Lawrence Warehouse Co. v. Defense Supplies Corp.

• Decision Date: 13 May 1948
• Docket Number: No. 11418.,11418.
• Citation: 168 F.2d 199
• Parties: LAWRENCE WAREHOUSE CO. v. DEFENSE SUPPLIES CORPORATION. CAPITOL CHEVROLET CO. v. SAME. McGREW v. SAME. DEFENSE SUPPLIES CORPORATION v. HENRY.
• Court: U.S. Court of Appeals — Ninth Circuit

168 F.2d 199 (1948)

LAWRENCE WAREHOUSE CO. v. DEFENSE SUPPLIES CORPORATION.

CAPITOL CHEVROLET CO. v. SAME.

McGREW v. SAME.

DEFENSE SUPPLIES CORPORATION v. HENRY.

No. 11418.

Circuit Court of Appeals, Ninth Circuit.

April 6, 1948.

As Amended on Denial of Rehearing May 13, 1948.

W. R. Wallace, Jr., W. R. Ray, and Williamson & Wallace, all of San Francisco, Cal., for appellant Lawrence Warehouse Co.

Morris Lavine, of Los Angeles, Cal., for appellant Capitol Chevrolet Co.

Theodore R. Meyer, Brobeck, Phleger & Harrison, David E. Lombardi, and R. L. Miller, all of San Francisco, Cal., for appellee Defense Supplies Corporation.

Before DENMAN, HEALY, and BONE, Circuit Judges.

DENMAN, Circuit Judge.

Motion of Reconstruction Finance Corporation.

The Reconstruction Finance Corporation, purportedly joined by the Defense Supplies Corporation, moves to amend the complaint and judgment herein by substituting the Reconstruction Finance Corporation as plaintiff and judgment creditor and to substitute it as appellee in this Court.

The admitted facts are that Defense Supplies Corporation ceased to exist on July 1, 1945, by virtue of the Act of Congress of June 30, 1945, dissolving that corporation; that after it ceased to exist, the trial of the case in the District Court on which the subsequent judgment rests was continued by the filing on July 2, 1945, of a closing brief in the name of the defunct corporation; followed by the Court's order of submission of the trial on July 16, 1945; thereafter, on April 15, 1946, the judgment was entered for the non-existent corporation against certain defendants and against it as to one defendant; that thereafter the defunct corporation purported to appeal, and the judgment debtors appealed to this Court; thereafter, on September 16, 1946, over a year after its dissolution, the defunct corporation filed here its points and authorities on its purported appeal and briefed and argued it, and the judgment debtors did likewise; that thereafter, this Court affirmed the judgment in favor of the defunct corporation in its entirety and denied petitions for rehearing thereon.

It also is apparent that all of the judges participating in the adjudications and all the parties (except the attorneys for the defunct corporation) were ignorant of the fact that they were charged with notice of the Congressional enactment of its dissolution. As for the attorneys for the defunct corporation, they frankly admit they were aware that they purported to act for the defunct corporation.

The act dissolving the Defense Supplies Corporation, June 30, 1945, Chap. 215 Public Law 109, 59 Stat. 310, 15 U.S.C.A. § 601 note, provides that, "notwithstanding any other provision of law, all functions of the dissolved corporation * * * are hereby transferred * * * to Reconstruction Finance Corporation and shall be performed, exercised and administered by that Corporation * * *."

That is to say that after July 1, 1945, the Reconstruction Finance Corporation "shall" file the final brief in the existing trial due after July 1, 1945, "shall" take the appeal from any adverse decision and "shall" defend in this Court any judgment favorable to it. The word "shall" is "the language of command" used in the statute in contrast to the "may" of the judges' power to allow intervention. Anderson v. Yungkau, 329 U.S. 482, 485, 67 S.Ct. 428, 430.

The construction of the Reconstruction Finance Corporation is, in effect, that this "shall" is not mandatory and that it need not do these things; that it may choose an alternative, namely, that lawyers formerly representing the defunct corporation may pretend it is still existing and in its name continue the trial by filing a brief and procure a judgment in favor of a non-existent party.

The dissolving act further provides that: "No suit, action, or other proceeding lawfully commenced by or against any of such corporations shall abate by reason of the enactment of this joint resolution, but the court, on motion or supplemental petition filed any time within twelve months after the date of such enactment, showing a necessity for the survival of such suit, action, or other proceeding to obtain a determination of the questions involved, may allow the same to be maintained by or against the Reconstruction Finance Corporation."

The Reconstruction Finance Corporation contends that it is not bound by this provision for maintaining the action and presents no petition to the Court with the required showing. Rather, they contend they are entitled to treat the recent specific Congressional act as subordinate to 28 U.S. C. 777, 28 U.S.C.A. § 777, providing that any court, including the Appellate Court, shall not abate any proceeding or reverse any judgment for a "defect * * * of form." The statute concludes the Court "may at any time permit either of the parties to amend any defect in the process or pleadings, upon such conditions as it shall, in its discretion and by its rules, prescribe."

This the Reconstruction Finance Corporation's brief would interpret as permitting us to disregard "defects of form and procedure." So interpreted, we could disregard a "defect of procedure" on appeal consisting of filing a notice of appeal four months after the judgment was entered in the District Court.

The Reconstruction Finance Corporation also contends that its failure to follow the mandate of the statute that it "shall" exercise the functions of the non-existent dissolved corporation is a mere "defect * * * of form." That is to say, the failure to supply any litigant at all over which the Court has jurisdiction to render a judgment is not a jurisdictional defect, but a mere defect of form. As seen infra, the Supreme Court in Payne v. Industrial Board, 258 U.S. 613, 42 S.Ct. 462, 66 L.Ed. 790, holds the defect to be a "want of jurisdiction."

The Reconstruction Finance Corporation cites our decision in Reardon v. Balaklala Consol. Copper Co., C. C., 193 F. 189, a case brought in the California District Court on diversity of citizenship. There the Court held valid a suit commenced by the father of the deceased, under a California statute allowing a suit by the personal representative of a deceased employee. No question of substitution of the personal representative was discussed and it was assumed that the father under the California law had the right to bring the action.

We do not agree that the failure of Reconstruction Finance Corporation to appear and give a jurisdiction in personam for a judgment and thereafter perform the functions of its statutory mandate is a mere "defect * * * of form" within Sec. 777 and deny the motion to substitute the Reconstruction Finance Corporation as judgment creditor, or as a party to the appeal.

The Motion of the Lawrence Warehouse Company et al.

The appellants from the judgment, Lawrence Warehouse Company et al. contend that the Reconstruction Finance Corporation cannot now be substituted as a party to the action as at any period of its pendency and move the court to set aside its affirmation of the judgment and remand the case to the District Court with instructions to dismiss.

Appellants' contention is not only that the judgment and its affirmance are acts in vacuo because in favor of a non-existent party but also the functions which the Reconstruction Finance Corporation shall perform are limited in time to the twelve months' period within which it must file a motion, "showing a necessity for the survival of such suit, action or other proceeding to obtain a determination of the questions involved," in which event the court "may allow the same to be maintained by or against the Reconstruction Finance Corporation."

It is apparent that if now, two years and seven months after the dissolution of the Defense Supplies Corporation, the Reconstruction Finance Corporation shall perform the former's function, the twelve month period of the statute is made meaningless, in violation of the cardinal rule of a construction of a statute that its words shall be given effect and not made nugatory. It seems impossible that Congress meant to say, "You can intervene and make the showing we require any time you please, but it would be nicer if you would do it within twelve months."

Emphasis is placed on the fact that a government agency may lose its valuable right of action if the dissolving act is construed adversely to it. As shown, infra, it is not true that by dismissal of the action here the right of action is lost to the government. The right of action here survives, though, as shown, the Supreme Court holds that the action against the dissolved corporation is "abated." Fix v. Philadelphia Barge Co., infra.

The act is not a one-way street. If the suit were against the governmental agency by a private litigant who had obtained judgment, we well could expect the argument that the statute was one for the protection of that agency and that Congress intended so to protect it, as shown, infra, by the Supreme Court decision holding non-compliance by the private suitor abated the action and caused the court to lose its jurisdiction over it.

Stress is laid on the statute's provision that no "action * * * by or against the dissolved corporation shall abate by reason of" its enactment. However, the Supreme Court has held of a statute, 28 U.S.C.A. § 780, identical in its provisions concerning abatement and substitution and providing that no action against a federal officer "shall abate by reason of his death, or expiration of his term of office," etc., that it is abated if his successor does not seek substitution within the twelve months' limitation provided for such procedure. The identity of the provisions of the Act of Congress of February 8, 1899, 28 U.S.C.A. § 780, with the instant dissolving act appears in the words of the two statutes. The 1945 act provides first that "Notwithstanding any other provision of law, all functions, powers, duties, and authority of the corporations...