Penn-Texas Corporation v. Morse, No. 11694

CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)
Writing for the CourtFINNEGAN, LINDLEY and SCHNACKENBERG, Circuit
Citation242 F.2d 243
PartiesPENN-TEXAS CORPORATION, and Ernest Stroheim, Plaintiffs-Appellants, v. Robert H. MORSE et al., Defendants-Appellees. Henry L. GARTMAN, Intervening-Plaintiff-Appellant, v. Robert H. MORSE et al., Defendants-Appellees.
Docket Number11750.,11740,No. 11694
Decision Date21 March 1957

242 F.2d 243 (1957)

PENN-TEXAS CORPORATION, and Ernest Stroheim, Plaintiffs-Appellants,
v.
Robert H. MORSE et al., Defendants-Appellees.

Henry L. GARTMAN, Intervening-Plaintiff-Appellant,
v.
Robert H. MORSE et al., Defendants-Appellees.

Nos. 11694, 11740, 11750.

United States Court of Appeals Seventh Circuit.

March 21, 1957.


242 F.2d 244

W. McNeil Kennedy, John R. Whitman, Willis S. Ryza, Barnet Hodes, George L. Siegel, G. Gale Roberson, J. Herzl Segal, Chicago, Ill., for plaintiffs-appellants, Penn-Texas Corp. and Ernest Stroheim.

Owen Rall, Gerhard E. Seidel, Chicago, Ill., Peterson, Lowry, Rall, Barber & Ross, Chicago, Ill., of counsel, for intervening plaintiff-appellant.

Albert E. Jenner, Jr., Edward E. Lynn, Charles J. O'Laughlin, Charles M. Price, Chicago, Ill., Johnston, Thompson, Raymond, Mayer & Jenner, Chicago, Ill., of counsel, for appellees.

Before FINNEGAN, LINDLEY and SCHNACKENBERG, Circuit Judges.

FINNEGAN, Circuit Judge.

After thirteen days of trial plaintiffs and intervenors failed in establishing any right to equitable relief and the trial judge, correctly, we think, allowed a motion under Rule 41(b) Federal Rules of Civil Procedure, 28 U.S.C.A., dismissing the complaint on the merits for want of equity. That final decree (entered February 29, 1956), and some of its derivative aspects, is now before us on plaintiffs' appeal and that of the intervenor, Gartman.1

Claiming to be common stockholders of the defendant Fairbanks, Morse & Co., an Illinois corporation, plaintiffs Penn-Texas Corporation and its financial vice-president-director, Ernest Stroheim, commenced the proceeding below against Illinois Fairbanks, Morse and each of its nine directors to enjoin the proposed issuance of roughly 169,500 authorized unissued common shares of that Corporation to Canadian Fairbanks, Morse Co., Ltd.,2 and to some interests referred to as the "Mailman Group" in exchange for shares of common stock of

242 F.2d 245
Canadian Locomotive Co., Ltd.,3 on a share for share basis. Plaintiffs also sought to have a certain by-law, of the corporate defendant declared invalid. Various members of the Morse family, joined as defendants, own stock in Illinois Fairbanks, Morse and simultaneously hold considerable stock in Canadian Fairbanks, Morse Company, Limited, and Canadian Locomotive Co., Ltd. Interlocking directorates in the persons of several Morses exist among those three corporations

The short of this case is simple enough. Plaintiffs assert standing as stockholders in Illinois Fairbanks, Morse in order to block an exchange of stock which plaintiffs claim would solidify domination by, and perpetuation in power, of the Morse family in the corporate trio and that the Morses would profit from the exchange in violation of their fiduciary relationships. By embedding the proposed exchange in a setting of family stockholders and interlocking directorates, plaintiffs would persuade us that the proposed exchange of stock is tainted enough for equitable relief. That situation is implemented by an elusive set of contentions predicated upon alleged disparity in the stocks to be exchanged.

Before going further, it is appropriate to mention plaintiffs' attack on the findings of fact filed below. We are asked to disregard them because they: (1) are condemned by plaintiffs as clearly erroneous and, (2) were prepared by attorneys for the defense. After carefully reading all of this unduly prolix record, we think the penetrating statements made by the district judge from the bench display a keen and accurate appraisal of some critical defects manifested by plaintiffs' evidence and a sure grasp of the realities spread before him, all of which is incompatible with the tenuous suggestions, about the findings he entered, now sponsored by plaintiffs in seeking reversal; thus among other things, the trial judge said:

"I don\'t know from the evidence here who the real party plaintiffs are. I don\'t know whether it is Francis I. du Pont & Company, the brokers, or some bankers behind them, or whether it is Charles H. Morse, Sr. I doubt that it is he and his family. I think he has just been smart enough to see a chance to make three or four hundred thousand dollars right quick under the circumstances.
"As I see it from the record of the evidence introduced here, he and his family have been very smart and very cunning to seize an opportunity to make probably a half million dollars on the deal. Naturally he doesn\'t care anything about continuing his efforts in the matter. He has got what he wants primarily, it would seem to me, so naturally he wouldn\'t be a named plaintiff.
"Now in summarizing my viewpoint of this case, I am not at all satisfied with the title of the plaintiffs. The intervening petitioners showed their title, and I have no quarrel with most of that. It was done and properly done.
"But whether or not the Penn-Texas Corporation and Mr. Stroheim are the real owners of this stock, I have grave doubt. It looks like to me they have got it pyramided, one on top of the other, and I don\'t know how many kinds of loans may be in the background. It looks like a conspiracy of some type or other to me to raid the stock market. It looks like to me, from the evidence that I have heard, a slugging operation, and I am not going to hesitate to tell you that this court of equity is no place for such types of action, in my
...

To continue reading

Request your trial
32 practice notes
  • Matarese v. Archstone Pentagon City (f/K/A Parc Vista), Case No. 1:09–CV–0857.
    • United States
    • United States District Courts. 4th Circuit. United States District Court (Eastern District of Virginia)
    • May 31, 2011
    ...and choosing from among conflicting inferences and conclusions those which he considers most reasonable. Penn–Texas Corp. v. Morse, 242 F.2d 243, 247 (7th Cir.1957) (citation and internal quotation marks omitted). The trial judge has the inherent right to disregard testimony of any witness ......
  • Williams & Wilkins Company v. United States, No. 73-68.
    • United States
    • Court of Federal Claims
    • November 27, 1973
    ...103, 109 (1971). See also Baumgartner v. United States, 322 U.S. 665, 670, 64 S.Ct. 1240, 88 L.Ed. 1525 (1944); Penn-Texas Corp. v. Morse, 242 F.2d 243, 247 (7th Cir.1957). Accordingly, under the standards which we employ for reviewing the findings of our trial judges, I would adopt these f......
  • Brubaker v. Gould, Gen. No. 48354
    • United States
    • United States Appellate Court of Illinois
    • March 5, 1962
    ...it such weight as he believed it entitled to receive.' [34 Ill.App.2d 450] To the same effect are Penn-Texas Corp. v. Morse, 7 Cir., 1957, 242 F.2d 243, 246; Chicago & Northwestern Ry. Co. v. Froehling Supply Co., 7 Cir., 1950, 179 F.2d 133, 135; Gary Theatre Co. v. Columbia Pictures Corp.,......
  • Taylor v. Republic Servs., Inc., Case No. 1: 12–cv–00523–GBL–IDD.
    • United States
    • U.S. District Court — Eastern District of Virginia
    • September 16, 2013
    ...and choosing from among conflicting inferences and conclusions those which he considers most reasonable. Penn–Texas Corp. v. Morse, 242 F.2d 243, 247 (7th Cir.1957) (citation and internal quotation marks omitted). The trial judge has the inherent right to disregard testimony of any witness ......
  • Request a trial to view additional results
32 cases
  • Matarese v. Archstone Pentagon City (f/K/A Parc Vista), Case No. 1:09–CV–0857.
    • United States
    • United States District Courts. 4th Circuit. United States District Court (Eastern District of Virginia)
    • May 31, 2011
    ...and choosing from among conflicting inferences and conclusions those which he considers most reasonable. Penn–Texas Corp. v. Morse, 242 F.2d 243, 247 (7th Cir.1957) (citation and internal quotation marks omitted). The trial judge has the inherent right to disregard testimony of any witness ......
  • Williams & Wilkins Company v. United States, No. 73-68.
    • United States
    • Court of Federal Claims
    • November 27, 1973
    ...103, 109 (1971). See also Baumgartner v. United States, 322 U.S. 665, 670, 64 S.Ct. 1240, 88 L.Ed. 1525 (1944); Penn-Texas Corp. v. Morse, 242 F.2d 243, 247 (7th Cir.1957). Accordingly, under the standards which we employ for reviewing the findings of our trial judges, I would adopt these f......
  • Brubaker v. Gould, Gen. No. 48354
    • United States
    • United States Appellate Court of Illinois
    • March 5, 1962
    ...it such weight as he believed it entitled to receive.' [34 Ill.App.2d 450] To the same effect are Penn-Texas Corp. v. Morse, 7 Cir., 1957, 242 F.2d 243, 246; Chicago & Northwestern Ry. Co. v. Froehling Supply Co., 7 Cir., 1950, 179 F.2d 133, 135; Gary Theatre Co. v. Columbia Pictures Corp.,......
  • Taylor v. Republic Servs., Inc., Case No. 1: 12–cv–00523–GBL–IDD.
    • United States
    • U.S. District Court — Eastern District of Virginia
    • September 16, 2013
    ...and choosing from among conflicting inferences and conclusions those which he considers most reasonable. Penn–Texas Corp. v. Morse, 242 F.2d 243, 247 (7th Cir.1957) (citation and internal quotation marks omitted). The trial judge has the inherent right to disregard testimony of any witness ......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT