Miller & Lux, Incorporated v. Anderson

• Decision Date: 19 August 1963
• Docket Number: 17929.,No. 18033,18033
• Citation: 318 F.2d 831
• Parties: MILLER & LUX, INCORPORATED, a Nevada corporation, Appellant, v. R. H. ANDERSON, Grace C. Arnold et al., Appellees. MILLER & LUX, INCORPORATED, a corporation, Appellant, v. Allen L. CHICKERING, Charles R. Blyth, Harry H. Fair, J. J. Hunter, and The Bank of California, a National Banking Association, Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

318 F.2d 831 (1963)

MILLER & LUX, INCORPORATED, a Nevada corporation, Appellant, v. R. H. ANDERSON, Grace C. Arnold et al., Appellees.

MILLER & LUX, INCORPORATED, a corporation, Appellant, v. Allen L. CHICKERING, Charles R. Blyth, Harry H. Fair, J. J. Hunter, and The Bank of California, a National Banking Association, Appellees.

Nos. 18033, 17929.

United States Court of Appeals Ninth Circuit.

June 18, 1963.

Rehearing Denied August 19, 1963.

C. Ray Robinson, John Lockley, Duane W. Dresser and Mary C. Fisher, San Francisco, Cal., for appellant.

Brobeck, Phleger & Harrison, Marion B. Plant and Richard Haas, San Francisco, Cal., for appellees Union Oil Co. of California and Independent Oil Producers Agency.

Hanna & Morton, Harold C. Morton and Max K. Jamison, Los Angeles, Cal., for appellees Superior Oil Co.

Clayton L. Orn, Findlay, Ohio, McCutchen, Doyle, Brown & Enersen, James D. Adams, Burnham Enersen and Arthur R. Albrecht, San Francisco, Cal., for appellee Marathon Oil Co.

McLaughlin & Casey and James A. McLaughlin, Los Angeles, Cal., for appellee Lon V. Smith, individually and as executor for Jane Smith.

Borton, Petrini, Conron, Brown & Condley, Bakersfield, Cal., for appellee A. J. West.

Paul O. Broxon and Robert N. Broxon, Newport Beach, Cal., for appellee Gulf Oil Corp. of California.

Buford W. Max, Miles W. Newby, Jr., and R. K. Barrows, Los Angeles, Cal., for appellees Texaco Inc. and The Texas Co.

Lawler, Felix & Hall, Marcus Mattson, and Richard D. DeLuce, Los Angeles, Cal., for appellee Standard Oil Co. of California.

Stanley F. Davie, Oakland, Cal., for appellees Jerome Magee, as executor of the last will of Harry H. Magee, deceased, Trico Oil & Gas Co. and Gene Reid Drilling, Inc.

Martin J. Weil and Adolph H. Levy, Los Angeles, Cal., for appellees Socony Mobil Oil Co., Inc., Kettleman North Dome Ass'n, Continental Oil Co., Western States Gasoline Corp. and C. R. Gallagher.

O'Melveny & Myers, Frederick C. Dockweiler, William W. Alsup, Rodney K. Potter, Allyn O. Kreps, Havelock Fraser, Los Angeles, Cal., and Walter L. Rowse, Bakersfield, for appellees Getty Oil Co., Signal Oil & Gas Co., Intex Oil Co., and Moriqui Exploration Co.

Gibson, Dunn & Crutcher, Henry F. Prince, Richard E. Davis, Martin E. Whelan, Jr., O'Melveny & Myers, William W. Alsup, Rodney K. Potter, and Allyn O. Kreps, Los Angeles, Cal., for appellee Lloyd Corp., Ltd.

William E. Woodroof, Mervyn W. Phelan, O'Melveny & Myers, William W. Alsup, Rodney K. Potter and Allyn O. Kreps, Los Angeles, Cal., for appellee Richfield Oil Corp.

O'Melveny & Myers, Sidney H. Wall, Rodney K. Potter and Allyn O. Kreps, Los Angeles, Cal., for appellees Rodney K. Potter and Elizabeth F. Potter, as executors of the estate of E. K. Potter, deceased.

Pillsbury & Dunlap, David C. Dunlap, and Edwin S. Pillsbury, San Francisco, Cal., for appellee Elmer C. Bolton.

Robert W. Walker, J. H. Cummins, and Richard K. Knowlton, Los Angeles, Cal., for appellee Chanslor-Western Oil & Development Co.

Stanley & Kirby, Charles C. Stanley and Robert A. Smith, Los Angeles, Cal., for appellee Sunray DX Oil Co.

Richard H. Peterson, W. E. Johns and Glenn West, Jr., San Francisco, Cal., for appellee Natural Gas Corp. of California.

Athearn, Chandler & Hoffman, Walter Hoffman and Edward G. Chandler, San Francisco, Cal., for appellee Elmer B. Stone.

Morrison, Foerster, Holloway, Clinton & Clark, Herbert W. Clark and Girvan Peck, San Francisco, Cal., for appellees Honolulu Oil Corp., Crocker-Anglo Nat. Bank as trustee under the will of James E. Fickett, Loretta Fickett Codington, Carol Codington, Alice June Fickett Lindsay, James Lindsay and Jennifer Lindsay.

Walter M. Gleason, San Francisco, California, Rosson & Pearson, Hanford, Cal., for appellees William F. Colm and Marion V. Rice.

Derby, Cook, Quinby & Tweedt, Lloyd M. Tweedt and Stanley J. Cook, San Francisco, Cal., for appellees R. H. Anderson and R. H. Anderson Inc.

Kimble & Hamlin and Joseph C. Kimble, Fresno, Cal., Elke, Farella & Braun and Thomas Elke, San Francisco, Cal., for appellee Frank Jeppi.

Labowe & Ventress and Ronald B. Labowe, Los Angeles, Cal., for appellees Gladys Z. Zimmerman and Charles F. Nielson as executors of the estate of F. C. Noel, deceased.

Landels, Ripley, Gregory & Diamond and Earl M. Ripley, San Francisco, Cal., for appellee Title Insurance & Trust Co., successor by merger to California Pacific Title Ins. Co.

Orrick, Dahlquist, Herrington & Sutcliffe, Christopher M. Jenks, James K. Haynes and Richard J. Lucas, San Francisco, Cal., for appellees Katherine R. Blyth, as executrix of the will of Charles R. Blyth, deceased, and Harry M. Fair, as executor of the will of Harry H. Fair, deceased.

Heller, Ehrman, White & McAuliffe and Lawrence C. Baker, San Francisco, Cal., for appellee Bank of California, N. A.

Johnson & Stanton and Thomas E. Stanton, Jr., San Francisco, Cal., for appellee J. J. Hunter.

Arthur B. Dunne, San Francisco, Cal., for appellees sought to be substituted for Allen L. Chickering, deceased.

Before MADDEN, Judge of the Court of Claims, and MERRILL and BROWNING, Circuit Judges.

MADDEN, Judge.

These two appeals, which we will treat in one opinion, are from orders of the United States District Court for the Northern District of California, Southern Division, dismissing appellant's complaints. In the Anderson case the complaint names as defendants some sixty individuals, partnerships and corporations. In the Chickering case there are five defendants, four being individuals and the fifth a banking corporation. Each complaint alleges, in substance, that the appellant is a Nevada corporation, the stock of which was, at all times mentioned in the complaint, held in trust by three trustees of the Henry Miller Trust; that, beginning at some time prior to 1927 and continuing thereafter, one J. Leroy Nickel, Jr., a trustee as well as a beneficiary of the trust, and a director and officer of the appellant; James E. Fickett, a director and the president of the appellant; J. E. Wooley, a trustee of the trust, and a director and officer of the appellant; and A. R. Olsen, a trustee of the trust and a director and officer of the appellant, acted in violation of their fiduciary obligations to the appellant, to enrich themselves and others at the expense of the appellant and to defraud the appellant. The activities of Fickett, Wooley and Olsen did not cover the entire period from 1927 to 1954, as did those of J. Leroy Nickel, Jr.

The complaints¹ recite the misdeeds and wrongs of the four persons named above as:

(1) Making and keeping profits on the purchase and sale of appellant's land and interests in land, through the use of their positions of influence and power in appellant corporation, without revealing to appellant the existence, nature and extent of such profits;

(2) Causing appellant to sell lands and interests in land to Fickett and Nickel and to various other officers and agents of appellant, directly or indirectly through the device and by means of strawmen, dummies, nominees and by other means, at less than the price that should have been obtained by the appellant, so as to realize profits by later or simultaneous resale, lease, rent or other use of said land or interests in said land, and to retain such profits for themselves, the wrongdoers.

(3) Causing appellant to sell to themselves and others, at a price less than should have been obtained by appellant, lands and interests in land without disclosing to appellant their value as actual or potential oil and gas bearing lands, so as to realize and retain for themselves profits upon later or simultaneous resale, lease, rent or other use of or dealings in the lands.

(4) Concealing from appellant and all others the existence of their conspiracy and wrongdoings.

The complaints name numerous persons who are said to have joined in the conspiracy with full knowledge of the existence and purposes of the conspiracy. Some of the persons so named are made defendants in the complaint in the Anderson case. Many of them are not made defendants. They are alleged to have caused the appellant to transfer, lease, assign or otherwise dispose of its lands and interests in lands, as more particularly described in exhibits 1 to 67 to the complaints. These exhibits contain details of conveyances, with dates, descriptions and names of grantees. The exhibits are incorporated by reference in the complaints.

A considerable number of defendants listed in paragraph XXII of the complaint in the Anderson case seem not to be charged with having knowingly joined in the conspiracy to defraud the appellant, but to be charged only with having purchased and taken their conveyances, leases, assignments and transfers "with notice or knowledge that in so purchasing, leasing or taking said lands and interests in land they were participating in and helping to accomplish the defrauding of plaintiff appellant and the violation of fiduciary duties owing to plaintiff appellant by its directors, officers, agents, and others."

The facts stated in this opinion are facts alleged by the appellant in its complaint and, in some instances, facts stated by appellant in admissions and in answers to interrogatories in these cases. There has been no occasion to introduce any proof of the facts so stated.

The complaints allege that after the various grantees named in exhibits 1 to 67 above received their conveyances, they drilled oil and gas wells on the land and took the products of these wells, and are now in possession of the lands and of the proceeds of their use.

The appellant alleges that during the many years that it was being defrauded by its directors, officers and agents, it was held completely captive and dominated by its directors and officers who were parties to the conspiracy, and was therefore powerless and unable to protect its interests. On June 13, 1954, certain beneficiaries of the Henry Miller Trust filed a suit in the...