64 F.Supp. 595 (E.D.N.Y. 1945), C. A. 4322, Koster v. (American) Lumbermens Mut. Cas. Co.

Docket Nº:C. A. 4322
Citation:64 F.Supp. 595
Party Name:Koster v. (American) Lumbermens Mut. Cas. Co.
Case Date:January 30, 1945
Court:United States District Courts, 2nd Circuit, Eastern District of New York

Page 595

64 F.Supp. 595 (E.D.N.Y. 1945)




Civil Action No. 4322.

District Court, E.D. New York.

Jan. 30, 1945

Page 596

Alfred Gurkin, of New York City (Abraham L. Pomerantz and William E. Haudek, both of New York City, of counsel) for plaintiff.

Townley, Updike & Carter, of New York City (Stuart N. Updike, of New York City, of counsel), for (American) Lumbermens Mut. Casualty Co.

ABRUZZO, District Judge.

The plaintiff, a citizen of New York, residing in this District, sued the three defendants above named.

The Lumbermens Mutual Casualty Company is a mutual insurance company which was organized and exists under the laws of the State of Illinois.

James S. Kemper & Co., Inc., is a corporation organized under and by virtue of the laws of the State of Illinois; and James S. Kemper, the individual defendant, is a citizen and resident of Illinois.

The plaintiff alleges that since May, 1941, he has been and is now a member and policyholder of the Lumbermens Mutual Casualty Company and brings this action in the right and on behalf of all its members and policyholders.

The motion brought under Rules 12(b) and 19(a) of the Rules of Civil Procedure, 28 U.S.C.A.following section 723c, asserts (1) that this Court in its discretion should not entertain jurisdiction over an action requiring it to interfere with and to control the internal affairs of a foreign insurance corporation; and (2) that plaintiff has failed to bring before the Court as a defendant, an indispensable party, to wit, James S. Kemper.

The first cause of action is against Lumbermens Mutual Casualty Company and the individual defendant, Kemper, and alleges that the defendant Kemper received from the Lumbermens Mutual Casualty Company an unwarranted increase in salary and other compensation which was without consideration and constituted a gift of corporate assets.

The second cause of action, against all three defendants, alleges that the individual defendant Kemper dominated and controlled the management, personnel and business policies of the defendant, James S. Kemper & Co., Inc.; and that the defendant, James S. Kemper & Co., Inc., received commissions, fees and other payments for services to the Lumbermens Mutual Casualty Company which the Lumbermens Mutual Casualty Company could have rendered just as efficiently for itself with its own employees; and seeks an accounting of all the profits derived by the James S. Kemper & Co., Inc., because of the action so complained of.

The third and fourth causes of action against the individual defendant Kemper and Lumbermens alleges that Kemper knowingly and willfully caused Lumbermens at various times to sell shares of stock for a sum less than the true value of the security and, by reason of these sales, the Lumbermens sustained damages in excess of $1,112,050.

The complaint demands that Kemper and the Kemper corporation be required to account to the Lumbermens for all damages and profits alleged in the complaint; and that the plaintiff be awarded the costs and expenses of this action including counsel fees and accountant's fees.

James S. Kemper, a very necessary party, especially in the first cause of action, and in the third and fourth causes of action, has not been served and...

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