North American Co. v. Landis, 6654

• Decision Date: 22 June 1936
• Docket Number: No. 6654,6655.,6654
• Citation: 85 F.2d 398
• Parties: NORTH AMERICAN CO. v. LANDIS et al. AMERICAN WATER WORKS & ELECTRIC CO. v. SAME.
• Court: U.S. Court of Appeals — District of Columbia Circuit

85 F.2d 398 (1936)

NORTH AMERICAN CO. v. LANDIS et al.^*

AMERICAN WATER WORKS & ELECTRIC CO. v. SAME.

Nos. 6654, 6655.

United States Court of Appeals for the District of Columbia.

Decided June 22, 1936.

F. D. McKenney, John S. Flannery, G. Bowdoin Craighill, and John E. Larson, all of Washington, D. C., and John C. Higgins, of New York City, and Joseph P. Tumulty, of Washington, D. C., for appellants.

Homer S. Cummings, Robert H. Jackson, Benjamin V. Cohen, and Robert E. Kline, Jr., all of Washington, D. C., for appellees.

Before MARTIN, Chief Justice, and VAN ORSDEL, GRONER, and STEPHENS, Associate Justices.

VAN ORSDEL, Associate Justice.

This is a special appeal from an interlocutory order of the Supreme Court of the District of Columbia staying further proceedings in plaintiffs' suits against the appellees, defendants below. The order staying further proceedings in these suits was passed to await final determination by the Supreme Court of the United States in the case of the Securities and Exchange Commission v. Electric Bond and Share Company et al., now pending in the District Court of the United States for the Southern District of New York, or until such time as the case is otherwise terminated.

These suits are for injunctions to restrain the defendants, on the ground of unconstitutionality, from enforcing the provisions of an act of Congress approved August 26, 1935, Public, No. 333, c. 687, title 1, 74th Cong., 1st Sess., 49 Stat. 803, 15 U.S.C.A. § 79 et seq., entitled, "An Act To provide for control and regulation of public-utility holding companies, and for other purposes." The plaintiffs are holding companies of the class which is required by the act to register with the Securities and Exchange Commission not later than December 1, 1935. Plaintiffs have not registered, and in their bills declare their intention not to register.

The North American Company filed its bill on November 26, 1935, and the American Water Works and Electric Company, Incorporated, filed its bill the next day. The bills invoke the equitable jurisdiction of the court because of irreparable injury which it is averred the act is already causing plaintiffs, and which plaintiffs will continue to suffer in ever increasing measure until final relief is afforded. The bills set forth fully the basis of the court's jurisdiction, the nature and character of plaintiffs' business, the provisions of the act applicable to the plaintiffs, the grounds for plaintiffs' belief that defendants intend to enforce the act against them, the reasons why plaintiffs are irreparably damaged through the threatened enforcement against them by defendants of the provisions of the act, that this damage will be sustained whether plaintiffs register under the act or not, and the reasons why, in the judgment of the plaintiffs, the act is unconstitutional.

Simultaneously with the filing of the bills in the plaintiffs' cases, the Securities and Exchange Commission, hereinafter referred to as the Commission, filed a bill against the Electric Bond & Share Company and five of its corporate subsidiaries in the United States District Court for the Southern District of New York. That case will be hereinafter referred to as the Bond & Share Case. At approximately the same time that plaintiffs filed their bills, some 48 other bills were filed in the various United States District Courts by other companies seeking substantially the same relief as that sought by the plaintiffs, and at about the same time, and prior to December 1, 1935, five other holding companies filed bills in the Supreme Court of the District of Columbia, seeking substantially the same relief sought by the plaintiffs.

On December 7, 1935, before any answer had been filed by the defendants herein, or by the defendants in any of the above-mentioned suits in the federal District Courts, or by the defendants in the Bond & Share Case, the defendants herein moved for a stay of proceedings to await the final determination of the Bond & Share Case. The grounds advanced in support of the motion for the stay were the pendency of the above-mentioned 48 suits in the federal courts; that the Commission had instituted the Bond & Share Case for the purpose of determining the constitutionality of the act, and that it would be prosecuted with all due diligence to the Supreme Court; that the other pending suits would "tend to clog the courts, over-tax the facilities of the Government, and make against that orderly and economical disposition of the controversy that is the Government's aim."

On hearing the court sustained the motion in the following order:

"This cause coming on to be heard upon motion of the defendants to stay further proceedings herein filed December 7, 1935, the Court having considered the pleadings and the arguments of counsel, and briefs having been submitted herein, it is this 9th day of January, 1936:

"Ordered, adjudged and decreed, that further proceedings herein be and are hereby stayed, upon the terms and conditions as set forth in the Opinion of this Court in this cause filed herein the 6th day of January, 1936."

In the course of his opinion the court called attention to the grounds upon which plaintiffs opposed the motion for the stay, to the tender of the defendants to submit to a temporary injunction pending a decision by the Supreme Court in the Bond & Share Case, and to the contention of plaintiffs "that many of the questions as to the constitutionality of the act involved in these cases are not involved in the Electric Bond and Share Case, and that even if the defendants were temporarily enjoined the plaintiffs would in the meantime suffer irreparable injury by the existence of this act upon the statute books, which would affect the validity of their contracts, their transfer of stocks, and other similar matters."

The court then said:

"In the instant case the relief sought by the plaintiffs is first a relief by injunction against the defendants, and second a declaratory judgment to the effect that the Public Utility Holding Company Act violates the Constitution of the United States and that the Act and each and every part thereof is invalid, null and void. * * *

"`* * * Courts do not declare statutes constitutional or unconstitutional as such. The judicial function is to determine whether or not under the facts proven at the trial, the application of the legislative enactment to the litigant before the Court invades his constitutional rights.'"

We think, from an examination of the bills in the present cases and the bill in the Bond & Share Case, which appears in the record, that many questions arise in the instant cases which would not and could not be disposed of in the Bond & Share Case. The sole question, therefore, for our consideration is whether or not the court below was justified in granting the stay in these cases; whether or not in so doing the court abused its discretionary power in the control of its docket.

Unquestionably a court has wide discretionary power in the matter of the order in which cases pending on its docket shall be tried, provided always that undue delay is not occasioned, to the damage of litigants. This power extends to the determination of which of two cases, pending in the same court or in courts of similar jurisdiction and involving the same issues and the same parties, shall be first heard, but this situation does not obtain in the present controversy. These cases are pending in courts of different jurisdictions, the parties are not the same, the issues involved are not such that the determination of one case would constitute a full determination of the others, nor are there present any of the conditions which would justify depriving plaintiffs of their day in court and an opportunity to be heard. Their bills have been filed, and without even an answer on the part of the defendants, or the bringing of the cases to issue, which might tend to clarify the issues involved, plaintiffs have been deprived, by an order of the court, of their day in court and an opportunity to be heard. They have been stopped in limine and denied the privilege of proceeding further for an indefinite period of time, subject to all the uncertainties surrounding the final determination of the Bond & Share Case.

The stay cannot be justified on the ground that the decision in the Bond & Share Case may "simplify" the issues or furnish a "valuable precedent" for the determination of the present cases. Indeed, from a comparison of the bill in the Bond & Share Case with the bills in the instant cases, it is difficult to conclude that a decision of the Bond & Share Case would dispose of all the issues in the present cases. In Rosenberg v. Slotchin, 181 App.Div. 137, 138, 168 N.Y.S. 101, 102, the rule is stated as follows: "It is only where the decision in one action will determine all the questions in the other action, and the judgment on one trial will dispose of the controversy in both actions, that a case for a stay is presented. Dolbeer v. Stout, 139 N.Y. 486, 489, 34 N.E. 1102; Ogden v. Pioneer Iron Works, 91 App.Div. 394, 396, 86 N.Y.S. 955; Consolidated Fruit Jar Company v. Wisner, 38 App.Div. 369, 375, 56 N.Y.S. 723."

The Rosenberg Case is also authority for the rule that under no circumstances will a stay in an action be granted until the issues are made.

It is urged that the issues of law in plaintiffs' cases will be greatly simplified by the determination of the Bond & Share Case. "Such a conflict, if it exist, is no valid ground for the staying of the plaintiff's proceedings; nor is there any warrant for such a stay to be found in the uncertainty of the law on any question, however unsettled the law and conflicting the decisions." Jenkins v. Baker, 91 App.Div 400, 402, 86 N.Y.S. 958, 959.

Where it appears that a party whose suit is sought to be tried has no remedy against his adversary except in the court in which he has brought his action, the...