BOARD OF GOVERNORS, ETC. v. Transamerica Corp.

• Decision Date: 27 June 1950
• Docket Number: No. 12587.,12587.
• Citation: 184 F.2d 311
• Parties: BOARD OF GOVERNORS OF FEDERAL RESERVE SYSTEM v. TRANSAMERICA CORP. et al.
• Court: U.S. Court of Appeals — Ninth Circuit

184 F.2d 311 (1950)

BOARD OF GOVERNORS OF FEDERAL RESERVE SYSTEM v. TRANSAMERICA CORP. et al.

No. 12587.

United States Court of Appeals Ninth Circuit.

June 27, 1950.

COPYRIGHT MATERIAL OMITTED

J. Leonard Townsend, Solicitor, Board of Governors of the Federal Reserve System, Washington, D. C. (Gregory O'Keefe, Jr., Washington, D. C., of counsel), for petitioner.

Samuel B. Stewart, Jr., Hugo A. Steimmeyer and G. D. Schilling, all of San Francisco, Cal., for respondents.

Before HEALY, ORR and POPE, Circuit Judges.

PER CURIAM.

An order denying a motion to dissolve a restraining order and granting an injunction containing our findings upon the issues herein, was filed on Saturday, June 24, 1950. We now proceed to state, more in detail, the facts disclosed in this proceeding, and the considerations which prompted our decision.

While the Board of Governors of the Federal Reserve System was in the process of holding hearings upon a complaint, filed under Section 7 of the Clayton Act, 15 U.S.C.A. § 18, charging Transamerica Corporation with a violation of that Act and seeking to require that corporation to cease and desist from such violations, and to divest itself of the stock of certain banks alleged to have been acquired contrary to the interdiction of the Act, the respondent Bank of America, which was also one of the banks listed in said proceedings, entered into arrangements with certain of the banks whereby the Bank of America proposed to acquire the assets of such banks.

Steps looking to the acquisition of these bank assets, although clearly planned for a considerable period, were commenced on June 20, 1950, three days prior to the institution of this proceeding, when the Comptroller of the Currency executed his consent to Bank of America to open branches at the locations of these several banks. Although the Comptroller's certificates of consent were, strictly speaking, limited to authorization to open branches, it is apparent, from the record, that he knew that acquisition of the banks' assets was contemplated, for the approved location in each case was that of the bank proposed to be acquired, and in his letter of transmittal of the certificates approving the branches, dated June 20, 1950, he listed opposite the name of each branch, the name of the bank "to be taken over".

At some date or dates subsequent to the 20th day of June written contracts were executed between the several banks and Bank of America providing for the acquisition of the formers' assets by Bank of America, which in each case was to assume the deposit and other liabilities. On the hearing before us some argument ensued as to whether these contracts were executed or executory. They fall into two categories. Those relating to state banks required the approval of the State Superintendent of Banks, who gave his approval on June 22, 1950 "effective at 3 o'clock p. m. California daylight savings time, June 24, 1950.¹

The contracts relating to National Banks are shown to have been in the form of that made by the First National Bank of Santa Ana. It recites that it is entered into "as of the 20th day of June, 1950". Its date of actual final execution is not indicated otherwise than by the fact that the signatures on behalf of Bank of America were acknowledged before a notary on June 23, 1950.

This contract, presented as a sample of the other contracts with the National Banks, shows on its face that it was wholly executory. It provided for actual transfer at a future date. It referred to a list of assets to be transferred, subject to such changes as may occur therein to and including "the date of actual transfer thereof". In like manner the liabilities to be assumed were "subject to such changes as may occur therein to and including the date of actual transfer thereof." Another clause requires the seller to indemnify the purchaser against any action or cause of action "that may be now existing or pending and not shown by the aforesaid records of seller, or which may hereafter be commenced, based upon any transaction, matter or thing happening or occurring prior to the actual transfer of the business and assets herein referred to." The price to be paid is not fixed. It is to be based on a valuation of assets which "shall be arrived at by the officers of the respective parties". It is to include such premium on loans and such good will premiums "as may be agreed upon". Seller agrees to cease business and liquidate "after completion of the transfers provided for in this agreement.

It was admitted at the hearing that the banks referred to, and their officers, would continue to function throughout the week in which these transactions were initiated and through June 24, 1950. Further indicating that the agreements remained executory, and that the actual transfers had not been made when the restraining order hereinafter referred to was served, is a press release of the Bank of America listing the banks in question, announcing the proposed acquisition, and stating "It is expected that these offices will become part of the Bank of America as of the close of business on June 24".

On June 23, 1950 the petitioner Board of Governors of the Federal Reserve System filed herein its petition disclosing the pendency of the proceedings before it, alleging that further hearings therein are set for July 17, 1950, and that the conclusion of such proceedings will probably require 30 days thereafter. It appears that such hearings have proceeded intermittently since February 2, 1949. The petition discloses, and it is conceded here, that the complaint in that proceeding, charged that respondent Transamerica Corporation had acquired the stocks of certain banks in violation of Section 7 of the Clayton Act, and that the effect of such acquisition has been and is to substantially lessen competition, to restrain commerce, and to tend to create a monopoly. The petition was directed against Transamerica Corporation, respondent in those proceedings, and also Bank of America. It alleged the imminent acquisition of the assets of the banks, and prayed that such transfer be enjoined until the Board's proceedings could be concluded.

The Board's Memorandum of Points and Authorities filed with its Petition, and based on appropriate allegations in the petition, discloses that our jurisdiction herein is asserted to exist by virtue of Title 28 U.S.C.A. § 1651, which provides: "The Supreme Court and all courts established by Act of Congress may issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law."

It is pointed out that the Board is without statutory authority to protect its own jurisdiction. Its orders may only be enforced in this court, whose jurisdiction, under Section 11 of the Clayton Act, 15 U.S.C.A. § 21, is exclusive. And, although the Board has not yet entered an order, or petitioned this court to enforce an order, yet it is argued that the jurisdiction of this court to issue an extraordinary writ in aid of its own jurisdiction is not delayed until the jurisdiction of this court is actually invoked. The writ may be issued to prevent frustration of the ultimate exercise of its jurisdiction even before an appealable or reviewable order has been entered in the tribunal below. Attention is called to the application of this principle in many cases following Barber Asphalt Paving Co. v. Morris, 8 Cir., 132 F. 945, 953, 954, 67 L.R.A. 761, where the court said: "It is obvious that the primary reason for the grant to the federal appellate courts of the dominant power to issue their writs of mandamus to the inferior courts in the exercise of and in aid of their appellate jurisdiction was to enable them to protect that jurisdiction against possible evasions of it. It is not less evident that the grant must in many, nay, in most, cases, fail to accomplish its chief end if the power to issue the writ can be exercised only after the appellate jurisdiction has been actually invoked by an appeal or by a writ of error. Under the acts of Congress the proceedings in every suit in the Circuit Court of the United States are now reviewable either in the Supreme Court or in the Circuit Court of Appeals. The moment such a suit is commenced, the appellate jurisdiction over it exists, the power and the right to ultimately review the proceedings in it are vested in one of the appellate courts. * * *

* * * * * *

"The reasons and decisions to which we have now adverted have impelled our minds with irresistible force to the conclusion that the true test of the appellate jurisdiction in the exercise or in the aid of which the Circuit Courts of Appeals may issue the writ of mandamus is the existence of that jurisdiction, and not its prior invocation; that it is the existence of a right to review by a challenge of the final decisions, or otherwise, of the cases or proceedings to which the applications for the writs relate, and not the prior exercise of that right by appeal or by writ of error; * * *" To like effect is Whittel v. Roche, 88 F.2d 366, decided by this court.

The cases just cited deal with writs issued in aid of our appellate jurisdiction. We think a like jurisdiction is granted, under Section 1651, in aid of our original jurisdiction to enforce the orders of this Board, and that it may be exercised at any stage at which it may appear reasonably necessary to preserve that jurisdiction. Indeed, in this situation, in which this court has been made the sole court vested with enforcement of this Act, our power to protect that jurisdiction is comparable to that of a district court which is confronted with a threat by litigants, or by third persons, to destroy its jurisdiction, as for example, in the case of a threatened destruction or removal of a res in custodia legis.² Here the threatened frustration is through concert between the respondents.

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