Shasta Minerals & Chemical Co. v. Securities & Exch. Com'n, 7277.
| Decision Date | 28 February 1964 |
| Docket Number | No. 7277.,7277. |
| Citation | 328 F.2d 285 |
| Parties | SHASTA MINERALS & CHEMICAL COMPANY, Appellant, v. SECURITIES AND EXCHANGE COMMISSION, Appellee. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Dan S. Bushnell, Little America, Wyo., for appellant.
Walter P. North, Associate Gen. Counsel, Securities and Exchange Commission, Washington, D. C. (Philip A. Loomis, Gen. Counsel, and Paul J. Kemp, Washington, D. C., on the brief), for appellee.
Before MURRAH, Chief Judge, and HILL and SETH, Circuit Judges.
The Securities and Exchange Commission filed with the trial court an Application for an Order to Require Obedience to a Subpoena. The Commission was engaged in a duly authorized investigation of appellant and had issued a subpoena duces tecum directing appellant to produce its stockholders' list and other records showing the names and addresses of its stockholders. The Application was filed pursuant to 15 U.S.C. § 77v(b) which provides that a United States District Court on such an application may issue an order requiring the person to whom the administrative subpoena was directed to appear before the Commission or its examiners and to produce documentary evidence as so ordered or to give evidence. The trial court issued an order directing appellant to comply with the subpoena duces tecum, and it appeals.
The powers of the court are here sought to carry out an administrative function during the preliminary stage of the Commission's investigation. Statutory provisions of this type are in general use to enforce administrative subpoenas. These statutes make available a judicial remedy for the administrative agency, which if granted is enforceable as any court order by the power to punish for contempt. This power to punish is not generally available to federal administrative agencies, Interstate Commerce Comm'n v. Brimson, 154 U.S. 447, 14 S.Ct. 1125, 38 L.Ed. 1047, thus recourse is here sought by way of a separate judicial proceeding. The administrative action is not far advanced, however there is an extensive background of related proceedings by the Commission involving appellant, so the matter is not entirely one of prophecy. 44 Colum.L.Rev. 531. Much has been written on the subject of this method of enforcement at this point in an investigation, and no purpose would be served by a further discussion here. Loss, Securities Regulation; 35 Colum.L.Rev. 578; 51 Harv.L.Rev. 312. In this close contact between the executive and judicial branches of government there can and do occur some difficult moments for both, as evidenced by the many opinions and articles on the subject. The Administrative Procedure Act also refers specifically to administrative subpoenas. 5 U.S.C. § 1005. It is apparent, and the trial court recognized, that the administrative agencies must be given broad powers and latitude to conduct their investigations and hearings. This is necessary to carry out the Congressional mandate as to their statutory duties and functions. The courts by separate judicial proceedings and within the limitations mentioned hereinafter assist the agencies in the performance of their prescribed functions.
The matter here before us is a sharply contested one and, as mentioned, is a part of a long series of hearings and investigations. The initial hearing below from which this appeal arose followed the trial court's order directed to appellant to show cause. The parties then moved for summary judgment, and the case although commenced in a summary manner was handled as provided in Rule 81 of the Federal Rules of Civil Procedure. The trial court held a preliminary conference and the parties indicated that affidavits would be filed in the summary judgment proceedings. The following colloquy took place:
The appellant filed affidavits but the Commission did not do so. The trial judge thereafter pointed out to the Commission that the affidavits were, of course, not then required to prevent an adverse ruling, but in view of the matters contained in appellant's affidavit, he mentioned that some explanation from the Commission would be helpful. Despite this encouragement, the Commission did not act and stood on its Application for an Order to Require Obedience, which may be considered to be its "pleadings." This hearing was held before the significant changes on this very point were made in Rule 56 effective July 1, 1963. What did the court have before it? The Commission's Application for an Order states that its investigation was being conducted to determine whether appellant was violating the registration and the anti-fraud provisions of the Securities Act; it also describes the issuance of the subpoena, and details the refusals to comply. The Application then states that the "* * * investigation has been unlawfully obstructed, delayed and hindered and will continue to be hampered by defendants' refusal to comply * * *." This is the extent of the facts the trial court had to work with as advanced by the Commission in support of its motion for summary judgment. As against the Commission's Application, the court had before it appellant's lengthy Affidavit in Support of Motion For Summary Judgment, with numerous exhibits attached. This document contains much by way of opinion and suspicion and many paragraphs do not otherwise conform to Rule 56 of the Federal Rules of Civil Procedure; however, it also contains some specific facts. It states that the representatives of appellant were told in a conference with Commission officials that appellant might as well withdraw its registration statement since it would never be permitted to become effective; also that appellant's representatives were then advised that the Commission had a "long file" on appellant's president and they would never permit a registration statement to become effective...
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