Kinnear-Weed Corporation v. Humble Oil & Refining Company

• Decision Date: 15 October 1968
• Docket Number: No. 16780.,16780.
• Citation: 403 F.2d 437
• Parties: KINNEAR-WEED CORPORATION, Petitioner-Appellant, v. HUMBLE OIL & REFINING COMPANY, a Texas Corporation (Now dissolved and merged into Standard Oil Company, a New Jersey Corporation) its successor and/or surviving corporations and its assigns, Respondent-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

403 F.2d 437 (1968)

KINNEAR-WEED CORPORATION, Petitioner-Appellant, v. HUMBLE OIL & REFINING COMPANY, a Texas Corporation (Now dissolved and merged into Standard Oil Company, a New Jersey Corporation) its successor and/or surviving corporations and its assigns, Respondent-Appellee.

No. 16780.

United States Court of Appeals Fifth Circuit.

October 15, 1968.

Fred Parks, Houston, Tex., W. E. Kinnear, Beaumont, Tex., for appellant.

Garrett R. Tucker, Jr., C. O. Ryan, Houston, Tex., for appellee.

Before JOHN R. BROWN, Chief Judge, and WISDOM, GEWIN, THORN-BERRY, COLEMAN, GOLDBERG, AINSWORTH, GODBOLD, DYER and MORGAN, Circuit Judges^*.

JOHN R. BROWN, Chief Judge:

This is an extraordinary petition¹ in which Petitioner² seeks to set aside the judgment of the Trial Court entered in 1956, holding a patent invalid and not infringed. That judgment was affirmed by this Court in 1958, with subsequent modification in 1961.³

The attack on the judgment of⁴ September 1956 is based upon the claim that the Trial Judge was disqualified by reason of business transactions and relations with the patent-suit defendant, Humble,⁵ amounting to a "substantial interest" within the meaning of the disqualification statute⁶ or other appropriate legal principles. Collateral to, but claimed to be independent of, the attack on the judgment, Petitioner also seeks various types of relief including damages, actual and punitive, attorney's fees, etc., from Humble, based upon fraud both on the District Court and on the Court of Appeals for the Fifth Circuit. Petitioner claims that the Trial Judge was disqualified because of substantial financial interest in the litigation arising from these four incidents, considered singly or in combination: 1 ownership by the Trial Judge of 100 shares of Humble stock, 2 the relationship between Humble and Coastal Tool Co., Inc., a service company in which the Trial Judge had a 25% stock ownership, served as director and secretary-treasurer, and from which he received both dividends and salary, 3 the settlement and disposition of the Beck suit brought against Humble (as the lessee) by owners of mineral interests, including the fractional share (1/320th) of the Trial Judge who was a named plaintiff, and 4 leases, options, and re-leases between Humble, on the one hand, and members of the family of the Trial Judge's wife in the Sabine Tram Lands.⁷ Petitioner asserts that the uncontradicted facts as to 1, together with the uncontradicted facts as to any one or more or all of 2, 3, or 4, entitle it as a matter of law — at this time and at the hands of this Court — to the relief here sought without the necessity for any further factual inquiry by this Court, a panel thereof, a Special Master acting for it, or by a District Court for handling by it either as an original suit or as a reference to it from the Court of Appeals.

Following an earlier submission of this case to a panel of three Judges, which rendered no decision, this Court, on its own motion, set the matter down for reargument and determination by the Court en banc. We have had extensive briefs and extended oral argument before the Court en banc. Because our disposition of the case calls for factual inquiry and determination by the District Court of the almost limitless factual disputes which have so far never been judicially resolved, we think it unnecessary and inappropriate to discuss any of these things in detail lest what we say might lead the District Court to believe that we had formed, or intimate, judgments, either factual or legal, on them.

Several matters, however, are decisive and can be briefly stated at the very outset. The first is that, contrary to Petitioner's assertion, this record does not contain uncontradicted facts with respect to 2, 3, or 4, singly or in cumulation which require, or permit, this Court to determine now as a matter of law, fact, or both, that the Trial Judge was disqualified. Thus the relief sought (see note 4, supra) cannot be granted by us on this record at this time. Nor does the present record show facts requiring, or permitting, this Court at this time to declare that Humble was guilty of fraud on this Court, the District Court, or both. We expressly decline to grant this relief.

At the same time we decline to accept Humble's plea of res judicata, which is based primarily on the historical fact that in 1960-61 Petitioner filed in this Court motions which essentially sought to have the Trial Court's patent judgment set aside because of disqualification of the Trial Judge for reasons 1 and 2, to which Humble made responses. Each of these reasons was set forth in considerable factual detail in the moving papers.⁸ Humble contends that when this Court denied that post-affirmance relief sought on the basis of disqualification of the Trial Judge for financial interest in the litigation, this action became insulated on familiar principles of res judicata, since neither the basis for this Court's action (untimeliness) nor the later addition of added factual details would be of any significance. But, as we several times make clear, this is a matter which transcends the interests of the parties. The purity of the judicial process and its institutions is the thing at stake. Whatever might be the usual consequences of res judicata, collateral estoppel or doctrines akin to them, we reject them here. They are not a bar or defense here or below.

We are equally clear that neither standing alone nor in combination with any one or more or all of 2, 3, or 4, item 1 the ownership of 100 shares of Humble stock is not, and was not, either as a matter of law or fact or both a disqualifying factor. The record shows without contradiction that the 100 shares owned by the Trial Judge⁹ were an infinitesimal portion of 36 million shares outstanding when the case was tried. This stock had been owned for a long time prior to the time the Trial Judge took his oath (September 9, 1954). The Trial Judge informed his wife that the stock would have to be sold as he would be handling matters in which Humble was a litigant. The stock was sold on January 17, 1954, within a few months after his accession, during which interval he had handled some preliminary matters in the patent case.¹⁰ Petitioner presses hard upon us the early decision of the Ninth Circuit in In re Honolulu Consolidated Oil Co., 9 Cir., 1917, 243 F. 348. We do not regard this case as controlling for a number of reasons. First, the disqualification was asserted well in advance of trial. Second, that case arose under the predecessor statute^10-A which defined the prohibited relationship between the Judge and the litigation as one in which he was "in any way concerned in interest" rather than the present statute (see note 6, supra), which has the far different term "substantial interest." This tiny fractional interest in the equity ownership of this huge industrial enterprise does not amount, either as a matter of fact, or law, or both, to a substantial interest by the Trial Judge in the case or a prohibited connection with a litigant. The fact that the Trial Judge insisted that the stock be sold neither makes it substantial nor indicates a conscious awareness that he had a relationship to the litigant which was improper or disqualifying.

We think, however, that there should be a factual, judicial determination of the facts with respect to 2, 3, and 4. We cannot emphasize too greatly, however, that since our approach in this case is one in which the interests of justice transcend those of the parties, this action of ours is not to be interpreted as a holding, either express or implied, that a "prima facie" case has been made out. Nor do we suggest even a remote possibility of a whisper of a suggestion as to how any one or more or all of these issues ought to, or must be decided. We are impelled by an abundance or perhaps an overabundance of judicial concern and public policy to order further hearings in this cause, but we disagree with our dissenting brethren only as a matter of degree.

Without even remotely suggesting what the facts or their significance may be, a brief mention of grounds 3 and 4 is illustrative. The Beck lawsuit in the State Court alleging nondevelopment of minerals, tried in the Spring of 1954, ended in a hung jury. In October of 1954 those actively in charge of the litigation for the mineral owners had worked out a settlement in which Humble was to pay $5,000 to defray the Plaintiffs' costs (and perhaps some of the attorney's fees incurred by them). The settlement was accepted December 21, 1954 with the money being paid on February 21, 1955. The share of the Trial Judge was $409.24. In the interim the Trial Judge on January 10, 1955, had denied Petitioner's first motion for a jury trial. There is an innuendo, but nothing more, that since historically production increased on this lease subsequent to that settlement, there must have been "something more" to the settlement.¹¹ Item 4 does not even enter the picture until after the Trial Judge had entered his findings of fact, conclusions of law and formal judgment.¹² The Sabine Tram Lands¹³ is a large tract of some 80,000 acres purchased in 1937 by the Trial Judge's father-in-law and another wholly unconnected with the family. An undivided 1/12th interest was transferred to the Trial Judge's wife, and over a period of many years prior to the Trial Judge's going on the bench, there had been numerous leases, releases, bonuses, and options between the co-owners of the lands, on the one hand and a number of oil companies, including Humble as but one of many. Nothing indicates that either the Trial Judge or his wife had anything to do with negotiation of the leases or management of the property. One of these transactions was a lease granted in November 1956 from which the Trial Judge's wife received in December of 1956 a substantial sum as her portion of the lease bonus paid by Humble.¹⁴ But this same record upon...