Harrie Brigham Chase

In Rich v. United States, a tank cleaner injured by falling from a ladder while cleaning tanks on a U.S. vessel sued the United States for negligence under the Public Vessels Act after receiving workers' compensation payments from his employer under the Longshoremen’s and Harbor Workers’ Compensation Act. The district court denied the United States' motion to implead the employer as a third party under Admiralty Rule 56, reasoning that no joint liability or liability over was asserted and that the compensation act's exclusivity provision would bar recovery from the employer. The Court of Appeals reversed and remanded, holding that the United States had sufficiently alleged a claim for indemnity based on the employer's independent duty, which could be pursued via impleader even though the compensation act bars direct suits by the employee against the employer.

procedurelabor & employmenttorts & liability

This case involved claims that corporate officers and related parties misappropriated funds from Automatic to purchase shares of Majestic stock, with the court having previously found liability on that basis rather than stock conversion. On rehearing, the court clarified the method for calculating the profits defendants must disgorge: for 41,500 shares sold by one defendant, profits are measured by the average gain across all her shares rather than isolating the highest-profit sales; for defendants holding unsold shares now worth less than cost, net gains or losses on the overall transaction are considered when a constructive trust is imposed; and no interest is awarded on profits where defendants realized no provable gain. These rules draw on trust and restitution principles governing commingled funds and single breaches, aiming only to strip wrongful benefits without imposing penalties or compensating the corporation beyond the principal already repaid with interest.

business & regulatory

This case concerned the proper tax basis for shares of stock that beneficiaries received in lieu of cash proceeds from the sale of real property directed under a will. The will of Laura E. Anderson directed her executors to sell specified real estate, pay small charitable bequests from the proceeds, and divide the balance among four named legatees; the executors instead transferred the property to a corporation in 1928 in exchange for stock that they issued to the legatees, who later received the property in liquidation. The Commissioner assessed capital gains tax using the property's 1921 fair market value at the testatrix's death as the basis, but the Tax Court and the Second Circuit held that the basis was the value of the legatees' claims to sale proceeds in 1928 when they surrendered those claims for the stock. The court reasoned that under New York law the beneficiaries held only equitable interests in the proceeds, not in the realty itself, which remained under the executors' control in trust until disposition, so any appreciation before 1928 affected the estate rather than the individuals; it therefore affirmed the Tax Court's determination of a modest deficiency based on the 1928 valuation minus the charitable amounts.

taxesproperty

The case involved David Goldstein's conviction for perjury under 18 U.S.C.A. § 231 after he testified under oath during a Treasury Department tax investigation of several companies and individuals that stock certificates numbered 5 through 8 of Aetna Coated Fabrics, Inc. had been issued in his name on October 2, 1941. The government charged that the certificates were actually issued after March 23, 1945, and presented evidence from the company's stock records and witness testimony showing the later date. Goldstein was convicted by a jury and sentenced to imprisonment and a fine. On appeal, the Second Circuit affirmed, holding that the evidence was sufficient to prove perjury as to at least one certificate and that this was adequate to sustain the single-count indictment without needing to prove all assignments. The court also addressed the standard of proof required for perjury and the procedural effect of the defendant's motion to dismiss.

criminal lawtaxesprocedure

The case Marcus v. Otis concerns a shareholder derivative action in which plaintiffs, through holding companies, sued directors of Automatic Products Corporation for converting 116,500 shares of Majestic Radio & Television Corporation stock that Automatic had acquired from DuMont Laboratories. The lower court held the defendant directors liable both for conversion of the shares and as constructive trustees for withdrawing corporate funds to purchase the shares for their own benefit, applying the same measure of liability on either theory. On appeal, the court reviewed the key transaction of April 26, 1943, in which DuMont transferred its Majestic securities to the defendants for $137,000 after negotiations involving Automatic's officers, and addressed issues including whether the directors converted the shares, the number involved, their status as constructive trustees, and the proper recovery amount. The opinion recounts the factual background, including Automatic's prior holdings in Majestic, the directors' roles, and communications confirming the purchase, while citing precedents on trusts, conversion, and remedies to guide the analysis of the defendants' conduct.

business & regulatory

This case is an appeal from a conviction after a fourth trial on charges of violating the White Slave Traffic Act and conspiring to do so. The court reviewed multiple claimed errors regarding the admission of evidence derived from an illegal search, limits on cross-examination, the use of post-conspiracy statements by a co-conspirator, jury instructions on the elements of the offense, and other evidentiary and procedural issues. It held that the trial court properly exercised discretion in admitting evidence based on the prosecutor's assurances of independent origin and that other asserted errors either lacked merit or were not preserved for appeal. The court also found no abuse of discretion in denying a post-trial motion for a new trial based on an affidavit later repudiated by the affiant. The judgment of conviction was affirmed.

criminal lawprocedure

The case involved a young Merchant Marine seaman who suffered permanent injuries, including blindness and epilepsy, after falling into a navy dry dock while returning to his ship from shore leave in the damaged and dimly lit port of Palermo, Sicily, during World War II. He sued the United States and the ship’s operating agent under the Jones Act and Suits in Admiralty Act, alleging negligence by the master in failing to warn him of dangers and by the government in not providing a safe route within the controlled port area, and also seeking wages plus extended maintenance and cure. The court affirmed dismissal of the negligence claims on the merits, finding no duty to deny shore leave or issue special warnings about obvious wartime conditions and no breach in the port’s security measures. It awarded limited wages, bonus, and maintenance and cure only up to the point of maximum medical recovery, holding that the obligation ends once the seaman is as cured as medical treatment can achieve and does not extend to future palliative care for permanent conditions.

labor & employmenttorts & liability

This admiralty case involved damage to a scow owned by CF Harms Co. and chartered to the Erie Railroad, which occurred when the vessel broke adrift during a hurricane while loaded with Army equipment at a pier under U.S. Army control in 1944. The owner sued the Railroad as charterer, and the Railroad impleaded the United States under the Tucker Act, alleging the government had assumed complete control. The court held that the Army had taken on a duty of reasonable care to protect the scow due to the wartime circumstances, including secrecy requirements that prevented the Railroad from intervening, creating a bailment-like relationship. It affirmed liability against the United States but ruled the Railroad was only secondarily liable as bailee. The decision rested on reconstructing the parties' relations to determine the imputed understanding of responsibility for moving the vessel to safety.

torts & liabilityfederal power

The case involved a veteran who sought one week's vacation pay after being restored to his pre-military position as a stamping operator at Crosby Co., claiming entitlement under section 8(e) of the Selective Training Act of 1940 and a 1946 collective bargaining agreement with the United Steelworkers union. The agreement provided vacation pay to employees in the company's employ for at least 26 weeks before July 1, 1946, but the company denied the claim, arguing that time on military leave did not count toward this period. The court affirmed dismissal of the petition, holding that the Act treats restored veterans as on furlough or leave of absence and only guarantees benefits matching those offered to others on such leave under established company rules. The contract's vacation provision did not include leave time in the employment calculation, unlike its separate seniority rules, and no such company practice for leaves was shown.

labor & employmentfederal power

The case arose from a 1942 collision in which a U.S. Navy tug struck and sank the libellant's lighter Dayton, leading to a libel against the towing tug Helen B. Moran and, after settlement, against the United States under an interlocutory decree awarding 80% of proven damages. The Commissioner calculated total damages at $61,021.59 based on wreck-raising costs, repairs, miscellaneous items, and demurrage, resulting in an 80% award of $48,817.27, but the court reversed the decree. The core reasoning, drawn from precedents such as The Reno and The Havilah, was that damages for a sunken vessel are limited to its value at the time of loss (plus necessary raising expenses if not a total loss) and that repair costs exceeding that value may not be recovered; the libellant did not meet its burden of proving a higher value, and the Commissioner's reliance on repair figures and expert testimony was flawed.

torts & liabilityprocedure

This case involved a suit by Eastern Transportation Company against the United States under the Tucker Act to recover unpaid freight due under a charterparty for transporting phosphate rock from New York to Baltimore, where the contract specified that freight was payable in full without deduction upon delivery. The United States answered with counterclaims for cargo damage, demurrage, and expenses due to unseaworthiness, but the district court struck the answer and entered judgment for the plaintiff. The court of appeals reversed, holding that the counterclaims were compulsory under Federal Rule of Civil Procedure 13(a) and had to be adjudicated before a final judgment could be entered, that Rule 54(b) and related precedents precluded final judgment while compulsory counterclaims remained pending, and that 31 U.S.C.A. § 227 independently preserved the government's right to set off debts against any judgment. The case was remanded for further proceedings consistent with these rules.

business & regulatoryfederal powerprocedure

The case involved the convictions of Modern Reed & Rattan Co. and its president Giannasca on multiple counts under the Fair Labor Standards Act of 1938 for willfully failing to pay employees statutory overtime compensation, shipping interstate commerce goods produced with underpaid labor, and related violations. The defendants had previously pleaded guilty to other FLSA violations, and the prosecution disclosed those prior convictions to the jury at the outset of the trial. The court held that this disclosure was error because a prior conviction is not an element of the charged offenses under the Act and is relevant only to sentencing by the judge, not to the jury's determination of guilt. Evidence of prior crimes is generally inadmissible unless the defense places character in issue or the defendant testifies, and the initial error improperly deprived the defendants of their choice on those matters. The judgment was reversed and the case remanded for a new trial.

criminal lawlabor & employmentprocedure

This case was a 1945 derivative stockholder suit by an Illinois resident against New York-based officers and directors of Thatcher Manufacturing Company, a glass container manufacturer, alleging fraud and waste in the 1943-1944 grant of stock options to five key personnel (including new president Pollock) as part of a management change amid declining profits and competitive threats. Jurisdiction rested on diversity, and the appeal was limited to the option-related claims after the complaint was dismissed on the merits. The court affirmed, holding that the directors (informed by Pollock's presentation of his stock holdings and proposed incentives) acted honestly in their business judgment to promote corporate welfare by using options to retain or attract talent and sustain morale, despite a later stock price rise that widened the option spread; such choices, including timing and conditions, were not constructive fraud or waste. The result of the directors' good-faith decisions was binding on the corporation and stockholders.

business & regulatory

The case involves plaintiffs seeking additional royalties from General Motors under a contract for manufacturing ice trays, claiming that double-grid trays should have been counted as two royalty units. The district court dismissed the complaint on summary judgment, holding that a prior lawsuit between the parties on the same contract barred this new action under the doctrine of res judicata. The court reasoned that the plaintiffs had discovered the relevant facts about the double-grid trays before the trial in the first suit and could have amended their complaint to seek those royalties but failed to do so, and parties cannot split their causes of action into multiple suits. The appellate court affirmed the dismissal.

procedurebusiness & regulatory

This case concerned U.S. Patent No. 2,118,888 for a simple hectographic copying sheet (or folded sheet) used to create master sheets for duplicating text via either the "spirit" or "gelatin pad" processes. The plaintiff sought a declaratory judgment regarding the patent and damages for unfair competition; the defendants counterclaimed for infringement of claims 10 and 11. The district court dismissed the complaint and issued an injunction against infringement. The Second Circuit reversed, ruling that Foster's earlier patent No. 2,060,190 (filed 1935) was a prior invention that fully disclosed the same attached or folded sheets and thereby anticipated the claims in suit. Because the claims were directed to the product itself rather than a new art or process, they were invalid.

propertybusiness & regulatory

The case involved an appeal from orders of the Bankruptcy Court denying a petition to submit a proposed alteration to a confirmed Chapter X reorganization plan for the debtor, owner of the Equitable Office Building. The plan had already been approved and partially consummated, leaving first mortgage bonds untouched while giving debenture holders new convertible bonds and stock, and old shareholders a smaller stake; the proposed alteration was an offer by City Investing Company to underwrite a new stock issue allowing shareholders to buy shares at $6 to generate funds to pay off the debentures in full. The district judge denied the petition, reasoning that the confirmed plan should remain stable. The Second Circuit reversed, holding that the bankruptcy court had discretion to submit the alteration under § 222 but erred in refusing to do so, because only the shareholders' interests were adversely affected and it was their decision alone whether to accept the financing option to redeem the debentures.

business & regulatoryprocedure

The case concerned the Federal Deposit Insurance Corporation's action for a declaratory judgment and foreclosure on a mortgage securing a bond issued by Congregation Poiley Tzedeck on a parcel of land in Syracuse, New York, which had been conveyed subject to a recorded restrictive covenant limiting use to synagogue purposes, along with claims against individual guarantors of the bond. The district court declared the restrictive covenant invalid, held that prior judgments did not bar recovery of principal and interest, and ruled the guarantors severally liable for up to $1,000 each. The Second Circuit affirmed the declarations regarding the prior judgment and guarantor liability, reasoning that the covenant could not be enforced by the congregation against itself as both covenantee and covenantor and thus provided no defense to the mortgagee or condition on the guaranties, which were unconditional on their face. The court dismissed appeals from the invalidity declaration on procedural grounds and rejected challenges to appeal notices and missing parties under the Federal Rules of Civil Procedure.

propertyprocedurereligious liberty

This case concerned the fair market value on August 31, 1936, of 159,899 shares of Barium Stainless Steel Corporation stock that the taxpayer had received in exchange for notes, for purposes of calculating taxable gain on later sales of those shares. The Tax Court determined the value was $3 per share based on subsequent sales and an option price, rejecting the taxpayer's expert and officer testimony that the shares were worth only 50 cents to $1. The Second Circuit affirmed, holding that its review of factual valuations is narrowly limited, that post-August 31 trading data provided ample support for the $3 figure, and that the Tax Court was not required to accept the taxpayer's lower valuation evidence. The court also upheld the Tax Court's refusal to refer the case to the full court or reopen for new evidence.

taxesbusiness & regulatory

The case involved Bollenbach's conviction for conspiring to transport stolen securities worth over $5,000 in interstate commerce after he was acquitted on the substantive count. The court addressed multiple claimed errors, including the sufficiency of evidence on value and identification, admission of prior crimes, and especially the trial judge's jury instructions on whether conspiracy could be formed after the underlying transportation ended and on presumptions arising from recent possession of stolen property. It clarified that recent possession raises a presumption of knowledge that goods are stolen but overruled any broader presumption of interstate transportation or theft itself, while holding that the erroneous instructions were harmless because other evidence, including the defendant's own statements, established the required knowledge. The conviction was affirmed on the conspiracy count.

criminal lawprocedure

This case involved the United States condemning land owned by Delano Park Homes, Inc. near Hempstead, New York, for War Department use during World War II, with the dispute centering on the amount of compensation awarded. The court affirmed the district court's award of approximately $4,140, holding that temporary wartime restrictions on building materials (priorities system) should be factored into the property's valuation as they limited its use. It rejected arguments that the award was unfair relative to the assessed value, noting that assessments often do not reflect market value, and upheld the use of an expert's appraisal even if it considered sales made under the threat of condemnation. The court also corrected a clerical error in the judgment regarding the allocation of awards between defendants.

propertyfederal powerprocedure