Smith v. Sperling, No. 14334.

CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)
Writing for the CourtSTEPHENS, FEE and CHAMBERS, Circuit
Citation237 F.2d 317
PartiesCharles B. SMITH, as Special Administrator of the Estate of Edward S. Birn, Deceased, Appellant, v. Milton SPERLING, Harry M. Warner, Jack L. Warner, United States Pictures, Inc., and Warner Bros. Pictures, Inc., Appellees.
Decision Date15 October 1956
Docket NumberNo. 14334.

237 F.2d 317 (1956)

Charles B. SMITH, as Special Administrator of the Estate of Edward S. Birn, Deceased, Appellant,
v.
Milton SPERLING, Harry M. Warner, Jack L. Warner, United States Pictures, Inc., and Warner Bros.
Pictures, Inc., Appellees.

No. 14334.

United States Court of Appeals Ninth Circuit.

May 21, 1956.

Certiorari Granted October 15, 1956.


237 F.2d 318

Moss, Lyon & Dunn, Herman H. Levy, Los Angeles, Cal., for appellant.

Freston & Files, Eugene D. Williams, Ralph E. Lewis, Los Angeles, Cal., Oliver B. Schwab, Beverly Hills, Cal., Arthur Livingston, Hollywood, Cal., for appellees.

Before STEPHENS, FEE and CHAMBERS, Circuit Judges.

Certiorari Granted October 15, 1956. See 77 S.Ct. 98.

JAMES ALGER FEE, Circuit Judge.

This is a stockholders' derivative suit, which was brought ostensibly for the benefit of Warner Bros. Pictures, Inc., a Delaware corporation, by plaintiff Smith, as Special Administrator of the Estate of Edward S. Birn, deceased, owner of 400 shares of stock therein. The corporation was joined as a defendant with two of its directors and another Delaware corporation, United States Pictures, Inc., along with one Sperling, a director of the latter. The trial court directed that the questions relating to jurisdiction and limitations should be determined before trial on the merits.

Upon such a preliminary hearing, judgment of dismissal of the first cause of action was granted because, when the court realigned Warner Bros., as plaintiff, diversity of citizenship no longer existed, since Delaware corporations were, respectively, among the plaintiffs and among the defendants.1

The second cause of action was dismissed for lack of equity. This cause was asserted against defendants Harry M. Warner and Jack L. Warner alone, and is based upon alleged violations of their duties in a fiduciary capacity as directors of Warner Bros. A third cause of suit was dismissed upon stipulation by the parties.

The facts which were found upon the preliminary hearing were as follows:

"As to the First Cause of Action, the Court Finds:
"I. That this action was commenced by Edward S. Birn, a citizen of the State of New York, and since the commencement of said action, said Edward S. Birn has died and Charles B. Smith, as special administrator of the estate of Edward S. Birn, deceased, has been substituted in his place as plaintiff. That said Charles B. Smith is a citizen of the State of California.
"II. That defendants Harry M. Warner, Jack L. Warner and Milton
237 F.2d 319
Sperling, and each of them, are citizens of the State of California, and that the defendants Warner Bros. Pictures, Inc. and United States Pictures, Inc., are, and each of them is, a corporation duly organized and existing under and by virtue of the laws of the State of Delaware, and is a citizen of the State of Delaware; and that as the parties are aligned by the plaintiff, it appears that the plaintiff is a citizen of the State of New York and that the defendants are citizens of the states of California and Delaware, as hereinbefore stated.
"III. That this action was commenced by Edward S. Birn as the owner, during the period of the transactions challenged in the complaint, of four hundred shares of the capital stock of the defendant Warner Bros. Pictures, Inc., and that he is suing derivatively on behalf of and for the benefit of said defendant Warner Bros. Pictures, Inc., and the stockholders thereof; that by the prayer of the complaint a trust is sought to be impressed on the capital stock and assets of United States Pictures, Inc., in favor of Warner Bros. Pictures, Inc., the agreement between said Warner Bros. Pictures, Inc. and United States Pictures, Inc. referred to in the complaint is sought to be cancelled and terminated and that the defendants Milton Sperling, Harry M. Warner, Jack L. Warner and United States Pictures, Inc. be required to account to Warner Bros. Pictures, Inc., for all losses and damages suffered by it and its subsidiaries and all profits and benefits received by said defendants and that said defendants make restitution accordingly. That the claim set forth in the first cause of action of the complaint, and relief sought, are for and on behalf of the defendant Warner Bros. Pictures, Inc., and that the said Warner Bros. Pictures, Inc. is the real party in interest in said cause of action.
"IV. That the Board of Directors of Warner Bros. Pictures, Inc. is composed of eleven men of whom the defendants Harry M. Warner, Jack L. Warner and their brother Albert Warner, are but three; that the contract in controversy was made and entered into in good faith and without fraud, and said contract was intended by the directors to be of financial benefit to Warner Bros. Pictures, Inc. and its stockholders, and said contract was considered by said eleven members of the Board of Directors of Warner Bros. Pictures, Inc. to be a sound business arrangement for the best present and future interests of the corporation; that in approving and authorizing the contract, the officers and Board of Directors acted in good faith and exercised their independent business judgment. That at the time of the execution of the contract, Albert Warner, together with the defendants Harry M. Warner and Jack L. Warner, owned less than twenty percent of the outstanding shares of stock of Warner Bros. Pictures, Inc., and that neither the corporation nor the directors or officers were shown to be at that time or at any time under the domination or control of the three brothers Warner above named. That neither the stockholders, its officers or directors were, at any time involved in this action, antagonistic to the financial interests of the corporation.
"V. That it is not true either as alleged in the complaint, or otherwise, that all or a majority or any of the
...

To continue reading

Request your trial
4 practice notes
  • Shaffer v. Coty, Inc., No. 265-58.
    • United States
    • United States District Courts. 9th Circuit. United States District Court (Southern District of California)
    • May 3, 1960
    ...Food Co., supra, 146 F.Supp. at pages 597-598; Smith v. Sperling, D.C.S.D.Cal.1953, 117 F.Supp. 781, 786-788, affirmed 9 Cir., 1956, 237 F.2d 317, reversed on other grounds 1957, 354 U.S. 91, 77 S.Ct. 1112, 1 L.Ed.2d 1205; Williams v. Minnesota Mining & Manufacturing Co., D.C.S.D. Cal.1......
  • Smith v. Sperling, No. 316
    • United States
    • United States Supreme Court
    • June 10, 1957
    ...District Court realigned Warner Bros. as a party plaintiff and dismissed the bill. 117 F.Supp. 781. The Court of Appeals affirmed. 9 Cir., 237 F.2d 317. The case is here on a writ of certiorari. 352 U.S. 865, 77 S.Ct. 98, 1 L.Ed.2d 74. This is a corporate cause of action brought by a stockh......
  • Duke & Benedict, Inc. v. Wolstein, No. 93-421-CIV-T-17A.
    • United States
    • United States District Courts. 11th Circuit. United States District Court of Middle District of Florida
    • July 15, 1993
    ...a party plaintiff and then dismissed the action for lack of diversity. The United States District Court of Appeals of the Ninth District, 237 F.2d 317, affirmed and the stockholder, via his administrator, brought certiorari. The Supreme Court stated that the issue was "to determine the......
  • Smith v. Sperling, No. 16387.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • April 20, 1960
    ...CHAMBERS, MAGRUDER and JERTBERG, Circuit Judges. PER CURIAM. This case was up on appeal previously. Smith v. Sperling, 9 Cir., 1956, 237 F.2d 317, reversed, 1957, 354 U.S. 91, 77 S.Ct. 1112, 1 L.Ed.2d It started by the filing on December 15, 1948, of a typical minority stockholder's derivat......
4 cases
  • Shaffer v. Coty, Inc., No. 265-58.
    • United States
    • United States District Courts. 9th Circuit. United States District Court (Southern District of California)
    • May 3, 1960
    ...Food Co., supra, 146 F.Supp. at pages 597-598; Smith v. Sperling, D.C.S.D.Cal.1953, 117 F.Supp. 781, 786-788, affirmed 9 Cir., 1956, 237 F.2d 317, reversed on other grounds 1957, 354 U.S. 91, 77 S.Ct. 1112, 1 L.Ed.2d 1205; Williams v. Minnesota Mining & Manufacturing Co., D.C.S.D. Cal.1953,......
  • Smith v. Sperling, No. 316
    • United States
    • United States Supreme Court
    • June 10, 1957
    ...District Court realigned Warner Bros. as a party plaintiff and dismissed the bill. 117 F.Supp. 781. The Court of Appeals affirmed. 9 Cir., 237 F.2d 317. The case is here on a writ of certiorari. 352 U.S. 865, 77 S.Ct. 98, 1 L.Ed.2d 74. This is a corporate cause of action brought by a stockh......
  • Duke & Benedict, Inc. v. Wolstein, No. 93-421-CIV-T-17A.
    • United States
    • United States District Courts. 11th Circuit. United States District Court of Middle District of Florida
    • July 15, 1993
    ...a party plaintiff and then dismissed the action for lack of diversity. The United States District Court of Appeals of the Ninth District, 237 F.2d 317, affirmed and the stockholder, via his administrator, brought certiorari. The Supreme Court stated that the issue was "to determine the issu......
  • Smith v. Sperling, No. 16387.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • April 20, 1960
    ...CHAMBERS, MAGRUDER and JERTBERG, Circuit Judges. PER CURIAM. This case was up on appeal previously. Smith v. Sperling, 9 Cir., 1956, 237 F.2d 317, reversed, 1957, 354 U.S. 91, 77 S.Ct. 1112, 1 L.Ed.2d It started by the filing on December 15, 1948, of a typical minority stockholder's derivat......

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