National Labor Relations Board v. Deena Artware, Inc.

PETITIONER:National Labor Relations Board
RESPONDENT:Deena Artware, Inc.
LOCATION:Superior Court of Bibb County

DOCKET NO.: 46
DECIDED BY: Warren Court (1958-1962)
LOWER COURT: United States Court of Appeals for the Sixth Circuit

CITATION: 361 US 398 (1960)
ARGUED: Dec 08, 1959
DECIDED: Feb 23, 1960

Facts of the case

Question

  • Oral Argument – December 08, 1959 (Part 1)
  • Audio Transcription for Oral Argument – December 08, 1959 (Part 1) in National Labor Relations Board v. Deena Artware, Inc.

    Audio Transcription for Oral Argument – December 08, 1959 (Part 2) in National Labor Relations Board v. Deena Artware, Inc.

    Ralph S. Spritzer:

    — (Inaudible) next to the (Inaudible) in which it ruled that it would not order discovery in the absence of a formal charge of contempt.

    Having been told that, the Board undertook further investigation to the extent that this was possible without access to the books and records and testimony.

    And it formulated a rather detailed contempt petition which appears at Record 3 to 13.

    That petition for contempt is directed not only against Deena Artware, the company involved in the original unfair labor practice, but also against the parent company, Deena Products against various other subsidiaries of Deena Products to which Deena Artware’s assets were ultimately transferred and against George Weiner, the President of all of these corporations and the controlling stockholder of the parent company.

    This contempt petition, filed in August of 1958, was accompanied by a renewed motion for discovery.

    The Court’s final decision of December 1958 dismissed the contempt petition and denied the motion for discovery.

    It’s that judgment, of course, that’s under review here.

    Now, to prove (Inaudible) petition.

    Ralph S. Spritzer:

    No, dismissed on motion.

    And the Court’s opinion says that the 1952 decree of the Court enforcing the Board’s original order was not sufficiently definite so far as restitution of back pay was concerned to support a contempt adjudication.

    The reason the Court says is that the 19 — the early — original Board order left undetermined the exact amounts due each employee, merely ordered that each one of them be made whole.

    Then the Court goes on to say that accordingly, there was no binding decree until the 1955 order of the Court which enforced the Board’s supplemental decision position, but reasons the Court, between 1952 and 1955, Deena Artware, on the Board’s own allegations, had completed the process with making itself judgment proof and after 1955 was unable to pay.

    Charles E. Whittaker:

    (Inaudible)

    Ralph S. Spritzer:

    That is correct.

    Thus it seems to us, we’ve come full circle in this case.

    The Board having first been told in 1953 when it diligently came in and sought to enjoin a partial assignment of assets that it was premature, and that it could always come back after the back pay obligation was liquidated if, in the meantime, Deena Artware had purposefully stripped itself of its assets.

    It’s told ultimately when it does come back with the petition for contempt on that very basis that at last it is now too late.

    Where is that first (Inaudible)

    Ralph S. Spritzer:

    That appears in the Court’s 1953 opinion which is setout beginning at page 51 of the appendix to the petitioner.

    I’m looking for the precise language that I referred to.

    Page 56.

    Ralph S. Spritzer:

    Yes, beginning about two thirds of the way down on 56.

    It will be time enough, the sentence begins, to rule on any question of contempt when the order becomes liquidated and final.

    If at that time any financial inability to pay the award as shown to be the result of improper actions on its part in the meantime appropriate contempt action can then be taken.

    Our — our position in relation to the Court of Appeals’ latest opinion can be summed up very simply, I think.

    We agree with the Court of Appeals that its 1952 decree, directing the company to make restitution to the named employees did not impose a present obligation to pay specific sums.

    Certainly, it was contemplated that the Board, in accordance with its usual practice, would exercise its continuing jurisdiction and that it would conduct such supplemental proceedings as might be necessary failing agreements between the parties to determine the exact amounts due.

    (Inaudible)

    Ralph S. Spritzer:

    Yes, sir.

    (Inaudible)

    Ralph S. Spritzer:

    I have — in a moment I would like to review briefly the series of acts.

    There are number of them, Your Honor.

    I will attempt to summarize the contempt petition in that respect.

    Record.

    Ralph S. Spritzer:

    Yes, sir.

    (Inaudible)

    Ralph S. Spritzer:

    No.

    That was the — he was in on the 1958 opinion when the Board sought discovery.

    Earl Warren:

    Where is that?

    Ralph S. Spritzer:

    That is printed in the appendix to the Government’s petition —

    Felix Frankfurter:

    Page 60.

    Ralph S. Spritzer:

    — at — yes, sir, at page 60, I thank you, the dissent beginning at 67.

    I — I was remarking that we did not take issue with the proposition that there was no obligation to pay specific sums when the 1952 decree was entered.

    Obviously, those sums had to be liquidated before there was the duty to pay.

    Our point is that it does not follow that because there was no immediate obligation to pay that the company was free to incapacitate itself from making restitution.

    We urge that the 1952 decree ordering that these named employees be made whole for past — a past period when they had not received wages.

    Charles E. Whittaker:

    (Inaudible)

    Ralph S. Spritzer:

    I mean stripped itself of its assets so that it will be unable to pay later.

    I mean —

    Charles E. Whittaker:

    (Inaudible)

    Ralph S. Spritzer:

    Transferring beyond the reach, attempting to transfer beyond the reach of those entitled to recover.

    Felix Frankfurter:

    And that’s — that ground has taken by the Board, isn’t it?

    Ralph S. Spritzer:

    The Board has alleged that this series of actions was a willful, if not fraudulent scheme to avoid the satisfaction of this obligation.

    Felix Frankfurter:

    Right after it appears that the —

    Ralph S. Spritzer:

    I’m —

    Felix Frankfurter:

    — in its — in its last motion and last proceeding and now through you asserts that the respondent had incapacitated itself financially —

    Ralph S. Spritzer:

    Yes.

    Felix Frankfurter:

    — to reach the liquidated amount, is that right?

    Ralph S. Spritzer:

    That is correct, sir.

    William J. Brennan, Jr.:

    You don’t mean that the Board has so found only that (Voice Overlap) —

    Ralph S. Spritzer:

    The Board has alleged and this Court must assume on the —

    William J. Brennan, Jr.:

    For this purpose.

    Ralph S. Spritzer:

    — state of case that that it so.

    William J. Brennan, Jr.:

    If he prevails, there would still have to be determination of that fact, isn’t it?

    Ralph S. Spritzer:

    I don’t think that the respondents deny that the Deena Artware Company is now without assets.

    What they contend is that the transactions which the Board says were fictitious transactions, fictitious transfers to evade the duty of payment, they contend were legitimate — constitutes the satisfaction of legitimate business obligations owing to the —

    William J. Brennan, Jr.:

    But, if you —

    Ralph S. Spritzer:

    — related corporations.

    William J. Brennan, Jr.:

    But if you prevail on your principle essentially, well, there not have to be a determination of fact or is this to be reached because as I understand it, the little problem here was (Inaudible) assigned.

    Ralph S. Spritzer:

    If we prevail in our contention here, it will become the duty of the Court of Appeals to determine very likely I would suppose through a special master whether the allegations of evasive assignments are borne out of proof.

    Felix Frankfurter:

    Do I to infer then that the Deena enterprise is incapacitated itself, it hasn’t any fund to which to (Inaudible) no fund, is that correct?

    Ralph S. Spritzer:

    Deena Artware, yes, that’s (Inaudible)

    Felix Frankfurter:

    You have nine others with affiliated relations to whom in view of their relation, the — what is sought to a civil contempt when you characterize it.

    Ralph S. Spritzer:

    That is correct and I think perhaps to make this perfectly clear, it might be best at this point for me to summarize briefly the allegations in the Board’s contempt petition.

    The Board alleges that there has been a concert of action by Weiner, the President and controlling stockholder, by Deena Products, the parent company and by the various subsidiaries including Deena Artware for the purpose of frustrating the satisfaction of this back pay obligation.

    The petition recites that the parent corporation has provided each of the subsidiaries with raw materials and supplies and that it has also fixed the prices at which the subsidiaries would sell their output back to the parent company.

    The parent has kept the books and records for all of the subsidiaries, has commingled the funds and property of the various corporations and has managed them as divisions or departments of a single enterprise.

    It is alleged further that following the institution of the original Board proceeding, the unfair labor practice case, Artware was compelled by the parent company products to buy dear and sell cheap.

    So that it would show losses from the operations and products which show substantial profits from those same operations.

    It is further alleged that various charges were made on the books against Deena Artware, which, under normal and proper accounting practice, should have been made against other of the corporations.

    It is alleged further that shortly after this Court denied certiorari in the unfair labor practice case, Products and Weiner caused Artware to cease operations.

    That was followed promptly according to the Board’s allegations by the transfer of Artware’s plant, property and assets to Products ostensibly in satisfaction of notes and other obligations which the Board says were fictitious.

    The plant and the physical facilities were then in turn assigned to other subsidiaries of Products and operated thereafter as they still are operated today as a part of this family of enterprises but under different corporate names.

    All of the relevant transfers and assignments of assets and property, according to the allegations, took place between 1952 when the first decree was ordered enforced and 1955 when the Court entered its second decree affirming the Board’s supplemental decision and all of the respondents, it is alleged, acted with full knowledge of the relevant orders of the Board and decrees of the Court.

    And thus, we say we are brought back to what seems to us to be the crucial question, namely, whether the equity decree entered in 1952 ordering Deena Artware its successors, assigns and officers to pay back pay whether that merely created an abstract determination of no binding of fact at all or whether particular consequences attached immediately to that order.

    Now, there’s no question, I take it, that we have here an in personam equity decree directing a party to do something, in this case, to make restitution.

    Charles E. Whittaker:

    But at that point, they could not (Inaudible)

    Ralph S. Spritzer:

    At that point, there’s no question that they could not have made the payments because they didn’t know the exact amount that would be involved and their entire argument is predicated upon that.

    Now, what we challenge is the contention that an order to make restitution imposes no restraint an equity court order to make restitution imposes no restraint.

    We say that it does impose a restraint before the amount is liquidated in dollars and cents.

    Ralph S. Spritzer:

    Suppose, for example, that a bankruptcy court were to order a bankrupt to turn our assets to a trustee, I take it, that that would be a binding obligation before there were any accounting or inventory to determine just how much property there was and before it was determined how much of it was statutory exempt property and how much nonexempt.

    We think this is a similar situation in that the equity decree imposes at once an obligation to refrain from frustrating the manifest purpose of the order.

    Felix Frankfurter:

    Suppose there had been no inter corporate relations and this that this first named petitioner had committed devastated on the estate so that none traceable this (Inaudible) of the estate shows that there couldn’t be one or assigned.

    Suppose it — it lost is all – (Inaudible) its money color, would there be a difference?

    Of course, you couldn’t then ask for a civil content on the assumption that — that he’s physically and financially unable to get himself out of jail if he were committed to it.

    But would that not be, what is your position on that?

    Ralph S. Spritzer:

    I think this case has the important difference that we have joined the transferees and hence the civil contempt remedy is available here.

    Felix Frankfurter:

    In the days that I’ve put, would you think that — that the Court has followed us?

    Ralph S. Spritzer:

    I think it might well constitute a case of criminal contempt.

    Earl Warren:

    Mr. Spritzer, is there anything in the record to indicate why it took the Board three years to ascertain those amounts or —

    Ralph S. Spritzer:

    No, there is nothing in this record and it is my understanding that frequently, these proceedings are rather complicated because the employer is entitled to have offset any amount which the employee earned in other employments or might have earned by diligently seeking equivalent employment.

    So that you might in effect have a small administrative lawsuit, conceivably have a small lawsuit before the Board as to each of 60 odd persons.

    As I say this record doesn’t —

    Earl Warren:

    It isn’t material anyway, but is it — is it (Voice Overlap) —

    Ralph S. Spritzer:

    No, I think — I think not.

    Felix Frankfurter:

    The acquisition of the Philips Dodge doctrine bears out what you just said.

    Ralph S. Spritzer:

    Yes.

    Felix Frankfurter:

    Namely, even if numeration of the damage through earnings or capacity to earn (Inaudible)

    Ralph S. Spritzer:

    Yes.

    Now, I don’t know —

    Felix Frankfurter:

    I don’t — I’m not talking about this —

    Ralph S. Spritzer:

    — how many contested issues there were here, I just haven’t seen the Board.

    Felix Frankfurter:

    I’m not talking about this case.

    There are other cases.

    Ralph S. Spritzer:

    Yes, and I assume that there were a good many problems in this case where it would not have taken us so long.

    Perhaps an — an example which is even closer than the bankruptcy example I just gave is this Court’s decision in McComb against Jacksonville Paper, and I have in mind the second Jacksonville Paper case, the civil contempt proceeding which is reported in 336 U.S.

    The Court will recall that as a result of prior litigation in the first Jacksonville Paper case, litigation instituted by the wages and hours administrator, Jacksonville Paper had been enjoined substantially in the words of the statute from paying certain categories of employees less than they would be entitled to receive under the provisions of the Fair Labor Standards Act.

    The contempt case, the second phase of that litigation, was instituted on the ground that the company thereafter departed from the statute’s minimum wage and overtime pay requirement and the prayer in that civil contempt proceeding was that the company be required to terminate its continuing violations and to purge itself of the contempt by paying the amounts of unpaid wages due the employees.

    Now, in that case, the company’s argument made to this Court was that the original injunction very broadly required compliance with the statute, that it did not direct or prohibit any specific act such as the payment — direction of payment of specific sums.

    And that it was not sufficiently definite therefore to support a contempt citation especially the company argued where the District Court had found that the respondent was uncertain as to the application of the statute’s requirements to the particular facts and had not willfully disobeyed them.

    Ralph S. Spritzer:

    Now this Court nonetheless held in that case that the absence of willfulness did not relieve the respondent.

    It sufficed the Court said that respondent there had taken a calculated risk and skirted close to the line.

    The Court went on to say that it was no defense in that case, that the injunction merely incorporated the statutory formula for computing pay, but failed to set out the exact amounts which be — would become due in particular context under a correct construction of the Act.

    Now, we submit that if an injunction to pay employees in the future in accordance with the requirements of the Fair Labor Standards Act it’s sufficiently definite to support a contempt citation even in the absence of willfulness as held in Jacksonville Paper, that the efficacy of this 1952 decree cannot be seriously questioned.

    The decree here did not relate to the future.

    It did not involve variant or changing factual situations.

    Its application couldn’t possibly be regarded as uncertain.

    It directed that 60 odd named persons be given back pay for a definite past period during which they had suffered the consequences of discharge and the decree, according to the Board’s contempt petition, has been willfully violated throughout.

    Now, there’s another aspect of the Jacksonville Paper case, which I’d like to mention here and it brings me to the last point that I would make.

    It was argued in Jacksonville Paper that the administrator was not authorized to bring a suit for compensation on the employees’ behalf under the Fair Labor Standards Act, that the contempt procedure should not be used to reach that result indirectly, and that the employers — the employees were fully entitled to bring a suit on their own to collect what was due them.

    In other words, it was argued that that injunction ought to be enforced by an independent proceeding and not by the Government agency involved.

    Now, the Court rejected that argument, stating that the fact that another suit might be instituted to collect the payments was immaterial.

    The Court said, “If the Court is powerless to require the prescribed payments to be made, it has lost the most effective sanction for its decree and a premium has been placed on violations.”

    Now, I would suggest that the case for going forward with the contempt proceeding is more compelling in the — in the instant situation.

    The employees here have no remedy of their own.

    Under this statutory scheme, the Board has the exclusive authority to enforce the commands of the Act.

    Moreover, the Board in awarding back pay and in taking steps to implement a back pay order is not as respondents would have it a mere collection agency to be analogized to a private creditor.

    This Court has said that the back pay remedy is one of the most important sanctions for effectuating the public policies of the Act.

    We stress that this proceeding stems from a back pay order of the Board which the Court of Appeals has ordered enforced and we suggest that the Court of Appeals has the continuing and the inescapable responsibility to see to it that that decree of the Court is complied with.

    That, of course, was the position which was elaborated by Justice Stewart in his dissent at an earlier phase of this litigation.

    I should also like to point out that institution of proceedings in the Kentucky courts or in the District Court by way of the bill in equity to set aside transactions in fraud of creditors cannot be assumed to be an equivalent remedy.

    The power of the Court of Appeals to enforce its own decrees through it’s equity authority is broad and it is flexible and the law fraudulent conveyancing of the States is certainly not notable for either of those attributes.

    Charles E. Whittaker:

    (Inaudible)

    Ralph S. Spritzer:

    Yes.

    Charles E. Whittaker:

    (Inaudible)

    Ralph S. Spritzer:

    It is the decree to make restitution by means of payments of money to be sure, but the — there — the Court has ruled time and again, I think, that the Court of Appeals acts in its equity powers when it enforces Labor Board orders and that those orders are enforceable through the contempt process, which of course would not be so if they were not in the nature of equity decrees.

    Charles E. Whittaker:

    (Inaudible)

    Ralph S. Spritzer:

    This is not an ordinary common law judgment.

    This a direction to pay just as the same I would suggest to Your Honor as a direction by an equity court sitting under state law directing a husband to pay alimony to his wife.

    Charles E. Whittaker:

    Well, that’s the one (Inaudible) for the alimony of the wife.

    Ralph S. Spritzer:

    Well, I would add all the cases involving the obligations of a fiduciary or a trustee or a bankrupt.

    Certainly equities powers are available there in their everyday use there.

    Felix Frankfurter:

    So when equity, as a matter of discretion, finds it is not necessary to issue an injunction, fixes money damage, does that make it any of the less from equity action though money was the remedy which the chancellor gave?

    Ralph S. Spritzer:

    No.

    I think it turns upon the — the nature of the proceeding and not upon the particular remedy.

    And I think that the Court of Appeals’ enforcement powers in relation to administrative orders of this kind are traditionally and have indeed been exclusively exercised through the contempt process.

    Charles E. Whittaker:

    But they’re all legal, are they not?

    Ralph S. Spritzer:

    Pardon.

    Charles E. Whittaker:

    Are they not all legal when it’s (Inaudible)?

    Ralph S. Spritzer:

    No.

    To — I — reinstatement to a job is not a — an ordinary common law judgment.

    Similarly if an employer is directed to cease and desist from certain practices or to post notices, I think most of the actions which are characteristically required by Labor Board cease and desist orders are duties of a kind which a common law court does not ordinarily enforce.

    Felix Frankfurter:

    Well, isn’t the order of —

    Ralph S. Spritzer:

    And I don’t think this is an exception merely because part of the remedy is making them whole to the payment of money.

    Earl Warren:

    Well, isn’t the order of the Court in requiring back pay, the reinstatement and back pay, that is what you’ve said, the requirements of back pay isn’t a settlement of a common law action but a means of effectuating the general public policy of the National labor Relations Act.

    Ralph S. Spritzer:

    Quite so, and I — I think it’s distinguishable from the — indistinguishable, excuse me, from the reinstatement phase of the same order.

    I would like — I’ve been referring to the question of whether an independent proceeding would be an equivalent remedy, and that’s just that proof of fraud though it certainly adds force to the Board’s claim that an adjudication and contempt should be made is not necessary to the establishment of contempt.

    I take it some form of avoidance short of fraud might well warrant the Court’s exercise of its contempt powers though presumably it would not move the Court to act in dealing with a bill to set aside and conveyance as in fraud of creditors.

    As I noted at the outset of this argument, the — the discriminatory discharge of these employees took place over 10 years ago.

    The various Weiner enterprises are still actively and I take it prosperously engaged in business, employing as I understand it, at this time, some 600 or more persons.

    According to the Board’s allegations here, the Deena Artware physical facilities are still in operation as an integral part of this enterprise.

    Throughout this extended period, not one cent of restitution has been offered or paid and it is high time we put it to the Court that the Court of Appeals determine whether the decrees of that Court have not been systematically fluttered.

    (Inaudible)

    Ralph S. Spritzer:

    No, I have not planned here, Your Honor, because I think that the liability as successors or assigns flows clearly from what I’ve argued is alleged in the Board’s petition, namely, that these transfers were willfully made for the purpose of evasion and I think therefore that essentially that that is the — another way of approaching the problem but reaching the same result.

    And —

    Felix Frankfurter:

    Mr. Spritzer, is it necessary or appropriate for us to consider whether the Court of Appeals did not, in fact, construe its own decree, scope of the decrees, the legal incidence of it, and therefore, if that be so, we have a question of sitting in judgment upon the framer of the decree’s interpretation.

    Ralph S. Spritzer:

    I don’t think the Court has that problem at all because the Court of Appeals has made it quite clear that it is relying upon what it considers to be the relevant propositions of equity jurisprudence generally.

    And I think I can answer that best by referring to the opinion.

    At page 81 of the opinion, the Court of Appeals observed that according to the Board’s allegations, at least since 19 — December 1955, the date of the supplemental decree, Artware has been financially unable to pay the awards.

    Then the Court goes on and says that inability of a defense to a charge of contempt, civil contempt.

    Ralph S. Spritzer:

    Then on page 82, the Court goes on to consider the liability of the company in these terms.

    It says acts prior to the entry of the order or judgment, referring now to the 1955 order, which he is charged with disobeying do not constitute contempt of court regardless of the intentions of the respondent to avoid the impact of an order or judgment expected by him to be thereafter entered.

    And so the Court is saying that an order to make restitution unless it’s liquidated in dollars and cents imposes no obligation and that in this case, when the order did become liquidated, the company had already dissipated the Act.

    Felix Frankfurter:

    It is your reading of the opinion of the Court whereas the opinion of the Court of Appeals, that they do not deny that in 1952, there was an adjudication of violation of a statute which required back pay payments, that the amount of those payments were to be settled in the future the amount — they were not liquidated, this was an unliquidated obligation —

    Ralph S. Spritzer:

    Yes.

    Felix Frankfurter:

    — but there was an adjudication — but there was an unliquidated obligation as between the time of that generalized, that’s an appropriate phrase, decreeing 1952 and the affirmance of the liquidation of the amount in 1955 be naturally all the acts now complained of as disabling the respondent of obeying the Court are taking place and that the duty of obedience in particularity didn’t arise until after all these transactions were over.

    Ralph S. Spritzer:

    That’s right and our chief difference was the Court of Appeals is our proposition which I had attempted to present, that the 1952 decree imposed a legal duty to refrain from incapacitating the respondent from making payments later when the amounts did in fact become liquidated.

    (Inaudible) another form of stating your position on point one.

    I understand your position on point two is that if you assume the Court of Appeals was correct in saying that no contempt obligation, no obligation that could be reached by a contempt was imposed until the 1955 decree that none consent because of the relationship of these enterprises, there would be liability here because of the relationship of these corporations.

    Now, that’s an entirely different proposition to the one you’ve been arguing.

    Ralph S. Spritzer:

    It is and I was suggesting in my answer to Your Honor that on the proposition that I’ve been arguing, we have something more.

    We have not only the relationship but the allegations of willful purpose to evade and of activities with a purpose of the evasion.

    If we — in the light of the Board’s allegations on going to the first proposition and those allegations, it seems to me, must be accepted here, I think that there’s no need to reach the question whether liability might be imposed on some more restricted basis, that is on a basis which would involve a — a more extreme position from the Government’s point of view.

    Or in other words, translating after you have more confidence to your first position, you have (Inaudible)

    Ralph S. Spritzer:

    No.

    I think with the — I would put it rather in these terms, Your Honor, that that is a more difficult position and the Board —

    Well —

    Ralph S. Spritzer:

    — did not initially proceed against this company as a single enterprise and I don’t think that it need be reached when the case is here on allegations which must be assumed correct, allegations which certainly alleged in unmistakable fashion that there has been a willful frustration of the decree.

    I think that’s a good answer (Inaudible)

    Charles E. Whittaker:

    Mr. Spritzer, may I ask, is it, as cited on page 81 of (Inaudible) and that these two things were made (Inaudible) prior to the entry of the Court of Appeals judgment (Inaudible)

    Ralph S. Spritzer:

    Yes.

    Charles E. Whittaker:

    Honestly it is.

    Ralph S. Spritzer:

    Yes.

    Hugo L. Black:

    May I ask you one question, Mr. Spritzer.

    Ralph S. Spritzer:

    Yes.

    Hugo L. Black:

    Do you take (Inaudible)

    Ralph S. Spritzer:

    I’m sorry, I didn’t get you.

    Hugo L. Black:

    I don’t want to ask you a question assume that was a patent case.

    Ralph S. Spritzer:

    Patent case, Your Honor?

    Hugo L. Black:

    Patent case, and the Court reaches the conclusion that a patent is valid, orders an accounting, suppose between then the time they ordered the accounting at the time they fix an amount of the defendant whoever he is disposes of his property, could they get him for contempt on that?

    Ralph S. Spritzer:

    I certainly think that at least civil contempt remedy would be available.

    Hugo L. Black:

    Be what?

    Ralph S. Spritzer:

    I would think a civil contempt remedy would be available.

    Hugo L. Black:

    It addresses the same thing you’re arguing here, is it not?

    Ralph S. Spritzer:

    Yes.

    This is a strictly a petition for civil contempt.

    Hugo L. Black:

    I mean the case I propose here.

    Ralph S. Spritzer:

    Oh.

    Hugo L. Black:

    Is there any difference between that and this one?

    Ralph S. Spritzer:

    Well, I think in order to make an accounting may not be as definite as this order was, but —

    Hugo L. Black:

    Well, if the finding —

    Ralph S. Spritzer:

    — this — this is a clearer case I would say.

    Hugo L. Black:

    A fine is invalid, a fine is valid and send it to (Inaudible) make some findings as to how much (Inaudible) that’s — your — your position could carry you to the point, wouldn’t it, as I was thinking it’s wrong that these people disposes their properties to make it sure that they did it because they didn’t want to say whatever judgment was rendered here.

    They could be allowed with contempt.

    Ralph S. Spritzer:

    I would think that in — in that kind of a case, if they disposed it to related companies pursuant to a scheme as alleged here that —

    Hugo L. Black:

    Suppose (Voice Overlap) —

    Ralph S. Spritzer:

    — the civil contempt —

    Hugo L. Black:

    — company they just decided to sell it or so.

    Ralph S. Spritzer:

    Well, I think that it —

    Hugo L. Black:

    Suppose.

    Ralph S. Spritzer:

    I think it’s a more difficult case if it is a normal business transaction, but on our allegations here we don’t have a normal business transaction.

    We have a fictitious set of transactions to evade the decree.

    Hugo L. Black:

    Would that add anything to the liability for the mere fact that it’s a fictitious one if it took place before assuming it would be a difference in liability of a conduct done before this time and place, conduct after the time and place, assuming it would be different, does it make any difference whether the act is fictitiously or not?

    Ralph S. Spritzer:

    I assume and I must assume that the 1952 decree imposed certain duties and that there were sanctions of law available in the event that those duties were not met.

    What I’m suggesting is that the duty which was imposed by the 1952 decree was a duty to refrain from engaging in acts which were designed to defeat the forthcoming decree which determined the liquidated amounts due.

    Hugo L. Black:

    You base that enforcement of facts that it’s an equity.

    Ralph S. Spritzer:

    Yes.

    Hugo L. Black:

    It would not apply common law case, would it?

    Ralph S. Spritzer:

    It would not.

    The common law judgment is not a — an in personam order to pay money.

    Ralph S. Spritzer:

    It’s a —

    Hugo L. Black:

    Suppose the judgment by the Court has rendered it specifically.

    Ralph S. Spritzer:

    Well, the — the —

    Hugo L. Black:

    And they don’t fix the damage.

    Between them, they decided to fix the damages (Inaudible)

    Ralph S. Spritzer:

    Well, the common law of plaintiff has — has to take care of themselves perhaps by attaching property, perhaps by seeing an — seeking an injunction pendente lite.

    Hugo L. Black:

    I —

    Ralph S. Spritzer:

    — but this company was under an injunction, and I —

    Hugo L. Black:

    I was just asking you to —

    Ralph S. Spritzer:

    Yes.

    Hugo L. Black:

    — bring out the points that you’re really relying on the equitable power of the Court.

    That’s — it had to be (Inaudible)

    Ralph S. Spritzer:

    I’m relying on the equitable power of the Court as embodied in a particular decree which in turn imposed a legally defined duty to make named employees whole and I say that that would impose at least, and in minimum it imposed a duty to refrain from taking steps which were calculated to prevent the possibility of that obligation being satisfied.

    I think —

    Hugo L. Black:

    May I ask you one other —

    Ralph S. Spritzer:

    Yes.

    Hugo L. Black:

    — question because you read first at page 81.

    In the — I have a little different question.

    What was on page 81 that you read?

    Ralph S. Spritzer:

    I think it was about two thirds as the way down, Your Honor, that where the Court observes that since 1955, Artware has been financially unable to pay the awards.

    Hugo L. Black:

    And I suppose — suppose I (Inaudible) through since 1955 (Inaudible) they’ve tried to collect, tried to kept the failing (Inaudible) but they didn’t have the money.

    Ralph S. Spritzer:

    Well —

    Hugo L. Black:

    Are you reading that on the basis that they could do that?

    Ralph S. Spritzer:

    I’m not reading this in terms of any criminal contempt problem at all because this is strictly a petition for civil contempt, Your Honor.

    Hugo L. Black:

    Well, I — I don’t care about the differences that you mean.

    What I’m talking — asking you, does your argument, if we accept it —

    Ralph S. Spritzer:

    Yes.

    Hugo L. Black:

    — is it worthwhile to say that whatever kind of contempt you cause, the man can be put in jail failing that they want, solely because he failed to pay money to get everything done, solely because he fails to pay money and he doesn’t have to.

    Ralph S. Spritzer:

    No, I’m not suggesting that.

    Hugo L. Black:

    That — that’s not embodied.

    Ralph S. Spritzer:

    It is not embodied in the argument at all because we have —

    Hugo L. Black:

    (Voice Overlap) —

    Ralph S. Spritzer:

    — joined the transferor and the transferees and the transferor here, Deena Artware, is a corporation and the transferees are corporations.

    The — one individual who could be ordered into confinement until he took steps to see that the obligation is satisfied is the man who was the president of all of these corporations, the transferee corporations as well as the transferor corporation and the beneficial owner of all of these companies.

    Charles E. Whittaker:

    (Inaudible)

    Ralph S. Spritzer:

    That’s right.

    I’m distinguishing between the transferor and the transferees.

    I think the sanctions of contempt until they purge themselves by making payment are available against the transferee companies.

    Charles E. Whittaker:

    When were (Inaudible) 1952 of the Courts of Appeals (Inaudible) so that transfers thereafter made of that property which if it tries in personam might — might also result in the citations for failure to sale in the judgment?

    Ralph S. Spritzer:

    This Court has had cases before it in which property involved in an equity proceeding was disposed of in the course of the proceeding and you said that that was the contempt of the Court even though there was at that point no — no equity decree and no injunction pendente lite.

    I would refer the Court to at least two cases in which the Court has held that a disposition of specific property which was involved in an equity proceeding during the litigation would be a contempt of the court.

    Lamb against Cramer in 285 U.S. was a case in which during the pendency of an equity proceeding involving the right to specific property, the defendant transferred a portion of the property to his lawyer in payment for services.

    And this Court held that the civil contempt power was available to require restitution though no order of the Court whatever predated the transfer.

    That was done on the theory that that was — that transfer constituted misbehavior before the Court or so near to the Court as to obstruct the administration of justice.

    Charles E. Whittaker:

    My reason for question is I consider (Inaudible) in an equity suit, but (Inaudible)

    Ralph S. Spritzer:

    Yes, I think the Maryland case which was cited in our brief also relates to that one.

    Charles E. Whittaker:

    Thank you.

    Earl Warren:

    Mr. Wheeler.

    James G. Wheeler:

    May it please the Court?

    When I refer to the federal statute which controls the action of the Court of Appeals in contempt, it — it may appear that we are behind a single shield which limits the jurisdiction or the authority of the Court.

    I want to refer to that first because we do rely on it, we do emphasize it, and we think it completely disposes of the issues on this appeal.

    At the same time, I’m unwilling to rest behind the statement of counsel without making my own statement in order to show the Court the facts as we see them which differ materially on some essential points as Your Honors will see.

    And I hope you will permit me to do that after I refer to the statute which is referred to, of course, in the opinion of the Court and which is Title 18, Section 401.

    A court of the United States shall have power to punish by fine or imprisonment had its discretion such contempt of its authority and none other as, one, misbehavior in the presence of the Court —

    Hugo L. Black:

    Where are you reading from?

    James G. Wheeler:

    I’m reading from the opinion page 81, Your Honor.

    Hugo L. Black:

    Of the brief.

    James G. Wheeler:

    Yes, sir.

    Hugo L. Black:

    Of the opinion record.

    James G. Wheeler:

    It is — it is quoted by Judge Miller, yes, sir, on page 61, misbehavior in the presence of the Court, misbehavior of any of its officers in their official transactions, disobedience or resistance to its lawful writ process, order, rule, decree or command.

    James G. Wheeler:

    Only number three is applicable here and we do take the position that until a decree is definite, until it fixes definitely and accurately, what shall be done, there can be no contempt of court under that statute.

    Now, because that seems to be a rather cold and technical position, I hope the Court will bear with me and let me tell you something about the background and the facts which lead up to this situation.

    Earl Warren:

    Mr. Wheeler, before you get to the facts, does it — does it make any difference in your position whether it is criminal contempt or civil contempt that they’re proceeding under?

    James G. Wheeler:

    Criminal contempt has never been suggested to me and I haven’t given thought to an answer to Your Honor’s question.

    Earl Warren:

    What is that Section you just read, is that a civil contempt?

    James G. Wheeler:

    Civil contempt, sir.

    I — I assume.

    It perhaps, might be applicable to both.

    It’s an old statute though its terminology has slightly changed.

    I remember the earliest case I found on it was in 1896 that’s cited in — in the opinion and in briefs where a party cut some timber on land which was directly violative of the spirit of the proceeding which was an ejectment and yet, there had been no order entered, the Court attempted nunc pro tunc to enter an order and it was — and it was disallowed on appeal.

    It was stated that the court had no jurisdiction to punish him for contempt under that statute.

    So our position is — I — I can’t answer the Court’s question as to whether it’s civil or criminal, I don’t know the answer to that question.

    I’ve only thought of it as a civil contempt action, which action was suggested from the beginning and debated in court in 1953 before the United States Court of Appeals.

    But if I may, let me tell you something about the development of this controversy and when it began and how it began because these dates are of three importance and the Court will see from the dates that everything complained of, if we dismiss the inference and the broad general charges of bad faith antedated not only the 1955 decree, the only decree fixing any amount, but also the 1952 decree, the first decree affirming the ruling of the Board.

    May I ask a question?

    What if it has been within the power of the Court or the Board in apportion to Board orders to put in provisions pending determination of the exact amounts to the employees of back pay (Inaudible) whether the company shall not dispose of any of its assets.

    James G. Wheeler:

    Would it —

    Would that have been within the power of the court to impose such a condition?

    James G. Wheeler:

    Well, it did not do so.

    No, what I (Voice Overlap) —

    James G. Wheeler:

    The question —

    — that I’m asking you is preliminary to another question.

    James G. Wheeler:

    Presumably it could do so.

    And if it had done so, could you have been punishable — reached by contempt order if you violated that provision?

    James G. Wheeler:

    Well, if you have violated an order of court which was as indefinite as that, I don’t see how you could be punished for contempt.

    (Inaudible) put this on.

    The Court could have enforced that kind of an order (Voice Overlap) —

    James G. Wheeler:

    I don’t whether the Court could have enforced that kind of an order.

    It’s indefinite.

    It takes us nothing.

    James G. Wheeler:

    It would be a freeze —

    Very definite you’re saying that you’re not to deal with your assets pending determination of the exact amounts due.

    James G. Wheeler:

    Well it — Your Honor’s question reminds me of one Judge Miller asked me when we were arguing these cases on appeal.

    And we had a ruling of the District Court and a verdict of the jury holding that the union was guilty of a secondary boycott when entering the judgment against the Brick and Clay Workers Union and the American Federation of Labor on the grounds that secondary boycott had stopped this construction work.

    I will come to that in a moment.

    The reason I asked you that question because it’s in the essence of the Chairman’s position (Inaudible).

    This order was necessarily to be read (Inaudible) imply, necessarily imply (Inaudible)

    James G. Wheeler:

    We — we think there’s no question about what it did not imply such a direction.

    Charles E. Whittaker:

    Well (Inaudible)

    Mr. Justice Harlan that you think you could have the have.

    Do you really think you could have?

    James G. Wheeler:

    No, I don’t know that I do.

    I don’t know that I do.

    Charles E. Whittaker:

    (Inaudible)

    James G. Wheeler:

    It did not.

    The question — the answer to the question is – it is moot and I’m rather unprepared to make a definite position as what the Court could have done.

    I never heard of it doing any such thing and it did not do so here.

    Hugo L. Black:

    You never heard of a court ordering that pending the hearing, litigant party should not dispose of their assets?

    James G. Wheeler:

    No, sir, I won’t go that far.

    I’m talking about a labor board case where there has been an adjudication that back pay was due or at any rate that the parties should be placed in “statute” and no one knows what that back pay will amount to.

    Hugo L. Black:

    But —

    James G. Wheeler:

    In this case —

    Hugo L. Black:

    — but wouldn’t it be very definite for it to say you — you might appeal and have it reverse, wouldn’t it be a very definite statement if the Court were to say in our opinion to hear it pending upon judgment fixing of the amount.

    We take it’s necessary to protect the rights of the litigant that the defendant does not transfer any of his assets, would not that have been a definite order telling him not to do it?

    James G. Wheeler:

    Yes, it would.

    Hugo L. Black:

    That you would either had to obey or — or appeal.

    James G. Wheeler:

    Oh, we certainly would have appealed.

    Hugo L. Black:

    I’m sure of that.

    James G. Wheeler:

    And it would have been confiscatory and it would have been added at a —

    Hugo L. Black:

    Well, that — that would be an argument —

    James G. Wheeler:

    Yes, sir.

    Hugo L. Black:

    — you would make there.

    James G. Wheeler:

    Yes, sir.

    Hugo L. Black:

    But such orders are sometimes made of, is it not?

    James G. Wheeler:

    I assume — I suppose so.

    I never had one made in any matter at any time.

    Hugo L. Black:

    I would suppose your argument was quite a little different to that, since here, they didn’t order such thing.

    James G. Wheeler:

    They didn’t order.

    Hugo L. Black:

    And this is — it’s no definite so far as — I — maybe it would be wrong but it’s so indefinite that it shouldn’t be construed as justifying punishment on the man who did something which it did not clearly prohibit.

    James G. Wheeler:

    That is our position and was the position of the — of the Court.

    The Court took that position.

    Now, this — this corporation, Deena Artware, was organized in 1946.

    It had capital stock of no par value, and it was organized to buy a little pottery which it bought for $65,000.

    It has been unsuccessful up to that time.

    There’s lot of good clay in Western Kentucky.

    And the purpose of the purchaser was to use it for making lamp bases.

    That was in 1946.

    In the late Fall of 1947, I believe as late as December 1947, the respondent Deena Artware determined to enlarge its plant.

    This has been attached to so many briefs that I feel like referring to it, Deena — Judge Miller describes it in some detail in his opinion.

    The plant was on the corner of 3rd and Ohio Street.

    Behind the plant was about a half a block owned by Deena Artware.

    There’s a little warehouse on one end of it and it was the purpose of Deena Artware to construct another building there at a cost of about $80,000 so that the manufacturing process could be completed, an integrated operation right there in one block in this town and it would have conveyors going from the pottery plant to the plant where the finishing work was done.

    That contract was made in December 1947.

    In the Spring of 1948, union negotiations began or rather the union began to get employees from the plant and finally, the Brick and Clay Workers Union was certified as a representative of the employees of Deena Artware.

    Deena, by the way, is Weiner’s wife’s name in an ancient language and all of his businesses carry that name.

    I — I hope it won’t be considered as some evidence of integration or whatever they call it that they’re all alter egos because they bear that name.

    Deena Artware carried on with the union negotiations until this kind of a difficulty arose.

    On May 26, a meeting was to be held with a federal conciliator, Gus Ferguson, had an office in Cincinnati.

    They would meet in my office and negotiate.

    At the last moment or few days before May 26, 1948, Ferguson wanted to change the date to May 28.

    James G. Wheeler:

    It was satisfactory to the employers’ committee consisting of his manager and two people in the office and they said so, and Gus Ferguson, the conciliator, undertook to notify the union representative, a man named Bellew who lived in Olive Hill which is as far from Paducah as Olive Hill is from Washington, it’s at the other end of the State, and he failed to notify Bellew, I don’t know why, but at any rate, on May 26, he came to the office and learned that the meeting had been postponed until May 28.

    Immediately with the few members of the union committee, he had a few words and they went on strike at 2 o’clock on 15 minutes notice, and 50 or 60 people walked out enough remained to operate the plant, but that was the cause and beginning of the strike.

    It — it was caused by the irritation and — and childish peek for which one cannot blame them too much after that long trip of this man Bellew.

    Well, a strike immediately brought on picketing and the — the usual difficulties and the picket line was extended from the pottery plant on the corner so as to include the work where the new construction was going on.

    A car load of steel could not be unloaded.

    The work couldn’t progress.

    It was a secondary boycott and was so held subsequently.

    The discontinuance of that construction work made it necessary for Deena Artware or for Weiner, if you wish to put it that way, to do something to maintain his business contacts.

    So the same plant and the steel and the material were taking down to Arlington in a nearby county, and a plant was put up there, and is still operating there, and that is Deena of Arlington.

    In the meantime, it bought for $25,000 a little plant at Whitlit, which is down on the Mississippi River.

    The plant at Whitlit burned while this labor trouble was going on and was rebuilt and made into a modern plant.

    This dispersal of operations was brought about not by Weiner or these affiliated companies, they were forced to do it.

    They wanted to have one operation at Paducah on one block so they could do it all there.

    They were compelled by this wrongful secondary boycott to move this plant to Arlington.

    And they did do the construction work at Arlington and they have now a useless foundation standing there for the cost of which they obtained a judgment against this union and the American Federation of Labor for about $30,000.

    That, there was a hung jury on the first trial and on the second trial, that judgment was obtained in 1950.

    In the meantime, the Labor Relations Board had gotten into the picture at a comparatively early date, and I don’t know which came first.

    I believe — but about the same time that the Court submitted to a jury the question of whether this was a secondary boycott and a judgment was rendered for Deena Artware.

    The Labor Board representative held it was not a secondary boycott and that the union had done no wrong in that respect and issued its ruling against Deena Artware.

    So that brings in to the point, I was going to answer Mr. Justice Harlan’s question that when I was arguing this case and it came up July 30th, 1952, the two cases arrived on the same date and was set one after the other.

    One of them, an appeal from the judgment of the United States District Court against this union, the American Federation of Labor on the grounds that it was a secondary boycott and the other, an appeal from the finding of the National Labor Relations Board based on the idea that it was not a secondary boycott.

    And Judge Martin leaned over the bench and I’ll never forget what he said because of the result that followed.

    He said, “Brother Wheeler do you ever think we could affirm both those judgments on the ground there was substantial evidence to support both of them?”

    Well, I had to say that it was possible but I thought the result would be very undesirable.

    I think it has been.

    They were affirmed.

    And the Court explained in the — in the judgment affirming the damaged action that, of course, there was substantial evidence to support both rulings and it just affirmed them both.

    Well, the next step in this proceeding took place in 1953.

    Deena Artware had a judgment and the judgment had been superseded by the deposit of some bonds by the unions with the clerk of the United States Circuit Court of Appeals.

    Deena Artware made an assignment of the judgment partly to my firm in payment for attorneys’ fees for which we have a lien under the Kentucky law anyway and the balance to Deena Products Company as additional security for its indebtedness to Deena Products Company which was then secured by a mortgage executed October 31st, 1949, three years before this decree was rendered.

    James G. Wheeler:

    The mortgage was thought to be insufficient to pay the indebtedness of Deena Artware to the parent company and so it assigned this judgment or a balance of it.

    The Board contested that assignment and sought to have it set aside making allegations almost identical with those made here and seeking discovery remedies including the right to examine books and to take depositions.

    The court at that time, in the trial of that, I call it the 1953 case, it’s the same case, made the statement that this is not a contempt proceeding.

    I don’t know why they made that statement in the opinion, but it wasn’t — not and it was commented on broadly in argument.

    The Court pointed out and more than intimated in that hearing that there were proper remedies before a court of general jurisdiction and that the court could attack the wrongful conveyance or mortgaging of properties if it was wrongful because when we filed that assignment and the Board undertook to prevent the execution of the assignment, Deena Artware appeared before the United States Court of Appeals in forma pauperis.

    The Board knew then as they had known prior thereto that this little corporation had no assets.

    It was obvious then in the 1953 case and the Court pointed out then that contempt was not the remedy, there were other remedies available to the Board if there had been any wrongful act.

    In April of that year, Deena Artware having theretofore employed these formal striking employees ceased to do business.

    It closed its doors on account of market conditions, all of which were well-known to the Board and it has never operated since.

    In 1954, five years having elapsed since that mortgage was made to Deena Products Company, it conveyed its assets, all of them, to Deena Products Company in satisfaction of that indebtedness, and the indebtedness gratefully exceeded the value of their assets.

    And there’s no allegation to the contrary.

    Hugo L. Black:

    Was that in Kentucky?

    James G. Wheeler:

    That was in Kentucky, yes sir.

    All of this is Kentucky, everything I have discussed.

    These — all of these corporations except Deena Products Company are Kentucky corporations.

    Earl Warren:

    What was the relationship with the stock ownership in these various companies?

    James G. Wheeler:

    The stock of the various companies is owned, it hasn’t always been exactly this way, but it is owned by Deena Products Company.

    It is a parent company so to speak.

    Earl Warren:

    And then —

    James G. Wheeler:

    There maybe some small holdings of Weiner or some of his organization but Deena Products Company is the parent company and owned substantially all of the stock of these companies.

    Hugo L. Black:

    Does the law is as broad as the law of Kentucky authorizing full action to set aside or met with such kind of —

    James G. Wheeler:

    Yes, sir.

    Hugo L. Black:

    — fraudulence?

    James G. Wheeler:

    Yes and judge — and it was referred to by the United States Court of Appeals in their opinion citing the statute.

    Hugo L. Black:

    If that’s true, would the court of equities which is imposing the Board decree have power at the same time?

    James G. Wheeler:

    Well, the Court didn’t think so.

    It thought that in order to investigate such facts as would be relevant on that kind of an inquiry the Board should have the facilities of a District Court or of a different type of court from the Court of Appeals and so stated and that admonition of the Court was repeated in two opinions.

    Hugo L. Black:

    And who would have the right to go into court?

    James G. Wheeler:

    I —

    Hugo L. Black:

    (Inaudible) up federal courts the tax set as fraudulent.

    James G. Wheeler:

    The Board would, I assume.

    The Court evidently thought that and I certainly agree that it could.

    Perhaps the employees themselves, I don’t know whether they could do it or not, but certainly the Board could.

    I think the Nathanson case has made that clear.

    Charles E. Whittaker:

    (Inaudible) of levying upon property claimed to have been fraudulently transferred in its sale and then the trial of the issue to (Inaudible)

    James G. Wheeler:

    No sir.

    The issue would be tried first, I take it.

    I don’t think you could levy on property.

    You might attach and filed a lis pendens notice, but I have — I — I don’t think there could be any actual levying until there had been an adjudication.

    In other words, a party — it has that day in Court, of course, it has to decide that.

    Hugo L. Black:

    I would suppose maybe — maybe I’m wrong, I would suppose maybe the sheriff could levy or the officer but it should — it’d read to be levied on the wrong property.

    James G. Wheeler:

    I don’t think he could levy before judgments were rendered.

    Hugo L. Black:

    Well —

    James G. Wheeler:

    He could have after judgment —

    Hugo L. Black:

    I meant —

    James G. Wheeler:

    — with an execution.

    Hugo L. Black:

    The — the Court though, they don’t get to reach the levy stage or the execution stage but you have a situation where you know a judgment can be rendered or think so and an equity is — valid equity is invoked to conserve the assets so that they would not be dissipated.

    Does cause of action is introduced?

    James G. Wheeler:

    No, sir.

    Hugo L. Black:

    It does not?

    James G. Wheeler:

    Not in the — not in the situation of this kind.

    I don’t know whether this such cause of action as that in Kentucky.

    I can’t conceive of Kentucky invading the prerogative of federal preemption in getting in to anything like this.

    Hugo L. Black:

    Well, what you are saying —

    James G. Wheeler:

    But this is a labor board case.

    Hugo L. Black:

    — what you are saying is that if anything like that could be done and has to be done by the federal court.

    James G. Wheeler:

    I think it definitely would.

    See, we had in this particular – the way this thing first came up, we had a judgment obtained in the federal court under Section 301 of the Taft-Hartley Law and they would try to stop the payment of it and all of these issues were raised and debated then.

    Then later, there began a series, and there were several of them, of efforts to examine books and records and to — and finally, to punish for contempt the — this corporation and the affiliated corporation.

    Hugo L. Black:

    Why the federal court has power to enforce this order or law if it was valid?

    Hugo L. Black:

    Do you think it — it would —

    James G. Wheeler:

    Why would it have it?

    Hugo L. Black:

    Do you think it to be lacking in power to do whatever is necessary to cease and desist which is carried (Voice Overlap) —

    James G. Wheeler:

    I don’t think — I don’t think a court could assume —

    Hugo L. Black:

    I understand that but suppose it had proved in this.

    James G. Wheeler:

    Well, after it had proved —

    Hugo L. Black:

    What did the courts do that something bad is to happen and it issued an order?

    James G. Wheeler:

    After it had proved, of course, it could proceed, but when there is a mere decree to make parties whole, I don’t think it can proceed, it doesn’t know what that amounts to anymore than the parties do.

    As a matter of fact —

    Hugo L. Black:

    That’s the only basis that didn’t know what it amounts to or it would be on the basis that there would be no proper showing to establish on that it was necessary for a court of equity to do that in order to prevent the future frustration of this decree?

    James G. Wheeler:

    Both, both sir.

    In this particular case, when they were talking about this in 1953, it was said the opinion shows it that the amount might go as high as $100,000.

    By the time the Board had gotten through with its hearing in 1954 and had disregarded the fact that we had a labor boom in Paducah in 1950 when all of these parties could have gotten better employment than they would have gotten from Deena, it was $300,000.

    Now, you can’t determine in advance how much that’s going to be, a great many things are involved.

    For example, in this — in this case, when these employees were reminded that the Government was spending nearly a billion dollars in that county building an atomic energy plant and that work was available for everybody, the Labor Board representative just said, “Well if — if you had had an opportunity to go back to work for Deena Artware then you wouldn’t have gone, would you?”

    “No.”

    Whereupon they disregard these high wages so — and — and that for restitution amounts to only paying them during a period of low wages and disregarding their earnings during the period of high wages.

    I refer to all of that because I’ve been through it all to show that it’s impossible when this 1952 decree is rendered to determine what the ultimate liability will be.

    It was impossible.

    Charles E. Whittaker:

    (Inaudible) does the Government concede that?

    James G. Wheeler:

    The Board concede it?

    Charles E. Whittaker:

    Yes?

    James G. Wheeler:

    I — they — they must do so.

    They must concede it.

    But they argued that we should stand by.

    They say we don’t mean you should freeze assets but you should standby and be ready to pay.

    Well, suppose we had stood by in 1952, July 30th, let’s see what we would have had standing behind us.

    We would have a little plant with a mortgage on it for $75,000 entered into three years before for an indebtedness, the validity of which they dare not attack because they’ve been invited to do it and they won’t do it, we would have stood by then with an insolvent party already insolvent but trying to carry on and it would — we’ve been exactly in the same position we’re in right now.

    Charles E. Whittaker:

    (Inaudible) not to tell the company it maybe subjected to condemn if we did, isn’t that the legal question?

    James G. Wheeler:

    Yes, sir, that’s the legal question and our position on that is unequivocal, but I like to make a statement because I don’t like to carry the burden of all of the charges that have been made against this company of bad faith when as a matter of fact, there is nothing extraordinary about this intercorporate relationship.

    James G. Wheeler:

    They speak of the fact that they make a joint statement.

    Well, of course, they make a joint statement.

    SEC would make them a joint statement if they’re big enough to be on the big board.

    Hugo L. Black:

    May I ask you a question about that statement because I — I don’t quite understand.

    Suppose the evidence shows that this transfer had been made for the purposes, before him, of evading any judgment it has.

    Suppose it was (Inaudible) by the evidence, it was not an artificial, fictitious, it didn’t have any real genuine (Inaudible), would you then say that the Court would be without power to force you to turn over that property even though — even though it knew that it’s fictitious?

    James G. Wheeler:

    Yes, sir.

    There’s no —

    Hugo L. Black:

    An official transaction and have — really hadn’t been any at all?

    James G. Wheeler:

    Well, there’s no property to turn over but I would say yes.

    The Court could not punish for that because there was no decree for it to violate.

    They may — it — It may have been —

    Hugo L. Black:

    That’s — that’s a different question.

    But there is a decree, we’ll say, in 1952 which said, “You got to obey, if you — you got to pay these people something,” we don’t know exactly what.

    Will you that that kind and to get billion and go through some artificial hocus-pocus, fictitious transactions which doesn’t really amount to a transfer, then the Court comes along and says later, “You turn this over.

    It’s fraudulent, you still have this and it’s still yours.”

    You mean to say that the Court couldn’t enforce that?

    James G. Wheeler:

    No, I won’t say anything of the kind, but I say it’s not relevant to this particular question.

    Hugo L. Black:

    You mean that’s not what you have?

    James G. Wheeler:

    No, sir, that isn’t what we have.

    But I will say this in order to frame Your Honor’s question in a little different manner, if they had done that, before there was any definite decree which they could obey or disobey a definite order to pay money which they could obey or disobey, they could not be punished for contempt.

    They might be reached in other ways but they could not be punished for contempt until there was a definite order which they could be in contempt on.

    Hugo L. Black:

    Well, you got an order you say then, you got an order and you want to go back behind to show that they have this property, it’s artificial transfer back there and they have it now, order it to pay it, couldn’t the court get them for contempt if it didn’t turn it over.

    James G. Wheeler:

    Well, presumably.

    Hugo L. Black:

    You’re not saying, are you, that they could — couldn’t look behind those transactions to see if there —

    James G. Wheeler:

    Oh, no —

    Hugo L. Black:

    — had been any definite legitimate —

    James G. Wheeler:

    No, if —

    Hugo L. Black:

    — transfer of the property.

    James G. Wheeler:

    — if they want to raise that issue, which they do not or never have, the court could go behind it, of course.

    James G. Wheeler:

    Yes, sir, certainly it —

    Felix Frankfurter:

    Don’t think that — don’t say it’s tendered that issue — can there — can there be contempt proceedings?

    James G. Wheeler:

    We think not.

    Felix Frankfurter:

    Don’t they say that they ask for a commitment civil contempt, namely, to carry out the order of 1952 rendered liquid — rendered liquidated by 1955 because not to ordinary, specific business adversity or regular business transaction but that there was a calculated design purposeful plan executed to render (Inaudible) imputed the liquidated amount when just went time.

    Isn’t that what they said the contempt case?

    I’m not saying there’s any — I’m not saying there’s any (Voice Overlap) —

    James G. Wheeler:

    Well, I understand, Your Honor.

    I don’t think they do exactly.

    I think they try to but I think in order to do that, you must allege some facts.

    You can’t just call us names or state conclusions which reflect on our honesty.

    You have to be a little more definite than that.

    Felix Frankfurter:

    Well, that isn’t the ground —

    James G. Wheeler:

    And I don’t think they have it.

    Felix Frankfurter:

    — that isn’t the ground on which the Court of Appeals went if they’d said you didn’t ask for a bill of particulars, and the Court of Appeals didn’t say we’ll leave him a civil contempt as a serious matter.

    And before I ask people to perform or on the alternative go to jail to see to if the phrase runs with their pockets to get out of it, you must be more specific if that in the Court of Appeals, I have my great doubts whether this Court would think it was this business to — to tell yes, there enough.

    That was the question of pleading.

    That isn’t what the case is about, is it?

    James G. Wheeler:

    I would say no.

    Of course, there was a very extensive exchange of pleadings.

    I have drawn so many answers and responses to motions that — but — but they’re set out in this record at least the last set of them and the allegations of the Board are substantially the same and they’re repeated and we have answered them and stated the facts, some of which I have stated here before the Court.

    Felix Frankfurter:

    And the Court didn’t say they’re insufficient and you make them more ample, more detailed, more particular for us to act on, the Court didn’t do that, did it?

    James G. Wheeler:

    They said they were insufficient.

    Felix Frankfurter:

    Yes, but out of legal ground, namely, that all that took place — took place prior to the —

    James G. Wheeler:

    Yes, sir.

    Felix Frankfurter:

    — the act of the controverted items of 1955 where the indefinite as the 1952, they’re definite.

    That’s why (Voice Overlap) —

    James G. Wheeler:

    That is the ground.

    That is the ground and it did say they were insufficient on that ground.

    Well, our position briefly stated and I don’t know that I need label to point because I think we have covered it in briefs and I think we’ve covered it in our responses to the motions.

    First, there’s no question here before the Court on inspection or that kind of thing.

    James G. Wheeler:

    That wasn’t tendered on the petition for certiorari.

    That question is not here.

    The question referred to on which Mr. Justice Stewart dissented is not here.

    It’s solely a question of contempt and this argument today eliminates from that even the question of contempt on the part of the subsidiaries or affiliated companies.

    Well, that’s not stressed and it appears to me that it has been abandoned.

    That apparently, equity — the — the allegations do not permit a consideration of those charges under Equity Rule 65 because there was no concerted action by the subsidiaries or affiliated companies with Deena Artware and is not charged that there was.

    They speak of siphoning of assets.

    There were no assets to siphon off since October 1949, three years before the first decree and eight years before the last decree.

    So it appears to us that we need not consider whether the affiliated corporations derived any responsibility for contempt from Deena Artware unless we find that Deena Artware was itself guilty of contempt, which it is admitted it could not have been since December 1955 when the final definite decree was entered.

    Charles E. Whittaker:

    Isn’t what you asked, if I understand, in substantive amount (Inaudible) there must be a judgment for (Inaudible)

    James G. Wheeler:

    Yes, sir.

    Charles E. Whittaker:

    And that he cannot be cited or held in contempt before (Inaudible) to form a judgment then he couldn’t be barred.

    James G. Wheeler:

    Yes sir, correct and that is the substance of our argument in the basis of our position.

    Hugo L. Black:

    What do you say to their second opinion?

    I understand that it doesn’t interpret issue it seems to me that pretty nearly kind of this issue which Mr. Justice Frankfurter suggested respondents are integral part of a single enterprise and as such were and are answerable to the Court’s decree which explicitly rise against Deena Artware and its officers, agents, successors and assigns, whether respondents or any of them are answerable to the supplementary decree as officers, agents, successors and assigns.

    James G. Wheeler:

    Well, I say —

    Hugo L. Black:

    Does that not tender the issue or does it?

    James G. Wheeler:

    I don’t — it appears to be tended on their petition for certiorari.

    It is referred to in briefs and we’ve submitted our argument and they’ve submitted theirs.

    I can’t say it isn’t tended.

    I’m referring to —

    Hugo L. Black:

    I misunderstood you to say it was not tendered.

    James G. Wheeler:

    Well, I — I expressly —

    Hugo L. Black:

    I misunderstood you, I’m sure.

    James G. Wheeler:

    No, sir, I expressed it inaccurately.

    I mean the counsel in presenting his argument did not stress it and didn’t bring it up at all until he was questioned from the bench as to whether he was abandoning that.

    I think we’ve covered it in briefs.

    And our position is that there is no showing or no allegation of such concert of action as would make these subsidiaries liable in any respect under the equity rule which is the only — only rule under which they could be responsible for anything that’s charged here.

    Hugo L. Black:

    Suppose they could establish (Inaudible)

    James G. Wheeler:

    All right, sir.

    Hugo L. Black:

    — the brief I’m asking you the question, I’m —

    James G. Wheeler:

    Yes, sir.

    Hugo L. Black:

    — I’m not — don’t understand it.

    Suppose they could have tell you as they say, these are really part of one integrated company all with the same interest and all allowed at the same thing of judgment might be a liberal reading of what they try to (Inaudible) raise it.

    Suppose they could establish it, why would they — and that was the issue they would try, why would they not be entitled to the information which they decide on that issue?

    And that’s (Inaudible)

    James G. Wheeler:

    Because the — the only thing that could bring into the (Inaudible) the Court’s order in this case would be such connection between them as would make them liable for a — a failure to perform the decree under Rule 65, that is, concert of action with the party charge, no charge has ever been made against these affiliated corporations.

    One of them, Deena Products Company, I doubt if it’s before the Court of the Sixth Circuit, hadn’t done business in the Sixth Circuit for five years.

    I doubt if it’s before that Court and we made the question of jurisdiction.

    But it’s —

    Hugo L. Black:

    Suppose — what I am getting at, suppose the Court was wholly right and wholly and that decree or whatever the basis is too indefinite to —

    James G. Wheeler:

    Yes, sir.

    Hugo L. Black:

    — get him for contempt for paying it insofar as payment of the thing that was concerned, but that on that — in addition to that, there was some issue tendered as to whether these companies were really operating as one so that whatever was going — done by one is done by all and that the Court now wanted to try that out in order to catch by inference to those fines.

    Would that not — would the information they seek not be required and would — would it not be valid to seek (Inaudible) on that inference?

    James G. Wheeler:

    Well, they might — they might seek it into some kind of a proceeding but they — they could not, in this proceeding, through the medium of contempt engaged in a punitive expedition against these little companies and undertake to get it that way.

    The —

    Hugo L. Black:

    Do you think we have to consider in the framework of contempt not in the framework in a case where there’s an effort ascertained whether or not there has been some artificial transaction.

    Some have taken place between, apparently between different people when in fact the old ones working to the same end and only the same thing.

    James G. Wheeler:

    I don’t know that I catch full import of Your Honor’s question and I don’t want to —

    Hugo L. Black:

    Well —

    James G. Wheeler:

    — answer it inaptly.

    Hugo L. Black:

    — the — the import of it is this.

    The — do you say that this has to be considered, the permissibility of this evidence on the basis of contempt and nothing else?

    James G. Wheeler:

    In this proceeding, yes, because that’s the way they are going.

    We tried — the courts tried to make them proceed otherwise but they won’t do it.

    Hugo L. Black:

    Well, that’s — that’s — then I suppose that that’s true, you’re saying in what — the second issue should be raised in a way of some kind of a bill to protect the equity as a preliminary to a definite order that would — he might find that’d be made by the Court.

    James G. Wheeler:

    Yes, sir.

    I’m saying that — well, we cited on page 23 of our brief these words in a Second Circuit case of Judge Hand.

    In allowing these words, successors and assigns to stand, we wish to make it clear however that we do not hold that a successor or an assign will be in contempt of our order if it should even after notice of the order, but without participating with the respondent in any disobedience of it, do exactly those things which the order forbids.

    Hugo L. Black:

    Well, that — that’s what I maybe — maybe the Government is not mentioning it but looks to me like what they’re claiming on their second question (Inaudible) or integral parts of the single entity.

    James G. Wheeler:

    Yes.

    Hugo L. Black:

    As (Inaudible) we’re not answering it to the Court’s decrees which explicit toward against Deena Artware and its officers, agents, successors and assigns.

    And I believe we did hold it in one case some years ago, did we not, that such a decree was binding on the successors and assigns?

    James G. Wheeler:

    Yes, it has been so held, but I think we’ve taken care of that in the latter part of our brief by showing that there is no statement which would bring them within the class of successors and assigns here.

    All the world that this is, is just simply using the corporate form to engage in business.

    Hugo L. Black:

    You’re saying that might be true if it questions that.

    James G. Wheeler:

    Yes, it is questioned.

    Hugo L. Black:

    They have a right to test it out, do they not, as to follow that is the truth in fact.

    James G. Wheeler:

    In a proper proceeding, but not by contempt against one or tempted to be enforced against others who are not even parties to the proceedings from which the contempt arises.

    That’s our — that’s our position.

    Earl Warren:

    Well, Mr. Wheeler, why — how can you say they don’t charge those things adequately?

    I notice on page 5, towards the bottom, it says that all times material herein, Weiner has owned all the shares of stock of Products except for the minimum shares required by directors to qualify for office.

    And Products has owned all of the shares of stock from shares and subsidiaries including Artware except for the minimum shares required by directors and — and so forth.

    Wiener has been the real owner of Products and the subsidiaries.

    Then, at all times, material herein, the officers and directors of Products and of the subsidiaries including Artware have been Weiner, his wife, his son and whoever has been employed as Weiner’s personal office secretary.

    Wiener has been president and treasurer of all the corporations.

    And then it says at all times, herein — material herein, Weiner has actively directed and controlled the financial and business operation of the products and the subsidiaries including Artware.

    Now –now, how — how can it be said that that doesn’t tie those people up into one package about as closely as humanly possible to — to do so, so far as the effect of this — this order whatever it may be goes?

    James G. Wheeler:

    All right, sir, strip of the conclusions, it just simply means that here is a parent corporation with several subsidiaries and —

    Earl Warren:

    Is that — is that a conclusion where you say Weiner is the owner, Weiner has directed the business, Weiner is a president, owns all of the stock and that he has handled all of the financial and business operations for Products and the subsidiaries, are those all conclusions?

    James G. Wheeler:

    Some of them are.

    Earl Warren:

    Are they statements of facts?

    James G. Wheeler:

    Most of them.

    In fact, the statement that he’s president and treasurer go on true as the statement of fact.

    Earl Warren:

    It poses — it poses the fact that he owns all of stocks would be a fact to —

    James G. Wheeler:

    It isn’t true.

    Tom C. Clark:

    — include their conclusion, would it?

    James G. Wheeler:

    It isn’t true, but it is — it’s not a conclusion.

    Earl Warren:

    I know but we’re talking about the allegation.

    James G. Wheeler:

    I understand.

    Earl Warren:

    It might — none of them might be true so (Voice Overlap) —

    James G. Wheeler:

    I understand.

    Earl Warren:

    — so far as I know.

    James G. Wheeler:

    But these are Kentucky corporations.

    They have Board of Directors.

    Weiner and Products can’t control them.

    We have the facts set out elsewhere in more detail which bears out what I say when I say that’s a mere statement of conclusions of bad faith.

    The facts are developed throughout the statements.

    Earl Warren:

    Well, what they’re asking for is a hearing on — on these allegations.

    James G. Wheeler:

    I don’t think so.

    Hugo L. Black:

    What if they’re asking for the evidence (Inaudible)?

    James G. Wheeler:

    Sir?

    Hugo L. Black:

    What if they’re asking for the evidence (Inaudible)?

    James G. Wheeler:

    I — well, I have my ideas about it.

    They don’t need any evidence.

    We’ve been over this thing.

    There’s a record filed in this Court.

    They’re surely familiar with these facts.

    The allegations show how well posted they are.

    They don’t need any evidence but that’s not before this Court now.

    The only thing before us —

    Hugo L. Black:

    What you — what you seem to be saying is that they cannot do what is generally called if the corporate fails even though there are sufficient allegations to justify in order to show that all that’s being done is really on the one mind and one control and one (Inaudible) party?

    James G. Wheeler:

    Well, they maybe able to piece the corporate veil is they want to try it.

    Hugo L. Black:

    I don’t much think — think why that should that occur (Voice Overlap) —

    James G. Wheeler:

    No, I [Laughter] — maybe, Your Honor, but that isn’t what is here.

    What is here is the question of contempt, and that’s all.

    Charles E. Whittaker:

    But you (Inaudible) all the factual allegations may find your (Inaudible) that this is all one entity owned by Mr. Weiner and they say but nevertheless, the 1952 judgment imposed no decree that could be provided and hence that could not be disobeyed and by the time (Inaudible) as a matter of law, there could be no citation for contempt.

    James G. Wheeler:

    Most of — most of that I go along with, but I do say that when in this series of statements shot through with conclusions of bad faith, they show that they knew that a mortgage was executed in 1939, three years before the first decree and six or seven years before the second decree that that fact is just as binding on them as these statements that they cite from the assets at a time when their own statement show there are no assets to siphon all.

    And they couldn’t have done it, because they knew the facts and when it’s taken as a whole, now, taking the — the allegations afford to by the Chief Justice just set out taken out of context, it would appeal that they had made charges that he was — that Weiner had or wrongfully controlled if — all of these corporations.

    But when you take all of the allegations and read the thing from beginning to end, you find that nothing after 1952 could have changed the situation in any respect.

    James G. Wheeler:

    Now, in — in conclusion, unless there’s something further that Court may suggest to me, I want to say that Judge Miller had tried this controversy seven times, and I think Judge Martin was waiting.

    It’s been up there before that Court so long that after the last one came up, one member of the Court said, “Well, we’ve gotten rid of old Deena at last”, but he was wrong.

    We hadn’t gotten rid of old Deena at last, but I refer to that now flippantly to show that that Court and the members of that court were thoroughly familiar with this matter, it’s been before them so many times.

    And Judge Miller’s final opinion from which this appeal is prosecuted is not only a review of facts, but we think a very thorough consideration of all of the issues before that Court and I refer to it because I know it will be studied by this Court as a more effective and more complete statement of facts from an impartial court than we could set out in our briefs up here.

    Earl Warren:

    Thank you, Mr. Wheeler.

    Mr. Spritzer.

    Ralph S. Spritzer:

    It seems to me that counsel has presented an entirely different version of the fact than I attempted to present.

    This results from the fact that counsel for respondent pleads the facts set out in the answer and we plead the facts set out in the petition.

    That seems like fair play except to the fact that in the posture of the case, as it comes here, the allegations of the petition had to be taken as true.

    Now, for example, it has been stated time and again that the Government can’t deny that this indebtedness reflected in a mortgage executed in 1949 had a legitimate basis.

    Well, the Government does deny it.

    On page 11, the Government says in its petition, “Artware’s alleged indebtedness,” I’m reading from paragraph (k), “to Products for which the notes, mortgage and assignments were executed was not a true and valid indebtedness and did not represent a true accounting of transactions between the companies.

    It was not executed in the usual course of business.

    It was made and executed for the purpose of the evading payment of the sums due under the decree, it was not for adequate and proper considerations for value given,” and so forth.

    Now, it was that mortgage which was foreclosed in 1953 after the first decree has been executed.

    Now, counsel refers time and again to the proposition you can’t do this by contempt.

    Well, I don’t know how an equity court enforces its decrees when it’s alleged that there has been a failure to comply with them except by the contempt process.

    And we’re not asking for punishment, that word has been consistently used.

    We have been asking for the traditional remedy, the coercive remedy which equity can give to assure compliance with its decree.

    That means that contempt will be purged by the mere fact of payment.

    Now, I did not mean to convey in my opening that we don’t rely on the proposition that the transferees or assigns or successors.

    What I did mean to convey was that I did not want to posit the case in which these successors were purely innocent transferees.

    Because it seemed to me that the case was so much stronger on the allegations here which show that they’re not innocent that the Court need not reach more difficult problems when it has to stand —

    William J. Brennan, Jr.:

    Well, may I ask, Mr. Spritzer?

    Ralph S. Spritzer:

    — on the simple ones in the Court.

    William J. Brennan, Jr.:

    This is probably the same question that Mr. Justice Harlan asked you earlier.

    What is your position in the event we can’t agree with you that they should be implied under the 1952 order, a restraint against frustrating the decree

    ?If we cannot do that, what is the significance of your allegations that this was a group?

    Ralph S. Spritzer:

    I think the Government would still be entitled to cry out on its allegations, the proposition that this was a single enterprise and that the transferee corporations were liable to the order as well as the transferor corporation.

    William J. Brennan, Jr.:

    Liable to an order even though there is not to be found in the order by implication or otherwise a restraint against frustrating the decree?

    Ralph S. Spritzer:

    Yes, because the order imposed an obligation to pay upon Deena Artware, its officers, successors and assigns and I would argue that even if there had been no scheme or, let me amend that, even if there had been no implied restraint against frustration of the decree that they would be liable if they received without adequate consideration assets of the corporation which was originally subjected to the order.

    Hugo L. Black:

    May I ask you just one question?

    Does that mean this?

    Let’s suppose, and I just want to agree with the courts below that to this extent that this order did not forbid the transfer of their assets with sufficient specificity to justify him under kept decree or whatever you call it (Inaudible) on that basis.

    Let’s suppose this, does that mean that that would end the case or is your complaint here sufficient to justify you in having a hearing in terms of whether or not the Court could amend upon that this property has been conveyed and has really been no conveyors to owe one person and that it then issues an order directed them to turn it over.

    Ralph S. Spritzer:

    Certainly, it is broad enough to cover that theory as well.

    Do you (Inaudible)

    Ralph S. Spritzer:

    I’m sorry, I didn’t catch that line.

    In your future complaint (Inaudible) Products, this type of company (Inaudible) as to another name of (Inaudible)

    Ralph S. Spritzer:

    Well it controls it and also that it is —

    (Voice Overlap) just legal question.

    Ralph S. Spritzer:

    It’s more than that.

    It —

    (Inaudible)

    Ralph S. Spritzer:

    We also have specific allegations it seems to me that all these inter corporate transactions ruled out by — without consideration or value.

    (Inaudible)

    William J. Brennan, Jr.:

    Even there it seems —

    (Voice Overlap) transferors or bona fide whether they were in the secretary (Inaudible)

    Ralph S. Spritzer:

    Well, I think —

    I think you can show that Products (Inaudible)

    Ralph S. Spritzer:

    I agree that we could argue it on the second theory so to speak on one of two bases.

    We could say it is all one that an integrated enterprise and I think that’s alleged and we could also say that to the extent that it isn’t for all purposes the same enterprise still they are successors and assigns because the transfers were without adequate consideration and their relationship plus the lack of consideration justifies treating the transferee as well as the transferor as subject to the directions of the order.

    Earl Warren:

    Very well, Mr. Spritzer.