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.

BACHMAN v. FIRST-MECHANICS NAT. BANK OF TRENTON

January 18, 1947

BACHMAN
v.
FIRST-MECHANICS NAT. BANK OF TRENTON



The opinion of the court was delivered by: FORMAN

Plaintiffs, New Jersey residents, common share-holders of the defendant national bank organized under the laws of the United States with its principal place of business in Trenton, New Jersey, bring this suit for themselves and on behalf of the other common share-holders. They allege, among other things, that the stock of defendant is divided into three classes; namely, preferred 'A', held entirely by the Reconstruction Finance Corporation, preferred 'B', held for the most part by certain members of the board of directors of the defendant, and common shares of which only a minority interest is held by the board of directors. They further allege that the Reconstruction Finance Corporation and the holders of preferred 'B' stock propose an increased issuance of common stock for the purpose of liquidating the preferred 'B' stock. They allege that, according to the articles of association of defendant, such action requires the vote of two-thirds of the common share-holders, but that it is proposed that the action should be taken upon the vote of the holders of the preferred 'A' stock, the preferred 'B' stock and the common stock. No charge of diversity of citizenship is made in the complaint. The plaintiffs allege that the execution of the proposed scheme to increase the common stock will work irreparable damage to those common share-holders who are not holders of the preferred 'B' stock. The complaint prays for the following relief:

'1. The First-Mechanics National Bank, which is the defendant of this suit, may answer this action and each and every allegation thereof.

 '2. That this court, by its order, decree that the defendant, its officers, directors, agents, servants, tellers and judges of election at the stockholders meeting called for January 14, 1947, or any adjournment thereof, be enjoined from:-

 '(a) Proceeding to the election of directors until after defendant association will have performed the acts and things required of it to be performed for the application of the existing reserve fund for retirement of preferred stock as set out in Article Fourth of the Articles of Association, particularly in Sections 9 and 10 thereof, to the end that not less than 130,000 shares of preferred stock 'A' now outstanding will have been retired before such election.

 '(b) Permitting to be voted any shares of preferred stock 'A' or of preferred stock 'B' on the matters set out in Paragraph 4 of the Agenda of said meeting contained in the Notice of Meeting unless and until holders of record on the day of meeting having in their names on the stock records of Defendant Association at least two-thirds of all the shares of common stock will have voted in favor of the items set forth in said paragraph 4 of said Agenda.

 '(c) Presenting or permitting to be considered an amendment to the Article of Association for the sale of any additional shares of common stock as set out in said paragraph 4.

 '(d) Issuing or causing to be issued any new common stock or warrants therefor as proposed in said Notice of Meeting unless and until holders of record on the day of said meeting having in their names on the stock records of Defendant Association at least two-thirds of all of the shares of common stock will have voted in favor of the items set forth in said paragraph 4 of said Agenda.'

 Since the action described in the bill was contemplated at a meeting of the defendant's stockholders to be held on Tuesday, January 14, 1947, a motion was made on Monday, January 13, 1947 for a preliminary injunction temporarily effecting the relief pending final hearing for which the complaint prayed as above set forth.

 In opposition to the motion defendant challenged the jurisdiction of this court to entertain the action.

 The plaintiffs pleaded in their complaint jurisdiction over the case in this court by virtue of the following statutes:

 'Sec. 94. Venue of suits.

 'Actions and proceedings against any association under this chapter may be had in any district or Territorial court of the United States held within the district in which such association may be established, or in any State, county, or municipal court in the county or city in which said association is located having jurisdiction in similar cases.' 12 U.S.C.A. ยง 94.

 They also point to the following sections of the National Banking Act:

 '(a) Notwithstanding any other provision of law, whether relating to restriction upon the payment of dividends upon capital stock or otherwise, the holders of such preferred stock shall be entitled to receive such cumulative dividends at a rate not exceeding 6 per centum per annum and shall have such voting and conversion rights and such control of management, and such stock shall be subject to retirement, in such manner and upon such conditions, as may be provided in the articles of association with the approval of the Comptroller of the Currency. The holders of such preferred stock shall not be held individually responsible as such holders for any debts, contracts, or engagements of such association, and ...


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.