Bowman v. Alaska Airlines, Inc.

14 F.R.D. 70, 14 Alaska 62, 1952 U.S. Dist. LEXIS 3580
CourtDistrict Court, D. Alaska
DecidedOctober 20, 1952
DocketNo. A-7157
StatusPublished
Cited by4 cases

This text of 14 F.R.D. 70 (Bowman v. Alaska Airlines, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Alaska primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bowman v. Alaska Airlines, Inc., 14 F.R.D. 70, 14 Alaska 62, 1952 U.S. Dist. LEXIS 3580 (D. Alaska 1952).

Opinion

DIMOND, District Judge.

The defendants have filed a motion to dismiss the Seventh Amended Complaint. In this complaint, Harry A. Bowman is named as the sole plaintiff, as in the commencement of the litigation, when the original complaint was filed. The co-plaintiff, George Turner, who appeared for the first time in the Fourth Amended Complaint, has, apparently, abandoned the action.

It appears that Turner, who is said to have acquired 550 shares of the stock of the defendant corporation in 1938, was brought in as coplaintiff to meet the requirements of Rule 23(b), Fed.Rules Civ. Proc. 28 U.S.C.A., that the plaintiff in such an action must be a shareholder at the time of the transaction of which he complains or that his shares thereafter devolved upon him by operation of law. Now that Turner is no longer associated as a plaintiff in the action, we are again confronted with the controlling circumstance, that of Bowman’s 10 shares of stock, the first 5 shares were acquired by plaintiff Bowman on January 31, 1949.

In this Seventh Amended Complaint, Bowman, now sole plaintiff, in paragraphs II and III thereof, avers:

“II
That the plaintiff is a stockholder of record of the Alaska Airlines, Inc., owning and entitled to vote ten shares of common stock, five shares of which stock were issued on the 31st day of January, 1949, and five shares of which stock were issued February 15, 1950, and that the plaintiff has at all times since January 31, 1949, been a stockholder in the defendant Alaska Airlines, Inc. corporation, and has been a shareholder at the time of all transactions of which the plaintiff complains since that date. And that this action is not a collusive one to confer on this Court or any Court of the United States, jurisdiction of any action of which it would not otherwise have jurisdiction.
“III
“That the plaintiff is the appointed agent of, and by lawful authorization of the owners thereof, controls approximately 2300 shares of common stock of the Alaska Airlines, Inc. representing shareholders numbering approximately 130 common stockholders, who consent to this action; and that the plaintiff, together with the minority stockholders herein mentioned as being represented by plaintiff, has no plan, scheme or design to bring a collusive suit against the corporation or its officers or to confer on this Court or any other Court, jurisdiction which it would not otherwise have and that [72]*72this action is brought for and on behalf of the Alaska Airlines, Inc. minority stockholders who care to join.”

The plaintiff in this pleading again challenges and in effect denies the applicability of Rule 23(b) (1) which says that in a secondary action by shareholders the pleading must aver “ * * * that the plaintiff was a shareholder at the time of the transaction of which he complains or that his share thereafter devolved on him by operation of law * *

1. It is urged by plaintiff that the date of acquisition by him of his stock is of no consequence because the principal wrongs complained of, alleged to have been committed by defendant Marshall in 1942, 1944 and 1945, as related in paragraph IV (d), (1), (2), (3) and (4), of the Seventh Amended Complaint, are continuing wrongs and therefore the provisions of Rule 23 above mentioned do not apply.

In reality, every wrong is a continuing wrong until it is righted or compensated for or adequately remedied. Under the circumstances stated in the Seventh Amended Complaint, to hold that Bowman may bring a representative suit such as here attempted, and therein put in issue in this litigation alleged acts of the defendant which were done many years before Bowman acquired his 10-share interest in the defendant corporation in the year 1949, would result in the virtual nullification by this Court for this action of the provisions of Rule 23(b) (1). Pergament v. Frazer, D.C.Mich.1949, 93 F.Supp. 9. The cases cited by the plaintiff, such as Lissauer v. Bertels, D.C.N.Y.1940, 37 F.Supp. 881, and nearly all of the similar cases are based upon facts from which it appears that the wrongs sued upon were current wrongs for the correction of which any stockholder might lawfully take action. The suggestion that the plaintiff in this action may plead wrongful acts committed by the defendant prior to acquisition by plaintiff of his stock—and perhaps for acts barred by statutes of limitations —runs counter to the express command of Rule 23(b) and must therefore be rejected.

It may be well to note here the contention of the plaintiff that Section 23 (b) is procedural only, and so, by inference, that its requirements may be the more easily relaxed. I am unable to accede to that view. Whatever may be the construction of 23(b) as applied to the District Courts of the United States within the several States, it is to be remembered that the District Court for the District of Alaska has been established by Act of Congress “with the jurisdiction of district courts of the United States and with general jurisdiction in civil, criminal, equity, and admiralty causes”. 48 U.S.C.A. § 101. Therefore, in a case of this nature, which does not depend upon diversity of citizenship, the District Court for the District of Alaska more nearly resembles a state court of general jurisdiction. Several of the states have adopted the provisions of 23 (b) by state legislation. Under those conditions it can scarcely be successfully argued that the restrictive provisions found in 23(b) are procedural only. An illuminating discussion is to be found in Home Fire Insurance Company v. Barber, 1903, 67 Neb. 644, 93 N.W. 1024, 60 L.R.A. 927, wherein Judge Roscoe Pound said that the rule is more than jurisdictional and is based upon a “sound and wholesome principle of equity,” 93 N.W. at page 1029. Judge Pound further stated, 93 N.W. at page 1028, that “sound reason and good authority sustain the rule that a purchaser of stock cannot complain of the prior acts and management of the corporation.” As Justice Jackson observed, in Cohen v. Beneficial Indus. Loan Corp., 1949, 337 U.S. 541, at page 555, 69 S.Ct. 1221 at page 1230, 93 L.Ed. 1528: “Rules which lawyers call procedural do' not always exhaust their effect by regulating procedure.”

2. The motion to dismiss raises the issue as to whether the Seventh Amended Complaint fails to comply with Rule 23(b) by reason of failure to set forth with particularity the efforts of the plaintiff to secure from the directors or trustees or shareholders such action as plaintiff desires. The pleading is sufficient in this respect as regards the alleged [73]*73wrongful act of the defendants on or about November 19, 1949, as stated in paragraph IV(d) (5) of the-Seventh Amended Complaint. The efforts or demands with respect to the alleged wrongful acts committed before January 31, 1949, may not be considered because the pleading of those alleged acts is in violation of the provisions of 23(b) and is therefore immaterial. While no demand whatever by or on behalf of the plaintiff for correction of alleged wrongs is pleaded concerning the alleged wrongful acts of December 1951 and June 1952, as stated in IV(f) and IV(g) of the Seventh Amended Complaint, the pleading is sufficient to indicate that any such demand would have been fruitless. The demand set out in Exhibit A to the complaint which is dated July 7, 1952, makes no.

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Cite This Page — Counsel Stack

Bluebook (online)
14 F.R.D. 70, 14 Alaska 62, 1952 U.S. Dist. LEXIS 3580, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bowman-v-alaska-airlines-inc-akd-1952.