Western Urn Mfg. Co. v. American Pipe and Steel Corp.

• Decision Date: 12 April 1962
• Docket Number: No. 16600.,16600.
• Citation: 113 US App. DC 378,308 F.2d 333
• Parties: WESTERN URN MANUFACTURING COMPANY et al., Appellants, v. AMERICAN PIPE AND STEEL CORPORATION, Appellee.
• Court: U.S. Court of Appeals — District of Columbia Circuit

113 US App. DC 378, 308 F.2d 333 (1962)

WESTERN URN MANUFACTURING COMPANY et al., Appellants, v. AMERICAN PIPE AND STEEL CORPORATION, Appellee.

No. 16600.

United States Court of Appeals District of Columbia Circuit.

Argued March 6, 1962.

Decided April 12, 1962.

Petition for Rehearing Denied October 11, 1962.

Mr. John H. MacVey, Washington, D. C., for appellants.

Mr. Albert H. Greene, Washington, D. C., for appellee.

Before WILBUR K. MILLER, Chief Judge, and DANAHER and BURGER, Circuit Judges.

DANAHER, Circuit Judge.

When an earlier phase of this litigation was before us, we pointed out that the District Court had misconceived the theory upon which its jurisdiction had been invoked. We remanded, noting that if the named garnishee Greene "shall be found to have been possessed of assets, funds or credits, of the appellee at the time the writ was served," the court should reinstate the complaint "subject to such further proceedings as the parties may feel advised to pursue." At a hearing after remand, the trial judge denied appellants' motion for leave to file an amended complaint. It was also found, without examination of Greene as a witness and without his sworn answers to the interrogatories which had been served on him, that Greene "was not indebted to, and was not otherwise possessed of assets of, the appellee at the time when the said writ of attachment before judgment was personally served in the District of Columbia upon the said garnishee, Albert H. Greene."

In reversing, we had ruled only in light of the facts discussed in our opinion.¹ After remand a very different situation was disclosed, and supplemental facts as presently discernible will hereinafter be developed.

Appellants noticed for rehearing on April 17, 1961, their motion for leave to file a proposed amended complaint and to summon as additional parties, the members of Greene's law firm. To establish a foundation therefor, appellants had procured an order for oral examination² of representatives of the National Savings and Trust Company and United States Treasury officials. Appellants were entitled, after oral examination, to file a traverse and to raise an issue with respect to matter developed at the oral examination.³

The Bank on October 31, 1959 had been served as garnishee in the original action. At that time the Bank had submitted sworn answers to the interrogatories served upon it, one of which read:

"Have you participated in the negotiation of a U. S. Treasury check in the approximate amount of $209,243.03 payable to American Pipe and Steel Corporation, and paid to or held for the account of Albert H. Greene, attorney in fact for said Corporation, any portion thereof?" A. "Yes."

Greene had not answered the interrogatories served on him at 4:15 P.M., October 16, 1959, with the writ of attachment before judgment. Had he done so, he might then have raised his defenses to the writ. Of course, the appellants would not have been bound by his answers even if he had denied possession of funds or credits of the appellee.⁴ Appellants would have been permitted by traverse to put in issue the factors upon which Greene might have relied. Our Code expressly so provides.⁵

To demonstrate the turn the case had taken, appellants first called a witness from the United States Treasury. Through his testimony it was established that on October 16, 1959 the Government had issued its check for $209,243.03 payable to American Pipe & Steel Corporation, care of Albert H. Greene, 1000 Connecticut Avenue, N.W., Washington 6, D. C. The Government's records showed that the check had been received on October 16, 1959 by Albert H. Greene whose signature preceded the name of his firm. The trial judge asked whether Greene had not been designated on the exhibit "as Attorney at Law or Attorney in Fact?" "No, sir, I don't believe so," replied the witness. The exhibit before us reveals that the Government's payment was on behalf of American Pipe & Steel Corporation "c/o Albert H. Greene." The witness further answered that according to the exhibit Greene had "physically received the check."

A Bank official as the next witness identified a series of exhibits, now of record for the first time. One was a certified copy of a resolution dated October 9, 1959 of the board of directors of American Pipe & Steel Corporation adopted September 25, 1959 which purported to authorize and empower one Jack Lane as president of the Corporation to sign and endorse over to Greene's law firm the Treasury Department's check so that the check "may be deposited to the account of" the firm, and so that "they may then issue to the Corporation their check for the difference between the amount of the Treasury Department check and the legal fee to be paid" to the law firm "as full payment for their counsel in connection with the $300,000 government claim settlement." The next exhibit was the Bank's check dated October 16, 1959 payable to the order of American Pipe & Steel Corporation in the amount of $159,243.03 drawn on Security-First National Bank of Los Angeles, California. This check bore the endorsement "Pay to the order of Jack Lane," then the name of the Corporation "By" signature illegible and the further typed endorsement "Jack Lane — President." Exhibit 4 was an original credit memorandum identifying the appellee's account and the amount of the check which, the witness explained, "sets up our obligation on our general ledger for the check which had been drawn or issued on the Security-First National Bank of Los Angeles."

Exhibit 5 was identified as "the microfilm of our deposit of October 16, 1959 in the amount of $50,000 which amount was credited" to Greene's law firm.⁶

The Bank's witness testified to familiarity with the transaction and the negotiation of the check. He had signed the check drawn on the California bank. With respect to the negotiation of the United States Treasury check, the Bank's witness testified that "Approximately at 1:00 or 1:30, Mr. Greene brought a gentleman in, Mr. Lane, who was president of the American Pipe & Steel Corporation and requested that we negotiate this check by issuing our check on a California bank minus the fee which was due his company."⁷

Thereupon the Bank's check was accordingly issued as requested for $159,243.03 and the account of Mr. Greene's firm at the same time was credited by the Bank with the amount of $50,000. The two sums total the amount stated in the United States Treasury check as payable to American Pipe & Steel Corporation. The corporate resolution was "our authorization for negotiating the check." The Bank's witness had learned prior to October 16, 1959 of the impending negotiations. "I had understood that Mr. Greene would be bringing a client in with the request that we negotiate a check for him but I had no other information about it."

"Q. But you knew that before October 16?

"A. That is right.

* * * * * *

"Q. And the transaction which you have just described was done in accordance with that prior knowledge?

"A. That is right."

Appellants' counsel brought out from the Bank's witness that the Treasury check had not been deposited. "We cashed the check for the American Pipe & Steel Corporation. Our records will show that we handled that as a cash transaction, cashing the check, in effect, for the corporation and depositing $50,000 in cash to the law firm."

Appellants challenge Greene's claim and the trial court's finding as to the legal significance of the record as established, insisting that the $50,000 had not become Greene's property or that of his firm, free from appellants' claim. On that theory jurisdiction could be established by the garnishment. They argue that by arrangements made in advance with Bank officials, Greene and the appellee through Lane, had procured the Bank to cash the Treasury check, to pay Greene and his firm, and even to set up on the Bank's books a credit in favor of the appellee against which the Bank issued its Treasury check on its California correspondent, and thus sought to hinder and delay the appellants despite various provisions of the D.C.Code.⁸ Appellants argue that the $50,000 received by Greene was chargeable in their favor. They insist that he and his firm and the appellee were not entitled to conclude appellants in derogation of appellants' rights derived from the circumstances as alleged in the proposed amended complaint.⁹

Turning to the latter pleading we examine the allegations upon which rest the appellants' contentions. Appellants would undertake to show that in 1957 Greene's law firm had filed three petitions in the Court of Claims on behalf of the appellee. The following year, the same firm in the name of the appellee as prime contractor but for use of the Western Urn Manufacturing Company as subcontractor, had filed a fourth petition in that court. In 1959 following conferences with appellants' attorneys, Greene had filed an amended petition in the Court of Claims in case No. 272-58. Thereafter Greene submitted to the Attorney General an offer to settle all four claims for a total of approximately $500,000. It was alleged that lacking complete agreement on how the business should be handled, Greene suggested that discussions between him and counsel for the appellants be postponed until the respective corporate parties had negotiated terms.

On or about June 4, 1959, the respective corporate parties actually concluded an agreement which called for an extension of the time within which appellee was to pay its note for $17,481.17 with interest, then held by the appellants.¹⁰ Also, it was alleged, the appellee was to pay the appellants the sum of $25,866.89 representing appellants' claim, reduced in the same proportion as were the claims of the appellee, in order to effectuate with the Government an effective settlement in the total amount of $300,000. Thereafter, on June 5, 1959, counsel for the appellants conferred with Greene to arrange participation in the...