Lead Opinion
At thе outset we must determine the finality, and hence the appealability, of an order holding that a receiver acting for the asserted owner of a chose in action, in dispute among the various parties to the action, has no title thereto. The chose in action here involved is a sum of money allegedly owed as royalties by the American' Society of Composers, Authors and Publishers to a similar Austrian organization, AKM,
The complaint is in three counts, of which the first and third involve matters not germane here and the second only is before us. Therein plaintiff alleges at sоme length the circumstances of the contract between AKM and ASCAP, the collection of royalties by the latter, and the order of taking by the Custodian. It also sets forth the appointment of Propper as state court receiver, and alleges by way of conclusion his lack of title or interest in the funds through such appointment. Defendant Taylor has answered admitting all the facts here pertinent, including the collection
Before filing his motion for judgment, Propper also answered, admitting his appointment and the existence of royalties due from ASCAP to AKM, and then extensively contested the plaintiff’s allegations in opposition to his right to the funds as receiver. Such claim of right presents the legal issue decided by the District Court upon these conflicting motions. As the court pointed out, the facts as to it are not at all in dispute and are quickly stated as above. The substantial legal points were two: (1) whether a temporary receiver under the controlling New York law, N.Y.Civil Practice Act, § 977-b, takes title or has merely a right to possession, and (2) if only the latter, whether the Executive Order cited above prevented the devolution of title on the appointment of Propper as permanent receiver. The District Court decided both these issues against Propper.
Upon this record it seems to us clear that this is the case of suit by the appropriate government official against two rival claimants to the same fund or chose in action, and that there will be a final judgment only when there is a decision as to the existence and ownership of the property in dispute. The conclusion that a fiduciary claiming to represent one of the claimants does not have formal legal title to the assets in question is not a final judgment upon the important and central point in dispute. Hence the case seems to us to fall within the authority of several similar cases where we have held nonappealable orders affecting some, but not all, parties to the same dispute. Porter v. American Distilling Co., 2 Cir.,
The parties here, in an endeavor to sustain appealability, suggest that the facts in connection with the receiver’s right are different from those involving the existence of the original сlaim. But as has often been stressed, no complete identity of facts can be required or else every claim by different persons or dealing with differing steps in a litigation will always involve a different “cause of action.” The theory adopted in the new rules, including the pertinent rule here, 54(b), Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c, has been that the “transaction” or “occurrence” is the subject matter of a claim, rather than the legal rights arising therefrom; additions to or subtractions from the central core of fact do
It should be noted that, except for this added detail of the right of Propper to represent the interests of AKM and its creditors, the situation is the oft-considered one of a claim affecting two or more parties so directly that adjudication as to one cannot be had without definitely settling the rights of the other. This is the standard case where both before and after the rules adjudication must be had as to all before finality obtains. The rule itself appears never to have been questioned, though naturally details in its application have at times presented problems. Hohorst v. Hamburg-American Packet Co., supra; Oneida Nav. Corporation v. W. & S. Job & Co.,
While this federal rule thus depends upon general principles and policies, Cat-lin v. United States, supra, not upon its scope of operation in a particular case, yet we deem it appropriate to suggest doubt whether any ultimate inconvenience here from the application of the rule is indicated. The parties do not state that a fiduciary title in Propper before the freezing order would do away with the enemy taint; unless this is so the whole present dispute may well have more procedural than substantive aspects. Assuming the decision below to be correct, still Propper is not an interloper; he is a state judicial officer with duties to preserve and protect the assets of the estate committed to his charge. Though he may not be an appropriate formal party, he can properly contest the merits of ASCAP’s claim in the right of AKM and raise any other issue in the case which affects AKM rather than himself. And the plaintiff’s position would seem to be at least no weaker, and possibly even stronger, if final judgment comes only after the court has heard some defense on behalf of AKM against the merits of the ASCAP contention. Hence how really decisive this preliminary skirmish will be on the ultimate result is not yet disclosed.
Appeal dismissed.
Notes
ASCAP is an unincorporated association; AKM was organized under Austrian law as a registered cooperative society with limited liability. Before June 12, 1941, AKM had been liquidated in Austria.
Other issues raised by Propper involved the jurisdiction of the court, the question of full faith and credit to be accorded to the state decree, and the claimed deprivation of vested rights of property without due process of law or due compensation — matters not discussed by the District Court.
The general principle is also stated in several other recent decisions, e. g., Petrol Corporation v. Petroleum Heat & Power Co., 2 Cir.,
This leading case, after stressing that the judgment to be appealable must be final as “to all the parties” and “as to the whole subject-matter and as to all the causes of action involved,” holds without application theré: “The seeming exception to this rule by which an adjudication final in its nature, of matters distinct from the general subject of the litigation, like a claim to property presented by intervening petition in a receivership proceeding, has been treated as final, so as to authorize an appeal without awaiting the termination of the general litigation below.” An earlier application of the rule as to intervention had occurred in prize cases where independent libels had been consolidated and thereafter various claims were “interposed” in the consolidated libel. Withenbury v. United States,
Such eases, like Collins v. Metro-Goldwyn Pictures Corporation, 2 Cir.,
Probably induced by the local state practice allowing numerous interlocutory appeals, which is said to be a ground fоr choosing federal jurisdiction where possible. Harper, Civil Practice in the Federal Courts, 1946, 1, 80, 81.
Since this amendment is only directly applicable in the district courts, it may not settle all questions; but undoubtedly it will be helpful as greatly narrowing the potential area of dispute and as suggesting there a form of reconciliation of disputed issues. For general approval of the amendment, see Ilsen, Federal Rules of Civil Procedure with Approved Amendments, Rev.Ed. 1947, 439; Armstrong, . Advisory Committee Recommendations, o F.R.D. 339, 350 (cf. id.,
Dissenting Opinion
(dissenting).
I dissent because this decision has marked precedential significance (since I think it overrules many decisions of the Supreme Court, of this Court, and of other Circuit Courts) and because it is distinctly harmful to both parties to this appeal. My reasons, more in detail, follow.
1. Grave injustice may easily stem from the application, without a nice regard to the particular facts of a case, of wide generalizations about “piecemeal appeals.” Apparently, at least for a moment, my colleagues (although somewhat reluctantly) so recognize. For, in support of their conclusion (which is contrary to the desires of both parties, earnestly expressed in their briefs) that the judgment is not final and appealable, (1) my colleagues say that Propper lost a mere “preliminary skirmish,” since (so they assert) the court below decided only that Propper does not have “formal legal title” to the claim against A.S.C.A.P., and (2) they imply that he is: in substantially the same position as he was before that judgment to participate in the trial in the district court against A.S.C.A.P. That the consequence of the judgment was not so superficial, and that dismissal of this appeal may have very substantial adverse effects on both Propper and plaintiff, appear, I think, from the following:
Plaintiff’s complaint joins two parties defеndant, A.S.C.A.P. and the receiver, Prop-per. , The complaint and the defenses fall into two separate parts: (a) Counts 1 and
Pursuant to plaintiff’s рrayer as to Prop-per — in effect a prayer for a judgment removing a cloud on title to plaintiff’s claim against A.S.C.A.P. — the district judge, on plaintiff’s motion for summary judgment, entered a judgment which “ordered and adjudged that the defendant Henry M. Propper * * * acquired no right, title or interest in or to the funds” of A.K.M., “held by” A.S.C.A.P., and “has no right, title or interest in or to the said funds”; it further ordered that plaintiff recover costs against Propper, and that “plaintiff have execution therefor.” I fail to understand how that judgment can be said by my colleagues to decide only that Propper has no “formal legal title.” In the plainest possible terms it adjudges that he has no title whatever. Obviously, it was intended to and will bar him from participation in the trial which will now ensue between plaintiff and A.S.C.A.P., where the issue will be whether A.S.C.A.P. owed anything to A.K.M. (and therefore to plaintiff as successor of A.K.M.).
Conceivably, my colleagues might so have construed the judgment that it would in no way have affected Propper’s relatiоn to the trial, i. e., they might have construed it as but a tentative warning in advance by the trial judge that, at the end of the trial, in which Propper would participate as fully as if there had been no such judgment, the judge, should A.S.C.A.P. lose, might hold that Propper would not be entitled to recover — unless meanwhile the judge had changed his mind. But, doubtless because of its obviously strained character, my colleagues have not relied on such an interpretation of the judgment.
As matters now stand, under my colleagues’ decision, only when, after that trial, a judgment for or against A.S.C.A.P. has been entered, can Propper appeal; then, for the first time, will he be allowed
It may also be seriously harmful to plaintiff. For if, at the end of the trial, he obtains a judgment against A.S.C.A.P., we may then, on appeal from that judgment, hold erroneous the present declaratory judgment against Propper; the result will be that plaintiff will have incurred, without recompense, the considerable expense of conducting a trial to vindicate a claim in which he had no interest.
2. This sort of situation is by no means novel. In divers circumstances, it has often been held that an order is final and appealable which shuts out one claimant to assets (whether tangible or intangible), although the claims of others, not of a joint character with the barred claim, remain undetermined.
In a landmark decision of that kind, Withenbury v. United States,
There is no reason to believe that it would have made the slightest difference to the Supreme Court when it refused to adopt that argument, if Withenbury & Doyle, instead of asserting а claim on its own initiative, had been joined as a party defendant, as was Propper here. No rational ground for such a distinction can be suggested. Indeed, that the doctrine of Withenbury v. United States is not limited to cases in which the claim of a defendant is dismissed, we recently made plain in Collins v. Metro-Goldwyn Pictures Corporation, 2 Cir.,
3. We have held repeatedly in our decisions in cases citing Collins v. Metro-Goldwyn Pictures Corporation, supra, that the key question is whether the same evidence, without substantial additions, will be sufficient to support both the dismissed and the non-dismissed claims. If the answer is no (i. e., if substantial additional evidence is needed), the order dismissing" the one claim is final and appealable; if the answer is yes, the order is not appeal-able. See Zalkind v. Scheinmann, 2 Cir.,
4. Thanks to their failure to observe this distinction, my colleagues are here, I think, overruling a long line of decisions (rendered both before and since the adoption of the Rules). Those decisions held appealable the following kinds of orders: (1) An order dismissing a claim of a creditor in a receivership, although the claims of other creditors remained undetermined.
5. My colleagues cite cases — such as Hohorst v. Hamburg-American Packet Co.,
Nor can I understand the pertinence of Studer v. Moore, 2 Cir.,
6. Of course, expedition should not he the sole aim of procedure. It should never be purchased at the expense of preventing a fair trial. For that reason, this court and others have discountenanced the use of a summary judgment, based on a mere written record, when it deprives one of the parties of a trial affording him the opportunity to cross-examine important witnesses whose credibility may critically affect decision on issues of fact.
In Audi Vision, Inc. v. R. C. A. Mfg. Co., supra, the majority opinion set forth the following reasons for disallowing a truly '“fragmentary” appeal, reasons all of which are pointless here: (1) The “waste of time and expense”; that argument cuts precisely the other way in the case at bar. (2) The “mischance of differing dispositions of what is essentially a single controlling issue”; there could be no such “mischance” if we entertained the present appeal. (3) The “shifting” of “emphasis from merits to form”; no such shifting would occur here. (4) The “abbreviation of a lawsuit beyond what is really feasible”; the “abbreviation” here is eminently feasible.
7. In further support of their position that Propper, by the judgment, lost merely a “preliminary skirmish,” my colleagues say: “The parties do not state that a fiduciary title in Propper before the freezing order would do away with the enemy taint * * * ” Of course, the parties do not so state. Plaintiff’s brief on the merits, which attempts with vigor to sustain the judgment, does not so much as intimate that there is any such infirmity (“enemy taint”) in Propper’s title. In that brief, the plaintiff maintains that the infirmity derives solely from the freezing order.
8. Above all, I am surprised that my colleagues should rest their decision on the alleged doctrine that where' a so-called “central core of facts” is the subject matter of two claims, then, without more, the dismissal of but one of those claims is not final. That alleged doctrine this court has repeatedly repudiated. As previously noted, we have often held (against persistent dissents) that the test is this: If, despite a so-called “central core of facts” common to a dismissed claim and a non-dismissed claim, decision with respect to the dismissed claim requires consideration of substantial relevant evidence in addition to that which is relevant to the non-dismissed claim,
The test applied by us in those cases has, we have said,
If we now adopt the so-called “central core of facts” test, we should, I think, henceforth regard as over-ruled all our own decisions cited in point 3 supra, to say nothing of the many cases cited in point 4, supra, as well as Withenbury v. United States, supra, and Reeves v. Bear-dall, supra. Accordingly, the decision here, because of its precedential significance for many future litigants, has an importance which transcends the injury it does the parties to the present suit. Inconsistent as it is with our previous decisions and with those in other circuits,
9. The “central core” idea is here being transplanted to the field of appeals from another distinct field
But some of them have not been content with their achievements. Although earlier they had objected to a rigid — “unpragmatic” — definition of “cause of action,” they now insist that “transaction,” in all procedural contexts, must be defined in but one way, regardless of the practical consequences. Wherefore, they say, as Rule 54(b) includes the word “transaction,” it must there mean events having a “central core of facts” and must be thus applied in the context of appeals. I believe that th.e advocates of this thesis are motivated by- a desire to attain iesthetic verba] symmetry and verbal consistency, heedless of the actual results. In their eagerness to transplant a rigid definition of “transaction” to the quite different area of appeals, they uncharacteristically abandon their frequent
I think that a ruling, like that of my colleagues in this case, which will not only cause long delay but also in other ways may seriously prejudice the parties, ought not to be made merely to afford satisfaction to those interested in maintaining the aesthetic proportions of a procedural theory. More important than delight in such verbal symmetry (as I believe the Supreme Court recognized in Reeves v. Beardall) is the avoidance of needless unfairness to litigants. A legal theory, no matter how beautiful in outward form, cannot be a wise theory, if, in actual practice, it works substantial injustice. Procedure, we have often heard, should be but the “hand-maid” of justice. I think that here the servant has achieved mastery.
Had they done so, I would have considered the interpretation a strange departure from the district judge’s purpose but perhaps, in order to ensure a fair result here and to prevent the creating of an unwise precedent, I would not have dissented.
In Los Angeles Brush Mfg. Corporation v. James,
In the case of a private litigant, it may, indeed, in practical terms, deprive him of any appeal whatever: to take the chance of defeat on appeal after a costly trial may involve too expensive a gamble. That consideration may induce him to accept an unfair settlement.
Emphasis added.
The discussion of the Withenbury case in Hohorst v. Hamburg-American Packet Co.,
Some of the cases cited deal with the problem raised by Hum v. Oursler,
Sec, e. g., Hatch v. Morosco Holding Co., 2 Cir.,
Bank of Taiwan v. Gorgas-Pierie Mfg. Co., 3 Cir.,
State of Texas v. Chuoke, 5 Cir.,
Crutcher v. Joyce, 10 Cir.,
See e. g., Missouri-Kansas Pipe Line Co. v. United States,
See the exposition of the facts of the Audi Vision case in the dissenting opinion in Libbey-Owens-Ford Glass Co. v. Sylvania Industrial Corporation, 2 Cir.,
See also Studer v. Moore, 2 Cir.,
Moreover, on the face of the complaint, the action appeared to he against both defendants for a joint liability.
Arnstein v. Porter, 2 Cir.,
• “All manner of expedients,” says Dean Pound, “have been resorted to * * to arrive at a written settlement of the facts not dependent on the credit to be accorded witnesses or the impression they may make on the particular trial court. These expedients in varying forms are intended to sift out thе crucial fact or facts by a series of averments and admissions on interrogatories addressed to the respective parties. But experience has shown we cannot be sure that in getting a clear-cut statement of facts in advance in this way, to which the law may be applied, we are not cutting out too mueh, so in the end to be trying an artificial case instead of the real controversy.” Pound, Appellate Procedure in Civil Cases (1941) 29.
Or vice versa.
See Zalkind v. Scheinman, 2 Cir.,
Eor recent cases in other circuits, inconsistent with the reasoning of my colleagues’ decision here, see, e. g., Lydick v. Fischer, 5 Cir.,
The distinction between the two fields seems to be recognized in Clark, Code Pleading (2d Ed.1947) 126.
This definition, it is said, was contrived with an “eye to trial convenience.”
See, e. g., 1 Moore, Federal Practice (1938) 145.
See, e. g., United States v. Dickinson,
Such is the “pragmatic” attitude in physical science: “That principle, theory or ‘law’ is dignified as scientific which •best promotes the actual attainment of control of concrete transformations. To this end, the experimenter will use Euclidean or non-Euclidean geometries, •geometries of four dimensions and of six, ordinary algebra and systems in which ab does not equal ba; he will employ a •quantum theory where it promises results along with an undulat.ory theory where it is productive”; Fries, Science and the Foundations of Freedom, 41 ,T. of Philosophy (1944) 113, 116-117. See Bridgman, The Intelligent Individual and Society (1938), 54; Bridgman, The Logic of Modern Physics (1927) passim; Demogue, An Analysis of Fundamental Notions, in the volume Modern French Legal Philosophies (1921) 351, 391, 564; Frank, Fate and Freedom (1945) 327-328; Cohen, Transcendental Nonsense and The Functional Approach, 35 Col.L.Rev. (1935) 809.
Long ago Aristotle warned that “the truth in practical matters is judged from operations and life, for the decisive factor is to be found in them.”; Nicoma-chean Ethics, X, ch. 8, 1179a, 16-22; McKeon, Aristotle’s Conception of The Development and The Nature of Scientific Method, 8 J. of The History of Ideas (1147) 3, 40.
Kenneth Burkе sagaciously warns that, .correlative with the principle known as Occam’s razor, we need another: “Entities should not be reduced beyond necessities”; Burke, A Grammar of Motives (1945), 324. See discussion and citations in Ricketts v. Pennsylvania R. Co., 2 Cir.,
Quoted by Feibleman, Introduction to the Philosophy of Peirce (1946) 300.
United States v. Dickinson, supra.
I cannot agree with the suggestion, twice made by my colleague Judge Clark (see Libbey-Owens-Ford Glass Company v. Sylvania Industrial Corporation, supra, and Petrol Corporation v. Petroleum Heat & Power Co. Inc., supra), that the amendment of Rule 54(b), which is not yet operative, has a bearing on cases decided before its effective date. But the suggestion invites the following interesting speculation: I strongly suspect that the trial judge here thought he was entering a final judgment. Suppose, then, that, when this case resumes in the district court, the judge, after the revised Rule becomes operative, and before the trial, re-enters the declaratory judgment against Proрper, using the appropriate language as to finality in accordance with the revised Rule, i. e., “That there is no just reason for delay.” (I think he can clearly do so, if the judgment as it now stands is interlocutory, as my colleagues hold.) If the judge so acts, will that re-entered judgment become at once appealable?
If the Rule were construed literally, so as to go further, we might have some most unfortunate results, since experience teaches that a trial judge, mistakenly convinced that- his order is flawless and that an appeal would be useless, may well be unwilling to expedite its review. If, for example, with the rule literally construed, a judge, in his discretion, refuses to declare final an order by which he denies an intervention that is a matter of right, then, notwithstanding Missouri-Kansas Pipe Line Co. v. United States,
It is suggested that to vest absolute discretion in the district judges as to the finality, and thus appealability, of orders will insure uniformity in the federal courts. See 55 Yale L.J. (1940) 141, 149. That is a fatuous notion: Consider the notorious lack of uniformity in sentencing by the district judges.
If there is to be discretion to allow interlocutory appeals, it would seem wiser to vest that discretion in the appeal Courts, for they are far more likely than the district judges to see the errors in the orders of those judges, and to comprehend when injustice will be caused by delays in reviеwing such orders. It has therefore been suggested that, by statute, the circuit courts be so empowered, provided the exercise of that discretion in any case turns on a finding by such a court that not to permit the appeal would be to work serious injustice. See Zalkind v. Scheinman, 2 Cir., K’
The present federal statute may trap a litigant: If he fails to appeal from an order which he believes interlocutory and non-appealable, he may find, when he-appeals from that order after the closе of the entire suit, that an earlier appeal was necessary, with the result that his appeal is barred by lapse of time. Accordingly, the proposed new appeals statute should, I think, provide something-like this: (1) Until all the issues in the entire suit have been determined, any appeal will be classified as “discretionary”; (2) failure to seek a “discretionary” appeal shall be no bar, because of lapse of time, to an appeal taken when all the issues have been determined.
To prevent interlocutory appeals from unimportant procedural rulings is wholly - desirable. But the opposition to interlocutory appeals (expressed by some procedural reformers), on the ground that such appeals emphasize procedural issues in the appellate courts, would logically lead to what I would regard as a backward step — the repeal of the federal statutes authorizing such appеals from or--
“But the courts do not exist for the lawyers; they do not exist for the judges. They exist for litigants, and litigants are entitled to the best possible procedure that human ingenuity can render. The courts are established to administer justice, and you cannot have justice if justice is constantly being thwarted and turned aside or delayed by a labyrinth of technical entanglements. Manifestly, the whole profession * * * are earnestly desirous of ridding the courts * * * of being the home of delay and the home of technicality”; Remarks of Attorney General Cummings before the House Committee on the Judiciary concerning the Rules. “Procedural rules are means to an end, not an end in themselves. This is a truism all too often forgotten”; Clark, Code Pleading (1947) (2d Ed.) viii.
Illustrative are the English “Hilary Rules” of 1834; see Hayes, Orogate’s Case: A Dialogue in Ye Shades on Special Pleading Reform, reprinted in 9 Holdsworth, History of English Law (2d Ed.1938) 417.