Lebold v. Inland Steel Co.

• Citation: 136 F.2d 876
• Decision Date: 19 July 1943
• Docket Number: 8234.,No. 8233,8233
• Parties: LEBOLD et al. v. INLAND STEEL CO. (two cases).
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

136 F.2d 876 (1943)

LEBOLD et al. v. INLAND STEEL CO. (two cases).

Nos. 8233, 8234.

Circuit Court of Appeals, Seventh Circuit.

June 16, 1943.

As Modified on Denial of Rehearing July 19, 1943.

Carl Meyer, Paul M. Godehn, and J. F. Dammann, all of Chicago, Ill., for appellant.

Silas H. Strawn, Arthur D. Welton, Jr., Thomas A. Reynolds, Frank H. Towner, and Franklin M. Warden, all of Chicago, Ill., for appellee.

Before EVANS, KERNER, Circuit Judges, and LINDLEY, District Judge.

LINDLEY, District Judge.

Both plaintiffs and defendant attack a judgment fixing plaintiffs' damages in pursuance of our mandate in 125 F.2d 369, the District Court having found the value of capital stock of the Inland Steamship Company as a "going prosperous concern, continuing in business" on May 1, 1936 to have been $2,350 per share. Plaintiffs assert that the evidence was such that the court could properly have fixed only a greater value. Defendant contends that the court could not rightly have attributed any value to the shares other than that of the physical assets; and, alternately, that, if additional value was to be considered, in view of the evidence, the amount fixed was excessive.

Defendant's first contention is grounded upon the premise that we were wrong in our conception of the law when the cause was last before us. Ordinarily, when a case has been once decided on appeal and remanded, whatever was before the court and disposed of by its decree is finally settled. In re Sanford Fork & Tool Co., 160 U.S. 247, 16 S.Ct. 291, 40 L.Ed. 414; In re Potts, 166 U.S. 263, 17 S.Ct. 520, 41 L.Ed. 994; Luminous Unit Co. v. Freeman-Sweet Co., 7 Cir., 3 F.2d 577. Obviously, however, if we were wrong, we have a right to, indeed, we should, correct our error. American Cyanamid Co. v. Wilson & Toomer Fertilizer Co., 5 Cir., 51 F.2d 665; Brown v. Gesellschaft Fur Drahtlose Telegraphie, M.B.H., 70 App. D.C. 94, 104 F.2d 227; Johnson v. Cadillac Motor Car Co., 2 Cir., 261 F. 878, 8 A.L.R. 1023; Luminous Unit Co. v. Freeman-Sweet Co., 7 Cir., 3 F.2d 577; United States F. & G. Co. v. Commercial Nat. Bank, 5 Cir., 62 F.2d 718. So, too, if the evidence now before us is such as to make inapplicable our previous announcements. With this in mind, aided by able advocates' earnest argument, we have examined again the principles of law involved and found controlling on the previous record, in the light of not only what was previously presented but also of what was before the court upon the trial on the merits. After mature and deliberate consideration, we conclude that nothing now urged justifies any modification of our earlier announcement.

We have, then, the question of whether the allowance was excessive or inadequate.

The direct evidence as to value consisted of the testimony of expert witnesses supplemented by various charts and comparative analyses of other like and unlike corporations.

Plaintiffs' witnesses approached the problem from the investor's point of view, assuming a willing buyer and a willing seller, each equally well informed as to the facts. They supplied thirty-two charts demonstrating that the general trend of iron and steel production and shipments of ore on the Great Lakes were, in 1934 and 1935, on the upgrade, and that the ship company and defendant had made more rapid improvement than the industry in general. They included an exhaustive analysis of cargo rates, length of time the ship company's vessels were in commission, the average time of cargo runs, the number, gross tonnage and types of cargoes carried, total earnings, operating expenses, net earnings, operating ratio and net income from 1928 through 1934 and 1935, insofar as the figures were available.

Capitalizing the shares on the same ratio as the steel company's stock's quoted market prices bore to its earnings, they fixed the value in excess of $3,000 per share. Capitalizing them on the basis of $150 dividends, on the same ratio as other quoted securities' market values bore to declared dividends, they thought the resulting value for a share of the ship company would be as follows: (1) on the basis of U. S. Government bonds, maturing or callable after 12 years, $5,689; (2) on the basis of 30 corporate Moody AAA bonds, $4,167; (3) on that of 30 similar AA bonds, $3,947; (4) on that of 30 A bonds, $3,505; (5) on that of 30 BAA bonds, $2,918 and (6) on the basis of stock of 120 corporations on the N. Y. stock exchange, $3,563; (7) on 120 bonds, classified by industry, 40 industrials, $3,886; 40 railroads, $3,348 and 40 public utilities, $3,505; (8) on common stocks, 14 industrial heavy industries, $4,000, 8 operating railroads, $3,488 and 16 leased railroads, $2,885. These values were proportionably increased when capitalized on the basis of annual earnings of $164 (the ratio actually existing January 1 to May 1, 1936) or $178 (average earnings in 1933, 1934 and 1935) or $192.03 (earnings for 1935) or $200, (as a projected future earning), the figures upon the last basis, $200, being as follows: on the basis of operating railroads, $3,361, leased railroads, $3,868, industrials,...