Newberg v. American Dryer Corporation
Decision Date | 12 June 1961 |
Docket Number | Civ. A. No. 28579. |
Citation | 195 F. Supp. 345 |
Parties | Herman NEWBERG and Yetta Newberg on behalf of themselves and all other stockholders of American Dryer Corporation similarly situated who may be entitled to intervene herein v. AMERICAN DRYER CORPORATION, William F. Kane, Bernard F. Lieberman, Jacob J. Holtzman, Jason M. Keiner, Jacob Corson, Myron Freudberg, J. Myron Honigman, Mildred Honigman, Delaware Valley Financial Corporation, the Citizens & Southern Bank of Philadelphia, Robinson & Co., Inc., Frank Brodsky and Vivian Holden. |
Court | U.S. District Court — Eastern District of Pennsylvania |
Marvin Katz, Philadelphia, Pa., for plaintiffs.
Lester H. Novack & Everett B. Dennis, Philadelphia, Pa., for defendants American Dryer, Kane, Lieberman, Holtzman, Keiner and Corson.
Aaron M. Fine, Philadelphia, Pa., for defendants Delaware Valley, Myron Honigman and Mildred Honigman.
Henry J. Morgan, Philadelphia, Pa., for defendants Robinson & Co. and Frank Brodsky.
The defendants presently before the Court comprise all captioned defendants except Vivian Holden. As to the latter, there has been no entry of appearance nor, apparently, service of process.
The thirteen defendants who have made the various motions at hand consist of four groups to be described below.
Lucid exposition of the several motions of defendants requires a preliminary outline of plaintiffs' complaint. Filed September 16, 1960, this unverified complaint consists of 18 numbered paragraphs and a prayer for judgment, as follows:
In paragraphs 3 through 12, ten of the defendants are briefly identified as follows (for this purpose, corporations described in the complaint as "organized under the laws of the Commonwealth of Pennsylvania" are here called simply "Pennsylvania corporations"):
American Dryer Corporation is a Pennsylvania corporation; William F. Kane is its president and is a controlling stockholder; Jacob Corson is sales manager; and Vivian Holden is a major stockholder.
Delaware Valley Financial Corporation is a Pennsylvania corporation, and J. Myron Honigman is its president.
Citizens & Southern Bank is a Pennsylvania state banking corporation, and Myron Freudberg is president.
Robinson & Co., Inc. is a Pennsylvania corporation engaged in business as a security broker and dealer, and Frank Brodsky is employed by it as a salesman.
Further (the complaint continues):
The defendants have aligned themselves in four groups, each of which has filed at least one motion attacking the foregoing complaint or asking judgment. Those motions will be taken up in order by groups.
Group I Motions.
These six parties comprise the defendant American Dryer Corporation and the following who are said to be persons in control: William F. Kane, Bernard F. Lieberman, Jacob J. Holtzman, Jason M. Keiner and Jacob Corson.
Group I did not answer the complaint, but has before the court its two-part motion which, as will be seen below, must be treated as two separate motions under the applicable Federal Rules of Civil Procedure, 28 U.S.C.: Rule 12(b) as amended, and Rule 56(b).
First Motion of Group I.
This motion to dismiss the complaint asserts that "The complaint fails to set forth a material issue of fact" in certain particulars. Those circumstances, however, go far beyond the pleadings, and necessarily bring into play the provisions of the last sentence of Rule 12(b) Fed.R.Civ.P. which was added by the amendment of 1946:
"* * * If, on a motion asserting the defense numbered (6) to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given opportunity to present all material made pertinent to such motion by Rule 56." 6 Moore's Federal Practice § 56.023, p. 2014 (2d ed. 1953).
Since all parties have had opportunities to present pertinent materials, the question of whether a genuine issue as to any material fact remains is ripe for disposition.
The Group I defendants' first motion points out that although the complaint purports to be a class action, it is neither a derivative nor a "true" class action by stockholders of the said corporation, and therefore can seek a remedy only for the Newbergs individually and other similarly situated stockholders who may actually intervene.
So far, defendants' position seems correct. It is amply clear to this Court that the present action purports to be a spurious class suit under the provisions of Rule 23(a) (3), Fed.R.Civ. P., and affects only such parties as in fact intervene. York v. Guaranty Trust Co., 2 Cir., 1944, 143 F.2d 503; Weeks v. Bareco Oil Co., 7 Cir., 1941, 125 F.2d 84. It is also a fact that to date no additional parties plaintiff have intervened under the permissive joinder provisions of Rule 23(a) (3).
These defendants, however, carry the proposition considerably beyond that point when they assert:
We have chosen not to make a point of the very serious question of whether a statutory action in a Court of the United States could be affected in the asserted fashion by a state court decree. Instead, the exhibited copy of the Decree in the aforesaid cause No. 3262 in Common Pleas No. 5 has been carefully examined. It has been found that by its own terms it is clearly the result of stipulation between the parties to a stockholders' derivative action. The purpose of the action was to require certain officers of the defendant corporation to return numerous shares of its stock to its treasury. There further appears the purpose of protecting the stockholders against recurrence of manipulations for private gain by the controlling officers.
That consent decree in the stockholders' suit has no bearing on the present action. It could not have been intended to prevent joinder of additional parties plaintiff in the present and unrelated statutory action. Nor could it prevent other stockholders, not parties in that suit—for that matter—from bringing any such unrelated statutory action or actions.
These defendants argue that time has or will have run out on the possible claims of other potential plaintiffs. It has often been held, however, that the bringing of a spurious class action tolls the statute of limitations while other potential plaintiffs decide whether or not to join in the action. Mutation Mink Breeders Ass'n v. Lou Nierenberg Corp., D.C.S.D.N.Y.1959, 23 F.R.D. 155; York v. Guaranty Trust Co., 2 Cir., 1944, 143 F.2d 503; 3 Moore's Federal Practice ¶ 23.12, p. 3476 (2d ed. 1948).
Therefore there is no certainty, as a matter of law or of fact, that no others may intervene as parties plaintiff in this action.
On a further ground, however, these defendants say that the present action must fail, leaving nothing to support joinder by other parties, since:
To continue reading
Request your trial-
Adair v. Hunt Intern. Resources Corp.
...376 F.Supp. 1154 (S.D.N.Y.1974); In re Ceasars Palace Securities Litigation, 360 F.Supp. 366 (S.D.N.Y.1973); Newberg v. American Dryer Corp., 195 F.Supp. 345 (E.D.Pa.1961). The Second Amended Complaint, like its predecessors, fails to specify when each plaintiff purchased his lots pursuant ......
-
Ingenito v. Bermec Corporation
...have failed affirmatively to plead compliance with the statute of limitations, as they are required to do. Newberg v. American Dryer Corp., 195 F. Supp. 345 (E.D.Pa.1961); Premier Industries, Inc. v. Delaware Valley Financial Corp., 185 F.Supp. 694 (E.D.Pa. 1960); cf. Fischman v. Raytheon M......
-
Mostert v. CBL & Associates
...to dismiss pursuant to Rule 12(b)(6), his decision is converted to a summary judgment. See discussion in Newberg v. American Dryer Corporation, 195 F.Supp. 345 (E.D.Pa.1961). The conversion may be automatic, as when the judge considers affidavits in connection with a Rule 12(b)(6) motion, G......
-
Eriksson v. Galvin, 74 Civ. 4031 (CHT).
...the limitations section is an essential ingredient of a private action which must be affirmatively asserted." Newberg v. American Dryer Corp., 195 F.Supp. 345, 352 (E.D.Pa.1961) (citations omitted). The plaintiffs' reliance on cases holding that "the relevant inquiry is which of the defenda......