Reply Brief of Petitioner — Jennings-Watts Oil Co. v. Gilbert

MAR 13

CHARLES fips

SUPREME COURT OF THE UNITEUs5TATES

OCTOBER TERM, 1950

No. 549

JENNINGS-WATTS OIL COMPANY, INCORPORATED,

Petitioner,

vs.

CORNELIUS GILBERT, Dorne Business Unper THE Firm

Name AND Srye or Gitpert StoracGe aNp TRANSFER Com-

PANY, ET AL,

ESE BT Ot ae cre by Be ee ach pea eee

ye ay \ 4 . wer!

(In the Case of Cornelius Gilbert, Doing Business, etc.,

Plaintiff, versus Gulf Oil Corporation, Defendant)

ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT

REPLY BRIEF FOR PETITIONER

Royston Jester, III,

Lynchburg, Virgina,

Mac AsBILL,

Washington, D. C.,

Counsel for Petitioner.

SUPREME COURT UF THE UNITED STATES

OCTOBER TERM, 1950

No. 549

JENNINGS-WATTS OIL COMPANY, INCORPORATED,

Petitioner,

vs.

CORNELIUS GILBERT, Dortne Business Unver THE Firm

NaME AND STYLE or GILBERT STORAGE AND TRANSFER Com-

PANY, ET AL.

(In the Case of Cornelius Gilbert, Doing Business, ete.,

Plaintiff, versus Gulf Oil Corporation, Defendant)

ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT

REPLY BRIEF FOR PETITIONER

1. Respondent has submitted no authority or reason which

supports his contention that petitioner’s motion to inter-

venely was not timely.—Throughout his brief respendent

overlooks the fact that the action in which petitioner seeks

to intervene was instituted by Gilbert against Gulf Oil Cor-

poration in the Western District of Virginia during Janu-

ary, 1948 (R. 1).

eet hE AES OTR SAAN RR ERS Bickers]

” —n

9

a

In none of the District Court decisions relied upon by

respondent on the question of timeliness did the motions

to intervene meet the other requirements of Section 24 (a)

for intervention of right.

In Union National Bank of Youngstown v. Superior Steel

Corp., 9 F. R. D. 124, the indemnitor of defendant moved to

intervene to oppose the motion of plaintiff to dismiss

its own complaint. The dismissal could not prejudice

or bind the indemnitor, and no reason existed why the inter-

vention should be allowed.

In In Re Rumsey Mfg. Corp., 9 F. R. D. 93, the United

States attempted to intervene in a District Court proceed-

ing to act as an observer and not as a combatant whereas

its rights were sufficiently protected in the pending bank-

ruptey proceeding in which it had presented its claim.

Lockwood v. Hercules Powder Company, 7 F. R. D. 24,

involved only permissive intervention under Rule 24 (b),

not intervention of right under Rule 24 (a).

In Mullins v. De Soto Securities Co., 2 F. R. D. 502, no

grounds existed for an intervention of right. Moreover,

the application to intervene was not made until plaintiff’s

case had been dismissed in a written opinion, and while a

motion for rehearing was pending.

Respondent has utterly failed to show that any prejudice

or inconvenience to him would, or could, have resulted if

the District Court had granted the motion to intervene at

the time it was made, which was two months before the

date set for trial. The motion to intervene was timely.

Cf. De Korwin v. First National Bank of Chicago, 94 F. Supp.

577, 578.

2. Respondent has failed to rebut petitioner’s. showing

that the representation of its interest by its indemnitee “‘is

or may be inadequate.’’.—Petitioner’s interest in respond-

ent’s action against Gulf arises from paragraph Tenth of

TR ot

Ne

| me

3

the contract of November 1, 1939, between petitioner and

Gulf Oil Corporation (R. 27). That paragraph of the con-

tract indemnifies Gulf against any and all claims arising

from petitioner’s operation and covers claims based on

negligence, or otherwise, so the obligation of petitioner

as indemnitor is absolute. Cf. Russell v. Shell Oil Co., 339

Ill. App. 168, 89 N. KE. 2nd 415, 417. The indemnity agree-

ment clearly makes petitioner an indemnitor to save Gulf

harmless from such claims as that on which Gilbert is suing

Gulf. The sole purpose of intervention by petitioner in the

action by Gilbert against Gulf Oil Corporation is to be able

to participate in the defense of that action so as to preclude

Gilbert from making a recovery against Gulf, the burden

of which would inevitably be passed on to petitioner under

its absolute obligation created by the indemnity agree-

ment. In such a situation the ‘‘practical necessities’’ grant

petitioner an absolute right to intervene, because there is

no other proceeding in which petitioner may protect its

interest. Brotherhood of Railroad Trainmen vy. Baltimore

& O. R. Co., 331 U.S. 519, 524.'

Whether the ag'eement of November 1, 1939 (R. 24) be-

tween petitioner and Gulf gives petitioner the status of

independent coutractor, or that of an agent or employee

of Gulf, is totally immaterial. In either event petitioner

has bound itself absolutely under paragraph Tenth of said

agreement (R. 27) to indemnify Gulf against any and all

1 While execution could not issue direetly against petitioner’s property

on a judgment in favor of Gilbert against Gulf, it would be quite a simple

matter for Gulf to institute a separate legal proceeding against peti-

tioner—a step which Gulf has in fact already initiated—in order to se-

cure the aid of court process in enforcing petitioner’s absolute obligation

to indemnify Gulf against the judgment. In such a proceeding Gulf

could put in evidence the indemnity contract and the judgment against

it, and petitioner would have no defense, unless it could prove fraud, collu-

sion or negligence of Gulf in the trial of the action in which the judgment

was obtained against Gulf. United States v. C. M. Lane Lifeboat Co., 25

F. Supp. 410, 411,

4

claims arising from petitioner’s operations. Hence, the

case of Gulf Refining Company v. Brown, 93 F. (2d) 870,

relied upon by respondent, has no bearing on the applica-

tion of Rule 24 (a), because in that case the court merely

held that Gulf was liable as principal to a third party in-

jured by operations of a distributor of Gulf products, and

did not pretend to hold that an agent or employee may not

voluntarily bind itself under an indemnity agreement with

its principal.

The brief of respondent relies primarily upon an as-

sumed financial worth of petitioner which is not shown in

the record. The right to intervene provided by Rule 24

(a) is not expressly or impliedly conditioned upon, or meas-

ured by, the financial standing of an intervener or of any

party to the litigation. In this case intervention is neces-

sary adequately to protect whatever present assets peti-

tioner may own and to safeguard its possibilities of future

development. Justice and fairness demand that petitioner

should not be forced to entrust its representation to the same

counsel who are suing petitioner on the indemnity agree-

ment. It is questionable whether the same counsel could

ethically accept this type of dual employment if it were

voluntarily offered to them.

Another assumption of respondent is fundamentally un-

sound. It seems too obvious for argument that the suc-

cessful advocacy by one set of Gulf attorneys of the forum

non conveniens doctrine (Gulf Oil Corporation v. Gilbert,

330 U. S. 501) furnishes no proof or assurance that an en-

tirely different set of Gulf attorneys (R. 13) will adequately

represent the interest of petitioner in a trial, before a local

jury in Virginia, of the factual issues involved in the pend-

ing litigation initiated by Gilbert against Gulf in 1948. In

the latter litigation the attorneys representing Gulf neces-

sarily occupy an inconsistent position with respect to peti-

ee

5

tioner since they are attorneys for Gulf in a pending action

against petitioner on its indemnity agreement (R. 24).

The word ‘‘may’’, as used in the clause ‘‘is or may be

inadequate’’ appearing in Rule 24 (a) (2), should be con-

strued in its ordinary sense to mean ‘‘might possibly’’.

United States v. Lexington Mill ¢& Elevator Co., 232 U. S.

399, 411; State ex rel, English v. Ruback, 281 N. W. 607,

610. Certainly, the representation of petitioner’s interest,

in an action brought against its indemnitee (Gulf) by Gil-

bert in which any judgment rendered against Gulf will be

binding on petitioner, ‘‘might possibly’’ be inadequate

where the same counsel for the indemnitee in that action

also represent the indemnitee in its pending action against

petitioner to enforce the indemnity agreement. To say the

least, there is a ‘‘ reasonable possibility’’ that the represen-

tation of petitioner’s interest by counsel for Gulf may be

inadequate. Federal Trade Commissionv. Morton Salt

Co., 334 U.S. 37, 46.

3. Allowance of intervention will not divest the Federal

Court of jurisdiction—An argument made by respondent

in the lower courts, to the effect that intervention by peti-

tioner would destroy the diversity of citizenship necessary

for Federal jurisdiction of the action (R. 34-35), is not

urged in respondent’s brief. Of course, there can be no

doubt that the intervention will be ancillary or auxiliary to

Gilbert’s action against Gulf and that its allowance will not

take away the jnrisdictional ground of diverse citizenship,

although petitioner and Gilbert are citizens of Virginia,

since the presence of petitioner is not essential to a decision

of the controversy between the original parties. Wichita R.

& Light Co. v. Public Utilities Commission, 260 U. S. 48,

53-54.?

? To the same general effect see Citu of Orangeburg v. Southern Ry. Co.,

134 F, (2d) 890, 894; Division 525, Order of Ry. Conductors of America

5 nt ie ee

Conclusion

It is respectfully submitted that the petition for writ of

certiorari should be granted.

Royston Jester, III,

Peoples National Bank Building,

Lynchburg, Virginia;

Mac AssIL1,

1012 Ring Building,

Washington 6, D. C.;

Counsel for Petitioner.

March 12, 1951.

Certificate of Service

I, the undersigned, one of the attorneys of record for

Jennings-Watts Oil Company, Incorporated, do hereby

certify that I have this day served the within reply brief

upon Max. J. Gwertzman, attorney for respondent, by

delivering a printed copy of the within brief to said attor-

ney by mailing a copy thereof to him by United States mail,

postage prepaid, at 116 John Street, New York City, New

York.

This 12th day of March, 1951.

Mac AssiL1,

Attorney for Jennings-Watts Oil Company,

Incorporated,

Petitioner.

v. Gorman, 133 F. (2d) 273, 277; Boesenberg v. Chicago Title & Trust

Co., 128 F. (2d) 245, 247; Williams v. Keyes, 125 F. (2d) 208, 209;

Kentucky Natural Gas Corporation v. Duggins, 165 F. (2d) 1011, 1015;

Drumright v. Texas Sugarland Co., 16 F. (2d) 657; Sun Oil Co. v. Humble

Oil & Refining Co., 88 F. Supp. 658. See also 4 Moore, Federal Practice

(2d ed. 1950), § 24.18, p. 135.

(3459)