Dickinson v. Petroleum Conversion Corp.

DICKINSON v. PETROLEUM CONVERSION CORP.

*508 Solomon Kaufman and Samuel Hershenstein submitted on brief for petitioner.

Alexander Kahan argued the cause and filed a brief for respondent.

The only issue presented by this case turns on the finality of a judgment for purposes of appeal, a subject on which the volume of judicial writing already is formidable. The Court of Appeals resolved against finality of the decree in question, saying, however, that it did so against the unanimous conviction of the court as constituted but in deference to a precedent established by a differently constituted court of the same Circuit. 173 F. 2d 738. Because of this intracircuit conflict, we made a limited grant of certiorari. 338 U. S. 811. That we cannot devise a form of words that will settle this recurrent problem seems certain; but in this case we agree with the convictions of the court below and reverse its judgment.

Something over a decade ago, Dickinson sued Lloyd, with whom he had been associated in promoting the Petroleum Conversion Corporation, along with others, to impress an equitable lien upon certain of the Corporation's shares then in Lloyd's name and possession. The District Court dismissed the complaint but the Court of Appeals reversed and directed a new trial. Dickinson v. Rinke, 132 F. 2d 805. Before retrial, Burnham and Vaughan, on behalf of themselves and such other stockholders as subscribed to a fund to aid the company or its predecessor in its embarrassment, were allowed to intervene. They set up a claim against both plaintiff Dickinson and defendant Lloyd that the stock involved in the controversy between them had been fraudulently issued and demanded that this stock be canceled. They *509 also sought recovery of $87,310.28 from them as unlawful profits secretly realized by breach of their fiduciary duty. Petroleum Conversion Corporation also intervened, making the same general allegations and demands for relief. The Corporation and the class of subscribers thus joined forces to get for one or the other substantially the same remedy against both Dickinson and Lloyd.

This triangular controversy was tried and a decree dated April 10, 1947, was entered. The issue here turns on the character of that decree. It recites twenty-three days of trial, the filing of a decision, opinion, findings of fact and conclusions of law, and it "ordered, adjudged and decreed" that all of the plaintiff Dickinson's claims be dismissed on the merits; that all of the defendant Lloyd's claims there pressed by his administrator be dismissed on the merits; that the class intervenors have judgment of $174,620.56 against both Dickinson and Lloyd's administrator, and that a concourse of all these subscribers be provided by which their several claims could be liquidated and the share of each in the recovery fixed; that Petroleum Conversion Corporation receive 8,200 shares of its stock in the hands of Lloyd's administrator but that its claim to 12,596 additional such shares and its claim to over 244,000 of its shares in possession of the court be dismissed; and Petroleum Conversion Corporation was directed to issue new shares to stockholders of another corporation, provided that, if any shares were not distributed for any reason, they be redeposited with the court subject to its further order with jurisdiction retained by the court to supervise the distribution of such shares. It dismissed all other claims of Petroleum Conversion Corporation.

From this decree Petroleum took no appeal. The District Court went ahead with hearings to determine claims of over seventy members of the class to share in the aggregate recovery against Dickinson and Lloyd's administrator. *510 On August 3, 1948, the court signed a "final decree" which apportioned the recovery as between those claimants. It recited that "the issues reserved in the decree herein dated the 10th day of April, 1947, having been determined by the Court . . . the said decree is hereby made final." It made no decision as to any issue involving Petroleum and in no way changed the 1947 decree as to it. It also awarded costs which had not been settled in the earlier decree, but made no award against Petroleum.

Thereupon Petroleum's receiver in bankruptcy appealed from so much of this 1948 decree as dismissed the claims of Petroleum. ¹ On motion to dismiss the appeal, the chief question and the only one we granted review, was whether the Corporation could have appealed from the 1947 decree, or whether it could only appeal from the 1948 decree. ² In deciding this motion, the court said:

"In the view of all members of the court, as it is now constituted, this should make no difference for the whole counterclaim of the Petroleum Conversion Corporation had been finally disposed of on April tenth, 1947; and as to it the action was at an end as much as though it had been denied the right to intervene at all; indeed, the judgment was more final, so to say, because, unlike the denial of a petition to intervene, it was a bar to any effort to relitigate the claims determined." 173 F. 2d at 740.

But because it could find no basis for distinguishing Clark v. Taylor, 163 F. 2d 940, in which a differently composed *511 court in the same Circuit had sustained what appears to be a contrary position, it held the earlier order not appealable and hence no bar to the present appeal. 173 F. 2d at 740-741.

Half a century ago this Court lamented, "Probably no question of equity practice has been the subject of more frequent discussion in this court than the finality of decrees.. . . The cases, it must be conceded, are not altogether harmonious." McGourkey v. Toledo & Ohio Cent. R. Co., 146 U. S. 536, 544-45. This lamentation is equally fitting to describe the intervening struggle of the courts; sometimes to devise a formula that will encompass all situations and at other times to take hardship cases out from under the rigidity of previous declarations; sometimes choosing one and sometimes another of the considerations that always compete in the question of appealability, the most important of which are the inconvenience and costs of piecemeal review on the one hand and the danger of denying justice by delay on the other. ³

The liberalization of our practice to allow more issues and parties to be joined in one action and to expand the privilege of intervention by those not originally parties has increased the danger of hardship and denial of justice through delay if each issue must await the determination of all issues as to all parties before a final judgment can be had. In recognition of this difficulty, present Rule *512 54 (b), Federal Rules of Civil Procedure, was promulgated. It provides:

"When more than one claim for relief is presented in an action, whether as a claim, counterclaim, cross-claim, or third-party claim, the court may direct the entry of a final judgment upon one or more but less than all of the claims only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment. In the absence of such determination and direction, any order or other form of decision, however designated, which adjudicates less than all the claims shall not terminate the action as to any of the claims, and the order or other form of decision is subject to revision at any time before the entry of judgment adjudicating all the claims."

The obvious purpose of this section, as indicated by the notes of the advisory committee, is to reduce as far as possible the uncertainty and the hazard assumed by a litigant who either does or does not appeal from a judgment of the character we have here. ⁴ It provides an opportunity for litigants to obtain from the District Court a clear statement of what that court is intending with reference to finality, and if such a direction is denied, the litigant can at least protect himself accordingly.

But this new rule—which became effective on March 19, 1948—was not in effect at the time of the 1947 decree in this case and it would not be appropriate to attempt to determine its effect on cases of this kind beyond observing that it may do much to prevent them from coming here. We will not, therefore, try to lay down rules to embrace any case but this.

*513 We have held that an order denying intervention to a person having an absolute right to intervene is final and appealable. Brotherhood of Railroad Trainmen v. Baltimore & Ohio R. Co., 331 U. S. 519; Missouri-Kansas Pipe Line Co. v. United States, 312 U. S. 502. When the application for intervention is denied, the would-be intervenor is foreclosed from further action in the case and its proceedings cannot affect him nor can he affect them. As the court below observed, it is hard to see why the exclusion of an intervenor from the case should be less final when it is based upon the evidence than when it is based upon pleadings. In either case, the lawsuit is all over so far as the intervenor is concerned.

When its claims were dismissed by the decree of April 1947, any grievance that Petroleum Conversion Corporation had was fully matured. ⁵ At that point Petroleum *514 was out of the case. The decree was not tentative, informal nor incomplete as to it; and the case was concluded and closed as to its counterclaims. The court's reservation of jurisdiction to supervise the distribution *515 of the shares of stock and the provision for further proceedings to determine the individual shares in the aggregate recovery allowed did not in any manner affect Petroleum's rights. What the court reserved was essentially supervisory jurisdiction over the distribution among the class of the recovery awarded the intervenors as the class' representatives. The only questions were, so to speak, internal to the intervening interest. Petroleum no longer had any concern with these questions and, however they were resolved, Petroleum could not possibly have been affected. The court obviously selected with deliberation the issues it would close by the decree and those it would reserve for future decision. If it had any purpose to leave open any issue concerning Petroleum's *516 contentions, or affecting its interests, half a line in the decree would have done so. But that half-line was not written.

We hold the decree of April 10, 1947, to have been a final one as to Petroleum ⁶ and one from which it could have appealed and that its failure to appeal therefrom forfeits its right of review. Its attempt to review the earlier decree by appealing from the later one is ineffective, and its appeal should be dismissed.

Reversed.

MR. JUSTICE DOUGLAS took no part in the consideration or decision of this case.

The right to appeal a judgment has long been said to depend on whether it is "final." This is a simple question where a court decides all issues simultaneously and enters a final order putting an end to a controversy. But when an order apparently leaves some question or claims open for further court action at a later date, doubts as to finality arise. See, e. g., Hohorst v. Hamburg-American Packet Co., 148 U. S. 262. Finality and appealability *517 have provided judges, lawyers, and commentators with a perpetual subject for debate. ¹ But litigants have too often been thrown out of court because their lawyers failed to guess that an order would be held "final" by an appellate court. The creditors of Petroleum Conversion Corporation, who are prosecuting this action for respondent here, are not the first victims of this jungle of doubt. ² I also doubt that they will be the last victims, despite the Court's hope that the new Rule 54 (b) has charted a clear route through the jungle.

I see no practical reason why the Court of Appeals should not have been free to review the respondent's challenge to the 1948 decree without regard to appealability of the 1947 decree. A rational system of jurisprudence should not attach inexorable consequences to failure to guess right on a legal question for the solution of which neither statutes nor court opinions have provided even a reasonably certain guide. Where, as here, arguments as to which of two decrees is "final" may be considered relatively even, an appellate court should be free to find "finality" in either decree appealed from. Under such a rule a court could consider the many circumstances relevant to orderly appellate administration without penalizing litigants merely because it finds that an earlier *518 decree falls on the "finality" side of what remains a twilight zone. Cf. Davis v. Department of Labor, 317 U. S. 249. See also dissent in Morgantown v. Royal Ins. Co., 337 U. S. 254, 263-264.

Even if the old "either-or" rule is applied as to appealability of the 1947 and 1948 decrees here, it seems to me that weightier reasons support holding the latter final. The judge who tried the case and rendered both decrees attributed finality to the decree of 1948 and not to that of 1947. He termed the 1947 order a "Decree," the 1948 order a "Final Decree." He specifically provided in the 1947 decree "That the taxation of costs in this case and the entry of judgment therefor, be deferred until the entry of judgment in respect to the matters hereinabove reserved for the future determination of this Court." At his order, both Petroleum and Dickinson received notice of subsequent hearings. Four months before the final 1948 decree the trial judge in a memorandum opinion referred to the 1947 decree as "interlocutory." Answering contentions that respondent here should have appealed from the 1947 decree, he stated: "In my opinion it was not a final decree and was not appealable, at least in so far as it involved the claim for $176,000." And in the 1948 decree the trial judge for the first time declared that the 1947 decree "is hereby made final." ³ The creditors prosecuting this appeal for respondent should not be deprived of an opportunity to appeal from the 1948 decree just because attorneys for the corporation failed to appeal from a former decree which the trial *519 judge himself seems to have considered interlocutory and nonappealable. ⁴

The holding that Petroleum's appeal from the 1948 judgment must be dismissed may well produce a strange consequence. The reason for dismissal urged here by petitioner Dickinson is that the 1947 decree was final; under his contention, that decree left nothing for the trial court to do except determine the shares of various "Rinke subscribers" in "the particular sum" found due to that class from Lloyd and Dickinson, and to assess costs and enter judgment. On this hypothesis the 1947 decree seems just as final on Dickinson's claims and liability as on Petroleum's. The 1947 litigation originated in charges of fraud made by Dickinson against Lloyd. Petroleum and persons designated as "Rinke subscribers" then intervened, charging fraud against both Dickinson and Lloyd. The 1947 decree rested on findings that the charges against Dickinson and Lloyd had been proven. The court concluded that the Rinke subscribers, and to some extent Petroleum, had been damaged by their fraud. Accordingly the court awarded partial relief to Petroleum on one of its claims, dismissing all its other claims. The court also fixed a particular amount for the Rinke subscribers as a group to recover from Dickinson and the Lloyd estate. That decree, here held final as to Petroleum, apparently had an identical degree of finality as to Dickinson: in addition to fixing the precise sum for which Dickinson and Lloyd were liable to Rinke subscribers as a group, it completely dismissed Dickinson's affirmative claims. ⁵ Yet *520 Dickinson himself has appealed from the 1948 decree, ⁶ and ironically enough he is the only party here urging dismissal of Petroleum's appeal from the same decree.

So far as we know, Dickinson's appeal is still pending. With Petroleum out of the case by this Court's judgment, he should certainly not be left free to have his own appeal considered in the Court of Appeals. Permitting him to challenge the 1947 findings would result in appellate review of that decree without the presence of Petroleum, who was one of Dickinson's 1947 adversaries. If Dickinson can challenge the 1947 decree by appeal from the 1948 judgment, Petroleum should also be allowed to challenge it. And if neither can challenge it, the basic questions of fraud and liability are now beyond the reach of appellate review. I cannot join the Court in applying a rule of "finality" which attaches such consequences to the understandable failure of these parties to appeal from the 1947 decree.