JRA CORPORATION v. Boylan
| Decision Date | 18 March 1940 |
| Citation | 30 F. Supp. 393 |
| Parties | J. R. A. CORPORATION v. BOYLAN et al. |
| Court | U.S. District Court — Southern District of New York |
Alexander Kahan, of New York City (Alexander Kahan, Louis A. Tepper, and Joseph Lotterman, all of New York City, of counsel), for plaintiff.
Chadbourne, Wallace, Park & Whiteside, of New York City, for defendant American Tobacco Co.
George Z. Medalie, of New York City, for defendant George W. Hill.
Sigourney B. Olney, of Brooklyn, N. Y., for defendants Richard J. Boylan, John A. Crowe, James R. Coon, and Edmund A. Harvey.
Clarence J. Shearn, of New York City, for defendants Paul M. Hahn, George W. Hill, Jr., Charles F. Neiley, and Vincent Riggio.
Judgment Affirmed March 18, 1940. See 109 F.2d 1018.
This is a motion to dismiss a complaint on the grounds that this Court has no jurisdiction over the action. Plaintiff, a New York corporation, has alleged a derivative stockholder's suit, in behalf of itself, and all other stockholders similarly situated, against The American Tobacco Company, a New Jersey corporation, and thirty-two of its directors and former directors. It seeks judgment against the individual defendants because of their alleged waste of corporate assets arising out of their participation in assertedly illegal stock purchase and bonus plans of the defendant, The American Tobacco Company, and because of their failure to reimburse the corporate defendant for its payment of their counsel fees upon the settlement of stockholders suits to which they were parties.
The complaint alleges that The American Tobacco Company has refused to enforce its rights in the present action, and that its management is hostile and antagonistic to the desires and interests of the stockholders with respect to the acts alleged in the complaint, which on its face shows that twenty-four of the thirty-three named defendants are citizens of the State of New York. The plaintiff argues, however, that for the purposes of determining jurisdiction The American Tobacco Company must be considered as the real plaintiff, and thus the necessary diversity of citizenship is supplied. In support of this novel proposition, it is asserted that under the substantive law of New York (see Niles v. New York Central & Hudson River Railroad Co., 176 N.Y. 119, 68 N.E. 142), the corporation is the only real party plaintiff, and in accordance with the rule announced in Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487, for the purposes of determining its diversity of citizenship jurisdiction, this Court is bound to consider the parties as they would be aligned by the New York Courts.
On the facts of this case, plaintiff's contention cannot be sustained. Even assuming that...
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