*1 .543 al. BLUM et al. v. FLEISHHACKER et
No. 9021. Circuit Appeals, Ninth Court of
Circuit 7, 1940. Feb.
Rehearing April 3, Denied *2 leged by appellant to have been received Fleishhacker, president, as con- its Herbert to make causing the sideration for his Bank ven- loans to used certain business Appel- interested. which he was ture in Thompson, and Alto Palo lants Farms, Inc., Fleish- were nominees of in- holding evidencing hacker terest, by corporation organized issued being carry enterprise. to The suit on one, joined a derivative the Bank also was as a defendant. The trial court found in favor of Bank and entered decree Fleish nominees, jointly hacker and his and severally, $736,485.57.2 D.C., in the sum of F.Supp. dissenting. MATHEWS, Judge, Circuit Following facts found were the the trial court: In 1919 the United States Shipping Emergency Corpora- Board Fleet tion on called bids an intended sale of large quantity surplus owned steel government. B. N. L. Barde and J. Barde, Sons, Inc., of M. Barde & desired reselling to bid the view steel profit. They at a invited Herbert Fleish- join proposed enterprise. Bardes and in- Fleishhacker conducted dependent investigations and decided that profitable venture would be one. Thereupon, December about agreed join and Fleishhacker basis that Fleishhack- Brobeck, Phleger Phleger, Herman partner equal er was to be with the two Haber, McKinstry & Peirce
Harrison, Bardes, namely, one-half Humphrey, Coombes, Rob- F. and William Fleishhacker and one-half to Bardes. Searls, Francisco, Cal. all of San ert M. having agreed equal After become Francisco, Baecher, of (John Ford San partner, Fleishhacker was advised Cal., counsel), Fleishhack- $250,000 required Bardes that launch Inc., er, Thompson, Palo Alto Stock enterprise, necessary being such amount Nat. Anglo-California Bank. and the bid, that, qualify the if bid Sapiro, H. Edwin McKenzie and V. J. successful, $250,000 an additional would be Cab, Francisco, for Klinker. both San $150,000 needed. the latter sum would Of Morton, Morton, Harold C. Hanna & deposit original form a added Cab, Brown, Angeles, Leon all Los guaranty purchase fund of Francisco, Cab, Moore, Courtney of San L. price; remaining and the appellees. capital. working aside as set MATHEWS, STEPHENS, Before agreed Fleishhacker to finance ven- HEALY, Judges. Circuit advance, ture, caused $250,000, December sum HEALY, Judge. Circuit Inc., Sons, note of M. Barde & the demand Anglo- Fleishhacker Appellees,1 stockholders endorsed N. Barde. deposit Bank of knew was to be used as National Fran- California San days Bank), bid. called the sued to on steel Three later (herein cisco profits caused Bank to al- hacker advance recover for the bonuses figure represents $348,125 Appellees reeeiv are This citizens residents They bonuses, Republic $388,- ed France. own 1554 interest, 770,000 outstand- of stock out of 360.57 shares ing. $75,000, between Barde Steel Products note tered into on a demand further sum of Ship- Corporation and United States one had endorsed as the first executed and Corporation. Emergency Fleet sum, $175,000 ping Board together surety performance of A bond faithful from the Central borrowed at the same time contract, amount of the additional constituted who also capital was furnished complete the total needed *3 signed favor indemnity agreement an outlay. Oak- in procured The sum company writing by demand note the bond. land was evidenced bank Sons, Inc., and by & executed M. Barde successful, and The steel venture was by was N. Barde. note endorsed following pecun- Fleishhacker received the by guaranteed Fleishhacker. 1920, 20, iary September benefits: On salary by by paid the Barde approved were loan com- was as The loans Corporation, Steel notwithstand- Bank recommendations Products mittee of the on the by by They ing employed that he was not Fleishhacker. secured the fact 16, 1921, $200,- it. ad- Liberty Bonds value of On March he received of the about an salary. 000, as furnished Bardes. ditional Between Janu- ary 1920, 15, 1923, 1, re- and March accepted, steel bid had been After $73,125 in ceived dividends the stock January organiz- and on the Bardes held March nominees. On about his Corporation, ed the Barde Steel Products Corpora- he sold his interest corporation, entity as an for a Delaware tion Bardes corpora- carrying enterprise. capital part tion had authorized con- The court found that 15,000 5,000 shares, consisting was shares sideration for loans to the Bardes par preferred having value of them and between $100 per share, 10,000 par participate no common with hacker should latter profits value. financ- Bank'; ed funds of the that Fleish- 7, January 1920, the caused On capital received one-half of Corporation adopt pro- a resolution Corpora- Barde Products stock of the Steel viding all this stock should is- dollar of paying tion without his own exchange sued L. B. for the it; president money that, as capital. bid and the cash No Bank, he received considera- this stock further contribution of procuring his loans with tion Corporation by to the the Bardes or ' to launch the venture. Fleishhacker. Half the stock actu- ally issued to the Bardes and other Fleishhacker, in The court concluded half to the nominees salary of Fleishhacker.3 accepting various sums dividends, and for his interest ven- All of the loans above referred to were ture, president his violated trust regarded as the at all times indebtedness accountable, should held to- Bank and Corporation Products the Barde Steel sums, gether for such with repaid, nominees^ 24, April and were or before interest. 1920, Corporation. out of funds of the Subsequent repayment, during to their principle applied 1. It is a settled — 1922, years 1921 and California, rigor Farmers’ & in its full Corporation caused the loan the Downey, 53 Merchants’ Cal. sums, additional at one time aggregating Am.Rep. who bank officer 62 — that a as much for use enter- bonus or other consideration receives a prise in which he half owned a interest. procuring funds loan of the bank’s January On en- commits breach of contract was No. Certificate 4—100 shares to Charles stock was distributed Fleishhacker’s Hoffman. G. as follows: Common: Preferred: No. shares Victor Certificate 1—1600 No. 1—800 shares Victor Certificate Klinker. Klinker. No. Palo 2—1600 shares.to Certificate shares Palo Certificate No. 2—800 Farms, Inc. Alto Stock (owned Alto Stock Inc. Harry No. shares to Certificate 3—1600 Fleishhacker). Thompson. T. Harry No. shares 4—200 Charles No. shares to Certificate Certificate 3—800 . Thompson. G. Hoffman. T. paid upon belongs consideration so bank general fifty-fifty basis. The de- also, See, may Necessarily, be recovered tails it.4 were uncertain. the en- Restatement, Trusts, n, large tire Comment matter remained at until § § k; Restatement, Restitution, finally Comment terms of Shipping Board were may Comment a. bonus be re- parties § ascertained and the were faced though specific problem covered even the bank has suffered the meeting them. One Restitution, damage (Restatement, problems financing of these involved the § c), though Comment even officer of the Bardes. good (Restatement, have acted faith plain It inte seems Fleishhacker’s t a; Restitution, Farmers’ Comment § proffered him, res in the venture supra; Downey, Merchants’ any rate, exchange substantial measure at Brown, 285, 288). Bain N.Y. anticipated procurement- services in the basic, Conceding the rule counsel' of loans. Fleishhacker must be deemed to *4 largely confine have for themselves this his acceded to condition when upon findings sum- understanding to an attack tentative- last with the Bardes They ripened no working contend marized. that there a definite into contract. proof agreement or testimony condition where- His own an indicates he did not regard finally in Fleishhacker received his interest Bardes deal with the' as consideration, had’agreed in closed venture as in whole or until he raise need to part, They response procuring money. ed in for the bank loans. He said an to part urge interrogatory, know until that Fleishhacker did not considera exchange with the been tion him in after his deal Bardes had for the furnished necessary Corporation guaranty that was for the stock of was his latter they borrow, and indeed the find- of cláim the Barde note to the Central Bank of indicate; hence, ings procurement in loans Oakland. getting so His of the loans beyond from his seem no for the Bardes Fleishhacker went own bank would less pure- obligation part his picture his and services have entered into the as ly gratuitous. of one consideration. transactions are The piece. argument upon The based what discussing in N. Barde testified that interpreta regard we as unwarranted raising with Fleishhacker the matter of whole, findings as and it is tion of the “right off” the latter stated borne out the evidence. While there it”; get he would to it and “attend proof agreement direct of an was no he, Barde, specify did not where the stated, the kind existence -of condition n money to come from-—all wanted- from inferable the facts and cir of one is very money.5 fact was the that Fleish- in evidence. Prior to the time cumstances expected, performed when con- necessary it became raise with the sidered in connection other cir- finally had no definite contract
there' been cumstances, is in itself evidence of rights liabilities determinative of the part his that needed on loans parties in All that the venture. forthcoming. would be clearly been was that seems to have decided arranged While "Fleishhacker for and go was to Fleishhacker with the hacker, dated Dec. reads as fol- a feder Such conduct is denounced : lows (12 “Herbert Fleishhacker President al as a misdemeanor U.S.C.A. statute London Paris National 595); a felo state statute § ny 561). (Cal.Penal St Francis Hotel San Francisco Calif: Code § following transmitting Just received wire L B A this witness letter of Pennsylvania $250,- Barde Hotel New York -first Fleishhacker note arrangements suggested Wire received in tone dated Dec. Arrange satisfactory testimony: supports to me with “In Herbert his substan'eé your regarding here of two additional credit hundred wishes with accordance fifty fifty covering enclosing deal, one writer a note thousand hundred Eastern balance-payable signing payable thousand' on de sum of and one hundred thousand dollar mand, has Mr. L. B. contract instructed working capital York, I have Barde; Tell Herbert New see the asked now in representative Company Guaranty his Parker to act as and do likewise. Trust you Sunday complied satisfactorily will Hoping have trade Writer we you matter, are, morning your and advise listen to wishes we (Emphasis your handling yours,” supplied.) suggestions truly Yery relative this telegram deal. Jack.” from the witness to A knew, course, he was They guaranteed performance bond Bardes. faithful and that steel venture interested Corporation, between for the surety of half the beneficial owner liability him was the possible aid sw Corporation, for stock had this least deposit company lay cash of at of Fleish- names nominees money into issued in their personally put He $4UU,U0U. showing of knowl- there is no risk. hacker. But financial and took small part edge in- compelling grounds are There consideration important obtained part the con- his ference that an causing make the furnish sideration he undertook to loans, deal and no evidence from which promising his half interest this in- can be knowledge fact procurement essential his services ferred. needed loans. be re- them must decree as we them Whether have discussed versed. not, carefully we have detail or consider by appellants ed drawn the distinctions com- We think separate Bank trans endeavor to plied requirements Equity Rule with the analysis from its matrix. The 723, re- following 28 U.S.C.A. section appear able counsel makes a close case lating rule to stockholders’ bills.7 The purely legalistic aspects, in its as cases one. of provides, part, complaint “must that the * are; * * frequently for often this character *5 particularity forth with set dealings line serve to divide thin plaintiff to efforts secure such unexceptionable in their from nature those part managing as he desires on the of the equity which condemns. essential But the trustees, and, necessary, if directors or explained verities of the situation cannot be shareholders, fail- the cause of his away, and when all is said there remains an action, ure to obtain such or the reasons ineradicable conviction that Fleishhacker making for not such effort.” position president used his of the Bank complaint alleged, detail, a de- The securing per as a means of emoluments upon bring mand the board directors to paid sonal to The him himself. action, bring it. refusal to 6 salary right and had the to command his respect allegations in this The ad- fealty pertaining undivided in all matters mitted, by found the court to be and were lending to of its dis funds. In the complaint allege, did not in so The true. re charge high the law holds of his trust words, board’s sue many that the refusal to sponsible was agent such Fleishhacker that it breach or was constituted a probity fidelity more standards improper. Nor did the court wrongful or place”. lofty those of “the market than effect; any specific finding to that make high is not standards this court These filing “after of the find that but it did disposed whittle down. present directors of the defend- action the common with Herbert bank made cause did ant allowing 2. court not err The and the other defendants various Fleishhacker on the sums received complained justify seeking the acts The Fleishhacker. amounts received recovery complaint herein.” and defeat salary belonged, and dividends in the him as whole, findings as a Upon obvious from It is equity, Bank. these funds the to the opinion, court that the as well as from the entitled to interest. It is likewise upon sue as refusal looked the board’s proceeds entitled to interest on received amounting breach of trust. to a Fleishhacker the stock. sale of Cal.Civ.Code, 2237; Restatement, See § question whether such refusal 208, deny Trusts, Comment f. To inter § any event, upon depends, wrongful was permit these sums be to est on the case. Hawes all the circumstances of profit Fleishhacker the use of 450, Co., Costa Water 104 U.S. v. Contra moneys belonging the Bank. 827; Woolsey, Dodge v. How. 26 18 L.Ed. 401; appel 331, Corbus Alaska Tread 3. There is evidence that L.Ed. v. 15 Co., 455, Mining 23 Thompson, 187 U.S. the Palo Alto Gold lants well 157, 256; Cyc. knew Fletcher Inc. details of the S.Ct. 5822, pp. And, in Corporations, between Fleishhacker and 124-126. arrangement § salary 7 yearly also, 6 See, (b) 23 Federal at Rule His that time Procedure, fol- Rules of Civil 28 U.S.C.A. lowing 723c. section .548 which, situation, knowledge that exercise present are satisfied of facts we In- bring right diligence, of due would have led to suit. had the discovery admit actual deed, appellants freely of the fraud. Consolidated brief Scarborough, be rati- “cannot Reservior & Power Co. v. taking a bonus that the 268; Lady so Cal. P.2d Board of Directors fied etc., Wood, 113 Cal. Washington, retention Co. v. confirm officer the Drum, 809; consideration, prevent suit v. or as to P. Victor Oil Co. illegal 243; its be- 184 P. Prentiss stockholder Cal. the bank or a McWhirter, Cir., recovery.” F.2d 715. for its
half
most,
that,
at
The evidence shows
A final contention
used
loans were to be
by the statute
knew
barred
the suit is
awas
in which Fleishhacker
a venture
limitations.
partner. Burges,
assistant
who was an
(Cal.Code of
applicable statute
department
the time the
at
note
provides
4)
Proc.
sub.
Civil
§
made,
by Alex-
loans were
ander,
told
ground of fraud
action for relief
department,
head of
three
brought within
or mistake must
venture;
partner
in the steel
years,
cause of action in
but that “the
nobody
considered the matter a secret.
accrued
to be
case
deemed
[is]
believed, erroneously,
Burges
But
party,
discovery,
aggrieved
until the
partner in
Barde &
was a
M.
constituting the fraud
the facts
Sons, Inc.;
know the details.
he did not
party in this
aggrieved
mistake.” The
Fleishhacker, member of the
Mortimer
Lofquist, 135
Earl v.
case is
Bank.
approved the
Finance Committee
416;
Whitten
Cal.App.
27 P.2d
position to
loans,
perhaps in a better
312;
People
P.
ex
Dabney, 171 Cal.
any one else in author-
the facts than
know
Co.,
Noyo
99 Cal.
Lbr.
rel. Eadie
thought
Her-
ity in
Bank. But
96;
503-504. The trial
P.
Cal.Jur.
personally put
“was to
bert Fleishhacker
however,
finding
court,
as to the
made no
*6
money
Bardes
up
large
and the
sum
It
discovered
fraud.
Bank
the
time the
sum”;
that Herbert
were to match that
plaintiff
only that
stockholders
found
be
Bardes were to
Fleishhacker and the
it until
less than three
did not discover
partners,
“and each in a substantial
years
before
commencement
loans were
He knew that
amount”.
action.8
enterprise,
new
but
to be used in the
specifically
pleadings did not
The
they were to be sent
did not know that
respect
issue
of the Bank’s
frame an
deposit on
contract.
East as
knowledge
the fraud. We
notice or
he dis-
Fleishhacker stated that
Herbert
doubt,
appellants
therefore,
are in
that
with the other members
loans
cussed the
urge the bar of the
in
position to
statute
(Mortimer
Committee
the Finance
relates
to the Bank itself.
sofar as it
Mack,9
Sigmund
J.
J.
regarded
court
the stat
Whether
trial
Stern9),
explaining
the loans were
having been waived
failure
ute
connection with a
deal
to made in
steel
be
it,
plead
and for that reason
properly to
partner.
become
is
which he was to
It
finding, we are unable to deter
made no
however, that Fleishhacker did
significant,
However,
parties have
since the
mine.
par-
testify
he ever disclosed
not
question
properly
be
that the
assumed
his deal with the Bardes.
terms of
ticular
us,
will consider and decide
fore
we
it.
And,
knowledge of Mortimer Fleish-
if the
proof
are satisfied that the
We
any
(and
hacker is
criterion
we think it
require
finding that
such as to
Bank
unlikely
colleagues
that his
on -the Finance
appelleees
the fraud
did not discover
until
any
he),
knew
more
Committee
than
it
light
investigations.
brought
actually
appears
Bank
that the
misled
the action is
barred as to the
Hence
believing
Herbert Fleishhacker into
Bank.
he, personally,
furnishing
half
“discovery”,
Bank,
money
word
as used in
for the venture. The
there-
fore,
statute,
suspect
knowledge,
reason to
means actual
page
clear,
could
Cal. at
.349 Lang, wrote appellees’ agent, in- Etienne for his him furnished consideration board chairman of delivered to the efforts business included terest letter, directors: following addressed to to be made. causing loans following stockhold- agent “I for the that the records am noted It is to be also Bank National Anglo California made ers of the loans were Bank that the showed [naming appellees] Inc., Sons, had of San Francisco firm M. Barde & Bank, behalf. writing am letter this at the line of credit an established apprised of cer- have Thus said been promptly paid. stockholders they were and that Fleish- Herbert pertaining to tend tain matters were not such as records bank, and the hacker, president of said put Bank suspicion or to excite N. bank to loans funds said inquiry. period during the Barde B. and L. prov true that burden It is from 1919 discovery by rested ing lack informed “These stockholders been supra; Lofquist, upon appellees. Earl v. Bardes, desiring borrow said Wood, supra; etc., Lady Washington, Co. v. $500,000 buying use in steel Co. Consolidated Reservoir & Power purposes of Government for United States supra. Scarborough, But we think pay resale, agreed Herbert discharged. burden has personally profits from the one-half Fleishhacker; appellant Affirmed, as to enterprise if would make that amount reversed, appellants Thompson, Klink- as to pursu- That available them. Farms, er, Inc. and Palo Alto Stock Herbert Fleish- ant to said said Anglo Nation- caused the California MATHEWS, (dissenting). Judge Circuit (then known as al Bank of San Francisco Anglo As California stockholders Anglo London Paris National 2(here- Bank of San Francisco1 National Francisco) to loan of San Anglo), brought this after called 16th, ($250,000 on December said Fleish- suit 1919) December —Herbert hacker, Thomp- Harry Victor T. arranged for said Bardes to borrow son, Farms, Incorporated Palo Alto Stock from the Central National (hereafter Farms), called repaid These Oakland. loans were Fleishhacker, Klinker, —to recover Said cor- few months. Bardes caused a Thompson Anglo, and Stock poration organized named the Barde profits alleged have been through Products Co. which to con- Steel hacker, aid with the and assistance enterprise, one-half caused *7 duct Klinker, Thompson, and Stock corporation stock of said to be issued of the 3 money belonging Anglo. from use of the to nominees of the said' Fleishhacker for complaint alleged The bill of the Further, Anglo his .benefit. the California profits so made exceeded Bank of San Francisco loaned National prayed accounting. Appellants for during said Barde Steel Products Co. the others, ground, among defended the on period between 1920-1923 additional appellees right to bring or maintain for in sums of use such appellees’ From a suit. decree8 in aggregating in excess of $736,485.57, appeal prose- favor for this is are further inform- “These stockholders cuted. large Fleishhacker received the said ed that Appelles profits pursuant citizens his said are of France. Fleish- hacker, regard Thompson Klinker citizens the said Bardes in are 20th, September of on California. Stock Farms a received is California 16th, corporation. Anglo banking is on March a national purported, in Products Co. a- located At all Barde Steel as association California. pertinent, company, times salary although here Fleishhacker was said Anglo’s employee president. officer or member not an of said con- He was a was also Further, paid of its board of there was directors. Klinker and cern. Fleishhacker, Thompson employees said held Anglo, were but of him, 29, 1934, were sum not directors. of On October nominees alleged Formerly Anglo The bill Fleishhaeker’s and London Par Thompson is National Bank of San Francisco. nominees Farms. Blum F D.C.. Supp. . mine whether
brought
which
action
Anglo
profits
motion
ber
doctrine of
moved to dismiss
among
ficient
the District Court
pellees’
red to.”
Fleishhacker in the transactions
make demand
seeking
holders believe the
said Herbert Fleishhacker
to recover all
appellees’ demand.
directors at
on behalf
the Barde Steel Products Co. to the
dividends,
Herbert Fleishhacker
Bros,
San
The letter
“Under these
maintain this
1934. The board refused
appropriate
case
Francisco,
which—if it
itself,
to constitute
appellees,
mentioned in the letter.
others,
Anglo
was,
favor.
thereby
in their own
26 L.Ed.
and that
of
large
appellees
Hawes v.
and in
tried,
denied, appellants
on
California National
that it did not state facts suf-
profits
meeting held
Appellants
plaintiff!
and on
indicated,
as stockholders of
suit,
circumstances,
presented
you
sum of
827:
bank the
entered
existed
and March
a cause
recover
which
profits
Thereafter,
names on
March,
forthwith to institute of
commenced this
we should
received
bill
sold his
their
money.
at all—existed in
Hence, to deter
rightfully
seek
its decree
a suit
received
to the board
necessary
on
behalf
were entitled
action. The
comply
reversal.
Appellants majority
just refer-
Anglo
the stock-
November
answered,
itself
apply
104 U.S.
cause
Bank of
Herbert charter
the said
ground,
Decem-
Anglo,
by the
belong
equity
I now
suit,
was to
suit
ap-
justified
poration,
pursuing
equity.
only
interest,
poration
foregoing
failure
pleted
shareholders;
managing
or
themselves
other
agers,
holders
is the
a
a
itself,
equity
authority
“Possibly
right
“Or
“Or where the Board of
“Or
“Some
“ * * *
corporation
prevent
cases.”
among
the other
corporation,7
be restrained
appropriate plaintiff,
in connection with some other
shareholders;
and in
or
where the
in his own
foundation of the
principles
of
corporation,
in manner destructive'of the cor-
itself,
which is
or other source
contemplated by
action
themselves,
Board
conferred
will result
irremediable
course
exercising
other
are
justice,
them,
shareholders, and
[To]
which the
fraudulent
or
or threatened
oppressively
to sustain in
existing
or to the interests
cases
of
majority
in violation of
are
name,
regarded
enable
Directors
which
or with other share-
acting
on
its
in serious
may
rights of
injury,
govern
a suit founded
suit—
corporation
name of
transaction, com-
aid
court
powers,8
a
there
them
of shareholders
Directors,
arise in
stockholder
as an outline
organization;
action
acting
or Trustees
beyond
corporation
a
which can
would be
must
this class
injury
the other
court
.illegally
court
but the
a total
which,
of
rights
party,
man-
itself
exist
or
own
cor-,
on
of
Huntington
Palmer,
Such a
arises where a
ease
board
Reaffirmed
pursuing
833;
directors
a course of action
Detroit
104 U.S.
amounting,
law,
Dean,
539-542, 1 S.Ct.
to a breach of
*8
106 U.S.
Quincy
Steel,
persisted
300;
course,
in,
560,
if
120
will
v.
27 L.Ed.
corporation
244-249,
520,
241,
cause
7
30 L.
its stockhold
S.Ct.
U.S.
injury. Dodge
624;
ers
v.
Alaska Treadwell
irremediable
Wool
v.
Corbus
Ed.
sey, supra;
Freight
Co.,
459-65,
Mining
455,
Greenwood v.
U.S.
Union
187
Gold
961;
256;
13, 16,
157,
Co.,
26
v.
R.
105 U.S.
L.Ed.
47 L.Ed.
Stewart
23 S.Ct.
Steamship Co.,
Co.,
Washington
Pollock
Farmers’ Loan &
Alaska
v.
Trust
&
161,
261;
673,
554,
466,
157
47 L.Ed.
15
39
23 S.Ct.
U.S.
S.Ct.
U.S.
187
Smyth
Refining Co.,
759;
Ames,
L.Ed.
Oil
v.
v. Jackson
&
169 U.S.
Wathen
466, 515-518,
418,
639-641,
225,
819;
635,
35
42
S.Ct.
59
18 S.Ct.
L.Ed.
U.S.
235
Copper
City
Cotting
395;
Co.,
v. Kansas
Securities
Yards
United
L.Ed.
79,
30,
183
22
U.S.
S.Ct.
46
C
92;
Harrington,
supra;
L.Ed.
Doctor
o
v.
Albany
Hudson
v.
Delaware &
Co.
.
Susquehanna
Co.,
corporation.
435,
5 Anglo
R.
U.S.
213
445-
is a
12 U.S.C.
862;
453,
540,
L.Ed.
29
Brus
S.Ct.
53
24.
A. §
Co.,
Woolsey,
Dodge
331,
6
haber
Pacific R.
v. Union
240 U.S.
18 How.
v.
As
10,
493,
9,
236,
1,
340-346,
36
60 L.Ed.
S.Ct.
L.
L.Ed.
15
Ann.Cas.1917B,
R.A.1917D,
414,
713;
Harrington,
7
196
Doctor v.
U.S.
inAs
Co.,
City
587-589,
355,
Title
Kansas
255
Smith v.
U.
579,
25 S.Ct.
551
immaterial,
here a associates of Fleishhacker
principles, I find
Applying these
any
no evidence that
entitling if true. There is
showing
any
total lack of
factual
member
dominated
There
of the board was
maintain this suit.
proof
Fleishhacker.
allegation nor
was neither
or
Anglo’s board of
had
directors
tíon.e
by Fleishhacker
Domination of the board
beyond
any
threatened
act which was
to do
supposed
be
was not —as the trial court
—to
authority
conferred on them
inferred from
fact
that the chairman
;9
organization
charter
of
or other source
board,
receipt of
acknowledging
been
any
or that
transaction had
fraudulent
letter, promised to
mentioned
above
completed
contemplated
or
the board
appellees’ agent,
“communicate”
later
directors;
board,
a
or
or
so;
but failed
fact that
to do
or
majority
them,10
acting for their
request appellees! agent
the board did not
interest,
own
destructive of
manner
in a
appear
proof
charges
offer
Anglo,
rights
or
stockhold
of other
letter,
“merely passed
made in
but
ers;
majority
Anglo’s
or that
stock
taken;”
resolution that no
or from
action
11
oppressively
illegally
holders were
that, having
joined
the fact
as a de
course,
pursuing
Anglo,
in the name of
suit, Anglo
fendant
“made common
rights
which was in
violation
cause” with
board
its co-defendants.15 The
stockholders;
other
or that
irremediable may,
faith,
good
have believed
suffered,
injury would be
or that
total
charges
the letter were false and
justice
occur,
failure of
if
court unfounded;
fact,
had,
Anglo
preventive powers.
did not exercise its
right
against Fleishhacker,
Klink
“foundation’’1
sole
of this suit was er,
Farms;
Thompson or Stock
that it
Anglo’s
failure
board of directors to
not,
conscience,
equity
good
could
or
name,
bring suit, Anglo’s
against
Fleish
them,
bring
appellees’
suit
or leave
hacker, Klinker, Thompson and Stock
proof
Lacking
undefended.
suit
-
directly charge
bill did
Farms. The
not
contrary,
presume
I
we should —and
do—
was,
any respect,
such failure
good
the board acted
faith. Corbus
wrongful
improper.
only allega
Co.,
Mining
Alaska Treadwell Gold
v.
(cid:127)
possibly
tion of the bill which could
157,
'
455, 463, 23
U.S.
S.Ct.
1119. Having failed show the board’s failure to or breach sue constituted fraud any respect or that
wrongful have, improper, appellees had, standing suit. to maintain this
The decree should he reversed and the
case should he remanded with directions to dismiss the bill of complaint.
NATIONAL LABOR BOARD RELATIONS PIQUA WOOD MUNISING CO. PRODUCTS
No. 8233. Appeals,
Circuit Court of Sixth Circuit. Feb.