277 F.2d 705 (8th Cir. 1960), 16310, Quirke v. St. Louis-San Francisco Ry. Co.
|Citation:||277 F.2d 705|
|Party Name:||Edward F. QUIRKE, Appellant, v. ST. LOUIS-SAN FRANCISCO RAILWAY COMPANY, Daniel K. Catlin et al., Appellees(two cases). Edward F. QUIRKE, Appellant, v. ST. LOUIS-SAN FRANCISCO RAILWAY COMPANY and David Roberts, Jr., Appellees. Edward F. QUIRKE, Appellant, v. ST. LOUIS-SAN FRANCISCO RAILWAY COMPANY and E. L. Bruce, Jr., Appellees. Edward F. QUIRKE,|
|Case Date:||May 04, 1960|
|Court:||United States Courts of Appeals, Court of Appeals for the Eighth Circuit|
Aaron Kravitch, Savannah, Ga., for appellant.
Ralph L. McAfee, New York City, for appellee.
Before GARDNER, WOODROUGH and BLACKMUN, Circuit Judges.
GARDNER, Circuit Judge.
There are involved in this appeal five actions consolidated for the purpose of trial and likewise consolidated on appeal. Basically they all stem from the same transaction; to-wit, the purchase of stock in the Central of Georgia Railway Company by the St. Louis-San Francisco Railway Company, and represent two causes of action. The first is a stockholder's derivative action brought by appellant on behalf of the St. Louis-San Francisco Railway Company, hereinafter referred to as the Frisco, against its directors and certain of its officers. The second is a bondholder's action, the bondholders reportedly represented by appellant, against the same directors and officers. Hereinafter we shall refer to appellant as plaintiff and appellee as defendant or the Frisco.
Defendant moved to dismiss both actions. Its motion to dismiss the stockholder's action is based upon the grounds that: (1) plaintiff's interests are adverse to those of Frisco and its other stockholders and that, therefore, he does not represent them; (2) the court lacks jurisdiction over the subject matter because the issues are within the exclusive primary jurisdiction of the Interstate Commerce Commission, and the proceedings before the Commission have not been concluded; and (3) the complaint fails to show plaintiff's efforts to secure shareholder action as required by Rule 23(b) of the Federal Rules of Civil Procedure, 28 U.S.C.
Its motion to dismiss the bondholder's action is based upon the grounds that: (1) the complaint fails to state a claim for fraud because the allegedly fraudulent representations were not made to plaintiff and plaintiff acquired his bonds before those representations were made; (2) the notice, demand and offer of indemnity requirements of the mortgage indentures, which are a condition precedent to the bringing of this action, have not been satisfied; (3) this is not a proper class suit because plaintiff does not adequately represent the interests of the class; (4) the requisite jurisdictional amount has not been established; and (5) the Interstate Commerce Commission has exclusive primary jurisdiction and plaintiff's administrative remedy had not been exhausted.
The court sustained both motions and this appeal followed. In seeking reversal plaintiff contends that the court erred in dismissing the stockholder's suit for failure to allege that plaintiff had sought relief from Frisco's stockholders. Likewise plaintiff contends that the court erred in dismissing the bondholder's suit for failure to allege compliance with the conditions precedent to suit imposed by the indentures which govern plaintiff's rights under his bonds, and that the court erred as to both causes of action in holding that plaintiff could not maintain these actions because he brought both actions in furtherance of interests adverse to those of Frisco and its stockholders and bondholders and therefore lacks standing to sue on their behalf and does not come into court with clean hands.
Plaintiff at all times here pertinent was the owner of 100 shares preferred and 200 shares common stock of the Frisco. In his complaint he charges that as a part of the plan of reorganization of Frisco certain bond issues were authorized to be issued and sold for certain specific purposes; that the officers and directors of Frisco, in disregard of the authorization for the issuance and sale of the bonds, devoted a large part of the proceeds of the bond sale to the purchase of Central of Georgia preferred and common stock. He asks that Frisco be restrained from disposing of the Central of Georgia stock and requests that it be sequestered, seized and impounded by the court and that a trustee by appointed to take possession of that stock. He also seeks compensatory, punitive, and exemplary
damages, plus expenses of the litigation, including counsel fees.
The complaint contains no allegations that prior to the institution of his stockholder's suit he had exhausted his remedies within the corporation by seeking remedy from either the directors or stockholders. By amendment he...
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