United States v. Dollar

• Decision Date: 22 June 1951
• Docket Number: 30428.,No. 30407,30407
• Citation: 97 F. Supp. 50
• Parties: UNITED STATES v. DOLLAR et al. DOLLAR et al. v. LAND et al. DOLLAR et al. v. MacGUINEAS et al.
• Court: U.S. District Court — Northern District of California

97 F. Supp. 50

UNITED STATES v. DOLLAR et al.

DOLLAR et al. v. LAND et al.

DOLLAR et al. v. MacGUINEAS et al.

Nos. 30407, 30428.

United States District Court N. D. California, S. D.

April 6, 1951.

As Amended April 11, 1951.

Motion to Vacate Denied June 22, 1951.

No. 30407:

Philip H. Angell, Sp. Asst. to Atty. Gen., for plaintiff.

Dunne, Dunne & Phelps, San Francisco, Cal., for defendants American President Lines, Ltd., and Joseph A. Tognetti.

Edward G. Chandler, San Francisco, Cal., Warner W. Gardner, Washington, D. C., for defendant minority stockholders.

Brobeck, Phleger & Harrison, San Francisco, Cal., for defendants R. Stanley Dollar, Dollar S. S. Line, Robert Dollar Co. and H. J. Lorber.

Chickering & Gregory, San Francisco, Cal., for defendants Anglo California Nat. Bank of San Francisco.

No. 30428:

Brobeck, Phleger & Harrison, San Francisco, Cal., for plaintiff.

Philip H. Angell, San Francisco, Cal., for respondents Donald B. MacGuineas, Paul D. Page, Jr., A. J. Williams and Lloyd C. Fleming.

Heller, Ehrman, White & McAuliffe; Martin Minney, Jr., Lloyd Dinkelspiel, San Francisco, Cal., for respondent Wells Fargo Bank & Union Trust Co.

Chickering & Gregory, Frederick M. Fisk, San Francisco, Cal., for respondent Paul E. Hoover.

Arthur B. Dunne, San Francisco, Cal., for respondents Ralph K. Davies, George L. Killion, M. J. Buckley, Arthur B. Poole, Joseph A. Tognetti, T. L. Eliot, E. E. Mann and American President Lines, Ltd.

Edward V. Mills, Jr., San Francisco, Cal., for respondent A. B. Dunne.

Motion to Vacate Denied June 22, 1951. See 190 F.2d 547.

HARRIS, District Judge.

The United States of America has filed herein a complaint for possession of personal property and declaratory relief seeking a declaration of rights with respect to the ownership of 100,145 shares of the Class A stock and of 2,100,000 shares of the Class B stock of American President Lines, and of certificates representing said shares, and has applied to this Court for a preliminary injunction. Consolidated with the hearing on this motion is a request made by American President Lines with respect to instructions as to conflicting claims to the ownership of the stock and as to the conduct of the officers and directors with respect to an order on mandate modifying the final judgment made and entered by Honorable Matthew F. McGuire, District Judge, United States District Court for the District of Columbia, and registered herein under the provisions of Section 1963, Title 28 U.S.C.A., under date of March 19, 1951.

Counsel for the Dollars, et al., seek an adjudication against the above named respondents, consisting of executives, directors, attorneys for the American President Line (referred to hereinafter as "APL"), as well as the Wells Fargo Bank & Union Trust Company as transfer agent, for alleged contempt of the aforesaid order.

The matter has come before this Court regularly as a consolidated cause and has been heard on oral testimony and elaborate affidavits, filed herein by respondents, and by the Government.

The Dollars originally brought suit on November 6, 1945, to recover from the then members of the Maritime Commission shares of the common stock of the American President Lines (formerly Dollar of Delaware) which they had transferred to the Commission pursuant to "adjustment agreement of August 15, 1938." Their contention was that the stock had been pledged, that the underlying debt had been paid off and that they were entitled to return of the stock. Defendants' contention was that the suit was an unconsented one against the United States and on the merits, that title to the stock had been transferred outright to the United States acting through the Maritime Commission and the 1938 agreement was not one of pledge. The original suit took many turns, both procedurally and on the merits, and has been dealt with by both the trial and appellate courts.¹

The case was tried before Honorable Matthew F. McGuire, Judge of the District Court of the District of Columbia, and after a lengthy trial and a voluminous record, he upheld the contention of the defendants that the transaction resulted in the acquisition of the stock and that the Dollars had transferred outright ownership to the Government. 82 F.Supp. 919.

Thereafter, the Court of Appeals reversed the decision, 184 F.2d 245, and subsequent petition for certiorari was denied. 340 U.S. 884, 71 S.Ct. 198. Many motions and procedural steps were thereafter taken by both the individual members of the Maritime Commission and by the Dollars, et al., which finally eventuated in the order more recently made by Judge McGuire.

To fully comprehend the scope of his recent order (and its scope must be fully considered for contempt adjudications are sought thereon), it is necessary to briefly relate the events leading up to its making, as well as the surrounding pronouncements of the Court of Appeals of the District of Columbia Circuit.

Under date of December 11, 1950, counsel for the Dollars, et al., appeared before Judge McGuire seeking a final order after mandate of the Court of Appeals. It was the contention of counsel that an order should be made adding Secretary of Commerce Charles Sawyer as a party defendant. The trial Judge, after seriously questioning jurisdiction, finally made an order which, in substance and effect, assumed to adjudicate title to the stock in question as against all persons.² An appeal was prosecuted to the Court of Appeals and the order of Judge McGuire was modified. 188 F.2d 629, 631. The appellate court therein said: "The result, which is inescapable from the very nature of the controversy, is paradoxical.³ In an action between a private individual and a public official, the court decides that the United States has no interest in the property involved and so the action will lie, but the ensuing judgment is effective only as to the parties before the court and is not res judicata against the United States, not a party."

The reviewing Court then noticed that the District Court, on the return of the mandate entered a judgment assuming to divest the title of any persons under the provisions of Rule 70, Fed.Rules Civ.Proc. 28 U.S.C.A. This paragraph⁴ was modified by the Court of Appeals and expressly limited the same to possession of the shares as against defendants.⁵

Thereafter, the Court of Appeals undertook to bring in Charles Sawyer as Secretary of Commerce under rule 71, F.R.C.P.⁶ upon the ground that the litigants had theretofore entered into a stipulation wherein it was agreed that the parties would not sell or otherwise dispose of the shares in question pending final determination. This stipulation was approved by court order.⁷

It is significant also that the United States Court of Appeals for the District of Columbia, on appeal decided January 31, 1951, in its per curiam opinion deleted the following language in the opinion: "If the Secretary of Commerce has possession of the shares, and if he were a party to the suit, the order of the court, as herein modified, would be lawfully enforceable against him."

Thereafter, the opinion was amended in this respect on February 8, 1951, to read: "If the Secretary of Commerce now has custody or possession of the shares, he obviously acquired such custody or possession since the beginning of this action, indeed since the order of June 11, 1947. Obedience to the order about to be entered pursuant to this opinion is, therefore, enforceable against him, and he is liable, under Rule 71, supra, to the same process for enforcing obedience to that order as if he were a party." Per curiam. 188 F.2d 632.

It is crystal clear that the jurisdiction, if any there is, with respect to Charles Sawyer as Secretary of Commerce is predicated solely upon the stipulation referred to and the order of Court approving the same of June 11, 1947, which stipulation has already been referred to.

The Court of Appeals, as well as the District Court, under said Rule 71, now asserts jurisdiction over Sawyer as Secretary and as a public official, in requiring him to endorse the shares in question and to engage in other affirmative acts in order to give to the Dollars "effective possession" of the shares.⁸

In connection with the order of Judge McGuire on mandate modifying the final judgment dated March 16, 1951, it is significant⁹ that the Judge struck from the proposed order submitted to him by counsel for the Dollars the following provisions as proposed:

"Said Charles Sawyer shall forthwith revoke any and all proxies that he may have given to anyone whomsoever to vote any of the B stock referred to above and 100,145 shares of the A stock or any part thereof, at the annual stockholders meeting of American President Lines, Ltd. to be held on Monday, March 19, 1951, or at any adjournment or continuance thereof, and shall forthwith execute and deliver an irrevocable proxy to E. H. Hall, plaintiffs' nominee, authorizing E. H. Hall to vote the said stock at said annual meeting or at any adjournment or continuance thereof, and shall execute no proxies to anyone else. Said proxy to E. H. Hall shall be delivered to him by delivery to said Moses Lasky as plaintiffs' attorney.

* * * * * *

"That any and all proxies that said Charles Sawyer may have executed and given to anyone whomsoever to vote any of said B stock or any of the 100,145 shares of the A stock at said annual meeting or at any meeting are revoked;

"(b) That an irrevocable proxy shall be deemed to have been given by Charles Sawyer to E. H. Hall to vote said stock at said annual meeting or any adjournment or continuance thereof;

* * * * * * "That said American President Lines, Ltd., its President, Secretary and Directors are instructed that by virtue of said Order on Mandate plaintiffs are entitled to vote said shares.

* * * * * *

"It is further ordered that this Court retains jurisdiction to enter such further orders as may be necessary or appropriate to enforce...