U.S. v. Michigan Carton Co.

• Decision Date: 28 March 1977
• Docket Number: No. 76-1751,76-1751
• Citation: 552 F.2d 198
• Parties: 1977-1 Trade Cases 61,393 UNITED STATES of America, Plaintiff-Appellee, v. MICHIGAN CARTON COMPANY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 198

552 F.2d 198

1977-1 Trade Cases 61,393

UNITED STATES of America, Plaintiff-Appellee, v. MICHIGAN CARTON COMPANY, Defendant-Appellant.

No. 76-1751.

United States Court of Appeals, Seventh Circuit.

Argued Nov. 30, 1976.

Decided March 28, 1977.

George D. Crowley, Chicago, Ill., H. Richard Wachtel, New York City, for defendant-appellant.

James F. Ponsoldt, Atty., Dept. of Justice, Washington, D. C., Samuel K. Skinner, U. S. Atty., Chicago, Ill., for plaintiff-appellee.

Before FAIRCHILD, Chief Judge, CASTLE, Senior Circuit Judge, and PELL, Circuit Judge.

CASTLE, Senior Circuit Judge.

The Government indicted Michigan Carton Company ("Michigan Carton"), a Michigan corporation, and St. Regis Paper Company ("St. Regis"), a New York corporation, with 71 other defendants on charges of conspiring to fix prices of folding cartons in violation of section 1 of the Sherman Act, 15 U.S.C. § 1. The indictment stated that Michigan Carton had merged into St. Regis during the pendency of the federal grand jury that returned the indictment. St. Regis moved to dismiss the indictment against Michigan Carton on the ground that only St. Regis was a proper party defendant to answer for any crime committed by Michigan Carton prior to the merger. The district court denied the motion. St. Regis thereafter entered a plea of nolo contendere on behalf of Michigan Carton and the district court entered a judgment of guilty. In this appeal, filed in the name of Michigan Carton, St. Regis challenges the district court's denial of its motion to dismiss the indictment as to Michigan Carton. The Government asks this court to dismiss the appeal, arguing that any objection the defendant may have had to the form of the indictment was waived by its plea of nolo contendere. We dismiss the appeal.

The question presented by St. Regis in this appeal is whether St. Regis or Michigan Carton should have been named in the indictment as defendant for Michigan Carton's conduct prior to the merger. St. Regis asserts that the question is governed by provisions of New York law dealing with the effect of a merger of two corporations, see N.Y. Bus. Corp. Law § 906 (McKinney 1963). As it interprets that law, the grand jury was prohibited from naming Michigan Carton after the merger and was required to name St. Regis as the surviving corporation, unless the grand jury had given Michigan Carton notice that it was being investigated prior to the merger. The Government, in urging dismissal of the appeal, contends that, if the naming of Michigan Carton instead of St. Regis was error, the error amounted to no more than a misnaming of the defendant. In other words, if St. Regis was the proper party defendant, its rights apart from its right to be sued in its proper name were not affected by the naming of Michigan Carton. Under the particular circumstances of this case, we agree.

First, the argument on appeal does not draw into question the sufficiency of the indictment as against St. Regis. St. Regis asserted to the district court that the indictment as drawn was sufficient to charge St. Regis, as the surviving corporation, with the misconduct of Michigan Carton. Our independent examination of the indictment has led us to the same conclusion. Insofar as St. Regis' right to be accused by a grand jury is concerned, the naming of Michigan Carton was mere surplusage.

The appeal does not draw into question the in personam jurisdiction of the district court. Under St. Regis' theory of the case, Michigan Carton ceased to exist as a separate legal entity upon merger with St. Regis, except for the limited purpose of responding to claims in proceedings then pending against the constituent corporation. Assuming that theory is correct under New York law, but see United States v. Stone, 452 F.2d 42 (8th Cir. 1971), Michigan Carton did not exist for the purpose of this case at the time the indictment was filed. The district court therefore could not acquire jurisdiction over Michigan Carton except through its successor in interest, St. Regis. Cf. Hoefferle Truck Sales, Inc. v. Divco-Wayne Corp., 523 F.2d 543 (7th Cir. 1975). However, St. Regis was named in the indictment, and it asserted to the district court that, by reason of the broad terms of the indictment, it was properly before the court to answer for any misconduct by Michigan Carton. Therefore, if the district court lacked jurisdiction over Michigan Carton, it nevertheless had jurisdiction over St. Regis to enforce a judgment imposed for criminal conduct on the part of Michigan Carton. For purposes of in personam jurisdiction, the question raised by St. Regis is therefore one of form and not of substance. It does not place in dispute the ultimate jurisdiction of the district court to enter a judgment binding as to St. Regis. This case is therefore distinguishable from Melrose Distillers, Inc. v. United States, 258 F.2d 726 (4th Cir. 1958), aff'd, 359 U.S. 271, 79 S.Ct. 763, 3 L.Ed.2d 800 (1959), on which St. Regis heavily relies in claiming appellate jurisdiction. In Melrose Distillers, the question presented on appeal was whether a federal criminal prosecution survived dissolution of corporations under Delaware and Maryland law. If appellants had been correct in their contention that the corporations after dissolution no longer existed for purposes of criminal prosecution, no other corporations would have been before the court to answer for the criminal conduct of the dissolved corporations. Melrose Distillers therefore presented a question of whether in personam jurisdiction existed at all, not merely an academic question of the manner in which it should be exercised.

St. Regis does not expressly assert that it was deprived of any substantive right by the naming of Michigan Carton. St. Regis did argue in its reply brief that it would be subjected to a "double penalty" because, although the conspiracy charged ended before the merger, it extended into a period when Michigan Carton was a wholly-owned subsidiary of St. Regis. If this contention has merit, but see Perma Life Mufflers, Inc. v. International Parts Corp., 392 U.S. 134, 141-42, 88 S.Ct. 1981, 20 L.Ed.2d 982 (1968), it nevertheless has no bearing on the issue originally presented in this appeal. St. Regis was not precluded from...