Milwee v. Peachtree Cypress Inv. Co.

• Citation: 510 F. Supp. 279
• Decision Date: 11 November 1977
• Docket Number: No. CIV-4-77-17.,CIV-4-77-17.
• Parties: George Q. MILWEE, Jr., etc., Plaintiff, v. The PEACHTREE CYPRESS INVESTMENT COMPANY et al., Defendants.
• Court: U.S. District Court — Eastern District of Tennessee

510 F. Supp. 279

George Q. MILWEE, Jr., etc., Plaintiff, v. The PEACHTREE CYPRESS INVESTMENT COMPANY et al., Defendants.

No. CIV-4-77-17.

United States District Court, E. D. Tennessee, Winchester Division.

November 11, 1977.

Jordan Stokes, III, Nashville, Tenn., for plaintiff.

H. Fred Ford, Nashville, Tenn., for defendants.

MEMORANDA OPINIONS AND ORDERS

NEESE, District Judge.

This is a civil action seeking compensatory and punitive damages and asking this Court to "set aside" a purported corporate merger. The Court's jurisdiction was attempted to be invoked under the provisions of several federal securities statutes and also on the basis of the diverse citizenship of the parties and the requisite amount in controversy. The defendants moved for a dismissal hereof, ostensibly for lack of the Court's jurisdiction of the subject matter, lack of jurisdiction of their person, and for the failure of the plaintiff to state a claim against them upon which relief can be granted. Rules 12(b)(1), (2), (6), Federal Rules of Civil Procedure. The defendants moved also for a summary judgment. Rule 56(b), Federal Rules of Civil Procedure.

Such motions were referred to a magistrate of this district for a recommendation as to their disposition by the Court. 28 U.S.C. § 636(b)(1)(B). It was recommended that each such motion be denied, although it was indicated that, as to any purported claim of the plaintiff under the federal securities laws, the Court would lack jurisdiction of the subject matter. The defendants served and filed timely written objections to such recommendation, to the extent that it recommended the denial of their aforementioned motions. 28 U.S.C. § 636(b)(1). An oral hearing on such objections was held on September 14, 1977.

Initially, the plaintiff Mr. Milwee was proceeding herein pro se; however, at the time of the oral hearing counsel appeared for the plaintiff. Accordingly, the plaintiff was allowed 15 days within which to amend his complaint to clarify his claims herein. Mr. Milwee filed a second amended complaint which, of course, was not before the magistrate at the time of his recommendation. Thus, the Court will consider each of the defendants' motions de novo. Idem.

Pretermitting all other matters is a determination of this Court's jurisdiction of the subject matter, for, without a finding that such jurisdiction exists, this Court is without power to proceed. Memphis Am. Fed. of Tecrs., L. 2032 v. Bd. of Ed., C.A. 6th (1976), 534 F.2d 699, 7011. It appears that, by his second amended complaint, the plaintiff has abandoned any claims he might have been advancing under the federal securities laws. In any event, for the reasons stated by the magistrate in his report and recommendation herein of August 9, 1977, this Court lacks jurisdiction as to any such claims. However, the Court does have jurisdiction on the basis of diversity of citizenship of the parties and the requisite amount. 28 U.S.C. § 1332(a)(1), (c).

The thrust of the plaintiff's claim herein is that the Tennessee Land and Development Company, Inc. (Land) was incorporated in Tennessee on June 1, 1948 with its only asset being real estate most of which was located within this district; that the plaintiff's father George Q. Milwee, Esq. was the owner of 100 shares of the stock in such corporation and served also as a director and officer thereof; that Land failed to pay its state franchise taxes for the year 1949 and, accordingly, on June 21, 1950, its charter was revoked by the Tennessee secretary of state, but thereafter that the real estate owned by Land remained in the corporate name; that the individual defendants became aware in 1974 of the fact that this defunct corporation held title to such Tennessee realty and conspired to acquire the same by paying the past due franchise taxes owed by Land, having its charter reinstated, and merging such corporation with the defendant Peachtree Cypress Investment Company, Inc. (Peachtree) which was a Georgia corporation controlled by them.

That pursuant to such plan of conspiracy the individual defendants filed with the Tennessee commissioner of revenue on January 21, 1975 a statement falsely representing themselves to be officers of Land and falsely stating that no third party would be injured by the reinstatement of its charter; that on the same day the defendants Messrs. Terry J. Aiken and Fred F. Filsoff, falsely representing themselves as president and secretary, respectively, of Land, filed with the Tennessee secretary of state a merger resolution, stating falsely that Peachtree owned all the capital stock of Land; and that, based upon these false representations, the Tennessee commissioner of revenue authorized the Tennessee secretary of state to reinstate the charter of Land which was done, the defendants having previously paid all outstanding franchise taxes of such corporation.

It is the plaintiff's contention that upon the revocation of Land's charter in 1950 such corporation's assets passed to its four stockholders or their heirs, and that, accordingly, his late father's estate has been deprived by the defendants of Mr. Milwee, Sr.'s ¼ interest in the assets of such corporation. The plaintiff contends that the aforementioned charter reinstatement and the merger of Land with Peachtree was illegal and should be declared void by this Court. He also seeks compensatory and punitive damages and attorney's fees.

The defendants' motion for a summary judgment asserts that this action is barred by a compromise or release executed on behalf of the plaintiff by his agent Mr. James H. Marks. Such motion was supported by an affidavit and other documents. Rule 56(e), Federal Rules of Civil Procedure.

Summary judgment is "* * * a procedure whose purpose is to test whether facially adequate allegations have sufficient basis in fact to warrant plenary presentation of evidence. * * *" Blackledge v. Allison (1977), 431 U.S. 63, 80, 97 S.Ct. 1621, 1632, 52 L.Ed.2d 136, 1518. It "* * * is clearly intended to be used to pierce the allegations of the pleadings and allow the trial court to dispose of the case in advance of the hearing on the merits when the pleadings, depositions, answers to interrogatories, admissions and affidavits show that there is no genuine issue as to any material fact. * * * The objective is to separate the sham and insubstantial from the real and genuine issues of fact. * * *" Bryant v. Commonwealth of Kentucky, C.A. 6th (1974), 490 F.2d 1273, 1274-12754, 5. Its purpose is not to cut litigants off from their right of trial by jury if they really have genuine factual issues to try. Poller v. Columbian Broadcasting System (1962), 368 U.S. 464, 468, 82 S.Ct. 486, 488, 7 L.Ed.2d 458, 4612. Summary judgment is only appropriate, however, where the documents tendered to the court disclose that no genuine issue of material fact remains to be decided—the court may not resolve disputed issues of fact in considering such a motion. Felix v. Young, C.A. 6th (1976), 536 F.2d 1126, 11302.

In ruling on a motion for summary judgment, the court must construe the evidence against the movant and in its most favorable light as to the party opposing the motion. Board of Ed., Cincinnati v. Department of H. E. W., C.A. 6th (1976), 532 F.2d 1070, 10711, 2. The movant has the burden of demonstrating that there is no genuine issue of fact, and any doubt as to the existence of such an issue is resolved against the moving party. Short v. Louisville and Nashville Railroad Company, D.C. Tenn. (1962), 213 F.Supp. 549, 5502. "* * * But, the whole purpose of summary judgment procedures would be defeated if a case could be forced to trial by a mere assertion that a genuine issue exists, without any showing of evidence. * * *" Idem.

"* * * Accordingly, where the movant brings forward and supports his motion for summary judgment, his opponent may not rest merely upon his pleadings but rather must come forward to show genuine issues of fact. * * *" Bryant v. Commonwealth of Kentucky, supra, 490 F.2d at 12754, 5; accord: Rule 56(e), Federal Rules of Civil Procedure; First National Bank v. Cities Service Co. (1968), 391 U.S. 253, 289, 88 S.Ct. 1575, 20 L.Ed.2d 569, 59215; James R. Snyder Co. v. Edward Rose & Sons, C.A. 6th (1976), 546 F.2d 206, 2103; Daily Press v. United Press International, C.A. 6th (1969), 412 F.2d 126, 1345, certiorari denied (1969), 396 U.S. 990, 90 S.Ct. 480, 24 L.Ed.2d 453. However, the mere hope by the party opposing summary judgment that evidence may turn up to support his position does not suffice to warrant a trial. 6 Moore's Federal Practice (2d ed.) 56-422, ¶ 56.151.-06.

In support of their motion for a summary judgment, the defendants submitted a power of attorney executed and sworn to by the plaintiff Mr. Milwee on April 5, 1976, whereby he appointed Mr. James H. Marks his agent:

* * * to act in his behalf and in his interest in the matter of The Tennessee Land & Development Corporation, and the settlement of the estate of his late father, G. Q. Milwee, * * * to sign his name to all the necessary documents pertinent to said matter and to execute all manner of legal and equitable forms in his name, where necessary, towards accomplishing the settlement of said estate and the matter pertaining to his interest in the said corporation; and to do, execute and perform all and every act or acts, thing or things, in law and equity needful and necessary to be done in and about the premises, as fully, completely, and amply, to all intents and purposes whatsoever as the plaintiff might or could do if acting personally. * * *

Therein, Mr. Milwee, Jr. also ratified and confirmed all lawful acts done by his so-designated agent Mr. Marks.

The defendants also submitted an "agreement" whereby Mr. Marks, acting "* * * under and by virtue of a general power of appointment from George Q. Milwee, Jr., individually and as executor of the estate of G. Q. Milwee, Sr., * * *" executed the same...