56 F.R.D. 363 | S.D.N.Y. | 1972
The motion made by defendants Chemical Bank, Manufacturers Hanover Trust Company, Irving Trust Company, Chase Manhattan Bank, N.A., and Bank of Montreal, to dismiss the complaint as to the first and second causes of action for failure to state a claim, pursuant to Rule 12(b) 6 of the Federal Rules of Civil Procedure [F.R.Civ.P.], is granted.
In four separate causes of action, the plaintiff alleges that she presently holds $10,000 face amount of debentures
It is further alleged that in late 1969 or early 1970, Penn Central informed the defendant banks of its critical need for funds and substantiated that need with confidential projections of its financial future, based on information not available to the public. The banks agreed to advance up to $50,000,000 to Penn Central provided the loan would be funneled through Pennco. Thus Pennco was paid $50,000,000 by the banks in purported consideration for its note and, pursuant to an alleged prearrangement and conspiracy between the banks and Penn Central, Pennco was caused to turn the money over immediately to Penn Central, in purported exchange for the latter’s note. It is claimed that Pennco’s participation in the loan was a sham transaction since it received no genuine consideration for the loan which impaired its capital and credit solely for the benefit of Penn Central and converted the assets of Pennco to the parent corporation’s use, by prearrangement with the banks.
The plaintiff’s first and second causes of action are derivative, grounded on Sections 17(a) and 22 of the Securities Act of 1933 (15 U.S.C. §§ 77q(a), 77v) and Section 20a (11) of the Interstate Commerce Act (49 U.S.C. § 20a(ll). The third and fourth causes of action stating a fraudulent conveyance under state law are based on pendant jurisdiction and diversity of citizenship respectively.
The movants have stated various grounds in support of their motion to dismiss. With regard to all four counts, they assert that the plaintiff bondholder has failed to assert conditions precedent in the Indenture, and that Pennco’s insolvency has not been adequately established. As to the derivative claims, they assert lack of standing, inadequate demand on the corporation’s directors, and that the substantive claims under the applicable federal acts are not actionable. With respect to the state claims, lack of subject matter jurisdiction is claimed in addition to a failure to state a claim based on state law.
As to the first and second causes of action, the court concludes that the plaintiff does not have the proper standing to maintain a derivative suit. It is the plaintiff’s contention that public debentureholders and public preferred stockholders stand in identical positions vis-a-vis the need for an equitable remedy to prevent depletion of the corporate assets by insiders and their conspirators. However, it is well recognized that a holder of an unmatured debenture, as a contract creditor, may not bring a representative action on the corporation’s behalf to enforce a corporate right. See 13 Fletcher, Private Corporations § 5972.2 at 411 (rev.perm.ed.1970). Pusey & Jones Co. v. Hanssen, 261 U.S. 491, 497, 43 S.Ct. 454, 67 L.Ed. 763 (1923). See also Quirke v. St. Louis-San Francisco Ry. Co., 277 F.2d 705 (8th Cir.), cert. denied, 363 U.S. 845, 80 S.Ct. 1615, 4 L.Ed.2d 1728 (1960).
Under Rule 23.1, F.R.Civ.P., a complaint which states a derivative action must allege that the “plaintiff was a shareholder or member at the time of the transaction of which he complains or that
The court dismisses the third cause of action which is premised on pendant jurisdiction. When federal claims are dismissed before trial, even though not insubstantial in a jurisdictional sense, the state claims should be dismissed as well. United Mine Workers v. Gibbs, 383 U.S. 715, 726, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966).
With respect to the fourth cause of action which is premised on diversity of citizenship, the court finds that this aspect of the complaint is jurisdietionally defective in failing to allege defendant Pennco’s principal place of business. See, e. g., Guerrino v. Ohio Casualty Ins. Co., 423 F.2d 419 (3rd Cir. 1970); Wymard v. McCloskey & Co., Inc., 342 F.2d 495, 497 (3rd Cir.), cert. denied, 382 U.S. 823, 86 S.Ct. 52, 15 L.Ed.2d 68 (1965). The plaintiff’s attempt to set forth defendant Pennco’s principal place of business in his brief does not cure the defective pleading. Under the circumstances, the court hereby dismisses the fourth cause of action but gives leave to the plaintiff to replead this claim in an amended complaint.
In view of the foregoing, the plaintiff’s first three claims are dismissed;
So ordered.
. Although these debentures are convertible, they are not convertible into common stock of Pennco but into the common stock of another company.
. With respect to these claims, the court finds no just reason for delay and directs the Clerk of the Court to enter judgment for the defendants Chemical Bank, Manufacturers Hanover Trust Co., Irving Trust Co., Chase Manhattan Bank, N.A., and Bank of Montreal pursuant to Rule 54(b), F.R.Civ.P.