Knight v. Bolivar

• Decision Date: 20 November 1957
• Citation: 156 F. Supp. 561
• Parties: Sam R. KNIGHT, Plaintiff, v. Dionisio R. BOLIVAR, Defendant.
• Court: U.S. District Court — Southern District of New York

156 F. Supp. 561

Sam R. KNIGHT, Plaintiff, v. Dionisio R. BOLIVAR, Defendant.

United States District Court S. D. New York.

November 20, 1957.

John A. Brough, New York City, John A. Brough, Alfred E. Froh, New York City, of counsel, for plaintiff.

Curtis, Mallet-Prevost, Colt & Mosle, New York City, for defendant.

LEVET, District Judge.

Defendant has moved to dismiss the complaint on the grounds that:

1. This court is not the proper forum for the trial of this action; and

2. An indispensable party has not been joined and that plaintiff lacks the capacity to sue herein as an individual. Motion is also made to vacate plaintiff's notice of examination of defendant.

The plaintiff is a resident of the State of New York. The defendant is a resident of Venezuela, who was served with process while in the State of New York in an action brought by the plaintiff in the Supreme Court of the State of New York, County of New York. The defendant thereafter secured the removal of the cause to the United States District Court, Southern District of New York.

The complaint alleges that in July of 1948, plaintiff purchased 300 shares of the 1,000 shares of stock of Industrias Unidas, S.A. (hereinafter called Unidas), a corporation organized under the laws of the Republic of Venezuela. This corporation engaged in the real estate and development business in Venezuela. In October of 1948, Unidas appointed the defendant and another prominent citizen of Venezuela, who were partners, as exclusive agents to act as brokers for the sale of property owned by Unidas. A small block of stock in Unidas was transferred by the plaintiff and other stockholders. Certain rearrangements of stock holdings took place, as a result of which defendant and his partner obtained the majority of the voting shares of Unidas. In March 1953, by reason of the control of Unidas and allegedly in furtherance of a conspiracy to defraud the plaintiff, the defendant was appointed as "administrator" of Unidas to act in lieu of the officers and directors. This procedure it appears is authorized by Article 242 of the Commercial Code of Venezuela, which is as follows:

"Article 242. — A corporation is administered by one or more administrators who are in tenure limited by time, revocable, who may be stockholders or nonstockholders."

The complaint further alleges that the defendant in effect has wasted the assets of the corporation and transferred the assets to others without adequate consideration, all to the damage of the plaintiff. The complaint alleges that under the laws of Venezuela the transactions set forth therein and the participation of the defendant in such acts made the defendant liable to plaintiff for all damages incurred by plaintiff as a result thereof.

The statute on which plaintiff contends this result flows is Article 266 of the Commercial Code of Venezuela, which is as follows:

"Article 266. — The administrators are jointly and severally liable to the stockholders and to third parties, as follows:

"1. for the (real) existence of the amounts paid in by the stockholders;

"2. for the actual availability of dividends paid;

"3. for the execution of the decisions of shareholders' meetings;

"4. for the faithful fulfilment of the duties laid upon them by law and the company by-laws."

The defendant asserts that the action should be dismissed on the ground of forum non conveniens. The factors which it is contended support this motion are as follows:

1. The transactions alleged are governed solely by the laws of Venezuela;

2. There was no prospective reliance by any of the parties upon the courts or laws of the United States;

3. All witnesses other than plaintiff and all books and records are absent from the United States;

4. Action in the United States fragmentizes this suit, it being contended that other parties will be involved with similar claims;

5. The courts of Venezuela are open to plaintiff;

6. The plaintiff is not suing "in his own right"—that is, that the corporation is an indispensable party.

The plaintiff in opposing this motion submits the following:

1. His own affidavit;

2. The affidavit of Richard B. Montgomery, Jr., a practicing attorney in the State of Louisiana, who visited Venezuela with the plaintiff;

3. The affidavit of John A. Brough, attorney at law in the City of New York; and

4. Affidavit of Dr. Marino Arcaya, a citizen of the Republic of Venezuela and a resident of the City of New York, who was admitted as a member of the Bar of Venezuela in 1943 and is still so licensed.

The facts set forth in the affidavits above mentioned demonstrate that the plaintiff, if this action is dismissed in this forum, has little likelihood of being able to prosecute the action elsewhere.

The moving papers in themselves do not controvert any material allegations of the complaint and in any event the facts alleged by the complaint must, upon motion directed to jurisdiction, be deemed to be true. Southern Music Publishing Co. v. Walt Disney Productions, D.C.S.D.N.Y.1947, 73 F. Supp. 580. The facts include plaintiff's allegations as to the Venezuelan law. The affidavit of the Venezuelan lawyer substantiates this factual contention of Venezuelan law made by the plaintiff; to this the defendant submits no competent denial. Consequently, even the problem of whether Unidas is an indispensable party is a question of fact which must be determined at the trial since this depends upon whether the transactions complained of create any substantive right in the corporation which would make it an indispensable party and is...