author: Mr. Justice Brennan Mr. Justice Harlan,

text:
    PRESBYTERIAN CHURCH IN THE UNITED STATES et al. v. MARY ELIZABETH BLUE HULL MEMORIAL PRESBYTERIAN CHURCH et al.
    No. 71.
    Argued December 9-10, 1968.
    Decided January 27, 1969.

      Charles L. Gowen argued the cause for petitioners. With him on the brief were Robert B, Troutman and Frank S. Cheatham, Jr.

      Owen H. Page argued the cause for respondents and filed a brief for respondents Eastern Heights Presbyterian Church et al. Richard T. Cowan, Frank B. Zeigler, and James Edward McAleer filed a brief for respondent Mary Elizabeth Blue Hull Memorial Presbyterian Church.
    Briefs of amici curiae, urging reversal, were filed by George Wilson McKeag for Thompson, Stated Clerk of the General Assembly of the United Presbyterian Church in the United States et al., and by Jackson A. Dykman and Harry G. Hill, Jr., for the Right Rev. John E. Hines, Presiding Bishop of the Protestant Episcopal Church in the United States.
    Briefs of amici curiae, urging affirmance, were filed by William J. McLeod, Jr., and W. J. Williamson, pro se, for Williamson, Secretary of Concerned Presbyterians, Inc., and by Alfred J. Schweppe for Laurelhurst United Presbyterian Church, Inc., et al.
   Mr. Justice Brennan

delivered the opinion of the Court.

This is a church property dispute which arose when two local churches withdrew from a hierarchical general church organization. Under Georgia law the right to the property previously used by the local churches was made to turn on a civil court jury decision as to whether the general church abandoned or departed from the tenets of faith and practice it held at the time the local churches affiliated with it. The question presented is whether the restraints of the First Amendment, as applied to the States through the Fourteenth Amendment, permit a civil court to award church property on the basis of the interpretation and significance the civil court assigns to aspects of church doctrine.

Petitioner, Presbyterian Church in the United States, is an association of local Presbyterian churches governed by a hierarchical structure of tribunals which consists of, in ascending order, (1) the Church Session, composed of the elders of the local church; (2) the Presbytery, composed of several churches in a geographical area; (3) the Synod, generally composed of all Presbyteries within a State; and (4) the General Assembly, the highest governing body.

A dispute arose between petitioner, the general church, and two local churches in Savannah, Georgia — the respondents, Hull Memorial Presbyterian Church and Eastern Heights Presbyterian Church — over control of the properties used until then by the local churches. In 1966, the membership of the local churches, in the belief that certain actions and pronouncements of the general church were violations of that organization’s constitution and departures from the doctrine and practice in force at the time of affiliation, voted to withdraw from the general church and to reconstitute the local churches as an autonomous Presbyterian organization. The ministers of the two churches renounced the general church’s jurisdiction and authority over them, as did all but two of the ruling elders. In response, the general church, through the Presbytery of Savannah, established an Administrative Commission to seek a conciliation. The dissident local churchmen remained steadfast; consequently, the Commission acknowledged the withdrawal of the local leadership and proceeded to take over the local churches’ property on behalf of the general church until new local leadership could be appointed.

The local churchmen made no effort to appeal the Commission’s action to higher church tribunals — the Synod of Georgia or the General Assembly. Instead, the churches filed separate suits in the Superior Court of Chatham County to enjoin the general church from trespassing on the disputed property, title to which was in the local churches. The cases were consolidated for trial. The general church moved to dismiss the actions and cross-claimed for injunctive relief in its own behalf on the ground that civil courts were without power to determine whether the general church had departed from its tenets of faith and practice. The motion to dismiss was denied, and the case was submitted to the jury on the theory that Georgia law implies a trust of local church property for the benefit of the general church on the sole condition that the general church adhere to its tenets of faith and practice existing at the time of affiliation by the local churches. Thus, the jury was instructed to determine whether the actions of the general church “amount to a fundamental or substantial abandonment of the original tenets and doctrines of the [general church], so that the new tenets and doctrines are utterly variant from the purposes for which the [general church] was founded.” The jury returned a verdict for the local churches, and the trial judge thereupon declared that the implied trust had terminated and enjoined the general church from interfering with the use of the property in question. The Supreme Court of Georgia affirmed, 224 Ga. 61, 159 S. E. 2d 690 (1968). We granted certiorari to consider the First Amendment questions raised. 392 U. S. 903 (1968). We reverse.

It is of course true that the State has a legitimate interest in resolving property disputes, and that a civil court is a proper forum for that resolution. Special problems arise, however, when these disputes implicate controversies over church doctrine and practice. The approach of this Court in such cases was originally developed in Watson v. Jones, 13 Wall. 679 (1872), a pre-Erie R. Co. v. Tompkins diversity decision decided before the application of the First Amendment to the States but nonetheless informed by First Amendment considerations. There, as here, civil courts were asked to resolve a property dispute between a national Presbyterian organization and local churches of that organization. There, as here, the disputes arose out of a controversy over church doctrine. There, as here, the Court was asked to decree the termination of an implied trust because of departures from doctrine by the national organization. The Watson Court refused, pointing out that it was wholly inconsistent with the American concept of the relationship between church and state to permit civil courts to determine ecclesiastical questions. In language which has a clear constitutional ring, the Court said

“In this country the full and free right to entertain any religious belief, to practice any religious principle, and to teach any religious doctrine which does not violate the laws of morality and property, and which does not infringe personal rights, is conceded to all. The law knows no heresy, and is committed to the support of no dogma, the establishment of no sect. . . . All who unite themselves to such a body [the general church] do so with an implied consent to [its] government, and are bound to submit to it. But it would be a vain consent and would lead to the total subversion of such religious bodies, if any one aggrieved by one of their decisions could appeal to the secular courts and have them [sic] reversed. It is of the essence of these religious unions, and of their right to establish tribunals for the decision of questions arising among themselves, that those decisions should be binding in all cases of ecclesiastical cognizance, subject only to such appeals as the organism itself provides for.” 13 Wall., at 728-729.

The logic of this language leaves the civil courts no role in determining ecclesiastical questions in the process of resolving property disputes.

Later cases, however, also decided on nonconstitutional grounds, recognized that there might be some circumstances in which marginal civil court review of ecclesiastical determinations would be appropriate. The scope of this review was delineated in Gonzalez v. Archbishop, 280 U. S. 1 (1929). There, Gonzalez claimed the right to be appointed to a chaplaincy in the Roman Catholic Church under a will which provided that a member of his family receive that appointment. The Roman Catholic Archbishop of Manila, Philippine Islands, refused to appoint Gonzalez on the ground that he did not satisfy the qualifications established by Canon Law for that office. Gonzalez brought suit in the Court of First Instance of Manila for a judgment directing the Archbishop, among other things, to appoint him chaplain. The trial court entered such an order, but the Supreme Court of the Philippine Islands reversed and “absolved the Archbishop from the complaint.” This Court affirmed. Mr. Justice Brandéis, speaking for the Court, defined the civil court role in the following words: “In the absence of fraud, collusion, or arbitrariness, the decisions of the proper church tribunals on matters purely ecclesiastical, although affecting civil rights, are accepted in litigation before the secular courts as conclusive, because the parties in interest made them so by contract or otherwise.” 280 U. S., at 16.

In Kedroff v. St. Nicholas Cathedral, 344 U. S. 94 (1952), the Court converted the principle of Watson as qualified by Gonzalez into a constitutional rule. Kedroff grew out of a dispute between the Moscow-based general Russian Orthodox Church and the Russian Orthodox churches located in North America over an appointment to St. Nicholas Cathedral in New York City. The North American churches declared their independence from the general church, and the New York Legislature enacted a statute recognizing their administrative autonomy. The New York courts sustained the constitutionality of the statute and held that the North American churches’ elected hierarch had the right to use the cathedral. This Court reversed, finding that the Moscow church had not acknowledged the schism, and holding the statute unconstitutional. The Court said, 344 U. S., at 116:

“The opinion [in Watson v. Jones] radiates . . . a spirit of freedom for religious organizations, an independence from secular control or manipulation— in short, power to decide for themselves, free from state interference, matters of church government as well as those of faith and doctrine. Freedom to select the clergy, where no improper methods of choice are proven, we think, must now he said to have federal constitutional protection as a part of the free exercise of religion against state interference.” (Italics supplied.)

And, speaking of the New York statute, the Court said further, id., at 119:

“By fiat it displaces one church administrator with another. It passes the control of matters strictly ecclesiastical from one church authority to another. It thus intrudes for the benefit of one segment of a church the power of the state into the forbidden area of religious freedom contrary to the principles of the First Amendment.” (Italics supplied.)

This holding invalidating legislative action was extended to judicial action in Kreshik v. St. Nicholas Cathedral, 363 U. S. 190 (1960), where the Court held that the constitutional guarantees of religious liberty required the reversal of a judgment of the New York courts which transferred control of St. Nicholas Cathedral from the central governing authority of the Russian Orthodox Church to the independent Russian Church of America.

Thus, the First Amendment severely circumscribes the role that civil courts may play in resolving church property disputes. It is obvious, however, that not every civil court decision as to property claimed by a religious organization jeopardizes values protected by the First Amendment. Civil courts do not inhibit free exercise of religion merely by opening their doors to disputes involving church property. And there are neutral principles of law, developed for use in all property disputes, which can be applied without “establishing” churches to which property is awarded. But First Amendment values are plainly jeopardized when church property litigation is made to turn on the resolution by civil courts of controversies over religious doctrine and practice. If civil courts undertake to resolve such controversies in order to adjudicate the property dispute, the hazards are ever present of inhibiting the free development of religious doctrine and of implicating secular interests in matters of purely ecclesiastical concern. Because of these hazards, the First Amendment enjoins the employment of organs of government for essentially religious purposes, Abington School District v. Schempp, 374 U. S. 203 (1963): the Amendment therefore commands civil courts to decide church property disputes without resolving underlying controversies over religious doctrine. Hence, States, religious organizations, and individuals must structure relationships involving church property so as not to require the civil courts to resolve ecclesiastical questions.

The Georgia courts have violated the command of the First Amendment. The departure-from-doctrine element of the implied trust theory which they applied requires the civil judiciary to determine whether actions of the general church constitute such a “substantial departure” from the tenets of faith and practice existing at the time of the local churches’ affiliation that the trust in favor of the general church must be declared to have terminated. This determination has two parts. The civil court must first decide whether the challenged actions of the general church depart substantially from prior doctrine. In reaching such a decision, the court must of necessity make its own interpretation of the meaning of church doctrines. If the court should decide that a substantial departure has occurred, it must then go on to determine whether the issue on which the general church has departed holds a place of such importance in the traditional theology as to require that the trust be terminated. A civil court can make this determination only after assessing the relative significance to the religion of the tenets from which departure was found. Thus, the departure-from-doctrine element of the Georgia implied trust theory requires the civil court to determine matters at the very core of a religion — the interpretation of particular church doctrines and the importance of those doctrines to the religion. Plainly, the First Amendment forbids civil courts from playing such a role.

Since the Georgia courts on remand may undertake to determine whether petitioner is entitled to relief on its cross-claims, we find it appropriate to remark that the departure-from-doctrine element of Georgia’s implied trust theory can play no role in any future judicial proceedings. The departure-from-doctrine approach is not susceptible of the marginal judicial involvement contemplated in Gonzalez Gonzalez’ rights under a will turned, on a church decision, the Archbishop’s, as to church law, the qualifications for the chaplaincy. It was the archbishopric, not the civil courts, which had the task of analyzing and interpreting church law in order to determine the validity of Gonzalez’ claim to a chaplaincy. Thus, the civil courts could adjudicate the rights under the will without interpreting or weighing church doctrine but simply by engaging in the narrowest kind of review of a specific church decision — i. e., whether that decision resulted from fraud, collusion, or arbitrariness. Such review does not inject the civil courts into substantive ecclesiastical matters. In contrast, under Georgia’s departure-from-doctrine approach, it is not possible for the civil courts to play so limited a role. Under this approach, property rights do not turn on a church decision as to church doctrine. The standard of departure-from-doctrine, though it calls for resolution of ecclesiastical questions, is a creation of state, not church, law. Nothing in the record suggests that this state standard has been interpreted and applied in a decision of the general church. Any decisions which have been made by the general church about the local churches’ withdrawal have at most a tangential relationship to the state-fashioned departure-from-doctrine standard. A determination whether such decisions are fraudulent, collusive, or arbitrary would therefore not answer the questions posed by the state standard. To reach those questions would require the civil courts to engage in the forbidden process of interpreting and weighing church doctrine. Even if the general church had attempted to apply the state standard, the civil courts could not review and enforce the church decision without violating the Constitution. The First Amendment prohibits a State from employing religious organizations as an arm of the civil judiciary to perform the function of interpreting and applying state standards. See Abington School District v. Schempp, supra. Thus, a civil court may no more review a church decision applying a state departure-from-doctrine standard than it may apply that standard itself.

The judgment of the Supreme Court of Georgia is reversed, and the case is remanded for further proceedings not inconsistent with this opinion.

It is so ordered.

Mr. Justice Harlan,

concurring.

I am in entire agreement with the Court’s rejection of the “departure-from-doctrine” approach taken by the Georgia courts, as that approach necessarily requires the civilian courts to weigh the significance and the meaning of disputed religious doctrine. I do not, however, read the Court’s opinion to go further to hold that the Fourteenth Amendment forbids civilian courts from enforcing a deed or will which expressly and clearly lays down conditions limiting a religious organization’s use of the property which is granted. If, for example, the donor expressly gives his church some money on the condition that the church never ordain a woman as a minister or elder, see ante, at 442, n. 1, or never amend certain specified articles of the Confession of Faith, he is entitled to his money back if the condition is not fulfilled. In such a case, the church should not be permitted to keep the property simply because church authorities have determined that the doctrinal innovation is justified by the faith’s basic principles. Cf. Watson v. Jones, 13 Wall. 679, 722-724 (1872).

On this understanding, I join the Court’s opinion.

       The opinion of the Supreme Court of Georgia summarizes the claimed violations and departures from petitioner’s original tenets of faith and practice as including the following: “ordaining of women as ministers and ruling elders, making pronouncements and recommendations concerning civil, economic, social and political matters, giving support to the removal of Bible reading and prayers by children in the public schools, adopting certain Sunday School literature and teaching neo-orthodoxy alien to the Confession of Faith and Catechisms, as originally adopted by the general church, and causing all members to remain in the National Council of Churches of Christ and willingly accepting its leadership which advocated named practices, such as the subverting of parental authority, civil disobedience and intermeddling in civil affairs”; also “that the general church has . . . made pronouncements in matters involving international issues such as the Vietnam conflict and has disseminated publications denying the Holy Trinity and violating the moral and ethical standards of the faith.” 224 Ga. 61, 62-63, 159 S. E. 2d 690, 692 (1968).

       This theory derives from principles fashioned by English courts. See, e. g., Craigdallie v. Aikman, 1 Dow 1, 3 Eng. Rep. 601 (H. L. 1813) (Scot.); Attorney General ex rel. Mander v. Pearson, 3 Mer. 353, 36 Eng. Rep. 135 (Ch. 1817). For the subsequent development of the implied trust theory in English courts, see Note, Judicial Intervention in Disputes Over the Use of Church Property, 75 Harv. L. Rev. 1142, 1148-1149 (1962).

       We reject the contention of respondent local churches that no First Amendment issues were raised or decided in the state courts. Petitioner’s answer and cross-claim in each case included an express allegation that the action of respondents in appropriating the church property to their use was “in violation of the laws of Georgia, the United States of America, and the Southern Presbyterian Church.” (Italics supplied.) At trial, petitioners’ counsel objected to the admission of all testimony “pertaining to [the] alleged deviation from the faith and practice of the Presbyterian Church in the United States” because that question was “exclusively within the right of the Presbyterian Church in the United States through its proper judicial body to determine.” On appeal, petitioners again contended “that questions of an ecclesiastical nature concerning whether or not' a church has abandoned its tenents [sic] and doctrines, or some of them, are exclusively within the jurisdiction of the church courts and should not be submitted to a jury for determination as this would destroy the doctrine of separation of church and state.” Petitioners thus clearly raised claims under the First Amendment as applied to the States by the Fourteenth Amendment. Kedroff v. St. Nicholas Cathedral, 344 U. S. 94, 116, 119 (1952). The Georgia Supreme Court considered and decided these claims. “In considering this contention [that the petitions raise ecclesiastical questions which are exclusively within the jurisdiction of the church, not of civil courts, and therefore that respondents could not maintain their action],” the court said, “we are mindful that 'The traditional American doctrine of freedom of religion and separation of church and state carries with it freedom of the church from having its doctrines or beliefs defined, interpreted, or censored by civil courts.’ ” 224 Ga., at 68, 159 S. E. 2d, at 695. The court concluded, however, that the trial court did not violate the doctrine. Citing Georgia Code Ann. § 22-408, which provides: “Courts are reluctant to interpose in questions affecting the management of the temporalities of a church; but when property is devoted to a specific doctrine or purpose, the courts will prevent it from being diverted from the trust,” the court held that “a trust [in favor of the general church] is conditioned upon the general church’s adherence to its tenets of faith and practice existing when the local church affiliated with it and ... an abandonment of, or departure from, such tenets is a diversion from the trust, which the civil courts will prevent.” 224 Ga., at 68, 159 S. E. 2d, at 695.

        “Watson v. Jones, although it contains a reference to the relations of church and state under our system of laws, was decided without depending upon prohibition of state interference with the free exercise of religion. It was decided in 1871 [sic], before judicial recognition of the coercive power of the Fourteenth Amendment to protect the limitations of the First Amendment against state action. It long antedated the 1938 decisions of Erie R. Co. v. Tompkins and Ruhlin v. New York Life Ins. Co., 304 U. S. 64 and 202, and, therefore, even though federal jurisdiction in the case depended solely on diversity, the holding was based on general law rather than Kentucky law.” Kedroff v. St. Nicholas Cathedral, 344 U. S. 94, 115-116 (1952).

       Accord, see, e. g., decisions involving Presbyterian churches, Trustees of Pencader Presbyterian Church v. Gibson, 26 Del. Ch. 375, 22 A. 2d 782 (1941); Bramlett v. Young, 229 S. C. 519, 93 S. E. 2d 873 (1956); St. John’s Presbytery v. Central Presbyterian Church of St. Petersburg, 102 So. 2d 714 (Fla. 1958); see also Northside Bible Church v. Goodson, 387 F. 2d 534 (C. A. 5th Cir. 1967). See generally for an examination of the development and growth of the rules for settling church property disputes, Note, Judicial Intervention in Disputes Over the Use of Church Property, 75 Harv. L. Rev. 1142 (1962); 54 Va. L. Rev. 1451 (1968); Duesenberg, Jurisdiction of Civil Courts Over Religious Issues, 20 Ohio St. L. J. 508 (1959) ; Comment, Judicial Intervention in Church Property Disputes— Some Constitutional Considerations, 74 Yale L. J. 1113 (1965).

       See, e. g., Bouldin v. Alexander, 15 Wall. 131 (1872); Brundage v. Deardorf, 55 F. 839 (C. C. N. D. Ohio 1893).

       We have no occasion in this case to define or discuss the precise limits of review for “fraud, collusion, or arbitrariness” within the meaning of Gonzalez.


source: Caselaw Access Project

author: Mr. Justice Marshall Mr. Justice Black,

license: Public Domain

text:
    SECURITIES AND EXCHANGE COMMISSION v. NATIONAL SECURITIES, INC., et al.
    No. 41.
    Argued November 18-19, 1968.
    Decided January 27, 1969.

      Solicitor General Griswold argued the cause for petitioner. With him on the briefs were Lawrence G. Wallace, Philip A. Loomis, Jr., David Ferher, Edward B. Wagner, and Frank N. Fleischer.

      John P. Frank argued the cause for respondents. With him on the brief was A. Gordon Olsen.

   Mr. Justice Marshall

delivered the opinion of the Court.

This case raises some complex questions about the Securities and Exchange Commission’s power to regulate the activities of insurance companies and of persons engaged in the insurance business. The Commission originally brought suit in the United States District Court for the District of Arizona, pursuant to § 21 (e) of the Securities Exchange Act of 1934, 48 Stat. 900, as amended, 15 U. S. C. § 78u (e). It alleged violations of § 10 (b) of the Act, 48 Stat. 891, 15 U. S. C. § 78j (b), and of the Commission’s Rule 10b-5, 17 CFR § 240.10b-5 (1968). According to the amended complaint, National Securities and various persons associated with it had contrived a fraudulent scheme centering on a contemplated merger between National Life & Casualty Insurance Co. (National Life), a firm controlled by National Securities, and Producers Life Insurance Co. (Producers). The details of the alleged scheme are not important here. The Commission contended that National Securities purchased a controlling interest in Producers, partly from Producers’ directors and partly in the form of treasury stock held by Producers. After taking control of Producers’ board, respondents sought to obtain shareholder approval of the merger by sending communications to Producers’ 14,000 stockholders. These communications, according to the Commission, contained misrepresentations of material facts and omitted to state material facts necessary to make the statements which were made not misleading. Among other things, respondents allegedly failed to disclose their plan for the surviving company to assume certain obligations which National Securities had undertaken as part of the consideration for its purchases of Producers’ stock. In plain language, Producers’ shareholders were not told that they were going to pay part of the cost of National Securities’ acquisition of control in their company.

The Commission was denied temporary relief, and shortly thereafter Producers’ shareholders and the Arizona Director of Insurance approved the merger. The two companies were formally consolidated into National Producers Life Insurance Co. on July 9, 1965. Thereafter, the Commission amended its complaint to seek additional relief; the previously sought injunction forbidding further violations of Rule 10b-5 was to be supplemented by court orders unwinding the merger and returning the situation to the status quo ante, requiring respondents to make an accounting of their unlawful gains, and readjusting the equities of the various respondents in whatever companies survived the decree. The Commission also requested whatever further relief the court might deem just, equitable, and necessary. Respondents moved for judgment on the pleadings, and the trial court dismissed the complaint for failure to state a claim upon which relief could be granted. The court ruled that the relief requested was either barred by §2 (b) of the McCarran-Ferguson Act, 59 Stat. 34 (1945), as amended, 15 U. S. C. § 1012 (b), or was beyond the scope of § 21 (e) of the Securities Exchange Act. 252 F. Supp. 623 (1966). The Ninth Circuit affirmed, relying on the McCarran-Ferguson Act. 387 F. 2d 25 (1967). Upon application by the Commission, we granted certi-orari because of the importance of the questions raised to the administration of the securities laws. 390 U. S. 1023 (1968).

I.

Insofar as it is relevant to this ease, § 2 (b) of the McCarran-Ferguson Act provides that “[n]o Act of Congress shall be construed to invalidate, impair, or supersede any law enacted by any State for the purpose of regulating the business of insurance . . . unless such Act specifically relates to the business of insurance . . ..” Respondents contend that this Act bars the present suit since the Arizona Director of Insurance found that the merger was not “[Unequitable to the stockholders of any domestic insurer” and not otherwise “contrary to law,” as he was required to do under the state insurance laws. Ariz. Rev. Stat. Ann. § 20-731 (Supp. 1969). If the Securities Exchange Act were applied, respondents argue, these laws would be “superseded.” The SEC sees no conflict between state and federal law; it contends that the applicable Arizona statutes did not give the State Insurance Director the power to determine whether respondents had made full disclosure in connection with the solicitation of proxies. Although respondents disagree, we do not find it necessary to inquire into this state-law dispute. The first question posed by this case is whether the relevant Arizona statute is a “law enacted ... for the purpose of regulating the business of insurance” within the meaning of the McCarran-Ferguson Act. Even accepting respondents’ view of Arizona law, we do not believe that a state statute aimed at protecting the interests of those who own stock in insurance companies comes within the sweep of the McCarran-Ferguson Act. Such a statute is not a state attempt to regulate “the business of insurance,” as that phrase was used in the Act.

The McCarran-Ferguson Act was passed in reaction to this Court’s decision in United States v. South-Eastern Underwriters Assn., 322 U. S. 533 (1944). Prior to that decision, it had been assumed, in the language of the leading case, that “[i]ssuing a policy of insurance is not a transaction of commerce.” Paul v. Virginia, 8 Wall. 168, 183 (1869). Consequently, regulation of insurance transactions was thought to rest exclusively with the States. In South-Eastern Underwriters, this Court held that insurance transactions were subject to federal regulation under the Commerce Clause, and that the antitrust laws, in particular, were applicable to them. Congress reacted quickly. Even before the opinion was announced, the House had passed a bill exempting the insurance industry from the antitrust laws. 90 Cong. Rec. 6565 (1944). Objection in the Senate killed the bill, 90 Cong. Rec. 8054 (1944), but Congress clearly remained concerned about the inroads the Court’s decision might make on the tradition of state regulation of insurance. The McCarran-Ferguson Act was the product of this concern. Its purpose was stated quite clearly in its first section; Congress declared that “the continued regulation and taxation by the several States of the business of insurance is in the public interest.” 59 Stat. 33 (1945), 15 U. S. C. § 1011. As this Court said shortly afterward, “[ojbviously Congress’ purpose was broadly to give support to the existing and future state systems for regulating and taxing the business of insurance.” Prudential Insurance Co. v. Benjamin, 328 U. S. 408, 429 (1946).

The question here is whether state laws aimed at protecting the interests of those who own securities in insurance companies are the type of laws referred to in the 1945 enactment. The legislative history of the McCarran-Ferguson Act offers no real assistance. Congress was mainly concerned with • the relationship between insurance ratemaking and the antitrust laws, and with the power of the States to tax insurance companies. See, e. g., 91 Cong. Rec. 1087-1088 (remarks of Congressmen Hancock and Celler). The debates centered on these issues, and the Committee reports shed little light on the meaning of the words “business of insurance.” See S. Rep. No. 20, 79th Cong., 1st Sess. (1945) ; H. R. Rep. No. 143, 79th Cong., 1st Sess. (1945). In context, however, it is relatively clear what problems Congress was dealing with. Under the regime of Paul v. Virginia, supra, States had a free hand in regulating the dealings between insurers and their policyholders. Their negotiations, and the contract which resulted, were not considered commerce and were, therefore, left to state regulation. The South-Eastern Underwriters decision threatened the continued supremacy of the States in this area. The McCarran-Ferguson Act was an attempt to turn back the clock, to assure that the activities of insurance companies in dealing with their policyholders would remain subject to state regulation. As the House Report makes clear, “[i]t [was] not the intention of Congress in the enactment of this legislation to clothe the States with any power to regulate or tax the business of insurance beyond that which they had been held to possess prior to the decision of the United States Supreme Court in the Southeastern Underwriters Association case.” H. R. Rep. No. 143, 79th Cong., 1st Sess., 3 (1945).

Given this history, the language of the statute takes on a different coloration. The statute did not purport to make the States supreme in regulating all the activities of insurance companies; its language refers not to the persons or companies who are subject to state regulation, but to laws “regulating the business of insurance.” Insurance companies may do many things which are subject to paramount federal regulation; only when they are engaged in the “business of insurance” does the statute apply. Certainly the fixing of rates is part of this business; that is what South-Eastern Underwriters was all about. The selling and advertising of policies, FTC v. National Casualty Co., 357 U. S. 560 (1958), and the licensing of companies and their agents, cf. Robertson v. California, 328 U. S. 440 (1946), are also within the scope of the statute. Congress was concerned with the type of state regulation that centers around the contract of insurance, the transaction which Paul v. Virginia held was not “commerce.” The relationship between insurer and insured, the type of policy which could be issued, its reliability, interpretation, and enforcement — these were the core of the “business of insurance.” Undoubtedly, other activities of insurance companies relate so closely to their status as reliable insurers that they too must be placed in the same class. But whatever the exact scope of the statutory term, it is clear where the focus was — it was on the relationship between the insurance company and the policyholder. Statutes aimed at protecting or regulating this relationship, directly or indirectly, are laws regulating the “business of insurance.”

In this case, Arizona is concerning itself with a markedly different set of problems. It is attempting to regulate not the “insurance” relationship, but the relationship between a stockholder and the company in which he owns stock. This is not insurance regulation, but securities regulation. It is true that the state statute applies only to insurance companies. But mere matters of form need not detain us. The crucial point is that here the State has focused its attention on stockholder protection; it is not attempting to secure the interests of those purchasing insurance policies. Such regulation is not within the scope of the McCarran-Ferguson Act.

This reading of the Act is implicit in this Court’s past decisions. Less than two years ago the Court approved the application of the registration requirements of the Securities Act of 1933, § 5, 48 Stat. 77, 16 U. S. C. § 77e, to certain annuity contracts issued by insurance companies. SEC v. United Benefit Life Insurance Co., 387 U. S. 202 (1967). The Court explicitly rejected arguments based on the McCarran-Eerguson Act in a similar case of slightly earlier vintage. SEC v. Variable Annuity Life Insurance Co., 359 U. S. 65, 67-68 (1959). Although the securities laws contain a number of exemptions relating to insurance and insurance companies, the Commission has traditionally regulated a number of activities related to insurance securities. Of course, under the securities laws state regulation may co-exist with that offered under the federal securities laws. See, e. g., Securities Act of 1933, § 18, 48 Stat. 85, 15 U. S. C. § 77r; Securities Exchange Act of 1934, § 28 (a), 48 Stat. 903, 15 U. S. C. § 78bb (a). But it has never been held that state regulation of insurance securities pre-empts federal regulation, on the theory that the federal securities laws would be “superseding” state laws regulating the “business of insurance.” The fact that Arizona purports to protect the interests of insurance company stockholders does not, therefore, by itself render the federal securities laws inapplicable.

II.

The fact remains, however, that the State of Arizona has approved a merger between two insurance companies which, as a matter of remedies, the Securities and Exchange Commission seeks to unwind. Moreover, Arizona has approved the merger not only under its laws relating to insurance securities but also in its capacity as licensor of insurers within the State. The applicable statute requires the State Director of Insurance to find that the proposed merger would not “substantially reduce the security of and service to be rendered to policyholders” before he gives his approval. Ariz. Rev. Stat. Ann. § 20-731B 3 (Supp. 1969). This section of the statute clearly relates to the “business of insurance.” The question is, then, whether the McCarran-Ferguson Act bars a federal remedy which affects a matter subject to state insurance regulation. In the circumstances of this particular case, we do not think it does; without intimating any opinion about what remedies would be appropriate should a violation be found after a trial on the merits, we hold that the McCarran-Ferguson Act furnishes no reason for refusing the remedies the Commission is seeking.

The Commission alleged that approval of the merger was obtained through the use of various fraudulent misrepresentations. It did not ask the trial court to pass directly upon a merger which the State Director of Insurance had approved. No question of the legality or illegality of the merger, standing alone, was raised. The gravamen of the complaint was the misrepresentation, not the merger. The merger became relevant only insofar as it was necessary to attack it in order to undo the harm caused by the alleged deception. Presumably, full disclosure would have avoided the particular Rule 10b-5 violations alleged in the complaint. Nevertheless, respondents contend that any attempt to interfere with a merger approved by state insurance officials would “invalidate, impair, or supersede” the state insurance laws made paramount by the McCarran-Ferguson Act. We cannot accept this overly broad restriction on federal power.

It is clear that any “impairment” in this case is a most indirect one. The Federal Government is attempting to protect security holders from fraudulent misrepresentations; Arizona, insofar as its activities are protected by the McCarran-Ferguson Act from the normal operations of the Supremacy Clause, is attempting to protect the interests of the policyholders. Arizona has not commanded something which the Federal Government seeks to prohibit. It has permitted respondents to consummate the merger; it did not order them to do so. In this context, all the Securities and Exchange Commission is asking is that insurance companies speak the truth when talking to their shareholders. The paramount federal interest in protecting shareholders is in this situation perfectly compatible with the paramount state interest in protecting policyholders. And the remedy the Commission seeks does not affect a matter predominantly of concern to policyholders alone; the merger is at least as important to those owning the companies’ stock as it is to those holding their policies. In these circumstances, we simply cannot see the conflict. Different questions would, of course, arise if the Federal Government were attempting to regulate in the sphere reserved primarily to the States by the McCarran-Ferguson Act. But that is not this case. In these circumstances, there is no reason to emasculate the securities laws by forbidding remedies which might prove to be essential. Cf. J. I. Case Co. v. Borak, 377 U. S. 426 (1964). On remand, the trial court may order a return to the status quo ante if it finds that course of action desirable, necessary, and otherwise lawful.

III.

Respondents argue that there are alternative grounds on which the lower courts’ action in granting judgment on the pleadings can be sustained. They contend that the complaint fails to allege a “purchase or sale” of securities within the meaning of § 10 (b) and the Commission’s Rule 10b-5, and that in any case Rule 10b-5 does not apply to misrepresentations in connection with the solicitation of proxies. Since this case is here in the context of an appeal from the pretrial dismissal of a complaint, a simple remand would leave the lower courts with nothing more on which to base a decision than the record presently before this Court. In addition, further delays in resolving this controversy might increase the difficulty of fashioning effective relief. Accordingly, we think it desirable to dispose of these two issues before remanding the case so that the trial court may go forward with further proceedings without undue delay.

Although § 10 (b) and Rule 10b-5 may well be the most litigated provisions in the federal securities laws, this is the first time this Court has found it necessary to interpret them. We enter this virgin territory cautiously. The questions presented are narrow ones. They arise in an area where glib generalizations and unthinking abstractions are major occupational hazards. Accordingly, in deciding this particular case, remembering what is not involved is as important as determining what is. With this in mind, we turn to respondents’ particular contentions.

Respondents argue that the complaint fails to allege any misstatements “in connection with the purchase or sale of any security,” as is required by both the statute and the rule. They rely upon the so-called “no-sale doctrine” presently set forth in the Commission’s Rule 133 under the Securities Act of 1933, 17 CFR § 230.133 (1968). That rule, promulgated under the Commission’s authority to define “accounting, technical, and trade terms” used in the 1933 Act, § 19 (a), 48 Stat. 85, as amended, 15 U. S. C. § 77s, sets forth various situations involving statutory mergers and other types of corporate reorganizations, and declares that no “sale” or “offer” shall be deemed to be involved. But whatever may be the validity or effect of this rule — and we intimate absolutely no opinion on these questions — it certainly does not determine the result here. The rule is specifically made applicable only to cases involving § 5 of the 1933 Act; this case arises under § 10 (b) of the 1934 Act. Although the interdependence of the various sections of the securities laws is certainly a relevant factor in any interpretation of the language Congress has chosen, ordinary rules of statutory construction still apply. The meaning of particular phrases must be determined in context, SEC v. C. M. Joiner Leasing Corp., 320 U. S. 344, 350-351 (1943). Congress itself has cautioned that the same words may take on a different coloration in different sections of the securities laws; both the 1933 and the 1934 Acts preface their lists of general definitions with the phrase “unless the context otherwise requires.” 1933 Act, § 2, 48 Stat. 74, 15 U. S. C. § 77b; 1934 Act, § 3, 48 Stat. 882, 15 U. S. C. § 78c. We must therefore address ourselves to the meaning of the words “purchase or sale” in the context of § 10 (b). Whatever these or similar words may mean in the numerous other contexts in which they appear in the securities laws, only this one narrow question is presented here.

Section 10 (b) and Rule 10b-5 together constitute one of the several broad antifraud provisions contained in the securities laws. In the context of this case, the Commission seeks to apply them to prevent the shareholders of Producers from being defrauded as a result of misstatements made by respondents. For the statute and the rule to apply, the allegedly proscribed conduct must have been “in connection with the purchase or sale of any security.” The relevant definitional sections of the 1934 Act are for the most part unhelpful; they only declare generally that the terms “purchase” and “sale” shall include contracts to purchase or sell. §§3(a)(13), (14), 48 Stat. 884, 15 U. S. C. §§ 78c (a)(13), (14). Consequently, we must ask whether respondents’ alleged conduct is the type of fraudulent behavior which was meant to be forbidden by the statute and the rule.

According to the amended complaint, Producers’ shareholders were misled in various material respects prior to their approval of a merger. The deception furthered a scheme which resulted in their losing their status as shareholders in Producers and becoming shareholders in a new company. Moreover, by voting in favor of the merger, each approving shareholder individually lost any right under Arizona law to obtain an appraisal of his stock and payment for it in cash. Ariz. Rev. Stat. Ann. § 10-347 (1956). Whatever the terms “purchase” and “sale” may mean in other contexts, here an alleged deception has affected individual shareholders’ decisions in a way not at all unlike that involved in a typical cash sale or share exchange. The broad anti-fraud purposes of the statute and the rule would clearly be furthered by their application to this type of situation. Therefore we conclude that Producers’ shareholders “purchased” shares in the new company by exchanging them for their old stock. As the Court of Appeals for the Seventh Circuit has said, “This view does no violence to the statutory language, and is the present interpretation of the body which is responsible for the administration of the acts.” Dasho v. Susquehanna Corp., 380 F. 2d 262, 269 (opinion of Fairchild and Cummings, JJ.), cert. denied, sub nom. Bard v. Dasho, 389 U. S. 977 (1967); see Vine v. Beneficial Finance Co., 374 F. 2d 627 (C. A. 2d Cir.), cert. denied, 389 U. S. 970 (1967); cf. Ruckle v. Roto American Corp., 339 F. 2d 24 (C. A. 2d Cir. 1964).

Respondents’ alternative argument that Rule 10b-5 does not cover misrepresentations which occur in connection with proxy solicitations can be dismissed rather quickly. Section 14 of the 1934 Act, 48 Stat. 895, 15 U. S. C. § 78n, and the rules adopted pursuant to that section, 17 CFR §§ 240.14a-l to 240.14a-103 (1968), set up a complex regulatory scheme covering proxy solicitations. At the time of the conduct charged in the complaint, these provisions did not apply to respondents; the 1964 amendments to the Securities Exchange Act would have made them applicable later if certain conditions relating to state regulation had not been met. 78 Stat. 567, 15 U. S. C. § 781 (g)(2)(G). But the existence or nonexistence of regulation under § 14 would not affect the scope of § 10 (b) and Rule 10b-5. The two sections of the Act apply to different sets of situations. Section 10 (b) applies to all proscribed conduct in connection with a purchase or sale of any security; § 14 applies to all proxy solicitations, whether or not in connection with a purchase or sale. The fact that there may well be some overlap is neither unusual nor unfortunate. Nor does it help respondents that insurance companies may often be exempt from federal proxy regulation under the 1964 amendments. The securities laws’ exemptions for insurance companies and insurance activities are carefully limited. None is applicable to the Rule 10b-5 situation with which we are confronted, and we do not have the power to create one. Congress may well have concluded that the Commission’s general antifraud powers over purchases and sales of securities should continue to apply to insurance securities, even though the more detailed regulation of proxy solicitations — which may often be conducted in connection with the managerial activities of insurance companies— was left to the States. Accordingly, we find no bar to the application of Rule 10b-5 to respondents’ misstatements in their proxy materials.

Since the McCarran-Ferguson Act does not prohibit the relief sought, and since neither of the alternative grounds for dismissal which have been raised here is meritorious, we reverse the judgment of the Court of Appeals and remand the case to the District Court for further proceedings consistent with this opinion.

It is so ordered.

Mr. Justice Black,

believing that the United States Court of Appeals for the Ninth Circuit correctly analyzed the issues in this case and that its judgment is right, dissents from this Court’s reversal of the judgment.

Mr. Justice Harlan, whom Mr. Justice Stewart joins, concurring in part and dissenting in part.

I concur entirely in Parts I and II of the Court’s opinion construing the McCarran-Ferguson Act. But I am at a loss to understand why the Court finds it necessary to go further and construe Rule 10b-5 promulgated under § 10 (b) of the Securities Exchange Act of 1934. The Court of Appeals did not reach this question since it believed that the McCarran-Ferguson Act entirely exempted the transaction involved here from the commands of the federal securities laws. The Government’s petition for certiorari is similarly limited. The only issue it raises is “[wjhether the McCarran-Ferguson Act . . . precludes the application of the anti-fraud provisions of the Securities Exchange Act of 1934. . . .” See Petition for Certiorari 2. When the respondents’ brief on the merits argued that Rule 10b-5 did not apply to the present case, the Solicitor General did not even attempt to present the Government’s position on that score because he quite properly believed that “the question is not appropriately before this Court for decision.” Government’s Reply Brief 2.

Despite the fact that we have not heard the views of the Securities and Exchange Commission, the Court chooses this case as a vehicle to construe for the first time one of the most important and elusive provisions of the securities laws. Moreover, the decision has far-reaching radiations, despite the fact that the precise issue presented is a narrow one. Courts and commentators have long debated whether Rule 10b-5 should be read as a sweeping prohibition against fraud in the securities industry when this results in rendering nullities of the other antifraud provisions of more limited scope which can be found in the statute books. See, e. g., §§ 11(a), 12 (2), and 13 of the Securities Act of 1933; § 18 of the Securities and Exchange Act of 1934. The late Judge Jerome Frank, Professor Louis Loss, and Milton Cohen, — to mention only three of those particularly eminent in this field — have warned that Rule 10b-5 should not be construed to supersede the special statutory schemes which Congress has devised to assure fair dealing in various aspects of the securities business. But see A. Bromberg, Securities Law § 2.5 (1967); Ellis v. Carter, 291 F. 2d 270 (1961). Even those who take an extremely broad view of the scope of the Rule have recognized that it could well be argued that the courts should not rush in to apply § 10 (b) to regulate proxy solicitations where Congress has refused to permit the Commission to intervene under § 14. See Bromberg, supra, § 6.5 (2), n. 93.1. Indeed, at one time the SEC itself was of the opinion that the Rule did not apply in cases of this sort. National Supply Co. v. Leland Stanford University, 134 F. 2d 689, 694 (1943). Nevertheless, the majority believes it can answer this question “rather quickly,” ante, at 468, without any real recognition of the basic principles which hang in the balance.

In addition, the Court has chosen to adopt a very loose construction of the requirement, first enunciated by Judge Augustus Hand in Birnbaum v. Newport Steel Corp., 193 F. 2d 461 (1951), cert. denied 343 U. S. 956 (1952), that a transaction must involve a “purchase” or “sale” of securities before it may be found to violate Rule 10b-5. While some commentators have welcomed the erosion of this doctrine, see Lowenfels, The Demise of the Birnbaum Doctrine: A New Era for Rule 1 Ob-5, 54 Ya. L. Rev. 268 (1968), especially in injunction actions initiated by the SEC, Note, The Purchaser-Seller Limitation to SEC Rule 10b-5, 53 Cornell L. Rev. 684, 694-697 (1968), others believe that “Birnbaum seems basically correct.” 3 L. Loss, Securities Regulation 1469. As recently as 1964, the Second Circuit rendered a decision which has been commonly understood to have reaffirmed the vitality of the Birnbaum doctrine, with my Brother Marshall casting the deciding vote. O’Neill v. Maytag, 339 F. 2d 764, 768 (1964); see Lowenfels, supra, at 270.

I am unwilling to decide these fundamental matters without full-dress argument. Indeed, if the courts of appeals are not to be permitted to develop the law in this area on a case-by-case basis, I think it much wiser for us to consider the basic issues in a case which squarely raises them rather than in one which is of marginal importance.

       “No Act of Congress shall be construed to invalidate, impair, or supersede any law enacted by any State for the purpose of regulating the business of insurance, or which imposes a fee or tax upon such business, unless such Act specifically relates to the business of insurance: Provided, That after June 30, 1948, the Act of July 2, 1890, as amended, known as the Sherman Act, and the Act of October 15, 1914, as amended, known as the Clayton Act, and the Act of September 26, 1914, known as the Federal Trade Commission Act, as amended, shall be applicable to the business of insurance to the extent that such business is not regulated by State law.”

       In 1966 Arizona law was amended to give him this power. See Ariz. Rev. Stat. Ann. §20-143 (Supp. 1969). This statute was passed in response to the 1964 amendments to the Securities Exchange Act. Pub. L. 88-467, 78 Stat. 565.

        E. g., Securities Act of 1933, § 3 (a) (8), 48 Stat. 76, 15 U. S. C. § 77c (a) (8); Securities Exchange Act of 1934, § 12 (g) (2) (G), added by Pub. L. 88-467, 78 Stat. 567 (1964), 15 U. S. C. § 781 (g) (2)(G).

       The Commision lists a large number of examples of its activities in its brief. Brief for Petitioner 16-17.

       Although the District Court held that some of the relief requested was beyond that properly allowable under § 21 (e) of the 1934 Act, 48 Stat. 900, as amended, 15 U. S. C. § 78u (e), no such question has been argued by either party here. Accordingly, we express no opinion about the proper construction of that section. See Note, Ancillary Relief in SEC Injunction Suits for Violation of Rule 10b-5, 79 Harv. L. Rev. 656 (1966).

       Section 10 (b) of the Securities Exchange Act of 1934, 48 Stat. 891, 15 U. S. C. §78j (b), provides:
      “It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securities exchange—
      “(b) To use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.”
      Rule 10b-5, 17 CFR § 240.10b-5 (1968), provides:
      “It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,
      “(a) To employ any device, scheme, or artifice to defraud,
      “(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or
      “(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.”

       For the history of this doctrine, see 1 L. Loss, Securities Regulation 518-542 (1961).

       These sections do indicate the breadth of the statutory terms by using the definitional word “include” and by including within the definitions contracts “to buy, purchase, or otherwise acquire” and “to sell or otherwise dispose of” securities.

       This case presents none of the complications which may arise in determining who, if anyone, may bring private actions under § 10 (b) and Rule 10b-5. Cf. J. I. Case Co. v. Borak, 377 U. S. 426 (1964). This is a suit brought by the Commission; the terms “purchase” and “sale” are relevant only to the question of statutory coverage. Therefore there are no “standing” problems lurking in the case. Cf. Lowenfels, The Demise of the Bimbaum Doctriné: A New Era for Rule 10b-5, 54 Va. L. Rev. 268 (1968).

         Fischman v. Raytheon Manufacturing Co., 188 F. 2d 783 (1951).

       3 Securities Regulation 1787-1791 (1961).

       “Truth in Securities” Revisited, 79 Harv. L. Rev. 1340, 1370 n. 89 (1966).

       Both O’Neill and Birnbaum were of course private actions, and I do not mean to suggest that my Brother Marshall is flatly inconsistent in now ruling that the “purchase” and “sale” requirement has been met in this case involving the SEC’s request for an injunction. Nevertheless, both private and public actions arise under the same Rule, and the legal problems involved in the two situations, while not identical, are closely related.


author: Per Curiam. Mr. Justice Marshall,

text:
    SKINNER et al. v. LOUISIANA.
    No. 44.
    Argued December 10, 1968.
    Decided January 27, 1969.

      George M. Leppert argued the cause for petitioners. With him on the brief were G. Wray Gill, Sr., and Robert S. Link, Jr.

      Louise Korns argued the cause for respondent. With her on the brief were Jack P. F. Gremillion, Attorney General of Louisiana, and Jim Garrison.

   Per Curiam.

The writ of certiorari is dismissed as improvidently granted.

Mr. Justice Marshall,

with whom Mr. Chief Justice Warren and Mr. Justice Douglas join,

dissenting.

Petitioners were convicted of the possession and sale of marihuana and given lengthy prison terms. The Louisiana Supreme Court affirmed. State v. Skinner, 251 La. 300, 204 So. 2d 370 (1967). We granted certiorari to consider several alleged errors occurring during the course of the state court proceedings. Skinner v. Louisiana, 391 U. S. 963 (1968).

Petitioners argued before this Court that they were denied due process of law because the trial court refused to declare a recess, but instead allowed the trial to continue until nearly 3 a. m. The principal basis for this claim is that Mr. Gill, counsel for Skinner and Gueldner, had become ineffective due to illness. I believe that the failure of the court to recess the trial when requested to do so by Gill effectively deprived petitioners Skinner and Gueldner of the right to the assistance of counsel guaranteed by the Sixth and Fourteenth Amendments to the Constitution.

The facts are relatively simple. After several continuances, some granted because of Gill’s illness, trial of the case commenced on the morning of March 21, 1966. The morning was consumed by selection of the jury and the trial proper did not commence until 2:45 p. m. The court recessed from 6:15 to 8 p. m. for dinner and at 11:40 p. m., the State rested. At that time, the following colloquy took place between court and counsel:

“By Mb. Gill. Before asking for a recess, I want to say this. I have done the best I could. I am absolutely, you might say mortally tired. We have ten, possibly twelve, witnesses to place on the witness stand. If Your Honor please, I am certainly not trying to put anything off. I have done the best I could. I’m mortally tired.
“By The Court. You have been after me all day, Mr. Gill. I’ve gotten tired of listening to you. I’m going to see if we can’t finish this case tonight. Go to work and see if we can’t finish the case tonight.
“By Mb. Gill. I’ll do what Your Honor says.
“By The Court. I’m sure everyone is tired. I have already asked the jury if they wanted to attempt to finish this case tonight and if we went to work on it without talking so much ....
“By Mb. Gill. I want to say one thing, Your Honor. I have a severe case of diabetes.
“By The Court. I know you have been ill and I know we have been having continuances on top of continuances because you have been ill but I have my duties to perform too and one of them is this case. I will gladly give you a recess for about three minutes and then we will come back and proceed with this case.
“By Mr. Gill. May I further say this. I tested myself for sugar. . . .
“By The Court. We will take a recess for three minutes.
“By Mr. Gill. If Your Honor please, I respectfully request Your Honor declare a mistrial.”

Thereafter, the court recessed for 35 minutes and reconvened at 12:25 a. m. The defense then presented its case. At 3 a. m., the court declared a recess until 9:30 the next morning. When the court reconvened, both parties presented their arguments to the jury.

In their motion for a new trial, petitioners alleged that the court erred in not declaring a recess after the State had rested. The trial court held a hearing on this issue, including the question of whether any of the jurors had been asleep during the trial. Gill and his physician testified at that hearing. Gill testified that by the time the State had concluded its case he was “just about dead on [his] feet” and that he did not, either that evening or the next morning, present the type of defense to which petitioners were entitled. He failed to ask for a mistrial after he had noticed a juror sleeping and had not called two possible witnesses. He had been in the hospital the week before and had just finished trying a case shortly before the present one began. During that earlier trial, he had found it necessary to go to bed by 7 p. m. His physical condition continued to deteriorate and he entered the hospital for two weeks shortly after the trial.

Gill’s doctor then testified as to his condition three days after the trial and to his probable condition on the day of the trial. He testified that Gill was suffering from an acidotic condition due to diabetes and from nervous exhaustion. The doctor testified that Gill’s efficiency at the trial would have been about two-thirds of normal and, after midnight, he “would be practically ineffective.”

The court sympathized with Gill but pointed out that the docket had to be cleared up and that the only way to do that is to “force lawyers to try cases.” The motion for a new trial was denied.

The Louisiana Supreme Court held that the record indicated that Gill had conducted a vigorous defense, reserving bills of exception and engaging in colloquy with the court. The testimony of the doctor was discounted because it was not supported by the record and because the doctor was not in court at the time of the trial. Accordingly, the court found no prejudice.

The State argues that granting of recesses is in the discretion of the trial court and that no abuse of that discretion has been demonstrated here. This Court has frequently indicated that the granting of continuances and recesses is within the discretion of the trial court. See, e. g., Ungar v. Sarafite, 376 U. S. 575, 589 (1964). Nevertheless, “a myopic insistence upon expeditiousness in the face of a justifiable request for delay can render the right to defend with counsel an empty formality.” Ibid. It is clear to me that in the present case the trial judge’s concern with the state of his docket has resulted in depriving petitioners of their right to effective assistance of counsel.

Gill made it clear to the court that he was suffering from diabetes and that the length of the day’s trial and the lateness of the hour had exhausted him. And the court was familiar with the history of Gill’s health problems. Yet, before Gill could even tell the court the level of his blood sugar, the court denied his request for a recess. I think it clear that the record establishes that Gill was seriously ill, to the knowledge of the court. I think it irrelevant that he was able to continue and present a credible defense; we should not be required to speculate when counsel is performing up to his capacity. Nor do I think it relevant that Gill did not take more affirmative action to establish the state of his health or to secure a recess or a continuance the next morning. As Gill himself testified, and his doctor confirmed, his efficiency at the time was practically nil. I find it hard to believe that court calendars are so congested that diabetic counsel must be forced to work until the early morning hours to clear them up. Accordingly, I would reverse the convictions of petitioners Skinner and Gueldner.

       The other alleged errors were the absence of one petitioner at hearings on certain pre-trial motions, the arraignment of one petitioner without counsel, and the giving of a conspiracy charge when no conspiracy was charged in the information.

       All three petitioners allege that at least two jurors were observed to have been sleeping during the trial and assign this allegation as further support for the argument that the length of the trial session deprived them of due process. The trial court, after a hearing on the motion for a new trial, found that none of the jurors had been asleep.


author: Per Curiam.

text:
    COMMISSIONER OF INTERNAL REVENUE v. SHAW-WALKER CO.
    No. 95.
    Decided January 27, 1969.

      Solicitor General Griswold for petitioner.

      Richard E. Nolan and John P. Carroll, Jr., for respondent.
   Per Curiam.

The petition for a writ of certiorari is granted and the judgment is vacated. The case is remanded to the Court of Appeals for further consideration in light of United States v. Donruss Co., ante, p. 297.


text:
    INTERSTATE INVESTORS, INC. v. UNITED STATES et al.
    No. 755.
    Decided January 27, 1969.

      Frederick W. P. Lorenzen and William R. Burt for appellant.

      Solicitor General Griswold, Assistant Attorney General Zimmerman, Howard E. Shapiro, Robert W. Gin-nane, and Jerome Nelson for the United States et al., and Thomas F. Daly, John W. Castles III, and Warren A. Goff for Transcontinental Bus System, Inc., appellees.
   Per Curiam.

The motions to affirm are granted and the judgment is affirmed.


text:
    PROVISION SALESMEN & DISTRIBUTORS UNION, LOCAL 627, AMALGAMATED MEAT CUTTERS & BUTCHER WORKMEN OF NORTH AMERICA, AFL-CIO v. UNITED STATES et al.
    No. 790.
    Decided January 27, 1969.

      Louis Waldman and Seymour M. Waldman for appellant.

      Solicitor General Griswold and Assistant Attorney General Zimmerman for the United States.
   Per Curiam.

The motion to affirm is granted and the judgment is affirmed. United Mine Workers of America v. Pennington, 381 U. S. 657; American Federation of Musicians v. Carroll, 391 U. S. 99; and Los Angeles Meat Drivers Union v. United States, 371 U. S. 94.

Mr. Justice Stewart is of the opinion that probable jurisdiction should be noted.


text:
    LOCUST CLUB OF ROCHESTER et al. v. CITY OF ROCHESTER et al.
    No. 799.
    Decided January 27, 1969.

      Ronald J. Buttarazzi for appellants.

      Sterling L. Weaver and Ruth B. Rosenberg for appellees.
   Per Curiam.

The motion to dismiss is granted and the appeal is dismissed for want of a substantial federal question.

Mr. Justice Black and Mr. Justice White are of the opinion that probable jurisdiction should be noted.


text:
    STEWART v. CHICAGO HOUSING AUTHORITY.
    No. 752,
    Misc.
    Decided January 27, 1969.

      Marshall Patner for petitioner.

      Henry F. Jankowicz for respondent.

      Peter 8. Smith, Joseph A. Matera, Kenneth F. Phillips, and Robert J. Spangenberg for the National Project on Urban Housing Law et al., as amid curiae, in support of the petition.
   Per Curiam.

The motion for leave to proceed in forma pauperis, the motion of the National Project on Urban Housing Law et al., for leave to file a brief, as amici curiae, and the petition for a writ of certiorari are granted. The judgment is vacated and the case is remanded to the Supreme Court of Illinois for further consideration in light of Thorpe v. Housing Authority of the City of Durham, ante, p. 268.