J. Howard Marshall

For other people named Howard Marshall, see Howard Marshall (disambiguation).

J. Howard Marshall
J. Howard Marshall II in 1954
Born	James Howard Marshall II (1905-01-24)January 24, 1905 Germantown, Pennsylvania, U.S.
Died	August 4, 1995(1995-08-04) (aged 90) Harris County, Texas, U.S.
Alma mater	Haverford College Yale Law School
Occupation(s)	Businessman, attorney, academic, government official
Spouses	Eleanor M. Pierce ​ ​ (m. 1931; div. 1961)​ Bettye Bohannon ​ ​ (m. 1961; died 1991)​ Anna Nicole Smith ​ (m. 1994)​
Children	2

Marshall in his 1926 yearbook picture at Haverford College

James Howard Marshall II (January 24, 1905 – August 4, 1995) was an American businessman, academic, attorney, and government official. His life spanned nine decades and almost the entire history of the oil industry. He was involved with and invested in the oil industry via academic, government and commercial endeavors. He owned 16% of Koch Industries. Marshall was married to model and celebrity Anna Nicole Smith during the last 14 months of his life. His estate became the subject of protracted litigation, which was reviewed by the Supreme Court in Marshall v. Marshall and Stern v. Marshall.

Early years

Born in Germantown, Philadelphia, Pennsylvania, J. Howard Marshall II attended George School, a private high school in Newtown, Pennsylvania, and then studied liberal arts at Haverford College, both Quaker institutions, graduating in 1926. While at George School and Haverford he edited the school newspapers, captained the debate teams and was an All American soccer player and played competitive tennis under the instruction of professional Bill Tilden. He graduated magna cum laude from Yale Law School in 1931. At Yale, he was case editor of the Yale Law Journal and studied with the law and economics pioneer Walton Hale Hamilton.

Careers

Upon graduation, he served from 1931 to 1933 as an Assistant Dean at Yale Law School and instructed courses in business, finance and procedure. At the same time, he was producing scholarship as a member of the influential legal realism school of thought, working with future Supreme Court Justice William O. Douglas on an article entitled A Factual Study of Bankruptcy Administration and Some Suggestions, published in 1932. However, his most influential works, done with Norman Meyers, were two articles entitled Legal Planning of Petroleum Production. These pioneering studies offered an alternative to the then-prevailing practices of controlled production in the petroleum industry, which were leading to dramatic boom/bust cycles. They gained the interest of the government, especially since the legal minds behind the New Deal were staunch supporters of legal realism.

In 1933, he left Yale to become the Assistant Solicitor at the Department of the Interior under Harold L. Ickes. During his first tour at Interior, he authored the Code of Fair Competition for the Petroleum Industry (1933), and the Connally Hot Oil Act of 1935 in the wake of the Supreme Court's decision to strike down the National Industrial Recovery Act (NIRA). Specifically, it revived the portion of the original legislation that regulated the flow of oil between states. Ostensibly enacted to protect the industry from "contraband oil" in order to stabilize falling prices.

In 1935, he left government service to become the special counsel to the president (Kenneth R. Kingsbury) of Standard Oil of California (now Chevron Corporation) in San Francisco, and began his long career as an oilman. Another two years later he became a partner at the firm Pillsbury Madison Sutro (now known as Pillsbury Winthrop Shaw Pittman), which was the company's outside counsel. It was at Standard Oil of California that he began a lifelong business association and friendship with his mentor Ralph K. Davies. In 1941, he was called back to Washington, D.C. during World War II as Solicitor of the Petroleum Administration for War, helping develop U.S. energy policy during the war, including the Cole Pipeline Act of 1941, and later as a member of the Committee on Reparations, the National Petroleum Council and the American Petroleum Institute. In 1944, after developing a relationship with Paul G. Blazer, he became Vice Chairman and President of Ashland Oil and Refining Co. (now Ashland Inc.). Later positions included Executive Vice President at Signal Oil & Gas under Samuel B. Mosher (1952), President of Union Texas Petroleum (1960) and Executive Vice President of Allied Signal (all now Honeywell) (1967), Union Texas Petroleum Holdings was later sold by Allied Signal to ARCO and merged into BP), until his semi-retirement in 1969.

Marshall remained active in the energy industry through many personal endeavors with Great Northern Oil Company, Koch Industries, Coastal Corporation (now El Paso Corporation), Independent Refinery, International Oil and Gas, various exploration syndicates and culminating in 1984, when he founded Marshall Petroleum. Throughout many of his endeavors, Marshall turned most of his business associations into friendships; including J.R. Parten, Fred Koch and his sons, Oscar Wyatt and E.O. Buck.

Koch Industries

Marshall turned his investment in Great Northern Oil Co. with Fred Koch during the 1950s into a 16% stake in Koch Industries, now America's second largest privately held company. When his eldest son J. Howard Marshall III sided with Bill Koch, Frederick R. Koch and other collateral family members in a failed attempt to take over Koch Industries from Charles Koch and David Koch, he purchased back company stock given previously as a gift and removed the eldest son from his estate plan. Conversely, during the same dispute, his youngest son E. Pierce Marshall sided with his father, Charles Koch and David Koch.

Marriages

Marshall married Eleanor Pierce in 1931 and divorced in 1961. They had two sons together: J. Howard Marshall III (born February 6, 1936) and E. Pierce Marshall (January 12, 1939 – June 20, 2006). His second marriage, to Bettye Bohannon, lasted from 1961 until her death in 1991. In 1994, at the age of 89, he married 26-year-old model Anna Nicole Smith. Their marriage lasted 14 months, until his death.

Death and ensuing lawsuits

Marshall died of natural causes at the age of 90 in Houston, Texas on August 4, 1995. Following Marshall's death, Anna Nicole Smith (who died on February 8, 2007) became involved in a court battle with her former stepson, E. Pierce Marshall (who died on June 20, 2006). J. Howard's will and trust did not include Anna Nicole or J. Howard's other son, J. Howard Marshall III. The legal dispute worked its way through both state and federal courts as Anna Nicole and J. Howard III sought to overturn the will and trust. In 2001, they both lost their cases during a six-month Texas state court jury trial, upholding Marshall's will and trust.

During the probate proceedings, Smith declared bankruptcy in California and was awarded $474 million as a sanction for alleged misconduct. In 2002, the bankruptcy judgment was vacated and her award was reduced to $88 million in a Federal District Court in California. In December 2004, a three-judge panel of the United States Court of Appeals for the Ninth Circuit vacated the District Court decision under the probate exception, ruling that the federal courts lacked subject matter jurisdiction over state probate matters. The Ninth Circuit decision also affirmed the primacy of Texas Probate decision which determined that no misconduct had taken place and that Smith was not one of J. Howard Marshall's heirs. However, on May 1, 2006, the Supreme Court in Marshall v. Marshall reversed the Ninth Circuit's decision regarding the probate exception, allowing Smith another opportunity to pursue her claims in federal court. The case was remanded to the Ninth Circuit for adjudication of the remaining appellate issues. On June 25, 2009, the same three-judge panel of the United States Court of Appeals for the Ninth Circuit heard oral arguments on the remaining appellate issues. On March 19, 2010, the United States Court of Appeals for the Ninth Circuit issued its second opinion on remand, finding in favor of E. Pierce Marshall, that the California Bankruptcy Court did not have jurisdiction and the California Federal District Court was precluded from reviewing matters already decided in the Texas Probate Court. On September 28, 2010, the U.S. Supreme Court again agreed to hear the case. On June 23, 2011, the United States Supreme court decided the case in a 5-4 decision in favor of the Marshall family (now styled Stern v. Marshall 10-179). The majority of the Court decided Congress cannot constitutionally authorize non-Article III bankruptcy judges final order jurisdiction on state law based counterclaims to proofs of claim which are not necessary to resolve the claim itself.

Marshall's eldest son not only lost his case in Texas probate court but also lost a counterclaim against him for fraud with malice. The jury originally awarded E. Pierce Marshall $35 million in damages but the probate court reduced that amount to $10 million. J. Howard Marshall III then filed for bankruptcy in California and was discharged by the same bankruptcy judge that had administered Smith's bankruptcy. This decision was affirmed by the Ninth Circuit Court of Appeals.

External links

• Ironton Tribune article
• American Spectator article
• E&P Magazine article
• Houston Chronicle article
• U.S. News and World Report article
• Ashland Oil history
• Profile of J. Howard Marshall, II
• Wall Street Journal article
• Connally Hot Oil Act of 1935 from Handbook of Texas online
• Again, Hot Oil from Time Magazine, 1938
• J. Howard Marshall II at IMDb