Raftery v. Senter, 1438.
| Decision Date | 10 September 1941 |
| Docket Number | No. 1438.,1438. |
| Citation | 41 F. Supp. 807 |
| Parties | RAFTERY v. SENTER et al. |
| Court | U.S. District Court — Western District of Pennsylvania |
Francis W. Sullivan, of Philadelphia, Pa., for plaintiff.
Thomas B. K. Ringe, Ernest R. von Starck, and Morgan, Lewis & Bockius, all of Philadelphia, Pa., for defendants.
George H. Huft and Bernard J. Kelley, both of Philadelphia, Pa., for intervening defendants.
This matter is before the Court upon a motion to dismiss the bill of complaint of John Raftery filed on behalf of himself and other holders of certificates of participation in the Philadelphia Rapid Transit Company Co-operative Wage Fund, an unincorporated association.
The bill alleges that Mitten Management, Inc., and the Philadelphia Rapid Transit Company, which it operated, were dominated by Thomas E. Mitten; that Mr. Mitten conceived the idea of employee ownership of the Philadelphia Rapid Transit Company and caused its directors to establish the Philadelphia Rapid Transit Company Co-operative Wage Fund for the benefit of the employees. The Fund was created by contributions of 10% of the employees' wages, and was placed in the custody of Trustees chosen according to the regulations adopted, but who were under the control of Mitten and others concerned with the management. In pursuance of the plan, the Wage Fund acquired 51% of the stock of the Philadelphia Rapid Transit Company.
Thereafter Mitten and others who controlled Mitten Management, Inc., caused the organization of Mitten Bank Securities Corporation and retained control of the voting stock therein. The same persons then induced and persuaded the holders of participation certificates in the Wage Fund to consent to the exchange of the Philadelphia Rapid Transit Company stock, by the Wage Fund Trustees, for 7% preferred stock of the Mitten Bank Securities Corporation. Additional preferred stock was sold to the public.
Thereafter Mitten and others acting in concert with him embarked on a career of reckless dissipation and mismanagement of Mitten Bank Securities Corporation's assets, sets, which finally resulted in the appointment by this Court of Receivers of Mitten Bank Securities Corporation. In the meantime the corporation had changed its name to Transit Investment Corporation.
It is alleged that although the Wage Fund had invested about twelve million dollars in Mitten Bank Securities Corporation, the Trustees neglected to examine the corporate books, and otherwise failed to exercise the discretion required of fiduciaries in the administration of assets in their care. The Trustees have not filed any accounting nor are the assets of the fund being properly managed for the best interests of the certificate holders, some of whom are employees of Transit Investment Corporation and former employees of Mitten Bank Securities Corporation. The Wage Fund is no longer active and no reason exists for its continuance in the custody of the Trustees.
Plaintiff bases his claim to jurisdiction upon averments that (1) this Court has custody of the Transit Investment Corporation receivership estate, and in order to render justice in that proceeding, it is essential that the Wage Fund, as a stockholder of Transit Investment Corporation, be represented by persons other than the present Trustees, and that (2) the Court should take judicial notice of the overlapping interests and interlocking directorates and the domination which existed between Transit Investment Corporation, Philadelphia Rapid Transit Company, the Wage Fund and the Mitten management groups. Plaintiffs' averment that the Wage Fund owns Philadelphia Rapid Transit Company stock is disregarded inasmuch as such fact is controverted.
The bill prays for the removal of the Trustees of the Wage Fund, the appointment of Receivers therefor, and for general relief.
Petitions of certain participation certificate holders and of the Philadelphia Rapid Transit Company Employees Union, as collective bargaining representative for all employees including a majority of Wage Fund certificate holders, for leave to intervene on behalf of the defendants, have been granted. They aver that the Trustees and the twenty-four members of the Co-operative Council which has jurisdiction of the Trustees are chosen equally from the employees and management, and that the employee members have carried out the will of the employees generally. No funds have been paid since 193...
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Kelley v. Queeney
...v. Swinburne, C.C., 8 F. 49, is there pointed out as an authority to the same effect as Raphael v. Trask, supra. In Raftery v. Senter, D.C.E.D.Pa., 41 F.Supp. 807, decided September 10, 1941, a citizen of Pennsylvania, certificate holder of a co-operative Wage Fund of the Philadelphia Rapid......