SECURITIES & EXCH. COM'N v. National Bankers Life Ins. Co.

Decision Date18 April 1973
Docket NumberNo. 71-3599.,71-3599.
Citation477 F.2d 920
PartiesSECURITIES AND EXCHANGE COMMISSION, Plaintiff-Appellee, v. NATIONAL BANKERS LIFE INSURANCE COMPANY et al., Defendants, Tom Max Thomas et al., Defendants-Appellants.
CourtU.S. Court of Appeals — Fifth Circuit

Larry Huelbig, Dallas, Tex., for Thomas.

Willard Herbert, Dallas, Tex., for Osorio.

Charles P. Storey, Dallas, Tex., for Carr.

Robert M. Cady, Dallas, Tex., for Hoover.

John Bass, Dallas, Tex., Gene M. Gardner, Duncan, Okl., for So. Atlantic Corp.

G. Bradford Cook, Gen. Counsel, S. E. C., Washington, D. C., Gerald E. Boltz, Robert F. Watson, Ernest Steve Watson, Fort Worth, Tex., Walter P. North, Associate Gen. Counsel, Jacob H. Stillman, Asst. Gen. Counsel, Alan Blank, Sp. Counsel, S.E.C., Washington, D. C., for plaintiff-appellee.

Arthur F. Mathews, A. Douglas Melamed, John H. Korns, II, amicus curiae for Jarrell B. Ormand, Washington, D. C.

Before COLEMAN, MORGAN and RONEY, Circuit Judges.

LEWIS R. MORGAN, Circuit Judge:

In this case the Securities and Exchange Commission filed a civil action to permanently enjoin certain corporations and individuals from distributing unregistered securities and engaging in fraudulent manipulative practices in connection with the sale of securities.

Prior to the judgment below, nine of the defendants had agreed to permanent injunctions and the SEC had dismissed five defendants without prejudice to refiling. Of the original 28 defendants in this case, only the following actively contested at trial the issuance of an injunction: J. Quincy Adams, Audy Byram, Waggoner Carr, James Farha, David Hoover, John Osorio, Phillip Proctor, Tom Max Thomas, and South Atlantic Company SAC.1 Nashwood Corporation was in default and the following did not actively contest the allegations of the complaint: Frank W. Sharp, Sharpstown Realty Co., Oak Forest Realty Co., and Oak Forest Investment Co.

Only four of the defendants, Waggoner Carr, David Hoover, John Osorio and South Atlantic Corporation, have appealed the judgment of the district court.

In an opinion2 which discusses thoroughly the facts, Judge Sarah T. Hughes held that the facts were ample to illustrate that there were manipulations, misrepresentations and fraud sufficient to constitute violations of the securities laws, and that a permanent injunction should be ordered.

Each of the appellants allege that the facts are insufficient to justify his inclusion in the group covered by the injunction. An exhaustive study of the record of this case shows ample evidence to establish that each appellant was sufficiently connected with this complex affair to support the findings of involvement in past, present or imminent future violations so as to justify an injunction against manipulations in futuro.

The judgment is affirmed.

COLEMAN, Circuit Judge (concurring in part and dissenting in part):

With no difficulty at all I can, and do, concur in the opinion of this Court affirming the judgment below as to David Hoover, John Osorio, and South Atlantic Corporation.

As to the remaining appellant, Waggoner Carr, I have serious doubt.

As the opinion points out, this was indeed a "complex affair". The trial record consumed 2,533 pages. Since I am in agreement as to all appellants except one, I restrict my discussion to the findings of the District Court applicable to Mr. Carr. These findings are reported, 334 F.Supp. 452-453:

L. Waggoner Carr

1. At all times pertinent hereto defendant Waggoner Carr was a controlling shareholder of Nashwood.
2. Between approximately October of 1968 and June 1970 defendant Carr was a controlling shareholder and director of CB&T.
3. Between approximately October of 1969 and May of 1970 defendant Carr was chairman of the board and a member of the loan committee of CB&T.
4. At all times pertinent hereto defendant Carr was a controlling shareholder of SAC and RIC.
5. Between approximately April of 1969 and July of 1970 defendant Carr was a director, a vice president and chairman of the executive committee of RIC.
6. Between approximately April of 1969 and June of 1970 defendant Carr was a controlling shareholder of DB&T.
7. In his capacity as a controlling person of CB&T, defendant Carr approved the CB&T loan of $550,000.00 to Osorio and Carr, secured by 222,735 shares of SAC
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7 cases
  • Securities and Exchange Commission v. Coffey, 73-1396
    • United States
    • United States Courts of Appeals. United States Court of Appeals (6th Circuit)
    • March 28, 1974
    ...(N.D.Tex), aff'd per curiam, 448 F. 2d 652 (5th Cir. 1971), final judgment entered, 334 F.Supp. 444, 456 (N.D.Tex. 1971), aff'd, 477 F.2d 920 (5th Cir. 1973), though the evidence may be circumstantial as well as "direct." SEC v. National Bankers Life Ins. Co., supra. Were such proof not req......
  • McClure v. First National Bank of Lubbock, Texas, 73-1376.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • October 7, 1974
    ...Whistle Corp., 359 F.Supp. 219 (N.D.Ill.1973); SEC v. National Bankers Life Insurance Co., 334 F.Supp. 444 (N.D.Tex.1971), aff'd, 477 F.2d 920 (5th Cir. 1973); and American Bank & Trust Co. v. Joste, 323 F.Supp. 843 (W. D.La.1970), do not mandate a contrary conclusion. Except for joste, the......
  • National Bank of Commerce of Dallas v. All American Assur. Co.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • November 14, 1978
    ...Whistle Corp., 359 F.Supp. 219 (N.D.Ill.1973); SEC v. National Bankers Life Insurance Co., 334 F.Supp. 444 (N.D.Tex.1971), Aff'd, 477 F.2d 920 (5th Cir. 1973). These cases hold that a bank becomes an "underwriter" when it forecloses and sells unregistered securities previously pledged to it......
  • U.S. v. Gentile
    • United States
    • United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
    • June 14, 1976
    ...Whistle Corp., 359 F.Supp. 219 (N.D.Ill.1973); S.E.C. v. National Bankers Life Ins. Co., 334 F.Supp. 444 (N.D.Tex.1971), aff'd 477 F.2d 920 (5th Cir. 1973). See also L. Loss, 1 Securities Regulation 649 (2d ed. 1961). To the extent that McClure v. First National Bank of Lubbock, Texas, 497 ......
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