Case Name: CLARK v. TAYLOR et al.
Court: United States Court of Appeals for the Second Circuit
Jurisdiction: United States
Decision Date: 1947-09-22
Citations: 163 F.2d 940
Docket Number: No. 257, Docket 20580
Parties: CLARK v. TAYLOR et al.
Judges: 
Reporter: Federal Reporter 2d Series
Volume: 163
Pages: 940–953

Head Matter:
CLARK v. TAYLOR et al.
No. 257, Docket 20580.
Circuit Court of Appeals, Second Circuit.
Sept. 22, 1947.
As Revised Oct. 15, 1947.
FRANK, Circuit Judge, dissenting.
A. Walter Socolow, of New York City (Alexander D. Diamond, of New York City, on the brief), for defendant-appellant.
David Schwartz, Atty., Dept. of Justice, of Washington. D. C. (Donald C. Cook, Dir., Office of Alien Property, of Washington, D. C., Harry LeRoy Jones and M. S. Isenbergh, Sp. Assts. to the Atty. Gen., James L. Morrisson and David E. Feller, Attys., Dept. of Justice, both of Washington, D. C, and John F. X. McGohey, U. S. Atty., of New York City, on.the brief), for plaintiff-appellee.
Before CHASE, CLARK, and FRANK, Circuit Judges.

Opinion:
CLARK, Circuit Judge.
At the 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, under a contract between the two. On June 12, 1941, defendant-appellant Propper was appointed temporary receiver of the assets of AKM located in the State of New York, an appointment made permanent by the state court on July 29. Meanwhile on June 14, the President of the United States by Exec. Order 8785, 12 U.S. C.A. § 95a note, 3 CFR, 1941 Supp., p. 225, 6 F.R. 2897, prohibited transfer of Austrian property unless authorized by the Secretary of the Treasury. The Secretary has not authorized any transfer of AKM assets. On July 29, 1941, Propper sued Taylor, representing ASCAP, in the New York state courts to recover the sums allegedly due. This suit has not yet been finally adjudicated. On September 4, 1943, the Alien Property Custodian, plaintiff's predecessor, vested in himself all assets held by ASCAP for the Austrian organization. ASCAP refused the Custodian's demand for a turnover of the sums allegedly due, and the Custodian brought this suit in the District Court, against both Taylor, as president of ASCAP, and Propper, to secure the turnover and a declaration that Prop-per had no right to the fund. On plaintiff's motion the District Court granted summary judgment against Propper on the ground of his lack of right or title to the funds as state court receiver and also denied his cross-motion for- judgment. D.C.S.D.N.Y., 70 F.Supp. 202. From this order Propper has appealed. The action still remains pending against Taylor, who has not taken part in the presentation of the appeal.
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 some 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 of unspecified royalties, but alleging as a separate defense the collection by AKM of royalties owed ASCAP "in excess of many thousands of dollars," leaving a large unpaid balance in favor of ASCAP. Not only does this present an important and extensive issue of fact — and perhaps also an issue of law as to the right of setoff— but the references in the affidavits to the extensive and bitterly fought state suit brought by Propper for these funds, contested by ASCAP, with several trips to the Appellate Division and one to the Court of Appeals of the State, and with trial not yet had, show its controlling importance in the final disposition of this litigation.
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., 157 F.2d 1012; Photometric Products Corporation v. Radtke, 2 Cir., 157 F.2d 849; United States ex rel. Weinstein v. Bressler, 2 Cir., 160 F.2d 403, 405; Studer v. Moore, 2 Cir., 153 F.2d 902; Atwater v. North American Coal Corporation, 2 Cir., 111 F.2d 125; Hohorst v. Hamburg-American Packet Co., 148 U.S. 262, 13 S.Ct. 590, 37 L.Ed. 443.
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 claim. 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 not change this substantial identity so as to support piecemeal appeals. See Petrol Corporation v. Petroleum Heat & Power Co., 2 Cir., 162 F.2d 327, and cases and authorities there cited. Here the central fact concerns the royalties collected by AS CAP for AKM and by AKM for AS-CAP and the legality and fact of offset between them. That AKM's right or title may have devolved to Propper does not change or lessen the importance of this question. It may add, and apparently here has added, another legal issue of some importance; but such an issue may arise as to any parties to a dispute. Thus here conceivably a question might arise as to the capacity and right of Taylor to sue for ASCAP; certainly a question would arise if any attempt has been made to make AKM itself a party. Further, an assignment by act of the parties or by act of law does not change the cause or ground of action, though it may add complications. Here, for example, we have seen the possibilities of lengthy litigation on the substantive issue as to the existence of a balance due from the royalties. While the parties, by the vigor and ability shown in their briefs and arguments, have made the issue as to the effect of the receivership one of interest, it still remains one of applying a comparatively few legal principles to undisputed facts, as Judge Coxe's opinion discloses. The mere device of assignment, voluntary or by act of law, is not an adequate basis for the overturn of the settled federal rule against the appealability of interlocutory orders not granted by special statutes. Studer v. Moore, supra.
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., 252 U.S. 521, 40 S.Ct. 357, 64 L.Ed 697; Bank of Rondout v. Smith, 156 U.S. 330, 15 S.Ct. 358, 39 L.Ed. 441; Hunteman v. New Orleans Public Service, Inc., 5 Cir., 119 F. 2d 465, certiorari denied 314 U.S. 647, 62 S.Ct. 89, 86 L.Ed. 519; cases cited supra. As applied, the rule has not been extended to claims of intervention in receivership proceedings or otherwise which Have been treated as separate and distinct from the original proceedings. Collins v. Miller, 252 U.S. 364, 370, 371, 40 S.Ct. 347, 64 L.Ed. 616. Further, the advent of the new federal rules permitting substantially unlimited joinder of claims led to the provisions of Rule 54(b), Federal Rules of Civil Procedure, ascribing finality to separate claims on separate transactions, even within the confines of a single civil action, as the Supreme Court held in Reeves v. Beardall, 316 U.S. 283, 62 S.Ct. 1085, 86 L.Ed. 1478, and we are holding in California Apparel Creators v. Wieder of California, Inc., 2 Cir., 162 F.2d 893. While the purpose was clear, difficulties in its application, particularly in this circuit, have led to the suggestion of the amendment to Rule 54(b) in the direction of more specific requirements of finality — an amendment which has been adopted, but is not yet effective. In all this we see no purpose or plan to modify the federal principle; indeed it has been strongly reiterated. Catlin v. United States, 324 U.S. 229, 233, 234, 65 S.Ct. 631, 89 L.Ed. 911; and see also United States v. Florian, 312 U.S. 656, 61 S.Ct. 713, 85 L.Ed. 1105.
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.
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., 162 F.2d 327; Audi Vision, Inc., v. RCA Mfg. Co., 2 Cir., 136 F.2d 621, 147 A.L.R. 574; Libbey-Owens-Ford Glass Co. v. Sylvania Industrial Corporation. 2 Cir.. 154 F.2d 814,. certiorari denied Sylvania Industrial Corporation v. Libbey-Owens-Ford Glass Co., 328 U.S 859, 66 S.Ct. 1353, 90 L. Ed. 1620. Iu the ease of Zarati S. S. Co. v. Park Bridge Corporation, 2 Cir., 154 F.2d 377, the court divided as to whether the rights and claims of the parties there pressed were "intertwined"; they were not, as here, so intertwined that one depended on a finding of the absence of the other.
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, 5 Wall. 819, 72 U.S. 819, 18 L.Ed. 613; Great Lakes Towing Co. v. St. Joseph-Chicago S. S. Co., 7 Cir., 253 P. 635, with explanation at 637, certiorari denied 248 U.S. 578, 39 S.Ct. 20, 63 L.Ed. 430; compare the distinctions made as to the former case in the Hohorst case, supra, and in Nyanza S. S. Co. v. Jahncke Dry Dock No. 1, 264 U.S. 439, 44 S.Ct. 355, 68 L.Ed. 777, Brandéis, J., the last times it has been cited in the Supreme Court. Not all these exceptions are clear; witness the question as to interpleader discussed in 2 Moore's Federal Practice, § 22.13. Here, too, a definite rule is to be desired.
Such eases, like Collins v. Metro-Goldwyn Pictures Corporation, 2 Cir., 106 F.2d 83, and Zalkind v. Scheinman, 2 Cir., 139 F.2d 895, certiorari denied 322 U.S. 738, 64 S.Ct. 1055, 88 L.Ed. 1572, dealing with separate and distinct claims, are hence not in point here.
Probably induced by the local state practice allowing numerous interlocutory appeals, which is said to be a ground for 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., 4 F.R.D. 124, 126); 56 Yale L.J. 141; 47 Col.L.Rev. 239, 254; and cf. Advisory Committee's Note to F.R. 54 (b) in its Report of June, 1946, pp. 70-72.