Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

ROGERS v. CROWN STOVE WORKS

December 22, 1964

CHARLES J. ROGERS, SR., PLAINTIFF,
v.
CROWN STOVE WORKS ET AL., DEFENDANTS.



The opinion of the court was delivered by: Campbell, Chief Judge.

Plaintiff, the owner of some 25% of the stock in the defendant corporation, is before the court seeking to enjoin the defendant corporation from selling the plaintiff's stock to discharge an indebtedness secured by a pledge of the stock in question.

The last five Counts of the Complaint do not allege an independent basis for predicating federal jurisdiction. They are, to the extent that they allege any claim against the defendant, dependent upon the first two Counts and an "ancillary jurisdiction" theory.

The first two Counts attempt to bottom jurisdiction on the Securities Act of 1933 (15 U.S.C.A. at § 77a) and following, and/or the Securities Exchange Act of 1934 (15 U.S.C.A. § 78a) and following.

Count I alleges that the Corporation's intended pledgee sale of the stock will violate Section 5 of the Securities Act (15 U.S.C.A. § 77e). Although not specifically spelled out in the Complaint, assumingly the alleged violation is the failure to file the Section's required registration statement and prospectus.

Count II alleges a violation by the Corporation of Section 10 of the Securities Exchange Act, entitled "Regulation of the Use of Manipulative and Deceptive Devices." (15 U.S.C.A. § 78j (b)). The Regulation more specifically alleged to have been violated, Regulation 240, 10 b-5, and is quoted in the Complaint as follows:

    "It shall be unlawful for any person directly or
  indirectly, by use of any means or instrumentality of
  interstate commerce, or of the mails, or of any
  facility of any national securities exchange,
    "(a) to employ any device, scheme, or artifice to
  defraud,
    "(b) to make any untrue statement of a material
  fact or to omit to state a material fact necessary in
  order to make the statements made, in the light of
  the circumstances under which they were made, not
  misleading, or
    "(c) to engage in any act, practice, or course of
  business which operates or would operate as a fraud
  or deceit upon any person, in connection with the
  purchase or sale of any security."

The right of a private party affected by violations of the Securities and Exchange Acts, or the Securities Exchange Act to maintain an action premised upon such violations can no longer be questioned. J.I. Case Company v. Borak, 377 U.S. 426, 84 S.Ct. 1555, 12 L.Ed.2d 423.

However, to properly invoke federal jurisdiction under the Securities Acts the complaint must be one,

    "* * * brought to enforce any liability or duty
  created by * *" the appropriate Act (§§ 77v(a) and
  78aa of Title 15.)

The applicability of the Acts, said the Supreme Court in speaking about the § 77d exemptions to the Securities Act,

    "* * * should turn on whether the particular class
  of persons affected needs the protection of the Act."
  S.E.C. v. Ralston Purina Company, 346 U.S. 119,
  reading from page ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.