Full opinion text
STONE, Circuit Judge. Motion for. new trial has been filed by each of the companies. These motions are identical except as to the grounds urged why Findings- of Facts VIII and IX are (it is claimed) erroneous. As to these two findings there is but one difference in the motions: The so-called New York and Hartford companies set forth identical grounds and the other companies set forth identical grounds differing from those of the New York and Hartford companies. The motions are divided into three general headings: erroneous statements in the opinion; erroneous findings of facts; and erroneous conclusions of law. In addition, the jurisdiction of the court is again attacked in brief and oral argument. I. Jurisdiction. In the opinion (p. 54), (38 F.Supp. 922) we stated “We have no doubt of the jurisdiction of this Court to act as the Superintendent contends”. We did not reach this conclusion without due consideration of the contentions, in that respect, of the companies. We simply did not set down the reasons therefor. Since these contentions are again urged in connection with the motions for new trial, we think it best to discuss and determine them with particularity rather than rely upon the bare statement of conclusion in the opinion. We shall dispose first of this matter of jurisdiction and then take up the contentions in the motions as to other matters. (a) Complete Lack of Power in the Court. Each of the companies attacks the jurisdiction of this court to distribute the funds to the policyholders “as such action would automatically set aside or modify the decree of February 1, 1936” (“Memorandum for Insurance Companies”, p. 2, filed June 24, 1939). They assert that this cannot be done “because (1) the term at which the decree was entered has expired, (2) the decree was not void, but at most only voidable, and .(3) the alleged injured party has not taken the requisite steps which, under an exception to the general rule, sometimes permit a decree to be set aside even after the term at which it was entered” (same, p. 2). Obviously, the contentions above rest upon the one matter of the power of a court of equity to open its decree after expiration of the term of court during which the decree was entered. The companies concede that decrees may be opened or vacated, after the entry term, for mistake or for fraud inducing entry of the decree. Their position is that this can be done, as to fraud, only for “extrinsic” fraud and then only “by an independent bill in equity” (Memorandum, supra, p. 4). They contend that no such independent bill has been here filed. That the bribery here involved would be such “extrinsic” fraud is certain. Barnett v. Kunkel, 8 Cir., 259 F. 394; and compare Arrowsmith v. Gleason, 129 U.S. 86, 9 S.Ct. 237, 32 L.Ed. 630; and Johnson v. Waters, 111 U.S. 640, 4 S.Ct. 619, 28 L. Ed. 547. Therefore, the real issue is as to whether relief can be obtained only by an original bill in equity. . What form of proceeding must or may be employed depends upon the situation to which the proceeding is to be applied. If the relief is sought in the same court from a fraudulent judgment at law — which really is not a proceeding to affect the judgment but only its enforcement — obviously, the procedure must be by original bill for, in such situations, courts of law have no such jurisdiction and equity does not act upon the judgment itself but upon the parties to the judgment. The same result applies where the proceeding is in a different court from that entering the judgment or decree— this is true because, among other reasons, no •court (except by way of some appellate review procedure) has any jurisdiction to open, vacate or alter the final determination of another court. Where the proceeding is in the same court and is directed against a decree in equity, the situation is different because the court is called to act upon its own earlier action and the original matter is already in equity. In such situations, the name or the form of proceeding is not of controlling importance; provided, it affords adequate opportunity for interested parties to support and to contest the relief sought — this opportunity includes the necessary elements of due process, such as sufficient notice, production of evidence and proper hearing in other respects. The ordinary procedure is by bill of review but, where the above essentials are preserved, procedure by motion has been approved by the Court of Appeals of this Circuit (United States v. Williams, 8 Cir., 67 F. 384, 386) and other courts. United States v. Sterling, 2 Cir., 70 F.2d 708, 711, certiorari denied sub nom. Commercial Trust Co. v. United States, 293 U.S. 584, 55 S.Ct. 97, 79 L.Ed. 679; In re New England Oil-Refining Co., 1 Cir., 9 F.2d 344, 346; Winslow v. Staab, 2 Cir., 242 F. 426, 431. Does the present proceeding comply with the above requirements as to due process? It is initiated by the Superintendent of Insurance through a “Motion * * * for Citation”. The relief sought is not summary action solely upon the motion. It is for a show cause order against the companies. This means, necessarily, the framing of issues and a hearing thereon before any relief is possible. Issues were so framed by the motion and the answers of the companies; full opportunity for evidence from both sides was given and such evidence produced; and a full hearing had thereafter through briefs and oral arguments. Every possible opportunity was afforded to and availed of by the companies fully to present their issues, evidence and views. A formal original bill or a bill of review could not have secured more for the companies than they actually had. The proceedings here are in every respect sufficient and the jurisdiction of the court is assured. All that has been said above would apply were this proceeding merely by one party to seek relief from opposing parties for claimed fraud alleged to have induced an unfavorable decree. There is an additional consideration here arising from the pleaded basis for the relief. That basis is “unclean hands”. The motion presents a situation calling for the exercise of the powers of the court upon that basis and invokes its action. This vitally affects the court itself by bringing to its attention a situation which involves protection of its own integrity and of the public policy requiring such protection and affords the means of so doing. If proved facts require action by the court in such a situation, that action must be in and must be effected upon the litigation resulting in the decrees. Therefore, if a selection of a particular form of proceeding is necessary, it would seem the one here adopted would be more appropriate than an original bill or a bill of review. There is yet another consideration. If the contention of the companies that these decrees cannot be opened be correct, the situation is that, a court would be powerless to protect itself against the most outrageous imposition upon it in entry of a decree unless it discovered the imposition and acted thereon within the decree term. This brings into direct conflict two established rules of public policy. One is the desirability of finality of decrees after the entry term, based upon the public policy that there should be an end to litigation. The other, is the protection of the integrity of judicial action, based upon the public policy that courts of justice must not be used as instruments to effectuate frauds or injustices. One of these rules must give way to the other. We can think of no rules of public policy attaching to the judiciary of equal importance to those which protect the integrity of the exercise of judicial power. Congress has sought to aid this public policy not only by making criminal various particular acts tending to thwart just results in the courts (U.S.C.A. Title 18, chap. 6, § 231 et seq.) but by making criminal any act influencing, obstructing, or impeding “the due administration of justice” (U.S. C.A. Title 18, § 241). But before and without any such legislation, courts in the Anglo-American -judicial systems had devised the remedy of contempt and courts of equity had evolved the ancient remedy of “unclean hands”. All of these methods are useful and none of them should be weakened. As said by the Court of Appeals for this Circuit: the “first duty [of a judicial officer] is to see that those who minister in the temple of justice shall not invoke his authority for the accomplishment of fraud.” Zeitinger v. Hargadine-McKittrick Dry Goods Co., 8 Cir., 244 F. 719, 723. In the Zeitinger. case, the District Court denied an intervention (pleading a rank imposition upon the court in a bankruptcy matter) on the ground “that it was helpless to prevent what was apparently a fraud on its own jurisdiction, that of the circuit court, and upon interveners, because it was of the opinion that no defense could be made to the voluntary petition in bankruptcy.” 244 F. at page 722. As to that action, the Court of Appeals said: “The District Court, however, could have safely relied upon the proposition that there is and can be no law or practice which would compel a court of bankruptcy or any other court to become a party to a fraud.” 244 F. at page 722. We believe it is more essential to preserve the integrity of the courts than to terminate particular litigations. So long as there remains anything which a court can do in a particular litigation to protect its integrity, we think it has the power to act: provided only, that such action is based upon a full opportunity for hearing by all interested parties. The companies make another attack upon the power of this court to take any action whatsoever in these proceedings. This contention is thus stated: “This is a three-judge Court and, as a three-judge Court, it has no jurisdiction over such a proceeding” (Suggestions of Plaintiff Insurance Companies in Support of their Motions for New Trial, p. 34). The supporting argument is that (for the same reasons that a single judge has no jurisdiction in a case within the “three-judge” statute (28 U.S.C.A. § 380) such a statutory court is “without jurisdiction to try or decide a case not coming within the Statute; as, for example, an action to set aside a decree obtained or induced by fraud. The fact that a challenged decree was entered by a three-judge court makes no difference. It is a decree and nothing more, regardless of whether it was rendered by a one-judge court or a three-judge court” (same, p. 34). Such a statutory court is certainly nothing more than a District Court with personnel enlarged by statute in the particular kinds of litigation defined by the statute. The purposes of the statute were to provide adequate hearing and full deliberation by three judges and, thus, to prevent a single judge sitting on the district from improvidently granting injunctions interfering with the operation of State law. Cumberland Telephone & Telegraph Co. v. Louisiana Public Service Comm., 260 U.S. 212, 216, 43 S.Ct. 75, 67 L.Ed. 217. Such suit is filed in the District Court and even a single District Judge may issue a restraining order. There is no suggestion, in the statute or in the effect intended by the statute, that the statutory court lacks any ordinary powers of a District Court which may be found useful in performance of its duties- — least of all that such court lacks the ordinary and basic powers of a court of equity to protect both the parties and itself from fraudulent imposition directly affecting the litigation before it. The decisions (such as Wilentz v. Sovereign Camp, 306 U.S. 573, 59 S.Ct. 709, 83 L.Ed. 994) relied upon go no further than that only the classes of litigation set out in the statute are within the jurisdiction of the statutory court. They do not even hint that, once having that jurisdiction properly, such a court cannot exercise all of the ordinary equitable powers of a District Court in respect to such litigation. A good method of testing the verity of a contention is by examination of the results which would flow from it. If this contention be true, some of the results therefrom would be as follows. The most outrageous fraud upon parties and even the grossest misuse of the powers of such statutory court might be induced— even through serious criminal acts — by another party- and there would be no possible power in the court either to prevent or to annul the nefarious results so brought about. This is true because no single judge —even of the same court — -has any jurisdiction to act except to grant a brief restraining order (Cumberland Telephone & Telegraph Co. v. Louisiana Public Service Comm., 260 U.S. 212, 43 S.Ct. 75, 67 L.Ed. 217; Ex parte Metropolitan Water Co., 220 U.S. 539, 31 S.Ct. 600, 55 L.Ed. 575), and if the statutory court has no power, then there is no such power anywhere. Also, we must adopt the view that when Congress required three judges to sit in certain classes of very important and often far-reaching litigations, it had as one purpose the denial to such court of the ordinary powers, possessed by and fundamental in every court of equity, to protect itself and litigants before it from fraud and imposition respecting such litigation. Clear expression of such purpose would have to appear in the language of the act before any court could even seriously consider attributing such intention to the Congress. (b) Limitation of Jurisdiction. The discussion as to the next preceding heading has had to do with the several contentions of the companies that this court had no jurisdiction to affect the decrees in any manner — at least, by the kind of proceeding here. We pass to another contention (presented in the answers to the show cause orders) which is that the only powers in the court are (1) to vacate the decrees in entirety and determine the cases on the merits, provided, the Superintendent shall first restore the status quo before the decrees were entered; or, alternately, (2) to leave the decrees wholly undisturbed. In limine, it is well to settle the doubt in the minds of counsel as to the status of the decrees (of February 1, 1936), as affected by the present proceedings, up to (just before) entry of the orders at which these motions for new trials are aimed. The status of the decrees was undisturbed prior to the orders requiring distribution of the returned funds to the policyholders. It is true the funds paid (under the decrees) to the companies and to the trustees were ordered returned to the custodian but that action was purely preliminary for the purpose of creating a situation where the court could readily and efficiently act upon whatever its determination might thereafter be as to the merits under the show cause order. Such return for that purpose was acquiesced in by the companies with the reservation of right to contest what such determination should be. The instant contention has to do with such determination and is one of the issues therein. This issue has to do with the powers of the court. It is that, unless and until the Superintendent fully restores the status quo before the. decrees were entered, the powers of this court are restricted solely to return to the companies the monies they have returned to the custodian, leaving the decrees undisturbed. By such status quo, the companies mean the return to the custodian, by the Superintendent, of more than $2,000,000 (the 20% under the decrees) paid to over 3,000,000 separate policyholders and of nearly $600,-000 paid by the trustees (out of the 30% going to the trustees under the decrees) to the Superintendent for his expenses and attorneys’ fees (Brief for the Fire Insurance Companies (p. 64) filed on the merits in these proceedings). The companies know very well that it is utterly impossible for the Superintendent to restore these funds even if he wished to do so. Therefore, the legal situation created by this contention (if well taken) when applied to the actual and known fact situation is that this court can do nothing to disturb the decrees — must, indeed, order the return to the companies of the monies paid back to the custodian by them. If we are right in holding (as we do) that the companies are legally responsible for “unclean hands” in securing the decrees, the result is that they will secure the full fruits of such improper action and a grave imposition upon the court cannot be remedied. This would be a sorry result. It would even be in conflict with the much emphasized willingness of the companies to take no benefit from the bribed settlement and the resultant decrees. To hand back the funds with the reservation that they must be returned to them unless certain conditions — known to be impossible of compliance — are complied with is an idle gesture. The related arguments in support of this contention are (1) the failure to restore or offer to restore — “the retention” — of these sums “is a fatal bar to the Superintendent’s right to have the decree set aside” (citing Grymes v. Sanders, 93 U.S. 55, 62, 23 L. Ed. 798; Henry v. United States, 3 Cir., 46 F.2d 640, 642; Ripley v. Jackson Zinc & Lead Co., 8 Cir., 221 F. 209, 211, 213; and Black on Rescission and Cancellation, secs. 539, 541, 563) (Brief of the Fire Insurance Companies on the merits, p. 64); and (2) that, by “retaining” these sums, the Superintendent has, in law, elected to ratify the decrees even though they may have been voidable because of fraud (citing Kentucky-Tennessee L. & P. Co. v. City of Paris, 6 Cir., 48 F.2d 795, 800, 801; Bruguiere v. Bruguiere, 172 Cal. 199, 155 P. 988, 989, 990, Ann.Cas.1917E, 122; Mallory v. Mallory, 160 Ill.App. 471 (should be 417) (same brief, p. 64). These arguments are not convincing and the cases cited are not applicable. The underlying defect in the arguments is that counsel confuse two maxims of equity. They seem to be considering the maxim “He who seeks equity must do equity.” That maxim is not involved here. These proceedings rest upon the maxim as to “unclean hands”. While situations arise where either or both maxims, as well as other maxims, might apply; and therefore some confusion is present in the decisions, nevertheless, these two maxims have cardinal differences. Goble v. O’Connor, 43 Neb. 49, 61 N.W. 131, 134; 21 C.J. 178, § 157 and citations, and 182, § 164 and citations; 1 Pomeroy’s Equity Jurisprudence, 4th Ed., pp. 737, 738. The vitality of each, since ancient times, undeniably proves some differences. The difference of importance here is as follows. In applying the maxim requiring equity from one seeking equity the court is concerned primarily with the rights and duties of the parties inter sese. In applying the “clean hands” maxim the court is concerned primarily with protecting its own integrity from improper action by a party. The former arises upon the pleading of a party (usually defendant) against whom a fraud has been committed. The latter need not be even pleaded; may come to the attention of the coúrt in any way; and the court will act sua sponte. Bentley v. Tibbals, 2 Cir., 223 F. 247, 252; Primeau v. Granfield, 2 Cir., 193 F. 911, 913. Even when the matter is brought to the attention of the court by a pleading, the court acts “not out of any regard for the defendant who sets it up, but only on account of the public interest.” McMullen v. Hoffman, 174 U.S. 639, 669, 19 S.Ct. 839, 851, 43 L.Ed. 1117. In these proceedings, the matter of “unclean hands” is brought to our attention by the Motion for Citation. That motion set forth a situation of the grossest imposition upon this court through inducing entry of decrees upon an arrangement based upon bribery. In all movement thereafter, this court was acting not for the benefit or punishment of any party but to do whatever the law and the facts justified in vindicating its integrity as a court of justice. We must and did take the situation as it then was and therefrom worked out that vindication in the only way possible — by taking from those we thought legally responsible for this imposition all fruits of such action. This court is not barred from doing this by failure of the Superintendent to restore or offer to restore the payments to the policyholders and the payments to him for expenses and attorneys’ fees if the Court of Appeals of this Circuit is right, as we think it is, in stating “that there is and can be no law or practice which would compel a * * * court to become a party to a fraud.” Zeitinger v. Hargadine-McKittrick Dry Goods Co., 8 Cir., 244 F. 719, 722. The case of Vallery v. Denver & R. G. Railroad Co., 8 Cir., 236 F. 176, has a bearing upon this urged necessity for restoration. Vallery, as receiver of the Colorado Midland Railway Company, brought an ancillary proceeding for the benefit of general creditors, inter alia, to set aside a sale to the Denver and R. G. Railroad Company of stock owned by Midland in a third company. The pleaded ground for this relief was that the Denver had secured this stock, much helow value, through exercising its control over Midland by a fraudulent scheme involving creation of mortgage indebtedness by the Midland and foreclosure sale thereunder. As to the contention that the receiver must restore the purchase price paid by the Denver for the stock, the court (236 F. at pages 181, 182) said: “This is not a case where equity would require the plaintiff to make a tender in money of the amount paid by the Denver & Rio Grande at the foreclosure sale of the stock. Fraud is alleged, and the plaintiff is but an officer of the court seeking to obtain property belonging to the Midland Company for the benefit of its creditors. To require the plaintiff to make a tender might defeat the action. When a plaintiff seeks to set aside a transaction for fraud, it is not necessary or his duty to tender any sums which it may appear that the parties guilty of the fraud have disbursed.” If restoration is not required as a prerequisite to recovery in an action between parties to set aside a fraudulent sale, where the plaintiff is required to do equity, so much the more is it not necessary in an “unclean hands” proceeding where the "court is not acting for the parties but to protect its own integrity. The decrees here provided for payment to trustees for the companies of 30% of the impounded funds and it was from this trust fund that the payments were made to the Superintendent for expenses and attorneys’ fees— thus these payments were such as “the parties guilty of the fraud have disbursed.” Another argument is that “When the impounded moneys received by the companies were restored to the Custodian, everything which had been accomplished by the decrees had been undone. It then became the duty of-the Court to determine who owned the impounded funds according to law and justice (Morgan v. United States, 304 U.S. 1 [58 S.Ct. 773, 999, 82 L.Ed. 1129] [counsel probably intended to cite United States v. Morgan, 307 U.S. 183, 59 S.Ct. 795, 83 L.Ed. 1211])” (Suggestions of Plaintiff Insurance Companies in Support of their Motions for New Trial, p. 35). This argument is unsound for two reasons. First, it is based upon the unreal assumption that the restoration by the companies opened or vacated the decrees. No such result followed since the sole purpose of such restoration was to place those funds in control of the court for whatever determination it might thereafter reach upon the issues raised in the show cause proceedings. Second, counsel again lose sight of the character of these proceedings as being in vindication of the integrity of the court. Let us suppose that, before the decrees had been entered, this court had discovered the companies had been guilty of some sort of unconscionable conduct before these suits were filed so that even counsel would have conceded that action under the “unclean hands” maxim was proper. In such situation, this court would have had to use the remedy (at the basis of the maxim’s doctrine) of dismissing the suits. What could the court have done— and it must do something — with the then impounded funds? Is it compelled to try the merits of the suits solely in order to dispose of the funds? If so, a possible result would be the handing over to the companies of these funds. Is it not absurd to say that the cases could be thrown out of court, without decision on the merits as to the order of rate reduction by the Superintendent — the only purpose of the suits — and yet, because the court impounded funds purely pendente lite on the insistence and for the protection of the companies (funds taken from policyholders above the only then legally established rates) and must dispose of such impoundments on dismissing the suits, that the court must proceed to try and determine the merits of the suits in order to get rid of the impoundments? Suppose the companies had voluntarily dismissed these suits before decrees entered, would the court have to try and determine the merits of the suits before it could dispose of the impoundments ? The Morgan case, 307 U.S. 183, 59 S. Ct. 795, 83 L.Ed. 1211, and other like cases announced rules as to disposition of pendente lite impoundments upon far different situations to the one here. Those cases have clearly no application whatsoever to our situation. (c) Conclusion. We conclude that there is no merit in any of the attacks upon the jurisdiction of the court to act in these proceedings and, upon the facts as we view them to be, to act as we have done. There is another feature in these proceedings which we think it well to notice in connection with these contentions as to jurisdiction. We do this because that feature is much stressed by the companies and because its force is affected by such contentions. This feature is the reiterated and emphasized claims that the companies want no benefit from these bribery induced decrees and that such attitude is evidenced by their prompt repudiation thereof and prompt return of the funds paid to them and (for them) to the trustees thereunder. The bribery transactions were brought into the open through a grand jury investigation, at Kansas City, Missouri, in the early part of 1939. In connection with such investigation, subpoenas were issued for some presidents of the companies who promptly notified the United States Attorney (in charge of the investigation) that they would give him every assistance (Rec. I, p. 492) and, we assume, that they did so. Then followed an interval of several months with no movement by any of the companies to bring the situation to the attention of this court nor to return any moneys. We do not state this by way of criticism, for there may have been justifiable reasons for such inaction. However, it is the fact that nothing in that direction was done by the companies until the hearing upon the Motion for Citation filed by the Superintendent of Insurance. What has been stated above as to the situation before that hearing is merely preliminary. Our immediate concern is with what has happened beginning with that hearing, which was on May 29, 1939. That hearing was for the purpose of determining what steps the court should take concerning this motion of the Superintendent. At that hearing there was no slightest suggestion as to any lack of jurisdiction in the court concerning entertainment and determination of these proceedings. As a result of that hearing the restoration order and the show cause order were entered in each case. There was no objection nor opposition to the making of either of such orders. Thereafter, the companies urged the above-discussed total lack of jurisdiction and continue to insist thereon. In this situation, the matter which we wish to notice is the bearing of these jurisdictional contentions upon the insistence of the companies that they wish no benefits from the decrees. We are not thinking of their right to present such contentions. We are thinking of the patent inconsistency of their two positions. They hand hack the funds saying with one breath we want no benefits from the decrees and, with the next breath, you have no power to affect the decrees by which we received these funds. Clearly, if the court cannot affect the decrees, the only thing it can do is to hand back the funds so returned. The practical situation thus developed is: take back the funds, we want no benefit from the decrees, but all you can do is to hand us back these funds —such funds being the sole benefits to them from the decrees. The willingness to return the funds would seem to be an idle gesture and none too graceful at that. II. Errors in Opinion. In the Motions for New Trial there are twenty claimed erroneous statements in the opinion. In the printed suggestions filed some time - later than and in support of the motions, counsel claim seventy-two erroneous or inaccurate statements in the opinion. In a still later “Outline of Mr. Bullitt’s Oral Argument”, counsel set forth about 120 claimed erroneous, inaccurate or criticised statements in the opinion. We might well dispense with any consideration of this character of criticism of the opinion on the ground that statements of fact contained in an opinion cannot be used to ascertain the evidence or the facts or to control or modify the findings of fact upon which a judgment or order is based. Loeb v. Columbia Township Trustees, 179 U.S. 472, 482, 485, 21 S.Ct. 174, 45 L.Ed. 280; Stone v. United States, 164 U.S. 380, 383, 17 S.Ct. 71, 41 L.Ed. 477. Also, we might dispose of them shortly by stating, what is true, that none of such as are either erroneous or inaccurate was material in reaching the ultimate facts upon which our 'decision is based. However, we prefer to do otherwise. We do this with the hope that an examination of these various contentions may be of some- aid to a reviewing court, be-cause this entire litigation — of which the present proceedings are but a part — is so complicated in many ways that it is not easy for a court, not intimately and long connected with it, to' escape confusion. In so doing, we have no thought of following counsel through the fine toothed combing ánd recombing resulting in the 72 criticisms in their printed “Suggestions” in support of the motions or the about 120 criticisms in the later “Outline of Mr. Bullitt’s Oral Argument”. We have carefully studied and considered every one of the additional matters set out in the above suggestions and outline and find no reason, in any or all of them, to grant any of the Motions for New Trial or why they should be discussed in detail. It is fair to assume that the major defects counsel claim to have found in the opinion are stated in the Motions for New Trial, which are the only pleadings before us requiring determination. Therefore, we shall confine discussion to such matters as are stated in those motions. As to the erroneous statements in the opinion claimed in the motions, an initial word may be said. This immediate litigation (disposition of that portion of the impounded funds returned by the companies) is an exceedingly complicated matter in itself because it involves the conduct of many individuals and the effects of such conduct upon the separate rights of more than 130 different companies operating as 57 different groups. The evidence covers more than 1,600 printed pages. A report on the evidence by the master could not be reduced to less than 678 printed pages. In addition to such difficulties, this immediate controversy is not entirely isolated. It is, in a sense, a link in a chain of disputes and litigations regarding Missouri insurance rates which has stretched unbroken for eighteen years —related to the general litigation. While not necessary to a determination of the immediate issues, we thought some references to this general situation might be useful to a reviewing court, as a matter of background if nothing more and, therefore, such were included in the opinion. In this situation, it would be unusual if some inaccuracies of statement did not occur in our regrettably but necessarily lengthy opinion. In the Motions for New Trial (p. 1) it is stated that, if the claimed erroneous statements of fact had been correctly stated, they “would, have, or might have, had a material effect upon the Court’s reasoning and conclusions adverse to the plaintiff.” Therefore, in examining these claimed inaccuracies, our concern is not so much with the existence of inaccurate statements of fact as it is with-the materiality of such as may exist. By “materiality” we mean as having any material influence upon the factual results reached in the opinion and in the findings of facts. Very generally stated, the main factual results reached in the opinion and in the findings were as follows: the nefarious conduct of Street; the agency of Street; and the knowledge (implied or actual) of the companies. With this measure in mind, we turn to the several items in the motions. The claimed inaccuracies refer to separate brief statements scattered throughout the opinion. To consider each separately is, therefore, a rather disjointed method but there seems no other way open to us. Hence, we will consider each separately stated matter (in the motions) as a distinct item except where, (because of like subject matter) we are able intelligently to cover several by the same discussion. Item I. This item charges that the statement in the opinion (p. 1), (38 F.Supp. 898) that one of the provisions of the settlement agreement was that "the suits were to be dismissed” is erroneous.. It is true that the agreement does not use the expression: “the suits are to be dismissed”. However, it does set forth, as one of the main purposes of the agreement, “the mutual desire of the parties to settle such controversies” (Rec. I, p. 28). That the parties to the agreement understood that such “settlement” involves dismissal of the suits is clear. This was shown to be true when they first brought this matter to the attention of the court (about a month following the agreement) in separate verified motions for decrees wherein the several companies stated “the parties to this cause have by mutual agreement settled said cause and controversy involved therein, including the distribution of the funds impounded with the court under its order and for a dismissal of this cause” (italics added). In substance, the statement in the opinion was true. More important and controlling is the obvious situation that, whether erroneous or true, the statement had not the, remotest influence upon the results reached in the opinion. It was so entirely immaterial that it could have been omitted without being missed. It is not and could not be disputed .that the decrees (including dismissal) were the direct and the intended result of the agreement. Item II. This item is not directed at any inaccuracy of statement in the opinion but at an inference, which counsel draw, that the language quoted in the item from the opinion might be construed as meaning that six of the companies had contributed to the bribery money. This statement in the opinion occurs in part “II. Contentions” of the opinion. This part of the opinion was, obviously, designed purely as a general statement of the “Contentions” of the parties before this court in this proceeding. In the brief filed by the companies on the merits, it is stated (p. 45): “The 139 Companies. fall into four ‘classes’ accord ing to the differences in information which they respectively had; and they will be so discussed: First Point 66 Companies (p. 48, infra) Second Point IS Companies (p. 91, infra) Third Point 34 New York Companies (p. 94, infra) Fourth Point 26 Hartford Companies (p. 101, infra) Total 139 Companies.** On the next page of the brief (p. 46) is a “Summary of Points Discussed” whereunder is the same grouping of companies as above. The statements in connection with these four groups (brief, pp. 46-47) clearly show that a prime reason for putting the New York and the Hartford companies in classes different from the 66 companies was that the New York and Hartford companies had participated in the New York or in the Hartford meetings at which the initial bribery money was arranged for. The statement in the opinion now criticised in all respects follows the substance of the statements in the brief of the companies as to the general “contentions” of the companies and it is obvious that the opinion (at this point) was stating merely the general contentions. The contentions in the motions (under this item) concerning contributions to bribery money by the six companies will be treated under Item XII which deals with the same matter. Items III, ÍV, XIV, XV, XVI. These are claimed to have to do with an erroneous statement as to the date when • the 155 suits (the original separate company suits in this court) were dismissed. The opinion (p. 11), (38 F.Supp. 903) states this date as “In May, 1929 (soon after the affirmances)' * * The “affirmances” were by the opinion of the Supreme Court (National Fire Ins. Co. v. Thompson, 281 U.S. 331, 50 S.Ct. 288, 74 L.Ed. 881), which was handed down April 14, 1930. It is obvious this statement should have been “In May, 1930”. This inadvertence is argued to have been important in the determinations reached by this court. The only statements in the opinion based on this erroneous date are those to the effect that, for several months during the dispute over Missouri rates, the ten percent reduction rate order was unchallenged (Op. p. 11), (38 F.Supp. 903) and that, shortly after the above affirmance, all of the 155 suits were dismissed (Op. pp. 48 and 49), (38 F.Supp. 919). Whether such order was or was not challenged in 1929 or in 1930 or at all has no bearing whatsoever upon the issue of “unclean hands” through conduct of the companies in 1935 and 1936. Whether these 155 suits were dismissed in May 1929, or in May, 1930, has, obviously, no bearing whatsoever upon the issues determined in the opinion or upon the reasoning by which the results in the opinion were reached. As to Item XIV it may be noticed that the erroneous statement attacked is not in .the opinion but in the bracketed expression interpolated by counsel into the language of the opinion. When taken in connection with the next preceding sentence in the opinion (p. 48), (38 F.Supp. 919), it is clear that no specific date was in mind or was material. When Items XV and XVI are read in the context of the paragraph (Op., pp. 48-49), (38 F.Supp. 919) containing them (as well as Item XIV) the strained character of these criticisms is clear. Item V. In a sentence of the opinion (p. 13), (38 F. Supp. 904) and the footnote thereto is the statement that by 1939 all distribution of the impounded funds to the companies and to the trustees had been made. Counsel correctly challenge this statement. They state “This is incorrect, because, in 1939, there remained at least $941,240.52 undistributed to the Companies and to the Trustees, i. e., (1) $613,918.21 out of the impoundings alone; and (2) $327,322.31 out of the interest and accretions going to the Companies.” They say: “This error is adverted to because (a) the Opinion refers to the Companies’ failure to demand an accounting of Street (pp.. 59, 60), (38 F.Supp. 924) ; and (b) our argument, which the Opinion evidently overlooked, that the time for an accounting had not arrived until this $941,240.52 was distributed and the Custodian’s accounts closed (brief, p. 58)” (Motions, p. 4). The point of the criticism as to this item is based upon the asserted premise that “in 1939, there remained at least $941,-240.52 undistributed to the Companies and to the Trustees, i. e., (1) $613,918.21 out of the impoundings alone; and (2) $327,-322.31 out of the interest and accretions-going to the Companies” (Motions New Trial, p. 4). On this basis is built the contention that this court overlooked the argument in the brief on the merits (p. 58). We did not overlook this argument in the brief. We considered it but we did not discuss it in the opinion. This lack of discussion might well lead counsel to the conclusion that we had overlooked it. We think we should now remove this impression and state our views. This argument (in the brief), which counsel think we overlooked, was that “The failure to receive Street’s promised accounting, for the comparatively small [5%] sum involved for each Company, excited no suspicion, because the time for such accounting had not arrived” — meaning, there was no reason to expect an accounting “until * * * the accounts of the Custodian and the Trustees could be finally closed up” after all moneys in the hands of the custodian and of the trustees had been distributed. The pertinence of this argument is in the contention of the companies, as follows: if Street had, at the time any company was asked for the 5% contribution, lulled inquiry as to the' intended use thereof by promising an accounting after the custodian’s distributions and accounts were closed, then no unfavorable inference could be drawn from failure of the company to demand such accounting until the time therefor arrived, which has not even yet occurred. This contention is not simply that there would — naturally— be an accounting by the custodian at the close of his services but it has to do solely with the state of mind of the officials of any company (at the time the 5% payments were made) induced by the claimed promise of Street that he would make an accounting of the use of the 5% contribution at a particular time, that is, after the accounts of the custodian had been closed finally. Before discussing this “argument” in the brief, it is useful to examine just how far the statement that “there remained at least $941,240.52 undistributed to the companies and to the Trustees” is accurate. That the ■custodian had this sum is true. The point is how far, or in what sense, can this sum he properly regarded as a fund belonging to the companies or to the trustees, and, therefore, “undistributed” to them. This requires explanation of the purpose of and the component elements of this fund of $941,240.52, which was in the hands of the ■custodian as of January 1, 1940. Why such a fund? Mainly to provide money for expenses of the distribution to the policyholders of the portions of the impounded funds going to them under the decrees. Such distribution required the calculation of several million different amounts for each of which a check must be issued and mailed to the particular policyholder. It was obvious that these and related matters would involve a vast amount of labor extending over much time. Also, that there would be a very sizable resulting expense which could not be even approximated when the decrees were entered. An ample fund must be provided therefor. This was done, by the consent decrees, and is the fund now being considered. How was this fund composed? It came from two sources: (1) such part of the earnings made by the custodian, from investing the impoundments, as were allocable to the impoundments not going to the policyholders; and (2) what we will call “retained impoundments”. “Retained impoundments” necessitate some explanation. Under the settlement agreement, the companies filed new rate schedules retroactively effective May 1, 1935, and impoundments were to cease as of April 30, 1935. For reasons not necessary to be detailed, the impoundments were continued until November 11, 1935, although business written beginning May 1 was regarded as being under the new rates. Since the “forthwith” disbursements to the companies and to the trustees provided in the decrees were only of 50% and 30%, respectively, of the net impoundments on business written before May 1, 1935, the impoundments on business written beginning May 1, 1935, were retained by the court. Such created the greater part of the “retained impoundments”. The remainder of the retained impoundments was made up of what, for want of a better name, we may call “equalizing amounts”. The total of these “amounts” is so relatively small ($16,454.98) that we are not justified' in taking space to explain why they came into being. For present purposes, it suffices to say that if the impoundments of any company on business written between May 1 and November 11, 1935, fell below 5% of the total net impoundments of that company, the deficiency to make up the 5% was supplied by retaining the required amount from the 50% of net impoundments (up to May 1) “forthwith” payable to that company. Thus these “retained impoundments” of $613,918.21 were made up of $597,463.23 of impoundments on business written between May 1 and November 11, 1935, and of $16,454.98 of “equalizing amounts”. The results were (1) that all companies not affected by the 5% requirement received “forthwith” (during 1936) payment in full of the 50% of net impoundings on business written up to May 1, 1935; and 36 companies and two participating accounts (Underwriters Grain Association $161.88 and General Cover Department $236.47) received such 50%, less amounts varying from $2,473.72 to $24.38 and total-ling for the 38 accounts $16,454.98. The information as to the “equalizing amounts” is, with one exception, derived from the books of the custodian and is attached to this opinion as an appendix. The above exception is a “breakdown” of the General Cover Department % 903 — shown in the Record III, p. 531. The decree required the “earnings” portion of this fund to be exhausted before resort to the “retained impoundment” portion. Thus from 1936 up to the time of the refund by the companies on July 1, 1939, the situation was that the custodian held only the trust fund for the policyholders (provided by the decrees Rec. I, pp. 34-35) which had been steadily paid out to them until practically completed by July 1, 1939 (Rec. III, pp. 533-534) ; and this expense fund for meeting those and other expenses and costs. Whether this expense fund would be exhausted or how nearly so could not be known until after full distribution and the time had arrived for the custodian to be discharged. From what has been said, it is clear that the statement in the Motions for New Trial that this expense fund was "undistributed to the Companies and to the Trustees” is accurate only in so far as this: that any balance left therein when the custodian was ready to close his accounts would be then so distributable in the way provided in the decrees. Having explained the character of this fund in the hands of the custodian, we examine next the claim that certain companies were influenced by promise from Street that he would explain or account for the payments he was asking of them and which he used for bribery. It is not urged that all of the companies had any such promise. This contention has to do with one feature bearing on implied knowledge of each of the companies — that is, the duty to inquire and lack of inquiry — at the time each made the 5% contributions. This feature, urged by the companies, as having an important influence upon such duty to inquire and lack of inquiry, is that Street had (they claim) promised an accounting which would explain for what these contributions were wanted. The argument is that a promise of such an accounting was relied upon and, therefore, would justify these 5% payments without further inquiry. Of course, even if such promise were made, it would have no bearing upon the duty to inquire unless it was relied upon by the company. If some sort of accounting were promised and the time therefor passed without accounting and without some steps by the company thereafter to obtain the accounting or the information the accounting would have given, it would be fairly conclusive proof that the company had not been influenced, when it made its contribution, by thecpromise of an accounting. But if the time for any promised accounting had not arrived, then there could be no inference from failure of the company to follow up the promise. The sole bearing of the contention under this item of the Motions for New Trial is, therefore, that no such inference can be drawn from failure to follow up because the time for the claimed promised accounting had not yet arrived since the particular accounting promised by Street was to be after closing of the custodian’s accounts and such closing has never been made. At the threshold of such consideration,, the incongruity of such contentions thrusts-itself forward. Street was asking contributions which, in so far as he disclosed, were to be used for purposes already fully-provided for by the trustees’ fund which the companies knew had not been exhausted. He was asking such be made to him. as an individual or as “Agent” and not in. his capacity as one of these trustees. It was obvious that these contributions had no-connection whatsoever with the expense-fund of the custodian or the fund of the-trustees. Then, why should Street make any accounting as to these contributions, dependent (as to time) upon closing the accounts either of the trustees or of the custodian? A fortiori, why should any company official be influenced in the slightest by such character of promise? Would not-the effect of such an unnatural connection. of ideas tend to arouse, not allay, suspicion and inquiry in the mind of any official giving serious consideration to an accounting? This incongruity bears not only upon the probability as to any such promised accounting but upon the influence — weight— of such a promise as an inducement to such contributions. Nevertheless, we will examine the evidence as to any promises by Street as to any such accounting. The opinion (pp. 58-60), (38 F.Supp. 924), after setting forth the obviously unusual and inquiry — exciting situations under which those 5% payments were made, contains two statements here pertinent. The first of which was that, in spite of such situations, “these experienced company executives, with few exceptions, made these contributions without further inquiry although (the testimony shows) they required information before they would pay out money for insured losses or other company expenditures.” (p. 59), (38 F.Supp. 924.) The second (and immediately following) statement was: “The few exceptions were satisfied by promises of later accountings which were never made and which they never further requested.” (pp. 59-60), (38 F. Supp. 924). From what is said above, it is clear that this contention as to accounting is rather narrowly confined to only one feature of the evidence as to.the duty to and the failure to inquire. Since no promise of any hind of accounting to be made at any designated time was ever followed up by any-company, the contention really narrows down to two considerations: (1) was the promised accounting of Street to take place after closing of the custodian’s accounts; and (2), if so, what influence had such promise upon the contribution of the company. The last of these two considerations is pertinent because even if the situation as to this particular feature were as the companies contend, yet other evidence might convincingly show that such promised accounting had no material influence upon the action of a company in making its contribution. Obviously, this matter -of promised accounting is an individual company consideration but since all of these payments (the initial bribe contribution of $100,500 and the later 5% contributions) were by groups and, therefore, all companies in a group like affected, we will make our examination by groups. Also, our examination will cover, not only the .5% payments which is the matter aimed at in this item, but, in addition, the contributions to the initial bribe money $100,500 made in connection with the New York and Hartford meetings in May, 1935. To ascertain as to which groups there was evidence as to any promise by Street of an accounting to be made after the custodian’s accounts were closed, we have rechecked the entire evidence. The very nature of this onerous task is such that inaccuracies are possible but the work has been carefully done and we believe there can be no material inaccuracy in the statements hereinafter as to this situation. While we are concerned only with promises as to a particularly timed accounting, yet our search of the evidence has revealed a variety of testimony as to accountings. In avoiding confusion, it may be helpful briefly to sketch this general situation and thus, by elimination, get down to those groups as to which there is evidence as to the particular promised accounting here involved. This general situation is as follows: As to many groups there is no evidence as to any kind of accounting, either promised or expected though not promised. As to other groups, there is no evidence of any promise of or statement that there would be any kind of accounting but the executive “assumed” or “expected” or “hoped” there would be an accounting, usually indefinite as to character or time (instances are Rec. I, 129, 134; III, 32, 33, 34, 39; II, 119; II, 233, 234, 235; II, 524, 525, 526; III, 13). As to yet other groups, there was evidence of a promise or a statement of Street that he would account at some indefinite time in the future (instances are Rec. I, 236, 244, 245, 246; I, 82; III, 401; III, 337; III, 76, 81; III, 48). As to other groups, there was evidence of promise or statement that the contribution to the initial $100,500 would be accounted for when the settlement had been made or when the special fund needed by Street and to which these initial contributions were “advances” was prorated among all of the companies (instances are Rec. Ill, 401, 402; III, 337; III, 74; II, 417, 419, 426; II, 458, 460; III, 88; III, 46) — of course, the prorata accounting was made when these initial advancements were deducted from the later 5% payments requested from these same companies. As to other groups, the evidence was that Street promised an accounting or explanation at the approaching semiannual meeting of the Western Underwriter’s Association to be held at White Sulphur Springs (instances are Rec. II, 61, 64; II, 510, 511, 512; II, 247, 249; I, 176, 185). As to one group (making only a 5% contribution) Street stated, March 30, 1936, that explanation would be made at the Association “meeting next month” (April, 1936) (Rec. III, 259). As to one group, the executive was referred by Street to Mr. Haid for explanation and Street stated also that he (Street) would explain “the first time I see you” (Rec. II, 428) but, the executive testified, “I wasn’t interested in getting them [any details] and didn’t ask either one of those gentlemen [Haid or Street] for them” (Rec. II, 435). The situation, set forth above in this paragraph, covers all except five groups (20, 23, 30, 43 and 45). Next, we will examine the evidence as to each of these five groups separately because such evidence contains statements which are or might be construed to be understandings that Street had promised an accounting after closing of the custodian’s accounts. Group 20. The statement by the witness for this group (William H. Koop) was that Street “told me led me to believe that he was asking the companies voluntarily to contribute 5 per cent with the expectation when all the settlements [both Federal and State cases] were made, the whole thing would be washed out and all calculations made and a proper allocation of the proceeds” (I, 417). Construing this language to mean a promise of an accounting after or later than the closing of the custodian’s accounts, it had nothing whatsoever to do with either the initial contribution or -the later 5% contribution by this group. This is so for any or all of three reasons. First, this statement was made after all checks from this group had been issued (Rec. I, 419), and, therefore, could have had no influence upon such issuance. Second, Koop (to whom the above-quoted promise was made) had nothing whatsoever to do with issuance of any of these checks (Rec. I, 414, 417). This was the group in which Street was an executive or western general manager, representing all of these companies in this litigation (Rec. I, 394, 395). It was within Street’s authority to authorize these checks (Rec. I, 414); the vouchers for the checks were signed by Street (Rec. I, 398, 402); and the checks issued through Street’s office (Rec. I, 417). Third, the issuance of these checks was by Street who was an active participant in all the bribery transactions. This actual knowledge was, in such a situation, the actual knowledge of this group. Group 23.. This group contributed both to the initial bribery payment and to the later 5% payments, being given .credit for the first payment by reduction in the later 5% payment. The witness for this group was Wilfred Kurth. Unfortunately, Mr. Kurth was not as frank at times as could be wished. This lack of frankness and the somewhat disjointed character of the examination as to separate occurrences makes a careful study of his testimony necessary in order to get an understanding of the real situation. He testified as to the New York, 1935, meeting (in connection with which the payment of $15,000 was made as a contribution to the $100,500 initial bribery fund) that Street said he wanted to raise $100,000 for legal expenses and was asking some of the larger companies to contribute that amount to save the delay and detail that would be occasioned by applying to all of the companies interested in the litigation (Rec. I, 424, 438); and that the $100,000 would be fully accounted for (Rec. I, 424-426). Then he was asked, “What if anything more was to be paid, or were you to have any of this $15,000.00 back? What about it?' What was the understanding at the time?” His ansYYer was “Well, it was to be applied to expenses and that when the final clean up of the Missouri impoundings was made, it would be accounted for” (Rec. I, 426). Also, he would get a credit “in the final cleanup of the accounting” (Rec. I, 440) for this advance on any further demands (Rec. I, 440, 441). When the $28,682.14 check was requested, Street did not say what it was for —“Just he wanted it” (Rec. I, 444). “He got it on the theory he was going to get up a full statement? A. Oh, yes, by the end of the year” (Italics added) (Rec. I, 444) — the year being 1936. When the $15,000 check was issued on May 2, 1935, the transaction was that day entered on the regular cash book of the company as “Legal Charles R. Street Chairman Mo. Refund Case $15,000.00” (Rec. I, 448, 449). The check for $28,-682.14 (dated March 23, 1936) was placed in a Special Suspense Account No. 3 which was created when the 11% check from the trustees was received and the $28,-682.14 check was issued (Rec. I, 436, 447, 449). Thus the situation (as to these two payments) following the creation of this “suspense” account was as follows: When the $28,682.14 check was given he understood that this plus the earlier check for $15,000 represented 5% of his impoundings (Rec. I, 437) and that his and all other companies were giving to Street, as agent, such 5% (Rec. I, 437, 438). Since he knew then that the earlier advance ($15,000) had been asked solely to save delay in applying to all of the companies and that it was being credited on his later 5% payment made in connection with collections of 5% from all of the companies, he must have known that all of these collections were for like purposes. Also, he knew then that he was, in connection with this second payment, getting the credit for the first payment ($15,000) which had been promised in “the final cleanup”. This last payment of $28,682.14 was to be ’accounted for in a “full statement * * * by the end of the year.” (Rec. I, 444). Therefore, it is clear that such statement at the end of the year would have given all the information as to the purposes for and uses of these two checks that he claims to have expected, as to the first check, at any final accou