Brief for the Respondents in Opposition — Benguet Consolidated Mining Co. v. Perkins

In the Supreme Cmtttyocss'**

askGeboos JUN ‘7 1943

united States

CHARLES ELMORE CROPLEY

CLERK

Ocroser TrRM, 1942, _ ¢

‘

No. 968 | a

Bencuret Consotipatep Mintnc Company

(a corporation),

Petitioner,

Vs.

TponaH Stave Perxis, Samuet I. Hartman

as Receiver, Hartrorp Beaumont and GEoRGE

A. Ferris,

Respondents.

4

BRIEF FOR RESPONDENTS,

IN OPPOSITION TO PETITION FOR WRIT OF CERTIORARI.

Hiram W. JoHNSON,

JAMES F'ARRAHER,

Tsxropore H. Rocue,

Mills Tower, San Francisco, California,

Counsel for Respondents.

TroporE J. RocHeE,

GrorGcE STOCKFLETH,

Mills Tower, San Francisco, California,

Of Counsel.

r

Subject Index

Page

PO ESRB fe Ree Les OY NCA rym Ean we gine 1

The Facts in the Record and the Issues Involved........... 2

Stock status of Mr. and Mrs. Perkins prior to marital

CO oes aOR Kaun tks Wea Vandeh cae 0a Sas CRO 3

Benguet delivers dividends to Perkins and takes his

indemnity agreement .............ccceeecevesececes 3

Bite Perkie DUOC ore iis ie ses Kes ee cue eee +

The Manila: UUGAUOR ok cae ce eee ss ceewe esse 4

The New York litigation, instituted by Perkins........ 5

Mrs. Perkins’ New York judgment.................445- 6

Benguet did not rely on Manila judgment in paying

GrvieRGs: to Perks ok 6 ees oa ONS es eee 7

April 5, 1934, order of the Manila court............... 8

Error in the Petition... oi. ec ees tcc w es ceuns 10

Answers to Petitioner’s Law Point...............-+eeeeeee 12

I. Answer to petitioner’s point that:

‘“The decision of the court below holding petitioner

concluded by a judgment to which it was neither a

party nor privy, deprives petitioner of its property

without due process of law and is in conflict with con-

trolling decisions of this court’’............+0seeeees } 12

II. Answer to petitioner’s point that: '

‘““The decision of the court below denies full faith and

eredit to the Philippine adjudications in violation of

Section 905 of the Revised Statutes and in so ruling

misapplies the decision of this court in Treinies v. Sun-

shine Mining Co.’? .........0ceeee eect eee eeeeneenees 19

Ill. Answer to petitioner’s point that:

‘The decision of the court below denies to the New

York judgment the same faith and credit it has by law

and usage in New York, contrary to the full faith and

credit clause and to the decisions of this court’’...... 23

Cenict abit i es ASS EA ee SAS ON hs Rh eek Sie 08 EONS 26

Table of Authorities Cited

Cases Pages

Chase National Bank v. Norwalk, 291 U.S. 431........... 17

City of New York v. Bronx Trust Co., 261 N. Y. 64, 184

IN. CE SiS R Khoo aeanee eee as aval Ces cabs eae wows 24, 25

Commercial National Bank v. Allaway, 207 Iowa 419, 223

DN BER ee a ee Geek beets bn sete ceeoene’s 14

Estate of Thomas, 147 Cal. 236............0..cceeee cece 12

Fowler v. Bowery Savings Bank, 113 N. Y. 450, 21 N. E.

BP a ea. orc eA bp cee Cakes WARE Rows ow Mae OS 23, 24, 25

Friend v. Talcott; 228 U. S. 27... 0.2... cece eee e cece eenee 25, 26

Grimm v. Barrington, 109 Mo. App. 35, 84 S. W. 357 (Mo.) = 21

Hammell v. Britton, 19 Cal. (2d) 72.............2 eee eeee 21

Hansberry v. Lee, 311 U. S. 32........... 2. cece eee e ween 16

Hughes v. United Pipe Lines, 119 N. Y. 423, 23 N. E. 1042 13

Martin v, Fritz, 228 Iowa 482, 292 N. W. 143............. 21

Meyer v. Price, 250 N. Y. 370, 165 N. E. 815.............. 25

Mueller v. Mueller, 124 Fed. (2d) 544 (8 C.C. A.)........ 20

Perkins v. Guaranty Trust Co., 274 N. Y. 250, 8 N. E. (2d)

ek rea Gs SUNSET REREAD ECE Ss be eas 11

Postal Telegraph v. Newport, 247 U. S. 464............... 16

“ . Postwick v. Cutten, 258 App. Div. 218, 15 N. Y. S$. 877.... 25

Riley v. New York Trust Co., 315 U. S. 348............... 17

Treinies v. Sunshine Mining Co., 308 U. S. 66....... 19, 20, 21, 22

Statutes

New York

Debtor and Creditor Law, Sec. 232..............05. 24

Philippine Islands

Civil Code of Spain, Art. 10. .... 0.0... cece ces eeeees 11, 12

In the Supreme Court

OF THE

United States

Ocroser TxrRM, 1942

No. 968

Bencuet ConsoLipaTep Minine Company

(a corporation),

Petitioner,

vs.

Iponan SiapE Perkins, Samuet I. Hartman

as Receiver, Hartrorp Beaumont and GrorcE

A. Ferris,

Respondents.

4

BRIEF FOR RESPONDENTS,

IN OPPOSITION TO PETITION FOR WRIT OF CERTIORARI.

INTRODUCTION.

Petitioner’s counsel seek at the outset to attract the in-

terest of this Court, by the time honored precedent, estab-

lished in the defense of weak causes, of calling the case one

of the ‘‘most extraordinary ever to come before this

Court,’’ and then, by forgetting a little of the evidence at

one point and substituting argument for facts at another,

giving the cause an atmosphere of outrageous disregard

of Petitioner’s constitutional rights.

2

But no amount of adornment or camouflage of the cold

record can hide the bare fact that what petitioner would

have this Court do, is to hold that a corporation is a

necessary party to a suit between two claimants to its

stock (in which it concedes it is without interest) because,

pending the dispute, it favored one of the claimants by

paying the dividends to him—and that therefore, a final

judgment determining title in one of them has no binding

effect upon the corporation.

In the belief that a clear cut statement of the facts

involved will reveal the total absence of equity or of legal

right in petitioner’s appeal to this Court, we shall, as

briefly as possible, relate the train of events appearing in

the record now before the Court.

THE FACTS IN THE RECORD AND THE ISSUES

INVOLVED.

Perkins, an American citizen, hailing from New York

State and residing in Manila, married respondent, an

American citizen, then resident in Spokane, Washington.

(Findings in New York Case, R. 553; Testimony of

Haussermann, R. 357.) Perkins became a law partner of

one C. A. Dewitt and they became the general counsel of

Benguet Consolidated Mining Co., petitioner herein, a

Manila corporation (or the Philippine equivalent thereof)

(R. 291), which was, and still is, headed by ‘‘Judge’’

John Haussermann, another American citizen, and a prom-

inent Manila lawyer. (R. 290, 291, 292, 347.)

3

Stock status prior to marital dispute.

For many years prior to 1930, Perkins and Mrs. Perkins

each held a block of stock of ‘‘Benguet’’ (R. 294), he

receiving his dividends in checks payable in Philippine

money, which he deposited in his;Manila bank account;

she receiving her dividends in American money by checks

drawn on Benguet’s American bank account in San Fran-

cisco, and made payable in American money and mailed

by Benguet to Mrs. Perkins’ Spokane, Washington, bank,

for credit to her account there. (Testimony of Hausser-

mann, R. 357, 367.)

Benguet delivers Mrs. Perkins’ dividends

to Perkins and takes his indemnity

agreement,

In the spring, 1930, marital differences arose between

Mr. and Mrs. Perkins, and in March of that year Perkins

approached Judge Haussermann, head of Perkins’ client,

Benguet, and induced Haussermann to deliver to him a

dividend check upon Mrs. Perkins’ stock which had just

been issued. The check was drawn payable to Mrs.

Perkins’ Spokane bank, and Perkins could not cash it.

(R. 294, 295, 261.) Mrs. Perkins warmly protested this ac-

tion, in her letter of April 1, 1930, to Benguet, stating that

the stock and dividends were her private property. (R.

655.) June 27, 1930. (R. 657.)

Shortly thereafter ‘and on May 26, 1930, Perkins again

called on Judge Haussermann and submitted a written

request for delivery of like dividend checks on Mrs. Per-

kins’ stock, announcing that on delivery of the checks he

would indorse and cash them, and agreeing to indemnify

Benguet against any damages Mrs. Perkins might recover

5

4

from Benguet because of its failure to deliver the checks

to her. (Findings, R. 98-100.) Dewitt, Perkins’ partner,

simultaneously supplied a letter containing a similar

guarantee. (R. 100.)

From that time forward and until April, 1934, Benguet

delivered to Perkins the dividend checks issued on Mrs.

Perkins’ stock, which checks were made payable to her,

but nevertheless indorsed and cashed by Perkins, as he

had in writing advised Benguet he intended to do. (R.

297.)

Mrs. Perkins’ protests.

On June 30, 1930, Benguet by Judge Haussermann, re-

plied in writing to Mrs. Perkins’ letter of June 27, 1930,

expressing regret that they could not accede to her de-

mand for dividends because, as Judge Haussermann

stated, ‘‘Your husband denies that the shares are your

private or paraphernal property,’’ and stated that Ben-

guet’s ‘‘attention has been called’’ that under a section

of the Civil Code the dividends are properly deliverable

to the husband as the manager of the conjugal partner-

ship, and concluding with the statement ‘‘We are there-

fore compelled to accede to your husband’s demand in

this case.’’ (R. 781.)

On December 19, 1930, Mrs. Perkins again wrote Ben-

guet reasserting that the stock was her private property,

demanding the dividends. (R. 658-659.)

The Manila litigation.

Mr. and Mrs. Perkins in 1930 began litigating their

differences in the Manila Courts, in the course of which,

by dint of the fact that he had induced her to withdraw

5

her original complaint against him, Perkins procured a

default judgment for an accounting in his cross-complaint

by default. Mrs. Perkins continued the litigation for

several years, without there ever having been a trial

‘*upon the merits.’’

The judgments rendered and orders made in the course

of that litigation were as follows: (1) A default judgment

on Perkins’ cross-complaint, following Mrs. Perkins’ with-

drawal of her complaint, which the New York Court held

was procured by Perkins’ duress upon his wife, and which

(‘‘mirabile dictu’’) fills 24 pages of the record in this

case, after many parts of it have been deleted (R. 661);

(2) an order adjudging Mrs. Perkins in contempt for

failure to deliver up the certificates to her husband and

ordering her to jail (R. 685); (3) an order denying Mrs.

Perkins’ application to set aside the default judgment on

ground of fraud, ete., because, although her application

was filed in less than the six months permitted by the

code section applicable, it was not filed within a ‘‘reason-

able time,’’ rejecting her excuse for delay that her attor-

neys refused to act until their fees were paid for past

work, as not being a good legal ground (despite the fact

that she had no money because Benguet, per Haussermann,

was paying her dividends to Perkins, her husband) (R.

696, 699, 700); (4) the order denying Mrs. Perkins’ peti-

tion for a writ of habeas corpus. (R. 707.)

The New York litigation instituted by

Perkins.

During the pendency of the litigation and after her

husband had had her incarcerated in a Manila jail under

a contempt order, Mrs. Perkins left Manila and returned

i

to the United States. Her stock had in the meantime been

deposited by her with the Guaranty Trust Company of

New York. Finally in 1933 Perkins filed suit in New

\ork to recover the stock from the Guaranty Trust Co.

and set up his claim of right to the stock. (R. 483.) The

Guaranty Trust Co. impleaded Mrs. Perkins, who came in

with a cross-complaint against Perkins and Benguet, ask-

ing that she be adjudged the owner of the stock (as her

separate property) and that she receive judgment against

Benguet and Perkins for the dividends Benguet had been

delivering to her husband, Benguet’s general counsel. (Pet.

p. 7; R. 483, 513.)

Although Benguet now insists that it should not be

bound by the New York judgment because it was not a

party thereto and had no opportunity to make a defense,

it at the time rejected the opportunity afforded it and

quashed service of summons upon it, upon the valid

ground (which Mrs. Perkins’ New York counsel were

bound to recognize) that the person served was not in the

real sense managing agent of Benguet (R. 639), and that

any way:

‘Benguet has no vested interest in or lien upon

the 24,000 shares of Benguet stock which are the sub-

ject matter of this suit.’’ (R. 647, 648.)

Mrs. Perkins’ New York judgment.

The case was tried upon its merits between Mr. and

Mrs. Perkins. She lost in the trial Court but the New

York Court of Appeals reversed the judgment, held the

Manila decrees and orders were procured by the extrinsic

fraud of the husband, and ordered judgment for Mrs.

re

7

Perkins, declaring her the owner of the stock and divi-

dends. (274 N. Y. 250, 8 N. E. (2d) 849, 854; R. 549.)

Perkins did not see fit to bring the case to the notice

of this Court and the judgment became final.

Although Benguet had, by affirmative action on its part,

removed itself from the New York proceeding on the

ground, among others, that it had no interest in the stock,

it now asks this Court to hold that it was a necessary

party to a determination of the issues in the New York

litigation and therefore that judgment is not binding

upon it.

Benguet did not rely on Manila judgment

in paying dividends to Perkins.

Now as to the facts surrounding petitioner’s claims

based upon the Manila orders. Petitioner says that ‘‘ pur-

suant to these judgments of the Courts of its domicile,

and pursuant to the property laws of the Philippines, peti-

tioner paid the dividends during 1930 and the following

years to Perkins and his transferees.’’ (Pet. p. 7.)

The only Manila decree or order pleaded by Benguet

as an inducement to action by it with reference to the

stock is the April 5, 1934 order directing transfer of the

stock on the records from Mrs. Perkins to Perkins. (R.

28-29.) The other decrees of the Manila Courts are

pleaded, but only as evidence of Perkins’ title, not as in-

ducing any action by Benguet. (R. 32-35.) And it is the

only order or decree pleaded by petitioner as a bar to

this action. (R. 18, 28.)

Judge Haussermann admitted, when on the stand in this

case, that the Manila litigation did not induce him to

deliver the dividends to Perkins.

When delivering the first of the long series of checks

(they were issued regularly 4 times a year), covering the

years 1930 to 1934, Haussermann; did not even know Mrs.

Perkins had filed suit. On cross-examination he admitted

that his ‘‘attitude would not have been any different if

Mrs. Perkins had not brought the suit’? (R. 403), and

again ‘‘in all probability I would have delivered the checks

to him if he came in and demanded it’’ whether she had

filed suit or not. (R. 404.) When delivering the checks to

Perkins (it will be recalled) Benguet held the indemnity

agreements of Perkins and Dewitt.

The Manila decrees other than the order of April 5,

1934, were pleaded only in support of Perkins’ claim of

title, not as something relied upon by Benguet in deliver-

ing the dividend checks.

April 5, 1934 order of the Manila Court.

Now as to the April 5, 1934 order of the Manila Court,

directing Benguet to transfer Mrs. Perkins’ stock to

Perkins:

The proceeding in which that order was made is of

considerable interest. Mrs. Perkins was in America, thirty

days by mail one way from Manila (it was before the ad-

vent of the Clipper mail service) (R. 424); her New York

suit with Perkins over the title to the stock was pending.

Judge Haussermann was busy, arranging to quash the

service upon Benguet in that New York case. (R. 660.)

Perkins, the attorney, secured an order in one of the

Manila cases. which until this time had lain dormant, di-

rected to Benguet, his client, ordering it to show cause why

it should not transfer Mrs. Perkins’ stock to Perkins. (The

Petition R. 714-718; the Order to Show Cause R. 719-720.)

Mrs. Perkins was not a party to the proceeding, although

she was of course the real party in interest; no notice of

the proceeding was served upon her. (R. 728.) Benguet

demurred to the order to show cause (R. 728-733), but

omitted to call to the Court’s attention therein, that at

that very moment Mrs. Perkins and Perkins were litigat-

ing the ownership of the stock in New York. In fact at

the hearing Judge Haussermann and Benguet’s counsel

maintained silence as to the New York litigation. (Haus-

sermann R. 433.) The order was signed April 5, 1934.

(R. 765-766.) On April 11th Benguet reported its ‘‘com-

pliance’’ with the order. (R. 777-778.) From the filing of

the petition to the ‘‘compliance’’ with the order by Ben-

guet, but 28 days intervened.

Judge Haussermann testified at the trial of this case

that at the time of complying with the order, he and his

counsel believed it to be absobutely void and that he still

retained that opinion. (R. 421, 422.) Yet he did not ap-

peal from the order, but promptly sat down with Mr,

Perkins, took another agreement of indemnity from.

Perkins and transferred the stock to him; and then wired

Benguet’s representative in the United States to cooperate

with Perkins’ New York attorney in having the service om

Benguet quashed in the New York case, and as we have

said the service was quashed. (R. 395, 430, 431.)

From the foregoing facts it will be observed that Peti-

tioner Benguet:

(1) Recognized, until the April 1934 order, that

Mrs. Perkins was the stockholder and entitled to

dividends on the stock, by issuing the checks in Mrs.

Rw

10 eee

Perkins’ name, although (against her protest) deliver-

ing the dividend checks to Perkins and accepting his

endorsement thereof. ©

(2) Began the practice of paying the dividends

on Mrs. Perkins’ stock in 1930 before it knew of the

pendency of any action iiled by Mrs. Perkins against

Perkins, and would have continued paying them

(until learning of the New York judgment in favor

of Mrs. Perkins) even if no suit had even been filed

by her in Manila.

(3) Placed no reliance on the April 5, 1934 order

of the Manila Court, but believed at the time of the

alleged ‘‘compliance’’ that it was absolutely void

and apt to be set aside; and accepted another in-

demnity agreement from Perkins before making the

transfer.

(4) Made the transfer of April 1934 ‘‘pendente

lite’’ of the New York case, in which the jurisdic-

tion of the Manila Courts were under attack, and

knowledge of the pendency of which action Benguet

collusively withheld from the Manila Court which

issued the order of April 5th.

ERROR IN THE PETITION.

On pages 5 and 6 of the petition, petitioner says:

- $*The stock was placed in the name of Mrs. Perkins,

but under the law of the Philippines, which deter-

mines the property rights in this stock, the stock was

the property of the conjugal partnership and as such

11

was subject to the sole management and control of

the husband.’’

This is merely a statement of Perkins’ contention. Pe-

titioner has failed to cite the pertinent section of the

Civil Code of Spain, to-wit: Article 10, which reads as

follows:

‘‘Personal property is subject to the laws of the

nation of the owner thereof, real property to the

laws of the country in which it is situated.”’

See

Perkins v. Guaranty Trust Co., 274 N. Y. 250, 8 N.

E. (2d) 849 at 852,

in which the New York Court of Appeals after quoting

that section of the code, called attention to the fact that

Mr. and Mrs. Perkins were citizens of the United States

and by virtue of the fact that New York was the place of

Perkins’ last American residence, the New York law ap-

plied, and that under New York law the stock in the name

of Mrs. Perkins was her property.

The decision of the New York Court of Appeals in

Perkins v. Guaranty Trust Co., also discloses that Mrs.

Perkins was originally of the opinion that the section

quoted by petitioner applied, but after the taking of the

default judgment against her by her husband in the sum-

mer of 1930, she discovered that the above quoted Article

10, and through it, the New York law applied.

On January 5, 1931, Mrs. Perkins filed in the Manila

Court a petition seeking to set aside the default judg-

ment against her by her husband and setting up the facts

showing that she and her husband were American citizens

12

and citizens of New York State, and that the above quoted

Article 10 of the Civil Code of Spain applied. The

Manila Court in its order of March 6, 1931 denied her

petition. The order recites the contents of Mrs. Perkins’

petition and her reference to the New York law. (R.

696 at 699.)

We shall now answer the law points raised in the

petition herein.

IL.

ANSWER TO PETITIONER’S POINT THAT ‘‘THE DECISION

OF THE COURT BELOW HOLDING PETITIONER CONCLUDED

BY A JUDGMENT TO WHICH IT WAS NEITHER A PARTY

NOR PRIVY DEPRIVES PETITIONER OF ITS PROPERTY

WITHOUT DUE PROCESS OF LAW AND IS IN CONFLICT

WITH CONTROLLING DECISIONS OF THIS COURT.’’ (The

Petition, p. 12.)

As a matter of first impression, one would be inclined

to say as did the California Supreme Court in Estate of

Thomas, 147 Cal. 236, that

‘“‘Tt is not easy to see how a corporation is a

necessary party to a controversy between third

parties as to the ownership of particular shares of

stock.’’ :

A corporation, confronted by two claimants to the same

shares of its stock, can remain absolutely neutral by

‘either interpleading the dividends as they come due and

compelling the parties to litigate the title or by withholding

‘the dividends until the title has been finally determined.

In the first of the foregoing alternatives the corpora-

tion makes the Court a stakeholder. In the other it makes

13

itself a stakeholder. In neither case would the corporation

be a necessary party to the ensuing litigation, nor should

it be interested in it in the slightest degree.

Now if a corporation sees fit to favor one of the claim-

ants (and in this case the favored claimant was not the

stockholder of record, but the other claimant—the corpo-

ration’s general counsel), it would seem unreasonable to

say that by so doing the corporation places upon the

stockholder the burden of establishing her title against

the corporation, after having established it against the

other claimant.

Here petitioner took from one claimant (Perkins) and

his law partner indemnity agreements protecting it against

just such a suit as this. (Findings herein, R. 98-102.)

Afforded an opportunity to take part in the New York

litigation between the two claimants, it refused it, ex-

pressly disavowing, as we have heretofore shown, any

interest in the controversy. (R. 647-648.) ‘‘We didn’t want

to be dragged into the New York case,’’ says Judge

Haussermann. (R. 430.) But now that its preferred claim-

ant, Perkins, lost that case upon the merits, they insist

Mrs. Perkins should retry the issues of that case and give

Benguet a chance to step into Perkins’ shoes and prove his

title for him.

Cases relied upon by California Courts.

Two cases directly in point were called to the attention

of the California Courts and were used as precedents in

the opinion of the District Court of Appeal (R. 824-825),

viz:—a decision of the New York Court of Appeals in

Hughes v. United Pipe Lines, 119 N. Y. 423, 23 N. EK.

14

1042, and the Iowa Supreme Court’s decision in Com-

mercial Bank v. Allaway, 207 Iowa 419, 223 N. W. 167.

Those cases are analyzed in the opinion of the California

District Court of Appeal. (R. 824-825.) The basis of each

decision is that if a third person injects himself into

the controversy between two claimants to title, it could

do so only by stepping into the shoes of one of the

claimants and making his fight for him, but that such

action could not be taken by him after that claimant had

already litigated his title with the other claimant and lost.

To pass to petitioner’s discussion of the point: In the

effort to bring petitioner outside the privity rule, peti-

tioner proves (we believe) the unreasonableness of its

contention, by its statement on page 13 of the petition

that:

‘‘Tt (Benguet) had no interest in the issues be-

tween Mr. and Mrs. Perkins therein (in the New

York case) litigated; it had succeeded to no interest.

It had no opportunity in that action to show it had

paid its true debtors.”’

If it had no interest in the issues of the New York

ease which was whether Mr. and Mrs. Perkins was en-

titled to the stock and the dividends therein—it could not

have been a necessary party and was not entitled under

the due process rule to be heard. It did have an oppor-

tunity to be heard in the New York case, but wasn’t inter-

ested and didn’t want to be dragged into it, so declined the

opportunity. If it had no interest in the litigation, why

should it now be permitted to show that it paid the

dividends to the claimed rightful owner—surely it cannot

be held that after the rights of the two claimants have

15

been finally adjudicated between themselves, Benguet can

come into Court and prove the unsuccessful litigant the

owner. The logical result of such contention if upheld

would be two final judgments, one adjudging Mrs. Perkins

to be the owner of the stock and dividends and the other

adjudging ownership in Mr. Perkins. How these two final

judgments could be legally reconciled, we are not advised.

Benguet neutral until Mrs. Perkins the

victor.

Judge Haussermann, head of Benguet and no mean

lawyer, when asked why up to April, 1934 Benguet had

not intervened, said:

‘That never occurred to me, because the whole matter

seemed to me at that particular time to be going

through the Courts of the Philippine Islands. It

didn’t seem necessary for Benguet—we were not a

party to that, and they were fighting over it. In

due course of time, I assumed, there would be a

judgment with reference to that particular matter,

and I saw no reason why we should intervene in those

actions.’’ (R. 431.)

When called upon to explain what protection he pro-

vided for Benguet in the event the April 5, 1934 order

of the Manila Court, should be declared void (as it was

by the New York Court) he said:

‘“The whole matter was in the courts as I thought

at that particular time, and I thought in due course

there would be a final judgment rendered in which

all of these matters would be definitely settled.”’ (R.

437.)

In other words, Benguet was willing to abide by the

decision of the Courts in which Mr. and Mrs. Perkins

16

were litigating the title to the stock, provided the ulti-

mate decision was in favor of its preferred candidate.

The decision went for Mrs. Perkins (the original stock-

holder of record) so Benguet asks this Court to require

Mrs. Perkins to retry her title with Benguet as a party

—so that Benguet might fight Perkins’ battle over again.

Petitioner’s citations.

Petitioner cites under this head four decisions which we

shall refer to in order. Hansberry v. Lee, 311 U. S. 32, in

our opinion, falls far short of supporting petitioner’s

contention that the due process rule has been disobeyed

in the present case. It holds that judgments can operate

as res adjudicata as to strangers, without violating the

14th Amendment—in class suits, where the interests of

those not parties to the action are fairly represented by

those members of the class who are parties. For as

Justice Stone expresses it:

‘“‘This Court is justified in saying that theee has

been a failure of due process only in those cases

where it cannot be said that the procedure adopted,

fairly insures the protection of the interests of absent

parties who are to be bound by it.’’ (311 U. S. 42.)

How better could a corporation be protected in a suit

of the kind now before the Court, as to title—than by

having the defense conducted by the party litigant upon

whose title the corporation prefers to rely.

The decision in Postal Telegraph v. Newport, 247 U. S.

464 is not in point because there the trial Court erro-

neously held that a judgment rendered against the de-

fendant’s successor in title, who took title before the action

was instituted, was binding as res adjudicata against de-

17

fendant. In other words, had Mrs. Perkins sued Benguet

alone and secured a judgment decreeing her the owner of

the stock (as against Benguet), that judgment would not

have been res adjudicata against Perkins. The reasons

are obvious.

We are at a loss to understand petitioner’s excuse for

citing Riley v. New York Trust Co., 315 U. S. 343. The

decision in that case goes no further than to hold that

each state in which a decedent has lived has the right

to determine whether or not his domicile was in that

state for probate purposes, and that a decree of a probate

Court in Georgia was not binding upon the administra-

tor C.T.A. in New York, who was a stranger to the

Georgia proceedings. The reason (expressed in Justice

Reed’s main opinion and in Justice Stone’s concurrence)

for the ruling on the latter point, prevents the case from

being a precedent favorable to petitioner, is that the

New York administrator was representing the state and

New York creditors and therefore his interest was adverse

to the Georgia heirs and to the Georgia executor, and he

therefore could not be considered as being fairly repre-

sented by them. The converse is true here—Perkins was

defending the very claim of title Benguet seeks to assert—

Benguet here merely seeks to step into Perkins’ shoes.

Benguet was adequately represented by Perkins, who not

only was the real party in interest as far as Benguet is

concerned, but, strangely enough, was the attorney selected

by Benguet to act as its general counsel over the years.

In Chase National Bank v. Norwalk, 291 U. S. 431 this

Court held that a judgment of ouster against a Power

Company did not operate as res adjudicata against a

18

trustee who held the legal title to the Power Company’s

equipment, poles etc., to secure the payment of the bonds

issued by the company, where the trustee was neither a

party to the former action or shown to have known of

its existence. The general language, from that opinion

quoted on page 16 of the petition herein, cannot aid peti-

tioner’s cause—for there this Court was discussing per-

sons ‘‘absolutely entitled to a hearing’, and having

‘legal rights’’ to be affected. Benguet was not entitled to

a hearing in the New York case (although given the

opportunity of one) and had no “‘legal rights’’ to be de-

termined in the New York action, for the very obvious

reason that the only issue involved was the ownership

of the stock and its dividends and as we have shown

Benguet denied it has an interest in or lien on the stock or

dividends.

Petitioner concludes its argument on this point by call-

ing attention to the fact that it is being held for ‘‘nearly

a half million dollars by the California Court for doing

what was required of it by the Court of its domicile.”’

This is a very great exaggeration. We have shown in

our statement of facts Benguet’s admission that prior to

the April 5, 1934 order of the Manila Court (on the pyo-

ceedings in which Mrs. Perkins was neither a party nor

served with process) it did not rely on any Court pro-

ceedings in giving to Perkins the dividend checks which

were payable to Mrs. Perkins; and that after May 26,

1937, when it received notice of the New York Court of

Appeals decision in favor of Mrs. Perkins, it impounded

all dividends on the stock remaining in Perkins’ hands,

whether a part of the certificates in dispute or not.

—T

19

And that when transferring Mrs. Perkins’ stock to

Perkins in ‘‘compliance with’’ the April 5, 1934 order,

Haussermann admitted that together with Benguet’s

attorneys he believed and at the time of the trial of the

case still believed the order was absolutely void—in

which belief they were affirmed by the New York Court of

Appeals.

And during all of this time Benguet held the indemnity

agreements of Perkins and Dewitt.

I.

ANSWER TO PETITIONER’S POINT THAT: ‘‘THE DECISION OF

THE COURT BELOW DENIES FULL FAITH AND CREDIT TO

THE PHILIPPINE ADJUDICATIONS IN VIOLATION OP SEC.

905 OF THE REVISED STATUTES AND IN SO RULING MIS-

APPLIES THE DECISION OF THIS COURT IN TREINIES v.

SUNSHINE MINING CO.’’ (The Petition, p. 18.)

The question of whether the New York judgment is

res adjudicata as against Benguet has already been dis-

cussed, and that point is not involved under the present

heading.

The question here raised by petitioner is whether the

California Court, by adopting the decision of the New

York Court, which in turn declared the Manila judgment

and orders void, denied to the Manila decrees the full

faith and credit required by Sec. 905 of the Revised

Statutes.

We believe that this Court’s decision in Trewies v.

Sumshine Mining Co., 308 U. S. 66 (referred to on page 19

of respondent’s petition) conclusively disposes of this

20

point. There an Idaho Court refused to follow the prior

decision of a Washington case on the ground the latter

Court lacked jurisdiction to decide the cause, and a Fed-

eral District Court in Idaho accepted the later judgment,

that of the Idaho Court. This Court found that the Idaho

Court had a right to look into the jurisdiction of the

Washington Court and its rejection of the Washington

judgment did not operate as a denial of full faith and

credit to the judgment of a sister state.

As the decision of the New York Court of Appeals in

the Perkins case (274 N. Y. 250, 8 N. E. (2d) 849) so

clearly shows—it was rejecting the Manila default judg-

ment and decrees, on the ground that the Manila Court

lacked jurisdiction of the original proceedings because

of Mrs. Perkins’ withdrawal of her complaint, and that

her consent to Perkins’ judgment on his cross-complaint

was procured by the husband’s fraud and duress, and the _

so-called supplementary proceedings of April 1936 were

void because Mrs. Perkins, the real party in interest,

was not a party and was not served. The New York Court

under the precedence of the Treinies case had the right

to pass on and decide the jurisdiction of the Manila Court,

and, having decided, its judgment was entitled to the full

faith and credit the California Court gave it.

The case of Mueller v. Mueller, 124 Fed. (2d) 544, is

of no assistance to petitioner. There the third Court to

pass on the matter (a Federal District Court) refused

to recognize the judgment of an Arkansas Court, because

that Court lacked jurisdiction and failed to give full faith

and credit to the judgment of a Minnesota Court, the first

Court to try the issues. That decision is consistent with

21

the Treinies decision and the California Court’s decision

in the present case. The New York Court in the Per-

kins case, under the authority of the Treinies case, had a

right to inquire into the jurisdiction of the Manila Court

and it found a lack of jurisdiction. The California Court

had a right to inquire into the jurisdiction of the New

York Court in the present case before giving that judg-

ment full faith and credit. It found jurisdiction existed

(and petitioner has never charged that the New York

Court lacked jurisdiction) and gave full faith and credit

to the New York judgment.

A quick reading of the decision in Hammell v. Britton,

19 Cal. (2d) 72, will immediately reveal that the Court was

dealing with a series of doubtful activities by one of the

litigants, and that the decision throws no light on the

issue here under decision.

Martin v. Fritz, 228 Iowa 482, 292 N. W. 143, is likewise

not in point. It merely shows that the Iowa Courts resent

the refusal of the Courts of other states to enforce Iowa

judgments.

In Grimm v. Barrington, 109 Mo. App. 35, 84 S. W. 357,

cited on page 21 of the petition, a Missouri Court which

had formerly decided the case in favor of the plaintiff, re-

fused to recognize the judgment of a New Jersey Court

later rendered in favor of defendant. The case is not in

point, principally because the plaintiff of the original

Iowa case, when sued by the defendant therein, in the

New Jersey case did not set up his lowa judgment—so

the New Jersey Court never passed upon the sufficiency

of the jurisdiction of the Iowa Court when rendering the

first judgment.

22

We have shown in our discussion of the facts herein

that there was no trial on the merits in the Manila pro-

ceedings; that Benguet delivered none of the dividends

in reliance on any Manila proceedings; that in the only

proceedings in which Benguet was a party, Mrs. Per-

kins was not made a, party, and Benguet and its attorneys

in transferring Mrs. Perkins’ stock to Perkins in pur-

ported compliance with the April 5, 1934 order culminating

those proceedings, believed the order absolutely void and

apt to be set aside, but did not appeal or advise the

Court making the order that at that very time Mr. and

Mrs. ~ erkins were fighting out the question of title in

New York.

The New York Court held all of the Manila orders void

on jurisdictional grounds which under the rule of the

Treimies case it had the authority to do. (274 N. Y. 250,

8 N. E. 849, 855-857.)

If the New York Court had failed to give ‘‘full faith

and credit’? to the Manila decrees, Perkins had his rem-

edy in the form of a petition to this Court. He failed to

pursue such remedy, obviously because he and his counsel

realized its futility. Benguet therefore cannot do that for

him at this late date.

Ii.

ANSWER TO PETITIONER'S POINT THAT: ‘‘THE DECISION

OF THE COURT BELOW DENIES TO THE NEW YORK JUDG-

MENT THE SAME FAITH AND CREDIT IT HAS BY LAW

AND USAGE IN NEW YORK, CONTRARY TO THE FULL

FAITH AND CREDIT CLAUSE AND TO THE DECISIONS OF

THIS COURT.’’ (The Petition, p. 22.)

Petitioner’s contention apparently is that under New

York law as it existed at the time of the judgment in

the Perkins case, Mrs. Perkins by taking judgment against

Perkins elected not to look to Benguet; and that the Cali-

fornia Court in this case by not recognizing this claimed

effect of the New York judgment failed to give it the

‘*full faith and credit’’ to which it was due.

What -petitioner really complains of is that the Cali-

fornia Court gave the findings of the New York Court

too much faith and credit, and what the petitioner urges

is \that the California Court should have ignored the

findings of the New York Court, because the very bring-

ing of the action constituted an election of remedies, pre-

cluding the institution of the California action.

Ignoring the question of whether California or New

York laws governs on this point, we shall assume for the

purposes of this reply that the New York law applies.

Petitioner’s reliance is on the decision of the New

York Court of Appeals, in Fowler v. Bowery Savings

Bank, 113 N. Y. 450, 21 N. E. 172 (rendered in 1889), which

held that where a bank paid money in a commercial ac-

count to the wrong person, the depositor by seeking to

collect from that person, waived the right to look to the

bank. It was one of those cases where the Court sought to

protect the bank which was innocent of any wrong. The

24

unsoundness of the decision is evidenced by the remark in

the course of the opinion that if the account had been

a ‘special deposit’’, there would have been no election.

The Fowler case is not at all determinative for the

reasons that:

(1) The rule it asserts was abrogated by

(a)

(b)

A decision rendered by the same Court in

1933 (years after the Fowler case was de-

cided and 3 years prior to the‘ decision in

the Perkins case), holding directly to the

contrary, in the case of City of New York

v. Bronx Trust Co., 261 N. Y. 64, 184 N. E.

495;

The adoption in 1928 of Section 232 of the

‘Debtor and Creditor Law’’, which provides

that

‘‘Judgment against one or more of several

obligors or against one or more joint or

joint and several obligors, shall not dis-

charge a co-obligor who is not a party to the

proceedings.”’

(Sec. 231 of the same law declares that

‘‘obligor includes a person liable for tort’’.)

(2) Mrs. Perkins did not have a free election—she was

impleaded into the case by Guaranty Trust Com-

pany (see Petition herein, p. 7, last paragraph)

and had she not appeared to set up her title,

judgment would have been taken against her.

The Bronx Trust Co. case (supra) leaves no doubt as

to the New York Court of Appeals’ attitude toward the —

25

point at issue, and in doing so destroys the value of

the Fowler case as a precedent. In the Bronx Trust Co.

case warrants. of the City of New York were forged and

cashed by the trust company. The city first pursued the

forgers and recipients of the moneys, recovered part of

the moneys and sued the trust company for the balance.

The Court held that there was no election; that ‘‘election

of remedies is a defense only ‘when a choice is exer-

cised between remedies which proceed upon irreconcilable

claims of right’ and has no application to the pursuit

of.remedies concurrently liable, short of payment or satis-

faction’’.

Certainly Mrs. Perkins’ rights against Benguet and

Perkins were concurrent and each predicated upon the

identical claim of title to the stock in her.

Not only was Mrs. Perkins compelled to appear in the

New York case when impleaded, but when she did appear

she sought to make Benguet a party, but that corpora-

tion got out of the case on a motion to quash, based

upon the fact that it had no managing agent in this

country, and was not interested im the stock or dividends,

the subject matter of the suit. (R. 639 and 648.)

So there is no picture here of a free election. That a

party cannot be bound by the election of remedy rule,

where he or she has to appear in the original action has

been definitely recognized in:

Friend v. Talcott, 228 U. S. 27, 32;

Postwick v. Cutten, 258 'App. Div. 218, 15 N. Y. S.

877, 879;

Meyer v. Price, 250 N. Y. 370, 165 N. E. 815, 816.

26

As this Court said in Friend v. Talcott (supra), “‘It

is impossible to conceive of a right of election in a case

where no such right existed”’.

There are other reasons why this point of petitioner is

not well taken: Such as the fact that the remedies against

Perkins and Benguet are consistent, being based upon the

same claim of title; and the fact that the effort to col-

lect from Perkins was not a detriment to Benguet, but

on the contrary would have been a benefit to it, if collec-

tion against Perkins had been made. They are fully

discussed in the opinion of the California District Court

of Appeal. (R. 828-837.) :

CONCLUSION.

The granting of the petition herein would pave the

way for a retrial of the title to the stock in question, after

the two claimants to the stock have already pressed their

claims to a final judgment. And if a retrial of those

issues were had, it would be for the benefit of a liti-

gant who could offer no evidence of its own rights, but

solely present evidence in support of the claim of the

unsuccessful claimant in the earlier action.

If a retrial were had and it was there determined that

Perkins was entitled to the stock and dividends, there

would result the anomaly of Mrs. Perkins being the owner

so far as Perkins was concerned, and Mr. Perkins being

the owner so far as Benguet was concerned. :

How could such a situation be unscrambled?

27

We respectfully submit that reason and the authori-

ties are against petitioner’s position.

Dated, San Francisco, California,

June 2, 1943.

Ham W. JoHnson,

JAMES F'ARRAHER,

TxeEoporE H. Rocuz,

Counsel for Respondents.

TuEoporE J. Rocus,

GrorGe STOCKFLETH,

Of Counsel.