Opinion ID: 290727
Heading Depth: 1
Heading Rank: 2

Heading: the intervening issue

Text: 8 We turn next to consideration of the question whether intervention by the United States was proper under Fed.R.Civ.P. Rule 24. The Government intervened here not because the underlying issues were of public concern, but simply because it wanted to assert a lien (unrelated to the underlying issues) on a fund before the court. Subsection (a) of Rule 24 provides for intervention of right upon timely application when either (1) a statute of the United States confers an unconditional right to intervene or (2) the applicant claims an interest relating to the subject of the action which may as a practical matter be impaired unless intervention is allowed and which is not adequately represented by existing parties.
9 The Government asserts that a statute, Int.Rev.Code of 1954 7424, afforded it an unconditional right to intervene in this case. Section 7424 provides that 'If the United States is not a party to a civil action or suit, the United States may intervene in such action or suit to assert any lien arising under this title on the property which is the subject of such action or suit'. On its fact, this language seems unconditional. The issue is rendered somewhat doubtful, however, by further language providing for the preservation of any valid lien in the event the Government's application to intervene is denied, a provision that obviously recognizes the possibility of denial. The legislative history of the statute, furthermore, lends some support to appellant's contention that the right is not intended to be absolute. 1 We find, however, that actually we do not need to consider the question whether 7424 gives an unconditional right to intervene because the conditions required by the second subsection of Rule 24(a) are met in this case. 10 This latter intervention provision requires three things: (1) the assertion of interest in the subject of the action, (2) a possibility that the disposition of the action may as a practical matter impede protection of the interest, and (3) inadequacy of representation of the interest by existing parties. Appellants contend that the intervention here fails to meet the Rule in all three respects. They first argue that the Government does not assert a sufficient interest in the subject of the action. It is true that, even though Rule 24(a)(2) provides that propriety of intervention is to be tested by practical considerations, intervention still requires a 'direct, substantial, legally protectable interest in the proceedings.' Hobson v. Hansen, D.D.C.1968, 44 F.R.D. 18, 24. We do not believe, however, that the interest has to be of a legal nature identical to that of the claims asserted in the main action, as appellants seem to suggest. All that is required by the terms of the rule is an interest in the property or other rights that are at issue, provided the other elements of intervention are present. The cases cited by appellants are cases in which intervention was denied because the interest was speculative or had no legally protectable nature. 2 By contrast, the Government in this case is asserting a tax lien, clearly a legally cognizable interest in property, which it seeks to attach to a res that is before the court. Interests in property are the most elementary type of right that Rule 24(a) is designed to protect. Cascade Natural Gas Corp. v. El Paso Natural Gas Co., 1967, 386 U.S. 122, 129, 87 S.Ct. 932, 936, 17 L.Ed.2d 814; Atlantis Dev. Corp. v. United States, 5th Cir. 1967, 379 F.2d 818, 826. We hold that the Government is asserting an interest in the property that is the subject of the suit within the meaning of Rule 24(a). 11 Appellants also contend that the Government has not shown that it may be impeded as a practical matter in protecting its interest if intervention is denied. This argument is based upon the undeniable proposition that if the Government is not in the suit, it will not be affected by stare decisis, res judicata, the law of the case, or any other doctrine that could render its claim incapable of legal enforcement. The Government, we recognize, could simply file an independent suit once the winners of the present action were determined. The soundness of this premise, however, is no guarantee against sophistry in the conclusion. Obviously, legal concepts do not completely determine practical relationships, and that is the reason the rule is written as it is. Trefina is a Swiss corporation. As appellants themselves point out, the United States cannot get in personam jurisdiction over it to here. 3 We have no difficulty in holding that a decision resulting in the necessity of the United States bringing a lien action in the Swiss courts, to assert rights in property that is now being adjudicated by a court of the United States, would 'impede' the protection of those rights 'as a practical matter' within the meaning of Rule 24. Cf. Cascade Natural Gas Corp. v. El Paso Natural Gas Co., supra. This is especially so since Congress itself has expressly recognized the inadequacy of separate tax lien proceedings in cases of this nature by its enactment of 7424, the statute relied upon by the Government. 12 Finally, appellant asserts that the rights of the Government are adequately protected by the existing parties to the main action. We disagree. Appellant is correct in stating that the Government is adequately represented as to the issue of Trefina's recovery from Southeastern. Trefina entered the suit with the sole purpose of effecting this recovery. Nonetheless, the argument is lacking in merit. Appellant ignores the fact that no existing party to the suit views the Government's tax lien favorably. Certainly Trefina does not. Where the supposed representative actually represents an interest adverse to the intervenor, the representation is obviously not adequate. See Martin v. Kalvar Corp., 5th Cir. 1969, 411 F.2d 552, 553. 13 Since the Government thus asserts a cognizable interest that is not adequately represented by existing parties and may be impeded as a practical matter if intervention is denied, the requirements of Rule 24(a)(2) are met in this case. The Government accordingly had a right to intervene provided its application to do so was timely. We proceed to examine this question. 14
15 Appellant Trefina points out that the application of the Government to intervene came a little over a year after the commencement of this litigation and approximately a year after the date that the Government clearly knew of the suit. Trefina also asserts that the application was filed only five days before trial. This contention misrepresents the circumstances, because the case had been broken into two separate lawsuits, and the United States was not concerned in the one that was set five days after the application. The trial court informed the parties that it would hold a hearing on the intervention before that trial was over, and it did so. At the time of the intervention, there had been no legally significant proceedings in the second of the two lawsuits other than completion of discovery and a pretrial that determined that there were to be two separate suits. There is no showing of any delay in the process of the overall litigation by the Government's filing of its application at the time it did. 16 Under these circumstances, we clearly cannot hold that the application was untimely. In the first place, timeliness is a question addressed to the sound discretion of the trial court, and we cannot reverse its allowance of the intervention absent an abuse of that discretion. 2 W. Barron & A. Holtzoff, Federal Practice and Procedure 594 (Wright ed. 1961); 3B J. Moore, Federal Practice P24.13(1) (1969). There is no abuse of discretion here. Timeliness of intervention is to be judged by two criteria: (1) The length of time during which the proposed intervenor has known about his interest in the suit without acting, and (2) the harm or prejudice that results to the rights of other parties by delay. In the context of this lengthy, complicated litigation, based on a contract signed over a decade ago, we do not think that the Government forfeited its right to intervene solely by the passage of a year after it knew of the suit. Cf. Kozak v. Wells, 8th Cir. 1960, 278 F.2d 104 (application timely even though a year late); Innis, Speiden & Co. v. Food Mach. Corp., D.C.Del.1942, 2 F.R.D. 261 (application timely after four years); Alleghany Corp. v. Kirby, 2d Cir. 1965, 344 F.2d 571 (application untimely after sixteen months). Furthermore, the more important question is not the mere length of time but the possibility of prejudice to existing parties that the delay may cause. This consideration is to be evaluated against the liberal treatment that is to be accorded applications for intervention of right; such applications 'may well be granted at a time in the suit when it would be wise to deny permissive intervention.' J. Moore, supra at P24.13(1). Since few legally significant events have occurred in the separate part of the case in which the Government is involved, and since many courts have allowed intervention in meritorious cases after trial, after judgment, and even after settlement, see W. Barron & A. Holtzoff, supra at 368 n. 36, J. Moore, supra at 24-526 to 24-528, we cannot find that the time of the application caused prejudice to Trefina's rights of a magnitude sufficient to justify overturning the trial court's decision.