*2 DENMAN, MATHEWS, Before STEPHENS, Judges. Circuit DENMAN, Judge. is an This from a final entered decree the district on June 1, 1943, pursuant 22(b) to Section 77v(b), Securities Act of U.S.C. § 77v(b),1 15 U.S.C.A. hereinafter called That directed the Act. comply with a duces tecum of requiring appear be- officer of the Commission fore an corporate pa-
produce certain pers documents. May On 20(a), 15 under Section an order directing 77t(a), an to de- appear contumacy before the or one “In ease refusal to designated by any person, examiners obey of its to ordered, issued to documentary courts, evidence if so the said United States give per- to question; or there evidencetouch- which said contumacy matter in guilty fail- or refusal son obey may upon application resides, such order of the obey ure be found or punished contempt said court as a issue to such tlio Commission requiring person thereof.” person 7á8 corporation Kentucky Comply When termine whether a failed to together subpoena, Corporation, called Bourbon Sales the Commission filed individuals, Sec- application with tions 5 had violated the district several court its for en- Act, 15 U.S.C.A. forcement under curities Se- 77e, 77q(a), alleging of securities in the sale §§ at *3 bottling entry sisting investigation its “had of contracts for the orders of 1942, whiskey. grounds district reasonable Sales On the October to believe that Kentucky Corporation court for District of Com- Western and Penfield .the The pany Corporation, in a directed proceeding Bourbon Sales California had violated and [were] case, comply provisions about to this to violate Sections similar the very 5(a) and subpoena with a of the Commission said more as ap- fully appears subpoena against the directed the like the said orders.” After appellant pellant the together here. Securities had filed and an answer D.C., Corp., supporting affidavits, hearing two Commission Bourbon Sales a F.Supp. held and the court stated that district should showing “there be of rele- some subpoena enforcement dis- The of that vancy, is, something that that there is about closed information which led Commis- the probability be done or a violation the present inquiry. sion into its It was dis- of the Securities Law that is in nature the appellant covered the for here had Jury of a criminal for Grand a acting agent been Bour- for investigation.” filed Mr. Odenweller then bottling Corporation selling bon Sales a concerning materiality statement and the persons the through mails contracts relevancy of the items called for in the two company appellant had whom that or the subpoenas, together support- with nineteen receipts, previously sold warehouse appears affidavits. It affi- from these subsequently had its own and that it bottling sold persons previously davits that been who had through in ex- contracts the mails receipts by sold either warehouse receipts. change investi- for such While Corporation appellant Bourbon Sales or the phase
gating
appellant’s
activi-
were induced to turn over those
ties,
the Commission learned also
exchange
bottling
for
appellant was
stock of the
first time that
being
stock;
tracts or
contracts
the bottling
mails,
through
public
sold to the
the
through
were
or sold
on
offered
the mails
exchange
bottling
previous-
contracts
in
ly
representation
way
the
ceipt-holders
the
by
or Bourbon
either
the
profit
could
receive a
Corporation.
April
the
On
by
of the skill of Bourbon Sales
virtue
original
supplemented its
or the
their
and
abil-
present appel-
the
name
ity
mum
sell
mini-
bottle and
the
secretary-treas-
Young, its
lant and A. W.
expense
price;
highest
and
and
at the
urer,
to cover the sale
and
.the
through
mails
sold
the
stock was
persons named
lant’s stock
which omitted
means of literature
supplemental order.
mis-
book
and contained
state its true
value
subpoena
here
April
On
profit possi-
representations concerning the
appellant and
volved was directed
appellant.
bilities of
Odenweller, Jr., Regional
Young
C. J.
filing
supplemental
answer
After the
Cleve-
-of
Commission’s
Administrator
fur-
appellant,
counter-affidavits
Office,
designated in
Regional
who was
land
hearing
was held and
ther
authorizing
Commission’s orders
granted
application
the Commission’s
empow-
investigation as one of the officers
subpoena, incorporating
enforcement of the
affirmations,
oaths and
administer
ered “to
order and decree
in its final
witnesses, compel
attend-
their
subpoena
subpoena specified.
items
evidence,
produc-
ance, take
correspondence,
opening
papers,
Commission in
its
tion of
The
appeal
rele-
or other records deemed
brief describes the
here
“from a
memoranda
inquiry.”
inquiry by
final order
decree.” On
vant production
required
concerning
Commission’s
appellant’s books, pa- statement,
responded
specified items of the
four-year
contending
covering
excellent brief
with an
pers
documents
May 1,
date of the
of the district court enforcing
period from
not
final
Commission’s
subpoena.
chambers,
dis-
Supreme
should
weather
and hence that
Court
reasoning,
missed.
Commission admits that
however well
fortified
Com-
Supreme
Commerce
case of Ellis v.
mission,
Court
Interstate
forecast
prior
“seems” about to
deci-
overrule
overruled. On sion,
over-
outrun that
ruling goal.
conjecture
contrary,
in Cobbledick v. United
It is
a fanciful
that,
84 L.
permit-
guessing
if such
contest
up-
Supreme
called
ted,
Court was
Ed.
ingenuity
judges, stirred
principal
philosophies
on
governmental
to decide the
contention
varied
appellants
regulations,
argu-,
con- social
case was
find rational
disposing
overruling
trolled
ments for
the Ellis decision.
score
adversely
appel
legal
of that contention
Court decisions.
To the strain on the
*4
there,
Supreme
profession
held 309
lants
the
many
of
overrulings,
recent
page
page 330,
at
84
60
at
S.Ct.
enumerated
paragraph
in the last
of
Smith v. Allwright,
L.Ed. 783:
321
“*
*
should not be added that of
over-
the
proceeding
aBut
that un-
like
ruling prescience of ten
courts of
circuit
of
Commerce Act
the Interstate
§
appeals
upwards
ninety
of
district
self-contained,
may
deemed
far
so
as the
courts.
judiciary is
much
concerned —as
as an
so
independent
equity
in
in which
suit
question
The
of their
is ever
injunction
will
without
the
lie from an
present
courts,
all
excepting
Su-
the
necessity waiting
Aft-
of
for disobedience.
preme Court.
In the
of Endi-
recent case
er the court
has ordered
recusant witness
Corp.
Perkins,
317 U.S.
cott-Johnson
Commission,
testify
before the
re-
there
87 L.Ed.
of
instead
nothing
mains
it
do.
this
Not
is
dismissing
appeal,
the
that Court held valid
respect
particular
with
witness
true
to the
subpoena
the
Secretary
of Labor
testimony
not,
sought;
whose
is
is
affirmed the order of the circuit
trial,
grand
any
in
jury
the case of a
or
appeals remanding the case to
inquiry
further
which
court “with directions to enforce
sub-
offending
permitted
halted
witness
peonas,” Perkins
v. Endicott-Johnson
appeal.
proceeding
The
the dis-
Corp., Cir.,
128 F.2d
and this al-
ancillary
any judicial
trict court is not
though
opinion
appeals
of the court of
proceeding. So far as
the court
is
considering
in
(pages
the Ellis case
213 and
cerned,
complete
isit
in itself.”
216) presented
jurisdictional question
agree
appellee
We cannot
with
what
for review
that
Court.
in disposing
there said
main
Appellant
A.
claims
Se
that
contention of
is
dictum.
mere
curities
ju
Commission has no
Subsequently,
Clarke
in
v. Federal Trade
risdiction
corporation
Commission, Cir., 1942,
for examination by the Com
court,
questioning
ap-
assumption
representatives
books,
mission or its
all
parently
parties
made
both
Ellis
that the
records, documents, contracts, agreements,
governed
case still
respect
to adminis-
checks,
statements, correspondence,
bank
subpoenas,
trative
premise
held on that
that
files,
papers
and all other
and memoranda
subpoena
enforcing
district court order
of which
twenty
there were listed
items.
the Federal
Commission
Trade
jurisdictional
The
defect claimed is the ab
collaterally
by appeal-
could not be
attacked
sence of a determination
Commis
subsequent
from a
commitment
sion itself that these documents and other
contempt.
sought
opinion
“in
information
Appellee strongly argues
evolv-
Commission,
necessary.”
Section
ing concept
investiga-
of the administrative
(b) (15
77s(b), 15
U.S.C.
77s
analogous
tions as
in other
features
(b),
provides,
purpose
Act
“For the
grand jury procedure requires
even an
which,
investigations
of all
ferior court to overrule Cob-
Ellis and
prop
bledick cases.
Its statement is
“In the
title,
er
any
enforcement
present
opinion,
climate of
the distinction member
any
of the Commission or
officer
between Ellis
no
and Cobbledick seems
designated
empowered
officers
it are
longer justifiable.”
(Emphasis supplied.)
affirmations,
to administer oaths and
sub
poana
agree
evidence,
We cannot
witnesses,
inferior federal
take
prognostication
books, papers,
production
any
make its
of the the
or oth-
change Commission,
deems
97 F.2d
which the
er documents
Perkins,
Corp.
inquiry. Such
or material
relevant
Endicott-Johnson
317 U.S.
production
of witnesses and
attendance
may be re-
documentary evidence
of such
B.
contends
States
any place
quired
whiskey sales
contracts are not
place
designated
any Territory
any
at
con
“investment
contracts within
term
supplied.)
hearing.”
(Emphasis
phrase
tract” as
used in
made
is admitted
Act,2
beyond
(1) of
and hence
it
prior
issuance
ho determination
demand
jurisdiction of the Commission to
relevant or
subpoena
deemed
it
concerning
evidence
They
transactions
them.
of evi-
classes
material
dentiary
are,
claimed,
ware
it is
no more than
which
matter
ordinary
house
transferred
produce.
Commis-
quired
course of business.
make
claims that it does
sion
not have
agree.
“investment
We do not
The term
may and
such a determination
but
appears
particularly,
contract”
power
de-
delegated
such a
its
make
thirty
acts,
construed
the state
C.
designating
termination
J.
long
cases,
both federal and
line
Odenweller as an officer to issue
state,
affording
investing public a
“require
production
protection,
full
measure of
whether
*5
papers, correspondence,
or oth-
memoranda
normal
transaction takes
of the more
one
material
to
er records deemed relevant or
security
forms of a
instead the
or whether
inquiry,
duties
perform
and to
all other
promoter
appearance
clothes it with the
authorized
in connection
as
therewith
species
of
or
a transaction in
of real
some
law,”
personal property.
Appellant’s argument
statute
phrase
This court
construed the
requires
that the
itself
agree
“investment contract” to include
formal act must
determination of
make the
purchasers
ments where “the
entire
[look]
relevancy
materiality
and
of the
ly
promoters
of
make
to the efforts
to
produced
etc. to be
determina-
and that this
Ather
profitable
their investment a
one.”
regional
delegated
tion
not be
States, Cir.,
9
128
ton v. United
F.2d
contrary
administrator. We
held the
have
Exchange
465. Cf. Securities
Commis
and
Woolley
States, Cir.,
in
v.
F.
Corp.,
C. M.
320 U.
Leasing
sion v.
Joiner
2d
that:
and
S.
Securities
Universal Service
commission
Commission v.
contended
“It
Association,
act,
Cir.,
alone,
provisions
cer
under the
tiorari denied 308
are
authority
what matters
to determine
inquiry,
and
this au-
L.Ed. 519.
to
delegated
examin-
thority cannot be
bottling con-
The evidence shows the
argument
on the
is based
officer.
agreements
themselves contain
tracts
quoted.
19(b),
provisions of
heretofore
Corporation to
appellant or Bourbon Sales
nothing
language
of the
There is
represented
bottle
argument.
adopt
justify
To
section
in
warehouse
turned
interpretation would be to emasculate
contracts,
bottling
to sell
whis-
the bottled
appointment
provision relating to
pay
key
contract-holders the
and
officers,
proceed-
all
examining
and
expenses
proceeds
all
less
and a commission
by the commission
ings
it-
conducted
gross
price per
case.
sales
10%
self.”
receipt-
aside
the fact
This' is
accept bottling
v.
Ex-
were influenced
Consolidated
Securities
holders
Cf.
Mines
oil, gas,
interest in
undivided
mineral
or
other
(I),
Under Section 2
or,
any
rights,
general,
any
in
‘security’
(1)
inter-
means
“The term
77b
note,
commonly
stock,
bond,
treasury stock,
or instrument
known
est
as
deben
‘security,’
indebtedness,
or
ture,
certificate of
certificate
evidence
participation
in, temporary
participation
any profit-
or
terest
interest
for, receipt
guar-
for,
certificate-
sharing agreement,
interim
cer
collateral-trust.
of,
right
preorganization
or warrant or
tificate,
antee
to sub-
sub
certificate or
purchase, any
forego-
to or
of the
scription,
share,
scribe
transferable
investment
ing.”
contract, voting-trust
certificate,
certifi
deposit
security,
for a
fractional
cate
receipts versely
exchange for
contention
contracts
their
in Consolidated
Mines
representation
on the
was the
Exchange Commission,
that that
back;
way
money
they
get
could
their
facts
On the
large
“a
was
adduced
clearly
the Commission is
* * *
busi-
concern
conduct
formed to
normal
function
investigating
position
of this
ness
nature and was in the
conduct
in transactions
protect
interest and market
through
[their]
the mails concerning
and
its stock
whiskey under
name
an established trade
sought
contracts. The evidence
make
price
would boost the
plainly
incompetent
“not
or irrelevant
profit;”
ain
better
purpose”
lawful
of the Commission.
position
“better
to know when
[their] The
items of the
with-
whiskey might
age
bottled
and be
in the normal
investigation.
area of such an
**
loss;” and
would
risk of
take
They
requirement
more than satisfy the
they
get
amount
“double the
in Endicott-Johnson
[they]
whis-
the bulk
Corp.
sale
Perkins, supra.
key.”
provisions
repre-
These contract
D.
contends
sentations,
well
the con-
as
as
fact that
provisions
19(b)
Act,
of Section
of the
tract-holders, being ordinary
investors
supplemented
amended
provi
dealers,
liquor
facil-
would not have the
sions of
inherent
ities or
federal
ly and as
applied
construed and
liquor
licenses to take
out
case, are invalid and
be
unconstitutional
dispose
bond and
it clear that
of make
they delegate
cause
judicial powers
they
“entirely
look
efforts
must
Securities and Exchange
promoters
their investment
make
Constitution,
III
Article
one,”
profitable
the criterion in our
deprive
courts of
F.
supra, 128
in Atherton v. United
functions
to what matters are or
*6
page 465.
2d at
inquiry.
relevant
place,
present
In
second
case
with
appellant
As
the two contentions of
stronger
than
and Atherton
the Joiner
cited,
last
fully
we heretofore have
con-
represented
because
here
cases also
it was
question.
Coplin
sidered
v. United
pooling
a
would
whis-
that there
States, Cir.,
656-657,
bottling.
key purchased by
appellant
Consolidated
Mines
Securities
words,
did
apparently
scheme
In other
Commission, Cir.,
decided
we
envisage any
segregration
rigid
adversely
appellant’s
contention.
company by
sold to
each
Ignoring
opinion
our
in the Consolidated
contemplated
tract-holder,
each
but
case, appellant
early
Mines
cites
circuit
proceeds
holder,
obtaining
instead of
of,
then,
Field,
Judge
Circuit
from the
the identical
sale
In re
Railway Commission,
Pacific
C.C.D.
him,
get
actually
over
turned
C.Cal.,
542. Holding, we v. do, that Ellis Interstate Commission, supra, is not over Commerce States, supra, by Cobbledick v. United ruled and, think, disregard ap I should we pellee’s criticism of Cobbledick deci my (Judges DEN- What associates sion. STEPHENS) say opin in their MAN and * to that criticism seems in answer ion unnecessary and better left unsaid.
me should be affirmed The order Woolley
authority of v. United 258; F.2d Consolidated Mines Commission, Cir., Security and States, 9 Atherton Cir., 128 paragraph beginning ending with the “We cannot” words with the words 'ninety district courts.”