source: Caselaw Access Project

author: PER CURIAM. GREEN, District Judge:

license: Public Domain

text:
    The RICHLAND TRUST COMPANY, Plaintiff-Appellant, v. FEDERAL INSURANCE COMPANY, Defendant-Appellee.
    No. 73-2100.
    United States Court of Appeals, Sixth Circuit.
    Argued Feb. 6, 1974.
    Decided March 19, 1974.
    See also 6 Cir., 480 F.2d 1212.

      Rees Davis, Mansfield, Ohio (Robert L. Ross, Ross, Davis & Baran, Mansfield, Ohio on the brief), for appellant.
    John L. Miller, Columbus, Ohio (J. Paul McNamara, John L. Miller, McNamara & McNamara, Columbus, Ohio on the brief), for appellee.
    Before CELEBREZZE and McCREE, Circuit Judges, and McALLISTER, Senior Circuit Judge.
   PER CURIAM.

This is an appeal from the grant of summary judgment in an action for breach of a bankers’ blanket bond. For the reasons set forth in Whitney National Bank of New Orleans v. Transameri-ean Insurance Company, et al., 476 F.2d 632 (3d Cir. 1973) (en banc), and the memorandum opinion of the district court filed November 7, 1972, attached hereto as an appendix, we affirm.

APPENDIX

MEMORANDUM AND ORDER

(Filed November 7,1972)

GREEN, District Judge:

There is before the Court a motion for summary judgment by defendant Federal Insurance Company against plaintiff The Richland Trust Company.

The facts, briefly stated, are as follows. The defendant, a New York insurance bonding corporation doing business in Ohio, issued a bankers’ blanket bond (No. 9601987-A) to the plaintiff in 1965. During 1969, the said bond was renewed with an added endorsement, being Number Five, making the insurer liable up to $250,000 for losses suffered by The Richland Trust Company:

By reason of having in good faith and in the course of business purchased or otherwise acquired, accepted or received, or sold or delivered, or given any value, extended any credit or assumed any liability, on the faith of, or otherwise acted upon any securities, documents or other written instruments which prove to have been counterfeited or forged as to the signature of any maker, .

Between 1966 and 1969, plaintiff made loans to one Roland A. Getz and certain corporations controlled by Mr. Getz, relying on a number of financial statements submitted by Getz during that period. In January of 1970, plaintiff became aware of a government tax lien against Getz, effectively halting the business operations for which the loans had been made. In May of 1970, the Ohio State Bank Examiners ordered Getz’s accounts, now totaling $288,500, transferred to the bank’s reserve for bad debts.

Thereafter, on December 3, 1970, plaintiff notified defendant that it was seeking recovery of $250,000 under Endorsement Number Five, claiming that the financial statements submitted on Mr. Getz and his enterprises were counterfeited documents within the meaning of the endorsement. Defendant denied coverage, and also asserted that the losses were as a consequence of non-payment of debts, which are excluded from coverage by another policy provision.

Plaintiff then filed this action to recover its losses up to the $250,000 limit.

In its motion for summary judgment, defendant argues, inter alia, that plaintiff’s loss was not incurred as a result of a forged signature or counterfeiting of “any securities, or other written instruments,” and that recovery must be denied as there is no other provision under the bond allowing recovery.

Plaintiff argues that the better-reasoned cases hold that documents which are inaccurate statements of actual conditions are “counterfeit”, as that word is used in the type of bankers’ blanket bond involved in this case. As authority, plaintiff cites a dictionary definition and several federal and state cases. None of plaintiff’s cited authorities are from this circuit or from this state.

Jurisdiction in this case is based upon diversity of citizenship, 28 U.S.C. § 1332. That being so, this Court is bound to apply and follow controlling state law, Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), which in this case would appear to be the law of Ohio.

In Union Banking Co. v. United States Fidelity and Guaranty Co., 4 Ohio App.2d 397, 213 N.E.2d 191 (1965), the question arose:

Whether or not the various duplicate certificates of title upon which loans were made by the plaintiff were proved to have been “counterfeited or forged as to the signature of any maker.” [Id., at 404, 213 N.E.2d, at 198]

After discussing what it found to be the majority rule, the court said:

There appears to be general agreement that the word “counterfeit”, as used means an imitation of a genuine document having a resemblance intended to deceive and be taken for the original. Id., at 405, 213 N.E.2d, at 196 (emphasis as in original).

The court then held:

We would again stress that a document or writing is counterfeit if it is an imitation, i. e. if an attempt has been made to simulate another document which is genuine.
However, the certificates of title in this case arise not from imitation, but rather from a false representation of fact to the clerk of courts in the application filed therein. Id. at 405-406, 213 N.E.2d at 197.

That same rule of law has been announced by the Sixth Circuit Court of Appeals. In First National Bank of Memphis v. Aetna Casualty & Surety Co., 309 F.2d 702 (1962), cert. den. 372 U.S. 953, 83 S.Ct. 951, 9 L.Ed.2d 977 (1963), it was held:

In our opinion, the warehouse receipts were not forged or counterfeited. They were signed and issued by the elevator company and endorsed by Butler-Foster, all by duly authorized officers. Falsity lies in the representation of facts contained in the warehouse certificates and not in the genuineness of their execution. In common parlance, the warehouse certificates would not be considered as forged or counterfeited and certainly not at common law or under the statutes of Alabama or Tennessee. Id., at 705.

The law of New York, the other forum whose laws could possibly apply to this case, is in accord with the Union Banking Co. and First National Bank of Memphis decisions. In Exchange National Bank of Olean v. Insurance Company of North America, 341 F.2d 673 (CA2, 1965), it was held that a genuine document containing false representations could not be considered as counterfeit under the terms of a bond comparable to that in suit. See also, Maryland Casualty Co. v. State Bank & Trust Co., 425 F.2d 979 (CA5, 1970) and cases cited therein at p. 983.

Granting that in this case the financial statements submitted to plaintiff contained false representations of fact, they were genuine as to form and not imitations or simulations of genuine documents. It follows, therefore, that under the law controlling upon this Court such documents cannot be held as counterfeit within the terms of the bond. Summary judgment will be entered in defendant’s favor dismissing plaintiff’s complaint.

It is so ordered.

/s/ Ben C. Green

United States District Judge


author: PER CURIAM:

text:
    UNITED STATES of America, Appellee, v. Jerome Lester REIDE, Appellant.
    No. 495, Docket 73-2168.
    United States Court of Appeals, Second Circuit.
    Argued Dec. 6, 1973.
    Decided March 29, 1974.

      Raymond J. Dearie, Asst. U. S. Atty., Brooklyn, N. Y. (Robert A. Morse, U. S. Atty., E. D. N. Y., Brooklyn, N. Y., L. Kevin Sheridan, Asst. U. S. Atty., of counsel), for appellee.
    Kristin Booth Glen, New York City, for appellant.
    Before MOORE, HAYS and TIMBERS, Circuit Judges.
   PER CURIAM:

Appellant appeals from his conviction for contempt arising from his citation by Judge Weinstein for his refusal to answer questions put to him during a Grand Jury investigation. Previous to this investigation, Reide had been adjudged a delinquent for his participation in a bank robbery. The Grand Jury was investigating whether there had been any additional persons involved beyond those already apprehended. Upon being called, Reide refused to answer any of the questions put to him and requested an attorney. Frank Lopez, Esq., was appointed. Reide confided in him that he had been “convicted” not only of the bank robbery but also of a manslaughter charge. What Reide did not confide was the fact of an outstanding weapons charge in the Eastern District, entirely unrelated to the bank robbery in question.

The Assistant District Attorney advised Mr. Lopez that he could not imagine how Reide could incriminate himself further by answering questions concerning the robbery. However, it was stated that if Reide wished to waive his Fifth Amendment rights, he would be granted immunity. Mr. Lopez then, not sensing any potential incrimination, advised Reide to answer. Reide again refused to answer and was cited for contempt. After a jury trial he was convicted and sentenced to a six-month sentence to run concurrently with a federal sentence imposed for a previous violation of the Federal Juvenile Delinquency Act.

Counsel for appellant advises us that this case presents “a veritable casebook of constitutional issues.” Certainly a great number of errors are alleged and couched in Constitutional terms. Upon inspection, however, it appears that none of the supposed errors rise to reversible status.

It is suggested at the onset that appellant should have been given Miranda warnings before being asked to testify. This failure, it is claimed, should void the contempt conviction. This argument fails for the reason that .Reide never did testify. In addition, Reide had counsel present and had been given advice concerning his Fifth Amendment privileges. Further, since he had already been adjudged guilty of the robbery, he had no right to remain silent on matters concerning it; thus the Miranda warnings were not called for.

To overcome some of the difficulties above, appellant urges that he would not have been protected by double jeopardy had he answered. Numerous speculative answers are suggested to the questions Reide refused to answer. Each of these answers might have had the effect of incriminating him further. These answers, however, do not meet the test laid down in Hoffman v. United States, 341 U.S. 479, 71 S.Ct. 814, 95 L. Ed. 1118 (1951). That case stated:

The witness is not exonerated from answering merely because he declares that in so doing he would incriminate himself . . . [However] [t]o sustain the privilege, it need only be evident from the implications of the question, in the setting in which it is asked, that a responsive answer to the question or an explanation of why it cannot be answered might be dangerous because injurious disclosure could result.

341 U.S. at 486-487, 71 S.Ct. at 818.

Appellant refused to say anything: he refused even to claim the Fifth Amendment. Judge Weinstein then properly instructed appellant to answer the questions, although only as they related to the robbery. If one of the speculative answers suggested was in fact correct, a response could have been framed with advice of counsel to avoid any incrimination or at least some inkling could have been conveyed to the Judge, perhaps by claiming a Fifth Amendment immunity, that appellant was legitimately afraid of making an injurious disclosure. As it was, appellant’s blanket refusal to respond, even to .give his name, left Judge Weinstein with no choice.

Appellant argues that, since his attorney was unaware of the impending weapons charge, he (Reide) was denied his right to effective counsel. Of course, the weapons charge, totally unrelated to the bank robbery, would not have supported Reide’s refusal to testify and thus, the advice given him by his attorney, although given in ignorance of the charge, was in fact correct.

The next argument raised by appellant is that the failure of the government to disclose the weapons count represents a suppression of evidence and should result in a reversal. This argument is also without merit. Unwitting non-revelation of irrelevant evidence certainly does not rise to the level of reversible error.

Appellant next contends that the Grand Jury was performing an improper function in that it was being used to prepare the weapons case against Reide. This in appellant’s eyes would excuse his contempt. However, no shred of evidence is presented that would suggest such an abuse.

Following this line of attack, it is also argued that appellant was improperly denied an opportunity to examine the minutes of the Grand Jury to determine whether it was serving a proper purpose or not. Barring this requested inspection, appellant contends the court should have reviewed the minutes in camera to insure that there was no misconduct. In support of his position, appellant alleged that the minutes of the Grand Jury were entitled “United States of America against Fred Fernandez”, that Fred Fernandez was already under indictment and that there was no need to re-indict him; that no other persons beside Reide were called to testify; and that forty-five days had elapsed since the beginning of the investigation and no indictment had been returned. This, appellant contends, formed a prima facie case sufficient under Fed.R.Crim.P. 6(e) to require the revealing of the Grand Jury minutes. This argument runs afoul of two facts. First, a Grand Jury need not necessarily return an indictment; it has a legitimate interest merely in investigating a crime. Second, the questions asked Reide could not be construed as an attempt to build a foundation for the weapons case. Thus, the Judge properly denied the motion.

Appellant’s next argument concerns the allegedly improper limitations placed upon him during the presentation of his case. Appellant had wished to call Daniel Meyers, his lawyer in a prior proceeding, and Judge Weinstein. Mr. Meyers’ testimony was severely limited, many of the questions put to him being categorized as irrelevant. Appellant’s attorney had hoped to elicit from him testimony concerning the weapons charge and plea bargaining. The Judge was correct, however, in ruling that the facts relating to the guns charge were irrelevant to the present prosecution. If it could be shown that the prosecution deliberately suppressed the guns charge before the Grand Jury investigation, or if it could be shown that there was a prima facie case of Grand Jury misuse, then these matters might carry some weight. In the present circumstances, the Judge was correct in limiting the testimony. Appellant also wished to call. Judge Weinstein who, it was alleged and eventually stipulated, would have testified that he knew nothing of the weapons charge. It was suggested by appellant’s counsel that Judge Weinstein might have testified that if he had known of the outstanding charge, he would not have held Reide in contempt. However, appellant was not allowed to call the Judge, and this latter portion of possible testimony was held to be irrelevant. This ruling was proper. Judge Weinstein, at that time, was neither the judge in this case nor the jury. It is true that a contempt citation is a matter in discretion of the judge who gives it, but in this case it was for current trier of fact to determine whether or not the unknown fact of the weapons charge would have swayed the Judge in the prior proceeding.

Finally, it is contended that the summation of the prosecutor was improper and denied appellant due process of law. The Assistant District Attorney, it is admitted, improperly referred to appellant’s conviction for bank robbery when, in actuality appellant had merely been found guilty and “adjudged” a delinquent. It is also argued that beyond this one “conspicuous” error, the summation, taken as a whole, goes beyond the line “which distinguishes permissible advocacy from improper excess.” United States v. White, 486 F.2d 204 (2d Cir. 1973). Naturally the judgment required here is a very subjective one. Reviewing both summations, there are criticisms which might be made of each; however, on balance, it cannot be said that the summation of the prosecutor was so flawed so as to have denied appellant due process.

Each argument raised by appellant having been considered in turn and found to be insufficient for reversal, the judgment of the court below is affirmed.


author: SWYGERT, Chief Judge.

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Robert DRAKE, Defendant-Appellant.
    No. 73-1593.
    United States Court of Appeals, Seventh Circuit.
    Argued Feb. 28, 1974.
    Decided March 25, 1974.

      David J. Colman, Bloomington, Ind., for defendant-appellant.
    Stanley B. Miller, U. S. Atty., Indianapolis, Ind., for plaintiff-appellee.
    Before SWYGERT, Chief Judge, KI-LE Y, Senior Circuit Judge, and STEVENS, Circuit Judge.
   SWYGERT, Chief Judge.

Defendant Robert Drake was indicted, tried by a jury, and convicted of distributing cocaine in violation of 21 U.S.C. § 841(a)(1). He has appealed and we affirm.

I

Defendant contends that the trial court, after refusing to hear evidence, erred in denying his motion to exclude the entire jury panel for cause. His challenge is predicated on the length of the panel’s service; the number and type of cases heard by the panel; exposure of the prosecutor and other members of the prosecutor’s staff to the panel ; and the prosecutor’s familiarity with the panel.

After reviewing the record we see no merit in defendant’s contention and hold that the trial court did not err in denying his motion.

The trial court, in confronting defendant’s challenge as to the panel’s length of service, noted that although they had “been on call for a number of months” (emphasis supplied), none of them had been required to serve as jurors in excess of the statutory period. 28 U.S.C. § 1866(e). Moreover, no offer of proof was made that the panel consisted of persons whose jury service exceeded the statutory limitation.

The record will not support the challenge that the jury panel was unable to give defendant a fair trial because of their exposure to the prosecutor or other members of the prosecutor’s office during trials, and the eases previously heard by them. The trial judge stated that the panel’s actual exposure to the prosecutor in this case had been on only two prior cases where “[t]he verdicts on three different counts contained in two indictments [had] been ‘not guilty,’ ‘guilty,’ and hung-jury.” Additionally, the trial judge noted that during the time the panel had been on call they had served on only three criminal cases. We think that defendant’s concern could have been remedied by questions during the voir dire examination since that is the appropriate time to ascertain the prospective jurors’ ability to render a fair and impartial verdict.

We are unpersuaded by the challenge that the prosecutor had a familiarity with the panel which disadvantaged defendant. When permitted to make a record of the evidence he desired to offer, defense counsel stated that he wanted the prosecutor to take “the stand and ask him the number of jurors that he had on the first trial that had reappeared on the second trial.” As the trial judge correctly stated, this matter had “already been brought out by questioning the jurors themselves.” Defense counsel also desired to question the prosecutor “if he had excused one juror.” We find no prejudice to defendant in being unable to inquire as to the reason behind the prosecutor’s peremptory challenge. Moreover, this is no basis to challenge the entire panel.

II

Defendant next contends the trial court erred in denying his motion to poll and admonish the jury on grounds that a prosecution witness, seated at counsel table, commented to the prosecutor that defendant’s alibi witness was “lying” in his testimony. It is asserted that defense counsel was informed the comments were overheard by courtroom spectators and since the prosecution witness was seated adjacent to the jury box there was “considerable probability” the jury also heard the comments. Defendant urges that only by polling the jury could the extent of the prejudice be determined.

This contention is compounded by the fact that defendant’s alleged request to poll the jury is absent from the record. Defendant explains that this omission was the result of the court reporter’s failure to perceive the comments or her inadvertence in transcribing the side bar conference. In this posture, F.R.App.P. 10(e) would have been the appropriate remedy since it provides for a dispute in the record to be submitted to the trial court for settlement. This procedure recognizes that it is impossible for an appellate court to properly make a determination if it must speculate about what occurred below.

Assuming arguendo that the defendant did request the jury be polled, as asserted in defense counsel’s affidavit, we find that the trial judge ruled correctly. The trial judge was unaware of what was specifically said by the prosecution witness. During the side bar conference defense counsel merely revealed that, “ . . . there were comments between the prosecutor and prosecution’s witnesses which may have been overheard by the jury. We do not know the jury did actually overhear, but they were overheard in the back of the courtroom by some spectators . . . .” There was no direct evidence that the jury overheard the alleged comments. Defense counsel did not assert that he himself heard anything. The trial judge, in response to the defense counsel’s request, did indicate that he would instruct the jury on the matter and subsequently did so through the following instruction which was not objected to by the defendant:

Sometimes, during the course of a trial, the persons seated at the counsel tables converse with each other in such a fashion that some parts of their conversations are audible to the jury . . . you should not consider . . . such ... in arriving at your verdict herein.

We think this instruction was sufficient to cure any prejudice which may have emanated from the prosecution’s table during the trial.

Ill

Defendant’s final contention is that prejudicial error was committed when the prosecutor made two factual statements in closing argument about defendant’s alibi witness which were not in evidence. It is urged that these statements impeached the credibility of the witness upon whom the defendant’s sole defense of alibi was based.

Defendant first objects to the prosecutor’s argument that defendant’s alibi witness had participated with defendant in a scheme “to defraud certain individuals” by selling sugar for heroin, and that he “openly admitted that he was ripping-off someone.” Defendant’s objection is grounded on the fact that the alibi witness testified he was neither involved in the “rip-off” sale nor was present. In response to defendant’s objection the trial judge indicated that if he disagreed with the prosecution he would have an opportunity to so argue on rebuttal. Subsequently, the prosecutor’s statement was attacked as being inaccurate during defendant’s closing argument. Additionally, there are facts in the record which support a reasonable inference that the alibi witness was involved in the “rip-off” sale.

Defendant also objects to the prosecutor’s argument that the alibi witness had been convicted of a crime. After objection by defendant, the prosecutor, realizing his error, corrected himself by indicating his intent to make reference to defendant, who had, in fact, been previously convicted of a crime and not the alibi witness. Moreover, the court emphasized to the jury that a mistake had been made by the prosecutor and admonished them to disregard his erroneous reference to the alibi witness.

We conclude that the prosecutor did not commit prejudicial error in his closing argument.

The judgment of conviction is affirmed.


author: HILL, Circuit Judge.

text:
    Ray L. GLENNY et al., Plaintiffs-Appellants, v. AMERICAN METAL CLIMAX, INC., and AMAX Lead & Zinc, Inc., Defendants-Appellees.
    No. 73-1494.
    United States Court of Appeals, Tenth Circuit.
    Argued and Submitted Jan. 10,1974.
    Decided March 19, 1974.

      Raymond T. Dahlberg, Great Bend, Kan. (H. Lee Turner, Great Bend, Kan., B. J. Cooper, Oklahoma City, Okl., and Arthur W. Skaer, Jr., Wichita, Kan., on the brief), for plaintiffs-appellants.
    Ben L. Burdick and Clyde A. Much-more, Oklahoma City, Okl. (L. E. Stringer, Oklahoma City, Okl., on the brief), for defendants-appellees.
    Before HILL, BARRETT and DOYLE, Circuit Judges.
   HILL, Circuit Judge.

Appellants, landowners in the vicinity of the smelter belonging to Blackwell Zinc Company, brought this action against the smelter’s parent companies American Metal Climax, Inc. (AMAX) and AMAX Lead & Zinc, Inc. (ALZ) to enjoin the operation of the smelter and to recover compensatory and punitive damages totaling $4,998,414. Appellees AMAX and ALZ thereafter filed a motion to dismiss pursuant to Rule 19(b), F.R.Civ.P., on the ground that the smelter’s owner and operator, Blackwell Zinc Company, was an indispensable party to the lawsuit. The United States District Court for the Western District of Oklahoma, after determining that Blackwell Zinc was an indispensable party and that appellants have a satisfactory alternative forum in state district court, sustained appellees’ motion to dismiss. This appeal followed.

Plaintiffs filed their original action on March 31, 1972, against Blackwell Zinc and AMAX. The complaint in that action alleged both defendants were corporations incorporated under the laws of New York and had their principal place of business in the State of New York. On May 8, 1972, defendant Blackwell Zinc moved to dismiss the plaintiffs’ action on the basis that the federal courts lacked subject matter jurisdiction, alleging a lack of diversity of citizenship between the parties since Blackwell Zinc’s principal place of business was in Oklahoma and most of the plaintiffs were Oklahoma residents. The district court thereafter entered a protective order limiting discovery to matters relating to the question of jurisdiction. In compliance with the protective order appellants took depositions of James E. Gorman, Blackwell Zinc’s plant manager, and James M. Frazier, Blackwell Zinc’s plant controller. In addition answers to interrogatories were filed.

On October 26, 1972, defendant Blackwell Zinc’s motion to dismiss for lack of subject matter jurisdiction was granted. Notice of appeal from the order was filed but later voluntarily dismissed by appellants upon filing their second action, the case presently under consideration. The second action was filed against defendants AMAX and ALZ. Appellants asserted in this action that ALZ was a wholly owned, operated and controlled subsidiary of AMAX. Furthermore, plaintiffs asserted Blackwell Zinc was a wholly owned, operated and controlled subsidiary of ALZ; that ALZ was nothing more than a subdivision, division, or department of AMAX; and that Blackwell Zinc occupied the same position in relationship to ALZ. Because of these relationships appellants asserted that at all times material to their action Blackwell Zinc, in its activities connected with the smelter, had operated as a mere agent, instrumentality and alter ego of appellees.

On April 5, 1973, defendants moved to dismiss the instant proceeding pursuant to Rule 19(b), F.R.Civ.P. for want of an indispensable party. During arguments on this motion all parties agreed that the partial discovery of the first action should be included in the record. From all the evidence before the court the trial judge determined that Blackwell Zinc was an indispensable party and accordingly dismissed the action.

Prior to dismissal of the instant case, appellants commenced a substantially identical action in the District Court of Kay County, Oklahoma, against Blackwell Zinc. Subsequent to the dismissal, appellants joined AMAX and ALZ in the state court action. That action is still pending.

On appeal we note that two issues are presented for our consideration. First, did the district court err in holding that Blackwell Zinc was an indispensable party to the instant proceedings? Second, did the district court err in dismissing appellants’ complaint against AMAX and ALZ for want of an indispensable party? We answer both these questions in the negative and accordingly affirm the district court’s decision.

Under Rule 19(a) we must first determine whether Blackwell Zinc is a person to be joined if feasible. Rule 19(a) (2) (i) provides that a person should be joined if “he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may as a practical matter impair or impede his ability to protect that interest.” The evidence shows that Blackwell Zinc is a multimillion dollar corporation which has existed and operated in Kay County, Oklahoma, for over half a century. It employs 800 people, all of whom work at its smelting plant near Blackwell, Oklahoma. Its principal place of business is located near Blackwell and it has no plant, equipment or operating assets outside the State of Oklahoma. Because appellants are demanding monetary and injunctive relief for damages caused solely by this smelter, we believe that Blackwell Zinc, although a wholly owned subsidiary of ALZ and AMAX, has at least an interest in the subject of this action. Without its joinder, Blackwell Zinc’s ability to protect that interest may be impaired.

The second question confronting us is whether or not under Rule 19(b) the action should be dismissed for want of an indispensable party. Rule 19(b) enumerates four factors to be evaluated by the court once it has determined that the joinder of a person or persons described in Rule 19(a) is desirable but not feasible. These factors include:

. first, to what extent a judgment rendered in the person’s absence might be prejudicial to him or those already parties; second, the extent to which, by protective provisions in the judgment, by the shaping of relief, or other measures, the prejudice can be lessened or avoided; third, whether a judgment rendered in the person’s ab-sense will be adequate; fourth, whether the plaintiff will have an adequate remedy if the action is dismissed for nonjoinder.

Rule 19(b) does not state what weight is to be given each factor, 7 Wright, Federal Practice and Procedure, § 1608 (1972), and thus we must determine the importance of each factor on the facts of each particular case and in light of equitable considerations. In making this determination we recognize that operation of Rule 19(b) depends to a large degree on the careful exercise of discretion by the district court. Broussard v. Columbia Gulf Transmission Co., 398 F. 2d 885 (5th Cir. 1968).

The first test to be considered is the extent to which “a judgment rendered in the person’s absence might be prejudicial to him or those already parties.” This test considers the need to protect absent persons from litigation adversely affecting their interests and the need to protect those who are parties from the threat of multiple actions. This test does not allow for mere theoretical possibilities but rather looks to the practical likelihood of prejudice and subsequent litigation. Schutten v. Shell Oil Co., 421 F.2d 869 (5th Cir. 1970). As a practical matter we do not believe appel-lees would be faced with multiple lawsuits if we elected to retain jurisdiction. After reviewing appellants’ allegations and demands for relief we believe that any decision rendered in this court would effectively preclude future litigation in some other forum. We do believe, however, that any decision rendered would adversely affect Blackwell Zinc’s interests and thus would constitute prejudice to the absént party. This conclusion is supported by the fact that appellants are asking nearly five million dollars for damage resulting from the operation of Blackwell Zinc along with asking the court to close down its operation. See McShan v. Sherrill, 283 F.2d 462 (9th Cir. 1960); Amerada Petroleum Corp. v. Rio Oil Co., 225 F.Supp. 907 (D.Wyo.1964).

The second factor listed in Rule 19(b) is “the extent to which, by protective provisions in the judgment, by the shaping of relief, or other measures, the prejudice can be lessened or avoided.” This factor obligates the court to seek an alternative to dismissing the action if to do so will minimize the prejudicial effect. Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U.S. 102, 88 S.Ct. 733, 19 L.Ed.2d 936 (1968). In the instant case, however, we do not perceive any alternative relief which will minimize the prejudicial effect to Blackwell Zinc. Appellants brought this action to recover for damages caused by operation of Blackwell Zinc’s smelters and thus any available relief will of course directly affect Blackwell Zinc. Thus there is no satisfactory way to minimize the prejudice in Blackwell Zinc’s absence.

The third factor in Rule 19(b) is “whether a judgment rendered in the person’s absence will be adequate.” As noted in the 1966 Advisory Committee Note to Rule 19, 39 F.R.D. 89, 93, this factor meshes with other factors, especially the “shaping of relief” mentioned under the second factor. And as we noted in discussing the second factor there is no way we can shape the relief to leave Blackwell Zinc unaffected. The same result is reached under the third factor; appellants are suing for damages caused by the smelter and thus only if Blackwell Zinc is present would we be able to grant the relief prayed for by appellants.

The final factor listed in Rule 19(b) is “whether the plaintiff will have an adequate remedy if the action is dismissed for nonjoinder.” Unquestionably appellants have a satisfactory forum available in state court. This conclusion is attested to by the fact that appellants already have filed an action in the District Court of Kay County, Oklahoma, against Blackwell Zinc, AMAX and ALZ seeking the same relief.

Based on the foregoing analysis we find that Blackwell Zinc is a party to be joined if feasible under Rule 19(a). Because joining Blackwell Zinc would destroy diversity of citizenship between all the parties, we looked to Rule 19(b) to determine whether the litigation could proceed in its absence. After analyzing the four factors set out in Rule 19(b) we believe Blackwell Zinc is a compulsory party and therefore we must affirm the district court’s dismissal of this action for want of an indispensable party.

Appellants try to circumvent the mandate of Rule 19(b) by alleging that Blackwell Zinc is merely the “alter ego” of appellees. The court in Lang v. Colonial Pipeline Co., 266 F.Supp. 552 (E.D. Pa.1967), aff’d 383 F.2d 986 (3d Cir. 1967), was confronted with the same argument and after analyzing congressional policy and reviewing pertinent Supreme Court decisions rejected the “alter ego” theory as a basis for retaining jurisdiction. The trial judge concluded that Congress did not intend federal courts to retain jurisdiction in all matters relating to diversity of citizenship. This is evidenced by the fact that in 28 U.S.C. § 1359 federal courts are denied jurisdiction in civil actions where a party has been improperly made or joined to invoke federal jurisdiction. In 28 U. S.C. § 1332(c) Congress has narrowed federal diversity jurisdiction by providing that a corporation shall be deemed a citizen both in its state of incorporation and the state where its principal place of business is located. 1 Moore’s Federal Practice, |f 0.78[2] (2d ed.1948). These statutes, coupled with the fact that Congress has not enacted any legislation compelling retention of cases dealing with manipulation of corporate identity, convinced the judge that Congress did not make retention obligatory on federal courts when the jurisdictional issue centered around a “dummy subsidiary”. Nor does it appear that the Supreme Court concerns itself with the “alter ego” question in deciding diversity of citizenship. Instead, the Court looks into the collusive activities of a parent company and its wholly owned subsidiary in deciding the jurisdictional question. See Black & White Taxicab & Transfer Co. v. Brown & Yellow Taxicab & Transfer Co., 276 U.S. 518, 48 S.Ct. 404, 72 L.Ed. 681 (1928) ; Miller & Lux, Inc. v. East Side Canal & Irrigation Co., 211 U.S. 293, 29 S.Ct. 111, 53 L.Ed. 189 (1908). The trial judge therefore concluded that he was not compelled to retain jurisdiction in a case where diversity is satisfied only by piercing the corporate veil. We agree with this reasoning.

In light of the foregoing analysis we find no error in the district court’s dismissal of the instant action for want of an indispensable party. Admittedly, in a different factual setting retention of jurisdiction might be necessary, but not so in the case presently before us.


text:
    Edward F. WARDE, Plaintiff-Appellee, v. Marvin B. DAVIS and Barbara Davis, Defendants-Appellants.
    No. 73-1080.
    United States Court of Appeals, Tenth Circuit.
    Argued and Submitted July 11, 1973.
    Decided March 19, 1974.

      Anthony Zarlengo, Denver, Colo., for def endants-appellants.
    John J. Mullins, Jr., Denver, Colo., for plaintiff-appellee.
    Before PHILLIPS, HILL and DOYLE, Circuit Judges.
   HILL, Circuit Judge.

This diversity action involves a contract dispute over sums allegedly due ap-pellee Warde for landscape architectural services performed by him for appellants Barbara and Marvin Davis. The trial court found appellants liable for breach of contract and awarded appellee $13,200 plus interest. Following argument to this court, and after reviewing the entire record, we concluded that the findings of fact were insufficient for a proper review of the case. It was therefore remanded to the trial court for the purpose of making sufficient and adequate findings of fact in compliance with Rule 52, F.R.Civ.P. Adequate findings of fact subsequently were made and the case is now before us for a proper determination.

The facts are simple. Appellants purchased real property in Englewood, Colorado, for the purpose of building a luxurious home. Desiring an aesthetically beautiful landscape to complement their new home, appellants asked Warde to design and supervise the landscape. Warde, a renowned landscape architect living in Beverly Hills, California, accepted the offer, but only on his own terms. These terms were set out in a letter to appellants dated September 19, 1968.

The letter stated that appellants had requested Warde “to design and draw up Landscape Plans and Specifications” for their residence and that said plans were to consist of the following:

1. Landscape Construction Plans showing circular drive and parking area, tennis court and tennis pavilion, future swimming pool, gazebo or equivalent, location of air conditioning compressor, sun bathing area, enclosed play area with recessed trampoline, recessed sandbox and other play equipment. Also incorporated in this Plan will be the location of major trees, garden lighting, outline of planting areas, location and description of any necessary walls, fences, and screens, garden paths, and lawn area and other garden accessories.

2. Landscape planting plans showing location, size, and description of all planting material to be installed.

The letter further stated the landscape plans would cost $1,800 and that “there will be, in addition, a supervision fee of 15% of the total amount spent.” Finally, the letter provided that Warde would be reimbursed for all expenses incurred in traveling to and from the job site from Los Angeles, California. Although reluctant to accept the 15% supervision fee, appellants ultimately relented and agreed to Warde’s terms.

Once the landscape plans were tentatively drawn construction began, and shortly thereafter disagreements between appellants and Warde erupted. Appellants felt that Warde’s landscape plan specifications were too general to be acted upon by contractors. They also felt that Warde was not spending adequate time on the job, but rather was delegating many of his supervisory functions to contractors. Because he was not performing his work as appellants had anticipated, Warde’s services were terminated on November 25, 1969. This lawsuit followed.

At trial appellant Davis testified that Warde spent very little time at the job site. Warde would come out to Engle-wood for one day and then fly back to Los Angeles, leaving all supervisory work to the subcontractors. He further testified that he and his wife placed many calls to Warde requesting him to come out more frequently and give the job closer supervision; but to no avail. He also intimated that Warde’s landscape plan specifications were too vague, as evidenced by the fact that on numerous occasions he or his wife received telephone calls from contractors asking for an explanation of Warde’s landscape plans.

Warde denied being derelict in his supervisory duties. He testified that it was his practice to design the landscape, select locations for the construction, and select the aesthetically appealing material to be used in the construction. Much of the actual supervision was left to the contractor. As for landscape plan specifications, Warde conceded that details were left up to his contractors. Although landscape architects usually furnish detailed plans showing contractors what must be done, it was his procedure to utilize detailed specifications supplied by the contractors. Warde’s position is that technical specifications for a construction project can best be made by the experts in their respective fields, i. e., the contractors.

The case was tried to the court without a jury. In the trial appellants asserted that Warde should not be allowed to recover because: (1) he violated state law by practicing landscape- architecture in Colorado without a Colorado license; (2) he failed to execute the contract according to its terms; and (3) the contract was a nullity because there was no mutual meeting of the minds on the meaning of “supervision”. The trial judge rejected these arguments and held that Warde was entitled to recover the 15% supervision fee on the cost of all work completed on or prior to his termination on November 25, 1969, plus the balance due on his landscape plans and reimbursement for travel expenses. He was also entitled to a 15% fee on that part of a swimming pool completed by November 25. In the final judgment Warde was awarded $13,200 for expenses and supervision fees plus $2,369.50 in interest.

On appeal four issues are presented for our consideration. Appellants first charge that Warde’s failure to register as a landscape architect pursuant to Colorado statutes regulating the practice of architecture bars any recovery. Secondly, that it was error to allow Warde a supervision fee on those items completed on or shortly after the date of his termination. Thirdly, that it was error to conclude the letter of September 19, 1968 constitutes an agreement between the parties. Finally, that it was error to assess interest on the judgment.

Whether failure to register as a landscape architect pursuant to Colorado law invalidates the contract between appellants and Warde raises a question not heretofore answered by the Colorado Supreme Court. We therefore are bound by the well settled rule that when a state court has not decided the question, the federal district court’s view of state law will be given great weight and credence. United States v. Hershberger, 475 F.2d 677 (10th Cir. 1973); In re Privett, 435 F.2d 261 (10th Cir. 1970).

The two applicable statutes state in part:

C.R.S.1963, 10-2-2 (1967 Cum.Supp.). Qualifications for practice — seal—(1) No person shall use the designation “landscape architect” or “landscape architecture”, or advertise any title or description tending to convey the impression that he is a landscape architect, or practicing landscape architecture, unless such person is a registered landscape architect, and shall comply with the provisions of this article. Every holder of a registration shall display it in his principal office, place of business, or place of employment.
C.R.S.1963, 10-2-6 (1967 Cum.Supp.). Exemptions — (3) None of the provisions of this article shall apply to the business conducted in this state by any horticulturist, nurseryman . . . or any other person, including, but not limited to, their right to plan and supervise in connection therewith, except that no such person shall use the designation “landscape architect”, “landscape architecture”, or any description tending to convey the impression that he is a registered landscape architect unless he is registered as provided in this article.

The district court interpreted these statutes as prohibiting a person from holding himself out as an architect rather than prohibiting a person from engaging in the business of landscape architecture. Davis, Brody, Wisniewski v. Barrett, 253 Iowa 1178, 115 N.W.2d 839 (1962). Unquestionably the statutes specifically prohibit a person from using any title tending to convey the impression that he is a landscape architect unless registered by Colorado, but nowhere do the statutes expressly prohibit a person from engaging in the landscape architectural business without a Colorado license. The statutes are apparently an attempt to prevent fraud by unqualified persons who use the title “landscape architect” as a guise for soliciting clients. The statutes are directed more toward preventing misrepresentations than preventing the practice of landscape architecture.

Appellants counter this argument by citing numerous cases where the Colorado courts have held service statutes to prohibit engaging in a service without a Colorado license, but in each case the statute expressly prohibited a person from engaging in a business without first obtaining a license. We do not find such an express prohibition here.

There is no proof appellants were defrauded into employing Warde as their landscape architect. Appellants solicited Warde in the State of California to perform the services now in question. The record does not disclose that Warde represented himself to appellants as a landscape architect licensed by the State of Colorado. Nor is there any evidence that appellants selected Warde because they believed he was an architect licensed by Colorado. Rather the evidence is that appellants did not feel there were any landscape architects in Colorado qualified to do the work so they searched elsewhere to find a suitable architect. Davis is a competent businessman who unquestionably knew what he was doing when he employed Warde. We thus cannot find where Warde breached Colorado’s holding-out statutes in accepting employment with appellants.

Appellants next argue the trial court erred in concluding that the letter of September 19, 1968, constitutes a valid contract between the parties. As noted earlier, that letter listed certain landscape plans to be drawn by Warde and stated the plans would cost $1,800 plus a supervision fee of 15% of the total amount spent. Appellants now charge there was no meeting of the minds on the terms “specifications” and “supervision”. Davis testified that he thought Warde would draw detailed specifications permitting subcontractors to proceed to fulfill the specifications, whereas in fact Warde relied upon the contractors for the detailed specifications. Davis also assumed that Warde’s supervisory function included being on the job site while work was proceeding to insure that the subcontractors were performing their work according to Warde’s specifications. This failure by both parties to agree on Warde’s duties, appellants argue, is a material breach which voids the contract.

Our review of the record convinces us there was a meeting of the minds on the terms of the contract, and we therefore reject appellants’ contentions. Unquestionably Davis considered the September 19 letter an acceptable contract, because on October 10, 1968, he sent Warde a letter specifically approving the letter-contract and enclosing a check for $500 as a retainer fee. Apparently Warde’s modus operandi was accepted by appellants for quite some time because they retained Warde for over a year. During this time Warde was paid over $9,900 for traveling expenses and services rendered. Appellants’ retaining of Warde for over a year disposes of any argument that the contract failed for lack of a meeting of the minds. See Hensel Phelps Const. Co. v. United States, 413 F.2d 701 (10th Cir. 1969).

Appellants next charge the trial court with error in concluding that Warde was entitled to a supervision fee on certain items. The trial court, after hearing all the evidence and viewing all exhibits, determined that Warde was entitled to his expenses plus a 15% supervision fee on those items contracted for and completed on or before the date of his termination.

We have reviewed the record carefully and are convinced there is sufficient evidence to support the trial court’s determination.

Appellants’ final argument is that the trial court erred in allowing Warde interest from December 1, 1970. It is their position that Warde recovered under a theory of quantum meruit, which is a claim fo.r unliquidated damages, and thus interest should not be allowed prior to judgment. As we mentioned earlier, the district court concluded there was a binding contract between Warde and appellants; hence the judgment was based upon breach of contract rather than quantum meruit. Warde was awarded interest from the time the money was due, and under Colorado law this is a proper determination. Harvey v. Denver & R. G. R. Co., 56 Colo. 570, 139 P. 1098 (1914); Donley v. Bailey, 48 Colo. 373, 110 P. 65 (1910); 1963 C. R.S. 73-1-2.

After carefully reviewing the entire record we agree with the trial court’s decision and accordingly affirm it in all respects.