Dyer v. Securities and Exchange Commission

• Decision Date: 02 August 1961
• Docket Number: No. 16554.,16554.
• Citation: 291 F.2d 774
• Parties: J. Raymond DYER, Appellant, v. SECURITIES AND EXCHANGE COMMISSION, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

291 F.2d 774 (1961)

J. Raymond DYER, Appellant, v. SECURITIES AND EXCHANGE COMMISSION, Appellee.

No. 16554.

United States Court of Appeals Eighth Circuit.

June 30, 1961.

Rehearing Denied August 2, 1961.

J. Raymond Dyer, St. Louis, Mo., pro se.

Mahlon M. Frankhauser, Atty., Securities & Exchange Commission, Washington, D. C., for the Securities & Exchange Commission. Thomas G. Meeker, Gen. Counsel, Walter P. North, Associate Gen. Counsel, Aaron Levy, Asst. Chief Counsel, and Paul J. Kemp, Atty., Securities & Exchange Commission, Washington, D. C., were with Mahlon M. Frankhauser, Washington, D. C., on the brief of appellee.

Before JOHNSEN, Chief Judge, and VOGEL and BLACKMUN, Circuit Judges.

JOHNSEN, Chief Judge.

This appeal is one by J. Raymond Dyer from a decree of injunction rendered against him, 180 F.Supp. 903, in a suit instituted by the Securities and Exchange Commission under § 18(f) of the Public Utility Holding Company Act of 1935, 15 U.S.C.A. § 79r(f), and also from an order dismissing a counterclaim filed by him.

The decree enjoined Dyer from soliciting any proxy from stockholders of Union Electric Company, of St. Louis, Missouri, or addressing any communication to them which under the circumstances of its situation would constitute a proxy solicitation, unless he complied with the filing requirements of the Commission's regulations as to proxy solicitation, and unless further, if the situation should be one in which the Commission ordered the filing of a declaration, the solicitation was made pursuant to such a declaration which the Commission had permitted to become effective.

The filing requirements of the Commission's regulations are discussed in our opinion in Dyer v. Securities & Exchange Commission, 8 Cir., 290 F.2d 541. There also is listed in that opinion the series of cases which Dyer has thus far brought before us, in his attempts to have overthrown orders made by the Commission in respect to proxy solicitations for stockholders' meetings and to other affairs of Union Electric, from the time that he took up the role of antagonist to Union's existing management.

Dyer first made his entry onto the corporate scene in 1956. That year, his then-minor daughter became the owner of 100 shares of common stock in Union Electric and, on the basis of a power of attorney executed by her in his favor, Dyer undertook to make demands on and engage in controversies with the officers of the corporation. Management refused to recognize the daughter's power of attorney as providing any basis to require it to deal with Dyer as to the corporation's affairs, in view of the lack of legal status of such an instrument given by a minor under Missouri law. See Dyer v. Securities & Exchange Commission, 8 Cir., 266 F.2d 33, 43.

Thereupon, Dyer, in January, 1957, purchased some shares of stock in his own name and again commenced to engage in disputes and demands on management, particularly as to such proxy material as would be sent out by management for the annual meeting of April 20, 1957, and as to the inclusion of proposals and statements by him therein. Some of these aspects, as they came to be involved before the Commission, are set out in our opinion in Dyer v. Securities and Exchange Commission, No. 15,765, 8 Cir., 287 F.2d 773.

Dyer was not averse to having public heralding made of what he was attempting to do and hoping to accomplish. In the instance here relevant, he had, on February 10, 1957, sent an article to the Harvard Law Record, entitled "The Gentle Art of Proxy Contesting or the SEC's New Marquis of Queensbury Rules", which appeared in that publication, under his name as author.

The article had been forwarded to the editor by Dyer in the form of a letter, stating: "* * * I was delighted to receive your invitation of February 2 to write about the Union Electric proxy contest". The article went on to characterize the Commission's regulations on solicitation of proxies as "Marquis of Queensbury Rules of Procedure for the fascinating game of proxy contesting". It declared the rules to be "astonishing in their clarity"; to be "all stacked in favor of the stockholders"; and to provide the means for insurgent stockholders "with just a little intelligence and some cooperative action (and some money, of course,) to nudge their vested interest management right out of the corporate nest".

As published, the article concluded with this paragraph: "Yes, proxy contesting is a fascinating game. Much food for thought. Much opportunity for conjecture. No wonder the game is becoming more and more popular. It is a gamble, of course, but if you win it can be highly lucrative. Much more lucrative than the average contingent fee damage suit. For, just as in political contests, to the victor belong the spoils".

Management felt that this expression on Dyer's part of apparent interest and object was entitled to be brought to the attention of the stockholders of Union Electric, in its seeming relation to the efforts, protests and proposals engaged in by him as to management's 1957 proxy material. It prepared and filed with the Commission a letter for inclusion with its proxy material, quoting the paragraph above set out and making some comments in respect thereto, such as, that "This is an astonishing statement"; that "The attitude expressed by Mr. Dyer has no place in the affairs of Union Electric"; and that the huge investment of stockholders and the widespread service of the corporation as a public utility "should not be the object of `spoils' or a `gamble' or a lawyer's `game' that `can be highly lucrative'".

Dyer immediately reacted with a charge that this was a false and vicious maligning of him and his motives and threatened that he would immediately file a suit for libel if the letter was sent out. He asserted, and he argues here, that the Harvard Law Record article was written and intended by him as mere humor, and that it was not entitled to be read or held out in any other light. He cites here the last two paragraphs of the article, which were contained in his manuscript but were deleted by the editor, as being in his view unmistakably demonstrative of its purely satirical nature and object.

In the first of these omitted paragraphs, Dyer had purported to make a proposal that there ought to be established a professorship to "teach the rules of proxy contesting at the Harvard Law School", and had added the suggestion, "I'm not very well qualified, as yet, but I would love to be offered that chair, after this Union Electric contest is over".

He concluded with this paragraph: "The course would have no dearth of students, I can assure you. Not the way I would teach it. The pastures are green, the field is not preempted, the Marquis of Queensbury Rules are not too hard to learn, and for sheer intellectual pleasure I know of nothing that can rival proxy contesting outside of sex".

Whether or not Union Electric's management and stockholders were obliged to find only entertainment in Dyer's article, management in any event ultimately decided not to send out the letter which it had prepared, and it so notified the Commission. Dyer, however, in the meantime had had a post card printed and addressed for mailing to every stockholder, which he transmitted a copy of to the Commission, with the statement that he intended to send it out "in opposition to declarant's Union's proxy solicitations".

The Director of the Commission's Division of Corporate Regulation promptly advised Dyer that the mailing of the card would under the circumstances constitute proxy solicitation on his part, in which he could not lawfully engage without complying with the order which the Commission had issued in the situation on February 27, 1957. That order prohibited anyone ("Union and all other persons") from soliciting proxies for purposes of the stockholders' meeting of April 20, 1957, except upon the filing of a declaration under § 12(e) of the Act, 15 U.S.C.A. § 79l(e), and Rule U-62 of the Commission's regulations, 17 CFR § 250.62, and upon the Commission's allowing the declaration to become effective.

Dyer disagreed with the view of the Division of Corporate Regulation that the sending out of the card by him would constitute proxy solicitation. He went ahead, mailed all the cards, and sent the Commission a telegram, stating he had done so and declaring, "No violation of any order involved". Shortly before the cards were mailed, he had filed a petition in this Court for review of the order which the Commission had made allowing the declaration filed by management pursuant to the Commission's requirement of February 27, 1957, to become effective for proxy-solicitation purposes by it. That review proceeding was the one which was involved, with affirmance being made of the Commission's order, in Dyer v. Securities and Exchange Commission, No. 15,765, 8 Cir., 287 F.2d 773.

One side of Dyer's post card contained only the following sentence: "If you can keep your head when others all about you are losing theirs then maybe you don't understand the problem". On the other side of the card, in addition to the name and address of the stockholder, and Dyer's return, there appeared two captions, "Truth in Union Electric", and "Stockholder Democracy — Stockholder Responsibility", together with the following communication over Dyer's reproduced signature: "Dear Stockholder: Have you been keeping score on Union Electric? Truth is the problem. I have filed with the U. S. Court of Appeals objection to the SEC's approval of management's proxy solicitations. I think truth will prevail".

It was because of Dyer's mailing of this card that the suit here involved was instituted by the Commission. In his testimony on the trial, Dyer declared that his purpose in mailing the card was to "simply put the stockholders on notice that I am going into the Court of Appeals, nothing more". At another point in his lengthy testimonial discourse, he insisted...