Austin v. Altman

• Decision Date: 15 May 1964
• Docket Number: Docket 28859.,No. 473,473
• Citation: 332 F.2d 273
• Parties: William AUSTIN et al., Plaintiffs-Appellants, v. Irving B. ALTMAN et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Second Circuit

332 F.2d 273 (1964)

William AUSTIN et al., Plaintiffs-Appellants, v. Irving B. ALTMAN et al., Defendants-Appellees.

No. 473, Docket 28859.

United States Court of Appeals Second Circuit.

Argued April 28, 1964.

Decided May 15, 1964.

Marion O. Jones, New York City, for plaintiffs-appellants.

Samuel R. Pierce, Jr., New York City (Battle, Fowler, Stokes & Kheel and Raymond F. Gregory, New York City, on the brief), for defendants-appellees Irving B. Altman and others.

Dunbar S. McLaurin, New York City, defendant-appellee pro se.

Before LUMBARD, Chief Judge, and MOORE and SMITH, Circuit Judges.

LUMBARD, Chief Judge.

We dismiss this appeal from Judge Palmieri's denial of an application for a temporary restraining order pending a hearing on the plaintiffs' motion to restrain the defendants¹ from proceeding with activities relating to the organization of the Freedom National Bank of New York, Inc., as the denial of such a temporary restraining order is not appealable.

In their complaint, filed on April 9, 1964, the plaintiffs, some of whom are alleged to be shareholders in the defendant bank and the remainder of whom are alleged to be prospective shareholders whose subscriptions have been rejected, charge the defendants with improper treatment of the plaintiffs' subscriptions, the distribution of an allegedly false prospectus compounded by the failure to make certain disclosures, refusal to distribute the stock as had been represented, the improper pledge of some 20,000 shares of stock to the Irving Trust Company, and conduct which will result in the Bank's being "controlled by a few businessmen, politicians, financiers, non-resident shareholders, all contrary to the expressed will of the people and contrary to the published prospectus." Apparently these and similar complaints so far as relevant to the issuance of a charter and the organization of the Bank had been advanced to the Comptroller of the Currency, and when he saw no reason to interfere with the organization of the Bank by the defendants this suit was commenced.

The complaint sought an injunction against further organizational activities and the holding of any shareholders' meeting, the appointment of a receiver during the pendency of the action, specific performance of the offers "in the prospective" (sic), acceptance by the defendants of the plaintiffs' subscriptions, and a declaration that the pledge to the Irving Trust Company was void. The complaint joined James Saxon, the Comptroller of the Currency, as a defendant and also sought to enjoin him; he has not been served and does not appear.

On Friday, April 10, the plaintiffs sought and obtained an ex parte temporary restraining order directing that the defendants be "stayed, enjoined and restrained from any organization or corporate action during the hearing of this motion," which was set for April 21. Apparently the principal reason for seeking a temporary restraining order was to prevent the defendants from proceeding with the organization meeting of the Bank scheduled for April 15 at 9:30 A.M. The defendants were not served with a copy of the order. In fact, by its terms the order could be served at any time up to 4:00 P.M. of April 15, six and one-half hours after the scheduled organization meeting. Having learned of the order, counsel for the defendants on Monday, April 13, visited the district judge who then modified the order by bracketing out the portion quoted above. When the district judge was advised of the possible effect of the temporary restraint, he commendably undertook to set matters right. He heard the parties at 4:30 P.M. on April 13 and again the following morning. At 7:00 P.M. on April 14 he again ruled on the matter in a written opinion and denied the injunctive relief requested by the plaintiffs which he had first granted ex parte.

The plaintiffs assert that the order denying a temporary restraining order is appealable under 28 U.S.C. § 1292(a) (1) as an interlocutory order "granting, continuing, modifying, refusing or dissolving" an injunction. We do not agree. "In a civil action a restraining order qua restraining order is non-appealable." 7 Moore's Federal Practice ¶ 65.07; Grant v. United States, 282 F. 2d 165 (2 Cir. 1960); Schainmann v. Brainard, 8 F.2d 11 (9 Cir. 1925). But the distinction between a temporary restraining order and a preliminary injunction, which is appealable, is often subtle and difficult to draw. We must look to the subject matter of the order, its duration and whether or not notice and hearing of both parties were had.

Here, the order was originally granted without notice to or hearing of the defendants. By its terms the order was to be effective solely during the hearing of the motion for a preliminary injunction and thus was viewed by both the plaintiffs and the district judge solely as a temporary order. Indeed, in his opinion of April 14, the district judge stated that "The sole issue presently before this Court is one of interim relief pending argument of cross-motions by the parties." It is thus clear beyond peradventure that the order here involved was a temporary restraining order, the dissolution of which is non-appealable.

What the district judge himself wrote concerning the merits of this matter when he denied the temporary restraining order on April 14 is abundant reason why the order of April 10 should never have been signed without giving the defendants an opportunity to be heard. The papers failed to disclose sufficient relevant facts to show...