Document Yrm27mMm8v70Vp5DLgyQM5MzE

FILE NAME Cape Asbestos CAPE DATE 1975 Dec 23 DOC CAPE172 DOCUMENT DESCRIPTION Letter Re Yandle & Kay Suits and liability Legal Tibbs Case Exhibit 70 LORD N. 015SCLL 015SCLL RE C.OILLEN TC BADO NA.MILWID NA.MILWID H.HILLI .GOOGcn OCCHIN MCYER 5 M. WEILANO CEN HILLER 1.5MITH 1.5MITH BT L.TOZCA ID MR C.MUELLER JONMSON JONMSON Lewin FISCHAUCA FISCHAUCA C.ROY PETERSON CUSHMAN 8-0155ELL M.O'CON OR JOHN M.O'CONNOR M.O'CONNOR ANTONIO R. SARADIA THOMAS P.HCALY KAROLO LIJACOBSON KCHE t.wifsC WILLIAM BUTLER JOHN T.ANDERSON THOMAS LUSTEVENS RICHARO RICHARO C.VALENTINE WARREN INGERSOLL LESTEA ~ ZACIEK RICHARD C.CONALIN JOHN C. MERRIMAN ALEX SEITH CLARK C. KING JA CUGENE M. WACHTEL MICHAEL SCHUETTE 5.SMAFIRA JOHN 5.SMAFIRA 5.SMAFIRA THOMAS W.DEMPSEY ALVIN E.DOMASH WALLACE E. MALONEY MALONEY S.LICHTERMAN HARVEY S.LICHTERSM.LICAHTERNMAN ROBERT B. AUSTIN JOHN C.GUALEY C.GUALEY R.R. MCMAHAN MCMAHAN ROBERT E.STEVENS E.STEVENS LESLIC W. MICHAEL THOMAS J^ BURKE J^ BURKE MICHAEL DAVIS JOSEPH C.COUGHLIN RO~ IA FROSS A. JR JOHN W.ADLER COUNSEL RATHONO RATHONO WEARING OCROWN CLOSC COWARD HAYES GRAYDON K. ELIS MAHILTON K. O~ EBE LORD BISSELL & BROOK 135 SOUTH LA SALLE STREET CHICAGO 60603 312-780-6200 CABLE LOWIA~ ^25-3070 TILEX 25-3070 WRITER'S DIRECT DIAL NUNDEA 313 786 - 6208 WASHINGTON OFFICE 21 DUPONT CIRCLE N.W WASHINGTON D.C.20038 D.C.20038 AREA CODE 202 833-3031 AOBCAT S. MEDVECKT WALTON N. SMITH MEM CHALES A ADAMLA ADAMLA GONDON ALLEN SIMON HARONSON HARONSON HARONSON TERRY W BACAUS RCO C.BEGY T BENWANCEP JOHN J BENWANCEP ELLEN HIGGINS BAOWER GEORGE L.BURGE CILGEN CAIRNS CORNELIUS P.CALLAMAN JOHN S CHAPMAN CHAPMAN ROBCAT B.CHAPMAN B.CHAPMAN WILLIAM P. DOW EDWARD F. FITZPATRICA FITZPATRICA DON W. FOWLER OCBORAH C.FRANCIER LAWRENCE A.GRAY MUGN C.GRIFFIN C.GRIFFIN WILLIAM GROEBL JOHN B.HAARLOW B.HAARLOW CHARLES J.MANSEN MICHAEL R.HASSAN JOHN J. HENCLY LELAND C.HUTCHINSO C.HUTN CHINSON RICHAND JOHNSON A.RNUTI MOSCAT A.RN A.U RNTUTII A.RNUTI SPENCCA LEROY SPENCCA JOHN P. HACRAS ^G RONALD SCOTT MANGUM -- -- -- -------- ---- ---- ----<-- DAVID MCLAUGHLAN T.MENAMARA T.MENAMARA KENNETH KENNETH C.MILLER C.MILLER HUGH MOORE M.MURRAY BIEPHEN BIEPHEN M.MURRAY JOHN D.KICHOLSON JAMES L.FITIHAN L.FITIHAN ROBERT JENNIE MASQA ROBCAT P.6CMMIQT P.6CMMIQT JOHN H.SHEFFCY J.TIGKAT JOHN J.TIGKAT M JAMES WALBN WILLIAM WEAVER FREDERIC WEBCA CARY W.WESTERBERG WILLIAH J.WHITE HERMAN WING December 23 1975 A. J. Penna Esq Group Solicitor Cape Industries Limited 114 Park Street London W1Y 4AB England Re Yandle Actions Dear Tony At the meeting that Max Meyer and I had with Dr. Gaze and Mr. Dougherty several months ago we informed them that Judge Steger at the resumption of the Fall Term of court indicated that he had taken the jurisdictional issues presented by the motions that we filed on behalf of Cape Industries and Egnep and the motions filed by certain other defendants under advisement and that he further informed all counsel that if any further docu- mentary information or briefing were desired it should be done promptly To date no one has filed any additional information However Judge Steger has not as yet indicated when he will rule on the pending motions Dick Bernays and I have discussed the status of the matter recently and we agreed that steps should be taken after the first of the year to inquire as to when a ruling by the court on the jurisdictional issues may be expected We have given further consideration to the matters raised in your letters of November 4 and June 16 particularly as to what action should be taken the event the Cape Egnep or Cape Fibres should be involved in any other U. S. litigation With reference to the Yandle suits if the court should sustain the motions only on the ground of insufficient and improper service while this would be tantamount to restarting the actions for purposes of effecting service of summonses it would not have in our opinion any limitation consequences for the date of the initial filing of the complaints rather than the date of proper service governs any limitations questions However if such ruling is handed 1179AS JUN 015 CAPE00141 ISSELL & BROOK 5. J. Penna Esq Mr December 23 1975 Page Two down and subsequent service is properly effected both then be before the court properly for the first time and the decision of whether or not default judgments should Cape and Egnep would would be faced with be permitted With reference to the other questions raised in your letter of June 16 be advised as follows 1 Although Cape is 63 owned by Charter Consolidated Limited it is our opinion that there is no valid basis to join Charter in the pending litigation or that there would be any valid basis of enforcing against Charter or any of its U. S. subsidiaries or U. S. assets any judgment entered against Cape Egnep or NAAC Nothing has come to our attention which would indicate complete control or dominance by Charter as to the activities of Cape Egnep or NAAC It is also our opinion that the directors of any of the Cape Companies or of Charter would not be subject to any civil or criminal liability by reason of any U. S. default judgments entered against such Companies or their subsidiaries Under Texas law a corporation itself cannot be found criminally liable Fletcher's Cyclopedia of the Law of Private Corporation Vol 10 1970 4942p 459. A fortiori the directors of such corporation would not be subject to any criminal liability The only exception to civil liability would be under the laws of Great Britain if their Companies might be subject to respond in damages to satisfy any default judgments and if it were improper to allow default judgments to be entered If Cape in the future should set up or acquire any U. S. Company or business then such Company or business would be deemed to be an asset of Cape even though acquired after the entry of any default judgments Such new Company or business would be considered an asset of Cape the U. S. and subject to garnishment to satisfy the default judgments If default judgments were awarded against Cape and Egnep such judgments would be ordinarily considered final However if the action continued against NAAC who would subsequently be successful in its own defense then under Rules 55 and 60 of the Federal Rules of Civil Procedure a remedy may be available for setting aside even a default judgment under specified circumstances The granting of such relief however would be entirely in the discretion of the court 1180AS JUN 015 CAPE000142 CAPE000142 A. J. Penna Esq December 23 1975 Page Three 5 It is our opinion that even if U. K. Court should judge a default judgment unenforceable under Texas law Articles 3773 and 5532 of Vernon's Civil Statutes of Texas a judgment is valid for 10 years and it may be revived by the issuance of execution against a defendant within the 10 year period Mingus v Kadane 125 SW 2d 630 Tex Civ App 1939 Of course if a judgment is allowed to be dormant without issuance of execution it cannot be revived after 10 years from the date of the judgment On the ultimate question as to whether Cape Industries itself might be held liable in this litigation for any tort committed by either of its subsidiaries NAAC or Egnep the holding of the Texas Supreme Court in the case of National Hotel Co. v Motley 123 SW 2d 461 Tex Texas Supreme Court stated on this point 1938 is most helpful There the It may be stated as a general rule that the fact that a corporation owns the controlling stock of another does not destroy the identity of the latter as a distinct legal entity and unless it be shown that such separate corporate existence is a mere sham or has been used as an instrument for concealing the truth or perpetrating fraud or where the organization and control of the subsidiary are shown to be such that it is but an instrumentality or adjunct of the dominant corporation no liability may be imposed upon the latter for the torts of the subsidiary " corporation Certainly on the basis of the discovery to date and based on our knowledge of the operations of Cape and its subsidiaries none of the exceptions stated by the Texas Supreme Court would be applicable Cape Industries and each of its subsidiaries should be considered separate and distinct legal entities advise If any further clarification of our foregoing views is required please SAM Sincerely Niewed a NieNiweweed d i er vy we A ens A Niewed Niewed Niewed NieweNid ewed Stephen Stephen A. 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