Hughes v. United States

Decision Date04 February 1952
Docket NumberNo. 86,86
Citation96 L.Ed. 394,72 S.Ct. 306,342 U.S. 353
CourtU.S. Supreme Court

Mr. T. A. Slack, Houston, Tex., for appellant.

Mr. Philip Marcus, Washington, D.C., for appellee.

Opinion of the Court by Mr. Justice BLACK, anounced by Mr. Justice DOUGLAS.

A three-judge District Court has construed certain provisions of a Sherman Act consent decree as compelling the sale of certain moving picture stocks owned by the appellant Hughes. This case is properly here on appeal from an order entered to compel the sale. 15 U.S.C. (Supp. IV) § 29, 15 U.S.C.A. § 29.

These anti-trust proceedings were originally brought by the United States against Radio-Keith-Orpheum Corporation and other moving picture producers, distributors, and exhibitors. From the District Court's judgment in the case both the Government and defendants appealed. We affired in part and reversed in part. United States v. Paramount Pictures, Inc., 334 U.S. 131, 68 S.Ct. 915, 92 L.Ed. 1260. We remanded the case to the District Court leaving it free to consider whether it was necessary to require the production and distribution companies to divest themselves of all ownership and interest in the business of exhibiting pictures. Thereafter a consent decree was entered containing detailed provisions for complete divorcement of R.K.O.'s production-distribution assets from its theater assets. To accomplish this, R.K.O. was to form two new holding companies: one, the 'New Picture Company,' was to take over all R.K.O. subsidiaries engaged in production and distribution; the other, the 'New Theater Company,' was to own and control R.K.O. subsidiaries which operated theaters. Upon formation of the new companies, R.K.O. was to be dissolved. Former stockholders were to become the owners of all the capital stock of the two new companies.

A factor considered in connection with this divorcement was that Howard R. Hughes, appellant here, owned 24% of the common stock of R.K.O. No other person or corporation owned as much as 1%. He and government representatives agreed on terms to meet this situation. Their agreement was embodied in the consent decree, becoming section V. This section of the decree, set out below,1 is the center of the present controversy. It provides that Hughes may 'either' (A) sell his stock in one or the other of the two newly formed companies, 'or' (B) deposit such stock with a court-designated trustee under a voting trust agreement to remain in force until Hughes shall have sold his stock in one of the companies. Hughes chose not to sell any stock, and he and the United States agreed on a trustee and the terms of a voting trust, which agreement was approved by a court order. Later, by motion the United States sought a court order forcing the trustee to sell Hughes' stock. Without evidence or findings of fact, and over Hughes' protests, the District Court amended its order appointing a trustee by providing that 'if the stock trusteed shall not have been disposed of by Howard R. Hughes by February 20th, 1953, the trustee shall dispose of such stock within two years thereafter.' Appellant Hughes urges that it was error to order his stock sold in so summary a manner.

First. The Government argues that section V should be read as compelling Hughes to sell his stock within a reasonable time. We hold that the language of the section imposes no such requirement. A reading of the either/or wording would make most persons believe that Hughes was to have a choice of two different alternatives. Hughes would have no choice if the first 'alternative' was to sell the stock and the second 'alternative' was also to sell the stock. Moreover, section V provided that, if Hughes did not sell his stock but chose to place it in a voting trust, this trust should remain in force 'until Howard R. Hughes shall have sold' his stock. This would ordinarily mean that Hughes, not the Court, could decide whether his stock should be sold. Nor can a different inference be drawn from the language authorizing the court to provide the trust's general 'terms or conditions, including compensation to the trustee.' This language cannot support an inference that the court was empowered to deprive Hughes of either of his expressly granted alternatives.

Arguing on a broader front than the mere language of section V, the Government urges: that section V must be interpreted so as to achieve the purposes of the entire R.K.O. consent decree; that the basic purpose of that decree was divorcement of production-distribution companies from theater exhibition companies; and that Hughes cannot consistently with this purpose be left...

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