445 F.2d 1045 (10th Cir. 1971), 354-70, Chandler v. O'Bryan

Docket Nº:354-70.
Citation:445 F.2d 1045
Party Name:Stephen S. CHANDLER, United States District Judge for the Western District of Oklahoma, Plaintiff-Appellee, v. William H. Pat O'BRYAN, Defendant-Appellant.
Case Date:May 11, 1971
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit
 
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445 F.2d 1045 (10th Cir. 1971)

Stephen S. CHANDLER, United States District Judge for the Western District of Oklahoma, Plaintiff-Appellee,

v.

William H. Pat O'BRYAN, Defendant-Appellant.

No. 354-70.

United States Court of Appeals, Tenth Circuit.

May 11, 1971

Rehearing Denied Sept. 9, 1971.

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Carl L. Shipley, Washington, D.C. (Merton Hollander and Irwin Goldbloom, Dept. of Justice, Washington, D.C., for United States amicus curiae), for plaintiff-appellee.

Harvery L. Davis and Reagan M. Martin, Dallas, Tex., for defendant-appellant.

Before VAN OOSTERHOUT, MEHAFFY and GIBSON, Circuit Judges. [*]

FLOYD R. GIBSON, Circuit Judge.

The defendant, W. H. Pat O'Bryan, appeals from a declaratory judgment and injunction entered against him and in favor of the plaintiff, Stephen Chandler, Senior Judge of the United States District Court for the Western District of Oklahoma, enjoining O'Bryan from enforcing a libel judgment (for $50, 000)

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obtained in the state courts of Oklahoma against Judge Chandler, enjoining him from any further litigation against Judge Chandler, and ordering the judgment in the State court expunged from the record. 1 The facts of this controversy have a long and complex history, and an understanding of the rather narrow legal issues involved in this appeal requires a rather detailed factual statement.

I. THE FACTS

A. The Background-- the Selected Investments Bankruptcy.

The controversy between the parties had its origin in the bankruptcy litigation of the Selected Investments Corporation. 2 The Selected Investments Corporation was an Oklahoma corporation organized in 1930 which dealt in securities with the general investing public. Without going into collateral details, we may say that the organization was a cleverly manipulated, fraudulent scheme which operated for more than 20 years without being discovered. See Burns v. United States, 286 F.2d 152 (10 Cir. 1961). Sufficient funds to meet the claims of its investors, thereby avoiding undue complaint which might attract the attention of public authorities, were acquired by the hazardous expedient of not paying income taxes.

However, by the early 1950's, the company had come to the attention of both state and federal taxing authorities and it was apparent that the day of reckoning was fast approaching. Not having a tax attorney on its staff, the company in February 1953 hired the defendant O'Bryan, who was both a certified public accountant and practicing attorney specializing in tax matters, to represent it in the tax litigation. The circumstances of O'Bryan's retention are not entirely clear, as will become evident, but it is undisputed that he in fact spent a good deal of time attending to the corporation's tax problems and was in substantial measure successful in obtaining significant rulings favorable to the corporation.

In the complicated proceedings which ensued with both the state and federal authorities, it became apparent that the company's federal tax liability would be determined in part by decisions in the state courts. In 1957, the Supreme Court of Oklahoma ruled in the company's favor and against the Oklahoma Tax Commission on a claim for more than $500, 000 of back state taxes. Selected Investments Corporation v. Oklahoma Tax Commission, 309 P.2d 267 (Okl.1957). Based on this decision, the federal authorities thereupon ruled that all back federal income taxes, if any, owed by the company, would be waived, but that in the future the company's tax liability would be computed differently, resulting in substantially increased payments. It later developed that certain Oklahoma Supreme Court Justices had been the recipients of a bribe in connection with the above decision.

The company was unable to continue its operations in the accustomed manner following the federal ruling as to its future tax liability and attempted to reorganize in a state receivership proceeding. This attempt precipitated in involuntary bankruptcy proceeding which was filed in the federal district court of Chief Judge Chandler.

B. O'Bryan's Claim in the Bankruptcy Litigation.

In early March 1958, O'Bryan had several telephone discussions with Selected's bankruptcy trustee involving questions pertaining to O'Bryan's filing a claim against the bankrupt's estate for

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legal fees for his work in the tax cases. These conversations left the trustee with the distinct impression that O'Bryan's claim would be based on an oral contract of employment with the company.

On March 24, 1958 O'Bryan filed a claim against the bankrupt's estate of more than $1, 000, 000 for the reasonable value of his services to the estate, alleging that this represented 10 per cent of the amount of taxes which he had saved the company in the tax litigation. In this claim he stated that he had received no note or security or other evidence of this indebtedness. On May 21, 1958, he amended his claim and alleged it was based on a written contract of October 29, 1954, which he had just found in his files.

On November 3, 1958, O'Bryan's claim came up for hearing in the bankruptcy court, Judge Chandler presiding. The trustee opposed the claim, not on the grounds that O'Bryan had not performed any services for the company, but on the ground that the written contract attached to the amended claim was manufactured and fraudulent, and had actually never been entered into by the parties until after the initiation of the bankruptcy proceedings. As the evidence developed at the hearing, Judge Chandler indicated that he agreed with the trustee's position and that if O'Bryan expected to prevail in his claim, he would have to overcome the evidence of fraud which had been presented. In addition to the inferences to be drawn from O'Bryan's prior conduct in the matter, there was some evidence presented by the trustee tending to indicate that the letterhead on which the contract was written had not been in existence in October 1954, and indeed had not been made up until September 15, 1955. Judge Chandler ordered another hearing to be set for November 10, 1958, and ordered O'Bryan to produce further proof of his claim.

At the November 10 hearing, O'Bryan appeared in person and by an attorney who had not previously represented him in these proceedings. He rested his claim and presented no new evidence. Judge Chandler thereupon denied the claim, and ordered O'Bryan disbarred from further practice in the federal court. No appeal was taken from either of these rulings.

C. The First Libel Suit.

Shortly after the above events, Judge Chandler wrote a letter to the Oklahoma Bar Association seeking O'Bryan's disbarment on account of his conduct in the bankruptcy proceedings. In March 1959, the Bar Association held a public hearing on the charges. No final action was taken by the Oklahoma Supreme Court in this matter until 1963, as discussed more fully below. On October 30, 1959, O'Bryan filed a libel suit in the state court against Judge Chandler, based on the letter written to the Oklahoma Bar Association. Shortly thereafter, Chandler's letter to the Bar Association was disclosed and the language did not talley with that quoted in O'Bryan's complaint. On December 1, 1959, O'Bryan dismissed his libel suit.

D. The Disbarment Proceedings.

In September 1959, O'Bryan filed a motion in the bankrupcty proceedings for reconsideration of his claim and restoration of his name to the role of admitted attorneys. This motion was denied by Judge Chandler; O'Bryan appealed and his appeal was dismissed as untimely. O'Bryan, O'Bryan & O'Bryan v. Harrison, 274 F.2d 831 (10th Cir. 1959).

In June 1963, the Oklahoma Supreme Court rendered its decision on O'Bryan's disbarment based on the public hearings held in March 1959. It concluded that the charges were true and ordered him disbarred. State v. O'Bryan, 385 P, 2d 876 (Okl.1963), app. dismissed, 376 U.S. 649, 84 S.Ct. 983, 11 L.Ed.2d 980 (1964).

In July 1963, O'Bryan filed an original action in mandamus in the Tenth Circuit against Judge Chandler, seeking to have the order disbarring him set aside. This was denied on the grounds that he could pursue the usual remedies available to him in the district court. O'Bryan thereupon, in September 1963, filed a

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motion to vacate the disbarment order in the district court. No action was taken on this motion, and in January 1966, O'Bryan filed another mandamus action in the Court of Appeals seeking action on his motion to vacate. In October 1966, the Court of Appeals for the Tenth Circuit ordered Judge Chandler to assign the motion to vacate to another judge for hearing and disposition.

The proceedings were assigned to Judge Edwin Langley, of the Eastern District of Oklahoma, who on March 28, 1967, entered an order denying the motion. O'Brien appealed on July 18, 1967, alleging that Langley's order was entered without a hearing as required by the prior Tenth Circuit order. On December 29, 1967, the Tenth Circuit reversed Judge Langley's order, holding that a proper hearing had not been accorded O'Bryan. Judge Chandler thereupon filed a Motion to Clarify, which was treated as a petition for rehearing, in which he contended that O'Bryan's appeal from the order of Judge Langley was untimely. After hearing oral argument, the Tenth Circuit withdrew its order and dismissed the appeal as untimely. In re O'Bryan, 399 F.2d 916 (10th Cir. 1968), cert. denied, 394 U.S. 906, 89 S.Ct. 1014, 22 L.Ed.2d 217 (1969).

In 1968, the United States Treasury Department refused to disbar O'Bryan on these charges, and in 1970 the Oklahoma Supreme Court refused to reinstate him. Apparently his certification as a public accountant has not been withdrawn.

E. The Malicious Prosecution Suit.

O'Bryan's conduct in the bankruptcy litigation occurred in 1958. Judge Chandler was of the opinion that this conduct violated several federal criminal statutes and urged...

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