193 F.2d 564 (2nd Cir. 1952), 112, Rattner v. Lehman
|Docket Nº:||112, 22170.|
|Citation:||193 F.2d 564|
|Party Name:||RATTNER et al. v. LEHMAN et al.|
|Case Date:||January 10, 1952|
|Court:||United States Courts of Appeals, Court of Appeals for the Second Circuit|
Argued Dec. 5, 1951.
Morris J. Levy, New York City, for appellant.
Sullivan & Cromwell, New York City (Eustace Seligman and Inzer B. Wyatt, New York City, of counsel), for appellees.
Roger S. Foster, Gen. Counsel and Myer Feldman, Securities and Exchange Commission, Washington, D.C., amicus curiae.
Before SWAN, Chief Judge, and L. HAND and AUGUSTUS N. HAND, Circuit judges.
SWAN, Chief Judge.
Between November 1948 and April 1949, Lehman Brothers, a partnership, purchased and sold 5, 000 shares of the common stock of Consolidated Vultee Aircraft Corporation, whose stock was duly registered on the New York Stock Exchange. From such 'short swing' transactions the partnership realized a profit of some $15, 000. One of the partners, John D. Hertz, was a director of the Aircraft Corporation. His share of the partnership's profits from the said transactions was $806.62, and this sum he paid to the Aircraft Corporation when informed of them. The corporation having refused to bring suit against Lehman Brothers, a stockholder commenced the present action on its behalf pursuant to section 16(b) of the Securities Exchange Act of 1934, 15 U.S.C.A. § 78p(b). After defendant Hertz had answered the complaint, he moved for summary judgment under Rule 56, F.R.C.P. 28 U.S.C.A. The other defendants moved under Rule 12(b) to dismiss the complaint for failure to state a claim upon which relief can be granted. The plaintiff countered with a cross-motion for summary judgment. The plaintiff's motion was denied and the defendants' motions were granted, the court's opinion being reported in 98 F.Supp. 1009. From the resulting judgment the plaintiff has appealed.
This appeal presents questions of novel impression. The first question concerns the extent of the liability of John D. Hertz, the partner who was a director of the Aircraft corporation. Specifically the question is whether he must account for more than his own share of the firm's profits. The district court correctly answered this question in the negative. The statute gives the corporation whose stock is purchased and sold in short swing transactions the right to recover from the director 'any profit realized by him.' 1 There are no circumstances...
To continue readingFREE SIGN UP