# Appellees Brief — Missouri-Kansas Pipe Line Co. v. United States > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386401_0379%3A11 ## Record - **Collection:** Supreme Court brief - **Document type:** Appellees Brief - **Published:** January 1, 1941 - **Citation:** 312 U.S. 715 ## Text - supreme Court of the United OctopEr TERM, 1940: 7? 3 No. 269. a oo PANHANDLE EASTERN PIPE LINE COMPANY, Appellant, vs. * © THE UNITED STATES OF AMERICA, COLUMBIA GAS & ELECTRIC CORPORATION, COLUMBIA OIL & GASOLINE CORPORATION, GEORGE H. HOWARD, PHILIP G. GOSSLER, CHARLES A. MUNROE, THOMAS R. WEYMOUTH, THOMAS B. GREGORY, EDWARD REYNOLDS, Jr., BURT R. BAY and JOHN H. HILLMAN, Jr., | A ppellees. ApprAL FROM THE District CourT OF THE Unrren Pmaaeee FOR THE District or DELAWARE. oe BRIEF OF APPELLEE, COLUMBIA OIL & GASOLINE CORPORATION. ° Danreu O. Hastinas, © €ontinental American Building, Wilmington, Délaware. ’ Wituram H. Burton, ¥ 27 Cedar Street, New York, N. Y. James B. AuLeEy, : 50 Broadway, i‘ New York, N. Y. Of Counsel: Wituiam H. Burton, James B. ALLEY. _ Pandick Press, Inc., 22 Thames St., New York, U. S. A.. : : & : ) | , , ; PAGE | Decision cr THE Lower Covrt.....:...... et te Quzs TIONS PRESENTED ..... : , 4 SearEMEnT oF THE Cask Point I— Appellee, Columbia: Ow & Genctine Corpo- _ ration, by its motion to. dismiss the application to intervene, with supporting affidavits, properly raised the question of the authority of the attor- neys prosecuting this appeal-to act on’ behalf of - Panhandle Eastern Pipe Line Company in making ~ | and prosecuting the intervention application.......... 13 Porrr II—The appeals should be dismissed on the: + °"~ ground that the order appealed from is net a final . order and, therefore,.is not appealable to this or any other court.under the provisions of the Expe- diting Act governing appeals in eyuity suits under. _ the Federal Anti-Trust Laws, wherein the United - States is complainant 15 Por I1I—The Court below was correct in dismiss- ing the intervention application in the name of Panhandle Eastern Pipe Line Company because it was not ‘authorized ‘by Panhandle Eastern Pipe : Line Company, and the attorneys making said ap- plication and prosecuting this appeal have not béen authorized by Panhandle Eastern Pipe Line Company to act in“its behalf ; BN a a stssdlld s * ete . + . BESBS . “9@t ” om Bay ONE OL EOE I ED Cases Crrep.. The Pueblo of Santa Rosa v. Fall, 273 U. §. 315.......... United States v. aliforate Cooperative Canneries, : Paden S. 553.: ~ ee 16, |: Sop , a. . iS, | | | Sraérures Crrep. : yo igi ae : => Delaware Corporation Law......... Sadat - 11,24 Sec. 17 (See Appéndix D, p. 42) oan 24 See. 18 (See Appendix D, p. | ROR Saree 24 Sec. 31 (See Appendix D, p. 42). Ke. al Expediting Act (U.S. C. A, Title 15, Sees. 28 and ee I ONDE 5 NERO a 15, 16 . Rules of Civil Procedure......... Schaioenpeesitah: >} Ne * Rule 8(c) ............ sila Madebe ai siurad alts — 44 Rule 8(d) ...... he 14 a Lf’ a : # ; i ° ° i a . e hh Bic poavmeomeenmsere nea Jk saisiibads Shnedcagesaatiielcatinia -foupreme Court. of the Ginited States ~ Ocroser Trem, 1940. ed 4 No. 269, > ame a f? PannanpLe Hastern Pipz Line Company, Appellant,” . ace ar , ah Porn vs. i THE Views f Grates or America, Conumeta.: $@as & Exsorsic Corporation, CoLumsia : Om & Gasotine Corporation, Gzorce H. | Howarp, Pump G. Gosster, Cares A. | ; Mouwnnog,. ''Homas R. Weyrmovra, THOMAS B. Gascony, Epwarp Reynows, Jz; Burr R. Bas, and Joun H. HimiMavn, JR., 4 eee a ae can pl ~~ 4 o AppEAt FROM THE Drsrarcy Cours oF THE UNITED States _ FOR THE Disrnicr oF DeLawane. BRIEF. OF APPELLEE, COLUMBIA OL. & GASOLINE | CORPORATION. | Pe Decision of the Lower Court: ° a This byief is submitted by the appellee Columbia Oil & | Gasoling Corporation (hereinafter referred, to a8. Columbia on) in opposition to the purported appeal of the appel- — lant, Panbandle Eastern Pipe Line Company -(hereinafter referred to as Panhandle Eastern), from an order of the District Court of the United States for the District of Delaware, dated April 23, 1940 (R.* 565). ‘That: order: . onset Trae of Record on hows — will be referred tg a 3 to dismiss an application (R. 412-424) made on March 23, 1940, in the name of Panhandle Eastern for leave to inter- vene in the anti-trust: suit instituted by the Government in the: District Court against’ the other appellees herein. Prior to the entry of the order, the District Court handed down an opinion which is printed at pages 520-526 of the Record andi is reported in 32 Fed. Supp. 474. For the con- _ venience of this Court that opinion is ‘printed at the end of this brief as Appendix A. The motions to dismiss the application in the court below were made upon the limited grounds (R. 426, 515) that the ~ application was not authorized. by Panhandle Eastern and ; that the attorneys who made the application were not authorized by Panhandle Eastern to act in its behalf in making or prosecuting such application or otherwise. The court granted these motions Te on these limited grounds (R. 520). . This peculiar situation was brought about by the fact that the attorneys who are allegedly acting for Panhandle Eastern in this matter claim that they are acting for Pan- handle Eastern under the authority of certain resolutions allegedly adopted at a stockholders’ ‘meeting of Panhandle . Eastern, held on March 11, 1940 (R. 423, 425). All the preferred stock and a majority of the common: stock: of Panhandle Eastern,’ however, were owned by Columbia Oil (R. 150, 448), but due to the provisions of the Consent — Decree herein (R. 146), the legal title to all this stock has been‘vested in Mr. Gano Dunn (R. 150), with the power to elect six. out of the nine directors of Panhandle Eastern (R. 523), and to vote on other subjects as directed by Colum- bia Oil (R. 147).- In short, Mr. Dunn had entire control of that stockholders’ meeting (R. 428-480). . | granted motions ‘(R. 426, 514-516) made. by the appellees i Columbia Gas & Electric Corporation (hereinafter referred | to as Columbia Gas)-and Columbia Oil.on March 29, 1940, 7 3 ; ‘Despite that fact and despite the adverse votes of Mr. - Dunn, said attorneys claim that at the meeting the minority "stock interests, namely, Missouri-Kansas Pipe Line Com- pany ( hereinafter referred to as Mokan), not only had the right to but did take control of this important corporation, - amended its by-laws (R. 451, 460), elected-a Board of Direc- tors (R. 458), appointed officers (R. ™_ and hired counsel (R. 461-463); It is evident that a situation of this sort ‘ei -have caused some concern, not only to Mr. Dunn but to Columbia ~ - Oil, the beneficial owtier of. the majority stock of Panhandle © Eastern. Accordingly, when the attorneys for Mokan, claiming to act for Panhandle Kastern, made the application iw the name of Panhandle Eastern for leave to intervene in the Government’s anti-trust suit pursuant to author? ‘ity which they claim was conferred upon them at this strange stockholders’ meeting, Columbia Oil and Columbia -Gas promptly moved in the District Court to dismiss:that ~° application (R. 426, 514-516). After a full hearing, tnat court decided that the actions of the minority interests at ‘the stockholders’ meeting of Panhandle Eastern were void’ and unjustifiable; that Mr. Dunn’ 8 votes in opposition to such alleged actions were valid; and ‘that the attorneys claiming to act for Panhandle’ Eastern had no authority to ’ do so (R. 520-526). In the meantime, the minority interests, _ in other, words Mokan, realizing the weakness of their posi- tion instituted a proceeding in the Chancery Court of the ‘State of Delaware-in an effort to validate what they hoped they had accomplished at this peculiar stockholders’ meet- ing (R. 510-514). ‘ _- After a full hearing in that proceeding, the Chancellor of the State of Delaware confirmed the election of nine _ - directors whose election had not been contested,. and held - : that the five additional persons who had been nominated as oy | 4 directors by the minority interests had not been elected, and that all. attempts by the minority interests to amend the by-laws, appoint officers and hire counsel were wholly | void and ‘without effect (Appendices B and C). — aoe It should be noted that under the General Corporation ‘Laws of the State of Delaware,* the ChanceUor i is vested with the exclusive power over such internal corporate con- - troversies. The Chancellor’s decree is, therefore, final and conclusive’ on the invalidity of the aitempted.actions of the minority interests at the stockholders’ meeting, as well _ as on the lack of authority fof these atterneys who claim to actions. No appeal hai een taken from the Chancellor’s decree and, therefore, his decision is final in the matter. ® a al coe a represent Panhandle i a on the basis of. such invalid ~_—n | Questions Presented. The only questions presented or this appeal are (a) Whether this Court has the jurisdiction to con- _ sider this appeal, (b) ° Whether the application for. leave to intérvene - in the anti-trust suit in the District Court was author- ized by Panhandle Kastern, and.‘ ¥ (c) Whether the attorneys who made said ‘appli. ‘eation in the name of Panhandle Eastern were author-: aS ee by Panhandle Eastern to act, on its behalf. Statement of the Case. ~ The cause ssiiiie in the District Court in which the application to intervene was sought to he filed is a.suit, originally instituted by the United States Government on * Section 31 of the General Corporation*Laws of the State of " Delaware i is printed in full in eo D at the end of this brief. © | s H March 6, 1938, by a bill in equity agains ne Columbia Gas, ° Columbia Oil and several individual defendants (R. 1), in which the ‘defendants Were charged with dominating and controlling the affairs ‘of Panhandle Eastern and restrain- ing, monopolizing and attempting to monopolize interstate trade and commerce ‘in natural gas in certain sections of the United States, in alleges violation of the Federal Anti- — Trifst Laws (R. 10-30). The defendants, including Colum- bia Gas and’ Columbia. Oil, filed answers denying these charges (R. 109-138). ‘The case was never tried. On January 29,, ,, 1936, a Consent Decree (Ri*142-149) was entered upon” . ’ stipula- tion signed by -all*the parties (R. 138-142), in which the - defendants maintained the truth of their answers and con- sente the entry of the decree provaded that such consent ; —_ of said decree should not constitute an admission djudication that they had violated any laws of ‘me _ United States (R. 139). One of the provisions of the Consent Decree permitted Columbia Cil to retain its stockholdings, and acouire addi- tional stockholdings, in Panhandle Kastern (R. 145), but required these. stockholdings-to be transferred to Mr. Gano Dunn, as Trustee, who was to, hold the legal title to said - stock and’ exercise all the rights and privileges incidental to the absolute ownership thereof (B. 146), with ‘broad dis- cretionary voting powers which will be discussed in more | . detail in Point III hereof. - + : tcp From shortl; after the enitty of the Conse Decree up to the present time, Coiumbia Oil Kas béen the’ beneficial owner of 100,000 shares of Class A and’ 10,000 shares of (Class B preferred stock of Panhandée, Eastern , (being “ll “the issued and outstanding shares of these classes), and . 404,326 shares of. its common stock (being a majority of the issuéd and ovtstanding shares of common stock), and. ieee 6 ’ Mr. Dunn has held this stcck.and voted the same as Trustee _ pursuant to the terms of: the Consent Decree ‘(R. 150, 431, 516). This stock carries the right to elect six of the nine — directors of Panhandle Eastern (R. 523). On January 12, 1939, approximately three years after the entry of the Consent Decree, the Government filed a - supplemental complaint in the District Court seeking to supplgnent the decree by a further order for the purpose of accomplishing’ what it construed the p sposag of the decree to be ‘(R. 274-283). The defendants, including Columbia Oil and Columbia Gas, filed their answers to the supplemental complaint (B. 313-314, 322-332), and this was followed by further proceedings i in the anti-trust suit which - are not pertinent to “She issues involved on this appeal > except to the extent hereafter discussed. ~ This“Court will _ find a more detailed statement thereof in the brief of this, appellee‘ submitted in appeal No. 268 which is now pending before this Court, the record on-which has been consoli- _ dated with the record on this appeal, , Mokan is a substantfal minority stockholder of Pan- handle Eastern claiming ownership to 339,275 shares of , its common stock (R. 538). The intervention application involved on this appeal isthe third of a series of four . intervention applications which have been ‘made by Mokan, . or by its attorneys, for leave to intervene in the antj-trast - proceedings pending i in the District: Court (R. 283-312, 362- . 371, 412-424, 526-540). All these applications have been | - denied or dismissed by the District Court (R. 321-322, 371, 565, 541- 542). Appeals were taken fron the orders deny- ing the first. two applications to. the United States Cireuit Court of Appeals for the Third Circuit, and were dismissed _ by the Circuit Court on December 15, 1939 (R. 6). The Circuit Court’s opinion is reported in 108 Fed. (2nd) 614. A: petition for a writ of certiorari was denied by this Court | . . site | 7 s ; : | ; ‘ on April 22, 1940 (309 U. S. 687). .This appeal No. 269 . and appeal No. 268, both of which are now pending in this - denying’ the third and fourth intervention a aaa respectively -In substance, the allegations in the present application (third intervention‘ application) are identical with, those sind te appeals from the two orders dismissing and ‘contained in the fourth application, and the prayers. for relief in both applications are the. same. Likewise, the allegations and prayers for relief in the present application * are substantially the ‘same as those.in the first application «, Which was made on February 6, 1939 (R. 284) ,°except that the prayers in-the present application are slightly more limited in scope. .. a The present application i is unverified and is not signed - -by any officer or. director of Panhandle Eastern, but is ~ signed by Arthur G. Logan and two other. attorneys (R. 424) who concededly are counsel for Mokan (R. 429, 477, 505-508, 514,540, 550-551, 555-557). Counsel for Pan- handle Eastern aré Messrs. E. M. Goodwin and Edwin D: Steele, Jr. (R. 429), neither of whose names, it will be noted, appear on the present application. It is claimed in the application, however, that Mr. Logan and his associates . were duly authorized to make that applieation by virttie of resolutions adopted at the annual meeting of stock- _ holders of Panhandle Eastern held on March 11, 1940, and” that Mr. Dunn, the Trustee under the Consent Decree, sought to vote against such. resolutions- but that his vote _ . Was improperly and illegally cast. (R. 423, 425). —_— eit An examination of the minutes of the annual stock- holdersyingeting of Panhandle Eastern held on March 11, 1940, which is part of the record on this appeal (R. 428- 487), discloses ‘thdt at the opening thereof, Mr. Greveling, the President, took the chair, called the meeting to order oe ~ . ; 6 8 AR, 428-429) as provided by the by- Awa (R, 404), and an- & nounced the presence ofa quorum ( 492). Immediately, Mr. Logan. who held 10, shares of stock which were boing ‘veted by proxy (R. 448), moved that Mr. A. Faison Dixon, Vice-President of Mokan, be made © ‘hairman of the meet ing (R. 432). Mr. Creveling declared the motion out of order in view of the provision’ of the by-laws that the President shall preside at all meetings of the stockholders CR. 494). Mr. Logan took an appeal from the ruling | of the chair, declaring that Mr. Dunn (the majority stocl- holder) could not vote Columbia Qil's stock without specific instructions as to how he should vote the stock on that particular motion, and that Mr. Dunn could not have any such specific. instructions because it_could not have been known by Columbia Oil that such:a motion would be made (R. 482-433). A vote was taken and Mr, Dunn voted to uphold the chair while Mr, Logan and five of his- associates vited to thecontrary (R, 434). — After Mr. Logan had again questioned Mr. Dunn's right to vote (R. 484), atid vehemently insisted that Mr.. Crevel- ing sheuld surrender the chair to Mr. Dixdmp Mr. Creveling disallowed Mr. ‘Logan’s appeal to disqualify Mr. Dunn’s vote, refused to relinquish the chair, and proceeded to the next order of business (R. 485-436). Thereupon, Mr. Logan denranded that whenever Mr. Dunn should vote on any motion he should produce the specific instructions from Columbia Oil showing that he was voting as instructed, and that, in the absence of such showing, Mr. Logan challenged his vete (R. 436). This same procedure continued through- out the meeting. Whenever any ‘motion was made cf which | Mr. Logan and his associates disapproved and which was — carried by Mr. Dunn’s vote, Mr. Logan claimed that Mr. Dunn’s vote was invalid because of his failure to produce specifie instructions from Columbia Oil as to how he should . Pal 9 vote, and likewise whenever Mr. Logan or his associates proposed any motion’ or resolution which was defeated by “Mr. Dunn's: opposing vote, Mr. Logan claimed that Mr. Duun'’s vote was invalid for the same reason. The following motions and resolutions, ( sometimes in the form of appeals from: rulings of the chair refusing to rule as requested), were mince or proposed by Mr. - or his associates: (a) Motion to amend the by-laws ‘to inoweané the Board of Directors from nine to fourteen directors (R. 451-452) ; - | | j (b): Appeal from the ruling of the chair refusing to declare five additional men, nominated by the repre- sentatives of Mokan, elected as directors in addition to the nine. directors whieh - were declared "elected (R. 457-458); (c) Appeal from the oulien of the ehair refusing to reject the judges’ report on the election -of two directors elected by the Class B preferred stock (R. 458-459) 5 (dy Motion to amend the by-laws to provide for officers to. be chosen by the-stockholders instead of: by the directors and. to provide that all officers’ salaries be fixed by the stockholders instead of by the directors (R. 459-460). (e) Motion.to elect Mesiva Maguire, Mente, Wat-. kins and Tringham, the first and last named persons being President and Secretary, respectively, of Mokan, to the offices of President, Vice-President, Secretary . and Treasurer, ss cea of Panhandle Eastern (R. 460-461) ; | \ (f)- Resolutions tian € Rastere bring si suits as requested in a letter from Mokam dated Janu- ary 15, 1940 (one of which was to make.the instant ap-- plication), employ Mokan’s attorneys to re ae ‘tive additional directors nominated by the vepeeseitatives of Mokan, and declare that said -persona were duly and validly elected to the Board of Directors; and that the Chancellor determine the validity of the election. of Menara, ~ Maguire, Newer, Watkins and Tringham to the offices of President, Vico-President, Seeretary and Presenter, rompee- tively (R. 513-614), On June 19, 1940, after a full hearing hefore the Chan- eeHor and during the pendeney of the instant appeal, the Chancellor entered his final deeree® in that proceeding dis- missing Mokan’s bill of complaint holding: (a) that none of the additional five directors nominated by the represen- 3 tatives of Mokan were elected aa directors of Panhandle Eastern, at the stockholders’ meeting, “(b) that Maguire, Neuner, Watkins and Tringham had not been elected as (officers of Panhandle EKastern at-the meeting, and (c) that _ the action at the annual meeting of the representatives of ° Mokan purporting to amend the by-laws of PanhandJe Rastern “was void and without effect and such by-laws - were not modified in any respect whatsoever by any action — taken at said meeting’’. ’ Instead of rendering a formal opinion the Chancellor wrote an opinion lettert dated June 11, 1940/to counsel for the interested parties setting forth his‘views on the matter. It/necessarily follows from the Chagcellor’s decision that Mr. Dunn's votes at the meeting in voting the majority stock were valid and legal. No appeal has been taken from - the Chancellor’s order. . In the meantime, on March 23, \1940,-Mokan’s attorneys made the intervention application in the name of Panhandle * For the convenience of this Court, the final decree Of the Chancellor is printed at the end of this brief as Appendix B. + For the convenience of this Court, a copy of this opinion let- ter.is printed at the end of this brief as Appendix C. - 18 @ eo ® ‘Easterti which is the subject of this appeal a 412-422). In on its opinion handed down on April 6, 1940 (RK, %20-526) on which thé order of-dismissal (R. 565) was entered, the court below held: (1) that the application was not authorized by Panhandie Hastern, (2) that: the uttorneys whose names appear on said application were not authorized by Pan handle Kastern to act in its Mlialf,. and (3) that Mr. Dunn’ had duly voted the shares of stock of Columbia Oil in. Pan- handle Kastern on all matters on which he had voted at the annual stockholders’ meeting in hecordance with the provi- - sions of the Consent Decree and pursuant to valid direc- tions from Columbia Of (Kt. 5255526). Thus, the Court _ granted the motions of Columbia Oil and: Columbia Gas to ‘dismiss the application on the specific grounds urged by ; Columbia Oil in its motion papers (R. 515). - The inetgnt appeal i is from the order of the court hglow dismissing the aforementioned intervention application! bie: ee ere e ! | Appellee, Columbia Oil & Gasoline Corporation, | by its motion to dismiss the application to intervene, with supporting affidavits, properly raised the question - of the authority of the attorneys prosecuting this appeal to acten behalf of Panhandle Eastern Fipe Line Company in making and Prosecuting . the intervention application. ; It is settled that a court may ‘in its discretion, at any stage of a case, require an attorney to show his authority to bring proceedings on behalf of a client, and that the appropriate manner in which to raise this question is by motion to dismiss such proceedings supported by affidavits. This Court conclusively established this principle in the’ brs) 14 leading case of The Pueblo of Santa Rosa v. Fall, 273 U. S.. 315, which has been consistenly followed by the courts in later decisions, There, as here, a motion was made by the defendaits, supported by affidavits, to dismiss the bill upon the ground tliat the plaintiff had never authorized the suil . and had never authorized the attorneys to bring or prose- eute it on its behalf. This Court agreed with the con- clusions of the District Gales in dismissing the bill, except to the extent that that court had dismissed it upon the merits, and, therefore, remanded the cause to the District Court with directions to dismiss the bill on the ground that the suit was brought by. counsel withodt authority, but without ‘prejudice to the bringing of any other suit there: after by. and with the authority of the plaintiff. This Court said at page 319: ‘‘Whether, as, a matter of practice, the challenge to the authority of counsel was seasonably inter- posed, it is not important to decide, for in any event, the trial court, or this court, has power, at any stage of the case, to require an attorney, one of its officers, to show his authority to appear. . In its brief the appellant argues (p. 28) that since i motions to dismiss set forth affirmative matters and at the same time do not contain denials of the allegations in the intervention application, they constitute affirmative de- fenses under Rule 8(c) of the Rules of Civil Procedure and must be deemed -to admit the truth of the allegations . of the intervention application under Rule 8(d). But Rule 8(d) express!y declares that such a résult only applies to averments in a pleading to which a responsive pleading is required. .The motions to dismiss, however, are not re- _sponsive pleadings. In fact, the application to intervene requested in its prayers for relief (R. 423) that the court 15 enter an order allowing the applicant to file the applica- tion and be made a party to the anti- trust suit. The court entered an order merely setting the application down for hearing and directing that the parties be given notice . thereof (R, 425-426). At no time did the court enter any . order granting the applicant leave to file its application or directing the parties in the anti-trust ‘suit to answer ‘the same. . Under such circumstances the motions cannot be responsive pleddings. : , ee | The-tontention of the appellant is. particularly surpris- ing in view of its next preceding: argument. to the effect that the motions did not raise. any question concerning the merits (Appellant’s Brief, p. 27), because it was made and granted on the limited grounds of the lack of authority of the attorneys to represent Panhandle Kastern in making or prosecuting the application on its behalf. Since the - motions admittedly did not raise any question on the merits, how is it possible for the appellant to argue that the merits of the allegations of its application were at issue : before the court below? . POINT II. The appeals should be dismissed on the ground that the order appealed from is not a final order and, there- fore; is not appealable to this or any other court under the provisions of the Expediting. Act governing appeals in equity suits under the Federal Anti-Trust Laws, wherein the United States is complainant. The Expediting Act (U.S. ©. A., Title 15, Sections 28 and 29) consists-of two sections, the second section reading as follows (U. S. C. A., Title 15, Section 29): 16 ‘*Apprats To Supreme Court. In every suit in - equity brought in any district court’ of the United States under any of the laws mentioned in the pre- ceding section, wherein the United States is com-. “plainant, an appeal from the final decree of the ' .. district court will lie only to the Supreme Court and must be taken within sixty days from the entry _ thereof.’ (Feb. 11, 1903, c. 544, §2, 32 Stat.. 823; - Mar. 3, 1911, ec. 231, §291, 36 Stat. 1167.)”’ . The preceding section to which nilhenaiune is made deals with suits in’ equity under the Federal Anti-Trust Laws, wherein the United States is complainant. - The suit. which is pending in the District Court; in | _ waick the appellant sought to intervene, is a suit in.equity under the Federal Anti- Trust Lawsj?wherein the United States is complainant, and; therefore, it comes within the. _ lass of cases to which the Expediting Act applies. : Obviously, the order of the District Court, dismissing . ‘appellant’s application for leave.i to intervene (R. 565) on - the limited ground that the attorneys were not authorized . by the appellant to, bring or prosecute ‘the. application on its behalf (R. 520), cannot be a final order on the merits. In fact, the appellant argues at some leagth in its brief (p. 27) that the order was not a Gotermination of the merits . of that application. — . Under these circumstances this order cannot hove the ‘necessary finality on which to base an appeal to this Court or to any other court under the ‘provisions of the Expedit- ing Act as construed by this Court in the case of United States v. California Cooperative Canneries, 279 U. 8. 553, where this Court+said at page 558: ‘ “Thus, Congress limited the right to. review’” (re- ferring to the provisions of the Expediting Act) ‘‘to an appeal from the decree which disposed of all : a . . . . ‘matters, see Collins v. Miller, 252 U. S. 364; and it ‘precluded the possibility of an appeal to either court’’ (referring to the —_ Court of Appeals and to this Court) ‘‘from ak interlocutory decree.’’ ° POINT III. The Court below was correct in dismissing the in- tervention application in the name of Panhandle East- ern Pipe Line Company because it was not authorized ‘by. Panhandle Eastern Pipe Line Company, and the attorneys making said application.and prosecuting this appeal have not been authorized by Panhandle Eastern Pipe Lizxe Company to act in its behalf. _ The mere statement of the facts in this case demon- strates that the intervention application in the name. of Panhandle Eastern was unauthorized and that the court below was correct in dismissing it. The representatives of Mokan, who are prosecuting this appeal, predicate their authority to make this application on Panhandle EKastern’s behalf on résolutions (R. 423, 425), which they claim were adopted. over the opposing vote of Mr. Dunn, the majority - stockholder, at the annual meeting of stockholders of Pan- handle Hastern- held on March 11;°1940. hey say’ that Mr. Dunn’s vote was improperly ‘and illegally cast because - he did not exhibit at the meeting’.specific instructions from Columbia Oil under the provisions of the Consent Decree (R. 147), directing him to oppose such resolutions, and, in addition, because the intervention application contemplated by said resolutions ‘was directed against Columbia Oil, and, therefore, even if he did, have specific directions from Columbia Oil he was disqualified from voting upon such — directions (R. 462). Similar tactics were employed through- ( \18- out’ the meeting by the minority stockholders, led by Mr. ~ Logan and. his associates representing Mokan, in attempt- _- ing to disqualify Mr, Dunn, the majority stockholder, from voting in opposition to any motions. or resolutions which the minority interests moved for adoption at the meeting (R. 428-487). | The proceedings at the meeting disclose a most dis-_ orderly attempt by minority stockholders to wrest control of the meeting from Mr. Dunn, the majority stockholder, who was appointed Trustee of Colimbia Oil’s stock under the Consent Decree in the Government’s anti-trust suit and who is the Government’s representative in supervis- ing the operations of Panhandle Kastern. These minority | stockholders claim that by their tactics they succeeded at the meeting in amending the by-laws of Panhandle Kast. ern‘to provide (a)Xor the increase of the Board of Directors from nine to fourteen directors, (b) for officers to be chosen by the stockholders instead of by the direc ors, and (e) for all officers’ salaries to be fixed by thé stockholders instead of. by the directors, despite the fact that the major: - ity stockholder voted in opposition - to these ‘proposed amendments (R. 451, 460), and despite: the further fact that no notice of the amendments.was contained in the notice of the meeting (R. 500-501) in violation of the. pro- visions of the by-laws (R. 499). The minority interests — further claim that there were duly elected, over the oppos- _ing vote of thé majority stockholder (R. 458), five addi- ‘ tional directors, who were nominees of Mokan, in addition to the nine directors who had been elected, of which three were nominees of Mokan, thus, claiming that they had suc- ceeded in seizing control of the Board of Directors. They ‘further claim that a president, vice-president, secretary and treasurer of their own choosing were elected over the opposing vote of thelma jority stockholder (R. 460). aa The Chancellor of State of Delaware has already de- creed that this attempted sleight- of-hand by the represen-— tatives of Mokan was wholly void and of no effect, that they had not succeeded in amending the by-laws at the meeting, and that they had not succeeded in electing five additional directors and new officers of their own choosin _ (Appendix A). ee ; a Mr. Creveling, who is-thus offiGially seasiond as the ‘President of Panhandle Eastern, has submitted an affidavit (R. 427), in which he states that nefther the duly consti- tuted directors nor the duly constituted officers of Pan- handle Eastern authorized Mr. Logan and his associates, . who are prosecuting the instant intervention application in the name of Panhandle Eastern, to act on behalf of Pan- handle Eastern in the matter. In faét, Mr. Logan and his associates do not claim that their authority to prosecute the application.emanates from the directors or the officers -of Panhandle Eastern. They claim their alleged authority solely by reason of the alleged adoption at the stockholders’ meeting over the opposing vote of Mr. Dunn, the majority stockholder, of certain resolutions, providing, among other y, ~___things, for Panhandle Eastern to intervene in the Govern- ment’s anti-trust suit (R. 462). Therefore, it is only nec- ‘essary to consider whether the vote of Mr. Dunn, as Trus- ae was properly and legally cast under the previsions of | the Consent Decree and pursvant to the directions — from Columbia Oil, the beneficial owner of the stock held by him as such Trustee. as ae fees Enormous responsibilities and obligations are imposed on Mr. Dunn, as Trustee of Columbia Oil’s stockholdings in Panhandie Eastern under the Consent Decree. , P&n- handle Bastern is an important corporation which enjoys large earnings. Columbia Oil’s“stock in Panhandle Kast- ms . .ern‘consists of a iii, issued and outstanding : 9. ae ‘@ ed Pe: 720 - common stock -and all of the issued ‘and outstanding pre- ferred: stocl (R. 429, 431), which, because of cumulative voting .(R. 489), is entitled to elect six of the nine directors of Panhandle Hastern (R. 523). In the appointment of. Mr. Dunn, as Trustee under the Consent Decree, the Gov- ernment realized the responsibilities placed upon his shoulders. ‘The court below, in discussing this aspect of the matter, remarked (R. 522) :. ' “The-selection of Gano Dunn as Trustee was made ‘by the Attorney General of the United States as the person best qualified to serve in a very difficult and exacting position -from.a group of names submitted to him.’’ In order to enable him to discharge his exacting duties, Mr. Dunn is vested with equally broad discretionary powers under the Consent Decree. Pursuant to the provisions thereof (R: 146), he holds as Trustee the legal title to all Columbia Oil’s stock in Panhandle Eastern and is author- ized to exercise ‘‘all the rights and privileges incidental to - absolute ownership thereof”’ subject to certain conditions. As such Trustee, he is given broad . discretionary voting powers. He is authorized to vote Columbia Oil’s stock for as mauy. directors of Panhandle Eastern as the number of | shares thereof might be entitled to elect; he is to act as one of the directors and the remainder to be elected by him ar6 to be selected from among persons recommended by Colum- bia Oil, in conference with him and with his advice. He is . also authorized to remove and replace such directors with others of his own choosing (R. 146). He 'is also given broad discretionary powers with respect to voting the stock upon all other questions, in the following terms (R. 147) : ““(b, To vote said stock upon all other. questions and matters in which ‘the stock is entiled to vote, as 2 + t 8 : directed by the beneficial owners thereof, except when such directions are inconsistent with the pur- ° poses of this decree ;’’. \ , When Columibia Oil received notice of the annual meet-. ing of the stockholders of¢Panhandle Eastern to be held on March 11, 1940, which specified only twe jtems of business to be acted upon at the meeting, namely, (a) the election of _ directors for the ensuing year, and (b) the management’s propused amendment to the certificate of incorporation to provide for the payment of participating dividends during any year when additional: common stock is issued (R, 500), Columbia Oil in pursuance of the provisions of the decree | promptly | recommended certain persons to Mr. Dunn, in conference witu him and with his advice, from whom. Mr. , Dunn selected six, who would receive his vote on the elec-: tion of directors at ‘said meeting (R. 504-505, 518-519). Columbia Oil also gave appropriate instructions regarding the manner in which Mr. Dunn should vote the stock on the | management’s proposed al ameridment: to: the certificate of incorporation (R. 503, 518), which instructions were sub- sequently modified by later instructions (R. 506- 507, 519). As to all other matters which might come befor@the meet- ing, Columbia Oil gave Mr. Dunn the following instructions on how he shouid.vote the stock (R. 503, 518) : ‘‘that as to all other matters except election of direc- tors, which might come before said meeting, he ‘ should vote said shares as, in his discretion, seemed _ best for the interest of Panhandle Eastern Pipe Lime | Company and generally to support the management; that, in case any matters were presented at the meet- ing on which he had any doubt’as to how to vote, he could adjourn the meeting for a sufficient time to confer by telephone with the representatives of denies Oil & Gasoline —— i SG REAL ENA alsin He > ‘ 2 “eS, - Since Mr. Dunn was authorized be the Consent Decree _ to vote the stock on all questions other than, the election of _dire¢tors as directed by the beneficial owners thereof, except when such directions were inconsistent with the purposes _ of the decree, and since Columbia Oii’s directions.were to vote the stock on such matters as in his discretion seemed ‘ best for the interest of Panhandle Eastern and generally © to support the management, Mr. Dunn was duly vested with such broad discretionary powers that he could vote the ' stock on such matters at the meeting in such manner as his judgment might dictate. Thus, when Mr. Dunn attended the meeting, he had received from Columbia. Oil all the instructions regarding . the voting of the stock which it was humanly possible to give him in respect to the contemplated items of business to be transacted at the meeting as well as in respect to any surprise matters which might come before the meeting. As the court below said (R. 523) : “From the foregoing, it appears that Gano Dunn attended the annual meeting of March 11 girded with . his own authority as Trustee, supplemented by all the directions from Columbia Oil that could have been anticipated ‘in the normal course of human . events.’’ ‘But the first objection which Mr. Logan and his associ- ’ ates made to Mr: Dunn’s vote, cast-in opposition to the reso- lutions contemplating the making of the intervention appli- cation, was that Mr. Dunn did not exhibit specific instructions that he should vote in opposition to such resolutions. The answer to this proposition is contained in the Consent ' Decree and Columbia Oil’s directions thereunder. The Decree did not provide that Columbia Oil must give spe-, cific directions and aamcemes Oil saw fit not to give specific 23 directions, leaving to Mr. Dunn’s discretion theemanner in its directions. Columbia Oil’s Board of Directors subse- .. which he should yote on all surprise motions. Obviously; the provision requiring Mr. Dunn. to vote as directed by the beneficial owner of thie stock was inserted in the Decree for | - the protection of Columbia Oil. It was not placed is the decree for the benefit of.any other party. Hence, Mokan, or -— apy other minority stockholder of Panhandle Kastern, can- ‘ not coniplain about the instructions which Mr. Dunn re- ceived from Columbia Oil as being too general. The dhly one affected by the nianner in which Mr. Dunn carried out its instructions is Columbia Oil, and Columbia Oil was sat-. isfied with the. manner in which Mr. Dunn had carried out quently approved the manner in whic Mr. Dunn voted (R. 509-510). The conténtions of Mr. Logan and his associates merely boil down to the surprising proposition that Mokan, as a - minority. stockholder in Panhandle Eastern, is legally enti- tiled at any time it sees fit to.overrule the vote of the major- ‘. ity stockholder and to take over the control of Panhandle Eastern, This must necessarily be the contention of’ Mr. Logan and his associates, because it follows from his ‘objec- tions at the meeting that, whenever the. representatives of Mokan see fit to make a surprise motion or to submit for adoption a surprise resolution, Mr. Dunn cannot vote Gs Columbia Oil’s stock because no one could have anticipated — such a surprisé action and, therefore, Mr. Dunn could not possibly have obtained specific instructions as to how to . _vote thereon. This is indeed a strange contention when it | is realized that Mr. Dunn is the Government’s represent-_ Key. = ative under the Consent Decree. Are his votes of the ma- jority stock in Panhandle Eastern to be thus easily chal- lenged? EP ere oe SA. ™ > ¢ e . Hien oe eo 7 : . 24 The second objection which was made by the represent- atives of- Mokan to Mr. Dunn’s vote, cast in opposition to the resolutions in question, was that, since the intervention application contemplated by the resolutions was directed “against Columbia Oil and others, Mr. Dunn could not vote according to the directions of Columbia Oil. There are two answers to this proposition, the first being that Columbia _QOil’s instructions to Mr, Dunn left it entirely to his judg- ment as to how-to cast his vote; the second answer is that, even in the complete absence of directions from Columbia Oil, Mr. Dunn would still be able to exercise the same broad -discretion in voting under the provisions of the Consent Decree. _. The vote of Mr. Dunn, as Trustee under ‘the Consent _ Decree and as the holder of record of all of Columbia Oil’s ° stock in Panhandle Fastern (R. 150, 448), was legal and valid under the laws of Delaware (Sections 17 and 18 of the Delaware Corporation Law*) and under the provisions — of the by-laws of Panhandle Hastern (R. 489-490). Mr. Dunn’s vote was legal and proper and he was acting within | the powers vested in him by the Consent Decree and within the directions received from Columbia Qil. So the court below. found (R. 525) : . “In construing the language of the consent de- cree, I ‘ind that the votes cast by Gano Dunn were authorized by the powers conferred upon him by the consent decree and tbat his votes were well - within’ the directions given to him by Columbia - 7 Oil. 9) ‘ . ' One other matter merits consideration. The general scope of Columbia Oil’s directions, within which. Mr. Dunn * Sections 17 and 18 of the General Cerperetion Laws of ‘the . State of Delaware are peated in full in Appendix D at the end of this brief. 25 yy vs was to, exercise his discretion in voting at the meeting, was that he should vote the stock’ as, in his discretion, seemed best for the interest of Panhandle Eastern and generally ‘to support the management. In voting the majority stock against the resolution providing for Panhandle Eastern to intervene in the Government’s anti-trust suit, Mr. Dunn’s action was definitely within the scope of these ~~ directions. Mokan had already attempted to intervene in _ the anti-trust suit on substantially the same state of facts on two different occasions (R. 284-312, 362-271), the first application (R. 308) having been made by Mokan both in its own right and also as a derivative stockholder’s appli- - gation on behalf of Panhandle Eastern. Both these appli- cations had been denied (R. 321-322, 371). It definitely appears, therefore, that Mr. Dunn was acting for the bene- fit of Panhandle Eastern in voting-against resolutions which might very well subject it to the payment of large counsel : fees on a matter which probably would be unproductive of results. KFurthermore, he-undoubtedly saw no reason for. Panhandle Eastern employing the attorneys of the minority stockholders for such a purpose. Panhandle Kastern had - its own counsel who would have been well able to under- take such a litigation, if it had appeared advisable to Pan- handle Eastern to follow such a course. . In the appellant’s brief (pp. 31-38), a number of cases © involving minority stockholders’ suits are referred to and - _ cited, and the general principle is developed that a ma- jority stockholder occupies a fiduciary position to the minority stockholders. We cannot understand what appli- cation these cases have to the case at bar. This is not a : minority stockholders’ suit. This is a ‘suit brought in the name of the corporation by attorneys of a minority stock- holder claiming ‘that they have been employed by the cor- poration ‘to bring and prosecute the :action under resoln- . ee tions .of its stockholders, which were never adopted be- cause the majority stockholder voted the majority stock against the resolutiona, Furthermore, Mr, Diinn is not an ordinary atockholder; | he is acting as Trustee of the majority stock under the provisions of a Consent Decree, He is already:a fiduciary. His primary dyties in his capacity as such Trustee are to a (the Government and to tke court of his appointment. His vote at the stockholders’ meeting, whieh is. the only ques- tion involved in this case, was neither fraudulent. or op- pressive as to minority stockholders because, as we have just shown, he voted in the interests of Panhandly Kastern and well within the powers vested in him by the Consent Decree, | \ ... .as he may deem proper under. the circumstances. _ The Chancellor i in any proceeding instituted under this ‘ Section shall have power to determine the right and power — of persons claiming to own stock, to vote at. any meeting of ~ ° . the oe authorized by or referred to in this Section. ce . The Chancellor shall have power to appoint a Master to hold any élection provided for ‘in this Section under such orders and powers as he shall’deem proper; .and he shall also have power to punish any officer ar director for con- tempt, in case of disobedience of any order made by the. Chancellor antl may, in case of disobedience by any sach - corporation of any order made by the Chancellor, in his discretion, enter a‘ decree against suchcorporation ‘for a ’ penalty in a sum not exceeding the sym of Five Thoysand . dollars ($9, 009,90): = 9, --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386401_0379%3A11. Public record. Not legal advice.