The opinion of the court was delivered by: MANUEL L. REAL
The court held a non-jury trial concurrent with a hearing to determine whether there were any material facts in dispute on defendants' Rule 12(b) motion which was being considered as a motion for summary judgment. For the reasons stated below, the court ordered judgment in favor of the defendants.
This matter involves two law suits and a counterclaim. These three cases essentially boil down to a controversy between John G. Jackson and Madalyn O'Hair on one side and James Hervey Johnson on the other. The dispute concerns the promulgation of atheist ideology and the survival of Truth Seeker Company, Inc. ("TSC, Inc.") and The Truth Seeker, the publication established to spread atheist doctrine throughout the English speaking world. These matters are complicated only in the sense that parties who were, at best, observers of the Jackson-O'Hair-Johnson dispute were caught in the elaborate web of Johnson's counterclaims. A brief history of TSC, Inc. and the key players in these cases will go a long way in unraveling the confusion.
The Truth Seeker magazine was initiated in 1873. In 1940, one Charles Smith took over operation of The Truth Seeker and filed articles of incorporation in New York, thus creating TSC, Inc. The articles specified perpetual life and authorized issuance of 200 shares of stock with a provision for the issuance of more.
In the early 1960s, Smith presented O'Hair and Jackson, on separate occasions, with stock interests in TSC, Inc. because of the work they had done for his company and the atheist movement in general.
However, no evidence of stock ownership resulting from these transfers survives. O'Hair was never issued a stock certificate although there is no evidence that a stock certificate was not issued and held by Smith. Jackson claims that his stock certificates were either lost during a move or thrown away because he thought they had no pecuniary value. Furthermore, at the time she was given a stock interest, O'Hair was asked to take over the publication of The Truth Seeker, which she declined to do.
Charles Smith died in 1964. Prior to his death, Smith moved to San Diego, California and there joined up with Johnson. After Smith's death Johnson, acting as president of TSC, Inc., continued to publish the magazine although it remains unclear as to how Johnson came into possession of the corporate structure. No evidence was presented at trial of Johnson's ownership or inheritance of TSC, Inc. In 1981, 1983 and 1984 O'Hair requested that Johnson relinquish management and control of TSC, Inc. and its publication. Johnson refused. Meanwhile, under his stewardship, The Truth Seeker's subscribers list dwindled from 25,000-30,000 to 200-400 subscribers by 1987.
Nineteen eighty-seven was a busy year in this saga. O'Hair felt particular urgency in taking over The Truth Seeker for the benefit of the atheist movement because she was worried about Johnson's advanced age and poor health and the drastic decline in subscriptions. Besides these concerns, O'Hair was further troubled because she had recently learned that Johnson's will left all his property in an open-ended trust to be administered by Lawrence Y. True, a non-atheist. O'Hair enlisted Stephen B. Thorne and Robin Shelley to assist Johnson in publication of The Truth Seeker as well as to obtain evidence of wrongdoing by Johnson in the conduct of TSC, Inc. and its sister non-profit organizations, American Association for Advancement of Atheism and The National Liberal League
It paid off because Thorne observed Johnson commingling funds from these organizations with his own. He apprised O'Hair of the commingling.
Additionally, in the summer of 1987, O'Hair regularly noticed a meeting of shareholders and other atheist "regulars" and "old-timers" interested in The Truth Seeker. A notice of the meeting was sent personally to Johnson; he did not attend. The meeting was held in Austin, Texas, the situs of O'Hair's offices and of a new corporation named Truth Seeker of Austin, Inc. ("TSA, Inc."). At this meeting O'Hair was elected to office by the persons present.
From June 1988 to September 1989 O'Hair distributed, without charge to anyone, a series of three newsletters, appropriately titled The Truth Seeker Newsletter, detailing publicly her efforts to re-start a viable atheist publication, Johnson's activities at TSC, Inc. and the progress of the lawsuits concerning Johnson and the defendants in both cases. Moreover, O'Hair attempted to freeze TSC, Inc.'s assets pending resolution of the litigation then in progress and in contemplation of future litigation to determine corporate ownership. In her capacity as an officer of TSA, Inc., she presented a corporate resolution to the bank and post-office to re-route TSC, Inc. mail to a post office box under Thorne's control in Escondido, California. No TSC, Inc. funds were ever withdrawn nor did any damage result to Johnson or the corporation from these actions.
Furthermore, in early 1987 O'Hair first learned that Jackson had also received a stock interest from Smith in TSC, Inc. After O'Hair informed Jackson of Johnson's misconduct which Thorne had reported, O'Hair and Jackson decided to obtain the advice of a lawyer, John W. Vinson, who was in the employ of O'Hair's companies in Texas. They were advised by Vinson that he had researched the matter and that Jackson could file a stockholder's suit in California to require an accounting by Johnson of TSC, Inc. activities. Jackson took the attorney's advice.
In October 1987, Jackson, as a shareholder of TSC, Inc., instituted the first law suit against defendants TSC, Inc., James Hervey Johnson
, and the two not-for-profit corporations, American Association for Advancement of Atheism and The National Liberal League [hereinafter "the Jackson case"]. Alleging that Johnson commingled TSC money with his own, misappropriated funds into his personal accounts and generally mismanaged the accounts and the book distribution business of TSC, Inc., Jackson sought an accounting and other relief concerning the operation of TSC, Inc.
On this underlying action, the Estate filed a counterclaim for itself and TSC, Inc. against several defendants, the most important for the purposes of this opinion being Jackson and O'Hair
(hereinafter "the Johnson case"]. The counterclaim was brought for (1) conversion; (2) trademark/tradename infringement; (3) conversion and infringement of common law rights; (4) violation of the Lanham Act (15 USC § 1125(a)); (5) RICO (18 USC § 1962(b)); (6) conduct of an enterprise involving interstate commerce through a pattern of racketeering activity (18 USC 1962(c)); and (7) conspiracy to violate 18 USC 1962(b) racketeering activity to acquire/maintain interest/control of an enterprise engaged in/affecting interstate commerce.