1. In April, 1947, the District Court, after hearing, entered a
decree in a civil proceeding in which the respondent corporation
and others had been allowed to intervene. The decree granted part
of the relief prayed by the corporation, but dismissed its other
claims. The court reserved jurisdiction as to matters which were of
concern to other intervenors but which could not possibly affect
the corporation. In August, 1948, a "final decree" was entered
which did not in any way change the 1947 decree as to the
corporation.
Held: as to the corporation, the 1947 decree was an
appealable final decree; its failure to appeal therefrom forfeited
its right of review, and appeal from the 1948 decree was
ineffective, and should be dismissed. Pp.
338 U. S.
508-516.
2. Rule 54(b) of the Federal Rules of Civil Procedure not having
been in effect at the time of the 1947 decree, this Court does not
determine its effect on cases of this kind. P.
338 U. S.
512.
173 F.2d 738 reversed.
A motion to dismiss an appeal by a corporation from a decree of
the District Court, on the ground that, as to the corporation, an
earlier decree was final and appealable, was denied by the Court of
Appeals. 173 F.2d 738. This Court granted a limited certiorari. 338
U.S. 811.
Reversed, p.
338 U. S.
516.
Page 338 U. S. 508
MR. JUSTICE JACKSON delivered the opinion of the Court.
The only issue presented by this case turns on the finality of a
judgment for purposes of appeal, a subject on which the volume of
judicial writing already is formidable. The Court of Appeals
resolved against finality of the decree in question, saying,
however, that it did so against the unanimous conviction of the
court as constituted, but in deference to a precedent established
by a differently constituted court of the same Circuit. 173 F.2d
738. Because of this intra-circuit conflict, we made a limited
grant of certiorari. 338 U.S. 811. That we cannot devise a form of
words that will settle this recurrent problem seems certain, but,
in this case, we agree with the convictions of the court below, and
reverse its judgment.
Something over a decade ago, Dickinson sued Lloyd, with whom he
had been associated in promoting the Petroleum Conversion
Corporation, along with others, to impress an equitable lien upon
certain of the Corporation's shares then in Lloyd's name and
possession. The District Court dismissed the complaint, but the
Court of Appeals reversed and directed a new trial.
Dickinson
v. Rinke, 132 F.2d. 805. Before retrial, Burnham and Vaughan,
on behalf of themselves and such other stockholders as subscribed
to a fund to aid the company or its predecessor in its
embarrassment, were allowed to intervene. They set up a claim
against both plaintiff Dickinson and defendant Lloyd that the stock
involved in the controversy between them had been fraudulently
issued, and demanded that this stock be canceled. They
Page 338 U. S. 509
also sought recovery of $87,310.28 from them as unlawful profits
secretly realized by breach of their fiduciary duty. Petroleum
Conversion Corporation also intervened, making the same general
allegations and demands for relief. The Corporation and the class
of subscribers thus joined forces to get for one or the other
substantially the same remedy against both Dickinson and Lloyd.
This triangular controversy was tried, and a decree dated April
10, 1947, was entered. The issue here turns on the character of
that decree. It recites twenty-three days of trial, the filing of a
decision, opinion, findings of fact, and conclusions of law, and it
"ordered, adjudged and decreed" that all of the plaintiff
Dickinson's claims be dismissed on the merits; that all of the
defendant Lloyd's claims there pressed by his administrator be
dismissed on the merits; that the class intervenors have judgment
of $174,620.56 against both Dickinson and Lloyd's administrator,
and that a concourse of all these subscribers be provided by which
their several claims could be liquidated and the share of each in
the recovery fixed; that Petroleum Conversion Corporation receive
8,200 shares of its stock in the hands of Lloyd's administrator,
but that its claim to 12,596 additional such shares and its claim
to over 244,000 of its shares in possession of the court be
dismissed, and Petroleum Conversion Corporation was directed to
issue new shares to stockholders of another corporation provided
that, if any shares were not distributed for any reason, they be
redeposited with the court subject to its further order, with
jurisdiction retained by the court to supervise the distribution of
such shares. It dismissed all other claims of Petroleum Conversion
Corporation.
From this decree, Petroleum took no appeal. The District Court
went ahead with hearings to determine claims of over seventy
members of the class to share in the aggregate recovery against
Dickinson and Lloyd's administrator.
Page 338 U. S. 510
On August 3, 1948, the court signed a "final decree" which
apportioned the recovery as between those claimants. It recited
that
"the issues reserved in the decree herein dated the 10th day of
April, 1947, having been determined by the Court . . . the said
decree is hereby made final."
It made no decision as to any issue involving Petroleum, and in
no way changed the 1947 decree as to it. It also awarded costs
which had not been settled in the earlier decree, but made no award
against Petroleum.
Thereupon Petroleum's receiver in bankruptcy appealed from so
much of this 1948 decree as dismissed the claims of Petroleum.
[
Footnote 1] On motion to
dismiss the appeal, the chief question, and the only one we granted
review, was whether the Corporation could have appealed from the
1947 decree, or whether it could only appeal from the 1948 decree.
[
Footnote 2] In deciding this
motion, the court said:
"In the view of all members of the court as it is now
constituted, this should make no difference, for the whole
counterclaim of the Petroleum Conversion Corporation had been
finally disposed of an April tenth, 1947, and, as to it, the action
was at an end as much as though it had been denied the right to
intervene at all; indeed, the judgment was more final, so to say,
because, unlike the denial of a petition to intervene, it was a bar
to any effort to relitigate the claims determined."
173 F.2d at 740. But, because it could find no basis for
distinguishing
Clark v. Taylor, 163 F.2d 940, in which a
differently composed
Page 338 U. S. 511
court in the same Circuit had sustained what appears to be a
contrary position, it held the earlier order not appealable, and
hence no bar to the present appeal. 173 F.2d at 740-741.
Half a century ago, this Court lamented,
"Probably no question of equity practice has been the subject of
more frequent discussion in this court than the finality of
decrees. . . . The cases, it must be conceded, are not altogether
harmonious."
McGourkey v. Toledo & Ohio Central R. Co.,
146 U. S. 536,
146 U. S.
544-545. This lamentation is equally fitting to describe
the intervening struggle of the courts sometimes to devise a
formula that will encompass all situations, and at other times to
take hardship cases out from under the rigidity of previous
declarations; sometimes choosing one and sometimes another of the
considerations that always compete in the question of
appealability, the most important of which are the inconvenience
and costs of piecemeal review, on the one hand, and the danger of
denying justice by delay, on the other. [
Footnote 3]
The liberalization of our practice to allow more issues and
parties to be joined in one action and to expand the privilege of
intervention by those not originally parties has increased the
danger of hardship and denial of justice through delay if each
issue must await the determination of all issues as to all parties
before a final judgment can be had. In recognition of this
difficulty, present Rule
Page 338 U. S. 512
54(b), Federal Rules of Civil Procedure, was promulgated. It
provides:
"When more than one claim for relief is presented in an action,
whether as a claim, counterclaim, cross-claim, or third-party
claim, the court may direct the entry of a final judgment upon one
or more but less than all of the claims only upon an express
determination that there is no just reason for delay and upon an
express direction for the entry of judgment. In the absence of such
determination and direction, any order or other form of decision,
however designated, which adjudicates less than all the claims
shall not terminate the action as to any of the claims, and the
order or other form of decision is subject to revision at any time
before the entry of judgment adjudicating all the claim."
The obvious purpose of this section, as indicated by the notes
of the advisory committee, is to reduce as far as possible the
uncertainty and the hazard assumed by a litigant who either does or
does not appeal from a judgment of the character we have here.
[
Footnote 4] It provides an
opportunity for litigants to obtain from the District Court a clear
statement of what that court is intending with reference to
finality, and if such a direction is denied, the litigant can at
least protect himself accordingly.
But this new rule -- which became effective on March 19, 1948 --
was not in effect at the time of the 1947 decree in this case, and
it would not be appropriate to attempt to determine its effect on
cases of this kind beyond observing that it may do much to prevent
them from coming here. We will not, therefore, try to lay down
rules to embrace any case but this.
Page 338 U. S. 513
We have held than an order denying intervention to a person
having an absolute right to intervene is final and appealable.
Brotherhood of Railroad Trainmen v. Baltimore & Ohio R.
Co., 331 U. S. 519;
Missouri-Kansas Pipe Line Co. v. United States,
312 U. S. 502.
When the application for intervention is denied, the would-be
intervenor is foreclosed from further action in the case, and its
proceedings cannot affect him nor can he affect them. As the court
below observed, it is hard to see why the exclusion of an
intervenor from the case should be less final when it is based upon
the evidence than when it is based upon pleadings. In either case,
the lawsuit is all over so far as the intervenor is concerned.
When its claims were dismissed by the decree of April 1947, any
grievance that Petroleum Conversion Corporation had was fully
matured. [
Footnote 5] At that
point, Petroleum
Page 338 U. S. 514
was out of the case. The decree was not tentative, informal, nor
incomplete as to it, and the case was concluded and closed as to
its counterclaims. The court's reservation of jurisdiction to
supervise the distribution
Page 338 U. S. 515
of the shares of stock and the provision for further proceedings
to determine the individual shares in the aggregate recovery
allowed did not in any manner affect Petroleum's rights. What the
court reserved was essentially supervisory jurisdiction over the
distribution among the class of the recovery awarded the
intervenors as the class' representatives. The only questions were,
so to speak, internal to the intervening interest. Petroleum no
longer had any concern with these questions and, however they were
resolved, Petroleum could not possibly have been affected. The
court obviously selected with deliberation the issues it would
close by the decree and those it would reserve for future decision.
If it had any purpose to leave open any issue concerning
Petroleum's
Page 338 U. S. 516
contentions, or affecting its interests, half a line in the
decree would have done so. But that half-line was not written.
We hold the decree of April 10, 1947, to have been a final one
as to Petroleum, [
Footnote 6]
and one from which it could have appealed, and that its failure to
appeal therefrom forfeits its right of review. Its attempt to
review the earlier decree by appealing from the later one is
ineffective, and its appeal should be dismissed.
Reversed.
MR. JUSTICE DOUGLAS took no part in the consideration or
decision of this case.
[
Footnote 1]
As we have already indicated, however, the 1948 decree did not
dismiss or decide any of Petroleum's claims except insofar as it
may be construed to finalize the 1947 decree.
[
Footnote 2]
If the 1947 decree was final as to Petroleum for purposes of
appeal, Petroleum could not appeal from the 1948 decree.
Hill
v. Chicago & Evanston R. Co., 140 U. S.
52.
[
Footnote 3]
The cases and the policy considerations underlying them are
collected and discussed in 3 Moore's Federal Practice, 1948 Supp.,
172-187; Moore's Commentary on the U.S. Judicial Code, 495-501,
507-518 (1949); Note to Rule 54(b), Advisory Committee's Report of
Proposed Amendments to Rules of Civil Procedure (1946);
Reformulation of the "Final Decision" Rule -- Proposed Amendment to
Rule 54(b), 56 Yale L.J. 141; The Final Judgment Rule in the
Federal Courts, 47 Col.L.Rev. 239; Federal Rule 54(b) and the Final
Judgment Rule, 47 Mich.L.Rev. 233.
[
Footnote 4]
Note to Rule 54(b), Advisory Committee's Report of Proposed
Amendment to Rules of Civil Procedure (1946) 70-72.
See
also authorities cited in
n 3,
supra.
[
Footnote 5]
While it should make no difference as to the law that governs
finality, it is fair to the law and to the court to dispel the
impression that this decision makes the creditors of Petroleum
Conversion Corporation "victims of this jungle of doubt," or
victims of any kind, or that they are in this predicament from a
"failure to guess right on a legal question." This calls for some
further detail irrelevant to the issue of law.
The decree of April 10, 1947, awards the recovery of
$176,245.24, with interest from 1926, to the Rinke Agency
Subscribers as their several shares might be determined. These were
the persons who, in 1926, put up the funds, amounting to some
$600,000, out of which Dickinson and Lloyd withdrew secret profits
in breach of their fiduciary duty to those subscribers. The
Petroleum Conversion Corporation had not been organized at the time
of this breach of faith, and its claim was derived from its
predecessor corporation, for the financial relief of which this
fund was subscribed.
It will thus be seen that Petroleum Conversion's claims as to
the existence of fraud and secret illegal profits were not based
upon any depletion of its own treasury, but of a separate fund
subscribed, of which it might ultimately be a beneficiary. The
repayment of the secret profits was awarded to those who had put up
the money of which they had been defrauded, and was not awarded to
the Corporation. The decree which it now wants to review was
entered on motion of Petroleum's own attorney. Its interests and
those of the intervening subscriber class were handled by the same
attorney at the trial. A single brief and proposed findings of fact
and conclusion of law were jointly submitted by Petroleum and and
other intervenors to the trial court, which left it to the court,
if recovery were allowed, whether the judgment should be in favor
of the Corporation or the subscribers. The court decided the
recovery belonged to the subscribers. It was deliberately decided
not to appeal the court's dismissal of Petroleum's claims under
these circumstances.
The attorney now seeking to prosecute an appeal sought in March
of 1948 to intervene in District Court on behalf of preferred
stockholders. He attacked this cooperation between counsel for the
two intervenors, and particularly the failure of counsel to appeal
the April 10, 1947 decree. As to this charge, the trial judge
said:
"Insofar as their petition for leave to intervene is based on
the charge that the Corporation's [Petroleum Conversion
Corporation's] rights in respect to the $176,000 claim have not
been fully and honestly presented, the history of this litigation,
as set forth in the Court's opinion of October, 1946, and the trial
record show that such charge is baseless. It was in that connection
that the trial court suggested that, '[i]n my opinion, it was not a
final decree, and was not appealable at least insofar as it
involved the claim for $176,000.' But the time to appeal was then
long past, and failure to appeal was not influenced by this
statement, nor, so far as appears, by any bewilderment as to the
finality of the decree. No appeal was prosecuted, because counsel
who had fought and won the principal issues in the case thought
justice had been done by the decree as it stood."
After the final decree, counsel, having been thus criticized,
filed, on September 1, 1948, a notice of appeal from the final
decree. This was on behalf of the trustee for Petroleum, which
meanwhile was adjudged bankrupt.
But the trustee at once laid the inadvisability of the appeal
before the bankruptcy court. He advised the court that
"The trustee is satisfied from his investigation that Judge
Leibell had sufficient evidence and supporting authorities for
finding as he did, and believes that an appeal to the Court of
Appeals would probably be fruitless."
He pointed out that the attorney who now proposes to prosecute
the appeal had objected to its abandonment, but reported that
"[t]he trustee accordingly proposes not to prosecute said appeal,
and petitions the approval of this court." Notice was given to all
creditors of the Corporation, and, "no creditors having objected to
the recommendations of the trustee," it was approved. It was
provided, however, that if any creditor desired to prosecute the
appeal, without liability upon the bankrupt's estate for costs or
expenses unless the appeal was successful, he might do so under §
64, sub. a(1) of the Bankruptcy Act, 60 Stat. 330, 11 U.S.C. §
104(a)(1).
Thereafter, permission so to prosecute this appeal was granted.
Counsel has also moved to amend both the notice of appeal and the
pleadings, without which he claims the appeal might be irreparably
prejudiced. What new issues he would raise we cannot learn from the
record before us.
Some of us are unable to see that this case exemplifies any such
injustice in the rule of finality that the practice should be
remolded to allow an appeal from either decree in order to save
this appellant.
The judgment required repayment of money to seventy and more
claimants who were defrauded of it in 1926. The purpose of the
appellant is to divert this same money recovery through the
trusteeship of a bankrupt corporation, where it would be subject to
renewed litigation as to how it shall be distributed and to
multiple fees. If the rule of finality we apply means that amends
for a 1926 fraud shall be concluded as early as 1950, we do not
think that condemns the rule as unjust.
[
Footnote 6]
The parties have not tendered to this Court, and we did not take
by certiorari, any issue as to any appeal by Dickinson. What its
fate will be if such an appeal is pending we do not know, and the
record is not compiled to inform us of its merits. Dickinson, we
only know, was a party to the original action, not, as Petroleum,
an intervenor. The last decree of the court, we know too, awarded
costs against him which the former decree did not. And it awarded
against him money judgments for specific amounts in favor of
particular claimants, whereas the earlier decree adjudged only a
general liability to a class. The Court of Appeals will be able to
deal with any contentions that the Dickinson appeal should be
dismissed, and, until it has acted, we draw no inferences from
obviously incomplete information on unlitigated issues.
MR. JUSTICE BLACK, dissenting.
The right to appeal a judgment has long been said to depend or
whether it is "final." This is a simple question where a court
decides all issues simultaneously and enters a final order putting
an end to a controversy. But when an order apparently leaves some
question or claims open for further court action at a later date,
doubts as to finality arise.
See, e.g., Hohorst v.
Hamburg-American Packet Co., 148 U. S. 262.
Finality and appealability
Page 338 U. S. 517
have provided judges, lawyers, and commentators with a perpetual
subject for debate. [
Footnote 2/1]
But litigants have too often been thrown out of court because their
lawyers failed to guess that an order would be held "final" by an
appellate court. The creditors of Petroleum Conversion Corporation,
who are prosecuting this action for respondent here, are not the
first victims of this jungle of doubt. [
Footnote 2/2] I also doubt that they will be the last
victims, despite the Court's hope that the new Rule 54(b) has
charted a clear route through the jungle.
I see no practical reason why the Court of Appeals should not
have been free to review the respondent's challenge to the 1948
decree without regard to appealability of the 1947 decree. A
rational system of jurisprudence should not attach inexorable
consequences to failure to guess right on a legal question for the
solution of which neither statutes nor court opinions have provided
even a reasonably certain guide. Where, as here, arguments as to
which of two decrees is "final" may be considered relatively even,
an appellate court should be free to find "finality" in either
decree appealed from. Under such a rule, a court could consider the
many circumstances relevant to orderly appellate administration
without penalizing litigants merely because it finds that an
earlier
Page 338 U. S. 518
decree falls on the "finality" side of what remains a twilight
zone.
Cf. Davis v. Department of Labor, 317 U.
S. 249.
See also dissent in
Morgantown v.
Royal Ins. Co., 337 U. S. 254,
337 U. S.
263-264.
Even if the old "either-or" rule is applied as to appealability
of the 1947 and 1948 decrees here, it seems to me that weightier
reasons support holding the latter final. The judge who tried the
case and rendered both decrees attributed finality to the decree of
1948, and not to that of 1947. He termed the 1947 order a "Decree,"
the 1948 order a "Final Decree." He specifically provided in the
1947 decree
"That the taxation of costs in this case and the entry of
judgment therefor, be deferred until the entry of judgment in
respect to the matters hereinabove reserved for the future
determination of this court."
At his order, both Petroleum and Dickinson received notice of
subsequent hearings. Four months before the final 1948 decree, the
trial judge, in a memorandum opinion, referred to the 1947 decree
as "interlocutory." Answering contentions that respondent here
should have appealed from the 1947 decree, he stated: "In my
opinion it was not a final decree, and was not appealable, at least
insofar as it involved the claim for $176,000." And, in the 1948
decree, the trial judge for the first time declared that the 1947
decree "is hereby made final." [
Footnote 2/3] The creditors prosecuting this appeal for
respondent should not be deprived of an opportunity to appeal from
the 1948 decree just because attorneys for the corporation failed
to appeal from a former decree which the trial
Page 338 U. S. 519
judge himself seems to have considered interlocutory and
nonappealable. [
Footnote 2/4]
The holding that Petroleum's appeal from the 1948 judgment must
be dismissed may well produce a strange consequence. The reason for
dismissal urged here by petitioner Dickinson is that the 1947
decree was final; under his contention, that decree left nothing
for the trial court to do except determine the shares of various
"Rinke subscribers" in "the particular sum" found due to that class
from Lloyd and Dickinson, and to assess costs and enter judgment.
On this hypothesis, the 1947 decree seems just as final on
Dickinson's claims and liability as on Petroleum's. The 1947
litigation originated in charges of fraud made by Dickinson against
Lloyd. Petroleum and persons designated as "Rinke subscribers" then
intervened, charging fraud against both Dickinson and Lloyd. The
1947 decree rested on findings that the charges against Dickinson
and Lloyd had been proven. The court concluded that the Rinke
subscribers, and to some extent Petroleum, had been damaged by
their fraud. Accordingly, the court awarded partial relief to
Petroleum on one of its claims, dismissing all its other claims.
The court also fixed a particular amount for the Rinke subscribers
as a group to recover from Dickinson and the Lloyd estate. That
decree, here held final as to Petroleum, apparently had an
identical degree of finality as to Dickinson: in addition to fixing
the precise sum for which Dickinson and Lloyd were liable to Rinke
subscribers as a group, it completely dismissed Dickinson's
affirmative claims. [
Footnote 2/5]
Yet
Page 338 U. S. 520
Dickinson himself has appealed from the 1948 decree, [
Footnote 2/6] and, ironically enough, he is
the only party here urging dismissal of Petroleum's appeal from the
same decree.
So far as we know, Dickinson's appeal is still pending. With
Petroleum out of the case by this Court's judgment, he should
certainly not be left free to have his own appeal considered in the
Court of Appeals. Permitting him to challenge the 1947 findings
would result in appellate review of that decree without the
presence of Petroleum, who was one of Dickinson's 1947 adversaries.
If Dickinson can challenge the 1947 decree by appeal from the 1948
judgment, Petroleum should also be allowed to challenge it. And if
neither can challenge it, the basic questions of fraud and
liability are now beyond the reach of appellate review. I cannot
join the Court in applying a rule of "finality" which attaches such
consequences to the understandable failure of these parties to
appeal from the 1947 decree.
[
Footnote 2/1]
See, e.g., Judge Frank, dissenting in
Clark v.
Taylor, 163 F.2d 940, 944-953.
See also Crick, The
Final Judgment as a Basis for Appeal, 41 Yale L.J. 539; Note,
Finality of Judgments in Appeals From Federal District Courts, 49
Yale L.J. 1476.
[
Footnote 2/2]
The corporation was adjudicated bankrupt in August, 1948. On
September 1, 1948, the temporary receiver (later appointed trustee)
filed an appeal from the 1948 decree. Subsequently, he refused to
prosecute the appeal, but the bankruptcy court accepted his
recommendation that creditors be allowed to do so without expense
to the estate. By today's decision, the creditors of the bankrupt
corporation, who were not represented in the trial below, are
deprived of their only opportunity to appeal.
[
Footnote 2/3]
Paragraph 3 of the 1948 decree reads:
"That the issues reserved in the decree herein dated the 10th
day of April, 1947, having been determined by the Court in its
decision and opinion and its Findings of Fact and Conclusions of
Law filed herein dated the 24th day of July, 1948, the said decree
is hereby made final."
[
Footnote 2/4]
The creditors have contended that the interests of the
corporation were not adequately represented at the trial because
the corporation attorney regarded it as immaterial whether the
corporation or Rinke subscribers obtained the recovery.
[
Footnote 2/5]
The possible distinctions between finality as to Dickinson and
as to Petroleum, listed by the court in
footnote 6 of its opinion seem unsubstantial. That
Petroleum entered the cases as an intervenor is immaterial; having
litigated its claims and being bound by the judgment, it is just as
much a party as Dickinson. The 1948 decree could have awarded costs
against Petroleum as easily as against Dickinson, since the 1947
decree expressly reserved the question of costs as to all parties.
And the extent of Dickinson's liability, adjudicated in the 1947
decree, was in no way altered by the 1948 decree allocating
recovery among the Rinke subscribers.
[
Footnote 2/6]
Lloyd's Administrator is listed in the Court of Appeals opinion
as "appellee appellant."