Citations
- 10 F. Supp. 943
Full opinion text
JOHNSON, District Judge.
This is a motion to dismiss the bill of complaint. Complainants, who are stockholders of the defendant corporation, filed their bill of complaint against the Milton Manufacturing Company, W. Walter Wilson, president, and Oran S. Stamm, treasurer, which alleges in substance that the defendants W. Walter Wilson and Oran S. Stamm, in collaboration with the directors, failed to hold regular meetings except twice since September, 1934; caused dividends to be paid out of the corpus assets of the defendant company; caused to be sold fixed assets which were necessary for the operation of the corporate business; caused to be issued yearly financial statements which inaccurately depict the true financial condition of the ■ defendant company and caused to be purchased mortgage bonds of the defendant company, materially reducing the defendant company’s cash on hand. The complainants pray for an accounting and the appointment of a receiver.
The defendants moved to dismiss the bill of complaint for the reasons, among others, that it violated Rule 24 of the United States Supreme Court Equity Rules (28 USCA following section 723), in that it was not signed by one or more solicitors of record, and that it volated rule 27 (28 USCA following section 723), in that “it does not set forth with particularity the efforts of the complainants to secure such action as they desire on the part of the managing directors or trustees, and if necessary, of the stockholders, and the causes of his failure to obtain such action or reasons for not making such effort.” The court granted a rule upon defendants’ motion.
The bill of complaint is signed by the complainants but not by one or more solicitors of record, and therefore does not comply with Equity Rule 24.
The averment in the bill of complaint which is sought to comply with Equity Rule 27 is as follows: “Your orators allege that they were unable to and did not secure the acts they herein complained of and desire on the part of the managing officers and directors, for the following reasons, viz.: (a) The officers and directors of defendant corporation, the Milton Manufacturing Company, are hostile to the minority interests of stockholders and perform and execute their respective offices and functions in an autocratic, unreasonable and selfish manner, (b) Your orators will be unable to anticipate the action of defendants * * * it being without notice of the same * *
Equity Rule 27 provides that the bill “must also set forth with particularity the efforts of the plaintiff to secure such action as he desires on the part of the managing directors or trustees, and, if necessary, of the shareholders, and the causes of his failure to obtain such action, or the reasons for not making such effort.”
From the bill it appears that the complainants have done nothing to secure from the directors or stockholders the action they desire. They content themselves with asserting that the reason for not making