SECURITIES & EXCHANGE COMM. v. GLASS MARINE INDUS., Civ. A. No. 2276.

CourtUnited States District Courts. 3th Circuit. United States District Court (Delaware)
Writing for the CourtLEAHY, Senior
Citation199 F. Supp. 18
PartiesSECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. GLASS MARINE INDUSTRIES, INC., a Delaware corporation, Defendant.
Docket NumberCiv. A. No. 2276.
Decision Date24 October 1961

199 F. Supp. 18

SECURITIES AND EXCHANGE COMMISSION, Plaintiff,
v.
GLASS MARINE INDUSTRIES, INC., a Delaware corporation, Defendant.

Civ. A. No. 2276.

United States District Court D. Delaware.

October 24, 1961.


199 F. Supp. 19

Thomas B. Hart, John J. Enright, and John W. Vogel, Chicago, Ill., and John Frohling, Washington, D. C., for Securities and Exchange Commission.

H. James Conaway, Jr., Morford, Young & Conaway, Wilmington, Del., and Lawrence A. Coles, Jr., Thompson, Raymond, Mayer, Jenner & Bloomstein, Chicago, Ill., for defendant.

Hayden Leason, intervenor, pro se.

Arthur J. Sullivan, Morris, James, Hitchens & Williams, Wilmington, Del., and Saul S. Nevins, Levy & Nevins, New York City, for special intervenor, Lancer Industries. Inc.

LEAHY, Senior District Judge.

The Securities and Exchange Commission brought this action under § 20(b) of the Securities Act of 1933, 15 U.S.C.A. § 77t(b) and § 21(e) of the Securities Exchange Act of 1934, 15 U.S.C.A. § 78u (e), and charges Glass Marine Industries, Inc., with certain violations in connection with the public offering on July 6, 1960 of the defendant's securities. The SEC seeks injunctive relief against defendant and the appointment of a liquidating receiver. Defendant denied all charges of violations and has resisted the issuance of an injunction and the appointment of a liquidating receiver. A temporary restraining order was entered in this cause on December 7, 1960, has been extended from time to time and has been amended and modified at various times throughout the pendency of this litigation. It remains in full force, as modified and amended, as of this date. No findings have been made thus far as to the alleged violations by defendant. All the evidence is in and the trial of the cause has been had. The Court awaits defendant's brief and proposed findings of fact.

Defendant has moved the Court to permit defendant to reorganize and merge with other companies in the boat construction industry. It has further moved the Court to approve a settlement agreement negotiated with Lancer Industries, Inc., a debtor of the company, or in the alternative, to modify the outstanding restraining order to permit the effectuation

199 F. Supp. 20
of that settlement agreement and the merger without specific judicial approval. Defendant contends both motions, if granted, could be supported under the inherent power of this Court, sitting as a court of equity, to use its "inherent power * * * to mold * * * decrees in a manner that best serves the equities of a particular case, wholly apart from the relief sought therein if such relief would not serve the equitable interests involved in such a suit."1 While the issues involved in the present two motions are similar, sufficient differences are present to call for their separate discussion

1. Few legal niceties bind a court of equity in its attempt to do "right and justice."2 It functions through "flexibility rather than rigidity,"3 in framing its decrees, and it recognizes "there is no limit to the various forms and kinds of specific remedy which * * it may grant, adapted to novel conditions of right and obligation, which are constantly arising from the movements of society."4 The Supreme Court has recently repeated that "District Courts, in the framing of equitable decrees, are clothed `with large discretion to model their judgments to fit the exigencies of the particular case.' International Salt Co. v. United States, 332 U.S. 392, 400-401 68 S.Ct. 12, 17, 92 L.Ed. 20."4a

However wide its freedom in framing decrees, a court is not free to issue any decree where it has decided no justiciable issue brought to it for decision. Here, a law suit has begun, and been tried. The SEC has charged violations by defendant Glass Marine of the Securities Acts of 1933 and 1934. Extensive testimony has been heard and documentary proof offered.5 No compromise has been reached between the parties, thus eliminating the necessity of making a final judgment on the merits. In fact, the SEC not only opposes the two present motions for lifting the restraining order in order to effect a merger and settle the Lancer claim, but urges the Court to direct defendant to file its argumentative papers and have the Court make its decision in the main cause. Defendant requests the Court to make no decision on the issue presented as to whether there has been a violation of the Securities Acts, but instead to permit the proposed merger and reorganization as negotiated by defendant. This Court has no such power. Whatever form of relief may be ordered should a finding be made that defendant has violated the Acts, none may be made until that determination has been made.

2. Defendant argues, since a court of equity may withhold relief sought by a plaintiff even if it should decide on the merits in favor of a plaintiff, "A fortiori that Court has the right to withhold such relief and grant alternative relief without findings on the merits * * *...

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  • SECURITIES AND EXCH. COM'N v. Glass Marine Industries, Inc., Civ. A. No. 2276.
    • United States
    • United States District Courts. 3th Circuit. United States District Court (Delaware)
    • August 31, 1962
    ...due to fear of SEC action. SEC Brief, p. 52; SEC Proposed Findings of Fact #14. 92 See, S. E. C. v. Glass Marine Industries, D.C.Del., 199 F.Supp. 18. 93 S. E. C. v. Glass Marine Industries, D.C.Del., 199 F.Supp. 94 The SEC has submitted proposed Findings of Law that Lancer is guilty of vio......
1 cases
  • SECURITIES AND EXCH. COM'N v. Glass Marine Industries, Inc., Civ. A. No. 2276.
    • United States
    • United States District Courts. 3th Circuit. United States District Court (Delaware)
    • August 31, 1962
    ...due to fear of SEC action. SEC Brief, p. 52; SEC Proposed Findings of Fact #14. 92 See, S. E. C. v. Glass Marine Industries, D.C.Del., 199 F.Supp. 18. 93 S. E. C. v. Glass Marine Industries, D.C.Del., 199 F.Supp. 94 The SEC has submitted proposed Findings of Law that Lancer is guilty of vio......

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