DocketNumber: 25
Citation Numbers: 96 L. Ed. 2d 19, 72 S. Ct. 14, 342 U.S. 19, 1951 U.S. LEXIS 2464
Judges: Douglas, Black, Jackson, Clark, Minton
Filed Date: 12/11/1951
Status: Precedential
Modified Date: 10/19/2024
delivered the opinion of the Court.
Rule 24 (a) of the Federal Rules of Civil Procedure provides in part as follows:
“(a) Intervention of Right. Upon timely application anyone shall be permitted to intervene in an action: . . . (2) when the representation of the applicant’s interest by existing parties is or may be inadequate and the applicant is or may be bound by a judgment in the action; or (3) when the applicant is so situated as to be adversely affected by a distribution or other disposition of property which is in the custody or subject to the control or disposition of the court or an officer thereof.”
Appellant claims intervention of right in the Sherman Act proceedings involving the reorganization of certain producers and distributors of motion picture films whose activities had been found to violate the Act. See United States v. Paramount Pictures, Inc., 334 U. S. 131. If appellant may intervene as of right, the order' of the court denying intervention is appealable. See Railroad Trainmen v. B. & O. R. Co., 331 U. S. 519, 524: 32 Stat.
The present controversy stems from the reorganization of Warner Bros. Pictures, Inc., pursuant to a decree of the court in the Sherman Act proceedings. Under this decree provision is made for the divorcement of Warner’s theatre business from its production and distribution business. The various steps in the reorganization are not material here. It is sufficient to note that according to the plán the stockholders of Warner will vote a dissolution of Warner. Two new companies Will be formed, one to receive the theatre assets, the other, to receive the production and distribution assets. Each of the new companies will distribute its capital stock pro rata to Warner’s stockholders.
Warner is a guarantor of a lease of theatre properties made by appellant to a subsidiary of a subsidiary of Warner. The lease, executed in 1928 and modified in 1948, is for a term of 98 years. The plan of reorganization submitted to the stockholders provides, as we read it and as construed by counsel for appellees on oral argument, that liabilities of the class in which the guaranty falls will be assumed by the new theatre company. Appellant seeks intervention to protect its guaranty.
There is intervention as of right under Rule 24 (a) (2) “when the representation of the applicant’s interest by existing parties is or may be inadequate and the applicant is or may be bound by a judgment in the action.” Appellant, however, is not a privy of Warner; its rights not only do not derive from Warner, they are indeed adverse to Warner. The decree in this case, like that in Credits Commutation Co. v. United States, 177 U. S. 311, therefore is not res judicata of the rights sought to be protected through intervention.
We do not think, however, that on this record appellant has shown that it will be “adversely affected” by the reorganization within the meaning of Rule 24 (a) (3). It will have the guaranty of the new theatre company. No showing is made or attempted that that company lacks the financial strength to assume the responsibilities of the guaranty. No showing is made or attempted that the contingent liability under the. guaranty is so imminent and onerous as to make the guaranty of the new company substantially less valuable than the guaranty of Warner’s. For all we know, a guaranty of a company in the "theatre business, freed from the hazards of the production and distribution business, may be even more valuable than the guaranty of Warner’s. We do not pass here on the fairness of the plan of reorganization. Cf. Continental Co. v. United States, 259 U. S. 156. We hold' only that appellant has not maintained the burden of showing that under Rule 24 (a) (3) it may intervene as of right.
Dismissed.