Court Opinion

ID: 6922978
Source: CourtListenerOpinion
Date Created: 2022-07-23 23:08:17.661733+00
Date Added: 2024-06-11T16:06:51.218549
License: Public Domain

HAYS, Circuit Judge
(concurring).
I concur in the result on the ground that appellants are entitled to intervene as of right under Rule 24(a) (3) for the reasons stated in the opinion of the court. It is my view, however, that the opinion, insofar as it would grant intervention under Rule 24(a) (2), is contrary to the prevailing, and correct, interpretation of that section.
Rule 24(a) (2) provides for intervention as of right
“when the representation of the applicant’s interest by existing parties is or may be inadequate and the applicant is or may be bound by the judgment in the action.”
While the government’s representation of the appellant’s interests “may be inadequate,” appellant will not be “bound” by the judgment in this action.
The Notes of The Advisory Committee on Rule 24 state that “[t]his rule amplifies and restates the present federal practice at law and in equity * * * See generally Moore and Levi, Federal Intervention: I The Right to Intervene and Reorganization (1936), 45 Yale L.J. 565.” See also Proceedings of the Institute on *865Federal Rules 265-66 (Cleveland, Ohio, July 21-23, 1938) (rule intended to codify and clarify existing law, citing Moore and Levi, supra); Proceedings of the Institute on Federal Rules 67 (Washington, D. C., Oct. 6-8, 1938) (remarks of Dean, now Judge, Clark citing Moore and Levi, supra, for explanation of the operation of the rule).
The cited article, upon which complete reliance was placed by the framers of the rule for an exposition of its purpose, makes perfectly clear that “bound by the judgment in the action” was used and understood exclusively in the sense of a judgment which would be res judicata as to the intervenor’s rights and which would legally preclude further litigation of those rights. 45 Yale L.J. at 591; Accord 4 Moore, Federal Practice ¶24.08 (2d Ed. 1950).
The Supreme Court has so interpreted Rule 24(a) (2). In Sutphen Estates, Inc. v. United States, 342 U.S. 19, 72 S.Ct. 14, 96 L.Ed. 19 (1951), a case involving a reorganization of Warner Bros, under a Sherman Act decree, intervention was sought for the purpose of protecting a' guarantee made by the corporation. Intervention was denied by the Supreme Court:
“Appellant, however, is not a privy of Warner; its rights not only do not derive from Warner, they are indeed adverse to Warner. The decree in this case, like that in Credits Commutation Co. v. United States, 177 U.S. 311, 20 S.Ct. 1636, 44 L.Ed. 782, therefore is not res judicata of the rights sought to be protected through intervention.”
342 U.S. at 21, 72 S.Ct. at 16. Accord Sam Fox Publishing Co. v. United States, 366 U.S. 683, 81 S.Ct. 1309 (1961).
The language of the Court in Sutphen applies exactly to the case at bar. Appellants are privies of neither plaintiffs below nor the government and their interests are adverse to both. A judgment would not be res judicata of the rights sought to be protected through intervention. Indeed appellants concede that if intervention is not permitted and plaintiffs prevail in the main action, “the appellants will be forced to institute an action in New York against the plaintiffs for the purpose of turning over the said property to IMC.” Similarly the principle of res judicata would not prevent an action by appellants against the government. They cannot bring such an action only because they are barred by the running of the limitations period.
The opinion of the Court suggests that the applicants may be “bound” by a judgment for the plaintiffs because it may result in the property being put outside their reach. Whether or not this is so, it is clear that it is subdivision three of Rule 24(a) which is applicable to the situation. Subdivision three is designed for precisely the purpose of protecting a claimant of specific property which may be distributed as a result of a judgment in the action. The court thus relies upon a reason which is the very reason for the existence of subdivision three as the basis for expanding subdivision two beyond its proper scope. In this case the result is the same, but in other contexts the court’s interpretation of the rule would create an absolute right to intervene in situations in which the trial court should exercise discretion, situations in which applicant will be no more than inconvenienced by non-intervention, and the trial court should be permitted to weigh the various equitable considerations that should enter into a decision on the question of permissive intervention. The court’s opinion tends to obliterate the distinction between intervention as of right and permissive intervention. Rule 24(a) (2) and (3) require that applications to intervene be granted regardless of considerations of trial convenience, introduction of extraneous issues, confusion and delay whenever the judgment may permanently foreclose applicant from the assertion of his rights, either because the judgment will have a res judicata effect or because specific property may be dispersed. Rule 24(b) *866requires that “[i]n exercising its discretion [as to whether to permit] the court shall consider whether intervention will unduly delay or prejudice the adjudication of the rights of the original parties.” The majority opinion is in error in its use of 24(b) criteria to support the conclusion that 24(a) (2) is applicable.
It is true that in Kaufman v. Societe Internationale, 343 U.S. 156, 72 S.Ct. 611, 96 L.Ed. 853 (1952), an action for the recovery of property under the Trading with the Enemy Act, stockholders of plaintiff corporation were permitted to intervene under 24(a) (2), although the opinion indicates that they would not have been bound by the judgment. The importance of-the Kaufman opinion was in establishing the right of stockholders to assert rights under the Trading with the Enemy Act separate from those of their corporation. Having established that principle, Mr. Justice Black added, almost, it seems, as an afterthought, that the stockholders were entitled to intervene under Rule 24(a) (2). The opinion did not consider the proper interpretation of the term “bound,” but cited Sutphen Estates v. United States, supra, as the sole authority for its conclusion. As noted above, the Sutphen opinion strongly supports the res judicata requirement of 24(a) (2). It may be further pointed out that Kaufman was a proper ease for the application of 24(a) (3) and the result was therefore correct under any view of the law. In any event, the Court in Sam Fox Publishing Co. v. United States, supra, decided during the last term of the Court, made it very clear, citing Sutphen but not mentioning Kaufman, that its present conception of Rule 24(a) (2) limits its application to cases in which the judgment in the main action would legally preclude the applicant under the rule of res judicata.
“[A]ppellants argue that even should they not be legally precluded from bringing a private action, nevertheless the very existence of the outstanding decree would as a matter of comity either preclude further relief or operate to limit the relief some future equity court might decree. Although there is no reason why such a court need consider the present decree as anything but a minimum towards insuring broader representation and more favorable income distribution should a claim for further relief be made out, there is considerable weight to the argument that the court will feel constrained as a matter of comity at least to build on the foundations of the present decree. Cf. United States v. Radio Corporation, [D.C.] 3 F.Supp. 23. However, it is abundantly clear that this effect is not at all the equivalent of being legally bound, which is what must be made out before a party may intervene as of right. See Credits Commutation Co. v. United States, 177 U.S. 311 [20 S.Ct. 636, 44 L.Ed. 782]; Sutphen Estates, Inc. v. United States, supra; Cameron v. President and Fellows of Harvard College, [1 Cir.] 157 F.2d 993; Jewell Ridge Coal Corp. v. Local No. 6167, [D.C.] 3 F.R.D. 251” (366 U.S. at 694, 81 S.Ct. at 1315).