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WESTERN PACIFIC RAILROAD CORP. ET AL. v. WESTERN PACIFIC RAILROAD CO. ET AL.

decided: April 6, 1953.

WESTERN PACIFIC RAILROAD CORP. ET AL
v.
WESTERN PACIFIC RAILROAD CO. ET AL.



CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT.*fn*

Vinson, Black, Reed, Frankfurter, Douglas, Jackson, Burton, Clark, Minton.

Author: VINSON

[ 345 U.S. Page 249]

 MR. CHIEF JUSTICE VINSON delivered the opinion of the Court.

The petitioners in these causes -- a corporation and some of its stockholders -- seek an accounting from respondents -- certain other corporations which, prior to a reorganization in 1943, were subsidiaries of the petitioning corporation. It is petitioners' theory that respondents had unjustly enriched themselves by wrongfully appropriating a "tax loss" incurred by petitioner Western Pacific Railroad Corporation and applying it to the sole benefit of respondent Western Pacific Railroad Company.

The factual background upon which petitioners' complaint was founded is as complicated as it is unique. For present purposes, we may pass over it. Suffice it to say that the cause of action was founded on a theory of unjust enrichment; jurisdiction of the federal courts was invoked upon the grounds of the diverse citizenship of the parties.

The District Court denied relief, and the Court of Appeals affirmed by a two-to-one vote. Petitioners then applied for a rehearing before the Court of Appeals en banc. With one dissent, the rehearing was denied; the court in its order struck the request that the rehearing be en banc. Petitioners then filed a second application protesting that the action of the two judges, who struck out the request for a rehearing en banc, was error because such a request was authorized by statute and required the attention of the full court.

[ 345 U.S. Page 250]

     The Court of Appeals, en banc, declined to entertain this second application. Chief Judge Denman dissented. We granted certiorari; among other things, we deemed it important to resolve the en banc questions precipitated by this litigation. 344 U.S. 809.

The issues stem from 28 U. S. C. § 46 (c). It reads:

"Cases and controversies shall be heard and determined by a court or division of not more than three judges, unless a hearing or rehearing before the court in banc is ordered by a majority of the circuit judges of the circuit who are in active service. A court in banc shall consist of all active circuit judges of the circuit."

It is petitioners' claim that the Code vests in a defeated party the right to ask for a rehearing en banc ; the court as a whole must act upon such a petition; thus the Court of Appeals erred in refusing to entertain the application in this case.

Obviously, the claim calls for close analysis of § 46 (c). What particular right, if any, does it give to a litigant in a Court of Appeals? To what extent is he entitled to put the merits of his cause before each member of the court in pressing his demand for a hearing or a rehearing before the entire court?

In our view, § 46 (c) is not addressed to litigants. It is addressed to the Court of Appeals. It is a grant of power. It vests in the court the power to order hearings en banc. It goes no further. It neither forbids nor requires each active member of a Court of Appeals to entertain each petition for a hearing or rehearing en banc. The court is left free to devise its own administrative machinery to provide the means whereby a majority may order such a hearing.

The statute, enacted in 1948, is but a legislative ratification of Textile Mills Securities Corp. v. Commissioner,

[ 345 U.S. Page 251314]

     U.S. 326 (1941) -- a decision which went no further than to sustain the power of a Court of Appeals to order a hearing en banc. When the statute is cast in historical perspective, this becomes more readily apparent.

As early as 1938, the Judicial Conference of Senior Circuit Judges*fn1 recommended that the Judicial Code be amended to make it clear that "the majority of the circuit judges may be able to provide for a court of more than three judges when in their opinion unusual circumstances make such action advisable."*fn2 The recommendation was renewed in 1939 and again in 1940.*fn3 Thereafter, in 1941, when a conflict developed between circuits*fn4 as to the power to sit en banc under the old Judicial Code, identical bills were introduced in both the House (H. R. 3390) and the Senate (S. 1053) to amend the Code as recommended by the Judicial Conference. The proposed amendment took the form of a proviso to § 117:

". . . Provided, That, in a circuit where there are more than three circuit judges, the majority of the circuit judges may provide for a court of all the active and available circuit judges of the circuit to sit in banc for the hearing of particular cases, when in their opinion such action is advisable." H. R. 3390, S. 1053, 77th Cong., 1st Sess.

[ 345 U.S. Page 252]

     When this legislation came up for a hearing before the Senate Judiciary Committee, Senator Danaher expressly raised the problem, "On whose motion would the court assemble en banc?" He was told that counsel might make a "suggestion," but that "the convening of the full court would be at the initiative of the court," and that it would not be desirable "to encourage the initiation of this suggestion by counsel." Senator McFarland said that from looking at the provision he got the impression that "they [the court] would be the ones to do the acting." Senator Kilgore agreed. Senator Danaher concluded that the amendment would be "impractical unless we make it clear that . . . the judges themselves decide."*fn5

This bit of legislative history is significant. Congress was attempting to frame legislation which would empower a majority of circuit judges in any Court of Appeals to "provide" for hearings en banc. The problem was immediately raised: how would a court be convened en banc -- would the legislation, as framed, give litigants the right to compel every judge to act on an application for a full court? The proponents of the legislation, and those who studied it, worked out this answer in their study of the problem: the determination of how the en banc power was to be exercised was to rest with the court itself -- litigants should be free to suggest that a particular case was appropriate for consideration by the full court, but they should be given no right to compel all circuit judges to take formal action on the suggestion.

Subsequent history of later proposals -- drafted in substantially similar language -- discloses no change in purpose. The amendment to § 117 of the old Judicial Code

[ 345 U.S. Page 253]

     passed the House, but it was never acted upon by the Senate.*fn6 It may have died because this Court's decision in Textile Mills intervened.

The inter-circuit conflict which brought on the proposed amendment to § 117, and which was later resolved by the decision of this Court in Textile Mills, was purely a dispute over the power to sit en banc ; it never reached the problem of how en banc proceedings were to be initiated. In Lang's Estate v. Commissioner, 97 F.2d 867 (1938), the Ninth Circuit had held that under § 117 there was no way in which a circuit of more than three judges could provide the means to convene itself en banc. But the Third Circuit, in Textile Mills,*fn7 reached a contrary conclusion:

". . . we cannot agree with Judge Denman's contrary conclusion in Lang's Estate . . . . We conclude that this court has power to provide, as it has done by Rule 4 (1), for sessions of the court en banc, consisting of all the circuit judges of the circuit in active service." 117 F.2d 62, 70-71. (Emphasis supplied.)

In affirming the Third Circuit, this Court did no more than sustain that court's exercise of the "power to provide . . . for sessions of the court en banc." There is nothing in that decision to indicate that we recognized any right in parties to have their cases passed upon by more than three circuit judges.

This was the state of the law in 1944, when the movement to revise the Judicial Code was in its early stages. At that time, Judge Maris, Chairman of the Judicial Conference Committee on the Revision of the Judicial

[ 345 U.S. Page 254]

     Code, submitted a memorandum to the House Committee on Revision of Laws. Pointing to this Court's decision in Textile Mills, he urged that the new Code should expressly provide "that except in cases and controversies . . . which the court by rule or special order directs to be heard by the full court, all cases and controversies brought before the court shall be heard by not more than three judges."*fn8 This proposal was the genesis of the present § 46 (c).*fn9 It was motivated by a dual purpose: to give express recognition to the doctrine of Textile Mills, while at the same time securing the tradition of three-judge courts against any further intrusion.

The first legislative draft of § 46 (c) did not differ in any material respect from its present form,*fn10 and the provision passed through the succeeding drafts and stages of legislative development without attracting any specific comment. But we are not left unassisted when we seek to divine the legislators' understanding of § 46 (c). We

[ 345 U.S. Page 255]

     have the Reviser's Notes, which are entitled to great weight.*fn11 These comments were before Congress when it reviewed the proposed revision of the Code, and were relied upon to "explain . . . the source of the law and the changes made in the course of the codification and revision."*fn12

The Reviser's Notes tell us that their purpose was two-fold: to "authorize the establishment of divisions of the court," and to "provide for the assignment of circuit judges for hearings" en banc.*fn13 Referring to the latter purpose, the Notes quote extensively from this Court's opinion in

[ 345 U.S. Page 256]

     rules pertaining to the administration of the courts. The Senate was told by its Judiciary Committee that "great care has been exercised to make no changes in the existing law which would not meet with substantially unanimous approval."*fn16 Similarly, Judge Maris told the House Committee on the Judiciary that the new Code "embodies a number of practical improvements in the judicial machinery of a wholly non-controversial nature which have resulted from suggestions originating with the judges whose day to day administration of the various provisions of the Judicial Code gives them a special knowledge of these matters."*fn17

A first reading of § 46 (c) may well leave one with doubts. It reposes power in "a majority of active circuit judges," and says no more. Perhaps, without further study, one might be inclined to fall back upon the general experience of our jurisprudence, and determine that the litigant is, by implication, given the right to compel the full court to determine whether it will exercise its power in a given case. But a study of the legislative background of § 46 (c) dispels such an idea and makes it quite clear that the ...


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