Swerdloff v. Miami Nat. Bank, 74-1646-Civ-JLK.
| Decision Date | 27 February 1976 |
| Docket Number | No. 74-1646-Civ-JLK.,74-1646-Civ-JLK. |
| Citation | 408 F. Supp. 940 |
| Parties | Arthur SWERDLOFF and Louis Swerdloff, Plaintiffs, v. MIAMI NATIONAL BANK, a National Banking Association, Defendant. |
| Court | U.S. District Court — Southern District of Florida |
Carl H. Hoffman, Miami, Fla., for plaintiffs.
Frates, Floyd, Pearson, Stewart, Miami, Fla., for defendant.
ORDER GRANTING MOTION FOR JUDGMENT ON THE PLEADINGS
This cause came on for consideration upon the defendant's motion for judgment on the pleadings. The court, having considered the record and being fully advised in the premises, finds and concludes that the motion should be granted.
This suit is brought pursuant to 12 U.S.C. § 1975, which, in conjunction with 12 U.S.C. § 1972, grants a civil action for treble damages to a person injured in his business or property by an illegal tying arrangement in the extension of credit by a bank. The complaint alleges that the defendant bank extended credit to plaintiffs' business on a revolving credit basis pursuant to an Accounts Receivable Financing Agreement. It is further alleged that some six months after the arrangement was entered into, the defendant required plaintiffs, as an additional consideration for extension of credit, to transfer 51% of plaintiffs' capital stock to a second corporation. Plaintiffs allege that when they refused to comply with defendant's request, defendant terminated the Accounts Receivable Financing Agreement, the corporation was then placed in involuntary bankruptcy, and the stock became worthless. Defendant moves for judgment on the pleadings on the basis that the plaintiffs' corporation is the proper party to bring this suit and that the plaintiffs themselves do not have standing. Given the nature of the injury asserted in the complaint, the court agrees.
At the outset it is to be noted that the pertinent statutes are relatively new legislation (December 30, 1970) and scant precedent exists to guide the court in its decision. The defendant draws parallels between the chapter (Chapter 22, Tying Arrangements) and the antitrust laws. This is not an unwarranted analogy and is one which has been made by other courts. See Clark v. United Bank of Denver Nat. Ass'n, 480 F.2d 235 (10 Cir. 1973). Further the intent1 and purpose2 of the chapter are very similar to those of the antitrust laws in that both seek to guard against unfair competition. Specifically, 12 U.S.C. § 1971 et seq., was passed to guard against the misuse of economic power by a bank. U.S.Code Cong. and Admin.News, at p. 5535 (1970). Further evidence of similarity is found in the wording of the statutes. The substantive section here involved, § 1972, is entitled "certain tying arrangements" while the procedural section, § 1975, is nearly identical to its counterpart in antitrust, 15 U.S.C. § 15.3 Considered altogether, the similarity of this chapter to the antitrust laws is inescapable. Therefore, in order to determine standing in the case at bar, the statutes and decisions defining this issue in the antitrust area are most pertinent.
Section 15 of Title 15 U.S.C. grants a civil cause of action to a person for treble damages arising out of injuries suffered to his business or property by reason of anything forbidden in the antitrust laws. As pointed out above, the language of this section and the one to be interpreted here, 12 U.S.C. § 1975, is very close. While there is as yet no authority interpreting Section 1975, there is a body of case law discussing the issue of standing under 15 U.S.C. § 15. Although the wording of that statute implies liberal access to redress antitrust violations, the courts have taken a more restrained view, Jeffrey v. Southwestern Bell, 518 F.2d 1129, 1131 (5th Cir. 1975). The Fifth Circuit, in defining what "person" may bring a private antitrust action, has held that stockholders of an injured corporation do not have standing. Id. See also Mendenhall v. Fleming Co., Inc., 504 F.2d 879, 881 (5th Cir. 1974); Martens v. Barrett, 245 F.2d 844, 846 (5th Cir. 1957); Peter v. Western Newspaper Union, 200 F.2d 867 (5th Cir. 1953). That court has taken the position that "where the business or property allegedly interfered with by forbidden practices is that being done and carried on by a corporation, it is that corporation alone, and not its stockholders (few or many) . . . who has a right of recovery, even though in an economic sense real harm may be sustained as the impact of such wrongful acts brings about reduced earnings, lower salaries, bonuses, injury to general business reputation, or diminution in the value of ownership." Martens v. Barrett, supra at 846. (emphasis supplied by the court). If the injury was sustained in corporate values, then it is only the corporation who may bring suit. Mendenhall v. Fleming Co., Inc., supra at 880. The language the court interpreted for this holding was "any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws." The language that this court must look to in the instant case is "any person who shall be injured in his business or property by reason of anything forbidden in section 1972 of this title." 12 U.S.C. § 1975. The court concludes that these identical words should be interpreted in an identical manner.
It is alleged in the instant case that the plaintiffs' corporation, Standard Container and Paper Co., Inc. (Standard) was (1) placed in involuntary bankruptcy as a result of defendant's actions and (2) that the capital stock has therefore become worthless. In the first instance it was Standard who sustained the only injury by its bankruptcy and so it is the only "person" who may seek to redress same. Mendenhall v. Fleming, supra. Secondly, plaintiffs may not assert the stock devaluation because the fact that the stock may now be worthless is both indirect and duplicative of the corporation's cause of action. Mendenhall v. Fleming Co., Inc., supra at 881; citing Peter v. Western Newspaper Union, supra. Plaintiffs may have suffered a "pocketbook injury" but they are not within that class of persons who have been found to be proper parties to vindicate the purposes of the type of legislation before the court. See Jefferson v. Southwestern Bell, supra at 1131.
Plaintiffs contend that they should be granted standing because they were bank "customers" within the meaning of 12 U.S.C. § 19724 and...
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Swerdloff v. Miami Nat. Bank
...to antitrust statutes and decisions was " most pertinent" in view of the substantial similarity of the Acts. Swerdloff v. Miami National Bank, 408 F.Supp. 940, 942 (S.D.Fla.1976). In the context of an alleged unfair competition violation of section 2(d) of the Clayton Act, as amended by the......