Atlas Corporation v. DeVilliers

• Decision Date: 09 September 1971
• Docket Number: No. 495-70 to 500-70.,495-70 to 500-70.
• Citation: Atlas Corporation v. DeVilliers, 447 F.2d 799 (10th Cir. 1971)
• Parties: ATLAS CORPORATION, Plaintiff-Appellee, v. W. Rodney DeVILLIERS and Orco Corporation, Defendants-Appellants, Betty June DeVilliers, Plaintiff-Intervenor, v. Emilio NARANJO, Third-Party Defendant, William C. Marchiondo, Intervenor, Kendall O. Schlenker, as Guardian ad Litem for minor children. ATLAS CORPORATION, Plaintiff-Appellee, v. W. Rodney DeVILLIERS and Orco Corporation, Defendants, Betty June DeVilliers, Plaintiff-Intervenor, v. Emilio NARANJO, Third-Party Defendant, William C. Marchiondo, Intervenor, Kendall O. Schlenker, as Guardian ad Litem for minor children, Appellant. ATLAS CORPORATION, Plaintiff-Appellant, v. W. Rodney DeVILLIERS and Orco Corporation, Defendants, v. Betty June DeVILLIERS, Plaintiff-Intervenor-Appellee, Emilio Naranjo, Third-Party Defendant, William C. Marchiondo, Intervenor, Kendall O. Schlenker, as Guardian ad Litem for minor children. ATLAS CORPORATION, Plaintiff-Appellant, v. W. Rodney DeVILLIERS and Orco Corporation, Defendants, v. Betty June DeVILLIERS, Plaintiff-Intervenor, Emilio Naranjo, Third-Party Defendant, William C. Marchiondo, Intervenor-Appellee, Kendall O. Schlenker, as Guardian ad Litem for minor children.
• Court: U.S. Court of Appeals — Tenth Circuit

447 F.2d 799 (1971)

ATLAS CORPORATION, Plaintiff-Appellee, v. W. Rodney DeVILLIERS and Orco Corporation, Defendants-Appellants, Betty June DeVilliers, Plaintiff-Intervenor, v. Emilio NARANJO, Third-Party Defendant, William C. Marchiondo, Intervenor, Kendall O. Schlenker, as Guardian ad Litem for minor children.

ATLAS CORPORATION, Plaintiff-Appellee, v. W. Rodney DeVILLIERS and Orco Corporation, Defendants, Betty June DeVilliers, Plaintiff-Intervenor, v. Emilio NARANJO, Third-Party Defendant, William C. Marchiondo, Intervenor, Kendall O. Schlenker, as Guardian ad Litem for minor children, Appellant.

ATLAS CORPORATION, Plaintiff-Appellant, v. W. Rodney DeVILLIERS and Orco Corporation, Defendants, v. Betty June DeVILLIERS, Plaintiff-Intervenor-Appellee, Emilio Naranjo, Third-Party Defendant, William C. Marchiondo, Intervenor, Kendall O. Schlenker, as Guardian ad Litem for minor children.

ATLAS CORPORATION, Plaintiff-Appellant, v. W. Rodney DeVILLIERS and Orco Corporation, Defendants, v. Betty June DeVILLIERS, Plaintiff-Intervenor, Emilio Naranjo, Third-Party Defendant, William C. Marchiondo, Intervenor-Appellee, Kendall O. Schlenker, as Guardian ad Litem for minor children.

Nos. 495-70 to 500-70.

United States Court of Appeals, Tenth Circuit.

August 4, 1971.

Rehearings Denied September 9, 1971.

Boston E. Witt, Santa Fe, N. M., for W. Rodney DeVilliers.

E. Douglas Latimer, Albuquerque, N. M., for Kendall O. Schlenker, as guardian ad litem for minor children, and for William C. Marchiondo.

Charles C. Spann, Albuquerque, N. M., for Atlas Corp.

Before MURRAH, PICKETT and HILL, Circuit Judges.

Rehearings Denied in Nos. 495-70, 498-70 September 9, 1971.

HILL, Circuit Judge.

These consolidated appeals and cross-appeals have for their genesis a prior action by Atlas Corporation against Rodney DeVilliers. Therein Atlas recovered a judgment of $415,000 against DeVilliers for fraud in the conversion of funds belonging to Atlas. This court affirmed in DeVilliers v. Atlas Corporation, 360 F.2d 292 (10th Cir. 1966). Since that time, Atlas has sought to levy on DeVilliers' assets in aid of execution of the judgment. Those attempts to satisfy the judgment have occasioned various proceedings in the trial court and our task on appeal is to review those proceedings for correctness.

The facts are unusual and complex. In August of 1967, W. Rodney DeVilliers organized DeVilliers Nuclear Corporation and became its president. According to the corporation's prospectus, Rodney DeVilliers, one John Dwyer, and one James Eagleston transferred 13,775 acres of New Mexico leases to the corporation in return for an original issue of 146,000 shares of its common stock. Of that aggregate, Rodney DeVilliers received 3,000 shares personally and held 73,000 shares as custodian for the benefit of his children. The remaining shares went to Mr. Dwyer and Mr. Eagleston, except that of the shares going to Eagleston, 40,500 were held by him as custodian for the benefit of Rodney DeVilliers' children. The 3,000 shares personally owned by Rodney DeVilliers and the 113,500 shares which DeVilliers and Eagleston held as custodians for the DeVilliers children were immediately placed in escrow at an Albuquerque, New Mexico, bank.

In 1968, Atlas, in an attempt to satisfy its judgment against DeVilliers, had the United States Marshal levy on the 116,500 shares of stock held in escrow at the Albuquerque bank. Because of the escrow agreement, the bank refused to release the stock. Accordingly, Atlas instituted a proceeding in the trial court seeking to require the escrow agent bank to show why it should not deliver the stock. In that proceeding, Atlas primarily alleged that the conveyance of the stock to the children should be set aside as a fraudulent transfer whereby Rodney DeVilliers sought to defeat the rights of his judgment creditor, Atlas. A guardian ad litem was appointed for the children, and the appropriate parties were ordered to show cause why the transaction should not be set aside as a fraudulent conveyance.

After a deluge of motions from both sides, the matter came to a head on Atlas' motion for summary judgment. On February 2, 1970, the trial court entered an order directing the escrow agent bank to deliver the stock to the United States Marshal who would hold the stock pending further order of the court. After the court entered the mentioned order, Betty June DeVilliers, the former wife of Rodney DeVilliers, intervened and sought to show that one-half of the stock was her community property and was exempt from Atlas' execution. Mrs. DeVilliers alleged that in state court proceedings she had been divorced from Rodney DeVilliers, and that the state court had retained jurisdiction to determine and divide the community property of the former spouses. Accordingly, Mrs. DeVilliers claimed one-half of the DeVilliers Nuclear stock on a basis exempt from Atlas' levy.

On June 1, 1970, the trial court, acting on a motion for summary judgment, entered an order declaring Betty June DeVilliers the owner of an exempt one-half of the 116,500 shares of stock formerly held in escrow. Respecting the remainder of the stock, the trial court found no material issue of fact and granted summary judgment in favor of Atlas. Implicit in the court's original order and final order of June 1, 1970, was the determination that the stock issued in the names of the DeVilliers children was held by them under a fraudulent conveyance which could be set aside by Atlas. The DeVilliers children now appeal that adjudication depriving them of any interest in the stock. The children's appeal is cause No. 498-70 in this court. Rodney DeVilliers also appeals from the trial court's orders, and that appeal constitutes No. 495-70. Atlas appeals the holding that Betty June DeVilliers has a one-half interest in the stock exempt from execution, and that appeal constitutes cause No. 499-70.

In 1969, Atlas also attempted to levy on 890,000 shares of Aqua Pura Corporation stock owned by Rodney DeVilliers and held in escrow by the Albuquerque bank. When the bank refused to release this stock, Atlas instituted a show cause proceeding similar to the one described above. William Marchiondo intervened in that proceeding and asserted a claim of ownership to 90,000 shares of the stock by virtue of an assignment from DeVilliers. Betty June DeVilliers also intervened and made claim to one-half of the stock as her community property. On Atlas' motion for summary judgment, the trial court held that Marchiondo was entitled to the 90,000 shares which he claimed, and Betty June DeVilliers was entitled to one-half of the remaining stock exempt from Atlas' execution. Atlas was granted summary judgment as to the remaining shares. Rodney DeVilliers' appeal from that proceeding constitutes cause No. 496-70. In cause No. 499-70 and 500-70, Atlas appeals the determination that William Marchiondo and Betty June DeVilliers have interests in the Aqua Pura stock which are exempt from Atlas' levy and execution.

The remaining appeal, No. 497-70, concerns the trial court's order adjudicating Rodney DeVilliers in civil contempt of the court. The facts which form the background for the contempt proceeding are intricately interwoven with the above mentioned attempts by Atlas to levy on DeVilliers' assets in aid of execution of its judgment.

It appears that in 1968 Atlas and DeVilliers reached some sort of an agreement whereby DeVilliers would satisfy Atlas' judgment by tender of cash and DeVilliers Nuclear Corporation stock. The stock in question was not registered with the S.E.C. for public sale, so an integral part of the agreement was the understanding that DeVilliers would obtain registration of the stock by April 4, 1969. Apparently DeVilliers failed to obtain registration for the stock, and the agreement aborted. Thereafter, on April 8, 1969, the United States Marshal visited DeVilliers' office armed with a writ of execution.

According to the Marshal's testimony, when he reached DeVilliers at his office, DeVilliers claimed that he had no assets or stock to pay Atlas' judgment. Several days later, the Marshal was advised that DeVilliers was seeking to register 50,000 shares of DeVilliers Nuclear Corporation stock for sale to the public. On April 30, 1969, the Marshal returned to DeVilliers' office seeking the stock, but after a long wait was unable to see DeVilliers. On May 1, the Marshal again returned, saw DeVilliers and served the writ. At that time, Rodney DeVilliers exhibited an unsigned copy of his aborted agreement with Atlas and claimed that he had paid Atlas' judgment. Upon the Marshal's inquiry about the 50,000 shares of stock, DeVilliers replied that the stock had been placed with a New York securities firm. The Marshal questioned DeVilliers about the location and identity of other assets, but DeVilliers responded that he had no other assets. The Marshal returned the writ unsatisfied.

Subsequently it developed that most of what DeVilliers had told the Marshal was false; that is, DeVilliers had not paid the Atlas judgment, the stock had not been placed with a New York securities firm, and DeVilliers indeed had assets in the form of 890,000 shares of the Aqua Pura stock previously discussed. Furthermore, sometime after the Marshal attempted to levy on the 50,000 shares, DeVilliers sold or encumbered at least 25,000 shares and thereby effectively put that quantity of stock beyond the reach of Atlas.

Based on these facts and the Marshal's testimony, DeVilliers was found to be in civil contempt of the court for resisting the court's lawful writ. DeVilliers was ordered to pay a fine of $150,000, payable in reduction of Atlas' judgment, or be committed to jail until the fine is paid. The fine was assessed with reference to the damages occasioned Atlas by DeVilliers contumacious conduct. Rodney DeVilliers appeals from the contempt citation, and this constitutes No. 497-70.

THE CIVIL CONTEMPT APPEAL

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