An Election, Another Explosion
When Nixon was elected in November of 1968, things really began to heat up at Gadsby & Hannah. Colson’s work on Nixon’s behalf had been very much appreciated by Nixon (even if it wasn’t by some of his men), and the opportunities for recompense at the firm were going to be substantial and numerous. In the midst of the burst of publicity and business development following Nixon’s election, Colson thought he would repay his old friend Joe Tauro with a favor.
Tauro’s boss, Governor Volpe, had just been appointed Nixon’s Secretary of Transportation, but Tauro had declined to follow him to Washington as his general counsel. He had a growing family and needed to get into private practice and make some money. Thinking he could help, Colson suggested to Morin that they include Tauro in a story that the Wall Street Journal was working on that identified Gadsby & Hannah as a firm that would have great influence with the new administration. With Morin’s enthusiastic agreement, Colson called Tauro and asked him if it would be alright if they included his name as one of the Boston lawyers who would be a factor with the new administration.
“Well I am a member of the D.C. bar, but I don’t have a Washington office,” Tauro told him.
“That’s okay Joe, I talked it over with Charlie, and we’ve agreed that you can use our office here at Gadsby & Hannah. As long as you tell him you’re coming to Washington, it’ll be okay.”
The Journal reporter called Tauro, he stuck to the script, and his name appeared in the article alongside Colson and Morin as one of the Boston lawyers who would be a big influence with the new administration.
And Tauro did, in fact, spend time in that office, working on a multitude of legal matters that resulted from that news article. He later became the U. S. Attorney for the Massachusetts district in 1972, and that same year was appointed to the U.S. District Court in Boston, where he still presides.
Morin’s Boston-based securities work on behalf of Cantella & Co. and the Boston Stock Exchange had ballooned significantly by the Spring of 1968 – and Morin needed help to get it all done. He turned to a young lawyer from South Carolina to help him. A genuine son of the confederacy, James Treadway was a product of Rollins College (where he was a high-ranking member of the nationally-ranked tennis team) and Washington & Lee University Law School. After two years in Atlanta, he decided to live among the New England Yankees, and was looking for a firm in Boston. He had an exceptional resume, and received offers from all of the top white shoe firms, including Ropes & Gray, Herrick & Smith, Gaston Snow & Ely Bartlett, and Hale& Dorr. But after an hour of talking with Morin, Treadway decided to pass up the big firms to work as Morin’s principal corporate securities man. By this time, Freddie Moss was ensconsed in the Boston Stock Exchange, Cantella & Co. was the 800 pound gorilla on the regional exchanges, Federated’s head-butting with the SEC continued apace, and Germany’s largest bank, Dresdner Bank, had retained Morin to represent its interests in trading on the U. S. regional exchanges. Here was an opportunity for Treadway to jump into deep water and work hand-in-glove with a man who had already proven himself a formidable presence in the corporate securities field.
In the summer 1968, Dresdner wanted to get into the US securities markets. Originally, it wanted to be a member of the NYSE, but they had a rule forbidding foreign members. The regional exchanges –especially Chicago and Boston, allowed–or did not forbid–foreign members.
So Dresdner was engaged in discussions with both Chicago and Boston. They were leaning toward Chicago because it was slightly larger and geographically central, when someone on the CSE floated the rumor that Dresdner had been the major bank for Hitler during WWII. The Dresdner executives went berserk, furious at the CSE for this unfounded slander. Thus, Dresdner Bank bought a membership on the Boston Stock Exchange, and, on the advice of Moss and BSE’s largest trader, Cantella, Dresdner retained Morin to represent its varied and substantial legal interests.
Becoming a member of the Boston Stock Exchange allowed Dresdner to trade stocks listed on the New York Stock Exchange under what were called “unlisted trading privileges”— but not all the NYSE stocks. Dresdner had to apply to BSE for these privileges, but the companies sometimes objected. They had no legal basis to object, but the BSE did not want to have a war with the NYSE or the listed companies, for political reasons. So initially, Morin was asked on occasion to clear the politics so that Dresdner could involve itself in the market for particular securities. He and Treadway would soon have their hands full with Dresdner’s interests when more European banks got into the act and the NYSE began to appreciate how much trading business was being siphoned off to the regional exchanges by foreign banks. These issues, which involved the arcane and complex Glass-Steagall Act and even the German laws regulating banks and securities firms, would eventually come to a boil, and Morin and Treadway would be at the forefront of a frontier
After the successful 1968 campaign against Hubert Humphrey, Colson was asked by Nixon to stay in the White House as counsel to the President, an offer he found impossible to resist. As had been amply demonstrated by his work for Saltonstall and Brad Morse, his political instincts were meticulous and they would lead him to achieve things for Nixon that were highly improbable – such as getting the Teamsters to support Nixon in 1972, and getting James Roosevelt to head the “Democrats for Nixon” organization. Much has been written about the impact of that career decision on Colson’s life, but there would be resulting events in Morin’s life as well.
Colson’s move to the White House in 1969 left Morin to manage the Washington office. For that reason, as well as Treadway’s insistence that there was major securities deal business that could be developed out of D.C., Morin and his wife made the decision to move from Boston to Washington. He had been going back and forth every week for years, spending a good deal of time in airports and trains. In 1963 they had moved their three boys out to a beautiful 18th century colonial in Wayland, but by 1970, Charles, their oldest son, was at Boston University, and James and Peter were at boarding school. Betty had been spending more and more time in Washington – they had taken an elegant apartment at the Sheraton Park Hotel, two floors above Spiro Agnew, in what had come to be called “the Republican Wing.” They kept the house in Wayland another year or two, for holidays and summers, but by 1973 Betty and Charlie considered themselves true Washingtonians –like everybody, from somewhere else. They sold the Wayland home and bought a stately home on Rockwood Parkway, in the elite Spring Valley neighborhood of Washington.
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Tags: boston stock exchange, charles colson, dresdner bank, james treadway, john volpe, joseph tauro, richard nixon
Gadsby & Hannah Goes Bi-partisan
It became apparent by the mid-sixties that Gadsby, Hannah, Colson & Morin was “too Republican.” Several of their clients, including Grumman’s Lew Evans, told them they should get a high-profile Democrat in the firm. It turned out that, at that very moment, Lynch’s pal Dick McGuire was looking for a place to hang his hat – if he were to join, he would add the Democratic powerhouse to the firm. Dan Lynch brought Dick into the office, and they chatted for a long while. Colson had done a good deal of work with McGuire while representing the New England Council. McGuire was very close to the entire Democratic leadership, especially Tip O’Neill, who was then chairman of the House Rules Committee. Due in large part to Lynch’s relationship with McGuire, he was eager to join the firm, but he said he wanted to bring in a lawyer from New Orleans named Merrigan with him. How could they say no?
Morin and Colson reviewed the scenario over a few drinks. Now how would they name the firm? Merrigan wanted his name in it, McGuire too. They came to a practical solution. They were running the firm – who cared what the name of the firm was? So they agreed – they both dropped their names, and the firm became Gadsby, McGuire, Hannah, and Merrigan. Befitting their new powerhouse image, they moved into penthouse offices at 1700 Pennsylvania Avenue, perhaps the most prestigious address in the District, looking out at the White House next door.
In 1968, Florida Senator George Smathers retired from the U. S. Senate. Smathers was elected in 1950 after Harry Truman recruited him to run against Claude Pepper, who had been part of a cabal that attempted to dump Truman from the 1948 ticket. He beat incumbent Pepper soundly, but the race is most famous for a speech Smathers apparently never gave. Smathers was alleged to have given a speech in rural Florida that went something like, “Are you aware that Claude Pepper is known all over Washington as a shameless extrovert? Not only that, but this man is reliably reported to practice nepotism with his sister-in-law, and he has a sister who was once a thespian in wicked New York. Worst of all, it is an established fact that Mr. Pepper before his marriage habitually practiced celibacy.” No one could prove that he ever said these things, but it has become part of political lore.
Smathers was a friend of Merrigan, and landed at 1700, where business was rolling along stronger than ever.
But not all was fine in the penthouse. Merrigan and Colson did not get along at all. Merrigan was very high-strung and had a ferocious, uncontrollable temper – a brilliant lawyer, and a New Orleans gentleman, except when he got mad. Colson couldn’t resist goading him, and eventually Merrigan had had enough of Colson and left.
The Mutual Fund Business Explodes
By 1967, due in large part to Morin’s reputation, the firm had been retained to represent the ten largest mutual fund organizations in the country (Keystone, the United Fund, Fidelity, Mass Investors Trust, to name a few) against the SEC’s attacks. The SEC’s offensive, and Morin’s defense of the industry, would eventually culminate in the passage of Investment Company Amendments Act of 1970.
At the same time, there was a ferocious battle going on between the banks and the mutual funds. Banks wanted the rules of their common trust funds relaxed so they could take fees from them and still be exempt from registration with the SEC (giving them a competitive advantage over the mutual funds). One of their most important allies was James Saxon, who was Comptroller of the Currency at the time. Saxon’s top priority as Comptroller was to expand the national banking industry and to liberate national banks from regulation he determined to be unduly burdensome, putting them in direct competition with the mutual funds. During his first year in office, Saxon approved 434 new bank charters, compared to the 237 charters issued in the previous decade.
Five years earlier in February 1962, Saxon had appointed an Advisory Committee of 24 bankers and lawyers to review the findings of a survey conducted with national banks. The committee published its findings the following September in a volume entitled National Banks and the Future. With these recommendations as a foundation, Saxon permitted national banks to engage in businesses they had previously been denied entry to, including the sale of insurance, revenue bond underwriting, and the issuance of credit cards.
These developments exacerbated the disputes between the two industries, to the point where the Investment Company Institute (then called the National Association of Investment Companies) brought a lawsuit against Citibank and the other major national banks to enjoin them from conducting these forms of business. It was a very, very bitter fight between mutual funds and national banks, with billions of dollars at stake.
Saxon was one of Dick McGuire’s cronies in the government. In 1967, he was preparing to leave the Comptroller’s office and enter private business.
Morin received a call one day from Wilfred Godfrey, the chairman of the Keystone Funds. Godfrey, a hard-nosed, crisp Welshman and CPA by training, was calling from Paris.
“Say it isn’t so.”
“What isn’t so?”
“I’m reading in the Herald-Tribune here in Paris that Jim Saxon has become a member of your firm.”
Morin said emphatically, “No way is he a member of this firm, or ever will be.”
“Well I’m pleased to hear you say that, because obviously our relationship is at an end if he becomes involved in your firm.”
And Morin assured him there was no truth to it, and promised him he would find out how the report had come to light.
Morin and Colson went straight to McGuire, who confirmed that, without consulting either Morin or Colson, he had told Saxon, “I’ve got an office for you, you make the announcement.” So Saxon announced to the press that he was joining the firm.
Colson let McGuire know there was no way that Saxon was coming into the firm.
McGuire said, “it’s Saxon or me.”
Colson said, “It’s you then – good luck!”
And McGuire left, joining with Saxon in a venture that failed in short order.
With McGuire and Merrigan gone, Colson and Morin were once again faced with the name change issue, which they resolved once and for all. The firm would simply be called Gadsby & Hannah, no matter who came or left. And that is the way it remained, even decades after both Morin and Colson had left, until the firm merged with McCarter & English in 2006.
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Tags: charles morin, dick mcguire, fidelity investments, george smathers, James Saxon, Tip O'Neill, Wilfred Godfrey
While Morin was pulling pranks on Colson, he was also exceedingly busy with high-powered lawyering. By the mid-1960’s, Federated’s problems with the SEC were an almost constant source of work for Morin and his principal litigation partner, Joe Mitchell.
His relationship with Federated, and in particular Jack Donahue and his senior team, Dick Fisher, John McGonigle and Tom Donnelly, deepened – they were all highly intelligent and motivated men who shared strong conservative values and rigorous moral and ethical principles, but they also knew how to enjoy their work and each others’ company. By the early 1960’s, Donahue had developed (with good reason) enormous confidence in Morin’s legal acumen, his mental discipline, and most especially, his fearless pursuit of his client’s interests. Nowhere were these attributes demonstrated more emphatically, and more often, than in Federated’s seemingly endless showdowns with the enforcement and investigative staff of the SEC.
In the mid-1960’s, Federated’s assets under management fell below the minimum $1 million threshold, and the SEC enforcement people went after them with unusual zeal. During a tense, contentious conference, chief staff attorney Sidney Mendelsohn offered a settlement proposal: Federated could continue in business, but Jack Donahue would be barred from the securities industry for life. Morin sat at the far end of the conference table, his clients between him and Mendelsohn, eyeing the regulator inscrutably.
“Fuck you Sidney,” he told the chief counsel of the enforcement division. Mendelsohn’s suggestion infuriated him. The idea that this bureaucrat could accuse Jack Donahue, or any member of the Federated firm, of lacking integrity or honesty was inimical to what he knew of them. He demanded to proceed with an administrative hearing, which he zealously prosecuted with Joe Mitchell.
SEC was represented at the hearing by a man named “Weiner,” pronounced WY-ner. Throughout the proceedings, Mitchell steadfastly called the man WEE-ner, to his burgeoning annoyance. After two months of exhausting head-to-head battering, the SEC caved in. Morin offered them a cosmetic, face-saving fig leaf, but Federated and Donahue remained in business. Donahue’s loyalty had been placed in the right man. And Morin’s fearsome reputation among the SEC enforcement staff had been established.
Joe Mitchell’s status as a foil and partner in the firm changed dramatically one day in early 1966 when Morin received a telephone call from Joseph L. Tauro, who was chief legal counsel to Governor John Volpe (and a Brown classmate of Colson’s). Tauro told Morin that Volpe wanted to help the law firm by appointing Joe Mitchell to the Superior Court bench.
“Bullshit! I can’t afford to lose him!”
Tauro wasn’t taking no for an answer. “Think what this’ll do for his family.”
“Well, don’t put it on the basis that you’re doing us any favor because we don’t want to lose him, but if he wants it, then good enough.”
So after five good years of practicing with Gadsby & Hannah, in 1966 Joe Mitchell became only the fifth black man in Massachusetts history to serve in the judiciary.
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Tags: chuck colson, jack donahue, john volpe, joseph mitchell, joseph tauro
Morin’s frenetic work pace did not distract him from preserving the office culture of well-planned pranks. He occasionally targeted another foil for his carbon trick: Colson himself. On one of these occasions, he ensnared an unintentional victim.
In January of 1967, Maine Congressman Stan Tupper was newly retired from Congress, looking for a law firm to enter, and was encouraged by Colson to join them at Gadsby Hannah. Morin crafted a letter to Congressman Tupper in which Morin confided that Colson’s addiction to alcohol was a great cause for concern, and Morin felt that the Congressman’s steadying presence in the firm would do Colson good and help him to reach and maintain a state of sobriety.
The carbon went into the Washington file, where it found its way to the desk of Colson’s secretary, Hannah Campbell. Campbell was unaware of the gag, however, and instead of passing the carbon along to Colson, who would immediately get the joke, she rushed down to Capitol Hill to the House of Representatives mailroom, where she attempted to convince the Postmaster to retrieve the letter.
When the Postmaster called Morin to request his assistance in assuring Ms. Campbell that her demand was out of the question, Morin had to confess; and Ms. Campbell impressed the House Postmaster with her command of the idiom.
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Tags: charles colson, hannah campbell, stan tupper
Morin wasted no time in developing a niche securities practice that brought him and the firm significant success. It began inconspicuously enough in the relatively small-time world of the Boston Stock Exchange, where small regional securities firms fought for a small number of small-issue public offerings that small New England companies could not afford to bring to the Big Board, equity “private offerings” that had been made possible through the newly adopted “Regulation D,” and small-block trades in public stock. One of the principal underwriters on the Boston exchange was Cantella & Co., Inc., a family-owned trading firm run by Vincent Cantella.
Cantella was a virtual caricature of the ethnic Italian. Tall and slim, the devout Catholic had dark, deep-set eyes, and a vulture-like posture. He could have been a walk-on in any Mario Puzo movie. In the 1960’s in Boston, such a figure did not attract the interest of the white shoe corporate law firms. They were not interested in his type. Cantella and Morin found affinity in their antipathy toward the Brahmin elite, and Morin began representing Cantella & Co. when no “reputable” (i.e., white shoe) Boston firm would do so. And the niche he found with Cantella became substantial and formidable.
At the time, the SEC required that all commissions charged by registered broker-dealers for public securities trades to be “fixed.” In other words, every trade made on a regulated exchange could charge a fixed fee, no matter how many shares were involved in the trade. This rule worked to the significant advantage of the major Wall Street firms (not coincidentally), which could afford to trade in huge blocks involving tens of thousands of shares, thus cutting the per-share cost of the commission to a pennies-per-share level. In addition, the NYSE member firms had devised ways of structuring “discount” commissions to their preferred customers, a practice that neither the NYSE nor the SEC was willing to police.
This left the regional exchanges in a weak competitive position, scrapping over the trades and issues that were too small to interest the large broker-dealers. And none of the regional exchanges were aggressive or inventive enough to devise a means of competing for larger trades – until Cantella and Morin got together. With Cantella’s enthusiastic backing, Morin devised a number of methods by which regional exchanges and their members could pool their trading business in a particular transaction, enabling them to compete with the big firms. These schemes, all perfectly legal, were given obscure names such as “customer-directed give-ups,” the “two-way ticket,” the “three-way ticket,” the “mirror trade,” and something called the “aunt minnie trade,” which was named after Morin’s aunt, Margaret “Minnie” Sullivan. These methods would allow member firms of the regional exchanges to increase their volume of trading in a competitive manner – but none more that Cantella & Co., which by 1966 was the dominant trader on all of the regional exchanges, but especially on the Boston Stock Exchange.
In time, when the successes of Cantella & Co. were learned by the white shoe firms in Boston, some of them decided that Vinnie’s ethnicity and religion could be overlooked, and they came calling for his business. Vinnie Cantella responded to them in his own fashion. “Go fuck yourself,” he said. “Charlie Morin’s my lawyer.”
In 1966, the Boston Stock Exchange was in need of a new chairman. Some of the old-line bokerage firms wanted hand-pick their man, but Cantella was too important to the order-flow of the Exchange, so he held a virtual veto on anyone who did not meet his needs. Calling around one day seeking names, Morin spoke with Jim Dowd, who was the SEC regional administrator in the Boston office. Dowd told Morin about a fellow named Freddie Moss, who was a member of the SEC’s Washington office staff and had worked on the ground-breaking two-year special study of the securities market from 1963-65.
Moss was the right guy for both Morin and Cantella – he was from Brooklyn, was Jewish (although not “too Jewish”), smart, tough, and definitely not white shoe. They approached him, and talked him into leaving the SEC to come to Boston to be the chairman of the Boston Stock Exchange.
With this move, Morin now had the Boston Stock Exchange locked up as a client. Moss was its head, he owed his job to Cantella and Morin, and he understood loyalty.
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Tags: boston stock exchange, cantella & company, Freddie Moss, Jim Dowd, regulation d, SEC
With a rapid growth in new legal business during the latter part of 1960, the firm had to expand. By early 1961, the firm had about twenty-six lawyers, evenly split between Boston and Washington. Much of the workload entailed representing several Boston-based securities underwriters who were busy doing “Regulation A” private securities offerings, which had recently been authorized by the S.E.C. The firm had also picked up the New England Council as a client. The Council served as a business lobbying group for New England based companies, and Colson did their political work while Morin began to pick up corporate work from the Council’s individual members.
One day in January of 1961, Congressman Morse called Morin and informed him that Edward Gadsby, then the Chairman of the SEC, was going to resign following John F. Kennedy’s inauguration. Gadsby was a country lawyer from Williamstown, MA – a Renaissance man; described by Morin as “a lovely, gentle guy.” He had planned to retire to Williamstown and open a small law office there, but Morse suggested to him that he join Colson & Morin, where he could hang his hat in Boston and have a presence in Washington too. Brad told Morin, “you two guys have exactly what he wants!”
Gadsby met with Colson and Morin in their Washington office, assessed their operation, and quickly discerned that the atmosphere in their operation was appealing to him. They broke up the meeting agreeing to talk again soon.
At the end of the day, Colson and Morin were ruminating over cocktails about the prospect of having the former Chairman of the SEC join their firm, and they began to wonder aloud, would he be offended if they suggested his name come first? While most lawyers would jump at the chance, they had pegged Gadsby as a humble country gentleman, and they were concerned that he might think they were trying to trade on his name.
A short while later, Colson invited Morin and Gadsby out to his suburban Virginia home for dinner, and during cocktail hour they began to discuss their potential law firm. Gadsby appeared somewhat uncomfortable to the partners, until after some prompting from Colson, he said, “You know, I’m very easy to please,” and he hesitated further, and continued, “you guys have done so well together and you’re obviously close friends, but the only thing I would suggest to you is that perhaps my name should come first.” Colson looked at Morin and shrugged, and Morin said to Gadsby, “that would be fine with us.”
By 1963, Gadsby, Colson & Morin had quadrupled in size, with offices in Boston, Washington and Ponce, Puerto Rico; and Morin that year moved his family from Hillside Avenue in West Newton to a beautiful historic colonial mansion on five acres in the heart of Wayland.
That same year, Morin received a call from Paul Hannah. He had been general counsel for Raytheon for a long time, and he was looking for a small firm to which he could bring along Raytheon as a client. Hannah met with the three partners and it was quickly agreed that he would be a welcome addition to the firm. Hannah was a very good corporate lawyer with a great deal of prestige and a bit more seniority (he was ten years older than Morin, 19 more than Colson). Hannah suggested that his name head the firm, but Morin promptly informed Hannah that they had promised Gadsby that his name would remain at the head of the firm. So it became Gadsby, Hannah, Colson & Morin.
It may seem unusual that a fledgling law firm in Boston would open a law office in Ponce, Puerto Rico. It is a story worth telling in Morin’s own words:
It all started in 1960 — a year of momentous events. Kennedy beat Nixon and became President. Leverett Saltonstall was reelected Senator from Massachusetts. Chuck Colson (who had managed Saltonstall’s campaign) and I decided to form a law firm. I met Pat Wilson.
Early that year Chuck called to ask for advice. He had been called by a young lawyer in Puerto Rico who wanted to know from Senator Saltonstall who was the number one constitutional lawyer in Boston. Sensing new business, I said “I am.” “Be serious,” Chuck said. “All right,” I said, “he’s on the faculty of the Boston University Law School, and his name is Bob Kent. Now, what’s it all about?”
What it was all about was, at the moment, Pat Wilson. Pat was a young lawyer from Idaho City, Idaho, who had graduated from Notre Dame and Georgetown Law School, had met and married a young lady from Puerto Rico who was attending Visitation Convent, a very exclusive Catholic girls’ school in Washington, D.C. After graduation and admission to the D.C. Bar he had set up a law practice in Ponce, Puerto Rico with a local lawyer named Charles Cuprill.
Pat Wilson’s wife, Adriana, was the daughter of Mario Mercado, a wealthy Puerto Rican sugar planter of meticulous Spanish descent. “Don Mario,” as he was universally known, was a true aristocrat — tall, strikingly handsome in his seventieth year, always dressed in starched cotton cord suit with starched white shirt and dark blue (sometimes red) cravat and a belted 38-caliber revolver holster (usually empty) on his thigh. One of the largest sugar growers in Puerto Rico, he lived in a magnificent hacienda high on the hills overlooking the south shore of Puerto Rico and the blue, blue Caribbean. “Magnificent” that is, until the Commonwealth Oil Company decided to take advantage of the Puerto Rico Industrial Development Act and the deep harbor facilities offered by Puerto Rico’s south coast and to build a state-of-the-art oil refinery only a few miles from Don Mario’s castle. Also, up-wind from Don Mario where the prevailing southerlies never let up in their depositing of large amounts of black, oily soot spewing out of the refinery into Don Mario’s immaculately white aerie — crystal chandeliers and ivory Oriental rugs included.
Don Mario’s hatred of the Puerto Rico Industrial Development Authority and his distrust of the government in general was, therefore, well-developed even before the authority decided to exercise its right of eminent domain to designate 40 hectares of Don Mario’s sugar cane for future factory construction and “industrial development.” Now, this was no great loss to the Mercado empire in terms of acreage. But the Authority itself — no great Mercado lover to be sure — singled out the 40 hectares which were so fertile and generous to cane cultivation that, two hundred years before, the pioneers of this industry had laboriously constructed an intricate network of wood-lined irrigation ditches to capture the pure rain water from the mountains to the north and channel it into the first of Puerto Rico’s sugar cane farms. So choice was the land, in fact, that for generations (including Don Mario’s) this 40 hectares was used for “seed cane” — that is, for developing strong, healthy supplies of cane for transplantation to and proliferation in the vast commercial fields of southern Puerto Rico. In other words, the Governor of Puerto Rico had decided to show the Mercado dynasty who was boss by putting Don Mario out of business.
It was this series of events which eventually, and circuitously, brought me to Puerto Rico as an authority on Constitutional Law, to examine the possible remedies available to the Mercados against the government of Puerto Rico. After considerable study I concluded that if I were successful it would cause the destruction of the then-blossoming, immensely successful and wildly popular program of industrial development of this small Commonwealth known as “FOMENTO” and reduce Puerto Rico once more to a poor agricultural economy dominated by the sugar planters whose principal export was rum.
But I am ahead of myself. To arrive at this stunning conclusion required what can be described only as an “odyssey.”
My first step was to sign up for Spanish lessons at Berlitz in Boston. I had a Panamanian teacher named Roberto. Lessons were two hours, twice a week. I soon learned that Roberto was a (social) beer drinker and it soon occurred to me that I was the last student of the day (4 to 6 p.m., as I recall), and that the Ritz Carlton Hotel was almost directly across Boylston Street (Clarendon ?) from the Berlitz studio. Thus, if I treated Roberto to a couple of beers at the Ritz bar after lessons (and myself to a couple of tongue-loosening dry martinis) I could get another hour or so of relatively cheap Spanish lessons. I learned the words for pencil, pen, paper, window, door, etc. and how to ask and answer certain questions (like,”what color is the pen?”), but by far the most important word I learned was that for “building”: “edificio.” Why, you will soon understand.
Soon it was time to practice law. Step number one was, of course, to read carefully the enabling statute itself, to examine the actual extent of the statutory authority to take private property — as well as the intent of the legislature in enacting the laws permitting it. And, indeed, the language was clear, and the power did exist in the Puerto Rico Industrial Development Authority to acquire private property by eminent domain to the extent reasonably necessary to fulfill the intent of the legislature. But there were some exceptions set forth in the statute, obviously generally intended to make it clear that the Authority was established to create employment, but not at the expense of existing businesses. But the language was strange, I noted.
The exception was described in the statute as applying to “any building wherein was being carried on a bona fide industrial commercial or agricultural enterprise.” “One does not carry on an agricultural enterprise in a building,” I reasoned. On the other hand, I was aware that very large expropriations of sugar fields had been accomplished in the areas east of San Juan for the construction of small factories and assembly plants, and that the local courts had sustained the takings as being authorized by the statute and not effectively excepted.
Still, I was not satisfied that the statute I was reading was at all consistent with that conclusion. And then it suddenly dawned on me that the law had originally been passed in Spanish and I was reading the English translation. And a very cursory bit of research reminded me that a basic principle of statutory interpretation is that the language of statutory origin governs.
With the help of Pedro Perrata’s law clerks I now delved into the Spanish language enabling statute and there — staring at me — was a word I did not know — “edificacione” — which had been translated in the English version as “building.” Oh, Roberto, thank you, Roberto! Somewhere along the course of my Berlitz foray I had learned that the word for “building” is “edificio.” What, then, did “edificacione” mean? Now, I am excited. Remember the irrigation ditches and the dams? What did the legislature intend? Am I on to something?
It is moments like this that have made the practice of law so exciting for me — so much fun. To tackle a problem, to think, to reason, to turn every stone, to discover! And then to pursue. I knew in the back of my mind what I hoped “edificacione” meant. And if I could prove it, I could imagine what it would mean — far beyond Don Mario’s seed cane!
All of this “research” had been carried on in the dark, dark roadside offices of Pedro Perrata which, if it had nothing else, had lots of books in various stages of neglect and obsolescence. (“Pocket parts,” for example, had been accumulated for years without filing, rendering the original volumes all but useless as a research tool. Mertens‘ definitive 20-volume treatise on federal income taxation which you would expect to find only in a serious practitioner’s complete tax library, had not been updated for the four years since its purchase — and there were literally piles of unfilled updated “pocket parts” and new volumes on the floor of the tiny “library” of this one-man shop.) So, it was time to move on.
The night of my “discovery” I briefed the taciturn Pat Wilson on my progress. He was only mildly interested but, more importantly, he remembered vaguely that the Puerto Rico legislature had only very recently begun to keep a sort of “Congressional Record” of its sessions. The next morning we were on our way to San Juan to see what the government had to offer. Maybe somewhere in Spanish we would find out what the legislature had in mind when it used the work “edificacione” instead of “edificio.”
Pat had remembered correctly. And during that fateful year, when it created the Puerto Rico Industrial Development Authority, transforming Puerto Rico’s future forever after from a purely agricultural/tourist economy into one basically dependent upon commerce and industry, the legislature had begun to make a daily record of its proceedings — the “Diario Secciones.” And with very little effort we came to the day when the Committee on Agriculture and Industry had brought its land-taking bill to the floor to explain on the record (diario) the nature of the exceptions set forth in the statute. Although the explanation did not explain the meaning of “edificacione” other than simply repeating it, it did make clear that the government was not meant to take jobs to create jobs. Etched in my mind is the phrase “es decir” used by the Committee Chairman in explaining the exception. “Es decir” (that is to say — or, “in other words” the power of eminent domain was to be used to create employment where none exists, but not at the expense of enterprises already being carried on. I really had all I needed to mount an attack on the Mercado expropriation. But my target was the United States Court of Appeals for the First Circuit, presided over by the brilliant Calvert Magruder.
I reasoned that the Court of first jurisdiction here would have to be the local Puerto Rico Court which could be depended upon to side with the government no matter how compelling the argument. But under the then-prevailing procedural rules an appeal from that court was not to a Commonwealth Court, but, rather, to the United States Court of Appeals for that judicial circuit subsuming Puerto Rico — the First. And Calvert Magruder was totally immune from any political pressure or extra-judicial influence. And Magruder was my hero from law school days. The clarity of his opinions and the flawless artistry of his explanation of them had made the study of the law enjoyable. And, as improbable as it certainly was, I came to know him personally and to play golf with him and his closest personal friend, Dean Erwin Griswold of the Harvard Law School, on a number of occasions as a very young lawyer. (But, that’s another chapter.)
Above all, I did not want to appear before Calvert Magruder unprepared or, even, under-prepared. I wanted to impress him with the depth of my research. I wanted an authoritative definition of that mystery word “edificacione.” One of the great libraries of the world is right in Washington, D.C., and it was there I hoped to find my answer.
The woman at the Library of Congress could not have been nicer. I eventually found her back in the stacks in the Spanish section of the library. It was her domain, and I had been forewarned that there was nothing in the Spanish language that she did not know something about. When I told her what I was looking for and why, she became at once an advocate for the cause. This was not some dull old research project; it was a war between actual people and we were on the same side, together, fighting for the right against the brutal dictator. “Edificacione,” she mused . “I have not heard used that word.” So it was that we found ourselves finally in the humidified, air-conditioned room housing the priceless old Spanish histories and — yes — encyclopedias. Great, large leather folios of bound parchment laboriously compiled with (I guessed) old quills with some sort of pigment and then illuminated (!) with gold outlines. What a sight! Only my friend could touch these, with white-gloved hands. And so it was she who came to the word “edificacione” with its description meticulously set forth in beautiful, legible script by (I guessed) holy monks five hundred years ago. It would be difficult to describe the feeling. Boy, will Magruder love this!
My new best friend read me the description in Spanish and then tried to interpret it. I have forgotten the exact words used, but they added up to what I had hoped for. “Would you say that a fair modern translation might be ‘man-made improvement’?” I asked. “Yes,” she said excitedly, “erect above the ground. That would be perfect.” I was already mentally taking this wonderful lady’s deposition as an expert. There was perhaps no one in the world better qualified to tell the Court what “edificacione” meant. And it meant exactly what I wanted it to mean. The ditches! The dams! The agricultural enterprise providing employment! The unlawful taking!
“This is the nicest morning I’ve ever spent, thanks to you.” I said. “Your courtesy and enthusiasm are beautiful.” “I have never met a lawyer who enjoyed so much what he was doing,” she replied. “I wish every day was so interesting.” And that ended our brief friendship, but left me with memories which will never die.
I hurried back to my Boston office and quickly called Bob Kent on whom I would rely in preparing the pleadings to bring us to victory over the oppressor. “I’ve got it, Bob,” I said. “We’re going to get Don Mario his land back, and we may even wreck the Puerto Rico economy.” “Carlos,” said the professor, “I don’t see how you do it. The average guy would have bowed out of this deal when he first looked at it, but I’ll be damned if I don’t agree with you. Let’s go.”
A flawless petition was prepared for filing in the United States District Court in San Juan (Bob’s idea being to force the government into asking for transfer to the local court if they wanted to). Nothing was left out and we honestly contemplated that they might capitulate rather than risk establishing a disastrous precedent. And now it was time to bring the joyous news to Don Mario and the great Pedro. And it was only fitting that Bob should come with me. He had been with me on my first visit when I needed — or thought I did — a real expert on Constitutional law. And he had formed a sort of bond with Pedro Perrata, who really was a “gas.” (To this day Bob chuckles when I remind him of the Perrata “library,” being far more addicted to the book side of the practice than I.) Besides, I reasoned that when the discussion got down to procedural matters I was going to need all the help I could get. And Kent was all the help anyone could ever ask for!
And so we found ourselves once again in Pedro’s dungeon-like office with Pat Wilson and, this time, Don Mario Mercado himself, in imposing person. This was to be the denouement — I was going to explain our proposed path to victory and Bob would answer the questions on how and when to proceed. And that I did, leaving no detail out, and rolling the word “edificacione” off the tongue in my best Spanish. And I said “Don Mario, we are going to get your cane field back.” There was stunned silence. Pat Wilson asked a couple of sensible procedural questions. Don Mario and Pedro listened awhile and then embarked upon a heated two-person conversation in Spanish which Pat seemed to be able to follow. Then questions followed, but not the kind we expected. Construction of a factory had already been started on the property (the first time I had heard this) — would they have to stop? “Yes, and tear down whatever was there.” The fields had already been destroyed; could damages be claimed? “Yes. Big damages.” (I thought sickly about the priceless ditches and dams!) More Spanish conversation. Might the government retaliate? “Don’t know how.” And so on. Recess for lunch, siesta. Meet again at 3:00 o’clock.
And so the three gringos, Pat, Bob and I, retired to the lovely Ponce Hotel on the mountain-side overlooking the old city and enjoyed a cocktail and a bottle of wine with some tasty little local specialty while Pat tried to fill us in on the conversation between Pedro and Don Mario. Bottom line, Don Mario was concerned that if we won this case the government would be very upset and might decide to retaliate. The Mercado interests stretched into many things in Puerto Rico and they were in rather steady argumentation with the revenue people. They were trying to get the government to help stop Commonwealth Oil from fouling Don Mario’s home. Maybe air service to Ponce would be curtailed, etc., etc., etc. Of course, we had assumed that all of these considerations had been long since discussed and discarded before deciding to retain us in the land-taking case. “Yeah,” said Pat, “but they never thought they could win!”
You guessed it. At 3:30 we met once more. Don Mario had decided that the risk of winning was too great. We had done a very good job and maybe things might change at a later date. Have a nice trip home.
Of the many stories Charles Morin committed to paper, this was the one he most often repeated.
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Tags: charles morin, edificaciones, edward gadsby, paul hannah, puerto rico, raytheon, robert kent
In 1962, NASA solicited eleven firms to bid on the design and construction of the Lunar Excursion Module (LEM) – a vehicle that would be capable of making a landing on the moon. While the invitation went to eleven firms, there were two major competitors. One was Martin-Marietta from Georgia, and the other was Grumman Aircraft Engineering, which had been responsible for building most of the military’s fighter aircraft – Wildcats, Hellcats, Tigercats Bearcats and others.
Clearly, Grumman was the better candidate, and they felt they had submitted a far superior bid. But Martin-Marietta was based in Georgia, and the chairman of the Senate Armed Services Committee (succeeding Saltonstall, in fact) was Richard Russell, an enormously powerful man with a reputation as an autocrat. He was going to see that the award went to Martin-Marietta. Fortuitously, the general counsel of Grumman was Colson’s former Navy boss, Llewelyn Evans, and when Evans saw the bind his company was in, he called Colson.
Evans told Colson, “I have a big problem –we’ve been working on the LEM project for years, we’re by far the best bid, and we’re going to get buried by Russell. I’ve got to get in to see Dick McGuire– can you help me?”
So there were Colson and Morin, two Republicans from Boston representing Grumman in a street fight against an autocratic southern Democrat and his hometown boys, and looking to the Boston Latin Mafia for their silver bullet.
Colson called Dan Lynch at Saltonstall’s office and told him the problem; Lynch invited Colson to bring his clients in, and soon, Evans and his Grumman team spent an hour in Saltonstall’s Senate office educating Lynch about LEM. When Lynch was through learning, he called Dick McGuire, his childhood pal, and asked him to see Evans, and of course, Dick said, “Anytime Danny, bring him right up!” Evans had been trying for a year to get an appointment with McGuire, and there he was five minutes later, sitting in McGuire’s outer office with Dan Lynch after one phone call. Soon, McGuire came out.
“Danny boy, HOWAHYAAHH!!! My Gawd it’s great to see ya,” he said in the archetypal Boston dialect.
Lynch returned McGuire’s hug and tried to introduce him to Evans, but McGuire cut him off – “we’ll get to that in a few minutes – Danny, come on in, I want to talk to you,” and McGuire took Dan Lynch into his office and left Evans in the waiting room alone.
In his office, Maguire said, “Danny, let him sit for a while, let him know how important you are. What can I do for you?” Lynch explained why they were there, and the two of them mapped out a game plan; and then McGuire allowed Lew Evans to join them. He explained to Evans that because of Grumman’s advocacy (i.e., Colson), he would interceded with Senator Russell, provided that certain political contributions were made to certain people.
The contract was awarded to Grumman, and in July of 1969, LEM landed on the moon and Grumman was permanently on the map.
Grumman was an appreciative and loyal client, retaining Colson & Morin annually for years to come; and as a result of their early success with Grumman, Colson & Morin signed on Harrington & Richardson Arms (later H&R Firearms), a Worcester company that was then the biggest rifle manufacturer in the world (they made the M-1 and M-14 rifles for the U. S. Military), and a number of other regional clients.
It couldn’t have happened too soon. Colson and Morin didn’t have a lot of money to establish their firm; and both had growing families and now a double office overhead. Colson borrowed $3,000, and they rented all of their office furnishings, right down to the carpeting (a relatively new scheme introduced to them by Bob Zeltzer, whom they had assisted in the creation of his new business, “Offices Unlimited”).
 McGuire was then the treasurer of the Democratic National Committee and one of Kennedy’s people.
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Tags: charles colson, charles morin, dan lynch, dick mcguire, grumman aircraft, llewelyn evans, martin-marietta, senator richard russell