Hirtenstein v. Tenney, 63 Civ. 3672.

CourtUnited States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
Writing for the CourtFRANKEL
Citation252 F. Supp. 827
PartiesDaniel J. HIRTENSTEIN, Plaintiff, v. Jerry M. TENNEY and Shirley M. Tenney, Defendants.
Docket NumberNo. 63 Civ. 3672.,63 Civ. 3672.
Decision Date14 April 1966

252 F. Supp. 827

Daniel J. HIRTENSTEIN, Plaintiff,
Jerry M. TENNEY and Shirley M. Tenney, Defendants.

No. 63 Civ. 3672.

United States District Court S. D. New York.

April 14, 1966.

252 F. Supp. 828

Chester A. Lessler, New York City, for plaintiff.

Dreyer & Traub, Brooklyn, N. Y., for defendants.

FRANKEL, District Judge.

On December 26, 1962, plaintiff bought from defendant Shirley M. Tenney 4,000 shares of Class A stock of Tenney Corporation for $20,000. On June 10, 1963, he wrote defendants, charging they had violated the Securities Act of 1933 because they had "suppressed and failed to disclose material facts concerning Tenney Corporation and concerning the stock", and demanded rescission. On December 19, 1963, following refusal of this demand, he brought this action. The complaint is in three counts, only the second of which is before us now on plaintiff's motion for summary judgment. This count alleges that the stock in question was not registered pursuant to Section 5 of the Securities Act of 1933 (15 U.S.C. § 77e); accordingly, plaintiff claims, he is entitled under Section 12 of that Act (15 U.S.C. § 77l) to redeliver the stock and have his money returned. For purposes of plaintiff's motion, the facts (viewing them, where there is conflict in the affidavits, favorably to defendants, Empire Electronics Co. v. United States, 311 F.2d 175, 180 (2d Cir. 1962); 6 Moore, Federal Practice, § 56.15 (3) n. 7) may be summarized as follows:

Defendant Jerry Tenney, during the times in question, was a preponderant majority stockholder, director, and chief executive officer of the Tenney Corporation. His wife, defendant Shirley Tenney, acquired 41,238 shares of the corporation's Class A stock in 1960 as part of an exchange of 142,000 Tenney shares for the stock of Lasro Corporation, which, pursuant to the exchange, became a Tenney subsidiary.

A registration statement under the Act of 1933 relating to 1,932,880 shares of Tenney Class A stock became effective on September 14, 1960. The statement included an undertaking, stressed here by plaintiff, which said:

"In the event that the 142,000 shares of Class A stock issued for the stock of Lasro Corporation including Mrs. Tenney's 41,238 shares * * * are resold or re-offered to the general public, the * * * Registrant undertakes to file Post-Effective Amendments setting forth the terms of such re-offering. * * *"

On August 15, 1962, these 142,000 shares, together with some 60,000 others, were deregistered, with the Securities and Exchange Commission's approval, upon the Commission's understanding that none of the individual owners intended at the time to dispose of these holdings. The Commission cautioned in this connection that these holders "would still be required to comply with the registration requirements of Section 5 of the Securities Act of 1933 in the absence of an exemption therefrom."

At some unspecified time in 1962, Jerry Tenney came to know plaintiff's father, Edward Hirtenstein, an insurance broker, who expressed an interest both in buying some Tenney stock and in obtaining some of the corporation's insurance business. Tenney told Hirtenstein the company already had an insurance broker but was willing to consider the possibility of a replacement who could obtain the needed coverage on better terms. At a later date in 1962, Tenney told Hirtenstein that Mrs. Tenney had shares she was interested in selling; that these could be bought by Hirtenstein at a price slightly below the prevailing market

252 F. Supp. 829
price; and that the seller would want an option to repurchase within two years at an advance of one dollar per share

Late in 1962 Edward Hirtenstein said he would take 4,000 shares at five dollars per share, giving the seller an option to repurchase all or part of the lot within two years at six dollars per share. Then, on December 26, 1962, Edward Hirtenstein's son, the plaintiff herein, appeared at Tenney's office and announced that he had come to purchase the stock. Plaintiff explained that his father had told him of the prior negotiations and that he was ready to buy on the basis previously...

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3 cases
  • Ingenito v. Bermec Corp., 70 Civ. 4077
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • 3 d4 Novembro d4 1977
    ...Knapp v. Kinsey, 249 F.2d 797 (6th Cir. 1957), cert. denied, 356 U.S. 936, 78 S.Ct. 778, 2 L.Ed.2d 812 (1956); Hirtenstein v. Tenney, 252 F.Supp. 827 (S.D.N.Y.1966). "The ultimate test, of course, is whether the particular class of persons affected need sic the protection of the Act . . ." ......
  • Doran v. Petroleum Management Corp., 74-3972
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • 20 d4 Janeiro d4 1977
    ...778, 2 L.Ed.2d 812 (1958) (triable issue of fact whether private offering when about 300 offerees involved). Cf. Hirtenstein v. Tenney, 252 F.Supp. 827 (S.D.N.Y.1966) (where plaintiff was sole purchaser of securities who may or may not have been sole offeree, there was triable issue of fact......
  • People v. Michael Glenn Realty Corp.
    • United States
    • United States State Supreme Court (New York)
    • 21 d1 Julho d1 1980
    ...purpose 'to exempt isolated transactions from the onerous burdens of registration requirements' " (Hirtenstein v. Tenney, D.C., 252 F.Supp. 827, The Attorney General mistakenly relies upon that aspect of Mr. Justice Clark's opinion in SEC v. Ralston Purina, supra, which indicates that the n......

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