# Petition for Writ of Certiorari — Avern Trust v. Clarke > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385604_1305%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1970 - **Citation:** 397 U.S. 963 ## Text LIBRARY ~~. Rae SUPREME COURT, U. Ss. | Office-Supreme | | FILED’ o { _ JAN 19 1979 %5 a ar SSS a / ® ores. bee acttotarcees .| ‘e's AVIS,, CLERK | ae ; £ - = In THE Supreme Court of the United States Ocroser Term, 1969. No. : 1091 : | od AVERN TRUST, VIRGINIA P. DOOLEY, JAMES A. DOOLEY and JAMES A. DOOLEY FOUNDATION, ; a charitable corporation, Petitioners, vs, JOHN W. CLARKE and JOHN W. CLARKE CO., a corporation, Respondents. og - . Petition For A Writ Of Certiorari To The United States Court Of Appeals .For The Seventh Circuit & Rosert A, SpreEcHER 111 W. Monroe Street @&- Chicago, Tlinois 60603 Attorney for Petitioners I ERE ire Wt ante gap ar Salou ieee MIDWEST LAW PRINTING GO., CHICAGO 60601, FINANCIAL 6-3988_ Sr moms a “we : & . INDEX ’ : PAGE RN ee pe Jurisdictional Statement 22222... cece cee ececeeeeeeeceeeee 2 Questions Presented — onto. icc ccseneosccectcecceegenceseeseeeeees 2 Concise Statement of the Case 0.0... cceccceeeceeece. 3 Reasons for Granting the Writ : Weiapsue tebeiaih 2 Seen : oe 12 1. This decision is in direct conflict with another decision of the same Court of Appeals on the | same matter of Federal law ..................... 12 2. This statutory action was tried as if it were a common law fraud case; In exacting proof of _ *“ntentional and deliberate” wrongdoing, and admitting evidence of other transactions on - which the investor profited, this Opinion con- flicts with decisions of this Court and those of the Second and District of Columbia Cireuits ... 15 3. The decision interprets Rule 5% of the Federal * Rules of Civil Procedure so that it is impossible to have a court of review pass upon objections to instructions—a deleterious effect upon the failure of future administration of this rule ab. ee . Prayer for Writ of Certiorari ....05.0002....-...--cc.00.-c- 24 List Or AUTHORITIES Cases: Buttrey v. Merrill, ‘orn Pierce, Fenner & Smith, Inc., 410 F. 2d 135 (7th Cir., 1969) ................ 12, 14, 15 Globus, et'al. v. Law Research Service, Inc., et al., _ Docket Nos. a il 68, U.S.C.A. 2d Cir. 1969 ... © at ASIN. cathy spate ces sheesh in Cine orsbalp acm vaivcemeewpevenspeabatinee 17, 16, 19 Hughes v. S.E.C., 174 F. 2d 969, 974 —.002... 18, 19 S.E.C. v. Capital Gains Research Bureau, Inc., 375 Ee Re CRED i haces Se csets as act iack 16 | Statutes: x | me A SM 2 Securities Act of 1933 : ig " Seetion 12(2)..(15,.U.S.C. §771(2)) ............- 13, 16, 18 Section 17(a) (15 U.S.C. §77q(a)) ........ 36, 17%; 2 Securities Act of 1934 ; Section 10b (15 U.S.C. $78} (b) ) -.-.--.2-2-------ce-ee-e 13, 17 Section 15A (15 U.S.C. §780-3) ...0....2.2. eee 13, 14 Section 15(¢)(1) (15 U.S.C. §780(e)(1)) ......-........- 13 Rules: > Rule 10b-5 (17 C.F.R: 240.10b- Seeepeenee acarnce 13, 15, 20 Rule 15e1-2 (17 C.F.R, 240.15e1-2) .........................- 14, 20 Rule 51, F.R.C.P. (28 U.S.C. Rule 51)... 20, 24 Rule 405 of the New York Stock Exchange eae 15 N. A.S.D. Rules of Fair Practice, Art. ITT, §§ 1,2. In Tue Supreme Court of the United States Octoser TERM, 1969 No. AVERN TRUST, VIRGINIA P. DOOLEY, JAMES A. DOOLEY and JAMES A. DOOLEY FOUNDATION, sy eo corporation, Petitioners, vs, = JOHN W. CLARKE and JOHN W. CLARKE Co., a corporation, Respondents. Petition For A.Writ Of Certiorari To The United States Court Of Appeals For The Seventh Circuit ¢ \ Petitioners pray that a writ of certiorari issue to the United States Court of Appeals for the Seventh Circuit to review the judgment of that Court entered on July 14, 1969, which affirmed a judgment of the District Court for the Northern District of Illinois entered upon the verdict of a jury finding the issues for the respondents. £ ~ OPINION BELOW. * No opinion was rendered by the United States District Court. The opinion of the Court of Appeals for the ain Seventh Circuit affirming the District Court’s judgment is reported as an Lege to 415 F. 2d Adyance Sheet No. 4. ; om eM oe : =e Petitioner, James A. Dooley acted on behalf of himself and the other petitioners. He is a Chicago lawyer. He is extremely active as a trial and appellate lawyer. He has contributed to his profession in lecturing at law ‘schools, bar associations, authoring nunrerous law review articles, and revising Judge Cooley’ s work on torts. (A. 439-441) en , ee ~ The District Judge stated: “The Court: As far as his (petitioner Dooley’s) activities are concerned, this Court is willing to take judicial notice of the fact that he has been on trial practically all of the working hours of the time... . I am willing to take judicial notice, because I have many times called him myself for ‘trial and found him engaged regularly and consistently. There is no ‘question about that counsel,’’ (R. 1478, A. 740) The respondent John W. Clarke knew that Dooley de- voted virtually all of his time to the practice of law. He wrote to Dooley from time to time and made such state- ments as the following:. ‘*Knowing your busy schedule . ‘‘When you get your heav€ burden of court off your shoulders. . .'.” (P. Ex. 12) ‘*L know’ you, like everyone else, must liave fifty . times more: to read than you have the time in which to do it. faa ‘**Tf you can pesaility find the time to read |this. . “ay (Pl. Ex. 13) ana | ‘*T know vou don’t have time to think of your invest- ments... .” (Pl. Ex. 14) * From 1938 or 1939 td’ 1960, Dopley had purchased se- curities from Baker, Walsh and Company. (A. 425) John F. Baker, a firm member, and Dooley had been law school . St aa ; e classmates. (A. 423, 425) At the end of 1960, Baker left the security business to return to the practice of | ‘law. (A. 423, 426) | Baker acted as Dooley’s financial adviser from 1946 to 1960. (A. 443) Baker consulted with Dooley oe those years. (A. 425, 431) Baker, Walsh and Company riever handled ‘any under- writings (A. 423, 430) and never owned any inventoried | - stocks or bonds, (A. 423) The company was licensed as a stock broker-dealer and was a stock exchange mémbher. (A. 423) On July 21, 1958, respondent Clarke telephoned Dooley and invited him to lunch. (A. 308, 309, 444) Clarke had read an article in the Wall Street Journal of July 7, 1958, (A. 309, 311) concerning a case wherein Dooley had received a fee of $150,000. (Pl. Ex. 6) Clarke’s purpose in hating the luncheon was to sell securities to Dooley. (A. 311, 444, Pl. Ex. 7) Dooley purchased $30,000 in bonds from respondents in 1958 (A. 983, Pl. Ex. 142, 434) and $35,000 in bonds - in 1959. (A. 984, Pl. Ex. 145) These transactions were not the subject matter of petitioners’ complaint. The relationship out of which this action arose com- menced in 1960, when Baker was returning to the prac- ~—tice_of law. (A. 448) This“is manifest by Resp. Ex. 36, a suggested program prepared by Clarke for Dooley dated- September 14, 1960. (A. 966) . During this period, Clarke sold petitioners certain se- curities, and petitioners sustained substantial losses. A chart tells the facts. more succinctly than words: igs Oa. Peti- Date Respondents’ tioners’ Issue Acq’d Profit* Loss** American Nat’! Ins. 11/13/61 ¢$ 512.60 $ 1,287.40 Ariz. Pub. Serv. Co. 11/1/61 801.20 27,993.10 Ariz. Pub. Serv. Co. 9/18/62 1,000.00 21,619.78 Arlan’s Dept. Stores 9/26/61 695.75 1,592.40 } 5/10/62 Business Cap. Corp. 2/8/61 3,700.00 21,261.48 Calandrga..-Photo 8/9/61 235.00 510.15 — ‘Champion Spark Pl. 11/16/60 540.00 1,687.88. Cowles Mag. & Broad. 10/30/61 . 680.00 4,530.88 Ford Motor ; 6/17/61 1,040.00 - 652.35 "| 2/24/62 1,015.00 Handschy Chemical 11/20/61 900.00 5,142.72 Rich. D. Irwin 8/29/61 234.00 1,406.86 Krvlon Ince. . 3/13/62 510.00 3,946.80 ‘Marsh & McLennan 3/20/62 820.00 2,850.80 Metro-Goldwyn-Mayer 3/13/61 898.60 12,638.76 © Morse Shoe Co. 4/5/62 568.00 5,566.20 North Am. Accept. 11/29/61 | 400.00 2,384.98 Pauley Petroleum 1/19/62 547.60 18,547.60 Pioneer Nat’l Gas 346.90 22.20 Tip Top Products 12/14/61 3,460.00 39,617.85 Western Nat. Gas 11/2/61 1,315.15 24,789.18 | 2/15/62 3/16/62 Total Respondents’ Profit _. $20,219.80 Total Petitioners’ Loss $198,049.37 * As partially disclosed by respondents’ answers to interrogatories . (A. 45-6) and summarized in petitioners’ Ex. 77, not received in evi- dence but offered as part of offer of proof (A. 1275-6) and in peti- tioners’ Ex. 20,.received in evidence. (A. 420) : ** As partially disclosed by respondents’ answers to interrogatories (A. 39-44) and summarized in petitioner’s Ex. 82, received in e vi- dence. ar ee The percentage of Clarke’s total allotment sold peti- tioners and his profit per share are very telling: Percentage of Profit Issuer ; Respondents’ Shares Per . Sold to Petitioners Share** *Arizona Publi¢ Service Co, 100% ¢ 50 Arlan’s Dept. Stores (1) 114% 1.75 -Arlan’s Dept. Stores (2) 333, % 1.75 Business Capital Corp. 0% ° :1.00 _Calandra Photo Co. 3314 % 80 ‘Champion Spark Plugs 40% 1.35 Cowles Mag. & Broadcast 20% 1.10 _*Ford Motor Co. (1) 3314 % . 2.66 _ *Ford Motor Co. (2) . 4124% 3.00 *General Motors Corp. 40% 1.00 Handschy..Chemical 25% 1.02 Inland Life Ins. 50% .24 *International Harvester Co. 100% 1.57 ' Richard D. Irwin 3314 % 1.28 Kellwood Co. 40% 1.40 Krylon Ine. 40% =. Marsh & McLennon % 25% 2.10 Morse Shoe Co. 32% » 1 North American Acceptance 6624 % 40 Northern Illinois Gas 20% 1.00 Sel-Rex Corp. 25% 1.98 Tip Top Products 50% 4.90 **21”’ Brands, Ine., . 16% 80 * Listed on New York Stock Exchange hut recommended and sold to petitioners by Clarke only when underwriting or secondary issue involved. ** Taken from Pl. Ex. 33, (R. 928-830) and Clarke’s testimony (A. 374 et seq.). a On Clarke’s advice, petitioners sold Business Capital Corporation an @ INDEX. PAGF mensoment. Of the Case. osnk ss os os Ko eo ees oi ea ary I. Nature of the Action and Proceedings Below.. 3 II. Facts Relevant to the Issues Raised by. the hes i, AR ee PLES Pees We RIG Re 4 The Writ Should Not Be Granted ........:......: 2) I. The Decision Below Is Absolutely Consistent With Buttrey v. Merrill Lynch, and Therefore Is No Conflict of Decisions Within the Seventh i a RS Ea ee LC pn er see een TONG wena StL) he ap 25 II. The Opinion Below Is Not In Conflict With Any Decision of this Court or of the Courts of Appeals of the Second and District of Colum- bia Circuits With Regard to the Necessary Fle- ments to be Established in a Private Action Under the Securities Act or Exchange Act .... 29 IIT. The Court of Appeals Has. Applied Rule 51 of the Federal Rules of Civil Procedure in Ac- cordance With the Mandate of This Court Laid Down in Palmer v. Hoffman .........:...... 34 COMME Os are ee ee en ote ea rs dee ens 36 AUTHORITIES. Cases. Buttrey v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 410 F. 2d 135 (7th Cir., 1969) .:........... . .20, 26 Colonial Realty Corporation v. Bache & Co., 358 F. 2d RIG (AG Rite BOY as Ses bad SAG oe eee ee ed 26 Globus v. Law Research Service, Inc., Nos. 32766-68 | mag ie. Une (2nd Cir., 1969); Fed. See. L. Rep. Rt Se aay ere pare Pee re eee pee pats chy Ay Ua 31 -. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385604_1305%3A1. Public record. Not legal advice.