Western Pac. R. Corp. v. Western Pac. R. Co.

• Decision Date: 20 August 1953
• Docket Number: No. 12506.,12506.
• Citation: 206 F.2d 495
• Parties: WESTERN PAC. R. CORP. et al. v. WESTERN PAC. R. CO. et al.
• Court: U.S. Court of Appeals — Ninth Circuit

206 F.2d 495 (1953)

WESTERN PAC. R. CORP. et al. v. WESTERN PAC. R. CO. et al.

No. 12506.

United States Court of Appeals Ninth Circuit.

August 20, 1953.

Herman Phleger, Maurice E. Harrison, Moses Lasky, and Brobeck, Phleger & Harrison, San Francisco, Cal., Frank C. Nicodemus, Jr., A. Perry Osborn, Norris Darrell and Mahlon Dickerson, New York City, Leroy R. Goodrich, Oakland, Cal., for appellant, Western Pac. R. Corp.

Herman Phleger, Maurice E. Harrison, Moses Lasky, and Brobeck, Phleger & Harrison, San Francisco, Cal., for appellant Alexi I. duP. Bayard, receiver.

William E. Haudek, Julius Levy, New York City, Webster V. Clark and Rogers & Clark, San Francisco, Cal., Pomerantz, Levy, Schreiber & Haudek, New York City, and David Freidenrich, San Francisco, Cal., for appellants Metzger and others.

Allan P. Matthew, James D. Adams, Robert L. Lipman, Burnham Enersen, Walker Lowry and McCutchen, Thomas, Matthew, Griffiths & Greene, San Francisco, Cal., for appellees Western Pac. R. Co. and others.

Everett A. Mathews and Pillsbury, Madison & Sutro, San Francisco, Cal., A. Donald MacKinnon, Milbank, Tweed, Hope & Hadley, Forbes D. Shaw, Whitman, Ransom, Coulson & Goetz, New York City, for appellee Western Realty Co.

Before HEALY, Circuit Judge, and FEE and BYRNE, District Judges.

HEALY, Circuit Judge.

In its decision of April 6, 1953,¹ the Supreme Court vacated our order of January 30, 1952, 197 F.2d 994, 1012, denying the petitions of appellants and intervenors for a rehearing and rehearing in banc, and also set aside the later order of the full court, 197 F.2d 994, 1013, 1016, denying leave to Western Pacific Corporation to file a motion to reinstate its petition. On June 12, 1953, the court in banc referred the matter back to this division for consideration and action in conformity with our amended Rule 23. 205 F.2d 374. Accordingly, the original petitions for rehearing and rehearing in banc are again before us for disposition, this time in light of the Supreme Court's observations on the subject.

We turn first to petitioners' suggestion that the case be reheard by the full court. In the past in cases decided by a division rehearings in banc have been ordered in but four instances.² It has been the policy of the court to avoid the duplication of effort and the frustrations, delays and expense to litigants necessarily incident to such anomalous procedure except in situations of a very limited class, namely those in which intra-circuit conflicts appear to have developed,³ or where the public interest in the administration of justice suggests that course.⁴ No conflict exists or is claimed to exist in this instance, nor is there likelihood that any will develop in consequence of our decision; and while the case, like all cases, is important to the parties the public has no perceivable interest in the issues or in the outcome.

Nevertheless various considerations are pressed upon us for calling upon the full membership of the court to turn its attention to the litigation. One of these is that the case is "difficult and complicated." Perhaps so, but it has not been thought that the mere presence of difficult problems warrants a departure from the normal three-judge procedure so essential to the dispatch of the court's business. Numerous causes presenting questions of greater perplexity than the present annually find their way here and are decided by divisions of the court with no feeling on the part of the judges that the administration of justice will suffer if they be not thereafter turned over to the full bench for reargument and a second decision.

But we are told that the amount at stake is so "stupendous" as to suggest a need that the "pooled wisdom" of the seven circuit judges be brought to bear upon the problem of who is entitled to it. We do not doubt that the case is important to the immediate parties, but what case that comes here is not? Surely the causes of all civil litigants are entitled to the same measure of attention on the part of the judges whether the amounts they involve be measured in terms of a few thousand or of millions. On the criminal side, where not infrequently the records present close and difficult questions of fact and law and where the liberty or life of the appellant is in jeopardy, the need for the exercise of such wisdom as the court possesses is certainly not less pressing than here. We are not disposed to inaugurate a practice which makes fish of one dissatisfied litigant and fowl of another; and unless the gates are to be opened to a flood of horizontal reviews it seems essential that we adhere to the principles which have guided us in the past. The normal court of three judges has functioned not only speedily but with a high degree of competence in the federal appellate system, and preservation of the right of the successful litigant to enjoy the benefits of that procedure should remain a matter of major concern to the judiciary.

Finally we are reminded by counsel that two of the judges who participated in the decision are district judges and only one a circuit judge. The intimation here, apparently, is that a court of appeals so constituted is inferior in quality or its decisions somehow lacking in the attribute of finality attendant upon other decisions of the court. If we were to accept this thesis, wholly insupportable as it is both in fact and law, we ought in fairness to discontinue the practice of availing ourselves from time to time of the invaluable service of district judges in the disposition of our business. On petitioners' theory the presence even of one district judge on a division may taint the result, since as not infrequently happens, disagreement between the two participating circuit judges renders decisive the vote of the district judge.

In summary we conclude that the case is not of such significance to the full court as to warrant the latter's attention.

The case originally was briefed and argued by exceptionally able counsel. Prior to decision it had the painstaking study of the participating judges over a period of many months during which there were repeated conferences and exchanges of views. The petitions for rehearing have not produced in our minds a belief that the cause was wrongly decided or that another hearing would produce a different result.

In ruling on the petitions we do not propose to repeat what was said in the opinion or again to discuss the case at large. However, counsel have directed our attention to the comments of Mr. Justice Jackson in his dissent to the effect that "On the face of it, the conclusion would seem warranted that the plaintiff is entitled to what fair arm's-length bargaining would probably have yielded" 345 U.S. 247, 73 S.Ct. 671, and to his statement that he would reverse and remand for findings in accordance with the doctrine of unjust enrichment.⁵ Our respect for the pronouncements of the Justice do not permit us to leave his comments unnoticed.

It is of course true that the California courts, in common with the authorities generally, recognize a cause of action based on unjust enrichment. We do not, however, regard the doctrine as applicable here inasmuch as the appellant⁶ has not sustained the burden of showing that appellee Western Pacific Railroad Company has in its possession money or property which came into its hands under circumstances which make it unjust to retain it, and which in equity and good conscience belongs to the appellant. The latter is claiming moneys which were earned through the operation of railroad properties in a trust estate administered for the benefit of unpaid creditors of its former wholly-owned subsidiary. It contends that had it not joined in the filing of consolidated tax returns the trust estate (appellee's predecessor) would have been required to pay these moneys to the United States; and that, the tax saving having been effected, appellee should be required to pay these moneys to the appellant.⁷

The title to and possession of the railroad properties were in the reorganization trustees who administered the operating company under the supervision of the United States District Court for the benefit of the unpaid creditors. These creditors had acquired their equities at a time when the operating company was wholly owned and controlled by the appellant. The reorganization trustees were appointed by the court; one of them was appellant's president and was appointed trustee upon appellant's recommendation. All of the officers and employees who acted in a dual capacity for appellant and the reorganization trustees were first officers and employees of the former and were subsequently used by the trustees because of their familiarity with the work involved. Such procedure is common in reorganization proceedings and does not sustain an inference that the trust estate dominated the parent company.⁸

In our decision we discussed the obligations of a...