Gaudiosi v. Franklin, Civ. A. 24654.

• Decision Date: 05 August 1958
• Docket Number: Civ. A. 24654.
• Citation: 166 F. Supp. 351
• Parties: Louis GAUDIOSI, Charles Schwartz, and Randolph Phillips, individually and on behalf of all other stockholders of the Pennsylvania Railroad Company similarly situated, Plaintiffs, v. Walter S. FRANKLIN, Richard K. Mellon, Robert T. McCracken, C. Jared Ingersoll, James E. Gowen, Philip R. Clarke, James M. Symes, John A. Diemand, John B. Hollister, Lammot du P. Copeland, Donald Danforth, R. George Rincliffe, William L. Day, Otto N. Frenzel, Fred Carpi, David C. Bevan, James P. Newell, Directors; Bayard H. Roberts and The Pennsylvania Railroad Company, a corporation, incorporated under the laws of the Commonwealth of Pennsylvania, Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

166 F. Supp. 351

Louis GAUDIOSI, Charles Schwartz, and Randolph Phillips, individually and on behalf of all other stockholders of the Pennsylvania Railroad Company similarly situated, Plaintiffs, v. Walter S. FRANKLIN, Richard K. Mellon, Robert T. McCracken, C. Jared Ingersoll, James E. Gowen, Philip R. Clarke, James M. Symes, John A. Diemand, John B. Hollister, Lammot du P. Copeland, Donald Danforth, R. George Rincliffe, William L. Day, Otto N. Frenzel, Fred Carpi, David C. Bevan, James P. Newell, Directors; Bayard H. Roberts and The Pennsylvania Railroad Company, a corporation, incorporated under the laws of the Commonwealth of Pennsylvania, Defendants.

Civ. A. 24654.

United States District Court E. D. Pennsylvania.

August 5, 1958.

Randolph Phillips, Pro se, Abrahams & Loewenstein, Philadelphia, Pa., for Charles Schwartz and Louis Gaudiosi.

Barnes, Dechert, Price, Myers & Rhoads, Philip Price, Philadelphia, Pa., for defendants.

KRAFT, District Judge.

This action embodying multiple claims is the second action brought by the plaintiffs as the result of a proxy contest for the election of directors of The Pennsylvania Railroad Company. The plaintiffs purportedly seek protection, in all but one of the claims, of the rights of Randolph Phillips, one of the plaintiffs, who is a candidate for director in opposition to the management candidates.

Count IV of the complaint, however, includes a class action, the aim of which is to impose liability on individual defendants, who are directors of the railroad company, to reimburse it for certain alleged improper expenditures of corporate funds on behalf of the management candidates in the proxy contest.

There was such a dearth of evidence on this claim that the defendants later argued, not without reason, that the class representative claim had been asserted in count IV only for the purpose of supplying the requisite jurisdictional amount in that count in which diversity jurisdiction had been invoked. The plaintiffs, in apparent reaction to defendants' intimation of a want of good faith in the representative claim, now press vigorously for the imposition of liability on all director defendants. Whether the plaintiffs' present vigor is the result of the defendants' doubt of plaintiffs' good faith need not now be determined. Suffice it to say that, on the trial record and in their requests for findings of fact and conclusions of law, the plaintiffs have presented the representative claim in such haphazard fashion as to make it virtually impossible for the trial judge to make any just, proper determination.

Of the 18 individual defendants, 17 are directors and 1 is not. Of the 17 director defendants 6 have neither been served nor appeared in...