Petition — Pioche Mines Consolidated, Inc. v. Fidelity Philadelphia Trust Co.

>,

In the Supreme Couft? *° "9

OF THE MICHABL RODAK, JR., CLERK

United States

Octoser Term 1979

NO.

— €8 ¹13 09

Piocus Mines Consotmaten, Ino.,

Petitioner

V.

Finetrry PHApRLTRHIA Trust Company

Respondent

MOTION FOR LEAVE TO FILE PETITION FOR

COMMON LAW WRIT OF CERTIORARI OR

WRIT OF MANDAMUS

AND

PETITION FOR COMMON LAW WRIT OF

CERTIORARI OR WRIT OF MANDAMUS

to the United States Court of Appeals for the Ninth Circuit

Franois T. CORNISR

3057 Van Sansul Avenue

San Jose, California 95128

Davin Horton

P. O. Box 2107

Carson City, Nevada 89701

Attorneys for Petitioner.

BOWNE-PERNAU WALSH © 1045 SANSOME ST. © 8. F., CA 94111 © (415) 961-7662

SUBJECT INDEX

Page

Motion for leave to file petition for common law writ of

certiorari or writ of a 1

Petition for common law writ of certiorari or writ of mandamus 2

, nn 2

Z 3

, ̃ K eie vies. . 3

Statutory and constitutional provisions involved ............. 4

SE EE TES Ne FSS Oe 4

Basis for jurisdiction in the court of first instance ............ 10

Reasons for granting the writ of certiorari .................. 10

I. The Trust Company used the processes of the federal

2. When the Trust Company could no further damage

Pioche Mines Consolidated Helen Dolman used the pro-

because of erroneous rulings of the District Cout 15

4. Although the Court of A corrected those errors the

ttorneys for the antag prevailed the District

court was to bankrupt Pioche Mines Consolidated ...... 16

6. The United States Supreme Court should not sanction the

processes of the federal courts being abused .......... 19

11

TABLE OF AUTHORITIES CITED

Cases

Page

Federal:

Ely Valley Mines, Inc. v. Lee and Dolman, 385 F.2d 188

SR MND ss, Ceo ͤ—·˙¹ q²ͥT . . 8

Pioche Mines Consolidated et al. v. Helen Dolman, 333 F.2d

enn esa ee 8

Pioche Mines Consolidated, et al. v. Helen Dolman, 336 F.2d

2 SS haga aR ameerengners agrees 8

Pioche Mines Consolidated v. Fidelity Philadelphia Trust

Co., 191 F.2d 300 (och Cir. 1051) .................... 6, 10

Pioche Mines Consolidated v. Fidelity Philadelphia Trust

Co, 908 F.Sd O64. (Sth Cir, )) ee ene. 6, 10

Pioche Mines Consolidated v. Fidelity Philadelphia Trust

Co., 206 F.2d 336 (9th Cir. 1953) 6, 10

Pioche Mines Consolidated v. Hon. Roger T. Foley as Judge

of the United States District Court for the ct of

Nevada, 237 F.2d 164 (9th Cir. 1956) .............. 7, 10, 19

Pioche Mines Consolidated v. Hon. Roger T. Foley as Judge

of the United States District Court for the District of

Nevada, 410 F.2d 742 (9th Cir. 1969) ................. 8, 16

Constitution

United States Constitution:

Irre 4, 20

FD 3, 4, 20

Statutes

e ] A eae ees 3

, ¶ d ak gle RYT 10

D ̃ , danls baked ek 3

In the Supreme Court

OF THE

United States

Octoser Term 1979

NO.

Piocue Mines Consoumatep, Inc.,

Petitioner

V.

Fipetiry PLA pELTHHIA TRUST CouraNx

Respondent

MOTION FOR LEAVE TO FILE PETITION FOR

COMMON LAW WRIT OF CERTIORARI OR

WRIT OF MANDAMUS

to the United States Court of Appeals for the Ninth Circuit

PIOCHE MINES CONSOLIDATED, INC., Petitioner

herein, by FRANCIS T. CORNISH and DAVID HOR-

TON, its attorneys, moves this Court as follows:

1. For leave to file the Petition, hereto annexed, for

common law writ of certiorari or for writ of mandamus.

2. Upon granting such leave, to issue a common law

writ of certiorari or common law writ of mandamus to the

United States Court of Appeals for the Ninth Circuit, in

accordance with the prayer of said petition.

Dated: February 17, 1979

Francois T. CornisH

Davm Horton

Attorneys for Petitioner.

: 2

In the Supreme Court

United States

Oro Tamu 1979

NO.

PiocHe Mixes Conso.matep, Inc.,

Petitioner

v.

Fiwetrry PRLADbRL ERA Trust ComMPANY

Respondent

PETITION FOR COMMON LAW WRIT OF

CERTIORARI OR WRIT OF MANDAMUS

to the United States Court of Appeals for the Ninth Circuit

To the Honorable Warren E. Burger, Chief Justice of the

United States Supreme Court, and to the Honorable,

the Associate Justices of the United States Supreme

Court:

PIOCHE MINES CONSOLIDATED, INC., Petitioner

herein, by FRANCIS T. CORNISH and DAVID HOR-

TON, its attorneys, respectfully petitions this Court to

issue a common law writ of certiorari or writ of mandamus

to review the judgment and opinion of the United States

Court of Appeals for the Ninth Circuit, which has not yet

been reported, but was filed on September 11, 1978, and

a rehearing of which was denied on November 27, 1978.

OPINION BELOW

The opinion of the Court of Appeals appears in Appen-

dix A, hereto. The Order of the Court of Appeals denying

3

a rehearing appears in Appendix B, hereto. No opinion

was rendered by the United States District Court for the

District of Nevada.

JURISDICTION

The judgment of the Court of Appeals for the Ninth

Circuit was entered on September 11, 1978. A Petition for

rehearing was denied on November 27, 1978. This Petition

for Certiorari was docketed within 90 days of that date.

This Court’s jurisdiction is invoked under 28 U.S.C. sec-

tions 1254 (1), and 2101 (e).

QUESTIONS PRESENTED

1. Whether this Court should exercise its jurisdiction to

issue a common law writ of certiorari or writ of mandamus

directed to that Court of Appeals on the ground that it

abused its discretion in affirming a judgment of the United

States District Court for the District of Nevada which dis-

missed a counterclaim, and thereafter refusing to rehear,

or reconsider, that affirmance of the District Court’s judg-

ment of dismissal.

2. Whether, under the circumstances of this case, the

dismissal of the counterclaim on the sole ground there was

delay in prosecuting it, which delay was caused largely by

earlier erroneous decisions of the same District Court

which dismissed the counterclaim, which erroneous de-

cisions were corrected in eight opinions of the Court of

Appeals which were rendered over a period of sixteen

years, was in violation of the provisions of the Seventh

Amendment of the United States Constitution.

3. Whether, under the circumstances of this case, the

dismissal of the counterclaim on the sole ground there was

4

delay in prosecuting it, which delay was caused largely by

earlier erroneous decisions of the same District Court

which dismissed the counterclaim, which erroneous de-

cisions were corrected in eight opinions of the Court of

Appeals which were rendered over a period of sixteen

years, was in violation of the provisions of the Fifth

Amendment of the United States Constitution.

4. Whether this Court should exercise its discretion to

issue a common law writ of certiorari or mandamus to

the Court of Appeals to prevent the misuse of processes

of the United States Courts to damage or destroy private

property.

CONSTITUTIONAL PROVISIONS INVOLVED

This case involves the Fifth Amendment to the United

States Constitution which provides in part:

“No person shall * * * be deprived * * * property,

without due process of law * * *”

and the Seventh Amendment to the United States Constitu-

tion which provides:

“In suits at common law, where the value in contro-

versy shall exceed twenty dollars, the right of trial

by jury shall be preserved and no fact tried by a jury,

shall be otherwise re-examined in any Court of the

United States, than according to the rules of the com-

mon law.” !

STATEMENT OF THE CASE

Pioche Mines Consolidated, Inc., was organized under

the laws of Nevada in 1928 to hold the controlling interest

of three corporations which owned extensive mining prop-

erties in Nevada. Until 1940 it had financed all of its op-

5

erating needs. Its properties consisted of underground

development and a mill from which it was capable of pro-

ducing ores and minerals. It had built an organization to

produce those minerals and an organization capable of

financing those operations. Part of this financing had been

through a debenture issue in 1929 and 1930. Fidelity Phil-

adelphia Trust Company had been designated as trustee

under that issue. In 1939 some of the debenture holders

claimed the debentures were in default. They instructed

the Trust Company to file suit to recover the amount

claimed due. At the same time the debenture holders re-

served the right to negotiate a settlement of their claims

independent of the Trust Company. The suit was filed in

1940. Simultaneously the Trust Company attached Pioche

Mines Consolidated’s properties. Pending the suit a Settle-

ment Agreement was negotiated. It was a bilateral execu-

tory agreement between the debenture holders and Pioche

Mines Consolidated. The Trust Company was not a party

to that settlement agreement. Problems arose between the

debenture holders and Pioche Mines Consolidated. The

Trust Company injected itself into the performance of the

settlement agreement. The Trust Company then filed a sup-

plemental complaint by which it sought to compel Pioche

Mines Consolidated to perform what the Trust Company

claimed Pioche Mines Consolidated was obligated to per-

form under the settlement agreement.

In so doing the Trust Company withheld the debenture

holders from being parties to the action. Pioche Mines

Consolidated then filed a compulsory counterclaim in which

it charged the Trust Company with interfering with, and

obstructing, the performance of the settlement agreement,

and in so doing clouding the financial structure of Pioche

6

Mines Consolidated so it could no longer operate, or finance

the operation of its properties. The filing of the supple-

mental complaint, as the Trust Company did, converted the

original action from an action for money into an action by

a person who was not a party to the settlement agreement

to compel one of the parties to the agreement to perform

that agreement and at the same time the other parties who

were indispensible to such action were withheld from the

action. .

The Trust Company then moved the Distriet Court for

summary judgment on the supplemental complaint. The

motion for summary judgment was opposed, but, notwith-

standing that the District Court granted it. This was a

judicial error, but it required four decisions of the Court of

Appeals to correct it. The first decision was Pioche Mines

Consolidated, Inc. v. Fidelity Philadelphia Trust Company,

191 F. 2d 399 (9th Cir. 1951), in which the Court of Appeals

denied a motion to dismiss the appeal and held that the

judgment was appealable. A copy of that opinion is at-

tached as Appendix C. The second decision was Pioche

Mines Consolidated v. Fidelity Philadelphia Trust Com-

pany, 202 F. 2d 944 (9th Cir. 1953), in which the order grant-

ing the summary judgment was reversed because the deben-

ture holders were indispensible parties and they were not

parties to the action. A copy of that opinion is attached as

Appendix D. The third decision was Pioche Mines Consoli-

dated v. Fidelity Philadelphia Trust Company, 206 F. 2d 336

(9th Cir. 1953), in which that part of the order granting

summary judgment which dismissed the counterclaim was

reversed, with leave for Pioche Mines Consolidated to

amend its counterclaims. A copy of that opinion is attached

as Appendix E. The fourth decision was Pioche Mines Con-

7

solidated v. Hon. Roger T. Foley as Judge of the United

States District Court for the District of Nevada, 237 F. 2d

164 (9th Cir. 1956), in which the District Court was man-

dated to obey the Court of Appeals and dismiss the amended

supplemental complaint. A copy of that opinion is attached

as Appendix F.

Pursuant to leave having been given by the Court of Ap-

peals, on June 30, 1955 Pioche Mines Consolidated filed its

second amended and supplemental counterclaim in which it

increased its claim for damages to include the damages

which resulted in the interim from its former pleading to

the filing of the second amended and supplemental plead-

ing. On April 24, 1956 the Trust Company answered the

second amended and supplemental counterclaim on its

merits.

The District Court signed a preliminary pretrial com-

ment on June 25, 1958. Pretrial conference order was made

on October 2, 1961. A supplemental pretrial order was made

on March 27, 1962. The date of th» trial of the counterclaim

was set for September 10, 1962. On August 29, 1962 the

District Court vacated the trial date and took the case off

the trial calendar “until the appeal involving the validity of

the appointment of the receiver is determined in Civil Case

311.”

Until Civil Case 311 was filed Pioche Mines Consolidated

was still in such a financial condition that it could, and

would have, proceeded to trial of the counterclaim against

the Trust Company. In “Civil Case 311” the District Court

made a judicial error when it appointed a receiver for the

assets of Pioche Mines Consolidated and at the same time

enjoined Pioche Mines Consolidated, its officers and its at-

torneys, from prosecuting the counterclaim.

Pioche Mines Consolidated appealed those orders to the

Court of Appeals. It required four more opinions of the

Court of Appeals to correct those erroneous rulings of the

District Court in “Civil Case 311.”

The first decision was Pioche Mines Consolidated et. al. v.

Helen Dolman, 333 F.2d 257 (9th Cir. 1964). In that opinion

the orders appointing the receiver and enjoining Pioche

Mines Consolidated from proceeding on the counterclaim

against the Trust Company were reversed. A copy of the

pertinent portions of that opinion is attached as Appen-

dix G. The second decision was Pioche Mines Consolidated,

et. al. v. Helen Dolman, 336 F. 2d 789 (9th Cir. 1964). In that

opinion the Court of Appeal had to “clarify” its earlier

decision in 333 F.2d 257. A copy of that clarifying opinion is

attached hereto as Appendix H. The third decision was Ely

Valley Mines, Inc. v. Lee and Dolman, 385 F.2d 188 (9th Cir.

1967). In that opinion the Court of Appeals was quite criti-

cal of Helen Dolman and her attorneys in their failure to

“understand” the earlier decisions of the Court of Appeals.

That opinion is attached hereto as Appendix I. The fourth

decision was Pioche Mines Consolidated v. Hon. Roger T.

Foley as Judge of the United States District Court for the

District of Nevada 410 F.2d 742 (9th Cir. 1969). In that

opinion the Court of Appeals mandated the District Court

to follow the opinions of the Court of Appeals and to com-

pel the receiver to turn over to Pioche Mines Consolidated,

forthwith, all of the properties of Pioche Mines Consoli-

dated including the counterclaim and the records pertain-

ing to it which were still under his exclusive control,

although his appointment had been invalidated five years

earlier. The Court of Appeals said:

9

“It simply does not lie in the mouth of the receiver,

who is illegally in possession of the corporations’ prop-

erties, or of the plaintiffs who wrongfully obtained his

appointment, or of the judge, who erroneously ap-

pointed him, to assert otherwise. A wrong cannot be

perpetuated in any such fashion. The trial court has

failed to comply with the mandates of this court.

“Let a writ of mandamus issue directing respond-

ent forthwith to order the return by the receiver of

the properties, books, files, records and accounts of

Pioche Mines Consolidated * * * and to restrain the

receiver from in any manner whatever further inter-

fering with the possession and use, by each corpora-

tion, of its properties, books, files, records, or

accounts.”

A copy of the entire opinion which the Court of Appeals

rendered is attached hereto as Appendix J.

The Trust Company, through its use of the court

processes, with indispensible parties absent, during the

first sixteen years this action has been pending deprived

Pioche Mines Consolidated of any opportunity to use its

properties profitably. When the Trust Company could no

longer cripple Pioche Mines Consolidated, the receivership,

during ten years from 1960 through 1969, and the erro-

neous decisions of the District Court which the Court of

Appeals had to correct by its eight opinions which covered

from 1951 through 1969 made it impossible for Pioche

Mines Consolidated to enjoy its properties so it could press

its counterclaim. The Trust Company, the receivership and

the District Court’s erroneous orders, had left Pioche Mines

Consolidated in such fmancial condition that it could pro-

gress no further until it could refinance. This could not be

10

accomplished before 1974, which was five years after the

last of the eight decisions of the Court of Appeals.

The Trust Company renewed its destructive efforts by

moving to dismiss the counterclaim without giving any

notice to the attorneys of record for Pioche Mines Con-

solidated until after the District Court dismissed the

counterclaim, apparently unaware of the fact no notice

had been given, although the Court’s file showed it had not

been given. When the District Court became aware of its

error it then set aside the dismissal on the condition that

Pioche Mines Consolidated be allowed only fifteen days

within which to prepare an opposition to the unnoticed

motion to dismiss Pioche Mines Consolidated’s counterclaim

for lack of diligent prosecution of its counterclaim.

BASIS FOR FEDERAL JURISDICTION

IN THE COURT OF FIRST INSTANCE.

Federal jurisdiction in the court of first instance was

28 U.S.C. section 1332 in that Fidelity Philadelphia Trust

Company was a citizen of the State of Pennsylvania and

Pioche Mines Consolidated, Inc., was a citizen of the State

of Nevada, and this was judicially established by the four

decisions of the Court of Appeals, 191 F.2d 309, 202 F.2d

944, 206 F. 2d 336 and 237 F. 2d 164, copies of which are at-

tached hereto as Appendix C, Appendix D, Appendix E

and Appendix F respectively, each of which decisions is

final.

REASONS FOR GRANTING THE WRIT

OF CERTIORARI

The decision of the Court of Appeals, Appendix A,

affirms a judgment of thc United States District Court for

11

the District of Nevada which dismissed a compulsory coun-

terclaim by which Pioche Mines Consolidated sought to

recover damages done to it by the Trust Company and its

attorneys through its tortious interfering with contractual

relationships and for their misuse of the processes of the

federal courts. The only reason for the dismissal was inac-

tivity in pressing the counterclaim.

The eight earlier opinions of the Court of Appeals which

are set forth in the appendices show conclusively that the

Trust Company and its attorneys, through their misuse of

the processes of the federal courts, and Helen Dolman and

her attorneys, through their misuse of the processes of the

federal courts, put Pioche Mines Consolidated in a financial

position such that it required refinancing before it could

continue. There was no showing that Pioche Mines Con-

solidated failed to take any affirmative action which it was

able to take.

The Court of Appeals did not find there was any affirma-

tive action to delay on the part of Pioche Mines. It only

found there was unexplainable delay from 1969 to 1974.

The unwarranted litigation with which Pioche Mines

Consolidated had to contend, all of which was without any

fault on the part of Pioche Mines Consolidated was not

considered, but solely the lapse of time, was the basis for

the dismissal of its counterclaim.

1. THE TRUST COMPANY USED THE PROCESSES

OF THE FEDERAL COURT TO DAMAGE THE

PROPERTY OF PIOCHE MINES CONSOLIDATED.

The Trust Company did it in this way. Its attorneys must

have known that if they filed the supplemental complaint

12

in the manner they did, the Trust Company injecting itself

into contracts to which it was not a party; it doing so with

parties indispensible to the relief sought not being parties

to the action, and keeping those indispensible parties out of

reach of the District Court in which the action was pending.

The attorneys for the Trust Company prevailed upon the

District Court to entertain that action which they must have

known could lead nowhere, or, lead to more confusion,

which the Trust Company was really seeking. In three of

its decisions the Court of Appeals pointed the way to the

District Court. It took a fourth decision, over the opposi-

tion of the Trust Company’s attorneys, to compel the Dis-

trict Court to obey the decisions of the Court of Appeals

and to dismiss the complaint of the Trust Company, leaving

only the counterclaim left in this action.

The Trust Company perpetuated that action until Octo-

ber 5, 1956, for nearly sixteen years, when the Court of

Appeals mandated the District Court to dismiss all com-

plaints filed by the Trust Company, 237 F.2d 164.

As a result of the first four decisions of the Court of

Appeals (Appendices C, D, E, and F,) the Trust Company

remaining only a defendant in a counterclaim against it for

it having interfered with contractual relations and the Trust

Company having abused the process of a federal court and

thereby damaging Pioche Mines Consolidated.

It changed the Trust Company from an aggressor to a

defensive position.

After only the second amended and supplemental counter-

claim and the answer thereto remained in the case, in June

1958, the District Court filed a pretrial comment. Six months

later the Trust Company sought to withdraw admissions

13

of fact which it admitted eight years earlier. The effect of

the admission was to put to rest any question which might

arise thereafter as to whether there had been compliance

with Securities and Exchange Commission requirements, a

question which had already been resolved in favor of Pioche

Mines Consolidated by that commission: The District Court

Judge, Hon. John R. Ross made this comment:

“A rather innocent request on its face. However, in the

light of the case history, the request assumes a rather

ominous tone in that it may well undo the efforts, good

or bad, of some eighteen years of litigation.* * * *

“It might be pointed out that since the inception of

this litigation in 1940, the United States Court of Ap-

peals for the Ninth Circuit has filed four opinions in

the case all of which were after plaintiff’s admissions—

which it seeks now to withdraw. This case is an

outstanding example of litigation which leads the lay

person to believe the Courts and court process are

designed to hinder, rather than to expedite, the disposi-

tion of litigation. In cases such as this, the delay and

confusion is invariably caused by counsel for the re-

spective parties—rather than by the Courts. Unhappily

the lay person cannot distinguish between delay caused

by Court or counsel.”

Thereafter two pretrial conference orders were signed.

The trial of the counterclaim was set for September 10,

1962. Pioche Mines Consolidated was then prepared to go

to trial. The trial would have proceeded except that twelve

days before the date for the trial the District Court took

the case off the trial calendar until the determination of the

appeal from the order appointing a receiver for Pioche

Mines Consolidated in another action, but that other action

seriously affected this action.

14

”

2. WHEN THE TRUST COMPANY COULD NO FUR-

THER DAMAGE PIOCHE MINES CONSOLIDATED

HELEN DOLMAN USED THE PROCESSES OF

THE FEDERAL COURTS TO DAMAGE —

MINES CONSOLIDATED

The two law suits commenced against Pioche Mines Con-

solidated, the suit by the Trust Company and the suit by

Helen Dolman, have this in common. Each case started by

abusing the processes of the federal court. In each the

attorney for its adversaries sought to prevail upon the

federal court to commit error. In each the errors were cor-

rected by three decisions of the Court of Appeals. In each

the attorneys for the adversary prevailed upon the District

Court to disregard three decisions of the Court of Appeals.

In each the Court of Appeals had to mandate the District

Court to obey the Court of Appeals. While each suit was

pending the properties of Pioche Mines Consolidated were

held in idleness. While each suit was pending Pioche Mines

Consolidated was prevented from earning income from its

properties. To recover from the damage in each suit Pioche

Mines Consolidated had to be reorganized and refinanced.

When the Trust Company could go no further, only days

before the trial date fixed for the counterclaim, came Helen

Dolman.

Again with an inadequate showing to obtain the relief

granted the District Court was prevailed upon to appoint

a receiver, to issue injunctions, and thereby divest Pioche

Mines Consolidated of all its properties, and to put Pioche

Mines Consolidated’s counterclaim into the hands of

strangers, where it remained until after April 28, 1969.

15

The receivership was initiated not for the welfare of

Pioche Mines Consolidated but to destroy it.

The attorneys for the receiver misled the District Court.

The orders sought by Helen Dolman’s attorneys, and

obtained from the District Court, enjoined Pioche Mines

Consolidated, its officers, its attorneys in this action, from

having anything to do with Pioche Mines Consolidated’s

properties, or its counterclaim, and transferred Pioche

Mines Consolidated’s properiies, records and accounts per-

taining to the counterclaim to the receiver. Those orders

were reversed by the Court of Appeals May 4, 1964, but it

took another five years, until April 28, 1969, when in its

eighth opinion of the Court of Appeals in this action and

the allied actions, that the receiver returned to Pioche

Mines Consolidated any of its properties and its records,

and its right to press its counterclaim.

3. THE EFFORTS TO USE THE PROCESSES OF THE

FEDERAL COURTS WERE SUCCESSFUL BE-

CAUSE OF ERRONEOUS RULINGS OF THE DIS.

TRICT COURT

The errors made by the District Court were:

1. Entertaining the supplemental complaint;

2. Granting the motion for summary judgment;

3. Dismissing the counterclaim;

4. Not dismissing the supplemental complaint when or-

dered by the Court of Appeals to do so;

5. Vacating the order setting the counterclaim for trial;

16

6. Dismissing the counterclaim without notice to the at-

torneys of record for Pioche Mines Consolidated;

7. Appointing a receiver for Pioche Mines Consolidated;

8. Enjoining the officers and attorneys for Pioche Mines

Consolidated;

9. Perpetuating the receivership and injunction.

4. ALTHOUGH THE COURT OF APPEALS COR-

RECTED THOSE ERRORS THE ATTORNEYS FOR

THE ANTAGONISTS PREVAILED UPON THE DIS-

TRICT COURT TO DISREGARD THE DECISIONS

OF THE COURT OF APPEALS

This happened twice. The first time was when the supple-

mental complaint had been ordered to be dismissed. The

Court of Appeals, over the opposition of the attorneys for

Trust Company, on October 5, 1956, mandamused the Dis-

trict Court to dismiss the amended supplemental complaint

counterclaim on October 5, 1956 (Appendix F). The second

time was when on April 28, 1969, the Court of Appeals

mandamused the District Court to compel the receiver to

restore Pioche Mines Consolidated’s assets (Appendix J).

5. THE EFFECT OF THE ABUSE OF THE PRO.

CESSES OF THE FEDERAL COURT WAS TO

BANKRUPT PIOCHE MINES CONSOLIDATED

The Court of Appeals recognized that substantial injury

had been done to Pioche Mines Consolidated when it said

in Pioche Mines Consolidated v. Roger T. Foley as judge,

410 F.2d 742 (Appendix J):

“It simply does not lie in the mouth of the receiver,

who is illegally in possession of the corporations’ prop-

—

17

erties, or of the plaintiffs, who wrongfully obtained his

appointment, or of the judge, who erroneously ap-

pointed him, to assert otherwise. A wrong cannot be

perpetuated in any such fashion. The trial court has

failed to comply with the mandates of this Court.”

In 1940 Pioche Mines Consolidated owned a multimillion

dollar project with mining properties, mines, a mill, a fi-

nancing organization, operating organization and manage-

ment. It was held in idleness by the Trust Company’s ac-

tion from 1940 through 1956. Pioche Mines Consolidated

was then ready to try its counterclaims. But in 1962, just

before the trial was to be held, its properties, its records,

all of its assets, even its counterclaim, was taken from it,

and its officers and its attorneys were enjoined from dealing

with its properties. ö

If mining properties are not kept up they deteriorate.

A mine which has been left idle for twenty nine years,

has been bereft of its management, its operating staff and

development staff, is far from a liquid asset.

The Trust Company conducted its lawsuits for the sole

purpose of ruining Pioche Mines Consolidated. It suc-

ceeded. Today Pioche Mines Consolidated has no organiza-

tion, but only deteriorated properties and no means of re-

vitalizing what was there thirty eight years ago. Until the

properties are rehabilitated they cannot be put into profit-

able operation. This cannot be accomplished until the com-

pany is re-financed. Men with capital of that type are not

interested in buying a lawsuit.

Until Pioche Mines Consolidated can be recapitalized all

it has left is a counterclaim against the Trust Company for

18

the damages done to it by the Trust Company through it

interfering with contractual relationship between some of

its debenture holders and Pioche Mines Consolidated, to

which contract the Trust Company was not a party.

To have dismissed that counterclaim on the sole ground

of passage of time in the face of the obstacles with which

Pioche Mines Consolidated was confronted for thirty six

years is a miscarriage of justice. It is a miracle that

Pioche Mines Consolidated survived it having had to

resort, eight times, each successfully, to help from the

Court of Appeals, over a period from 1940, through 1951,

through 1969.

To dismiss a meritorious counterclaim for lack of dili-

gent prosecution on the sole ground of lapse of time in

spite of the facts shown by the eight opinions of the Court

of Appeals (Appendices C, D, E, F, G, H, I, and J) must

be called to the attention of the highest Court of the land.

It is the only court which has jurisdiction or power to cor-

rect the misuse of the processes of the Federal Courts to

which Pioche Mines Consolidated was subjected.

This Court should vacate the Order of the United States

District Court for the District of Nevada, and the decision

of the Court of Appeals by which the Court of Appeals

affirms that judgment of dismissal, which were for the sole

reason Pioche Mines Consolidated had delayed in pressing

the counterclaim, in spite of the obstacles with which Pioche

Mines Consolidated was subjected.

The erroneous rulings of the United States District

Court for the District of Nevada which the Court of Ap-

peals had to correct, and the misconduct of the receiver

— rs —— ne eee nn

19

who was wrongfully appointed, but by the United States

District Court for the District of Nevada, so emasculated

Pioche Mines Consolidated that it was a miscarriage of

justice for the United States District Court for the Dis-

trict of Nevada to have deprived Pioche Mines Consoli-

dated of its only redress against the Trust Company which

was its compulsory counterclaim which it had to file be-

cause the Trust Company filed the action in 1940 and main-

tained that action until 1956 (237 F.2d 164) (Appendix F).

6. THE UNITED STATES SUPREME COURT SHOULD

NOT SANCTION THE PROCESSES OF THE FED-

ERAL COURTS BEING ABUSED

The United States is a land of laws. There must be

laws. They guide us. They protect us. Those laws are the

security of our people. Security in those laws exists only

as long as we have courts. The Supreme Court of the

United States supervises all federal courts. The Supreme

Court may take into its hands any action pending in any

of the federal courts at any time.

Every litigant has to depend on our federal courts and

judges. Every person who depends on a federal court

expects that that court will mete out justice to him.

At the same time there are those who would pervert

our court system, not to seek justice, but to take private

property, even to steal property to which they are not

entitled. This is done by misleading the court, which if

successful, undermines our court system, and destroys

the confidence of the people in those courts, and its judges.

20

Anyone who deliberately misuses the court’s processes

is a menace to society. Pioche Mines Consolidated asks

that the highest Court in the land recognize that the

Seventh Amendment of the United States Constitution,

which reads:

“In suits at common law, where the value in contro-

versy shall exceed twenty dollars, the right of trial

by jury shall be preserved and no fact tried by a jury,

shall be otherwise re-examined in any Court of the

United States, than according to the rules of the com-

mon law.”

and the Fifth Amendment to the United States Constitu-

tion, which reads in part:

“No person shall * * * be deprived * * * property,

without due process of law * * °”

have been circumvented by the Trust Company by its de-

liberate tortious conduct.

If the dismissal of the counterclaim meets with the ap-

proval of this Court and the abuses of the processes of the

federal courts also meet with the approval of this Court

then it is an indictment of the federal court system.

Denial by this Court of a review of the decision of the

Court of A, reals, the highest Court in the land thereby puts

its stamp of approval on abusing the processes of the federal

courts.

The highest Court in the land should be afforded the

chance to rectify such a miscarriage of justice. It was

brought on in a large part by the federal courts them-

selves through their failure to promptly realize that ap-

parently respectable litigants were in fact attempting to

— «E —

— EE

——

2¹

blind the court to the fact that such apparently respectable

litigants were in fact prevailing upon, yes deceiving, the

federal courts so as to enable the litigants to abuse the

processes of that court, not to assert rights to which they

were entitled, but to use the courts to tie up properties

of their legal antagonists, not to assert rights, but in reality

to pervert justice.

This Court should guard its lower courts against the

assaults against their integrity. To enable this Court to

do so this Court should issue the writ of certiorari so it

may examine the entire record and do justice to all parties.

The eight opinions of the Court of Appeals indisputably

show that Pioche Mines Consolidated was wrecked.

CONCLUSION

Petitioner asks that the highest Court in the United

States recognize that abuse or misuse of the processes of

the federal courts which deprives a litigant of the right

to a jury trial, or which deprives the litigant of his prop-

erty without a fair hearing, is an invasion of the litigant’s

rights given by the United States Constitution, which this

Court should review.

Therefore Petitioner respectfully petitions this Court

to issue its writ of certiorari and to examine and review

the opinion of the United States Court of Appeals for

the Ninth Circuit made in this action on September 11,

1978 with every confidence that upon so doing this Court

will reverse that opinion and upon so doing will mandate

the Court of Appeals to vacate its judgment of dismissal

and direct the United States District Court for the Dis-

22

trict of Nevada to fix a trial date which date Pioche Mines

Consolidated’s Second Amended and Supplemental Coun-

terclaim filed in that United States District Court on June

30, 1955 on which the issues of said counterclaim and the

reply thereto be tried by a jury.

Dated, February 17, 1979

Respectfully

Francis T. CornnisH

Davin Horron

Attorneys for Petitioner

(Appendices Follow)

Appendices

Appendix A

United States Court of Appeals

for the Ninth Circuit

Nos. 76-3180

and 76-3443

Fidelity Philadelphia Trust Company,,

Appellee,

VS.

Pioche Mines Consolidated, Inc.,

Appellant. |

[Filed September 11, 1978]

Appeal from the United States District Court

for the District of Nevada.

OPINION

Before: BARNES and GOODWIN, Circuit Judges, and

MUECKE*’, District Judge.

Muecke, District Judge:

This appeal involves a counterclaim filed by appellant,

Pioche, against appellee, Fidelity, which was originally filed

in 1940 and has been pending in its final form since 1956.

That counterclaim was dismissed by order of the district

Hurt, and it is from that order that this appeal arises.

Fidelity filed their first motion to dismiss the counter-

claim November 1, 1960 alleging lack of prosecution as four

and one-half years had passed since the filing of the final

*The Honorable C. A. Muecke, United States District Judge for

the District of Arizona, sitting by designation.

A-2

form of counterclaim. That motion was denied on June 5,

1961. A pretrial conference was held the next day at which

time the matter was set for trial to commence December

4, 1961. That date was re-set four times with the last date

being vacated on August 29, 1962 at the request of Pioche.

It has never been re-set since. (The complaint has long

since been dismissed and the only issue to be tried was the

counterclaim.)

Fidelity filed their second motion to dismiss for lack of

prosecution on June 18, 1974. That motion was served on

certain counsel and officers of Pioche, but was not served

on their counsel of record. The court below granted that

motion on October 25, 1974, but set that order aside on

August 28, 1975 so that Pioche could respond. On October

2, 1975 the motion was referred to the Magistrate pursuant

to a Local Standing Order in which the parties agreed to

accept the Magistrate’s order as final with the right to file

specific objections to the District Court. A hearing was held

by the Magistrate on November 7, 1975 at which time the

motion to dismiss was granted. Pioche filed a motion to re-

argue along with additional evidence. That motion was

denied on June 17, 1975 and a formal ruling granting the

motion to dismiss was entered by the Magistrate on June

18, 1975.

Objections to the June 18 order were filed with the Dis-

trict Court, which objections were overruled on July 12,

1975. It is from that order that this appeal comes.

The two key dates in analyzing the delay in prosecution

of this case are 1962 and 1969. The delay from 1956 to 1962

was, at least in part, caused by Fidelity. Therefore, that

A-3

delay should not be used as a basis for dismissal of the

counterclaim. Pioche also argues that the delay from 1962

to the date on which the mandamus order was issued in 1969

by this court was also unavoidable and partly the fault of

Fidelity because of the pending receivership. However, that

action was not a direct bar to the prosecution of the coun-

terclaim and Pioche did not apply to the court for a stay

on that counterclaim.

There is some merit to Pioche’s argument that they could

not proceed with the counterclaim until the records were

returned by the receiver, which did not happen until the

writ was issued in 1969.

There is, however, no excuse for the delay from the time

the writ was issued in 1969 until the date on which the

case was dismissed for lack of prosecution—six years of

inactivity. Nothing was done on the case for five years,

until 1974 when certain records were discovered missing.

And even then it was not until seven months after the mo-

tion to dismiss was filed that Pioche’s attorney even got

involved in seeking those records. Appellant cannot use his

actions after the motion to dismiss was filed as evidence

of his diligence in prosecuting the suit.

Even had Pioche been actively seeking the production of

the lost records, this was no excuse for the lack of prose-

cution. Federal Rules of Evidence 1003 and 1004 allow

copies of records to be used in place of lost originals. Such

copies were available and could have been used if the orig-

inals had not appeared prior to trial.

A district court’s dismissal for failure to prosecute a

claim with reasonable diligence will not be overturned un-

A

less the district judge clearly abused his discretion. This

Court should not overturn that discretion unless there is

“a definite and firm conviction that the court below com-

mitted a clear error of judgment in the conclusion it reached

upon a weighing of the relevant factors.” Anderson v. Air

West, Inc., 542 F.2d 522, 524 (9th Cir., 1976).

A judge abuses his discretion only when his decision is

based on an erroneous conclusion of law or where the rec-

ord contains no evidence on which he rationally could have

based that decision. Premium Service Corp. v. Sperry d

Hutchinson, 511 F.2d 225, 229 (9th Cir., 1975). Further-

more, the rule is that unreasonable delay creates a pre-

sumption of injury to the defendant. Alexander v. Pacific

Maritime, 434 F. 2d 281, 283 (9th Cir., 1970). In this case a

total of thirteen witnesses died, seven prior to the first

1960 motion to dismiss, and six more prior to the filing of

the second such motior.

It is a well established rule that the duty to move a case

is on the plaintiff and not on the defendant or the court.

Boudreau v. U. §., 250 F.2d 209 (9th Cir., 1957); Hicks v.

Bekins Moving ck Storage, 115 F.2d 406 (9th Cir., 1940).

In this case there was a twelve-year delay (1962 to 1974)

and, at the very least, a five-year delay (1969 to 1974). The

finding by the District Court that this delay justified a dis-

misal of the counterclaim for lack of prosecution was not

an abuse of that Court’s discretion and this Court will,

therefore, not disturb that ruling. The Dixtrict Court’s

judgment in dismissing the counterclaim is, therefore, af-

firmed.

Appendix B

United States Court of Appeals

for the Ninth Circuit

Nos. 76-3180

and 76-3443

Pioche Mines Consolidated, Inc., J

Plaintiff-Appellant,

VS.

Fidelity Philadelphia Trust Company,

Defendant-Appellee.

—

[Filed November 27, 1978]

Before: BARNES and GOOD WIN, Circuit Judges, and

MUECKE*, District Judge

The Petition for Rehearing is DENIED. >

*The Honorable C. A. Muecke, United States District Judge for

the District of Arizona, sitting by designation.

Appendix C

Reported 191 F.2d 399

United States Court of Appeals

for the Ninth Circuit

No. 12865

Pioche Mines Consolidated, Inc., et a

vs. 1

Fidelity-Philadelphia Trust Co., et al.

[August 31, 1951]

Before: DENMAN, Chief Judge, and HEALY and BONE,

Circuit Judges.

DENMAN, Chief Judge.

This is a motion by the appellee, Fidelity-Philadelphia

Trust Company, to dismiss an appeal by Pioche’ Mines

Consolidated, Pioche Mines and others from a summary

judgment of the district court entered on May 11, 1950

and directing the parties herein to perform a Settlement

Agreement executed by them. That Agreement provided

for a reorganization of the appellant corporations and

another corporation into a single company and was intended

by the parties as a compromise of previous litigation be-

tween them.

Performance of this Agreement involves, among other

things, the transfer of new income bonds by the appellants

to the appellee in return for old debentures of the companies

C-2

undergoing reorganization. It will also mean that the ap-

pellants must endeavor to sell for cash preference notes

in the new company so that legal expenses of the reorgani-

zation may be paid.

The successful suitor under the summary judgment seeks

to have a dismissal of this appeal on the ground that the

district court has not disposed of matters in the original

complaint and has therefore violated Rule 54 (b), Federal

Rules of Civil Procedure, 28 U. S. C. A.“ We think no dispo-

sition of the original complaint was necessary. A supple-

mental complaint praying for enforcement of the Settle-

ment Agreement was also filed; and the appellee prevailed

on this claim. In it was merged by virtue of the Settlement

Agreement the controversy represented by the original

complaint and answer thereto. This merger of all matters

between the parties in the supplemental complaint is no

more in effect than an amendment of the original complaint.

When judgment is rendered on an amended complaint,

no dismissai of the original unamended complaint is nec-

essary.

The appellee contends the order is not appealable be-

cause the district court has reserved power to make further

orders in the case. Assuming that the other requirements

* b) ＋ „ Upon Multiple Claims. When more than one

claim for relief is in action, whether claim,

Lene direct

0-3

of finality are met, a reservation to make further orders

does not mean orders inconsistent with the finality of the

judgment.“ Johnson v. Wilson, 9 Cir., 118 F.2d 557, 558.

Furthermore, the order is appealable despite the reserva-

tion of power by the district court since the order requires

the immediate disposition of property. Preference notes

must be sold to finance the reorganization scheme provided

for in the Settlement Agreement; and transfers of bonds

between the parties must be made. This brings the case

within the rule of Dean v. Nelson, 10 Wall. 158, 19 L.Ed.

926 ; cf. Forgay v. Conrad, 6 How. 201, 12 L.Ed. 404; Caron-

delet Canal & Nav. Co. v. Louisiana, 233 U.S. 362, 34 S. Ot.

627, 58 L.Ed. 1001; Radio Station WOW v. Johnson, 326

U.S. 120, 65 S.Ct. 1475, 89 L.Ed. 2092.

The motion to dismiss is denied.

Appendix D

Reported 202 F. 2d 944

United States Court of Appeals

for the Ninth Circuit

No. 12865

Pioche Mines Consol., Ine. et al.

v. 1

Fidelity-Philadelphia Trust Co. et al.

[March 23, 1953]

Before: STEPHENS, HEALY, and BONE,

Circuit Judges.

HEALY, Circuit Judge.

This is an appeal from a summary judgment granted on

motion of Fidelity-Philadelphia Trust Company, plaintiff

below, and from the dismissal of a complaint in intervention

of Baker and a counterclaim of Pioche Mines Consolidated

and its president, Janney, who were defendants.

Pioche Mines Consolidated, a Nevada corporation, here-

after referred to as Consolidated, was formed in 1928 to

hold the controlling interest in two other Nevada companies,

Pioche Mines Company and Nevada Volcano Mines Com-

pany. Consolidated issued debenture bonds in the amount

of several hundred thousand dollars in 1929 and 1930, mostly

acquired by persons in the east. It was agreed that Fidelity-

D-2

Philadelphia Trust Company, a Pennsylvania corporation,

should act as trustee in these bond issues.

Thereafter Consolidated defaulted in payment of the obli-

gations. In 1939 a group of the eastern debenture holders

representing a majority of the outstanding debentures met

and executed a Debenture Holders’ Agreement. In this doc-

ument these holders agreed, inter alia, to deposit their

debentures with Fidelity as trustee to take such action

relating thereto as the holders should direct, reserving to

the holders the right to make a settlement agreement with

Consolidated. In addition, the agreement set up a Debenture

Holders’ Committee of four men (two of whom survive),

which was given broad powers generally to execute the

agreement and to represent the debenture holders in all

dealings with Fidelity and Consolidated. In 1940, on order

of the Committee, Fidelity as trustee filed a diversity suit

in the District Court for Nevada against Consolidated,

Pioche Mines Company, and John Janney, president of

Consolidated, to recover the principal and interest of the

bonds. While depositions were being taken in that action, it

was agreed that the suit should be settled. The result was

a “Settlement Agreement,” drawn up in 1942, and to which

the parties were Consolidated, Debenture Holders’ Com-

mittee, and a creditors’ committee representing various

creditors of the three companies. Fidelity was not a party

to it. .

The Settlement Agreement provided that the three Ne-

vada companies were to be consolidated into a new company

which would take title to all properties owned by the three.

It further provided: (1) That Consolidated should issue

D-3

30-year income bonds to the debenture holders in exchange

for the old debentures; (2) that Consolidated should issue

5-year preference notes to secure cash to finance the reor-

ganization; and (3) that a certain amount of 30-year income

notes should be issued to cover certain debts and reorgani-

zation expenses. Under the terms of this contract all parties

to it agreed to use their best efforts to obtain cash in ex-

change for the preference notes, and also agreed to use

their best efforts to obtain a long-term lease of the proper-

ties, under which the new company to be formed would have

an assured income. Finally, the agreement provided for the

eventual discontinuance of all legal proceedings then pend-

ing.

Difficulties arose in carrying out the Settlement Agree-

ment. A statutory merger of the three companies under

Nevada law was effected in late 1943. A dispute then arose

between the parties as to whether the income bonds to be

transmitted to the debenture holders complied with the

Trust Indenture Act of 1933. After resolution of that issue,

the impasse which resulted in the present proceedings arose,

Pursuant to previous correspondence, Consolidated had

sent to Fidelity, at the latter’s request, most of the income

bonds for transmittal to the debenture holders. The Deben-

ture Holders’ Committee thereupon instructed Fidelity to

hold both the old debentures and the new income bonds,

taking the position that Consolidated should complete its

duties under the agreement, including the sale of the prefer-

ence notes, after which a closing settlement would be held

at which time all matters, remaining would be settled and

the old debentures delivered for cancellation. Consolidated,

on the other hand, insisted that the old debentures must

D4

first be exchanged for the new income bonds. Until that was

done, Consolidated contended, the preference notes would

not be marketable. The result was a complete deadlock, with

Fidelity holding both sets of securities, and neither party

to the Settlement Agreement willing to budge.

Thereafter, in May of 1946 (the dismissal of the original

suit as contemplated by the Settlement Agreement not hav-

ing been effected), Fidelity filed in the District Court a

pleading entitled “Supplemental Complaint.” This pleading

had the effect of completely changing the character of the

action then pending. It alleged the execution of the Settle-

ment Agreement by the Debenture Holders’ Committee and

Consolidated; set forth the terms of that agreement; and

alleged that it had been performed in certain particulars,

and had not been performed in others. The basic prayer

of the complaint was that the court enter its order directing

the parties to the action to perform the remaining unper-

formed obligations imposed upon them respectively by the

agreement at such time and in such manner as the court

might direct. Consolidated answered this complaint, and at

the same time moved the court to order the joinder of the

Debenture Holders’ Committee as party plaintiff. Also prof-

fered at that time was a counterclaim, with a motion for

leave to file. The counterclaim alleged the existence of a

conspiracy between Fidelity and the Debenture Holders’

Committee and the carrying out by them of certain acts

for the purpose of preventing the consummation of the

Settlement Agreement and for the purpose of financially

crippling Consolidated so that it could be taken over cheaply

by the debenture holders. The counterclaim asked for dam-

ages of $3,000,000.

— —

— —

—

D- 5

While these motions were pending, Fidelity moved for

summary judgment on its supplemental complaint, sup-

ported by affidavits. Before this latter motion was decided,

the court denied Consolidated’s motion to join Debenture

Holders’ Committee as a party, but granted permission to

file the counterclaim. Fidelity answered the counterclaim.

Meanwhile Baker, one of the parties to the contract who

had not been a party to the action previously was permitted

to intervene, and joined in seeking the relief prayed for in

the counterclaim. Fidelity answered his complaint on the

merits. Prior to the hearing on the motion for summary

judgment, Consolidated filed counter-affidavits, and made

numerous motions relating to the sufficiency of Fidelity’s

showing on its motion. After hearing, the court decided

there was no genuine issue of fact raised on the supple-

mental complaint and the answer to it; dismissed the coun-

terclaim and the complaint in intervention; and rendered

summary judgment for Fidelity ordering, among other

things, the following: (1) That plaintiffs and defendants

perform the remaining unperformed obligations of the Set-

tlement Agreement; (2) that the securities transmitted by

Consolidated to Fidelity be exchanged for the old deben-

tures, and that the latter be deposited in court; and (3) that

the plaintiffs and defendants together take the necessary

steps to obtain cash for the preference notes described in

the Settlement Agreement. This appeal followed.

Consolidated advances several contentions, one of which

—and the only one we will notice—is that Fidelity’s action

should have been dismissed because of the failure of the

court on Consolidated’s motion to join indispensable parties,

namely, the members of che Debenture Holders’ Committee.

D-6

See Rule 19, F. R. C. P., 28 U.S. C. A. These parties, not being

amenable to service in the district of mu could not of

course be brought in by process be

Responding to the claim that à dismissal was imperative

because of the ‘absence of indispensable parties, Fidelity

argues that since indispensability is not jurisdictional, but

is based on equity, the Debenture Holders’ Committee

should not be held indispensable in the circumstances of

this case. We are not able to agree: As observed in 3 Moore’s

Federal Practice § 19.05, “the concept of indispensability

goes beyond federal jurisdiction and touches the very power

or the right of the court to make an equitable adjudication,

where an indispensable party is not before it. In this situa-

tion, barring exceptional equities, it should not proceed

without his joinder, even though his citizenship would not

destroy jurisdiction in the cases of diversity and alienage,

or although it is immaterial, as when jurisdiction is based

on the character of the subject matter—a federal question.”

No exceptional equities are discernible here.

We proceed to consider the nature of the action and the

effect of the relief granted. The position taken by Fidelity

in bringing its supplemental complaint appears from the

statement of its counsel, which the trial judge quoted in

his opinion, to the following effect: [The Settlement Agree-

ment is a contract which provides that] one side shall do

certain things and the other side shall do certain things.

There has been dispute between the two parties as to how

they shall do it and who shall do it first: It has got to a point

where nothing can be done, hence the supplemental com-

plaint and presentation of the matter by Fidelity here to

see what shall we do, tell us what we shall do, here is the

— —

De

record, give us judgment which says do this and that and

we will go ahead and dispose of the matter.“

As already said, the contract is between the Debenture

Holders’ Committee and Consolidated. Necessarily these

must be the “two parties” to whom counsel refers in his

statement. We gather that Fidelity and the trial judge

regarded Fidelity as a sort of intermediary or stakeholder,

waging the suit for the purpose of settling what the parties

to the contract should do to carry out their respective en-

gagements. Yet one of those parties was not before the

court. The judgment entered runs only against the party

who was, namely Consolidated. The judgment directs that

“plaintiffs and defendants” take the necessary steps to sell

the preference notes; and that “plaintiffs and defendants”

perform the remaining unperformed obligations under the

Settlement Agreement, which obligations, by the terms of

the agreement, would inelude also using their best efforts to

secure a long-term lease of the properties. The “plaintiffs

and defendants” in the lower court were Fidelity on the

one hand and Consolidated on the other.

Now the Settlement Agreement plainly provided that

Consolidated and Debenture Holders’ Committee shall use

their best efforts to sell the preference notes and to obtain

the lease—not that Consolidated and. Fidelity shall do so.

Clearly the Committge is not bound by the order to carry

out its contractual obligations; and equally clear is it that

the Committee and not a trust company was expected to

perform in these respects.

A leading case indicating the criteria by which to deter-

mine whether or not a party is indispensable is State of

D- 8

Washington v. United States, 9 Cir., 87 F.2d 421, 427-428.

The court said:

From these authorities it appears that the absent

party must be interested in the controversy. After first

determining that such party is interested in the contro-

versy, the court must make a determination of the fol-

lowing questions applied to the particular case: (1) Is

the interest of the absent party distinct and severable?

(2) In the absence of such party, can the court render

justice between the parties before it? (3) Will the

decree made, in the absence of such party, have no

injurious effect on the interest of such absent. party?

(4) Will the final determination, in the absence of such

party, be consistent with equity and good conscience?

“If, after the court determines that an absent party

is interested in the controversy, it finds that all of the

four questions outlined above are answered in the af-

firmative with respect to the absent party’s interest,

then such absent party is a necessary party. However,

if any one of the four questions is answered in the

negative, then the absent party is indispensable.”

Asking ourselves these questions as related to the situa-

tion in the instant case, we get certain answers:

(1) Not only is the interest of the Debenture Holders’

Committee not distinct and severable, but it has the only

real interest in the Settlement Agreement. Fidelity, not a

party to that agreement, could have no valid interest in the

manner or method of carrying it out, even though it might

be interested in having it performed promptly.

(2) We are unable to see how the court could render

justice between the parties before it, since the complaint

was based on an allegation that the two parties to the con-

D-9

tract had not fulfilled their obligations under it. Debenture

Holders’ Committee had obligations under that agreement ;

Fidelity had none. As to the matter of rendering justice,

it is notable that the court proceeded to order Consolidated

to do a number of things notwithstanding it stated in its

opinion that [the impasse spoken of by Fidelity in its

brief was created by Fidelity’s action in following the in-

structions. of the Debenture Holders’ Committee. The in-

structions of the Debenture Holders’ Committee were in

violation of the Committee’s obligation under the Settle-

ment Agreement, .“ Yet no order was made or could

be made against the absent Committee.

(3) Fidelity urges, in effect, that no injurious conse-

quences will be visited upon the absent Committee or the

debenture holders because the order runs in their favor.

It points out that F*delity has already complied with that

part of the order requiring it to exchange the securities and

deposit the old debentures in court. We think it more than

doubtful whether the form of the relief granted is of any

consequence, even though it is favorable to the absent party.

See Young v. Powell, 5 Cir., 179 F.2d 147, 151-152. It is the

relief sought that determines indispensability, and here

Fidelity asked that the court order the agreement to be per-

formed. At that time, an order could very well adversely

affect the debenture holders. By bringing the supplemental

complaint, and by virtue of the order entered, Fidelity has

gone ahead and exchanged the debenture holders’ past due

obligations for 30-year income bonds, without the debenture

holders being heard—an exchange Fidelity was instructed

by the Committee not to make.

D-10

(4) Finally, it is evident that the decision below, in the

absence of the Debenture Holders’ Committee, is not equi-

table. We know of no reason, and none is shown, why the

absent debenture holders and the Committee could not chal-

lenge the validity of the exchange, or why they are other-

wise bound by the provisions of the order, or bound to ac-

cept as satisfactory what Consolidated might do by way of

performance of its obligations under the Settlement Agree-

ment or under the court’s order.

Fidelity contends that it had authority to bring the action

and bind the debenture holders by cirtue of the Debenture

Holders’ Agreement of 1939, which it says was incorporated

by reference into the Settlement Agreement. Even conced-

ing that the 1939 agreement was incorporated into the Set-

tlement Agreement for any purpose other than to show the

authority of the Debenture Holders’ Committee to enter

into it (a question not entirely without difficulty) we find

nothing in the 1939 agreement authorizing this action by

Fidelity or purporting to bind the debenture holders. The

provisions of the deposit agreement of 1939 appear to make

Fidelity a depositary only, and to grant certain powers to

it, including the power to bring suit to collect the original

obligations. That agreement, however, specifically reserved

to the Debenture Holders’ Committee, and not to Fidelity,

the right “[t]o negotiate with the Pioche Company, [a]

settlement for the purpose of avoiding or terminating liti-

gation * * *.” and the power “[t]o determine all details

releting to the carrying out of this Agreement and any ar-

rangement or settlement negotiated as above provided or

involved in the collection, by litigation or otherwise, of the

sums so due and payable.” We may add that a party to a

D-11

contract may assign rights under it, but he cannot assign

obligations.

In summary this would appear to be a case where a trust

company, not a party to a contract, asks that the contract

be interpreted and the rights and obligations of both parties

to it be defined and enforced, with only one party to the

contract being before the court. It is a situation where the

trust company, without a showing of authority, asks that

the rights of the absent party be disregarded, and that the

company be permitted to perform in the place and stead

of such party to the extent that the latter is obligated to

perform, and, further, that the party before the court be

required to accept the company’s volunteer performance as

the equivalent of performance by the absent party.

Reversed with directions to dismiss.

Appendix E

Reported in 206 F.2d 336

United States Court of Appeals,

for the Ninth Circuit

No. 12865

Pioche Mines Consol., Inc., et al.

8

Fidelity- Philadelphia Trust Co. et al. ö

[July 27, 1953]

Rehearing Denied Sept. 2, 1953.

Before: STEPHENS, HEALY, and BONE,

Circuit Judges.

HEALY, Circuit Judge.

We heretofore ordered the dismissal of the supplemental

complaint of appellee Fidelity in this case for absence of

indispensable parties. Pioche Mines Consolidated v. Fidel-

ity-Philadelphia Trust Co., 202 F.2d 944. In ruling on the

case we neglected the issue whether the trial court’s dis-

missal of Pioche’s counterclaim was proper. Pioche peti-

tioned for a rehearing requesting that we pass on that mat-

ter. Fidelity was asked to present a brief expressing its

views on the subject and has done so. To this Pioche has

replied, and the neglected issue is now before us for dispo-

sition.

oa? eee racy ue

E-2

Fidelity argues that the dismissal of its complaint ren-

ders mandatory a dismissal of the counterclaim also. We

think not. Compulsory counterclaims are required to be

dismissed only when the complaint is dismissed for want

of jurisdiction, which was not the case here. The counter-

claim persists where it is supported by an independent

ground of federal jurisdiction, Isenberg v. Biddle, 75 U.S.

App.D.C. 100, 125 F.2d 741; 3 Moore’s Federal Practice

§ 13.15. Pioche is a resident of Nevada, Fidelity of Pennsyl-

vania; and federal jurisdiction thus rests on diversity. The

Debenture Holders’ Committee is not an indispensable

party to the action on the counterclaim. The cause of action

undertaken to be stated in the latter sounds in tort, for

which liability is joint and several. In such situation the

right may be asserted against any one or more of the tort-

feasors, the others not being necessary parties. 3 Moore’s

Federal Practice § 19.11. See Rule 19, F. R. C. P., 28 U. S. C. A.

Fidelity further contends that the counterclaim was prop-

erly dismissed on its motion for summary judgment. It says

that the trial court, after a careful study of the lengthy

record, determined that no genuine issue of fact was pre-

sented by the counterclaim. We do not so understand the

attitude of the trial judge. His opinion clearly indicates

that, as regards the counterclaim, he was dismissing the

first cause of action set out in it on the ground that it at-

tempted to state a claim against Fidelity for breach of the

Settlement Agreement, to which Fidelity was not a party.

In our view a liberal reading of that count indicates an

attempt to state a claim for tortious interference by Fidel-

ity with contractual relations between Pioche and the De-

benture Holders’ Committee. As regards the second cause

E-3

of the counterclaim, it is clear that the judge dismissed

it on the narrow ground that the allegations bearing on the

existence of tortious conspiracy were not pleaded with suffi-

cient particularity, and also because it was not alleged that

Fidelity had acted through any particular officers.

The granting of the summary judgment and the dismissal

of the counterclaim were accomplished in a single order.

Pioche moved that the order be amended to permit it to

amend its counterclaim, but the motion was denied. In view

of the liberal spirit as regards amendments displayed in

Rule 15 F.R.C.P., we think Pioche should have been given

opportunity by amendment to cure if it could the shortcom-

ings of the counterclaim indicated by the judge.

Finally, Fidelity contends that the counterclaim was

properly dismissed because directed against Fidelity in its

individual capacity, whereas, it is said, Fidelity brought the

supplement complaint in its representative or fiduciary ca-

pacity. The argument proceeds on the rule that a counter-

claim against a trustee in his individual capacity, where he

has sued as a fiduciary only, is not permissible inasmuch as

it is not a counterclaim against an “opposing party,” as

contemplated by Rule 13. See Higgins v. Shenango Pottery

Co., D.C., 99 F.Supp. 522; Chambers v. Cameron, D.C., 29

F.Supp. 742. We think it highly doybtful that Fidelity

should be considered as having brought this action as a fi-

duciary in the sense of the rule. (See discussion in our orig-

inal opinion of the position taken by Fidelity in the action.)

In any event it would appear that Fidelity has waived the

point. It answered the counterclaim on the merits and inter-

posed no objection on the score of its status as a fiduciary.

E-4

Rule 12(h) provides that, with certain exceptions not here

pertinent, a party waives all defenses and objections which

he does not present either by motion or in the answer or

reply. This court has interpreted the rule as to require the

raising of all affirmative defenses not so excepted in the

reply or by motion. Morgan Electric Co. v. Neill, 9 Cir.,

198 F.2d 119.

The order or judgment dismissing Pioche’s counterclaim

is reversed with leave to Pioche to amend the same if so

advised.

Appendix F

Reported 237 F.2d 164

United States Court of Appeals

for the Ninth Circuit

No. 15198

8

Pioche Mines Consolidated, Inc., Pioche

Mines Company and John Janney,

Petitioners,

vs.

Hon. Roger T. Foley, as Chief Judge of

the United States District Court for the

District of Nevada, and the United

States District Court for the District of

Nevada,

Lae

Respondents.

a

[October 5, 1956]

Before: STEPHENS, HEALY, and BO IE,

Circuit Judges.

PER CURIAM.

‘Petitioners, hereafter generally referred to as Pioche,

seek mandate to compel the respondent court and judge to

dismiss an “amended supplemental complaint,” which was

filed by Fidelity (plaintiff below and intervener here)

subsequent to our decisions and mandates on prior appeals

in this case. The district judge refused to rule on Pioche’s

motion to dismiss the aforesaid amended supplemental

F.2

complaint. Instead, he postponed action thereon until the

time of trial.

Our opinions and orders on the prior appearances here

of the controversy between Fidelity and Pioche are pub-

lished in Pioche Mines Consolidated, Inc., v. Fidelity-

Philadelphia Trust Co., 191 F. 2d 399; 202 F. 2d 944; and

206 F. 2d 336. For an adequate understanding of what the

case is about it is essential that the reader consult those

opinions and rulings.

In the earliest of them we held that the supplemental

complaint there interposed was tantamount to an amend-

ment of the original complaint, and that the original com-

plaint became merged therein. Our second opinion ordered

the dismissal of the supplemental complaint because of the

absence of indispensable parties. No leave was given to

join indispensable parties. Our mandate commanded that

“proceedings be had in said cause, in conformity with the

opinion and judgment of this court.” Clearly, we intended

that Fidelity file no more complaints, however, denomi-

nated, in this action.

A writ of mandate will issue directing respondent court

and judge to dismiss the amended supplemental complaint.

é

*

5.

Appendix d

Reported in 333 F. 2d 257

United States Court of Appeals

for the Ninth Circuit

Nos. 17709,

18192

Pioche Mines Consolidated, Ine, Ely Val.

ley Mines, Inc., and John Janney,,

Appellants,

vs.

Helen Dolman, et al.,

Appellees.

John Janney, |

Appellant,

vs.

Helen Dolman,

Appellee.

[May 21, 1964

Rehearings Denied August 3, 1964.

Before: HAMLEY, BROWNING and DUNIWAY,

Circuit Judges.

DUNIWAY, Circuit Judge.

Before us are 10 appeals, 9 in No. 17,709 and 1 in No.

18,192, all of which have been consolidated bere.

G-2

1. The appeal in No, 18,192.

In No. 18,192 there is but one appeal. That action, num-

bered 310 below, was begun by appellee Dolman as a stock-

holder of Ely Valley Mines, Inc., a Nevada corporation

(Ely), and Pioche Mines Consolidated, Inc., a Nevada cor-

poration (Pioche), and on their behalf, seeking access to

the records of the corporations. The defendants are John

Janney, President, and one Calhoun, Secretary, of each of

the two corporations. An amended complaint was filed on

February 18, 1960, accompanied by a motion for an order

granting access to the records, supported by an affidavit.

The court, on the same day, granted the motion by an ex

parte order. Armed with the order, Dolman did obtain an

examination of the records.

* * „ „

2. The appeals in No. 17,709.

In No. 17,709, there are nine appeals. The action, No. 311

in the trial court, was filed by Dolman on February 20, 1960.

It is a stockholders’ derivative action, brought on behalf

of stockholders of Pioche and Ely against them as nom-

inal defendants, and Janney and a number of Does. It

alleges that plaintiff is a citizen of California, that the two

corporations are Nevada corporations.

The case (No. 311) was consolidated with certain other

pending cases by an order made November 3, 1960. These

are Fidelity-Philadelphia Trust Company v. Pioche Mines

Consolidated, old No. 101, now No. (1221 (the Fidelity

case), action No. 310, and Dodd, et v. Pioche Mines

G-3

Consolidated, No. 1523 (the Dodd case). This order also

set aside the hearing dates of all pending matters, and set

pretrial for December 8.

Ae Ho. 4

On February 6, 1962, a motion was filed for an order

requiring Dolman, et al., to give security in connection with

the restraining order, as required by Rule 65 (e), F. R. Civ.

P. On March 16, 1962, a formal order, appointing one Amer-

ico Campini receiver of the two corporations, with bond

of $150,000, was signed and filed. This order also con-

tains a restraining order similar to that of February 5.

On April 6, 1962, a notice of appeal from the March 16

order was filed. We call this

Appeal No. 5.

On March 20, 1962, the receiver petitioned for instruc-

tions. This petition was granted, and the receiver in-

structed, on the same day. On April 6, 1962, a notice of

appeal from the March 20 order was filed.

On May 24, the court made an order instructing the re-

ceiver. On May 31, 1962, a notice of ro a from this order

was filed. be call this

7 Appeal No. 8.

‘On October 8, 1962, judgment was filed and entered. This

judgment continues the receivership, restrains appellant

Janney and the corporations from disposing of any of

the assets or records of the corporations, restrains Janney

from disposing of his stock in the corporations, and gives

G-4

judgmert in favor of the receiver and against Janney, in

the sum of $1,000,000, plus interest and costs of $1,299.29.

It awards Dolman her expenses in prosecuting the action,

plus “compensation” for her services, and fees to her attor-

neys. It directs that sums collected be apportioned between

and paid to Dolman, her attorneys, and the stockholders

of Pioche Mines Consolidated, Inc., exclusive of Janney.

It retains jurisdiction for two purposes: to change the

amount of the receiver’s bond, and to instruct the receiver.

Findings of fact and conclusions of law were filed at the

same time. A notice of appeal from this judgment was

filed on October 16, 1962. We call this

Appeal No. 9.

The court did err, however, in ordering the default of

the corporations. Appellees’ counsel expressly stated that

their motion was directed solely to the striking of Janney’s

pleadings and the entry of his default, and that he was not

asking for such relief against the corporations. Neverthe-

less, the order that counsel prepared, and that the court

signed, orders that the defendants’ pleadings be stricken,

and their default entered. The judgment is to the same

effect. We think that, while Rule 37(d) gave the court

authority to enter the default, it should not have done so,

as to the corporations, when such relief was not sought.

The rule itself provides for a motion and notice, and coun-

sel made it clear, when the motion was heard, that his

motion was not aimed at the corporations.

When this discrepancy between the motion and the re-

sulting order was called to the court’s attention, it declined

G-5

to change it, apparently accepting the representation of

appellees’ counsel that default of the corporations was

technical only, since they were nominal defendants against

which no relief was sought. This view, however, failed to

take account of the motion to appoint a receiver over the

corporations. Moreover, in striking the pleadings of the

corporations, the trial court struck counterclaims by which

the corporations had asserted claims for relief against

plaintiff Dolman. We consider at a later point the sig-

nificance of this error.

* s * *

D. The Receivership.

We have concluded that it was error to appoint a re-

ceiver for the two appellant corporations, for several rea-

sons.“

First, the prayer of the complaint is insufficient to permit

the appointment on a default. The prayer, so far as mate-

rial is as follows:

“4, That said corporations, and each of them, and

the said JOHN JANNEY, be restrained from exer-

cising any control or entering into any transaction

with regard to the said corporations, until further

order of this Court.”

We think that a receivership is so different from an in-

junction that this can hardly be held to give notice to

appellees that a receivership would be sought. (See Pueblo

Trading Co. v. El Camino Irr. Dist., 9 Cir., 1948, 169 F. 2d

312)

Second, as we have already held, it was error to enter

the default of the two corporations. The default of Janney

alone would not justify a default receivership of the cor-

porations. His sole interest in that question would be in his

G-6

capacities as president of and as a stockholder in each. The

corporations were entitled to contest the application, and

this right was not accorded to them. Not every receiver-

ship is beneficial to a corporation. There is always expense

involved. Sometimes a receivership results in insolvency.

Thus they were prejudiced by the entry of their defaults.

Third, we do not think that a receivership would be proper

in this case in any event. Receivership is an ancillary rem-

edy, and the substantive relief here sought does not justify

its use. The only claims for substantive relief stated in the

amended complaint are two. One is that the court should see

that certain taxes be paid upon undesignated real proper-

ties. This has been done, and the matter is moot. The other

is for $1,000,000, on behalf of the corporations and against

Janney. This has been awarded, as to Pioche. The only an-

cillary relief asked is the injunction referred to in the por-

tion of the prayer quoted above. A receivership is not an

end in itself; it is but a means to an end. Here no end was

sought. Under the judgment, none is in sight.

The orders appointing the receiver, and the portion of

the judgment that continues the appointment, must be re-

versed. The receiver must be required to account and to

deliver the properties of the respective corporations to

them, and be then discharged. (See Brictson Mfg. Co. v.

Close, 8 Cir., 1922, 280 F. 297, 301)

E. The Injunction.

The court, by minute order of December 6, 1961, ordered

the issuance of a temporary restraining order. This was

embodied in a formal order on January 24, 1962. The

order provides:

G-7

JT IS HEREBY ORDERED that the abovemen-

tioned defendants, and each of them, are hereby re-

strained from disposing of any and all assets, including

moneys, of the abovementioned defendant corporations

until further order of this Court;”

The court did not require a bond as provided in Rule 65 (e)

F.R.Civ.P. The order appointing the receiver, of March 16,

1962, also contains an injunctive provision as follows:

“IT IS FURTHER ORDERED that said defendant

corporations, their officers, managers and agents, are

restrained from disposing of, transferring or removing

any of their assets, properties, books, files, records and

accounts, and they and each of them and all other par-

ties having property in their possession or under their

control belonging to said corporations are hereby di-

rected to deliver the same to said receiver.”

It requires a receiver’s bond of $150,000. The first order

fails utterly to comply with Rule 65(d); the second com-

plies. The bond, however, is not the customary form of bond

issued when an injunction is obtained (Rule 65(c)).

The judgment contains the following injunctive pro-

visions :

“Said defendant corporations, their officers, mana-

gers and agents, are restrained from disposing of,

transferring, or removing any of the assets, proper-

ties, books, files, records and accounts of said corpo-

rations, and they and each of them and all other

parties having property in their possession or under

their control belonging to the said corporations are

hereby directed to deliver the same to said Receiver.

“Defendant John Janney is hereby restrained from

disposing of or otherwise hypothecating his stock in

G-8

the following corporations: Pioche Mines Consoli-

dated, Inc., Ely Valley Mines, Inc., Pioche Power &

Light Company.”

Appeals Nos. 4, 5, 7 and 9 relate to these matters.

The order of January 24, 1962 must be reversed for

failure to comply with Rule 65(d). The order of March 16,

1962 must be reversed because it is in aid of the receiver-

ship, as to which it is also being reversed.

The judgment, insofar as it enjoins anyone other than

Janney, must also be reversed, because of the error in

entering the default of the corporations. As it relates to

Janney, it must be reversed insofar as it enjoins him from

disposing of his stocks.

G. The Form of the Judgment.

The judgment awards the receiver $1,000,000.00 against

Janney, “for the benefit of Pioche Mines Consolidated, Inc.

stockholders,” exclusive of Janney. It further directs that

moneys collected be paid direct to the stockholders of

Pioche, exclusive of Janney and of any other stockholders

whom the court may hereafter designate.

This is error. Pioche is still an existing corporation, and

the judgment belongs to it. (19 C.J.S. Corporations § 833d,

pp. 254-255) Moreover, its creditors, if any, have rights

against its assets that are superior to those of its share-

holders. The judgment also confiscates a portion of the

value of Janney’s stock, which, so far as the record shows,

is lawfully issued and outstanding. Its effect is to give his

fellow shareholders a double recovery against him. We

know of no rule of law or equity that supports this result.

In these respects, the judgment must be reversed.

G-9

H. The Orders Instructing the Receiver.

Appeals Nos. 5 and 8 bring before us two orders in-

structing the receiver (28 U.S.C. § 1292(a) (2)). The first is

the ex parte order of March 20, 1962. It authorizes the re-

ceiver:

1. To employ counsel for Dolman as his counsel,

on terms to be determined by the court.

2. To close the office of the corporations at Pioche

and open an office at Las Vegas.

3. To employ a watchman at Pioche.

4. To open a checking account.

5. To advance $6,500 of his own funds, and issue

to himself a receiver’s certificate in that amount.

6. To pay a number of expenses:

(a) $300 per month for watchman.

(b) $100 per month for office overhead.

(c) Insurance premiums, in an amount to be de-

termined.

(d) $1500 premium on his bond.

(e) $3500 to his attorneys for costs to be incurred

in the Fidelity case.

(f) Up to $260 for experses in preparing an inven-

tory.

(g) Up to $500 for his travel and other incidental

expenses.

7. To terminate any present employee of the cor-

porations.

G-10

8. To take physical possession of all corporate as-

sets.

The second is the order of May 24, 1962. This orders the

receiver to take charge of the prosecution of the counter-

claim of Pioche in the Fidelity case and for that purpose

to retain counsel for Dolman. It restrains Janney and his

attorneys from interfering with the receiver in so doing,

and requires that they turn over to him all papers and evi-

dence relating to the matter. It further authorizes the re-

ceiver to issue certificates, upon terms later to be author-

ized, and to use funds thus raised to pay the expenses of

the litigation. The order expressly recognizes the right of

Janney and his counsel to participate in the trial, “in co-

operation with the Receiver and Intervenor [Dolman] and

their counsel.”

[20-22] Since we hold that the appointment of a re-

ceiver was erroneous, these orders must be vacated.

3. The judgment against Pioche Mines Consolidated, Inc.

and Ely Valley Mines, Inc. is reversed.

4. The order entering the defaults of those two corpora-

tions and striking their pleadings is reversed. The

court is directed to reinstate their counterclaims.

5. The orders of December 16, 1961, January 24, 1962,

and March 16, 1962, and the judgment, insofar as they

direct the appointment of, or appoint the receiver, are

reversed.

6. The orders of December 6, 1961, January 24, 1962, and

March 16, 1962, insofar as they contain injunctive pro-

visions, are reversed.

G-11

7. The judgment, insofar as it contains injunctive pro-

visions against anyone other than appellant John Jan-

ney, his agents, servants, or employees, is reversed.

@ eo * *

12. The orders of March 20, 1962, and of May 24, 1962,

instructing the receiver, are vacated.

13. The matter is remanded to the trial court with direc-

tions.

a. To modify the judgment in the manner herein-

above ordered.

b. To enter a judgment that plaintiffs take nothing

against Ely Valley Mines, Inc., or on its behalf,

other than the portion of the injunction awarded

against John Janney personally that is hereby

affirmed, that the action be dismissed as against

Ely Valley Mines, Inc., and that it recover its tax-

able costs in the trial court against plaintiffs.

c. To vacate the appointment of the receiver, require

him to account, settle his accounts in the manner

herein approved, charge expenses of the receiver-

ship against such parties as may be appropriate

under the principles stated in this opinion, require

the receiver to deliver the respective properties,

books, files, records and accounts of Pioche Mines

Consolidated, Inc. and Ely Valley Mines, Inc., to

them, and upon the settlement of his accounts and

the completion of his duties, discharge him.

d. To take all other actions necesessary to carry out

the foregoing orders, and such further proceedings

as shall be consistent with this opinion.

Appendix H

Reported in 336 F. 2d 789

United States Court of Appeals

for the Ninth Circuit

Nos. 18402,

18770, 19005

Pioche Mines Consolidated, Inc., Ely val.

ley Mines, Inc., and John Janney,

Appellants,

vs. >

Helen Dolman, et al.,

Appellees.

[September 23, 1964]

Before: HAMLEY, BROWNING and DUNIWAY,

Circuit Judges. ,

DUNIWAY, Circuit Judge.

These appeals involve matters occurring subsequent to

the judgment in the case of Dolman v. Pioche Mines Con-

solidated, Inc., et al., No. 311 in the United States District

Court fur the District of Nevada, Pioche Mines Consoli-

dated, Inc. v. Dolman, 1964, 9 Cir., 333 F. 2d 257, No. 17,709

in this court. On appeal from the judgment and from cer-

tain other orders in that case, we reversed in part and

affirmed in part, and remanded the matter for further

proceedings. .

H-2

Appellants have filed a d.cument which they entitle

Motion for Summary Reversal. Appellees have replied and

appellants have answered that reply. In view of the posi-

tions taken by the parties, we are of the view that oral

argument is not necessary in connection with any of these

appeals.

The order of March 13, 1963 granting a request of the

receiver to sell certain corporate assets is reversed and the

matter is remanded to the district court for further pro-

ceedings consistent with the directions given by us on

remand in Pioche Mines Consolidated, Inc., et al. v. Dol-

man, et al., No. 17,709.

In No. 19,005 the order of August 29, 1963 directing the

filing of the receiver’s account, authorizing him to accept an

offer for the purchase of certain corporate assets, and per-

mitting him to reimburse himself for certain claimed costs,

to pay certain attorneys’ fees, to reimburse his attorneys

for certain claimed costs, and to pay himself a fee, is

reversed, and the matter is remanded to the district court

for further proceedings consistent with the directions given

Voie es ee ee

v. Dolman, et al., No. 17,709.

Appendix I

Reported in 385 F. 2d 188

United States Court of Appeals

for the Ninth Circuit

Nos. 19745,

19761 and 21099

Ely Valley Mines, Inc., et al., ‘

Appellants,

vs.

Lawrence Rust Lee, et al.,

Appellees.

Ely Valley Mines, Inc., and Pioche Mines

Consolidated, Inc.

Appellants,

vs. >

Helen Dolman, et al.,

Appellee.

Ely Valley Mines, Inc., et al.,

Appellants,

vs.

Helen Dolman, et al.,

Appellee.

1

[November 8, 1967]

Before: HAMLEY, BROWNING and DUNIWAY,

Circuit Judges.

DUNIWAY, Circuit Judge:

These appeals relate to orders made by the District

Court after it had entered a new judgment pursuant to our

1-2

mandate in Pioche Mines Consolidated, Inc. v. Dolman,

9 Cir., 1964, 333 F.2d 257, cert. denied, 1965, 380 U.S. 956,

85 S. Ot. 1081, 13 L.Ed2d 972. In No. 19,745, the appeal is

from an order striking the answer of appellants Ely Valley

Mines, Inc. and Pioche Mines Consolidated, Inc. to the

amended complaint. In No. 19,761, the appeal is from a

restraining order. In No. 21,099, the appeal is from an

order denying a motion to amend the judgment entered

upon our mandate and an order relating to costs.

At the outset, we find it necessary to consider a misap-

prehension under which appellees, and perhaps the District

Judge, seem to be laboring. Appellees urge that the appeal

is not really taken by the two corporate appellants but by

John Janney and that therefore we should not recognize or

take cognizance of the appeals. And the court, in its order

striking the answer of the corporations in our No. 19,745

(a document prepared by appellees’ counsel) recites:

“11. That the said document is purportedly filed on

behalf of defendant corporations by defendant JOHN

JANNEY; that the said JOHN JANNEY has hereto-

fore been enjoined from acting on behalf of the said

corporations, which said injunction has become final

after appeal.”

There is nothing whatever in the record to support this

notion. Only two things have happened to Mr. Janney.

First, Pioche Mines Consolidated, Inc. has a judgment

against him for money. Second, he is enjoined by that

judgment from “disposing of, transferring, or removing

any of the assets, properties, books, files, records and

accounts” of the two corporations. But the judgment does

not outlaw Janney, either personally or as president of

1-3

either corporation, much less does it outlaw the two cor-

porations. It certainly does not prohibit either corporation

from asserting whatever right it may have in this litigation.

Each is entitled, like every other litigant, to its full day in

court, whether its pleading be signed or vertified on its

behalf by Janney as its president or by some other officer or

agent. Each is entitled to have its counsel recognized in this

case, whether or not they were retained on its behalf by

Janney as president. He has not been removed as president.

The directors and other officers have not been removed

from office. And we have held that this is not an action for

such relief. (See 333 F.2d at 273.) If appellees could bring

themselves to recognize this fact a lot of the sparring and

name calling that has gone on in this case might cease, and

it ought to be possible to hear and decide the remaining

issues on their merits and with reasonable dispatch.

Appellees assert that so long as Janney remains as

president of Pioche Mines Consolidated, Inc., he will not

permit the corporation to enforce its judgment against him.

To this there are at least three answers. First, the injunc-

tion which we have just quoted would prevent him from

disposing of or transferring that judgment. Second, as we

pointed out in our prior opinion, there are means whereby

the stockholders can elect new directors who will appoint

new officers, or can get other appropriate relief. Third, if

the stockholders, knowing the facts, should, in a lawful

manner, decide that the judgment against him should not

be enforced, they could probably do so, whether appellees

like it or not.

14

This litigation has been pending since 1960. Companion

cases have been pending much longer. The judge has been

on the receiving end of charges of various kinds of mis-

conduct, levelled at him by Janney and the appellants and

their counsel, during most of this time. He has borne him-

self with more patience than the members of this panel

might have shown under similar provocation. We are not

surprised to find that, from time to time, he has shown

some annoyance at the behavior of these parties and their

counsel. They may well have goaded him into taking more

drastic actions than he would otherwise have taken. See our

prior opinion, supra, and our decisions in Pioche Mines

Consolidated, Inc. v. Fidelity-Philadelphia Trust Co., 9

Cir., 202 F. 2d 944 and 206 F. 2d 336, Pioche Mines Consoli-

dated, Inc. v. Foley, 9 Cir., 237 F.2d 164, and Pioche Mines

Consolidated, Inc. v. Dolman, 9 Cir., 336 F. 2d 789.

The restraining order appealed from in No. 19,761 is

dated September 2, 1964, and reads:

“Upon the reading of the affidavit of Americo L.

Campini herein, and good cause appearing therefor,

IT IS HEREBY ORDERED that defendant John

Janney, directly and indirectly, by and through T.

David Horton, Victor Cottino, and all other agents of

said John Janney, are hereby restrained from attempt-

ing to occupy, possess, or in any way exert dominion or

control over the properties of Pioche Mines Consoli-

dated, Inc., and Ely Valley Mines, Inc.

IT IS FURTHER ORDERED that each and all of

said persons are to be removed from said properties

forthwith.”

15

Our mandate in Pioche Mines Consolidated, Inc. v. Dol-

man directed, among other things, that the court:

„ * vacate the appointment of the receiver, re-

quire him to account, settle his accounts in the manner

herein approved, charge expenses of the receivership

against such parties as may be appropriate under the

principles stated in this opinion, require the receiver

to deliver the respective properties, books, files, rec-

ords and accounts of Pioche Mines Consolidated, Inc.

and Ely Valley Mines, Inc., to them, and upon the set-

tlement of his accounts and the completion of his du-

ties, discharge him.” (333 F. 2d at 277-278.)

Obviously, the requirement that the properties of the cor-

porations be delivered to them is subject to the normal

delays incident to termination of a receivership. But if it

appears that there is to be substantial delay in settling the

receiver’s accounts, as there has been here, and unless it also

appears that there is some valid reason why the receiver

should retain possession, the return of the properties and

records should not await settlement of the receiver’s ac-

counts. The continued retention of them by the receiver is a

continuing wrong to the corporations. So far as appears,

the restraining order is still in effect, and the receiver is

still in possession. The restraining order must be reversed.

The properties and records should be surrendered forth-

with, unless the court determines, promptly, that there is

a good reason for not doing so. As we have pointed out, the

fact that Janney is still the president of each corporation is

not such a reason.

Appendix J

Reported in 410 F. 2d 742

United States Court of Appeals

Ninth Circuit

No. 22700

Pioche Mines Consolidated, Inc., and Ely

Valley Mines, Inc.,

Petitioners,

vs.

ö

The Honorable Roger T. Foley, Judge of

the United States District Court for the

District of Nevada,

Respondent.

i

[April 28, 1969]

Before: HAMLEY, BROWNING and DUNIWAY,

Circuit Judges.

DUNIWAY, Circuit Judge:

Pioche Mines Consolidated, Inc. and Ely Valley Mines,

Inc, petition this court for a writ of mandamus directing

the District Judge to order the immediate return of their

properties and records now held by the receiver appointed

by the court.

On August 3, 1964, in Pioche Mines Consolidated, Inc. v.

Dolman, 9 Cir., 333 F. 2d 257, we held (p. 273):

“The orders appointing the receiver, and the portion

of the judgment that continues the appointment, must

J-2

be reversed. The receiver must be required to account

and to deliver the properties of the respective corpo-

rations to them, and be then discharged.”

We remanded the case with directions, inter alia:

“To vacate the appointment of the receiver, require

him to account, settle his accounts in the manner herein

approved, charge expenses of the receivership against

such parties as may be appropriate under the prin-

ciples stated in this opinion, require the receiver to

deliver the respective properties, books, files, records

and accounts of Pioche Mines Consolidated, Inc. and

Ely Valley Mines, Inc., to them, and upon the settle-

ment of his accounts and the completion of his duties,

discharge him.”

The trial court thereafter refused to order return of the

properties because the receiver had not yet accounted. The

corporations then sought leave to file a petition for a writ

of mandate with this court, which we denied without opinion.

Next, the trial court issued a restraining order enjoining

John Janney, the president of the two corporations, and

his agents, from attempting to occupy or control the cor-

porations’ properties. On appeal, we reversed on November

8, 1967. Ely Valley Mines, Inc. v. Lee, 9 Cir., 385 F. 2d 188.

In that opinion we pointed out that our denial of leave to

file the petition for a writ of mandate was not an affirmance

of the court’s order refusing to require the receiver to

deliver the companies’ properties. We also said (p. 193):

“Obviously, the requirement that the properties of the

corporations be delivered to them is subject to the

normal delays incident to termination of a receivership.

But if it appears that there is to be substantial delay

in settling the receiver’s accounts, as there has been

here, and unless it also appears that there is some valid

J3

reason why the receiver should retain possession, the

return of the properties and records should not await

settlement of the receiver’s accounts. The continued

retention of them by the receiver is a continuing wrong

to the corporations.

“The properties and records should be surrendered

forthwith, unless the court determines, promptly, that

there is a good reason for not doing so. As we have

pointed out, the fact that Janney is still the president

of each corporation is not such a reason.”

We hoped that this would dispose of the matter. Un-

fortunately, it did not, for in the meantime Janney died.

Counsel for the plaintiffs and the receiver, and the trial

court, seized upon this fact as a basis for claiming that

there “ve no officers or directors of either corporation to

whom the properties can be returned. This, in spite of the

clear statement in our first opinion (333 F.2d at 272-273)

that the action was not one for the replacement of the

officers and directors, and in our second opinion (385 F. 2d

at 190) that the judgment did not outlaw the corporations,

and that the directors and other officers had not been re-

moved from office. There is not a shred of evidence in the

record to support an assertion that those persons listed

as officers, directors, and agent of each corporation, as filed

each year with the Secretary of State of Nevada, pursuant

to Nevada law (Nev.Rev.St. § 78.150) are not, at the very

least, de facto’ what they purport to be.“ There is no sug-

gestion that anyone else occupies any of those positions.

It simply does not lie in the mouth of the receiver, who

is illegally in possession of the corporations’ properties, or

of the plaintiffs, who wrongfully obtained his appointment,

or of the judge, who erroneously appointed him, to assert

J-4

otherwise. A wrong cannot be perpetuated in any such

fashion. The trial court has failed to comply with the

mandates of this court.

Let a writ of mandamus issue directing respondent forth-

with to order the return by the receiver of the properties,

books, files, records and accounts of Pioche Mines Consol-

idated, Inc. and Ely Valley Mines, Inc. to any officer,

director or agent of each, named in the current annual lists

of officers, directors, and resident agent required by Nev.

Rev.St. § 78.150, and to restrain the receiver from in any

manner whatever further interfering with the possession

and use, by each corporation, of its properties, books, files,

records, or accounts.