United States v. Pendergast, 5040 (Eq. No. 270-426).

• Decision Date: 28 May 1941
• Docket Number: No. 5040 (Eq. No. 270-426).,5040 (Eq. No. 270-426).
• Citation: 39 F. Supp. 189
• Parties: UNITED STATES v. PENDERGAST et al.
• Court: U.S. District Court — Western District of Missouri

39 F. Supp. 189

UNITED STATES v. PENDERGAST et al.^*

No. 5040 (Eq. Nos. 270-426).

District Court, W. D. Missouri, Central Division.

May 28, 1941.

Richard K. Phelps and Charles F. Lamkin, Jr., Asst. U. S. Attys., both of Kansas City, Mo., for plaintiff.

R. R. Brewster and John G. Madden, both of Kansas City, Mo., for T. J. Pendergast.

Terence M. O'Brien and Ralph M. Russell, both of Kansas City, Mo., for R. E. O'Malley.

Forest W. Hanna, of Kansas City, Mo., for A. L. McCormack.

Before STONE, Circuit Judge, and REEVES and OTIS, District Judges.

OTIS, District Judge.

This case concerns contempt charged to have been committed against this three-judge court by Thomas J. Pendergast, Robert Emmett O'Malley and A. L. McCormack. The case of Nye and Mayers, Petitioners v. United States of America and Guthrie, 61 S.Ct. 810, 85 L.Ed. ___, was decided by the Supreme Court April 14, 1941, after the trial of this case had begun. The reliance of learned counsel for defendants here is chiefly on the decision in that case. This court, of course, accepts in its full extent what was decided by the Supreme Court. But if ingenious counsel have misinterpreted that decision, out of an understandable inclination to save their clients from punishment for what was the grossest misbehavior against the administration of justice in a federal court of which there is any record known to us, this court is not bound by their misinterpretation. We think the Supreme Court will spurn it as unthinkable. We think the Supreme Court will make it clear to all that, while — as was ruled in the Nye and Mayers case — it is not punishable contempt for an individual, at a point one hundred miles away from the seat of justice, to persuade a litigant to sign and mail a letter to a judge directing the dismissal of his case, it is punishable contempt for an agent of fire insurance companies and a political "Boss" (whose influence was bought by the payment to him of $440,000) and a bribed state official (to whom $62,500 was paid in bribery) and a fourth individual, the go-between of the principal conspirators, in open court, in the presence and face of the court, grossly to deceive and hoodwink the judges constituting the court, and by that deception fraudulently to obtain decrees (inter alia) disposing of an impounded fund of $10,000,000, so prostituting the court to their venal purposes and exposing its judges to the possibility of disgrace and to certain humiliation. What is presented in this case is as distinguishable from the facts in the Nye and Mayers case as night is from day.

Findings of Fact.

We state at once the essential facts (they are stated here as formal findings of fact):¹

1. On May 28, 1930, one hundred and thirty-nine insurance companies filed one hundred and thirty-seven separate injunction suits against the Superintendent of Insurance and the Attorney General of Missouri to protect proposed increase of premium rates for fire, windstorm and hail insurance filed by the companies with the superintendent. Thereupon this three-judge court was constituted. Temporary injunctions thereafter were entered upon conditions, one of which was that the companies might collect the increased rates pendente lite but must deposit the amount of the increase so collected with a custodian of the court to await the ultimate outcome of the suits. Deposits were made aggregating $10,000,000.

2. One Charles R. Street, now deceased, was the agent of the companies. Thomas J. Pendergast was a political "Boss" with almost dictatorial power residing in Kansas City. R. Emmett O'Malley, a creature of Pendergast, was Superintendent of Insurance and a party-defendant in the suits. A. L. McCormack was an insurance agent residing in St. Louis.

3. Before final determination of any of the suits Street, Pendergast, O'Malley and McCormack conspired and agreed together that the insurance companies (acting through Street) and O'Malley would enter into a pretended or fake settlement of the suits, whereby the interest of policyholders would be sacrificed and 80% of the impounded fund would be paid to the companies. It was a part of the conspiracy — and it was effected by Street, Pendergast, O'Malley and McCormack — that Street, as agent of the companies, would pay Pendergast for his influence with and control over O'Malley the total sum of $750,000 ($440,000 actually was paid to Pendergast), with a portion of which O'Malley should be bribed to betray the policyholders ($62,500 was paid O'Malley) and with another portion of which McCormack was to be compensated for his services as messenger between Street, Pendergast and O'Malley (McCormack was paid $62,500). It was a part of the conspiracy — and it was effected by Street, Pendergast, O'Malley and McCormack — that when the fake settlement of the suits finally was agreed on by Superintendent O'Malley and Street, (the fake settlement was reached in the Muehlebach Hotel in Kansas City, about six blocks from the United States Court House where the suits were pending) the attorneys for the Superintendent and the companies (the attorneys being ignorant of the corruption and fraud) would present to the court, in open court, as a basis for motions for decrees, the fake settlement, as a genuine, good-faith settlement by antagonistic litigants. The fake settlement was presented to the court June 22, 1935, by Street, Pendergast, O'Malley and McCormack through and by their messengers. The court, the members of which were grossly deceived by the lying, false and fraudulent representation made in open court at the instance of Pendergast, O'Malley, Street and McCormack, entered the decrees February 1, 1936. The deception practiced on the court was vicious misbehavior, committed and consummated in the presence of the court and in open court. It was intended and calculated to mislead and deceive the court and to obtain fraudulent judgments and decrees. The deception was a continuing deception, was intended to exert its deceiving, pernicious and poisonous influence indefinitely, and until and unless discovered by the court. The deception was fortified and renewed by affirmative supplemental acts of deception committed as late as March, 1939.

4. When the court discovered (early in 1939) — through investigations of government agents into suspected income tax evasions and consequent grand jury inquisitions (the matter also was formally called to the court's attention by motions filed May 29, 1939) — that it had been victimized and its decrees obtained by gross imposture and fraud perpetrated upon it in open court and in the presence of the court, it requested the United States Attorney to file an information in contempt. The information in this case, filed at last on July 13, 1940, resulted.

The Nye and Mayers Case.

1. There never has been the slightest word of denial by the testimony of any person or even by the assertion of counsel in argument that the defendants were not guilty of the misbehavior revealed in the findings of fact. Except for McCormack, who confessed, the defendants did not take the stand. They stood on their technicalities. Two of the defendants, Pendergast and O'Malley, entered pleas of guilty in this District Court (Pendergast on May 22, 1939, O'Malley on May 27, 1939), before one of its judges, to attempts to evade the payment of income taxes on receipts of the very money the insurance companies paid them for their services in deceiving and misleading the court and they had been sentenced to and had served sentences in the penitentiary for attempted evasion of taxes.²That they got the money is a fact that stands out like Pike's Peak! They were paid $440,000. For what?

The misbehavior is confessed or had as well be confessed. As long as Toledo Newspaper Co. v. United States, 247 U.S. 402, 38 S.Ct. 560, 62 L.Ed. 1186, declared the law — as it did declare the law until April 14, 1941 — misbehavior of the character of this obviously was punishable contempt. But counsel seem to argue that the Nye and Mayers case lays down an astounding doctrine — Misbehavior, to be punishable contempt, even if committed in the presence of the court, must be of that character of misbehavior which disturbs the peace of the courtroom.

The Supreme Court espouses in the opinion of April 14, 1941, no such emasculating and destructive doctrine as counsel in this case would thrust upon it. Quite the contrary. The case dealt only with the proper interpretation of the phrase "so near thereto" in the statute, Judicial Code, Sec. 268, 28 U.S.C.A. § 385, providing that the "power to punish contempts shall not be construed to extend to any cases except the misbehavior of any person in their presence, or so near thereto as to obstruct the administration of justice * * *." It did not involve the companion phrase — misbehavior "in the presence of" the court. The court expressly cited with approval, as illustrating misbehavior "in the presence of the court," punishable as contempt, Ex parte Savin, Petitioner, 131 U.S. 267, 9 S.Ct. 699, 33 L.Ed. 150 and Cooke v. United States, 267 U.S. 517, 45 S.Ct. 390, 69 L.Ed. 767. The misbehavior in the Savin case was an attempt to intimidate a witness in the jury room, used as a witness room, and an attempt to intimidate a witness in a hallway of the courthouse while court was in session in the courtroom. The judge and other officials knew nothing of the misbehavior until it was revealed at a time hours subsequent to its occurrence. Here, of course, was no disturbance of the peace, no uproar in the courtroom, no interference with order and decorum within any narrow meaning of those words. But the Supreme Court said unanimously it was punishable contempt committed "in the presence of the court." 131 U.S. 267, 9 S.Ct. 702, 33 L.Ed. 150. In the Cooke case the misbehavior was sending a letter to the judge. The letter was written by Cooke blocks away from the courthouse and was delivered by a messenger to the judge in...