Court Opinion

ID: 6912800
Source: CourtListenerOpinion
Date Created: 2022-07-23 22:29:46.614278+00
Date Added: 2024-06-11T16:06:31.947069
License: Public Domain

FRANK, Circuit Judge
(concurring).
I concur in the decision, but I think my colleagues travel the wrong road to reach the correct conclusion.
1. Of course, the “enforcing court” (i. e. the court which enforced the S. E. C. order approving the plan) had exclusive jurisdiction of everything relating to the plan and to the allocation of the assets of the reorganized company, i. e. the allocation of securities issued pursuant to the plans. Of course, too, that court’s injunction prohibited the plaintiffs from taking any steps whatever, except in the enforcing court, to obtain a larger share of the assets of that company. For that reason, among others, this court held that a previous suit by plaintiffs, against the reorganized company itself, could not be maintained. See Nichols v. Long Island Lighting Co., 2 Cir., 207 F.2d 931, and 2 Cir., 211 F.2d 392.
In the present suit, however, plaintiffs do not seek to obtain a larger share of the reorganized company’s assets. Instead — precisely because the judgment of the enforcing court (including its injunction) prevented their doing so— they seek damages, not from the company, but from persons who, so plaintiffs allege, wrongfully brought about that judgment. In other words, the present suit is based upon a tort consisting of the alleged harm done to plaintiffs by the wrongful conduct of the defendants. If plaintiffs were to win in the present suit, they would indeed have more than the securities allotted to them under the plan. But that added recovery would in no way diminish the assets of the reorganized company, nor would it be at the expense of the other participants in the plan. Consequently, I cannot agree that plaintiffs seek to “assert a right extinguished by the decree” in the reorganization proceedings.
I think when B, by certain kinds of fraudulent conduct, helps to bring about a judgment adverse to A in a suit by A against C, then B has committed a tort as against A, so that A may maintain an action for that tort against B. Such a tort action is not a collateral attack on the judgment adverse to A in his suit against C.1 ******To be sure, it is generally held that, if the wrongful conduct of B consisted solely of perjury at the trial in the suit between A and C, that wrong is not actionable; the most cogent reason for such rulings is that, on grounds of policy, the courts regard such an action, based upon such perjury, as undesirable, because the fear of such a possible action may tend to induce honest witnesses not to testify.2 *81But here the plaintiffs charge the defendants with a general conspiracy— involving fraud on the S. E. C. and the enforcing court — of which perjury in the reorganization proceedings was but an incident.3 Accordingly, I think that in bringing the present suit (1) the plaintiffs did not violate the injunction, and (2) that this suit cannot properly be dismissed on the ground that the enforcing court in the reorganization proceedings had exclusive jurisdiction of such a nature as to bar the present suit.
2. The correct basis for dismissing the complaint is, I think, the following: In the reorganization proceedings — including those in the enforcing court and on appeal from its judgment — the very facts which plaintiffs now assert were considered, and findings on those facts were made adverse to plaintiffs. See Common Stockholders Committee, etc. v. S. E. C., 2 Cir., 183 F.2d 45, and In re Long Island Lighting Co., 2 Cir., 197 F.2d 709. Indeed, when this court decided against these plaintiffs in their suit against the company, it did so, in part, on that very ground; see Nichols v. Long Island Lighting Co., 2 Cir., 207 F.2d 931, 934, and 2 Cir., 211 F.2d 392, 393. As the decision in that suit against the company did not rest on a trial at which testimony was received (or the equivalent), and as there were no findings of fact, it probably did not, itself, give rise to a collateral estoppel here.4 But we surely can and should accept that decision as the most reliable sort of stare decisis to the effect that the previous decision in the reorganization case did operate as a collateral estoppel as to the facts which plaintiffs now allege.
Most of the present defendants were, I think, sufficiently “in privity” with the company, and with others opposed to the present plaintiffs in the reorganization proceedings, so that the findings in the reorganization proceedings constitute a collateral estoppel which precludes this suit.5
As to the others, the district judge dismissed the complaint, as a sham pleading, on the basis of facts stated in the defendant’s affidavits and facts appearing in the record of the reorganization proceedings. Those statements of fact flatly denied, as to these defendants, the allegations of the unsworn complaint. In effect, as to these defendants, the judge entered a summary judgment. Plaintiffs filed no counter-affidavit disputing the facts as asserted in the affidavits and appearing in the record. Since those facts were not at all peculiarly within the knowledge of the defendants, I think inapposite the doctrine enunciated in such eases as Subin v. Goldsmith, 2 Cir., 224 F.2d 753, 755, 757-761, and in Alvado v. General Motors, 2 Cir., 229 F.2d 408.
My colleagues in footnote 11 of their opinion say that, since the complaint lacks allegations “to the effect that the S. E. C. was fraudulently induced to exert a jurisdiction over the Long Island which, in actual fact, did not exist, the complaint does not show that the *82plaintiffs have been wronged in this regard.” To that extent, my colleagues justify a dismissal on the merits. I incline to agree. But my colleagues do not rest their decision on that ground.

. A asserts that B, by his fraudulent conduct, intentionally harmed A; A thus shows a prima facie tort. B must therefore defend on the ground that his conduct is immune from liability. He attempts to do so thus: “I admit, arguendo, that I committed the alleged fraud; but I am not liable, simply and solely because the judgment adverse to A, in his suit against 0, is a bar.” I think such a defense is untenable.
A judgment may be the means by which a fraudulent conveyance is accomplished. Northern Pacific R. v. Boyd, 228 U.S. 482, 33 S.Ct. 554, 57 L.Ed. 931; Glenn, Fraudulent Conveyances (1944) s. 224; Frank, Some Realistic Reflections on Corporate Reorganizations, 19 Va.L.Rev. (1933) 541. A judgment creditor of tbe debtor may pursue the grantees of that conveyance without attacking or disturbing the judgment. If he sues one who is not a grantee but who aided in bringing about the fraudulent conveyance, his action is one for a tort; see Glenn, Fraudulent Conveyance (1940) Sec. 56; Phelan v. Middle States Oil Corp., 2 Cir., 220 F. 2d 593, 615-616; cf. Findlay v. Mc-Allister, 113 U.S. 104, 114, 5 S.Ct. 401, 28 L.Ed. 930.

. Godette v. Gaskill, 151 N.C. 52, 53, 65 S.E. 612, 24 L.R.A.,N.S., 265; Stevens v. Rowe, 59 N.H. 578; Hocker v. Welti, 239 Ill.App. 392, 397.

. Cf. Robinson v. Missouri Pacific Transp. Co., D.C., 85 F.Supp. 253, 258; Verplanck v. Van Buren, 76 N.Y. 247 as interpreted in Burbrooke Mfg. Co. v. St. George Textile Corp., 283 App.Div. 640, 129 N.Y.S.2d 588 and in Anchor Wire Corp. v. Borst, 278 App.Div. 728, 102 N.Y.S.2d 871, 873; Dictograph Products Co., Inc., v. Sonotone Corp., 2 Cir., 231 F.2d 867 (C.A. 2, March 28, 1956).
Most of those cases dealt with collateral attacks; their reasoning therefore applies a fortiori to a case like the instant case.
Dictograph Products Corp., Inc. v. Sonotone Corp., supra, disposes of the intrinsic-extrinsic fraud distinction in tho federal courts, even in a collateral attack suit.

. Lawlor v. National Screen Service Corp., 349 U.S. 322, 326, 75 S.Ct. 865, 99 L.Ed. 1122.

. See, e. g., Judge Goodrich’s concurring opinion in Bruszewski v. United States, 3 Cir., 181 F.2d 419, 423; Adriaanse v. United States, 2 Cir., 184 F.2d 968.