# Petition for a Writ of Certiorari — Denicke v. Anglo California National Bank

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for a Writ of Certiorari
- **Published:** January 1, 1944
- **Citation:** 323 U.S. 739

## Text

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“Iu the Supreme Gout —— >

OF THE

United States

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Jo Rarer ree coment

CUARLES § PLE
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Octoser Term, 1943

———_ SISNSE Ie

No. iva DE \ : > S N\ |

Ernest H. Denicxe and Mary E. Dose,

Petitioners,
vs.

Tue Ancio Cauiroryia Nationat, Bank or San
Francisco (a national banking association),
Mortimer FrrtsHnacker, Hersert FLrisi-
HACKER, Mortimer FLeisHHacker, J R., GEORGE
I. Cocuray, Pump S. Baxer, R. D. Bric-
HAM, Water E. Buck, Watrer A. Haas,
Paut E. Hoover, WruuiaM F. Hompnrey,
Samvuet Kann, Vicror Kuinker, Wii1aM B.
Reis, Paut Sxour, Leon Stoss, Jr., Lours
Surrer, Aurrep B. Swrverron, T. C. TILDEN,
JosepH O. Topix, Wuuarp 0. WayYMAN,
Trene L. Bere, Executrix of the will of Wil-
liam H. Berg, Deceased, R. Stantey Doar
and Frank Moss,

Respondents. e

PETITION FOR WRIT OF CERTIORARI
to the United States Circuit Court of Appeals
for the Ninth Circuit
and
BRIEF IN SUPPORT OF PETITION.

Aaron M. Sarcent,

Hobart Building, San Francisco 4, California,

Attorney for Petitioners.

4a a eae

Subject Index

Petition for Writ of Certiorari Page

Statement of matter involved... .........ccccscccccvcsnvce 2
Irregular signature clause on opinion.................

Court rule governing opinions filed during adjournment 5

Irregular entries in violation of rule.................. 6

Refusal to vacate or reassign. ..................eceee- 6

Pre Or Ik Nia koe ao a oe ees 7

Questions not decided in District Court :
Ss ee NE 55-2 bee de ea Re eee eh een

Violation of Supreme Court decisions requiring findings

Standards governing proceeding under Rule 23(e)

ARNIS Mpg aDE ores erat ye ee cnet robo OT AS mee tat
Derivative status established by Supreme Court deci-

re re PE ye Pet En Pa ee ES gh
Local law defining shareholders’ rights...............
Cross-examination of bank officers....................
Depositions of Schram and Husbands.................
Status of Reconstruction Finance Corp................
Infringement of right to amend and intervene.........

Suppression of record on certiorari.................22000-
Duty to render opinion disposing of appeal................
i Ee Per yer EOP eee ee re
Sn SN 6 5 dis chic ceca vuSe Sp aphccaexeeevans

Reasons for granting the writ...............ccccccccccces

Brief in Support of Petition
Ne: Ole DO Ns cir ot vk ee eae wks hae awad be eae
IR, oo arr en ee ee ee

bnGeent OF ENG GARG ces. cktcccs cade Gow naw dala g os Rivac chee
Proceedings in the District Court.....................
Proceedings in Cirenit Court... .........ccsccccccances

I CI i ee ru elem paw ab Rk aks
Right to vaeate void entries in Cireuit Court..............

Duty to render written opinion, supported by signatures...

-!

10

17
18
18
20
20

i Sussect INDEX
Page
Reversal for failure to make findings.....-..----+-++++++> 53
Duty to reverse because of denial of hearing..........---- 56
Right to vacate decree on ground of mistake.......------- a7
Standards governing approval of a settlement under Rule
tly I oo ais cn en ec ee hn eee heaven ens det enneees 58
Right to nonsuit of the petition. ...-.------+es sere erertees 61
Duty to follow local Jaw coneerning derivative status...... 65
1 nial of right to amend and intervene.....-----+++-+25> 68

Cross-examination of bank officers handling the negotiations 69

Right to take depositions of witnesses Schram and Husbands

under Rule 26 FRCP. .......------eseee cere ce eeceecee 73
Right to take depositions of federal officials under Rule 31

doy a thaxersceneeencaanpenetasseness ss 74
Privilege of witnesses ......-.--0--eeseerereer reste 82
Question presented by refusal of bank to employ independ-

ih ee a chads bh aeameen as Aepeweus ehh snes ss 85
Duty to issue writ to protect right of appeal........-----+-- 87
Denial of due process in the Circuit oka ia hash 89

py PORN I IS EFS

Table of Authorities Cited

Cases Pages
Alford v. United States, 282 US 687 at 692............... 56
Anderson v. Akers, 7 Fed. Supp. 924 at 939............... S4
Arizona v. California, 283 US 423 at 452................-. 81
Aspen Mining & Smelting Co. v. Billings, 150 US 31....... 24
Atherton v. Anderson, 99 Fed. 2d 883 at 889.............- S4
Avery v. Alabama, 308 US 444.............: cee eee ec ee 56
Brassfield v. United States, 272 US 448................65. 56
ee ae a yD rr rrr S4
Bruno v, United States, 308 US 287............ een ercat: 56
California Water Service Co. v. City of Redding, 304 US
kee oe ica FA Wolk a he wie aaoniw INS Soa aw aIA eB 8 * 56
Case v. Los Angeles Liunber Products Co., 308 US 106 at
eae ee a ae Tee ba dn eas keke aie OUD 11, 12, 26, 59
(Chesbrough v. Woodworth, 244 US 72.............05 0006: 24,3
Chicago & Great Western v. Basham, 249 US 164......... 24
Citizens Bank v. Opperman, 249 US 448................5- 24
Cohen v. Young, 127 Fed. 2d 721 at 725............... 12, 27, 60
Cohens v. Virginia, 19 US (6 Wheat.) 264 at 408.......... 28, 47
Consolidated Rock Products Co. v. DuBois, 312 US 510 at
ie eee ee ee OS USS e Ge Kn akewelem 4 11, 54, 60
Cox v. Montague, 78 Fed. 845. 0.0.6.0... cece eee eee S4
Delaware & Hudson Co. v. Albany & Susquehanna RR Co.,
hi pie wdnakeu ss seco need vss 13, 27, 61, 68
Denicke v. Anglo Bank, 26 Fed, Supp. 240...............- 32, 34
Denicke v. Anglo Bank, 45 Fed. Supp. 524...............- 32
Denicke v. Anglo Bank, 141 Fed. 2d 285................. 32
Doetor v. Harrington, 196 US 579 at 587............ 13, 27, 62, 68
Eggers v. National Radio Co., 208 Cal. 308 at 313, 281 Pace.
eh ee eae hie heh PERO LE ORR ON CR EOS 17, 25, 66
Erie RR Co. v. Tompkins, 304 US 64...............45- 17, 25, 67
Federal Deposit Insurance Corp. v. Mason, 115 Fed. 2d 548 = 84
Federal Housing Administration v. Burr, 309 US 242..... 83
Federal Land Bank v. Priddy, 295 US 229.............-4. 83
Fleming v. Bernardi, 1 FRD 624................0 eee eens 84

SDSL EGER LEAL LEAL LL ENTE

ERE AGERE SAE STS Be cas

e Seaaeets

iv TABLE oF AUTHORITIES CITED

Pages
Giasser v. United States, 315 US 60 at 69-70..........+++- 57
loess v. Ehret, 85 Fed. 2d 109......2---- eee eeee ee ereces 84
Hill v. Texas, 316 US 400.........6 5 cece eee eee ee renee 56
Interstate Cireuit Inc. v. United States, 304 US 55 at 56... .11, 54
In re Culhane, 269 Mich. 68, 256 NW 807........--.++-+: 84
In re French, 315 Mo. 75, 285 SW 513, 47 ALR Backes &4
In re Giannini Ine., 90 Fed. 2d 445. ........ 2-0 eee eens 46 -
In re Millspangh, 307 Mo. 185, 270 _, Bi BAe err ers. 84
Johnson v. Zerbst, 304 US 458.......... ee cence eee pies 56
Keifer & Keifer v. Reconstruction Finanee Corp. and Re-
vional Agricultural Credit Corp., 306 it” PR 20, 83
Kelley v. Everglades District, 319 US 415 at 420... .10, 11, 54, 60
Klopstoek v. Superior Court, 17 Cal. 2d 15 at 16, 108 Pae.
ik sc ink cine nk ea bare neha heer eserhe sees hs 17, 25, 65
Mahnich v. Southern Steamship Co. (Oct. Term, 1943 No.
es eee ada n mek REN DEK EMTS eT er AeA Les 55
Mayo y. Canning Co., 309 US Oe Es ree ee 11,54
Morgan v. United States, 304 Ean ere ft 56
National Surety Co. v. Coriell, 289 US 426 at + _ ee gay ee 11, 58
Norris v. Alabama, 294 US 587.......------e eee er erences 56
Pepper v. Litton, 308 US 295.2... +... seers e reer 20, 28, 82
Powell v. Alabama, 287 US 45. ........5- eee cece errr ee eee 56

Reconstruction Finance Corp. v. Menihan Corp. 312 US
81
Rio Grande Irrigation Co. v. Gildersleeve, 174 US 603 at 608 46

Securities and Exchange Commission v, Chenery Corp., 318

Td. & OT Pre rer rn TY ToC e er ae et 10, 54
Securities and Exchange Commission v. United States

Realty & Improvement Co., 310 2 AP ys 11, 60
Smith v. O’Grady, 312 US 329........-.- eee cere reece ces 56
Smith v. Texas, 311 US 128......... cece cece cere ee ecees 56

Texas & Pacifie Ry. v. Murphy, 111 US 488. ....------0 +> 24

SARGERAS RE

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TaBLE OF AUTHORITIES CITED Vv

Pages

Sn NE Ti TI. So ip cas ocin pe dheddass sa chee eeeenene 29, 84

United States v. General Motors Corporation, 2 FRD 528.. 4

Voorhees v. Noye Mfg. Co., 151 US 135................4.. 24

Ward ¥. TORO, BEG Te GGG oss snd 6 oie eed csivicsuvendeecs a6

Weil v, Neary, B70 UG. WOO OF DODD oon 6 cick cccccvcvescines 46
Werner vy. Crippen, 245 App. Div. 363, 282 NY Supp. 722,

SF Dy ee SE As cc his ci wee despise sheer sennaeees “4
Whitten v. Dabney, 171 Cal. 621. ........... cece eeeeees 17
Wichita Royalty Co. v. City National Bank of Wichita

Pie, SOG TS SOR Oe BI oo hi viii ic ce Sone cnncecsestecs 11, 54

Codes and Statutes
Act of Mar. 3, 1891, 26 Stat. 826, Chpt. 517, See. 3.2... .4, 44, 87
California Code of Civ. Proec., See. 2055. ..............46. 82
EE Br nccccawcedew eats ueks owrNapensieueeee as keke 76
ee I ck as eka sehc nes cent adeeshacahvnaeny 14, 81, 82
Se ens ok acd burg eee ee eaNheneN aha 76, 77
I Be gnc vc hee een own ced oe dean ka whe cekeedcsstex 23
We TE vou ct canlia KA a oe OES 4 ENE Res ae ee pn cea eee 23
got | RE arenes erm yey araeny mes pa Ararg 78
Oe Ge NE bigs einen ok sche nee nhes abe Rbaeeiens aha wia ee 84
OE PI ngs xd ch dda eat ¥h4 ced EON EMA CSRS ERE E ETS 78
Pe I SE oes ok Ki ok Sarg ees aaah awed sen ewieuesnure 76
Re See - hivoas Kee ou sc onebeoettaeev eNews ea weneen 23
Re RY, SOE os os he oh D ne ews SOL eke nnnws DekGweenn 76
GSR As nt on os ale ciate wae Side Ot Oe wee yee ei a Cediers 77
Oe Re as inka evened t Ka bod oviee en Caen a cen hanes 83
Be Ry I oer as Rees kee eh Se eS RARER eR 23
Se EE AE EW nen sad eee au odiec ranean snare Ow eee 23
OT Ie avons okarnk ed eek avaden es eee beawencomwan aan 20, 83
Bt of et | ee eae Se rrcrerre rirg rh eC 81
Se oe os Uo reas Cou ha eee eek eae Oran 23
Pi Eine rier erie Crass nee errr 23,47, 51

pe? 3 ere ener errr ery rarer sa ee ee 2, 23, 87

ANAT EK SSR GEER ARYA RE ROIS SR rt IESE SHER a a EU ETE ENTALION NIRIG DD EAE EINE EA CNN

vi Tape or AutTHoRITIES CITED #
Rules |

Supreme Court: Pages i
RIN ee PC net ile ites ie cktp loss 32 Of
er canine ts 32 i
MEE ee Ne Ces se eae GAs a dee ee Ts ee be 32, 52, 87, 89 ;

Cireuit Court:

Ne ee te SRY we 64s W sede 5s ay a
he oe ake hal ghee 66 HEA S 2 bo 24a bh Oe 7
MORE En aecees ott e ees Wh aS Baty CUR SY sine agra Sm gee 24
RRP te nec gcreig a Gs kbc Xa a > o,0o Siva ba Boe 48

Federal Rules of Civil Procedure:
Ce ka yy Wie bak ede Khia ad 67
Be vce cucleneaas SiMe oie ea bed passcdnesvacteve 14, 15
Na oo is Gh GS ne we vik Hes 2, 12, 20, 25, 26, 58, 60
RUNNIN ccs che ok 6 Se 4 uk BAe Bw 6.4 9 wr ae 18, 36, 39, 43, 74, 82
sr es oe eels ne bw ROA a halen ee 6 oR 18, 25, 43, 74
Ee kG ai a alg sas RENE SE RASS OEY 82
TR ea aera taal oes ah Waele Ran MOONS 24, 26, 48, 52, 53
TN ook ele ae a bans Cae brk Ue Ae Ae oo Rae 25, 43, 57

Texts and Miscellaneous
American Law Institute—Address of Hon. Robert H. Jack-
RR arteries ae ToT igihate ciea ee Wa ase A OS MNO ee 56

ae ae eked od eben te 64 asa wee VOdee ew heee bee 71
Democracy and Finanee—William O. Douglas, pp. 56, 234,

PR re eee rrr ery Seer rr rrr s Pr reer 64, 72
Diseovery—Against Federal Administrative Agencies—Pike

& Fischer (56 Harvard Law Rev. 1125)................. 84

Federal Administrative Procedure Act—proposed by Am.
Bar Assn. (Journal issue of Apr. 1944, p. 228)........... 51

Jurisdiction of the Supreme Court of the United States—
Robertson & Kirkham, p. 542................cccccceees 88

Law and Its Administration—Harlan F. Stone (Columbia
University Press 1924), p. 2138................ cece eee 49

2 SPIT eS

; REAR ee I Bah Ane Re ad » ‘ eT NE ET a Me Lie Boe
aR rh AES

TABLE OF AUTHORITIES CITED

Methods of Reaching and Preparing Appellate Court De-
cisions-—published by Judicial Section of Am. Bar Assn.

Pe EE iho SOL a ea kau RENE eRe oS eves a eeRs ot
Report of Will Shafroth, Chief of Division of Procedural
NE SI SIN Sloe cna Sa ci asd Seed eeke pao cae
Statement of Hon. Louis D. Brandeis before Commission on
Industrial Relations of 64th Congress, Ist Session—
Senate Document Vol. XXVI, p. 7661 (1915)...........
Supreme Court of the United States—Charles Evans
Hughes (Columbia University Press), pp. 64-65.........
Testimony of Justice Van Devanter on Senate Bill 2176,
74th Congress, Ist Session in 1935.....................
The Business of the Supreme Court—Frankfurter & Landis,
eM RENO SES AXEL ares Fan Sead GORY RSE Ls ches
The Modern Corporation and Private Property—Berle &
Re es DS ahah sul veuiula v ned va Wha tabi eas
The Struggle for Judicial Supremacy—Robert H. Jackson
(Alfred A. Knopf, 1941), pp. 293-294

Page

50

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Ernest H. Denicke and Mary E. Doster,

In the Supreme Court

OF THE

United States

OctToser Term, 1943

Petitioners,
vs.

THe Ancio Carivornia Nationa Bank or San

Francisco (a national banking association),
Mortimer FLemsHHacker, Hersert Firisu-
HACKER, Mortimer FLEISHHACKER, JR., GEORGE
I. Cocnran, Pumire S. Baker, R. D. Bric-
HAM, Water fk. Buck, Watter A. Haas,
Paut KE. Hoover, Wittiam F. Humpnrey,
SaMvueL Kaun, Victor Kuryxer, WituiaM B.
Rets, Paut Suour, Leon Stross, Jr., Louis
Sutter, ALrrep B. Swinerton, T. C. Tivven,

JosepH QO. Topix, Wittarp ©. WayMan, |

Irene L. Bere, Executrix of the will of Wil-
liam H. Berg, Deceased, R. Staxuey Dotar
and FRANK Moss,

)

|
|

|

Respondents. |

PETITION FOR WRIT OF CERTIORARI

to the United States Circuit Court of Appeals

for the Ninth Circuit.

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2

To the Honorable Harlan Fiske Stone, Chief Justice of the
United States, and to the Honorable Owen J. Roberts,
Hugo L. Black, Stanley Reed, Felix Frankfurter,
William O. Douglas, Frank Murphy, Robert H. Jack-
son, and Wiley Rutledge, Associate Justices of the
Supreme Court of the United States:

This is an application under Section 240 of the Judicial

Code (28 USCA 347) for a review, on certiorari, of the |

following matter, viz:
Case No. 10,329 (CCA 9th Cir.) entitled ‘‘ Ernest H.
Denicke and Mary E. Doble, Appellants v. The Anglo
California National Bank of San Francisco, et al.,
Appellees.”’ ;

SUMMARY STATEMENT OF THE MATTER INVOLVED.

We come to this Court with a record disclosing serious
misconduct in the Circuit Court of Appeals for the Ninth
Cireuit. There has been a miscarriage of justice. Certiorari
is necessary to correct that condition.

Nature of the Litigation.

Petitioners are prosecuting a derivative suit on behalf
of The Anglo California National Bank of San Francisco.
Respondents are present and former directors charged
with violations of Federal Banking Laws. The damages
arise from breach of trust. The loss exceeds four million
dollars.

The District Court approved a settlement without mak-
ing the inquiry required by Rule 23(c) FRCP. The
bank engineered this proposal. It accepted five percent
of the liability, thus obtaining a release for twenty-two

of its directors.

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3

Petitioners objected. They were denied a hearing. There
were no findings. Judgment was entered without a trial.
A motion to vacate was denied.

Gross Irregularities in the Circuit Court.

The Cireuit Court refused to decide the questions pre-
sented. An irregular opinion was filed during adjourn-
ment. This document was void, and in violation of Court
rules because of the lack of a concurring signature. We
present same as,—

Petitioners’ Exhibit No. 1.
Signature Clause Attached to ‘‘Opinion’’.

‘We need not stop to inquire whether the order
denying appellants’ motion to vacate the judgment
was appealable, for the opinion already sufficiently
indicates our view that appellants had ample time
and a reasonable opportunity to present a full show-
ing in opposition to the compromise. We find no
merit in other points argued.

‘* Affirmed.

William Healy,
United States Circuit Judges.”’

a

4

This document was prepared for the signatures of
three ‘United States Circuit Judges’’. It was signed by

one Circuit Judge.

It was the act of Cireuit Judge Healy. It was not the
act of the Circuit Court of Appeals for the Ninth Circuit.

In that Circuit, the power of an individual judge is
strietly limited during adjournment. He has no authority
to announce a decision. He may join with one or more
of his associates and vender a decision by filing signed
opinions or other documents of decision with the clerk.
There is no other procedure.? Litigants are entitled to
documentary evidence, supported by the signatures of at
least two Circuit Judges.

This practice was established by an amendment of the
rules effective November 30, 1936. That amendment was
evidenced by a document signed by every member of the
Court. We present same as our next exhibit.

Werk of CCA refused to print a true copy of the opinion.
In spite of our designation (R, 2070, item 8) the irregular sig-
nature clause was left out. (R. 1996 at 2004.) The transcript
is false in not showing the matter quoted on preceding page.
We file, herewith, motion to correct diminution of record.

2Authority to adopt such rule granted by the Act providing
for organization of the Cireuit Courts of Appeal. See:

‘Act of Mar. 3, 1891, 26 Stat. 826, Chap. 517, Sec. 2. ‘‘The
court shall have power to establish all rules and regula-
tions for the conduct of the business of the court within
its jurisdiction as conferred by law.”’

Petitioners’ Exhibit No. 2.

**Unitep States Circuit Court or APPEALS

FOR THE NINTH Circu!r

Ix THE MATTER OF THE AMENDMENT
or Rue LU or tHe Ruues or

PRACTICE OF THIS Court.

Ir Is Heresy Orperep that Rule ILL of the Rules of Prac-
tice of this Court be amended by the addition of a para-
graph number (4) to said rule, as follows:

(4) No adjournment in any of the terms of the Court
shall be made to the succeeding term save when made on
the last day prior to the beginning of such succeeding
term. Appeals shall be deemed decided when announced
from the bench in a session of the court at the place of the
term in which they are submitted, or when the signed opin-
ions or other documents evidencing their decision are filed
with the Clerk.

Dated: Nov. 30, 1936.

(Signed) Curtis D. Wilbur

Francis .. Garrecht

(Endorsed ) William Denman
Filed Nov. 30, 1936 Clifton Mathews
Paul P. O’Brien, Clerk Bert Emory Haney

“nited States Cireuit Judges.’”*

3Clerk of CCA disregarded our designation of this document
(R. 2074, Item 8a.) We inelude it in our motion filed herewith
to correct the record.

The Court had a membership of five when this doeument was
filed.

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poe RRS

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Paine ani ata In at

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6

Clerk’s Entries During Adjournment.

The ‘‘opinion’’ was filed March 1, 1944. On the same
day, the Clerk made an ‘‘Order’’ and entered a ‘‘ Decree’’.
Both were unsigned. The Court was not in session. /t did
not make any order. It did not direct the entry of any

decrees

Refusal to Vacate the ‘‘Decree’’.

We moved to set aside these proceedings. (R. 2005.)
Cireuit Judge Mathews presided. He was accompanied by
Judge Healy—author of the opinion. The third member
was absent." These two sat to pass upon their conduct in
our case. Argument on the motion was cut short. Judge
Mathews made the following statement from the Bench:

‘Rule 3, paragraph 5, is a rule made by this court
for the guidance and protection of its clerk. Neither
you nor your clients have any interest in enforcing
that rule. /t isn’t any of your business whether that
is complied with, or not.”’ (R. 2058.)

Application for Reassignment in Bank.
We sought an immediate reassignment to the Court in
bank. By praecipe, the clerk was requested to present such

‘The clerk was involved in four distinct violations of duty on
this date.

1. Entry of ‘‘Order Directing Filing of Opinion and Filing
and Recording of Deecree’’. (R. 1995.) Court held no session—no
signed document was furnished to sustain such entry. There
was no transaction to enter.

2. The Healy Opinion was not in due form. The elerk vio-
lated his duty to appellants in filing it.

3. Filing of ‘‘Deeree’’. Clerk took a printed form, filled in
the blanks with typewriter, and filed it without signature.

4, Entry of ‘‘Decree’’ in Minute Book. (R. 2004.) The same
document was then recopied after filing.

44Appeal was argued and submitted to Cireuit Judges Mathews,
Stephens and Healy February 15, 1944. (R. 1994.)

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application to the senior judge for action under Rule 4 of
the Cireuit Court. (R. 2014, 2015.) It was ignored. The
docket fails to show whether it was presented, or withheld,
or considered, or denied.”

Denia] of Petition for Rehearing.

We petitioned for a rehearing in bank. We asked for
consideration of that petition in bank. It does not appear
to have been examined by any judge not originally assigned
to our case. Circuit Judges Mathews, Stephens and Healy
sat to deny rehearing.®

We now present the questions which the Cireuit Court
refused to decide.

Point No. 1.
Denial of a Hearing in the District Court.

We start with a flagrant violation of the Bill of Rights—
the entry of a judgment without trial. The facts do not
admit of dispute:

"CCA Rule 4 reads,—

‘Assigning of Causes for Hearing.

(1) The calendars of the court shall be made up by the
clerk under the direction of the senior circuit judge subject
to the approval of the majority of the judges.

(2) The senior circuit judge after conference with the
circuit judges shall designate and assign the judges who are
to hear the causes placed upon the ealendars of the court:
such designation or assignment may be modified or set aside
by a majority of the judges.’’

*We request this Court to read the Petition for Rehearing at
R. 2017. This document discloses deliberate failure to decide
the questions presented on appeal. In spite of the misearriage of
justice disclosed therein, it was impossible to obtain action from
any judge who did not sit in the first instanee. Order denying
rehearing is at R. 2061.

8

On March 19, 1942 the bank petitioned for approval of a
settlement. (R. 314.) An order to show cause issued. (R.
329.) Petitioners objected. (R. 333, 340.) These pleadings
raised factual issues requiring a hearing.

On March 31, 1942 the bank presented its case on the

petition. (R. 1845.) We moved for a nonsuit. (R. 1883.)
The Court suggested that counsel submit the entire matter.

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A discussion followed. Then the Court acted on its own
initiative. It continued the petition until April 21, 1942, for

996

a ‘‘ further hearing

b

By this order, the petition was put on the calendar.

SIR:

Thereafter it was kept on the calendar. The Court made
five subsequent orders. Kach postponed the date set for

Ahad

further hearing. The last one provided for a trial on
August 18, 1942.

Diseovery was conducted to prepare for that hearing.
The bank was required to photostat ledger cards. (R. 393.)
Petitioners employed an auditor. His report showed a loss

6March 31, 1942 Minute Order at R. 392; same facts are
shown by clerk’s worksheet (R. 1937), and by closing entry
in reporter's transcript. ( R. 1890.)

7April 13, 1942. ‘Ordered . . . further hearing on the motion
to terminate proceedings, be continued from April 21, 1942, to
May 5, 1942.’’ (R. 398-399.)

May 1, 1942. ‘“ The judges responded by a
filing an ex parte order to keep such matter out of the 4
transcript. We present that order as: ¢
Petitioners’ Exhibit No. 3. :

“‘OrpER Re PREPARATION OF RECORD FOR

CERTIORARI PuRPOSES

Mr. Aaron M. Sargent, counsel for appellants, having
requested the clerk to prepare a record for use upon peti-
tion for writ of certiorari, in the above-entitled case, and
to issue as a part of the certified record a photostatie copy
of the opinion of this court, it is Ordered that the clerk
prepare the record in the usual and customary manner,

5Photostat of entire Opinion, including irregular signature
elause (R. 2070, item 8); also photostat of document evidencing
amendment of rules signed by entire Court. (R. 2074, item 8a.)

‘FAS

22

Dated: San Francisco, California, April 14, 1944.
Ciirton MaTHEws,
United States Cireuit Judge.

FrLep AvBerT LEE STEPHENS,
Apr. 14, 1944 United States Circuit Judge.
Paul P. O’Brien, Witiiam Heaty,

Clerk. United States Circuit Judge.”’

(R. 2066.)

The Clerk was requested to photostat and certify these
records as separate documents. He refused.’* An incom-
plete record has been transmitted to this Court. The body
of the Opinion was printed. The signature clause was
left out.'7 The clerk certified that the documents fur-
nished were true copies of the originals.'*

We then tested our right by motion. Circuit Judges
Mathews, Stephens and Healy sat to deny that motion.
No argument was permitted. Judge Mathews made the
following statement from the bench:

‘‘We have here a so-called motion to obtain certified
photostatic copies of designated records, in the case of
Denicke and Doble against The Anglo California Na-
tional Bank, No. 10329. We have examined this so-
called motion. We find that it is simply a request to
the Court that the Court require the clerk to do that

16Praecipe requesting such copies filed with clerk May 10,
1944—copy thereof included in motion to correct transcript.

17See IR. 2004 showing omission of signature. clause in print-
ing of Opinion.

18(Jerk’s certificate to this Court (R. 2078) is obviously false.
It states that the documents included are ‘‘full, true and cor-
rect (copies) .. . as the originals thereof remain on file’’.

SEPT LIELEL) DELIEND e002:

23

which we have told him not to do. We wont entertain
this motion. The motion is denied.’’

We demanded a hearing.

‘““Mr. Sargent. I ask for my constitutional right to
argue the motion.

Judge Mathews. Motion denied. Court will be ad-
journed.

Mr. Sargent. / renew my request for my constitu-
tional right to argue the motion.

Judge Mathews. You have no such right as that.
The Court will be adjourned.’

JURISDICTION.

This Court has jurisdiction under Section 240 of the
Judicial Code as amended by the Act of February 13, 1925.
(28 USCA 347.)

The Cireuit Court had jurisdiction under Section 128 of
said code (28 USCA 225); the District Court had original
jurisdiction under Section 24 thereof. (28 USCA 41.)

Suit arose under the laws of the United States. It was
an action to enforce directors’ liability created by the
National Bank Act and Federal Reserve <Act.?! Original

‘Statement appears in Reporter’s Transcript filed in Cireuit
Court—included in Motion for Enlargement.

*!Defendant directors were charged with permitting violation of
loan limit (12 USCA 84), with assenting to illegal loans to execu-
tive officers (12 USCA 375a), and with receipt of bonuses and
other considerations in connection with the granting of loans (12
USCA, 595). Directors were liable for such violations under 12
USCA, Sees. 93 and 50la, which are respectively part of the
National Bank Act and Federal Reserve Act.

24

jurisdiction is sustained by Chesbrough v. Woodworth,
244 US 72.

The Cireuit Court entered a ‘‘judgment”’ on March 1,
1944. (R. 2004.) Petition for rehearing was filed within
the time required by rule (R. 2017)?* and was denied April
7, 1944. (R. 2061.)

The time for certiorari did not run until denial of such
petition.?*

Petition for a writ is filed within three months of order
denying rehearing.

QUESTIONS PRESENTED.

1. Duty to issue a writ in order to cancel void entries
made by the Cireuit Court.

2. Duty to grant the writ in order to protect peti-
tioners’ right to an appellate review of their case.

3. Right to an adequate opinion or other decision in
writing, signed by two or more Circuit Judges, and dis-
closing the action taken by the Cireuit Court with respect
to all substantial questions raised on appeal.

4. Right to a writ to obtain reversal and compliance
with decisions of this Court requiring findings under
Rule 52(a) FRCP.

2CCA Rule 25 allowing filing within 30 days after judgment.
Decree was dated March 1, 1944. We filed March 29, 1944. Order
denying rehearing showing filing within time permitted. (R. 2061.)

23Citizens Bank v. Opperman, 249 U.S. 448; Texas & Pacific
Ry. v. Murphy, 111 U.S. 488: Chicago & Great Western v.
Basham, 249 U.S. 164; Aspen Mining & Smelting Co. v. Billings,
150 US. 31; Voorhees v. Noye Mfg. Co., 151 U.S. 185.

25

5. Duty to issue writ and direct reversal because of
judgment entered without trial of objections in the Dis-
trict Court.

6. Duty to issue such writ to direct reversal of judg-
ment under Rule 60(b) FRCP on the ground of mistake.

7. Duty to order reversal because of refusal of District
Court to admit evidence under Rule 23(c) FRCP.

8. Duty to direct District Court to grant nonsuit be-
cause of derivative status established by petitioners, and
lack of capacity in bank to maintain a petition.

9. Duty to recognize local law as declared in Klopstock
v. Superior Court, 17 Cal. (2d) 13, 108 Pac. (2d) 906;
and in Eggers v. National Radio Co., 208 Cal. 308, 281
Pac. 58, confirming property right of petitioners sufficient
to support stockholders’ suit.

10. Erroneous application of Erie RR Co. v. Tomp-
kins, 304 US 64, in holding that procedure for realign-
ment of bank as party plaintiff would depend on state
law rather than upon federal rules.

11. Right to cross-examine bank officers handling set-
tlement negotiations.

12. Right to take depositions of officers of RFC who
were parties to settlement discussions.

13. Right to propound interrogatories under Rule 31
FRCP to officers of RFC, Federal Reserve and FDIC,
regarding transactions before suit.

14. Right to propound such interrogatories to Chief
National Bank Examiner to locate documents within the

scope of a subpoena duces tecum.

26

15. Right to file amended pleading setting up facts
developed by discovery—and right to intervene and ap-
pear as co-plaintiff in such pleading.

REASONS FOR GRANTING THE WRIT.
1. To vacate the judgment and set aside the arbitrary

and irregular entries made by the Cireuit Court herein.

2. To protect petitioners’ right to an appellate review.

3. To enforce compliance with decisions of this Court
requiring findings under Rule 52(a) FRCP.

4. To secure petitioners’ constitutional right to a trial
of their objections and to correct the miscarriage of justice
whieh has resulted from a refusal to recognize that right.

5. To lay down adequate standards governing opinion
writing and the entry of judgments by Circuit Courts, to
the end that the irregularities disclosed in this case may
not be repeated.

6. To define adequate procedure governing the right of
a litigant to obtain rehearing in bank in a Circuit Court,

where necessary to correct palpable error.

7. To lay down proper standards governing approval
of settlements under Rule 23(¢) RFCP—and to define the
meaning of the term ‘‘fair and equitable’’, as applied to
such a proceeding.

8. To consider the application of the decision of this
Court in Case v. Los Angeles Lumber Products Co., 308
US 106, and other Chandler Act cases—in respect to pro-
ceedings for compromise of a shareholder’s suit.

27

%. Confliet between Sixth and Ninth Circuits. In the
former, standards similar to those in Chandler Act cases
are enforced. See Cohen vr. Young, 127 Fed. (2d) 721. In
the Ninth Circuit, dismissal of a stockholders’ suit has
been held to rest in the uncontrolled discretion of a Dis-
trict Judge.

10. Departure from proper course of Judicial proceed-
ings in the Cireuit Court—as shown by entry of a void
decree, the filing of an Opinion in violation of Rule, re-
fusal to vacate decree, failure to entertain proper motion
for that purpose, refusal to consider application for re-
assignment, refusal to grant rehearing in bank, suppres-
sion of material facts from transcript, refusal to sepa-
rately certify material records, and denial of motion for
copies of papers within the scope of records required
hy law to be kept public in said Court.

11. Complete disregard of duty in sanctioning arbi-
trary conduct of District Court in entering judgment
without trial or findings.

Special Questions of Public Importance.

12. Derwwative status. This ease involves a modern
application of the principles announced in Delaware &
Hudson Co. v. Albany & Susquehanna RR. Co., 213 US
435, and in Doctor v. Harrington, 196 US 579. The wide-
spread use of proxy voting, the dispersion of share-
holders, and the shifting of power in favor of corporate
managements has made this problem of unusual im-
portance. This Court should analyze and restate the law
applicable to that set of facts.

13. RFC Status. The Reconstruction Finance Corpo-

ration is majority stockholder. Its rights and obligations

por nenegen: Wea 4 Sy

28

should be defined. This Court should apply the rule in
Pepper v. Litton, 308 US 295, 306 to that situation.

14. Failure of jurisdiction on appeal. The Circuit
Court has arbitrarily declined to exercise the powers
granted to it by Congress. The result has been a mis-
carriage of justice. This condition establishes a right of
review on certiorari. Petitioners rely on the Opinion of
Chief Justice Marshall in Cohens v. Virginia, 19 US (6°
Wheat.), 264 at 403.

“The judiciary cannot, as the legislature may,
avoid a measure... . We cannot pass it by, because
it is doubtful. With whatever doubts, with whatever
difficulties, a case may be attended, we must decide
it, if it is brought before us. We have no more right
to decline the exercise of jurisdiction which is given,
than to usurp that which is not given.”’

15. Right of subpoena. In refusing to permit eross-
examination of the persons involved in settlement nego-
tiations, the District Court raised questions of tremen-
dous importance. Petitioners sought the testimony of
bank officers and federal officials.

This process was claimed to rebut adverse presump-
tions indulged without a trial. The Constitutional right
to a subpoena was invaded.

The remedy of a Congressional subpoena has recently
been the subject of public interest. That process fur-
nishes the method for discovering truth in legislative
matters.

Individual rights are secured by a similar process—
the judicial subpoena. This includes the subpoena duces
tecum. That right is basic. Without it, impartial adminis-

tration of justice is impossible.

29

We have created Courts where all men can be heard.
Due process of law has been guaranteed. We have pro-
vided for equal justice under law. The humblest man in
our nation is guaranteed these rights as against the most
powerful interest.

For one hundred and thirty-seven vears this process has
heen kept inviolate. It was recognized by Chief Justice
Marshall in June, 1807, on the trial of Aaron Burr.

““It is a principle of the English Constitution that
the King can do no wrong; that no blame ean be
imputed to him, that he cannot be named in debate.

By the Constitution of the United States, the Presi-
dent as well as every other officer of the government
may be impeached and may be removed from office
on high crimes and misdemeanors.

** * the President is elected from the mass of the
people, and, on the expiration of the time for which
he is elected, returns to the mass of the people again.

Whether essentially this difference of cireumstances
must vary the policy of the laws of the two countries,
in reference to the personal dignity of the chief ex-
ecutive, will be perceived by every person * * *

If, then, as is admitted by the counsel for the
United States, a subpoena may issue to the Presi-
dent, the accused is entitled to it, of course; and,
whatever difference may exist with respect to the
power to compel the same obedience to the process,
as if it had been directed to a private citizen, there
exists no difference with respect to the right to ob:
uae? **

The court can perceive no legal objection to issuing
a subpoena duces tecum to any person whatever, pro-
vided the case be such as to justify the process * * *

eae P EAC

ova

ANE:

et SRE TES rb a pial

prota 5

on

30

It is not for the court to anticipate the event of the
present prosecution. Should it terminate as is ex-
pected on the part of the United States, all those who
are concerned in it should certainly regret that a
paper which the accused believed to be essential for
his defense, which may for aught that now appears
be essential, had been withheld from him. 1 will not
say that this circumstance would in any degree tar-
nish the reputation of the government; but I will say
that it would justly tarnish the reputation of the court
which had given its sanction to its being withheld.’

Under Section 240 of the Judicial Code, we apply for
issuance of a writ of certiorari to the Cireuit Court of
Appeals for the Ninth Cireuit.

Dated, San Francisco, California,

June 7, 1944.

Aaron M. Sarcent,
Attorney for Petitioners,

CERTIFICATE OF COUNSEL.

I hereby certify that in my judgment the foregoing
petition for writ of certiorari is well founded, and_ that
the same is not interposed for purposes of delay.

Dated, San Francisco, California,
June 7, 1944.
Aaron M. Sarcent.

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA34806415_2236%3A01. Public record. Not legal advice.
