Noey v. Ukpeagvik Inupiat Corp.

683 P.2d 260, 1984 Alas. LEXIS 310

• Court: Alaska Supreme Court
• Decided: June 22, 1984
• Docket: No. S-278
• Status: Published

Opinions

OPINION

PER CURIAM.

In February, 1981 Stephen W. Noey & Associates, Ltd., et al. (hereafter Noey) and Ukpeagvik Inupiat Corporation (hereafter UIC), the Barrow Village corporation, entered into a written agreement whereby Noey would appraise certain properties owned by UIC in and around Barrow. UIC paid Noey $10,000 when the contract was signed. A dispute arose between the parties and on May 27, 1983 UIC filed suit for rescission and restitution in the superior court in Barrow claiming that Noey had not fully performed his duties under the contract. On May 31, 1983, unaware of the Barrow suit, Noey filed suit in the superior court in Anchorage claiming that it had performed all required appraisal services and that UIC owed it $13,000 under the written agreement and $3,500 for additional services performed at the request of UIC.

On June 6, 1983 Noey was served with notice of the UIC Barrow complaint. Noey responded by filing a motion to dismiss the complaint on the grounds of improper venue, or, in the alternative, to have venue transferred to the Third Judicial District at Anchorage. Noey’s motion argued, inter alia, that it could not get a fair trial in Barrow because a large percentage of the jury pool there are UIC shareholders and therefore biased toward UIC. Judge Jeffery rejected this argument and held that the interest in having the controversy decided locally outweighed any prejudice that could result from the Barrow jurors’ ownership in UIC. Judge Jeffery further stated that UIC shareholders would not be subject to a challenge for cause under Civil Rule 47(c)(12). Noey then filed a petition for review.

We hereby GRANT the petition for review of Judge Jeffery’s ruling solely as to the question whether UIC shareholders would be subject to a Rule 47(c)(12) challenge for cause.

Civil Rule 47(c)(12) states:

(c) Challenges for Cause. After the examination of prospective jurors is completed and before any juror is sworn, the parties may challenge any juror for cause. A juror challenged for cause may be directed to answer every question pertinent to the inquiry. Every challenge for cause shall be determined by the court. The following are grounds for challenge for cause:

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(12) That the person has a financial interest other than that of a taxpayer in the outcome of the case.

The superior court held that the financial interest that the shareholders of ANCSA-created village corporations presently have is so attenuated as to not be the basis of a challenge for cause when such a corporation is involved in litigation. We disagree.

“That a stockholder in a company which is a party to a lawsuit is incompetent to sit as juror is so well settled as to be black letter law.” Chestnut v. Ford Motor Company, 445 F.2d 967, 971 (4th Cir.1971).¹ This rule extends to village and regional corporations irrespective of whether the shares are freely alienable or are earning dividends at the time of trial. Ownership of shares in a village corporation constitutes a direct financial interest in that corporation and consequently a financial interest in the outcome of the litigation to which the corporation is a party.

We thus REVERSE that portion of the superior court’s ruling which held that ownership in UIC is not a ground for challenge for cause under Civil Rule 47(c)(12). The motion to change venue is REMANDED to the superior court for redetermination in light of the views expressed herein.²

RABINO WITZ, J., dissents.

1 . This case is distinguishable from Maier v. City of Ketchikan, 403 P.2d 34 (Alaska 1965), overruled on other grounds, Johnson v. City of Fairbanks, 583 P.2d 181 (Alaska 1978) where the prospective jurors were rate-payers of the municipal utility. In that situation, the jurors did not effectively have a financial interest in the outcome of the case other than that of taxpayers which is an insufficient ground for challenge under Civil Rule 47(c)(12).

2 . Judge Jeffery suggested in his order that he might grant the motion to transfer venue if shareholders in UIC were disqualified. The order states:

In this case, the interest in having "localized controversies decided at home” so that the case can be decided in the "view and reach [of local people] rather than in remote parts of the country where they could learn of it by report only” must prevail ... It may be that this balancing would be different following 1991, if shares in the village and regional corporations become freely alienable on the open market.

[Memorandum Decision and Order, pp. 4-5 (citations omitted) ] We express no view on whether the motion should be granted.