Snyder v. Harris

Citation268 F. Supp. 701
Decision Date27 April 1967
Docket NumberNo. S 66 C 78.,S 66 C 78.
PartiesMargaret E. SNYDER, also known as Peg Snyder, Plaintiff, v. Charles HARRIS and Earl W. Kirchhoff, Defendants.
CourtUnited States District Courts. 8th Circuit. United States District Court (Eastern District of Missouri)

Hyman G. Stein and Charles Alan Seigel, St. Louis, Mo., for plaintiff.

Morris A. Shenker, St. Louis, Mo., for defendants.

MEMORANDUM OPINION AND ORDER

HARPER, Chief Judge.

This matter is before the court on the joint motion of the defendants to dismiss the amended complaint. The motion has been submitted on the briefs of the parties and oral argument.

The plaintiff seeks to bring this action as a class action pursuant to Rule 23, Federal Rules of Civil Procedure, as amended July, 1966. The relevant part of the amended complaint alleges that the plaintiff, Margaret E. Snyder, is a citizen of the State of Arizona, and the defendants, Charles Harris and Earl W. Kirchhoff, are citizens of the State of Missouri; that there is diversity of citizenship and the amount in controversy exceeds $10,000.00; that since prior to November 22, 1966, the plaintiff has been a shareholder of Missouri Fidelity/Union Trust Life Insurance Company (hereinafter referred to as Missouri Fidelity) and owns two thousand shares of said company; that the By-laws of Missouri Fidelity provide for a Board of Directors consisting of fifteen directors and that the defendants were at all times relevant to this action members of said board of directors; that at all times relevant to this action the market price of Missouri Fidelity was about $2.63 per share; that sometime prior to November 22, 1966, National Western Life Insurance Company (hereinafter referred to as National Western) submitted to the directors of Missouri Fidelity a proposal to purchase from them for $7.00 per share all of the shares of Missouri Fidelity owned by them, conditioned however, that all directors of Missouri Fidelity, except four, resign as directors and that five nominees of National Western be elected as directors of Missouri Fidelity, and that such nominees be designated and elected as a majority of the executive committee and of the investment committee of Missouri Fidelity; that on or about November 22, 1966, National Western, pursuant to its said offer, entered into an agreement with eight of the directors of Missouri Fidelity, including the defendants herein, to pay to them and to friends and relatives of theirs $7.00 per share for an aggregate of approximately 300,000 shares of Missouri Fidelity owned by them, and thereupon and in pursuance of such conduct said eight directors, including the defendants herein, did resign as directors of Missouri Fidelity, and nominees of National Western were designated, named and elected as directors of Missouri Fidelity and as a majority of the executive committee and of the investment committee of Missouri Fidelity; that the aforesaid conduct and acts of the said eight directors, including the defendants, were a breach of trust and a violation of their duties as directors of Missouri Fidelity, and National Western procured said resignations and therefore paid or has agreed to pay the said eight directors who resigned, including the defendants herein, and their friends and relatives, a premium of about $1,200,000.00; and that the aggregate amount paid by National Western for the said shares was approximately $1,200,000.00 in excess of the market value of said shares and was a premium paid by it to the said selling shareholders for the resignations of said directors who resigned and for the obtaining of control of the executive committee and investment committee of Missouri Fidelity.

The amended complaint prays for judgment in the amount of $1,200,000.00, said judgment to be entered in favor of the plaintiff and the other individual shareholders (allegedly over 4,000 in number) according to their respective share holdings.

The present motion alleges various grounds for dismissal of the amended complaint, including lack of jurisdictional amount. For reasons hereinafter set forth, this court need only consider the question of lack of jurisdictional amount.

The defendants contend that if the plaintiff has pleaded a class action, she has pleaded a "spurious" class action and that the jurisdictional amount in such an action may not be determined by aggregating the amounts which might be claimed by others in the class action. Further, the defendants contend that the plaintiff's individual claim can amount to no more than $8,740.00. The plaintiff, on the other hand, contends that since "spurious" class actions no longer exists under Rule 23, F.R.Civ.P., as amended July, 1966, and since a judgment in any class action is now binding upon the entire class, the claims of the entire class are in controversy and should, therefore, be aggregated in arriving at the jurisdictional amount.

The law concerning the aggregation of claims in a class suit before the amendment in July, 1966, to Rule 23, F.R.Civ. P., is fairly stated in Moore's Federal Practice, § 23.13, p. 3480, to-wit:

"In the case of joinder of plaintiffs the matter of aggregation of claims is ruled by the doctrine of Pinel v. Pinel (240 U.S. 594, 36 S.Ct. 416, 60 L.Ed. 817). There the rule was laid down that if the demands of the plaintiffs are `separate and distinct', each must have a claim in the jurisdictional amount, while if they unite to enforce a joint or common interest aggregating is permissible. These principles apply with equal force in the class action, since the class action is but a procedural device to permit some to prosecute or defend an action without the necessity of all appearing as plaintiffs or defendants. Thus in the case of a true class action, if instead of bringing a class action the members of the class joined as plaintiffs, the jurisdictional amount would be determined by the joint or common claim; no one has a several claim. Unless the class suit were utilized all of the members of the class would have to join. Normally this is impracticable, and the class action device is employed; but the jurisdictional amount is determined in precisely the same manner, and aggregation is proper. In the hybrid and spurious class suit, on the other hand, the rights are several and there can be no aggregation, whether the parties all join or the class action is resorted to."

The so-called "spurious" class action under the old Rule 23 was where the character of the right sought to be enforced for or against the class was several, and there was a common question of law or fact affecting the several rights and a common relief was sought. (See old Rule 23(a) (3)) Any judgment in the spurious class action was binding solely on the named parties; it was in...

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11 cases
  • Snyder v. Harris Gas Service Company v. Coburn
    • United States
    • United States Supreme Court
    • March 25, 1969
    ...company and not merely to a few of them. The suit was brought in the United States District Court for the Eastern District of Missouri, 268 F.Supp. 701, diversity of citizenship being alleged as the basis for federal jurisdiction. Since petitioner's allegations showed that she sought for he......
  • Collins v. Bolton
    • United States
    • United States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)
    • June 27, 1968
    ...Company, 375 F.2d 992 (5th Cir. 1967), from the Fifth Circuit, and Snyder v. Harris, 390 F.2d 204 (8th Cir. 1968), affirming 268 F.Supp. 701 (E.D.Mo.1967), from the Eighth Circuit, have indicated that aggregation remains proper only when the demands of the plaintiffs are joint and common, r......
  • Berman v. Narragansett Racing Association, 7245-7247.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • July 31, 1969
    ...of the United States, 124 F.2d 788 (7th Cir.1941), cert. denied, 316 U.S. 682, 62 S.Ct. 1270, 86 L.Ed. 1755 (1942); Snyder v. Harris, 268 F.Supp. 701, 704-705 (E.D.Mo.1967), aff'd, 390 F.2d 204 (8th Cir.1968), aff'd, 394 U.S. 332, 89 S.Ct. 1053, 22 L.Ed.2d 319 (1969). Demonstrably, the inst......
  • Dixon v. Northwestern National Bank of Minneapolis
    • United States
    • United States District Courts. 8th Circuit. United States District Court of Minnesota
    • October 19, 1967
    ...principles in class action circumstances. See Alvarez v. Pan Am. Life Ins. Co., 375 F.2d 992 (5th Cir. 1967); Snyder v. Harris, 268 F.Supp. 701 (E.D.Mo.1967). (2) This court holds that plaintiffs' claims can be aggregated in this case. Defendant bank urges, which is undoubtedly true, that t......
  • Request a trial to view additional results

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