Teas v. Twentieth Century-Fox Film Corporation

• Decision Date: 24 June 1969
• Docket Number: No. 26599.,26599.
• Citation: 413 F.2d 1263
• Parties: Paul C. TEAS et al., Plaintiffs-Appellees, Arthur J. LEWIS et al., Involuntary Plaintiffs-Appellees, v. TWENTIETH CENTURY-FOX FILM CORPORATION, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

413 F.2d 1263 (1969)

Paul C. TEAS et al., Plaintiffs-Appellees, Arthur J. LEWIS et al., Involuntary Plaintiffs-Appellees, v. TWENTIETH CENTURY-FOX FILM CORPORATION, Defendant-Appellant.

No. 26599.

United States Court of Appeals Fifth Circuit.

June 24, 1969.

Mark Martin, J. Mike Joplin, Neth Leachman, Dallas, Tex., Otto E. Koegel, William F. Koegel, New York City, Howard I. Friedman, Robert M. Ruben, Los Angeles, Cal., Strasburger, Price, Kelton, Martin & Unis, Dallas, Tex., Royall, Koegel, Rogers & Wells, New York City, Loeb & Loeb, Los Angeles, Cal., for appellant.

Ira Butler, J. A. Gooch, Cecil E. Munn, Carlisle Cravens, Jack C. Wessler, Charles L. Stephens, Fort Worth, Tex., Robert I. Waxman, Atty., U. S. Dept. of Justice, Washington, D. C., Cantey, Hanger, Gooch, Cravens & Scarborough, Fort Worth, Tex., for appellees.

Before RIVES, BELL and DYER, Circuit Judges.

RIVES, Circuit Judge:

This litigation is in the same case as and is supplemental to that reported as Teas v. Twentieth Century Fox Film Corp., N.D.Tex., 1959, 178 F.Supp. 742, on appeal 5 Cir.1961, 286 F.2d 373, cert. den. 368 U.S. 818, 82 S.Ct. 33, 7 L.Ed.2d 24. It concerns the continuing effect of the judgment rendered by the district court on remand in accordance with the opinion and decision of this Court. The district court held that its judgment foreclosed the relief sought in two suits filed in California — one by the defendant Twentieth Century and its wholly owned real estate holding subsidiary, Fox Realty Company, and the other by Fox Realty alone. It denied Twentieth Century's motion to dismiss or to hold this proceeding in abeyance pending action in the California court and granted the motion of the plaintiffs for summary judgment. We affirm.

The facts upon which our decision was based have been sufficiently stated in the former opinions. We determined Twentieth Century's personal obligations to the plaintiffs under contracts executed in April 1943, imposing joint and several personal obligations on Twentieth Century and Fox Realty, and under an oil and gas lease on the property involved executed by Fox Realty in March 1952. The gist of our holding was thus expressed:

"We conclude, therefore, on the merits, that this contract is to be construed as entitling the plaintiffs, in addition to the 8 1/3% payments to be received directly from the lessee, to receive a sum equal to one-half of the amounts received and to be received by Fox and denominated in the lease contract `variable participating royalties.\'" Emphasis added.

286 F.2d at 379.

Twentieth Century has never denied that the plaintiffs are entitled to receive 8 1/3% of the proceeds of all oil and gas produced from wells bottomed under the land. The point decided against Twentieth Century was that the net profits interest, called "variable participating royalties," was in truth a "bonus" under the 1943 contracts which provided that the plaintiffs were to receive one half of any "bonus" paid for entering into an oil and gas lease.

Fox Realty was not made a party to this action apparently because the parties thought that might destroy diversity jurisdiction. We held that Fox Realty was not an indispensable party because this action is not one dealing with an interest in realty, but is based upon Twentieth Century's separate personal obligation under its joint and several promise with Fox Realty.

On remand the district court entered a judgment which provided in pertinent part as follows:

"That plaintiffs and involuntary plaintiffs do have and recover from defendant judgment which hereby determines, fixes and declares the rights of such plaintiffs and involuntary plaintiffs arising under the contracts sued on to be hereafter paid by the defendant, and the duty, obligation and requirement of such defendant under such contracts to hereafter pay to such plaintiffs and involuntary plaintiffs, and each of them, according to their respective interests and percentages as hereinafter shown, sums and amounts equivalent to fifty percent (50%) of any and all sums and amounts whatever which may be hereafter received either by or for the credit or benefit of such defendant or its subsidiary, Fox Realty Corporation of California, as lessor, in that certain oil and gas lease dated March 21, 1952, made and entered into with Universal Consolidated Oil Company, as lessee (or which may be hereafter paid, credited or received by or between any successor or assign of such companies), on account of or under those provisions of such lease which provide for the payment by such lessee to lessor of a 50% net profits interest and which is referred to therein as being a `variable participating royalty\'." Emphasis added.

Neither this Court nor the district court discussed further provisions of the 1943 contracts by which the personal obligations of Twentieth Century and Fox Realty to the plaintiffs could be terminated by conveying to the plaintiffs 8 1/3% of all minerals under the land and by imposing a burden upon the remainder of the mineral and oil interests in the property and the property itself to pay one half of any bonus payments to the plaintiffs. There was no occasion to discuss those provisions, both because the plaintiffs were to receive the same payments whether from joint and several personal obligations of Twentieth Century and Fox Realty or from the land itself and because at that time there had been no effort to terminate the personal obligations and substitute the interests in real property.

In compliance with the judgment of the district court, Twentieth Century paid to the plaintiffs' trustee in excess of $1,200,000.00 from the date of the judgment, November 29, 1961, until June 15, 1967, when its payments ceased, and shortly thereafter its Assistant Treasurer notified plaintiffs' trustee:

"This is to advise you that Fox Realty Corporation of California, as lessor in that certain oil and gas lease dated March 21, 1952, will make no further payments to you in connection with the interest denominated in the lease as the variable participating royalty."

As of June 15, 1967, the date on which Twentieth Century ceased payments under the judgment, instruments of conveyance, purportedly pursuant to the 1943 contracts, were executed and delivered by Fox Realty to plaintiffs' trustee. Immediately after the execution of the conveyances, both Twentieth Century and Fox Realty filed proceedings in a California State court seeking to secure a declaration that the conveyances effected a termination of their personal covenant obligations under the 1943 contracts. At the same time, in a separate action in the California court, Fox Realty sought to quiet its title, free of any claim of plaintiffs to a charge on account of any part of the "variable participating royalty." Thus Twentieth Century seeks from the California court a declaration that its personal obligation, on which the judgments of this Court and of the federal district court were based, has now terminated, while its wholly owned subsidiary Fox Realty seeks to re-litigate in the same California court the issue of whether the "variable participating royalties" are legally a "bonus" in which the plaintiffs are entitled to a 50% participation.¹

On August 10, 1967, the present supplementary proceeding was filed. Plaintiffs asked the district court, pursuant to 28 U.S.C. § 2202,² to declare that Twentieth Century continues to be obligated by the district court's prior judgment to pay to plaintiffs and their successors in interest sums equal to one half of the "variable participating royalty" theretofore or thereafter received by Fox Realty, the lessor, under its 1952 oil and gas lease and for ancillary relief. Twentieth Century moved to dismiss the present proceeding on ground that the district court did not have jurisdiction of the controversy under 28 U.S.C. § 2202,³ or in the alternative to abate the proceeding pending the determination of Twentieth Century's declaratory judgment action in California. The plaintiffs filed interrogatories which Twentieth Century answered. Plaintiffs also deposed two of Twentieth Century's officers. Plaintiffs then moved for summary judgment. Twentieth Century submitted no evidence in opposition other than its verified response and a proposed opinion. Plaintiffs also submitted a proposed opinion. The district court entered a brief opinion of its own composition and a judgment denying Twentieth Century's motion to dismiss, granting plaintiffs' motion for summary judgment and also granting ancillary relief which included an injunction against Twentieth Century,

"both in its own name and by and through Fox Realty Corporation of California, its wholly owned subsidiary, from further proceeding with Action No. 911816 and Action No. 911841 heretofore filed and now pending in the Superior Court of the State of California for the County of Los Angeles, other than the dismissal of that litigation, and from instituting any other similar litigation or taking any other further similar or different action designed or intended to deprive petitioners of sums and amounts hereafter due them under the prior judgment of this Court and under the declaratory judgment contained in Paragraph 4 hereinabove."

Twentieth Century appeals from that judgment.

We hold that the district court properly assumed jurisdiction of the controversy and properly granted plaintiffs' motion for summary judgment. Our holding is based upon the admitted power of the district court to construe and effectuate its judgment and to prevent any interference with it. That is both an inherent power of courts of the United States and one expressly conferred by statute.⁴ The All Writs Act, 28 U.S.C. § 1651(a), empowers the federal courts to "issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law." See Toledo Scale Co. v. Computing Scale Co., 1923, 261 U.S. 399, 426, 43 S.Ct....