Case Name: NORTH AMERICAN CO. v. LANDIS et al.; AMERICAN WATER WORKS & ELECTRIC CO. v. SAME
Court: United States Court of Appeals for the District of Columbia
Jurisdiction: United States
Decision Date: 1936-06-22
Citations: 85 F.2d 398
Docket Number: Nos. 6654, 6655
Parties: NORTH AMERICAN CO. v. LANDIS et al. AMERICAN WATER WORKS & ELECTRIC CO. v. SAME.
Judges: 
Reporter: Federal Reporter 2d Series
Volume: 85
Pages: 398–407

Head Matter:
NORTH AMERICAN CO. v. LANDIS et al. AMERICAN WATER WORKS & ELECTRIC CO. v. SAME.
Nos. 6654, 6655.
United States Court of Appeals for the District of Columbia.
Decided June 22, 1936.
F. D. McKenney, John S. Flannery, G. Bowdoin Craighill, and John E. Larson, all of Washington, D. C., and John C. Higgins, of New York City, and Joseph P. Tumulty, of Washington, D. C., for appellants.
Homer S. Cummings, Robert H. Jackson, Benjamin V. Cohen, and Robert E. Kline, Jr., all of Washington, D. C., for appellees.
Before MARTIN, Chief Justice, and VAN ORSDEL, GRONER, and STEPHENS, Associate Justices.
Writ of certiorari granted 57 S. Ct. 30, 81 L. Ed. —. Decree reversed 57 S. Ct. 163, 81 L. Ed. —.

Opinion:
VAN ORSDEL, Associate Justice.
This is a special appeal from an interlocutory order of the Supreme Court of the District of Columbia staying further proceedings in plaintiffs' suits against the appellees, defendants below. The order staying further proceedings in these suits was passed to await final determination by the Supreme Court of the United States in the case of the Securities and Exchange Commission v. Electric Bond and Share Company et al., now pending in the District Court of the United States for the Southern District of New York, or until such time as the case is otherwise terminated.
These suits are for injunctions to restrain the defendants, on the ground of unconstitutionality, from enforcing the provisions of an act of Congress approved August 26, 1935, Public, No. 333, c. 687, title 1, 74th Cong., 1st Sess., 49 Stat. 803, 15 U.S.C.A. § 79 et seq., entitled, "An Act To provide for control and regulation of public-utility holding companies, and for other purposes." The plaintiffs are holding companies of the class which is required by the act to register with the Securities and Exchange Commission not later than December 1, 1935. Plaintiffs have not registered, and in their bills declare their intention not to register.
The North American Company filed its bill on November 26, 1935, and the American Water Works and Electric Company, Incorporated, filed its bill the next day. The bills invoke the equitable jurisdiction of the court because of irreparable injury which it is averred the act is already causing plaintiffs, and which plaintiffs will continue to suffer in ever increasing measure until final relief is afforded. The bills set forth fully the basis of the court's jurisdiction, the nature and character of plaintiffs' business, the provisions of the act applicable to the plaintiffs, the grounds for plaintiffs' belief that defendants intend to enforce the act against them, the reasons why plaintiffs are irreparably damaged through the threatened enforcement against them by defendants of the provisions of the act, that this damage will be sustained whether plaintiffs register under the act or not, and the reasons why, in the judgment of the plaintiffs, the act is unconstitutional.
Simultaneously with the. filing of the bills in the plaintiffs' cases, the Securities and Exchange Commission, hereinafter referred to as the Commission, filed a bill against the Electric Bond & Share Company and five of its corporate subsidiaries in the United States District Court for the Southern District of New York. That case will be hereinafter referred to as the Bond & Share Case. At approximately the same time that plaintiffs filed their bills, some 48 other bills were filed in the various United States District Courts by other companies seeking substantially the same relief as that sought by the plaintiffs, and at about the same time, and prior to December 1, 1935, five other holding companies filed bills in the Supreme Court of the District of Columbia, seeking substantially the same relief sought by the plaintiffs.
On December 7, 1935, before any answer had been filed by the defendants herein, or by the defendants in any of the above-mentioned suits in the federal District Courts, or by the defendants in the Bond & Share Case, the defendants herein moved for a stay of proceedings to await the final determination of the Bond & Share Case. The grounds advanced in support of the motion for the stay were the pendency of the above-mentioned 48 suits in the federal courts; that the Commission had instituted the Bond & Share Case for the purpose of determining the constitu tionality of the act, and that it would be prosecuted with all due diligence to the Supreme Court; that the other pending suits would "tend to clog the courts, overtax the facilities of the Government, and make against that orderly and economical disposition of the controversy that is the Government's aim."
On hearing the court sustained the motion in the following order:
"This cause coming on to be heard upon motion of the defendants to stay further proceedings herein filed December 7, 1935, the Court having considered the pleadings and the arguments of counsel, and briefs having been submitted herein, it is this 9th day of January, 1936:
"Ordered, adjudged and decreed, that further proceedings herein be and are hereby stayed, upon the .terms and conditions as set forth in the Opinion of this Court in this cause filed herein the 6th day of January, 1936."
In the course of his opinion the court called attention to the grounds upon which plaintiffs opposed the motion for the stay, to the tender of the defendants to submit to a temporary injunction pending a decision by the Supreme Court in the Bond & Share Case, and to the contention of plaintiffs "that many of the questions as to the constitutionality of the act involved in these cases are not involved in the Electric Bond and Share Case, and that even if the defendants were temporarily enjoined the plaintiffs would in the meantime suffer irreparable injury by the existence of this act upon the statute books, which would affect the validity of their contracts, their transfer of stocks, and other similar matters."
The court then said:
"In the instant case the relief sought by the plaintiffs is first a relief by injunction against the defendants, and second a declaratory judgment to the effect that the Public Utility Holding Company Act violates the Constitution of the United States and that the Act and each .and every part thereof is invalid, null and void.
" ' Courts do not declare statutes constitutional or unconstitutional as such. The judicial function is to determine whether or not under the facts proven at the trial, the application of the legislative enactment to the litigant before the Court invades his constitutional rights.' "
We think, from an examination of the bills in the present cases and the bill in the Bond & Share Case, which appears in the record, that many questions arise in the instant cases which would not and could not be disposed of in the Bond & Share Case. The sole question, therefore, for our consideration is whether' or not the court below was justified in granting the stay in these cases; whether or not in so doing the court abused its discretionary power in the control of its docket.
Unquestionably a court has wide discretionary power in the matter of the order in which cases pending on its docket shall be tried, provided always that undue delay is not occasioned, to the damage of litigants. This power extends to the determination of which of two cases, pending in the same court or in courts of similar jurisdiction and involving the same issues and the same parties, shall be first heard, but this situation does not obtain in the present controversy. These cases are pending in courts of different jurisdictions, the parties are not the same, the issues involved are not such that the determination of one case would constitute a full determination of the others, nor are there present any of the conditions which would justify depriving plaintiffs of their day in court and an opportunity to be heard. Their bills have been filed, and without even an answer on the part of the defendants, or the bringing of the cases to issue, which might tend to clarify the issues involved, plaintiffs have been deprived, by an order of the court, of their day in court and an opportunity to be heard. They have been stopped in limine and denied the privilege of proceeding further for an indefinite period of time, subject to all the uncertainties surrounding the final determination of the Bond & Share Case.
The stay cannot be justified on the ground that the decision in the Bond & Share Case may "simplify" the issues or furnish a "valuable precedent" for the determination of the present cases. Indeed, from a comparison of the bill in the Bond & Share Case with the bills in the instant cases, it is difficult to conclude that a decision of the Bond & Share Case would dispose of all the issues in the present cases. In Rosenberg v. Slotchin, 181 App.Div. 137, 138, 168 N.Y.S. 101, 102, the rule is stated as follows: "It is only where the decision in one action will determine all the ques tions in the other action, and the judgment on one trial will dispose of the controversy in both actions, that a case for a stay is presented. Dolbeer v. Stout, 139 N.Y. 486, 489, 34 N.E. 1102; Ogden v. Pioneer Iron Works, 91 App.Div. 394, 396, 86 N.Y.S. 955; Consolidated Fruit Jar Company v. Wisner, 38 App.Div. 369, 375, 56 N.Y.S. 723."
The Rosenberg Case is also authority for the rule that under no circumstances will a stay in an action be granted until the issues are made.
It is urged that the issues of law in plaintiffs' cases will be greatly simplified by the determination of the Bond & Share Case. "Such a conflict, if it exist, is no valid ground for the staying of the plaintiff's proceedings; nor is there any warrant for such a stay to be found in the uncertainty of the law on any question, however unsettled the law and conflicting the decisions." Jenkins v. Baker, 91 App.Div 400, 402, 86 N.Y.S. 958, 959.
Where it appears a party whose suit is sought to be tried has no remedy against his adversary except m the court in which he has brought his action, the opposing party, not having answered or brought the case to issue, is m a poor position to plead for delay. Nor is the plea of the Department of Justice in the present case that it is not equipped to handle the numerous cases which have arisen, because it is involved m other litigation, a valid ground for a blanket stay in limine of all further proceedings m the present cases for an indefinite and protracted period.
The government of the United States as a litigant has no greater rights than the humblest citizen. While we recognize the difficulty which confronts the Department of Justice in conducting the vast amount of litigation in which the various agencies of the government have become involved, as well as the duty of the courts to be indulgent where possible in the public interest, yet the rights of the citizen are not to be overlooked. lie is entitled to be heard in the courts in defense of his rights, if he honestly believe that they have been invaded to his damage, even by an agency of tire government. These rights may not be disregarded, to the damage of the litigant, because of any question of mere governmental convenience or public interest, and the discretion of the court should not be swayed by any of these considerations so as to deprive the litigant of his day in court and a prompt and speedy trial.
While it is true that a court of equity bas wjde discretion, in the public interest, -n tbe exercise 0f ¡j-s jurisdiction, yet it may not stay its lland because of such interest if by so doing private rights will suffer. Pennsylvania v. Williams, 294 U.S. 176, 185, 55 S.Ct. 380, 79 L.Ed. 841, 96 A. L.R. 1166. That the rights of the plaintiffs in the present cases would suffer by reason of thc stay granted is apparent, since very existence of die act, whether ^cy register under it or not, must of necesslty affect materially the conduct of ^cir business during the pendency of these smts-
The order is reversed,
GRONER, Associate Justice.
Very shortly after this suit was begun, the Attorney General filed in the trial court a motion to stay proceedings. In the motion he said that there had been filed in ten District Courts of the United States at least forty-eight bills of complaint in behalf of 147 plaintiffs, all of which similarly sought to enjoin the enforcement of the Act of Congress approved Aug. 26, 1935, known as the Public Utility Holding Com pany Act of 1935. I he Attorney General informed the court that he was anxious to secure an early determination of the constitutionahty of the act, and to that end he had had the Commission institute a suit in the Southern District of New York against Electric Bond & Share Company and that the suit would be prosecuted with due diligence to secure from the Supreme Court an authoritative determination of the validity of the act. On the ground that the pending suits would clog the courts and overtax the facilities of the government and militate against an orderly disposition of the controversy, he asked the court to stay proceedings in the instant case. The Attorney General offered to submit to a temporary injunction pending a decision by the Supreme Court in the Electric Bond & Share Case. The court, after hearing, entered an order staying all proceedings pending a decision by the Supreme Court, on condition that the Bond & Share Case be diligently prosecuted.
On this appeal the question for our decision is whether the lower court had the right and power to enter the order, and, if it had the power, whether the entry of the order in the form in which it appears was an abuse of discretion.
Undoubtedly a federal District Court may grant a stay in a cause pending before it and may enter such other orders as may be necessary to control the progress of the cause in the interest of justice. Ordinarily such orders are within the sound discretion of the court. ' A stay of proceedings is sometimes granted for the accommodation of counsel, sometimes because of the absence of witnesses, sometimes because of illness on the part of counsel or witnesses, sometimes to avoid a multiplicity of suits, sometimes to avoid a conflict of jurisdictions, .and perhaps for other grounds which do not occur to me at the moment — all of which show that the right exists. But in every instance that I know of in which a stay has been asked and opposed, the right, where it has been exercised,- has been exercised with caution and with the assurance on the part of the court that the rights of the plaintiff will not suffer by the delay. Any other course would be obstructive of justice.
Here the learned judge of the lower court points out that the defendants have offered to submit to a temporary injunction pending a decision by the Supreme Court in the Electric Bond & Share Case; and this, he says, will afford just as full relief as a decision in this suit holding the challenged act of Congress unconstitutional. If, from an examination of the record, I could say that the court's conclusion in this.respect were correct, it would be difficult to find any reason for disturbing the order; but I think the conclusion is not sustainable. As is stated by Judge VAN ORSDEL, there is a marked difference between many of the issues in this case and in the Bond & Share Case due primarily to a different corporate setup; and careful examination of the act and of the purposes of the two suits shows that, even though the act of Congress may be constitutional as to the Bond & Share Company, it may be unconstitutional as to these plaintiffs; in short, that a decision in the one case will not foreclose all questions in the other. Nor is there doubt that the provisions of the act, even if they ultimately be held unconstitutional, seriously affect the business and affairs of these plaintiffs pending the determination of that question. In that view they are clearly entitled to a speedy trial. "The very essence of civil liberty certainly consists in the right of every individual to claim the protection of the laws, whenever he receives an injury." Marbury v. Madison, 1 Cranch 137, at page 163, 2 L.Ed. 60. But I mention these matters merely in passing. In my opinion the order entered by the lower court is not such a stay order as a court ought ever to enter as a matter of discretion.. It is substantially an injunction against these plaintiffs, preventing them for an indefinite period from litigating a question of legal rights which they insist the act of Congress unlawfully impairs. If, instead, the stay had been temporary, if the court had announced that it would not set the case for trial except at the reasonable convenience of the parties, I would think its action well within its discretion. But here we are confronted with an order restraining' litigants from prosecuting their case, grounded upon the theory that, because it would seriously inconvenience the Attorney* General to try a number of cases at one time, a selection may be made and the others suspended, not temporarily, for that in the circumstances would have been reasonable and proper, but indefinitely, even where the parties are different and the rights and interests not identical.
In addition to all of this, the motion was made without bringing the case to issue.' No answer or pleadings of any kind in defense have been filed. The order was entered at the very threshold of the court. In any case, this is premature. The trial court should require defendants to bring the case to issue and then, if the circumstances are such as indicate that no harm will be done in a reasonable postponement of the trial, it may very well be that the court, in the exercise of its discretion, can delay the trial temporarily; in other words, take such action in relation to the progress of the cause on its own docket as may then seem to it equitable and fair. But the present order goes beyond that limit, and in that respect was improvidently entered.