joint clients

Stockholders of First American Life Insurance Company of Alabama brought, in the Northern District of Alabama, a class action against the company and its directors, officers, and controlling persons. They alleged violations of the Securities Act of 1933, the Securities Exchange Act of 1934, SEC Rule 10(b)(5), the Investment Company Act of 1940, the Alabama Securities Act and common law fraud, seeking to recover the purchase price which they and others similarly situated paid for their stock in FAL. They also asserted a derivative action claiming that FAL was itself damaged by alleged fraud in the purchase and sale of securities. FAL filed a cross-claim against all other defendants, asserting in its own behalf the rights the plaintiff shareholders had claimed in the derivative aspect of their complaint. R. Richard Schweitzer served as attorney for the corporation in connection with the issuance of the FAL stock here involved. After the transactions sued upon were complete he became its president. On deposition Schweitzer was asked numerous questions concerning advice given by him to the corporation about various aspects of the issuance and sale of the stock and related matters. Other questions went into the content of discussions at meetings attended by him and company officials and information furnished to him by the corporation. All questions related to times at which Schweitzer acted solely as attorney, before he became an officer of the company and before the filing of suit. The plaintiffs had served a subpoena duces tecum on Schweitzer to bring various documents to the taking of his deposition. Both he and the corporation claimed the privilege with respect to some of the documents. The District Court treated the subpoena as though it were a motion to produce under Rule 34. The District Judge held that the privilege is not available to the corporation as against these plaintiff stockholders. Contemporaneously the District Judge ordered the case transferred to the Southern District of Alabama under 28 U.S.C. § 1404(a). With respect to both orders he entered appropriate findings pursuant to 28 U.S.C. § 1292(b), the interlocutory appeal statute. This court granted applications to allow both interlocutory appeals — the plaintiffs from the transfer order, docketed as No. 26168, and the defendants from the order denying the claim of privilege, docketed as No. 26266 — but provided that ultimate disposition of the appropriateness of interlocutory appeal would be taken with the case on the merits. Also the plaintiffs filed with this court a petition for a writ of mandamus directing the District Judge to retain jurisdiction of the case in the Northern District. The court has concluded that the consolidation of the two interlocutory appeals should be vacated. In this opinion we decide No. 26266, the interlocutory appeal of FAL on the privilege issue.

Petitioners Daniel D. Glasser, Norton I. Kretske, and Samuel H. Roth, together with Louis Kaplan and Anthony Horton, were found guilty upon an indictment charging them with a conspiracy to defraud the United States under § 37 of the Criminal Code. Glasser had served as assistant United States attorney in charge of liquor cases from March 1935 until April 1939. Kretske assisted him from October 1934 until April 1937 before entering private practice. Roth was a private attorney. Kaplan was an automobile dealer reputedly engaged in the illicit alcohol traffic. Horton was a professional bondsman. The second count alleged that the defendants conspired to defraud the United States of its governmental function to be honestly represented in court free from corruption. This was to be accomplished by soliciting payments to influence Glasser and Kretske in their official duties. Before trial all defendants moved to quash the indictment on the grounds that the grand jury was illegally constituted because women were excluded and that the indictment had not been properly returned in open court. Glasser, Kretske, and Roth also demurred. The motions and demurrers were overruled. Trial began on February 5, 1940. After Kretske's counsel sought a continuance that was denied, McDonnell was appointed Kretske's attorney. On February 6, after Kretske expressed dissatisfaction, the court appointed William Scott Stewart, who had already entered an appearance for Glasser, to represent Kretske as well. Glasser objected on the record, stating that he wanted his own lawyer representing him. He noted inconsistencies in the defense because statements about payments to take care of Glasser would not be binding on him and could create an impression that the defendants were together. After further discussion Stewart was appointed for Kretske and represented both defendants throughout the month-long trial. The government called witnesses including accountant Brantman, who testified he gave Kretske $3000 on behalf of Abosketes, Abosketes himself, Frank and Anthony Hodorowicz, Edward Dewes, and others who described payments to Kretske to fix liquor-violation cases, references to "Red" or the red-head, and Roth's representation of defendants in those matters. The jury, composed of six men and six women, returned a guilty verdict on March 8, 1940. Glasser and Kretske received sentences of fourteen months' imprisonment and Roth was fined $500. The Seventh Circuit affirmed the convictions of Glasser, Kretske, and Roth. Glasser and Roth filed affidavits alleging that women on the petit jury panel had been drawn exclusively from the membership of the Illinois League of Women Voters. The record is barren of any actual tender of proof on the motion for new trial. The Supreme Court granted certiorari.