Consolidation, out of which the present corporate defendant grew, was approved by more than 2/3rds of the stockholders of each of the consolidating companies. This, in effect, negatives any suggestion of fraud and misrepresentation.
Since a stockholder's derivative suit on behalf of the corporation derives its cause of action out of an invasion of the rights of the Corporation, if the Corporation itself has no such cause of action it necessarily follows that a stockholder cannot sue in its behalf. Gallagher v. Pacific American Co., 9 Cir., 97 F.2d 193; Laughner v. Schell, 3 Cir., 276 F. 241, 18 C.J.S., Corporations, § 559. Under the facts set forth in the fifth alleged cause of action, defendant, Beneficial Industrial Loan Corporation, could not maintain this action, and plaintiff suing as a stockholder has no better right. Defendants' motion to dismiss the fifth cause of action, for the reasons above set forth, is granted.
The plaintiff's sixth alleged cause of action charges in broad general terms that between the years 1937 and 1943, the defendant corporation, acting through its directors, some of whom are defendants herein, paid to its affiliate, Beneficial Management Corporation, sums of money in excess of $ 26,000,000 many of which payments are unsupported by bills or other vouchers, that many of these payments were improperly and illegally made for the purpose of unjustifiably enriching the individual defendants herein, and were illegal and ultra vires in nature.
Plaintiff further charges that it is impossible, for the reasons set forth, to obtain from the books of the defendant corporation an accurate accounting of the uses to which the money has been put, but avers that an examination of the officers and directors of Beneficial Management Corporation before the trial of this issue will disclose the illegal and ultra vires nature of such payments.
This alleged cause of action the defendants attack on the ground that it does not state any claim, and is grounded on a mere suspicion that may find support by examination of officers and directors of the defendant corporation.
The allegations of the sixth alleged cause of action, while setting forth a certain factual situation, fail to identify any cause of action within the requirements of the Federal Rules of Civil Procedure, 28 U.S.C.A.following Section 723c. The plaintiff's charge that many payments were illegal and improperly made, without further enlargement, is insufficient to meet even the bare requirements of the rules of pleading. The further averment by plaintiff that 'an examination of officers and directors' will disclose which payments were illegal and ultra vires, stamps this alleged cause of action as one disclosing an aspiration rather than a claim upon which recovery may be had. United States v. Atlantic Basin Iron Works, D.C., 53 F.Supp. 268. The words of the Court in Mebco Realty Holding Co. et al. v. Warner Bros. Pictures, Inc., D.C., 44 F.Supp. 591, 592, are apropos in the instant case. Therein the court stated:
'I do not understand that the Federal Rules of Civil Procedure, 28 U.S.C.A.following section 723c, or any other rule of law or practice, will justify a suit against an individual or a corporation which does not state a case, and then permit the plaintiff to call witnesses in a fishing expedition, with the hope that somewhere or somehow it may develop that a defendant has some liability.'
At the very least, the statement or pleading must give fair notice of what an adverse party may expect to meet. Battin Amusement Co. v. Cocalis Mausement Co., D.C., 1 F.R.D. 769. The complaint herein, however, falls short of that requisite. It is in the nature rather of an expression of a charge that the plaintiffs hope to substantiate if they are successful in gleaning further information prior to trial.
The Seventh alleged cause of action contains the same infirmities as the sixth and must fall for the reasons specified above.
The Ninth alleged cause of action is likewise found to be insufficient. While it is true that Rule 8()(2) requires but a 'short and plain statement of the claim showing that the pleader is entitled to relief', that requirement is not met by a series of conclusions couched in broad general terms alleging wrongdoing but entirely lacking in any statement of fact upon which the allegations are based. Toomey v. Wickwire Spencer Steel Co., D.C., 3 F.R.D. 243. See also Arn v. Bradshaw Oil & Gas Co., 5 Cir., 93 F.2d 728 and Mebco Realty Holding Co. v. Warner Bros. Pictures, Inc., supra.
Defendants' motions to dismiss the fifth, sixth, seventh and ninth causes of action, for the reasons above specified, are granted. The motion to dismiss the fourth cause of action is denied.
In view of the foregoing determinations, the Court will not rule on the remaining motions. The parties may, however, renew such of them as the situation resultant on these findings may render fitting.
An order in accordance with the above ruling may be entered.
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