaintiffs 2 in their own behalf as licensed lawyers and in a representative capacity in behalf of every other licensed lawyer in Minnesota, as well as in behalf of the courts and the public. 3
Defendant, who is possessed of only a grade-school education, has never been admitted to the practice of law in Minnesota or elsewhere. During a two-year period immediately prior to the time of trial, he followed the occupation of a public accountant. Prior thereto, he served for three years as a United States deputy collector of internal revenue. Before that, he had worked for six years as the credit manager of a hardware company, about five years as the operator of a collection agency, and for four years as an insurance solicitor and risk inspector.
At and prior to the time with which we are concerned, defendant held himself out to the public by newspaper advertisements and by other advertising media as an “Income Tax Expert,” duly qualified to give advice, aid, and assistance to the public generally in the discharge of a taxpayer’s duty to make accurate returns of income to the federal government. Defendant alleges that he is thoroughly familiar with income tax rules and regulations. He has used a *472 business card on -which he describes himself as a “Tax Consultant” and prominently calls attention thereon to the fact that he was a former deputy collector of internal revenue.
On or about March 4, 1948, Cecil G. Germain, a private investigator employed by plaintiffs to obtain information as to whether defendant was engaged in the practice of law, went to the office of defendant under the assumed name and identity of an alleged taxpayer, George Heinl. Germain, as George Heinl, informed defendant that he operated a truck farm, that he had come to have his income tax return prepared, and that he needed help with certain questions. For a cash consideration, defendant prepared the income tax return and gave Germain professional advice for the determination of the following questions:
. (a) Whether the taxpayer, who himself had exclusive control of the operation of the truck farm, was in partnership with his wife, who had contributed one-half of the purchase price, who helped with the work, and who received one-half the profits.
(b) Whether the taxpayer was entitled to claim his wife as an exemption, since he had never been ceremonially married, though maintaining a common-law marriage status.
(c) Whether the taxpayer should file his separate return and advise his so-called common-law wife to file a separate return.
(d) Whether certain money expended on improvements of buildings on the truck farm was deductible from his earnings.
(e) Whether a certain produce loss sustained by frost and subsequent flood was a deductible item.
Aside from the fundamental issue of whether defendant’s activities constituted the unauthorized practice of law, we are concerned with these procedural issues:
(1) Does the district court have the power to adjudge defendant in contempt of court and to punish him for the unauthorized practice of law?
(2) Does the district court have jurisdiction to enjoin the unauthorized practice of law where defendant’s acts of purported law practice did not involve any act or appearance before said court?
*473 (3) Is a justiciable issue presented when the evidentiary base of an action to enjoin the unauthorized practice of law consists primarily of professional acts of advice and service which were furnished for a consideration to a person who was not a bona fide taxpayer, upon a fabricated and hypothetical state of facts, and in connection with the preparation of an income tax return which was never intended to be filed?
We shall dispose of the procedural matters first. A proceeding to adjudge a person in contempt of court for the unauthorized practice of law — whether such unauthorized practice occurred within or outside the presence of the court — is punitive and criminal in its nature and is primarily brought in the public interest to vindicate the authority of the court and to deter other like derelictions. In re Frederick Bugasch, Inc. 12 N. J. Misc. 788,
The district court has jurisdiction to enjoin the unauthorized practice of law, whether such practice takes place within or outside the presence of the court, and such jurisdiction is not destroyed by the criminality of the defendant’s misconduct. The criminal nature of unauthorized practice neither gives nor ousts jurisdiction in chancery. Fitchette v. Taylor,
Does a justiciable issue arise when the purported acts of unauthorized practice of law were intentionally performed by defendant upon the mistaken assumption that he was then advising a bona fide taxpayer and was preparing for him a tax return for use in reporting an actual taxpayer’s income? Defendant’s intentional acts were performed when plaintiffs’ private investigator provided the occasion and the opportunity for such performance by calling at defendant’s office under an assumed name with a purely fictitious and hypothetical state of facts. Although such investigator employed defendant’s services for the sole purpose of obtaining evidentiary information as to the nature of defendant’s regular activities, defendant did intentionally give his advice in the same manner as if
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a bona fide taxpayer bad actually appeared. The fact that the income tax return was based upon fictitious facts and figures is not of itself a defense. Frequently decoy letters and other fictional devices have been employed in law enforcement cases, not to induce the commission of an unlawful act, but to secure information as to whether unlawful acts had been and were being committed. United States v. Lindenfeld (2 Cir.) 142 F. (2d) 829. Defendant here assumes that because the tax return which he prepared was not authentic he could not have committed any offense. He is mistaken. The leading case upon this point is Grimm v. United States,
“* * * it is insisted that the conviction cannot be sustained, because the letters of the defendant were deposited in the mails at the instance of the government, and through the solicitation of one of its officers; that they were directed and mailed to fictitious persons; that no intent can be imputed to defendant to convey information to other than the persons named in the letters sent by him, and that as they were fictitious persons there could in law be no intent to give information to any one. * * *
<£* * * The mere facts that the letters were written under an assumed name, and that he was a government official — a detective, he may be called — do not of themselves constitute a defence to the crime actually committed. The official, suspecting that the defendant was engaged in a business offensive to good morals, sought information directly from him, and the defendant, responding thereto, violated a law of the United States by using the mails to convey such information, and he cannot plead in defence that he would not have violated the law if inquiry had not been made of him by such government official.”
This court followed the Grimm case in State v. Gibbs,
An actual intent by defendant to hold himself out to the public as willing to do and as customarily and regularly doing the acts which are here alleged to constitute the unauthorized practice of law is the very basis of these proceedings. In view of the eviden-tiary establishment of his intent and his regular doing of such acts, does it follow that no justiciable issue is presented simply because the evidence was obtained by the device of a fictitious tax return and a purely hypothetical set of facts? There is nothing fictitious or hypothetical about the basic issue between the parties. Instead of a fictitious, academic, or hypothetical issue, we have an actual, genuine, and live controversy as to whether defendant is guilty of the unauthorized practice of law. We are not concerned with some contingent or threatened event which may never occur. We are dealing with acts of alleged unlawful practice which have occurred. Furthermore, a controversy is not moot where, as here, the judgment of the court will have a swift and definite impact upon defendant' by forever enjoining him from giving regular advice and service in connection with the preparation of income tax returns?]
Was defendant, however, practicing law when, as a preliminary to and as part of his preparation of an income tax return, he advised the purported taxpayer as to whether he had acquired a partnership status, a valid marriage for exemption purposes, whether he should file a joint return with a woman to whom he had never been ceremonially married, and whether certain building and truck farm improvements, as well as certain losses sustained by frost and subsequent flood, were deductible items?
Much of what is law practice is conducted outside the courtroom, and as to that field of activity we have said:
*477 “* * * The line between what is and what is not the practice of law cannot be drawn with precision. Lawyers should be the first to recognize that between the two there is a region wherein much of what lawyers do every day in their practice may also be done by others without wrongful invasion of the lawyers’ field.” Cowern v. Nelson,207 Minn. 642 , 646,290 N. W. 795 , 797.
Although it is difficult to draw any precise dividing line, the task is ours to find some criterion for distinguishing that which is from that which is not law practice. The development of any practical criterion, as well as its subsequent application, must be closely related to the purpose for which lawyers are licensed as the exclusive occupants of their field. That purpose is to protect the public from the intolerable evils which are brought upon people by those who assume to practice law without having the proper qualifications. See, 29 Mich. L. Rev. 989. The need for public protection is not of new origin. As early as 1292, 7 theproblem was recognized when Edward I, by royal ordinance, limited the number of attorneys and directed his justices “to provide for every county a sufficient number of attornies and apprentices from among the best, the most lawful and the most teachable, so that king and people might he well served” (Italics supplied.) 1 Pollock and Maitland, History of English Law, p. 194. See, Herbert, Antiquities of the Inns of Court and Chancery, pp. 166,167. The limitation and selection of lawyers, without strict regulation, proved inadequate.
“* * * The evil finally became so great that in the year 1402 Parliament this time took cognizance of it and enacted the now famous statute, 4 Henry IV, Ch. 18, which provided that all attorneys should be examined by the justices, and in their discretion, only those found to be good and virtuous, and of good fame, learned and
*478
sworn to do their duty, be allowed to be put upon the roll and all others put out.” Rhode Island Bar Assn. v. Automobile Service Assn. 55 R. I. 122, 133,
These early English statutes illustrate that a licensed bar subject to the supervision of the courts originated with a public demand for the exclusion of those who assumed to practice without being qualified therefor.
The protection of the public, as the purpose of confining law practice to a licensed bar, ancient as it is in its origin, is of vital importance today. See, In re Estate of Peterson,
If we bear in mind that any choice of criterion must find its ultimate justification in the interest of the public and not in that of advantage for either lawyer or nonlawyer, we soon cease to look for an answer in any rule of thumb such as that based upon a distinction between the incidental and the primary. See, People v. Title Guarantee & Trust Co.
In rejecting the incidental test, it follows that the distinction between law practice and that which is not may be determined only from a consideration of the nature of the acts of service performed in each case. No difficulty arises where such service is the primary business of the actor. We then have law practice. Difficulty comes, however, when the service furnished is incidental to the performance of other service of a nonlegal character in the pursuit of another calling such as that of accounting. In the field of income taxation, as in the instant case, we have an overlapping of both law and accounting. An accountant must adapt his accounting skill to the requirements of tax law, and therefore he must have a workable knowledge of law as applied to his field. By the same token, a lawyer must have some understanding of accounting. In the income tax area, they occupy much common ground where the skills of both professions may be required and where it is difficult to draw a precise line to separate their respective functions. The public interest does not permit an obliteration of all lines of demarcation. We cannot escape reality by hiding behind a facade of nomenclature and assume that “taxation,” though composed of both law and accounting, is something
sui generis
and apart from the law. See, Matter of New York County Lawyers Assn. (Bercu)
In restraining laymen from improper activity,
the difficult question of law criterion
is to be applied in a common-sense way which will protect primarily the interest of the public and not
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hamper or burden that interest with impractical and technical restrictions which have no reasonable justification. Cowern v. Nelson,
“* * * Federal income taxation is founded on statute, elaborated and interpreted by administrative regulations and rulings, and construed by court decisions. Matters in this field, as in other statutory subjects, will at times involve difficult questions of interpretation of statute or court decision, and the validity of regulations or statute; they will also involve doubtful questions of nontax law on which the tax issues may depend, and questions of liability for criminal or civil penalties or of statutes of limitation or of liability as transferee for the taxes of another. Such questions, in general, are the kind for which lawyers are equipped by training and practice." 10
When an accountant or other layman who is employed to prepare an income tax return is faced with difficult or doubtful questions
*483
of the interpretation or application of statutes, administrative regulations and rulings, court decisions, or general law, it is his duty to leave the determination of such questions to a lawyer. In so holding that the determination of difficult or doubtful questions is the practice of law, it does not follow that the entire income tax field has been preempted by lawyers to the exclusion of accountants. The work of an accountant disassociated from the resolving of difficult or doubtful questions of law is not law practice. See, Opinion of the Justices,
“such aspects as inventory pricing methods (last-in-first-out, first-in-first-out, retail method, cost determination, actual costs, standard costs, cost of in-process merchandise, market price valuation, etc.), accrual and installment accounting, carryover and carryback of net operating losses, depreciation, depletion and corporate distributions. The taxation of such income may involve such concepts as consolidated returns, taxable years of less than twelve months, invested capital, etc. All of these are concepts of accounting, * * 36 Iowa L. Rev. 227, 229.
Where difficult accounting questions arise, the careful lawyer will naturally advise his client to enlist the aid of an accountant. In the income tax field, the lawyer and the accountant each has a function to perform in the interest of the public. 11
In the instant case, the evidence sustains the trial court’s findings and conclusions that defendant was engaged in the practice of law. For a consideration, and as part of his regular income tax work, defendant advised and determined for the taxpayer whether the latter had attained the status of a lawful marriage with a woman with whom he had been living but to whom he had never been ceremonially married. He further gave advice as to whether such taxpayer and his consort should file separate or joint returns. The purported taxpayer was likewise uncertain as to whether he *484 occupied the status of a partner with his so-called common-law wife in the operation of a truck farm, over which he himself exercised exclusive control but in which the latter shared equally in the labor, investment, and profit. This question, the answer to which obviously required legal training, he also resolved. We do not here have the case of a taxpayer whose legal status was established or known beforehand. In addition, defendant gave advice as to the deductions which the taxpayer might claim for certain farm improvements and for certain produce loss by frost and subsequent flood. Although the preparation of the income tax return was not of itself the practice of law, defendant, incidental to such preparation, resolved certain difficult legal questions which, taken as a whole, constituted the practice of law.
In further confirmation of the conclusion that defendant was practicing law, the evidence establishes that he advertised and held himself out as a “Tax Consultant,” which by reasonable implication advised the public that he was competent to give legal advice on the law of taxation. A layman, whether he is or is not an accountant, may not hold himself out to the public as a tax consultant or a tax expert, or describe himself by any similar phrase which implies that he has a knowledge of tax law. It should be noted that lawyers, by the canons of ethics of the American Bar Association and the opinions thereto pertaining, are likewise prohibited from advertising any special branch of law practice. Canons of Professional and Judicial Ethics, American Bar Association, Canons 27 and 45, and see Opinion 260.
The order of the trial court is affirmed.
Affirmed.
Notes
Plaintiffs are the members of a committee on the unauthorized and illegal practice of law, which is a subcommittee of the Committee on Practice of Law of the Ramsey County Bar Association.
As amici curiae, the following organizations have filed briefs with the court: Minnesota Association of Public Accountants, National Society of Public Accountants, Minnesota Society of Certified Public Accountants, American Institute of Accountants, Minnesota State Bar Association, and the American Bar Association.
Asto the distinction between a contempt proceeding, even though its. ¿/Object and result are wholly punitive, and an ordinary criminal proceeding,, see Boot v. MacDonald,
As to contempt proceedings generally for the unauthorized practice of law, see Bump v. District Court,
United States v. Lindenfeld (2 Cir.) 142 F. (2d) 829; United States v. Becker (2 Cir.) 62 F. (2d) 1007; Fiunkin v. United States (9 Cir.)
What is probably the first Anglo-Saxon statute regulating the practice of the law was passed in 1275 as the Statute of Westminster, the First. 3 Edwardi I, c. 29 (1 Stat. at Large, p. 94). The professional lawyer, however, began to appear in.Anglo-Saxon England shortly after the Conquest. See, Cohen, The Law: — Business or Profession? (1924) pp. 84-86. Cfa**'
The shortcomings of a narrow specialization is well illustrated by the service given by the respondent to his client in Matter of New York County Lawyers Assn. (Bercu)
"'Giving any legal advice’ would include telling a man whether it is lawful to write ‘Please do not open until Christmas’ on a parcels post package. ‘Any action taken for others in any matter connected with the law’ would include parking a man’s automobile for him parallel to the curb not over six inches from it.” 19 American Bar Assn. Journal 65 2 .
Maurice Austin, Relations Between Lawyers and Certified Public Ác'-'j countants in Income Tax Practice (1951), 36 Iowa L. Rev. 227, 228. (
See, 1 Catholic University of America L. Rev. 21,