Petition — Rudolf Wolff & Co. v. Neiman

Supreme Court brief1980

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In THE

Supreme Court of the United RODAK, JR., CLERK

OCTOBER TERM, 1980

RUDOLF WOLFF & CO., LTD.,

Petitioner,

—against—

DAVID NEIMAN, d/b/a THE LONDON GROUP (1974),

Respondent.

On Writ or CERTIORARI TO THE UNITED STATES

Court oF APPEALS FOR THE SEVENTH CIRCUIT

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Exuiot Paskorr

405 Lexington Avenue

New York, New York 10174

Tel: (212) 682-4567

Attorney of Record for Petitioner

Of*Counsel : Rudolf Wolff & Co., Ltd.

TownLey & UPpIKE and

Auuan E. Lapinus

115 South La Street

Chicago, Illinois 60603

Tel: (312) 781-2200

Attorney for Petitioner

Rudolf Wolff é Co., Ltd.

VeEppER, Pricz, KAUFMAN

& KaMMHOLZ

IN THE

Supreme Court of the United States

October Term, 1980

No. 80-

RupoutpeH Wotrr & Co., Lrp.,

Petitioner,

—against—

Davip Neman, d/b/a THE Lonpon Group (1974),

Respondent.

On Writ oF CERTIORARI TO THE UNITED STATES

Court oF APPEALS FOR THE SEVENTH CIRCUIT

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Questiors Presented

l(a). In matters of international commerce, has the

Seventh Circuit created a lesser measure of due process

available to an alien by permitting Illinois to assert ‘‘long

arm’’ jurisdiction over an English Company premised upon

the amalgamation and comingling of (1) contacts of the

alien found to be insufficient for ‘doing business’’ with (2)

a single forum contact of the alien which, im and of itself,

does not rise to a constitutionally substantial ‘‘transaction

of business’”’ in the forum?

(b). Alternatively, in a due process analysis may a

Court, having found that an alien’s contacts with the forum

fall short of ‘‘doing business’’ there, tack on those insuffi-

cient ‘‘doing business” contacts to a single insufficient con-

tact (two hour meeting in the forum) in order to amalga-

mate contacts for jurisdictional sufficiency?

2. Whether in matters of international commerce, a

State’s (Illinois) assertion of in personam jurisdiction over

an alien (English Company) by reason of its Long Arm

Statute requires a cautious analysis test as suggested by

the Second Circuit, weighing as viable components of

‘*due process’’ the State’s particular interest in adjudicat-

ing the dispute as against the burdens imposed upon the

alien of defending in the American forum?

3. Whether the Seventh Circuit’s premise that it is just

as inconvenient for the alien English Company to defend

in Illinois as would be for the Illinois citizen to prosecute

his action in England, without regard to an analysis of (a)

choice of law, (b) place of contemplated performance, (c)

residence of witnesses with personal knowledge, (d) loca-

tion of relevant documents and (e) whether the alien

(English Company)! could have reasonably expected that

it would be required to defend itself in an American court-

room, reaches the measure of due process available to an

alien consistent with the Fourteenth Amendment to the

United States Constitution?

1 The following persons or entities were parties to the proceedings

before the United States Court of Appeals for the Seventh Circuit :

1. David Neiman d/b/a The London Group (1974), a citizen

of the State of Illinois;

2. Rudolph Wolff & Co., Ltd., an English Company ; organized

under the laws of the United Kingdom;

3. James Gourlay, an English resident ;

4. Ingleram Investments, Lid., an English Company.

iil

TABLE OF CONTENTS

PAGE

Ce ey rs er (i)

CD: BN 5 5. vaio ob chads oc Kia aa ba eee eees |

NE ropa at Nine shee ceaen areas coe’ 1

Constitutional Provision and Statute Involved ..... |

a Be Perey Terre eT error rr re 2

Bi. FRCL TORN oi ee li ees eeiinas 2

B. The Decisions of the District Court .......... 5)

C. Opinion of the Court of Appeals ............ (j

Reasons for Granting the Writ .................. 10

1. Supreme Court Guidance Is Urgently Needed

Jn Present Times Of International Commerce

So That Alien Persons Engaging In Comrer-

cial Transactions With American Citizens

Abroad Can Predict, With Some Reasonable

Assurance, The Consequences Of Their Acts 10

ll. In Matters Of International Commerce The

Seventh Circuit’s Due Process Analysis Is

In Conflict With ‘The Second Circuit’s

Cautious Analysis Test ................ Me 13

I1l. In Matters Of International Commerce The

Burdens Of Defending In A Distant Or In-

convenient Forum Must Be Carefully

Weighed As A Component Of Due Process .. 17

IEA AM tet RES Ie PB ab TAPS ee U Noy ed AOU Pa LAIN 19

een WE EN ee ee tk rae 21

TABLE OF AUTHORITIES

PAGE

Cases

Bersch v. Drexel Firestone, Inc., 519 F.2d 974 (2d

Cir.) cert. denied, 423 U.S. 1018 (1975) .......... 14, 15

Charia v. Cigarette Racing Team, Inc., 583 F.2d 184,

(TE GA BG oc ckbe es ahaenoecenpusae c cersess 14

Chicago Silver Exchange v. United Refinery, Inc., 394

P. UG. L508 CBs. Bik ROTOR kc one ixecessndves 9, 14

Duple Motor Bodies, Ltd. v. Hollingsworth, 417 F.2d

231 (9th Cir. 1969) (dissenting opinion) ....... 16-17

Hanson v. Denckla, 357 U.S, 235 (1958) ........... 10, 12

International Shoe Co. v. Washington, 326 U.S. 310

CE. has Ki. FS WOR dENG pane k waaade es tases 9,10

Leasco Data Processing Equipment Corp. v. Maxwell,

O68 FOG THOS (FR Cie. TUTE ociids tevin cs ceveiyes 16

Long 3. Victor Products Corporation, 297 F.2d 577

ee | eer a Seep rrr errr rer ery carr 14

McGee v. International Life Ins. Co., 355 U.S. 220

CRUSE Xi cv scialnss dep anke weer aes ee aes hvieces 10, 11

Milliken v. Meyer, 311 U.S. 457 (1940) ............ 10

Perkins v. Benquet Consolidated Mining Co., 342 U.S.

We. SEED ss asa cased heisivsusbeseeenecaee 11 n.10

Tommills Brokerage Co. v. Loeb, Rhoedes & Co., 411

fh Fe Ble Pre eee ry te 9,14

World-Wide Volkswagen Corp. v. Woodson, 444 U.S.

S06. GE EG. Ba GRD (IED i kde ck ve canes 10, 13, 17

Xedit Corp. v. Harvel Industries Fidelipac, 456

P Bee, TEs Cae. MAUS 5 0 ceed has cheese 14

PAGE

Constitution, Statutes and Rules

United States Constitution Amendment XIV ...... 1, 10, 17

re 1

Ill. Rev. Stat., Ch. 110, §17(1)(a) 0.00... cee eee. 1, 2 n.3, 3

NE a ota eececcesébeesnue set 2n.3

i Ev cca ens cceccsecessucesses 3 n.4

Miscellaneous Authorities

Restatement (Second) of Conflict of Laws § 24, Com-

ie aad bet kbs op 6o whe aeuies 19

Restatement (Second) of Conflict of Laws § 37,

ee in ile 6 wd b'n bic 0.0045 cop awake 17

Von Mehren & Trautman, Jurisdiction to Adjudi-

cate: A Suggested Analysis, 79 Harv.L.Rev. 1121

ae i wack pueceetcentyehestaws 19 n.13

Opinions Below

The opinions of the United States District Court for the

Northern District of Illinois rendered on March 16, 1978

and, following reconsideration, on April 20, 1979 have not

been officially reported and are contained in the annexed

appendix? at pages Al4-A25. The opinion of the United

States Court of Appeals for the Seventh Circuit is reported

at 619 F.2d 1189 (7th Cir. 1980) and is reproduced in the

appendix at pages Al-A13.

Jurisdiction

The Seventh Cireuit’s judgment was entered on April

23, 1980 (App. A26). Petitioner’s timely petition for re-

hearing in bane was denied on May 22, 1980 (App. A27).

The jurisdiction of this Court is invoked under 28 U.S.C.

§ 1254(1).

Constitutional Provision and Statute Involved

The constitutional provision involved is the Due Process

Clause articulated in Section I of the Fourteenth Amend-

ment to the United States Constitution, U.S. Const. amend

XIV, as applicable to Section 17 of the Illinois Long Arm

Statute, ITT. Rev. Stat., Ch. 110 §17(1)(a), which recites

in pertinent part that:

(1) Any person, whether or not a citizen or resident

of this State, who in person or through an agent does

any of the acts hereinafter enumerated thereby sub-

mits such person . . . to the jurisdiction of the

2 Reference to the Appendix annexed to Wolff’s Petition For a

Writ of Certiorari herein shall appear as (App. page designation).

courts of this State as to any cause of action arising

from the doing of any such acts:

(a) The transaction of any business within this

State.

(3) Only causes of action arising from acts enum-

erated herein may be asserted against a defendant

in an action in which jurisdiction over him is based

upon this Section. (Emphasis Supplied) ?

Statement of the Case

A. Preliminary Statement

This is a diversity action, pending in the United States

District Court for the Northern District of Illinois in which

plaintiff, David Neiman (‘‘Neiman”), a citizen of Illinois

seeks damages from petitioner Rudolf Wolff & Co., Ltd.

(‘‘Wolff’’), a United Kingdom corporation, located in

London, England, for its alleged failure to deliver to plain-

tiff in London silver bullion purchased on the London

Silver Market (App. Al, A33).

Petitioner Wolff does not transact or do business in

Illinois; does not maintain an office or telephone listing in

Illinois; does not have any employees or agents in Illinois;

and does not own any property in Illinois (App. A111-

A112).

3 The Ill. Rev. Stat., Ch. 110, § 17, has provided a model for a

multitude of State Long Arm Statutes. Accordingly, the issues which

beg to be resolved before this Court concerning the unprecedented

analysis of due process by the Court of Appeals for the Seventh

Circuit, extend well beyond the Illinois statute involved herein. £.g.,

The New York Civil Practice Law & Rules § 302(1)(a) is sub-

stantively identical to Ill. Rev. Stat., Ch. 110 §17, yet the Court of

Appeals for the Seond Circuit, in a case bearing remarkable similarity

to that at bar, has suggested a cautious analysis approach to trans-

actions having an international context. See Point II, infra at page 17.

Jurisdiction was purportedly asserted over petitioner

pursuant to the Illinois Long Arm Statute, Ill. Rev. Stat.,

Ch. 110 § 17(1) (a).

During the summer of 1974, Neiman solicited his own

broker, William E. Casselman, for information concerning

silver trading on the London Silver Market (App. A4, A22

6, A43). Thereafter, on October 14, 1974, James Gourlay,*

an English resident passing through Chicago on other

business, lunched with Neiman and his broker Casselman

at a Chicago restaurant for two or three hours (App.

A4, A43-A44, A92). Neiman and Gourlay engaged in social

dialogue, discussed in general terms the nature of silver

trading on the London markets, including a loan agree-

ment of a Swiss financier.*

In November of 1974, Neiman placed his first order for

London silver bullion by telephoning his broker Casselman,

a resident of Stuart, Florida, instructing Casselman to

purchase silver for the London Group, a purported limited

partnership (App. A45-A46). On November 6, 1974, Cassel-

man from Stuart, Florida wrote to Gourlay in London,

England to initiate the first silver bullion transaction (App.

A76). Thereafter, Neiman called Casselman in Florida and

4In order to obviate the factual issue of apparent authority, peti-

tioner advised the District Court that, for purposes of its motion to

dismiss the Complaint pursuant to Fed.R.Civ. P.12(b) (2), it could

be assumed arguendo that Gourlay purported to represent petitioner

during the single meeting in Chicago with plaintiff on October 14,

1974. Both the District Court and the Seventh Circuit accepted that

premise for purposes of the motion.

5 The Swiss financier, I. Rochester (Finance), Ltd. was to finance

the silver bought by Neiman payable in British sterling with the

London silver acting as security for the loan. In this context, before

Neiman had any right to demand or expect delivery of the silver in

J.ondon, the financier’s security interest or lien would have to be

satisfied in London as would Neiman’s obligation to deliver an equiva-

lent amount of silver to Wolff in London.

asked him to purchase 748,000 ounces and then 2,000,139

ounces of silver bullion by contacting Wolff in London,

England (App. A49). Subsequently, Neiman contacted

Wolff directly by initiating telephone calls from Chicago to

London (App. A50).

Neiman’s contracts to purchase London silver bullion and

sell back an equivalent amount of London silver were to be

performed exclusively in England on the London Silver

Market without any activity contemplated in Illinois. The

silver was located, stored and to be delivered in London,

England (App. A77-A78), The silver was to be paid for in

British sterling, financed entirely by a Swiss financier, I.

Rochester (Finance) Ltd. The debt to the Swiss financier

was to be repaid in London out of the British sterling

proceeds of Neiman’s London silver trading (App. A77,

A113, A129).

The gravamen of Neiman’s Complaint is Wolff’s alleged

failure to deliver silver bullion to him in London when in

March of 1975 Neiman was in London and demanded de-

livery (App. A338, A61-A62, A77, A81-A82). During Nei-

man’s meetings in London with his solicitors and those of

Wolff, petitioner came to doubt Neiman’s financial responsi-

bility © and demanded full cover for Neiman’s contracts to

deliver London silver in the future, a position Wolff had

the right to take pursuant to custom and usage in London

silver trading and the Rules of the London Silver Market

(App. A77-A78, A109, A115). Following Neiman’s failure

to cover the loan by the Swiss financier (App. A168-A170,

A115) or to provide the cover for his future obligations,

6 It should be noted that Neiman through the date of this petition

has not paid even one American dollar to Wolff or anyone else while

purporting to purchase and sell 16,601,000 ounces of London silver

bullion. The record amply demonstrates the absence of Neimans’s

financial responsibility (App. A40-A42).

Wolff refused to deliver the silver to Neiman in London

until the encumbrances against it were satisfied; the litiga-

tion at bar ensued.

B. The Decisions of the District Court

The District Court, in a memorandum decision of March

16, 1978, reviewed Neiman’s own deposition testimony and

held that Wolff’s luncheon meeting with Neiman in Chicago

did not qualitatively possess ‘‘minimum contacts’’ so that

it could be said that Wolff, by its voluntary acts, invoked

the benefits and protections of Illinois law. Recognizing

that the gravamen of plaintiff’s complaint is that Wolff

failed to deliver silver bullion to plaintiff in London, the

District Court was not unmindful that ‘‘minimum contacts’’

must be viewed as to ‘‘what is fair and reasonable in the

circumstances of a particular case’’ Wolff’s motion to dis-

miss for lack of jurisdiction over its person was granted

(App. A17).

During the year following the order of dismissal as

against Wolff, Neiman took the deposition of five non-party

witnesses, William Casselman, Ronald Richter, Moshe

Shaltiel, Joseph Klein, Edward Hansen and Marshall

Persky. Upon those depositions, Neiman moved for recon-

sideration and argued that Wolff was “doing business”

in Illinois. The District Court, although denying the

motion for reconsdieration, did so following its careful

analysis of Neiman’s new deposition evidence. The District

Court reviewed the depositions of the foregoing witnesses

and correctly determined that all but one Illinois resident

had solicited Wolff to engage in London commodities trans-

actions for their own investment motivation (App. A24, A86,

A99-A100, A102, A105-A106, A124). Neiman, on his own

deposition, admitted tha: he was desirous of trading in

London silver and initiated the meeting with Gourlay

(App. A4).

The District Court was also aware of the requirement

that where jurisdiction is asserted over a non-resident upon

its transaction of business under a Long Arm Statute, the

cause of action must arise out of the transaction of business.

Accordingly, the District Court did not amalgamate the

volume of London transactions which the few other Illinois

residents had done with Wolff in London as a consequence

of their own solicitation of Wolff in order to trade in

London commodities as part of their personal investment

desires (App. A99-A100, A102, A105-A106, A124).

C. Opinion of the Court of Appeals

The Court of Appeals affirmed the dismissal of Neiman’s

common law tort claim, but reversed the judgment dis-

missing the breach of contract claims against petitioner

Wolff and defendant Gourlay.

Wolff’s limited contacts with Illinois over the years were

reviewed by the Court of Appeals for purposes of determin-

ing whether jurisdiction could be asserted on either “doing

business” presence or as “a transaction of business.”

Gourlay in late 1973 or early 1974 had visited Chicago and

met with Casselman, Persky and Klein and discussed a

tax shelter program. Persky and Klein upon deposition

stated they were not solicited by Gourlay. To the contrary,

they solicited Wolff since it was their own desire to trade

in London metals (App. A86, A99, A102).’

7 Notwithstanding the unambiguous testimony of Messrs. Persky

and Klein that Gourlay had not solicited them to trade in London,

the Court of Appeals at footnote 1 of its opinion resolved the “factual!

disputes” in favor of Neiman. The remarkable error of the resolution

of the facts in Neiman’s favor is that no dispute exists since all per-

sons who were prseent at that 1973 meeting agree that there was no

solicitation.

Neiman never even heard or knew of Persky or Klein until subse-

quent to this litigation. Accordingly, the Court of Appeals errone-

ously created a factual issue of solicitation of Persky and Klein by

Gourlay in 1973 and resolved it in Neiman’s favor when no such

dispute existed (App. A3n.1).

The opinion then noted, and presumably relied on, that

Casselman during 1974 had placed twenty four London

silver transactions with Wolff in London for his customers.

Unfortunately, the Court of Appeals missed that part of

Casselman’s testimony where he explained that only Neiman

and one other person were Illinois residents. His other

clients had no relationship to Illinois and, in fact, traded in

London commodities after Casselman had moved to Florida

(App. A95, 97).

The opinion described how Gourlay on two occasions had

met with Ronald Richter, an Illinois resident, for less than

one hour and concluded “eash-and-carry transactions in-

volving forty-nine million dollars worth of silver and option

contracts for silver worth hundreds of millions of dollars” *

(App. A6). Again, the Court of Appeals failed to note and

perhaps consider in its measure of due process that Richter

had initiated the calls to Gourlay because he wished to trade

in London silver; and that during Richter’s calls to London,

virtually all of the terms were negotiated on the telephone

(App. A106). In essence, Gourlay’s two visits with Richter

in Illinois, each lasting les" an one hour, were an insub-

stantial part of Richter’s .ransactions of London business

with Wolff.

Lastly, the Court of Appeals detailed the October 14,

1974 meeting between Neiman, Casselman and Gourlay in

Chicago, Illinois. That two or three hour luncheon, arranged

while Gourlay was passing through Illinois on other busi-

ness, was the only contact attributable to Wolff on which

8 Richter’s trading in London options are unquestionably unrelated

to Neiman’s London silver cash and carry transactions. It cannot be

denied that Neiman’s cause of action does not arise from Richter’s

London option transactions. Notwithstanding, the Court of Appeals

seems to have amalgamated Richter’s option trading with Neiman’s

~~ silver trading to support “a transaction of business” presence

in Illinois,

Neiman’s action arises. Although the Court’s opinion

correctly describes that Gourlay, Neiman and Casselman

differ in their respective accounts of that luncheon, it is

significant that Casselman and Gourlay independently agree

that Gourlay did not solicit Neiman’s business but only

responded to his questions. Neiman’s own version does not

state that he was solicited and concedes that not even a

single proposal for specific silver purchases was. discussed

(App. A5, A45, A92, A119).°

The opinion correctly concludes that Wolff’s isolated,

sporadic transactions with residents of Illinois and mere

occasional solicitation does not reach “doing business”

presence required for the assertion of in personam jurisdic-

tion over the alien Wolff (App. A6-A7).

However, it is at this analytical juncture, that the Court

of Appeals departs from the teachings of this Court and,

ignoring the clear testimony by the non-party witnesses of

their solicitation of Wolff (App. A99-A100, A102, A105-

A106, A124), amalgamates their unrelated London com-

modities transactions with Wolff in London, which were

unknown to Neiman and from which Neiman’s claims do not

arise, with the two hour luncheon between Gourlay and

Neiman. The Court of Appeals’ erroneous analysis and

unprecedented theory of amalgamating contacts insufficient

for “doing business” with a contact insufficient for juris-

dictional presence as a “transaction of business” is revealed

in its opinion by the following language:

9 The preliminary nature of the October 14, 1974 luncheon is evi-

denced by the fact that even after Casselman, a resident of Stuart,

Florida (App. 76), had instructed Wold to trade in London silver

(App. A45), Neiman’s counsel two months later in December of

1974, wrote to Wolff in London indicating that the transactions were

merely contingent and not binding on Neiman unless he formed a

limitec geste capitalized with at least $1,000,000 (App. A54-

A57). The limited partnership was never formed, a fact never re-

vealed to Wolff (App. A53, A58-A59).

. when the luncheon meeting is considered with

Gourlay’s solicitation of Casselman and other ACLI

brokers in late 1973 or early 1974, Gourlay’s conduct

in Illinois was sufficient to permit the district court

to exercise personal jurisdiction over Gourlay and

his principal, Wolff (App. A9). (Emphasis Supplied)

There is little doubt that the two hour luncheon held on

October 14, 1974 between Neiman and Gourlay in Chicago,

in and of itself does not satisfy “minimum contacts” under

the Illinois Long Arm Statute. International Shoe Co. v.

Washington, supra; Tommills Brokerage Company v. Loeb

Rhodes & Company, 411 F.2d 764 (7th Cir. 1969) ; Chicago

Silver Exchange v. United Refinery, 334 F. Supp. 1332,

1335 (N.D. Ill. 1975).

Accordingly, the Court of Appeals has, by this decision,

created a lesser standard of due process which affords the

amalgamated whole (jurisdictional sufficiency under the

Fourteenth Amendment) a value which is greater than the

sum of its parts (contacts which are insufficient for “doing

business” or a “transaction of business”), to the constitu-

tional detriment of an alien.

Because the Court of Appeals has gone well beyond this

Court’s due process guidelines so as to permit the trans-

atlantic assertion of in personam jurisdiction over Wolff,

it has become impossible for any alien to predict the con-

sequences of its conduct and comprehend when and where

its conduct will subject it to suit in the United States.

As previously noted, the Court of Appeals reversed the

judgment of dismissal over Wolff and Gourlay and re-

manded the action to the District Court.

Reasons for Granting the Writ

Supreme Court Guidance Is Urgently Needed In

Present Times Of International Commerce So That

Alien Persons Engaging In Commercial Transactions

With American Citizens Abroad Can Predict, With

Some Reasonable Assurance, The Consequences Of

Their Acts.

This case involves a jurisdictional issue transcending

national boundaries, affecting international commerce, and

the ability of an alien to understand and predict the con-

sequences of its acts with an American citizen consistent

with due process afforded under the Fourteenth Amend-

ment to the United States Constitution, U.S. Const. amend

XIV. This Court’s articulated guidance on balancing the

constitutional guarantee of due process as against a state’s

assertion of in personam jurisdiction over a non-resident,

has measured due process within the sovereign and terri-

torial context of interstate federalism between citizens of

different states. Milliken v. Meyer, 311 U.S. 457 (1940);

International Shoe Co. v. Washington, 326 U.S. 310 (1945) ;

McGee v. International Life Ins. Co., 355 U.S. 220 (1957) ;

Hanson v. Denckla, 357 U.S. 235 (1958); World-Wide

Volkswagen Corp. v. Woodson, 444 U.S. 286, 62 L.Ed.2d

490 (1980).

This Court has never directly set forth the parameters

of due process available to an alien, not “doing business”

in the forum, concerning a dispute between an American

citizen end an alien who performs commercially for the

American citizen outside of the United States.'®

Without this Court’s guidance on this issue of paramount

import to all aliens like Wolff, engaged in business rela-

tions with Americans, the Seventh Circuit’s opinion, prem-

ised upon the unprecedented comingling or amalgamation

of due process concepts of “doing business” with those

arising from “a transaction of business”, results in a new

but constitutionally impaired standard of due process. This

new standard confuses or lessens the degree of predictability

which allows aliens to structure their conduct with some

reasonable assurance as to where that conduct will and will

not render them subject to suit.

The Courts below have accepted as established precedent

that the Due Process Clause, as the bulwark against state

jurisdictional expansion, resulting in inconvenient or dis-

tant litigation, has been substantially relaxed. This trend

favoring State expansion was first articulated by this Court

in McGee v. International Life Ins. Co., 355 U.S. 220, (1957)

where it observed:

Today many commercial transactions touch two or

more States and may involve parties separated by

the full continent. With this increasing nationaliza-

tion of commerce has come a great increase in the

i0 Approximately twenty-eight (28) years ago this Court in Per-

kins v. Benquet Consolidated Mining Co., 342 U.S. 437 (1952), ad-

dressed an issue of jurisdictional due process asserted by a State

over a Philippine company. However, that decision did not reach

the issues raised by this petition since the alien defendant was found

to have been continuously and systematically “doing business” in the

State of Ohio. In the instant petition, the Seventh Circuit specifically

held that petitioner was not continuously and systematically present

in Illinois to be “doing business” there, yet amalgamated or tacked

those insufficient contacts on to Neimen’s independent and unrelated

two hour meeting which was, in and of itself, insufficient for jurisdic-

tional presence.

amount of business conducted by mail across state

lines. At the same time modern transportation and

communication have made it much less burdensome

for a party sued to defend himself in a State where

he engages in economic activity.

Id. at 222-223,

This Court’s decision in Hanson v. Denckla, 357 U.S. 235

(1958) contains language which buttresses this discernible

trend of State expansion of its right to adjudicate disputes

involving its citizens within its own courts:

As technological progress has increased the flow of

commerce between the States, the need for jurisdic-

tion over non-residents has undergone a similar in-

crease. At the same time, progress in communications

and transportation has made the defense of a suit

in a foreign tribunal less burdensome... .

Id. at 250.

However, the foregoing observations of this Court have

always been made in controversies involving interstate

federalism between American citizens of different States

and not in any case requiring an alien defendant to be

hauled into an American forum, across an ocean, to defend

itself. Assuming arguendo than an alien is not present in

the United States by reason of “doing business,” there has

been no direct voice by the Supreme Court on how to

balance the components of due process where the alien

defendant is required to cross an ocean to defend itself in

an American forum. The Seventh Cireuit, in weighing the

components of due process, has ignored the eritical distine-

tion between litigation involving citizens of different states

and litigation between an American citizen and an alien

domiciled to a different continent.

Accordingly, to permit the Seventh Cireuit’s decision to

stand in the face of this Court’s concern for the burdens

imposed upon a non-resident domestie corporation required

to litigate in a distant or inconvenient forum, World-Wide

Volkswagen Corp. v. Woodson, 444 U.S. 286, 62 L.Ed 2d

490 (1980), shall result in manifest injustice to aliens who,

like petitioner Wolff, are performing commercially in a

foreign country for an American citizen. It becomes im-

possible for that alien to predict or understand, with reason-

able assurance, when and where its conduct will result in

causing it to litigate in an American forum by reason of a

lesser measure of due process available to it under the

United States Constitution.

In Matters of International Commerce The Seventh

Circuit’s Due Process Analysis Is In Conflict With The

Second Circuit’s Cautious Analysis Test.

A reading of the Seventh Cireuit’s opinion below leads

one to conclude that American citizens who trade in foreign

-—non-United States—securities or commodities markets

may successfully assert, by virtue of a State Long Arm

Statute, in personam jurisdiction over the alien broker

should a dispute involving the foreign trade arise.

The Seventh Cireuit’s decision has erroneously permitted

the amalgamation and tacking of insufficient jurisdictional

contacts so as to create a purported compound of constitu-

tional sufficiency. This Court has never suggested, as the

Seventh Circuit has done, that the distinet coneepts of juris-

dictional presence of “doing business” and a “transaction

of business” may be comingled or amalgamated.

Moreover, the decision has repealed by implication the

statutory requirement that the cause of action arise from

the alien’s acts in the forum, Ill Rev. Stat., Ch. 110 § 17,

when the Court included in its “transaction of business”

analysis activities wholly unrelated to and independent of

Neiman’s trading in London silver unique to his own invest-

ment strategy. Subsection (3) of the Illinois statute, limits

jurisdictionally relevant contacts to those out of which

plaintiff’s claims arise, Chicago Silver Exchange v. United

Refinery, 394 F. Supp. 1332 (N.D. Ill, 1975) and is essential

to the constitutional assertion of jurisdiction over non-

resident defendants who do not engage in a continuous and

systematic course in business in Illinois, i.e., who are not

“doing business” in Illinois. The “arising from” language

common to State Long Arm Statutes, is to insure that there

is a close relationship between a non-resident’s jurisdic-

tional activities and the cause of action against which he

must defend. Xedit Corp. v. Harvel Industries Fidelipac,

456 F. Supp. 725 (8.D.N.Y. 1978).

By amalgamating the contracts of petitioner with Illinois

as they involved unrelated persons and independent trans-

actions of one year earlier (App. A9), together with the

single contact of the two hour luncheon involving Neiman’s

claim, the Court of Appeals has rejected the heretofore

unquestionable rule, embraced by other Circuits, that a

non-resident defendant’s isolated and sporadic transactions

in the forum are jurisdictionally insufficient unless they

are the very transactions out of which plaintiff’s claims

arise. Charia v. Cigarette Racing Team, Inc., 583 F.2d 184,

189 (5th Cir. 1978); Long v. Victor Products Corporation,

297 F.2d 577 (8th Cir. 1961); Tommills Brokerage Co. v.

Loeb, Rhoedes & Co., 411 F.2d 764 (7th Cir. 1969).

The suggested premise of the Seventh Cireuit’s decision

is in direct conflict with the analysis provided by Judge

Henry Friendly writing for the Second Circuit in Bersch

v. Drexel Firestone, Inc., 519 F.2d 974 (2d Cir.) cert. denied,

423 U.S. 1018 (1975).

In Bersch, the issue before the Second Cireuit was

whether Americans trading in Canadian securities on the

Canadian Securities Market may constitutionally assert in

personam jurisdiction over the Canadian broker when liti-

gating a dispute concerning the foreign securities in an

American forum. The operative facts revealed that the

Canadian broker visited New York investment houses four

or five times “in an apparent attempt to drum up trade”

and had two meetings in New York at which, among other

things, the subject of the Canadian securities underwriting

[IOS offering] was discussed. Id. at 99 fn. 56).

The Bersch decision bears remarkable similarity to that

involving the petitioner and Neiman. The Canadian broker

attended two breakfast meetings in New York where one

of its partners met with the IOS chief attorney and one of

the principal architects of the IOS offering. The concept

of the securities offering was discussed, as was the capital

structure of the corporation dividend policy, terms, and

timing of the issue with no detailed recommendations and

no final decisions being made. In rejecting in personam

jurisdiction premised upon these meetings, Judge Friendly

found the injuries to American citizens being too tenuous

to permit the wrongs as “arising from” the two breakfast

meetings. Supra at 999. On the issue whether the Canadian

broker was otherwise present in New York, the Court took

a cautious analysis view of international transactions and

opined:

[The Canadian broker’s] current business so far as

the United States is concerned, consists of buying

and selling for Americans securities traded on Cana-

dien markets and arranging with American brokers

for its Canadian customers to buy or sell securities

traded in American markets. This is not doing busi-

ness within the United States; if it were, every securi-

ties dealer of any significant size anywhere in the

world would be “doing buisn»ss” here. Supra at 998.

In any comparison between the Seventh Circuit decision

and that of the Second Circuit, the unfortunate result is

that the alien is thoroughly confused and unable to under-

stand the consequences of his acts with an American citizen

and when performing commercially on foreign soil will

subject him to suit in an American forum despite the wholly

foreign nature of the transaction.

Petitioner believes that in matters of international com-

merce, the cautious analysis view of the Second Circuit,

articulated in Leasco Data Processing Equipment Corp. v.

Mazwell, 468 F.2d 1326, 1341 (2d Cir. 1972) and relied on in

Bersch, supra, should prevail over the unprecedented Sev-

enth Circuit theory of amalgamating insuffiicent jurisdic-

tional contacts. The importance of this Court’s direct voice

and resolution of the issues raised is evidenced by the con-

tinued expansion of international commerce and manifest

conflict between Circuits resulting in a state of confusion for

aliens who perform commercially in their own nations for

American citizens. If the Seventh Cireuit’s decision is per-

mitted to stand, without benefit of this Court’s review, Nei-

man, an American citizen having paid neither a single dollar

nor a single British pound to anyone and having duped an

English company into trading 16,601,000 ounces of London

silver for Neiman’s non-existent partnership (App. A53-

A54, A79), shall have the power to compel that English

company into defending itself in an American court involv-

ing exclusively London transactions and substantive issues

turning on English law. This result, in the face of “tradi-

tional notions of fair play and substantial justice”, brings

to mind Judge Ely’s caricature of “Blind Justice with arms

of rubber” stretching half way around the world. Duple

Motor Bodies, Ltd. v. Hollingsworth, 417 F.2d 231, 236 (9th

Cir. 1969) (dissenting opinion).

In Matters of International Commerce The Burdens

Of Defending In A Distant Or Inconvenient Forum

Must Be Carefully Weighed As A Component Of Due

Process.

Although it appears that the Due Process Clause of the

Fourteenth Amendment to the United States Constitution,

U.S. Const. amend. XIV, protects “the defendant against

the burdens of litigating in a distant or inconvenient

forum.” World-Wide Volkswagen Corp. v. Woodson, 444

U.S. 286, 62 L.Ed.2d 490, 498 (1980), the Seventh Circuit

has voided that component of due process, at least when

weighing the burdens of defense imposed upon an alien.

In addressing the issue of the burden of defense imposed

upon Wolff, the Seventh Cireuit has opined that the in-

terest of the forum state and issue of convenience are

“secondary factors” (App. All n.8). Its conclusion that

Illinois has an interest in adjudicating this dispute because

Neiman is a citizen of Illindis is overly simplistic. Aside

from Neiman’s citizenship, this is not a case involving

dangerous instruments where [Illinois might have some

greater interest in protecting its citizens. Restatement

(Second of Conflict Laws § 37, Comment a (1971). Rather,

this is a case involving peculiarly London transactions,

governed by the Rules of the London Silver Market and

where all witnesses, other than plaintiff, are likely to be

English residents.

With respect to the factor of convenience, the Seventh

Circuit makes no attempt to discuss (1) choice of law; (2)

nature of the commercial transactions; (3) place of con-

templated performance; (4) residence of witnesses; (5)

location of relevant documents; and (6) whether Wolff

could have reasonably expected that it would be required

to defend itself in an American courtroom. Rather, the

Seventh Circuit shifts the burden of inconvenience to Nei-

man and states “[a]lthough it may be inconvenient for

defendants, an English corporation and citizen, to defend

in Illinois, it would also be inconvenient for plaintiff to sue

overseas.” (App. All n.8). This analysis, as it is designed

to do, entirely negates the inconvenience component of due

process when a defendant happens to be an alien. It is

respectfully submitted that this Court did not intend to

create components of due process that can be so easily

negated in the case of an alien as to be substantively non-

existent.

The record, upon Neiman’s own deposition testimony re-

veals that Neiman initiated the London transactions in-

volved at bar; the London transactions were governed by

the Rules of The London Silver Market and custom and

usage of London silver trading (App. A109, A115); the

transactions contemplated complete performance in Lon-

don, including storage of the metal, payment and delivery

to occur there; the transactions were financed by a Swiss

financier and payable in British sterling in London (App.

A77, A113, A120) ; Neiman’s demand for delivery and repre-

sentations of his ability to perform occurred in London

(App. A33, A61-62, A77, A81-A82); all witnesses for both

Neiman and Wolff are English residents (App. A65-A68, A73,

A83) ;** all relevant documents are located in London; and

11 Neiman must prove his alleged performance on his future obliga-

tions to deliver an equivalent quantity of silver to Wolff in London by

calling as a witness Mr. Edgar of Sharps, Pixley London, England,

who Neiman testified agreed to cover his future obligations to Wolff ;

Mr. Edgar's testimony shall also be relied on by Wolff.

Additionally, since Neiman denies that his London solicitors had

authority to represent to Wolff that Neiman would cover his future

obligation to Wolff (App. A67, A77), those London solicitors,

Coward Chance, are necessary witnesses for Wolff.

finally, Neiman should have contemplated that any dispute

arising from the silver transactions would be resolved in

London. Wolff, of course, believed the same. Under no

reasonable construction of “fair play and substantial jus-

tice” could Wolff have contemplated or foreseen that it

would have to stand trial in an Illinois courtroom defend-

ing a lawsuit concerning Neiman’s London silver transac-

tions for which he has not paid even a single dollar or

British pound. See Restatement (Second) of Conflict of

Laws § 24, Comment b (1971)."

Conclusion

If the Seventh Circuit’s decision is permitted to stand, it

effectively negates due process as available to aliens who

commercially perform in their own country for American

citizens. Moreover, as against the States’ ever expanding

effort to assert jurisdiction by virtue of Long Arm Statutes,

it would create a dual standard of due process, one em- |

braced by the Second Circuit consistent with this Court’s

teachings and one created by the Seventh Circuit amalga-

mating insufficient jurisdictional contacts into an artificial

compound of jurisdictional sufficiency. Justice, fairness and

the furtherance of international commerce commend that

this Court offer its direct voice on this issue of manifest

import to all aliens."

12 The Restatement, supra at § 24, comment b suggests use of juris-

dictional factors which measure what is “fair and just” and in “the

best interest of international and interstate systems.”

13Von Mehren & Trautman, Jurisdiction to Adjudicate: A Sug-

gested Analysis, 79 Harv.L.Rev. 1121, 1127 (1966) appropriately

points out that “in establishing bases for jurisdiction in the interna-

tional sense, a legal system cannot confine its analysis solely to its own

ideas of what is just, appropriate and convenient. To a degree it must

take into account the views of other communities concerned. Conduct

that is overly self-regarding with respect to the taking and exercising

jurisdiction can disturb the international order and produce political,

legal and economic reprisals,”

For the foregoing reasons, the petition for a writ of

certiorari should be granted.

Respectfully submitted,

Exuiot Paskorr

405 Lexington Avenue

New York, New York 10174

Tel: (212) 682-4567

Attorney of Record for Petitioner

Rudolf Wolff & Co., Ltd.

and

ALLAN E, Lapivus

115 South La Street

Chicago, Illinois 60603

Attorney for Petitioner

Rudolf Wolff & Co., Ltd.

Of Counsel:

TownLey & Uppikr

Vepper, Prick, KAurMAN

& KAMMHOLZ

Certificate of Service

I Heresy Certiry Txar on this [GPP ives of August, 1980,

three copies of the Petition For A Writ of Certiorari were

served, by first-class mail, postage pre-paid on:

Edward T. Joyce, Esq.

Attorney of Record for Respondent

David Neiman

77 West Washington Street

Chicago, Illinois 60602

William J. Harte, Esq.

Attorney for Respondent

David Neiman

111 West Washington Street

Suite 2025

Chicago, Illinois 60602

Theodore Low, Esq.

Attorney for Defendant

James Gourlay

11 South La Salle Street

Chicago, Illinois 60603

I Furruer Certiry pursuant to Rule 28.3 of this Court

Attorney of Recond for Petitioner

Rudolf Wolff & Co., Ltd.

Townley & Updike

405 Lexington Avenue

New York, New York 10174

Tel: (212) 682-4567

APPENDIX

A(i)

APPENDIX

TABLE OF CONTENTS

Documents PAGE

CE OE RI CE ois bison eect earese eeees Al

ee GS I a gt as ace ke sivneceke eer Al4

District Court Memo On Reconsideration ......... A23

Court of Appeals Judgment .................045- A26

Court of Appeals Order Denying Rehearing ....... A27

First Amended Complaint a ea ceeuuesene A28

Certain Pages of Neiman’s Deposition Transcript .. A39

Letter dated November 6, 1974 From William E.

Casselman (Stuart, Florida) to James Gourlay

CNL SIND bw bce dn cee dbo sobs Owe BED A76

Letter dated May 20, 1975 from Coward Chance

(London, England) to Radcliffes & Co., (London,

oP res Per eye wore ear A777

Neiman’s Answers to Certain of Wolff’s Interroga-

I kanes kbar Ne Lk Ae eee we Re Ne Lee we A78

Certain Pages of Casselman’s Deposition Transcript A84

Certain Pages of Klein’s Deposition Transcript .... A98

Certain Pages of Persky’s Deposition Transeript .. A101

Certain Pages of Richter’s Deposition Transcript .. A103

Rules of the London Silver Market ............... A108

Affidavit of Francis Holford dated October 16, 1975 A110

Affidavit of James Gourlay dated October 17,1975 .. A117

Affidavit of Moshe Shalteil dated August 25, 1976 .. A122

iu the

United States Court of Appeals

For the Seventh Cirrntt

Nos. 79-1622 and 79-1802

DAVID NEIMAN d/b/a LONDON GROUP (1974),

Plaintiff-A ppellant,

Vv.

RUDOLF Wo LFF & Co., LTp., JAMES GOURLAY and

INGLERAM INVESTMENTS, LTD.,

Defendant-A ppellees.

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 75-C-2531—Thomas R. McMillen, Jada.

ARGUED FEBRUARY 15, 1980—DECIDED APRIL 23, 1980

Before CUMMINGS, SPRECHER, and TONE, Circuit

Judges.

TONE, Circuit Judge. This is a diversity action assert-

ing claims arising out of silver transactions on the Lon-

don Silver Market. Jurisdiction over the person of the

defendants is asserted under the Illinois long-arm

statute, Ill. Rev. Stat., ch. 110, § 17, applicable by virtue

of Rule 4(e), Fed. R. Civ. P. B on depositions,

documents, and affidavits, the court dismissed the action

for lack of jurisdiction, holding that the defendants’ con-

tacts with Illinois were insufficient to subject them to

that state’s jurisdiction. We reverse that decision with

respect to two defendants.

Nos. 79-1622 & 79-1802

Plaintiff David Neiman is a citizen of Illinois. Defen-

dant Rudolf Wolff and Company Lid., is a United

Kingdom vg with its office in London. Defen-

dant James Gourlay is a British citizen.

Wolff is in the business of trading in metals, including

silver. It acts as broker and principal in transactions on

the London Silver Market. It has had no connection with

Illinois other than the events described below.

Gourlay, who lives and works in London, was formerly

employed by Wolff and later was engaged in the

business of advising and counseling with respect to

metal trading. For purposes of the present appeal. the

parties stipulate that Gourlay was acting as Wolffs

agent with respect to the events involved in this case.

Plaintiff withdrew its claim against a third defendant.

Ingleram Investments, Ltd., during oral argument in

this court.

Because the district court has decided the defendants’

motion or on the basis of written materials, Neiman

need only show a prima facie case for personal juris-

diction. O’Hare International Bank v. Hampton, 437

F.2d 1173, 1176 (7th Cir. 1971); Data Disc, Inc. v.

Systems Technology Associates Inc., 557 F.2d 1280, 1285

& nn.l & 2 (9th Cir. 1977). In addition, Neiman is

entitled not only to the acceptance of all undenied

factual assertions in his submissions, but also to the

resolution in his favor of all disputes about relevant

facts. United States Railway Equipment Co. v. Port

Huron & Detroit Railroad, 495 F.2d 1127, 1128 (7th Cir.

1974); O’Hare International Bank v. Hampton, supra,

437 F.2d at 1176.

Some time in late 1973 or early 1974 Gourlay visited

Chicago and called on William E. Casselman, a com-

modities broker, whom Gourlay /had known in a prior

business relationship. Casselman was with a Chicago

firm called ACLI. After Casselman had asked Gourlay,

whom he had not seen in a few years, what he was doing

and Gourlay had responded that he was “working on a

tax shelter program,” Gourlay went on to say, according

to Casselman’s deposition testimony, “[W]e have devised

Nos. 79-1622 & 79-1802

a method of getting an interest deduction that looks. . .

like it’s a feasible situation.” Gourlay explained the tax

shelter program to Casselman and two or three of the

latter’s business associates in the ACLI firm.’ The

device around which the program was built was

known as a “cash-and-carry” transaction and was later

ne lained by Gourlay in an affidavit filed in this case as

ollows:

A “cash-and-carry” transaction is a_ straddle in

which one purchases a quantity of silver for im-

mediate delivery; the purchase price is wholly

financed by a third party financier in a non-

recourse loan secured by the purchased silver and

repaid with the proceeds of the sale of that silver on

the due date of the loan; and, the buyer at the time

of the purchase immediately sells the silver for

delivery on the loan’s due date.

Casselman understood Gourlay to say that he con-

templated that the cash-and-carry transactions he had in

mind would be carried out through Wolff. According to

Casselman, Gourlay also said that he and an associate

had arranged financing for the transactions with I.

Rochester, a Swiss banking firm. Thereafter, Casselman

stated, he had several telephone conversations with

Gourlay about the tax shelter program in which Gourlay

supplied additional information.

During 1974 Casselman placed orders for various

customers that resulted in approximately twenty-five

1 Casselman testified that Gourlay also explained the tax

shelter to Marshall Persky and prenaiy fe oseph Klein at

ACLI during that visit. Both Persky and Klein denied discuss-

ing any business with Gourlay in Chicago at that time. Persky

did testify, however, that he learned of cash-and-carry silver

from Casselman about the time of Gourlay’s visit and that he

orders with Gourlay, presumably for customers, in late

1973, 1974, and 1975. Klein, who first met Gourlay in London

in 1969, also testified to having conducted six cash-and-carry

transactions at some point during this time period, but did not

say that he learned of the shelter through either Gourlay or

Casselman. As we have said, factual disputes are resolved in

favor of Neiman.

Nos. 79-1622 & 79-1802

cash-and-carry transactions. All were handled through

Gourlay with Wolff, some were financed by I Rochester,

and some were actively solicited by Casselman. Marshall

Sabee fe another ACLI broker to whom, according to

Casselman, Gourlay explained the cash-and-carry trans-

actions during his visit to Chicago, testified by way of

deposition that he entered into cash-and-carry transac-

tions through Gourlay in late 1973, 1974, and 1975.°

In the summer of 1974 David Neiman approached

Casselman to discuss the possibility of using silver

trading as a tax shelter. Casselman told Neiman about

the device Gourlay had worked out and answered many

questions asked by Neiman about that device. Cas-

selman also said that Gourlay was planning to be in

Chicago in the fall of 1974 and could meet with Neiman.

Neiman asked Casselman to arrange a meeting. Some

time thereafter, and before the luncheon meeting that

was ultimately held, Casselman gave Neiman a copy of

the form of loan agreement used for the I. Rochester

financing.

The luncheon meeting between Neiman, Gourlay, and

Casselman was arranged for October 14, 1974, during a

visit Gourlay was making to Chicago for other reasons.

The accounts of the meeting presented in the depositions

of Neiman and Casselman and the affidavit of Gourlay

vary significantly. Neiman testified that in addition to

asking many questions about the tax shelter device,

silver des the Wolff firm, and Gourlay’s rela-

tionship to Wolff, Neiman discussed with Gourlay

the I. Rochester loan agreement form and asked for two

specific changes on the form, which Gourlay said could

be made.? Neiman also testified that ne and Gourlay dis-

cussed Wolff's commission rate, Neiman asking that it

be reduced and Gourlay stating that it could not be

¢ As stated in note 1, Persky denied discussing any business

with Gourlay in Chicago at that time, but testified that he

learned of cash-and-carry silver from Casselman about the

time of Gourlay’s visit.

’ Neiman also testified that Casselman’s stated reason for

proposing to Neiman that_he meet with Gourlay was to work

out differences in the I. Rochester loan agreement form.

Nos. 79-1622 & 79-1802

reduced. Neiman concedes that no specific amounts of

silver purchases were discussed but asserts that he did

tell Gourlay that he would Py substantial orders if the

transactions could be handled as Gourlay had outlined.

Neiman also testified that after lunch, while he and

Gourlay were sharing a taxicab, he told Gourlay that if

the changes he wanted in the I. Rochester form of loan

agreement were made, Neiman “thought we had a very

large thing going.”

Gourlay’s version of the meeting, as stated in his af-

fidavit, was that he explained the cash-and-carry trans-

action and “pointed out to Neiman that its attractive-

ness would depend on his individual financial and

tax circumstances, and suggested that the situation

could only be evaluated by him and his tax and financial

advisers.” Gourlay states that no proposals were made

by any of the parties.

The version Casselman gave in his deposition was that

Neiman asked many questions about the tax shelter

device and silver trading. He could not recall any dis-

cussion about the loan agreement form or the nature of

the Wolff firm and its business. Casselman testified that

Gourlay did not solicit business from Neiman but mere-

ly answered his questions.

In November 1974 Neiman, in the name of “the Lon-

don Group,” placed four orders for cash-and-carry trans-

actions with Gourlay. The orders were a through

Casselman, who by then had moved to Florida. During

the next few months Neiman pes three more orders

directly with Gourlay on behalf of the London Group. As

a result of these orders seven cash-and-carry transac-

tions were concluded on the London Silver Market for

the purchase and sale for future delivery of a total of

16,601,000 ounces of silver. All the transactions were

handled by Wolff and financed by I. Rochester in the

manner Gourlay had described in his conversations with

Casselman and his associates and in his conversation of

October 14, 1974 with Casselman and Neiman. The

purchases were confirmed by written confirmation

notices sent by Wolff to Neiman. These are the transac-

tions out of which the claims in suit arise.

Nos. 79-1622 & 79-1802

Neiman has also presented evidence that Wolff,

through Gourlay, had other contacts with Illinois during

this period. Specifically, Ronald Richter testified by way

of deposition about two meetings with Gourlay in

Chicago, in October, 1974 and October, 1975. At these

two meetings, each of which lasted less than an hour,

Richter and Gourlay concluded cash-and-carry transac-

tions involving $49 million worth of silver and option

contracts for silver worth hundreds of millions of

dollars. The terms of the cash-and-carry transactions

had been worked out prior to the meeting, but Gourlay

wanted to meet Richter and persons who knew Richter

before concluding the transactions. In addition, smaller

details were settled and the terms were rhaps

clarified. Richter had only casually mentioned option

contracts over the sh igen prior to the meetings.

Gourlay then successfully solicited Richter’s business

during their meetings.

Neiman’s amended complaint alleges claims for

breach of contract against Wolff and Gourlay and an

alternative claim for breach of warranty of authority

against Gourlay. Also alleged is a claim against both

defendants for what is designated as “common law

fraud” but is later described as a conspiracy “to deprive

Neiman of the benefits of his contracts with Wolff.” We

consider first the issue of jurisdiction over the claims

sounding in contract.

Plaintiff's argument that, by reason of the events

described above, Gourlay and Wolff were doing business

in Illinois in 1974 in the traditional sense, requires little

discussion. Mere occasional solicitation does not subject

a defendant to the state's jurisdiction generally, 7.¢., as

to claims not arising from the solicitation. Lindley v. St.

Louis-San Francisco Ry., 407 F.2d 639, 642-43 (7th Cir.

1968); Scheidt v. Young, 389 F.2d 58 (3d Cir. 1968); Long

v. Victor Products Corp., 297 F.2d 577 (8th Cir. 1961).

Nor do isolated, sporadic transactions with residents of

the forum state. See Charia v. Cigarette Racing Team.

Inc., 583 F.2d 184, 189 (5th Cir. 1978). Nor does the

Nos. 79-1622 & 79-1802

acceptance elsewhere of orders resulting from the

solicitation, which necessarily includes mailing confir-

mations into the state. See Bersch v. Drexel Firestone,

Inc., 519 F.2d 974, 998-99 (2d Cir.), cert. denied, 423 U.S.

1018 (1975). Accordingly, the assertion of personal

Faabe nesee over Gourlay and Wolff must rest on the II-

inois long-arm statute, § 17 of the Illinois Civil Practice

Act.

II.

We hold that personal jurisdiction exists with respect

to the contract claims under § 17(1Xa), which confers

jurisdiction over a cause of action arising from “(t]he

transaction of any business within this State.” First, the

Illinois courts have applied the quoted provision to

sustain jurisdiction in circumstances analogous to those

at bar. In Kropp Forge Co. v. Jawitz, 37 Ill. App. 2d 475,

186 N.E.2d 76 (1962), defendant, after extensive negotia-

tion by telephone, traveled to agents premises in

Illinois for a quick inspection of the machinery to be

sold. This was held sufficient for jurisdiction as “activity

in furtherance of’ the contract by the defendant in

Illinois.4 See also United Air Lines, Inc. v. Conductron

eRe 69 Ill. App. 3d 847, 26 II]. Dec. 344, 387 N.E.2d 1272

(1979). Compare Koplin v. Thomas, Haab & Botts, 73 Ill.

App. 2d 242, 219 N.E.2d 646 (1966) with Koplin v. Saul

Lerner Co., 52 Ill. App. 2d 97, 201 N.E.2d 763 (1964). In

fact, since §17(1Xa) reaches as far as federal due

process allows, its scope “is measured by federal

standards.” Fisons, Ltd. v. United States, 458 F.2d 1241,

1250 (7th Cir. 1972), cert. denied, 405 U.S. 1041 (1972);

Lakeside Bridge & Steel Co. v. Mountain State Construc-

tion Co., 597 F.2d 596, 598-99 (7th Cir. 1979), cert.

denied, 100 S. Ct. 1087 (1980).

In our opinion, the foregoing activities of Gourlay in

Illinois satisfy the due process requirement, as stated

in Hanson v. Denckla, 357 U.S. 235, 253 (1958), of

‘ This alternative holding is to be accorded precedential

—— See Woods v. Interstate Realty Co., 337 U.S. 535, 537

A8 Nos. 79-1622 & 79-1802

“some act by which the defendant purposefully avails

itself of the privilege of conducting activities within the

forum state, thus invoking the benefits and protections

of its laws.” See also World-Wide Volkswagen Corp. v.

Woodson, 100 S. Ct. 559, 567 (1980); Lakeside Bridge &

Steel Co. v. Mountain State Construction Co., supra. The

defendants here, unlike the defendant in Lakeside, 597

F.2d at 601, themselves conducted activities within the

forum state. Whether these activities make exercise of

personal jurisdiction reasonable is, therefore, the focus

of our inquiry.

If we credit Neiman’s version of the October 14, 1974

luncheon meeting with Casselman and Gourlay, as we

must for present purposes, that meeting was a signifi-

cant contact by the defendants with Illinois. Although

this conversation, even by Neiman’s own testimony, did

not constitute the entire dealings between the parties or

the entry into a completed contract, neither of these

results is necessary to satisfy the requirements of due

process. The conversation did constitute the bulk of the

parties’ negotiations about terms of the arrangement. A

defendant’s participation in the state in substantial

Peceeenety negotiations leading to the contract in issue

as been held a sufficient basis for long-arm _jurisdic-

tion, National Gas Appliance Corp. v. AB Electroluz,

270 F.2d 472 (7th Cir. 1959), cert. denied, 361 U.S. 959

(1960), even under New York’s long-arm statute, which

does not extend as far as due process allows, Liquid

Carriers Corp. v. American Marine Corp., 375 F.2d 951

(2d Cir. 1967). Although this luncheon meeting was not

as prolonged a negotiation as those in National Gas

Appliance and Liquid Carriers, a defendant’s oribig 8

tion in one or two brief meetings in the forum state has

been held sufficient for the exercise of personal jurisdic-

tion when significant negotiation of important terms of

the transaction occurs.’ Since, according to Neiman’s

® See Moser v. Boatman, 392 F. Supp. 270, 274 (E.D.N.Y.

1975) (personal jurisdiction existed where defendants, in two

short meetings in forum state, “were actively involved in at

least preliminary ... contractual negotiations in [forum

state] where agreement on at least a number of the essential

(Footnote continued on following page)

Nos. 79-1622 & 79-1802

version of the luncheon meeting, the discussion resulted

in agreement on important terms of the arrangement,

this contact with Illinois was very significant.

Even if we credit Gourlay’s version of the luncheon

meeting, his conduct amounted to circumspect solicita-

tion of business from Neiman. Gourlay, by his own ac-

count, conferred with Neiman at the October 14 meeting

about cash-and-carry silver transactions Neiman pro-

ed to make. Gourlay explained the transactions to

eiman with a view to interesting Neiman in engaging

in the transactions, although cautioning him to do so

only if they would suit Neiman’s tax and financial objec-

tives.

Whichever version we credit, when the luncheon

meeting is considered with Gourlay’s solicitation of

Casselman and other ACLI brokers in late 1973 or early

1974, Gourlay’s conduct in Illinois was sufficient to per-

mit the district court to exercise personal jurisdiction

over Gourlay and his principal, Wolff. Gourlay’s

statements to the brokers when he called on Casselman

at ACLI were plainly aimed at interesting them in

securing investors in silver transactions on the London

Silver Market from which he and Wolff would make a

or His statements to Neiman had the same purpose.

his purpose was achieved: numerous transactions were

entered into, among them the seven Neiman transac-

tions out of which the claims at bar arose. The efforts of

5 continued

terms was apparently reached.”); Mendelson v. Fleischmann,

386 F. nae 436 (S.D.N.Y. 1973); ECC Corp. v. Slater Elec.,

Inc., 336 F. Supp. 148 (E.D.N.Y. 1971). But see Viers vr.

Mounts, 466 F. Supp. 187, 191 (W.D. Va. 1979).

_ When a meeting in the forum state has been viewed as an

insignificant porfion of the negotiations concerning only minor

details of the agreement, however, it has been held not to be

sufficient to give a court personal jurisdiction over a defen-

dant. See National Spinning Co. v. Talent Network, Inc., 481

F. Supp. 1243 (S.D.N.Y. 1979); Luxury Air Service, Inc. v.

Cessna Aircraft Co., 78 F.R.D. 410 (N.D. Ga. 1978); Verner +.

ha Towing & Transp. Co., 258 F. Supp. 169 (S.D.N.Y.

Al10

Nos. 79-1622 & 79-1802

Gourlay to obtain orders through brokers in Illinois

from customers generally, and not merely from Neiman,

and the resulting orders placed by ‘brokers for

customers other than Neiman are relevant to the due

process issue under the Fe Court’s analysis in a

tort context in World-Wide Volkswagen, supra.* The

Neiman transactions were “not simply . . . isolated oc-

currence{s], but [arose] from the efforts of [Wolff] to

serve, directly or indirectly, the market for its product

in other States.” 100 S. Ct. at 567. Moreover, Neiman’s

orders themselves cannot be regarded as a casual, for-

tuitous result of Gourlay’s two trips to Illinois.?7 Neiman

6 See Hardy v. Pioneer Parachute Co., 531 F.2d 193, 195 (4th

Cir. 1976) (No unconstitutional burden is imposed on a

foreign corporation by requiring it to defend a suit in a forum

located in a state where it has advertised and sold a product

whose use gave rise to the cause of action.”): rg yet v. Jor-

dan Volkswagen, Inc., 428 F. Supp. 195 (W.D.N.C. 1977).

Perhaps Boing a bit further is Restatement (Second) of Conflict

of Laws § 36, Comment e (1971) (3 36 is provision for in-

ividual defendants parallel to § 49 fo

defendants, which is applicable here):

It is . . . reasonable that a state should exercise judicial

jurisdiction over a foreign [corporation] as to causes of

action arising from an act done . . . in the state for

pecuniary profit and having substantial consequences

there even though the act is an isolated act not con-

stituting the doing of business in the state.

See also Vencedor Mig. Co. v. ler Indus.. Inc., 557 F.2d

886, 891 (Ist Cir. 19 PAS te C.J.) (“After McGee [v. Inter-

national Life Ins. Co., 355 U.S. 220 aegelle it seems fair to say

that one who solicits in a state may be sued there if the trans-

action he has sought s sour.”); Sahatjian v. Woodlets, Inc..

466 F.Supp. 945 (D. Mass. 1979); cf. also Peebles v. Murray,

411 F.Supp. 1174, 1178 (D. Kan. 1976) (transaction of business

for purposes of long-arm statute occurs “when an individual is

within or enters this state in person or by agent and, through

dealing with another within the state, effectuates or attempts

to effectuate a purpose to improve his economic conditions and

satisfy his desires.”).

7 Thus, this case is unlike Aaye-Martin v. Brooks, 267 F.2d

394 (7th Cir.), cert. denied, 361 U.S. 832 (1959). See Scovill

7) hoe v. Dateline Elec. Co., 461 F.2d 897, 900 (7th Cir.

r nonresident corporate

All

Nos. 79-1622 & 79-1802

placed the orders through Gourlay with Wolff as a

result of Gourlay’s activities in Illinois. Those activities

were an important factor in the formation of the con-

tracts out of which plaintiff's contract claim arises.’ Ac-

cordingly, Gourlay’s activities in Illinois were substan-

tial enough and important enough to the subject matter

of the action to satisfy the minimum contacts require-

ment of due process.®

* The interest of the forum state and convenience, two fac-

tors not explicitly discussed in text, are often considered as

part of a due process minimum contacts analysis. See Af-

tanase _v. Economy Baler Co., 343 F.2d 187, 197 (8th Cir.

1965); Restatement (Second) of Conflict of Laws § 36, Comment

e (1971) (§ 36 is parallel to § 49, which is applicable here).

However, these have been viewed as secondary factors. Aaron

Ferer & Sons Co, v. Atlas Scrap Iron & Metal Co., 558 F.2d

450, 456 n.10 (8th Cir. 1977). In the case at bar the former,

which depends upon the relation of the plaintiff to the forum

state, favors the exercise of jurisdiction here since Neiman is

an Illinois resident. Although it may be inconvenient for

defendants, an English corporation and citizen, to defend in

Illinois, it_ would also be inconvenient for plaintiff to sue

overseas. Given defendants’ purposeful acts in Illinois, we do

not find any inconvenience to amount to a denial of due

process.

Similarly, even though the fact that forum state law is to

govern a contract is often viewed as a factor favoring personal

Jurisdiction, we do not find that the fact that these sales were,

according to the conditions printed on the reverse side of the

confirmation notices, apparently to be governed by the rules

and regulations of the London Silver Market requires us to

deny personal! jurisdiction.

% See Scovill Mfy. Co. v. Dateline Elec. Co., 461 F.2d 897 (7th

Cir. 1972) (in contract action, personal jurisdiction existed

over defendant-seller. where defendant started attending

semiannual] trade show in.:forum state in 1967, where dis-

cussions on sale began at July 1968 show, where negotiations

elsewhere completed the contract, and where further dis-

cussions about details of production occurred at January 1969

and July 1969 trade shows). See alsv Bastille Properties, Inc.

v. Hometels of America, Inc., 476 F. Supp. 175, 176-77

(S.D.N.Y. 1979); American Contract ate Ine. v. Cliff-

side, Inc., 458 F.Supp. 735 (S.D.N.Y. 1978); Xedit Corp. +.

Harvel Industries Corp., F'idelipac, 456 F. Supp. 725, 727-28

(Footnote continued on following page)

Al2

Nos. 79-1622 & 79-1802

Ill.

Plaintiff alternatively asserts a tort claim labeled as

common-law fraud but described as a conspiracy between

Gourlay and Wolff “to deprive Neiman of the benefits of

his contracts with Wolff.” Whether the tort claim is

treated as a fraud claim or as a redundant clai:» for in-

ducing breach of contract, no facts have been pleaded or

shown elsewhere to support the claim or jurisdiction

over it. The order of dismissal is affirmed with

to the tort claim, without prejudice to plaintiff's right to

seek to amend the pleadings to conform to the proof if

* continued

S.D.N.Y. 1978); Northwest Animal Hospital. Inc. r.

arnhardt, 444 F. Supp. 10 (W.D. Okla. 1977). Fieldcrest

Mills, Inc. v. Mohasco Corp., 442 F.Supp. 424 (M.D.N.C.

1977); Scott Paper Co. v. Scott's Liquid Gold, Inc,, 374 F.Supp.

~~ (D. Del. 1974); H.K. Corp. v. Lauter, 336 F.Supp. 79 (ND.

37a. bs

This case is distinguishable from Bersch vr. Drerel Firestone.

Inc., 519 F.2d 974, 999-1000 (2d Cir.), cert. denied, 423 U.S.

1018 (1975). The main difference between Bersch and the case

at bar is that Neiman’s orders were the purposeful objective

of both Gourlay’s earlier visit to Casselman and his lu :cheon

meeting with Neiman. In Bersch, no connection was shown

between the earlier solicitation trip and the later grant of the

IOS Canadian underwriting to Crang. Also, at least the first

breakfast meeting was not set with the IOS underwriting in

mind. In addition, the New York long-arm statute, unlike that

of Illinois, does not reach to the full extent permitted by con-

stitutional due process. Compare Longines-Wittnauer Watch

Co. v. Barnes & Reinecke, Inc., 15 N.Y.2d 443, 261 N.Y.S.2¢ 8,

209 N.E.2d 68 (1965). cert. denied, 382 U.S. 905 (1966) with

Braband v. Beech Aircraft Corp., 72 Ill.2d 548, 557, 21 Ill.

Dec. 888, 892, 382 N.E.2d 252, 256 (1978). cert. denied. 442

U.S. 928 (1979) (quoting Nelson vr. Miller, 11 Ill. 2d 378. 389.

143 N.E.2d 673, 679 (1957)).

Defendants also urge that we follow Wessel Co. rv. Yofier &

Beitman Management Corp., 547 F.Supp. 939. 941 (N.D. TIL.

1978), and find that the facts here constitute not “the transac-

tion of business in Illinois {out the transaction of business

with an Illinois |[resident).” Wessel Co. is clearly dis-

er, eee however, since the only contacts defendant had

with Illinois were interstate phone calls and mail concerning

the transaction at issue.

Al3

Nos. 79-1622 & 79-1802

evidence adduced later shows the existence of a claim in

tort as to which defendants are subject to Illinois long-

arm jurisdiction.

The judgment is affirmed with respect to the tort

claim and reversed with respect to claims sounding in

contract as to defendants Gourlay and Wolff, and the

case is remanded for further proceedings consistent with

this opinion. The judgment is affirmed as to defendant

Ingleram. Plaintiff shall recover one-half of its costs

against Gourlay and Wolff. Ingleram shall recover its

costs against plaintiff.

AFFIRMED IN PART; REVERSED AND REMANDED IN PART.

A true Copy:

Teste:

Clerk of the United States Court of

Appeals for the Seventh Circuit

USCA 4512—Midwest Law Printing Co., Inc., Chicago—4-23-x0—350

Al4

District Court Opinion

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

DAVID NEIMAN d/b/a

LONDON GROUP (1974), °

Plaintiff,

No. 75 C 2531

Vv.

RUDOLF WOLFF & CO., LTD.,

an English Corporation;

INGLERMAN INVESTMENTS,

LTD., an English

Corporation; and JAMES

GOURLAY,

tl i

Defendants.

' MEMORANDUM OPINION AND ORDER

This matter is before the Court on

defendant Rudolf Wolff & Co., Ltd.'s

("Wolff") Motion to Dismiss pursuant to

Rule 12(b) (2), Federal Rules of Civil

Procedure. Jurisdiction is invoked pur-

suant to 28 U.S.C. §§1331 and 1391.

Al5

DISTRICT COURT OPINION

Plaintiff is a citizen and resident

of the United States and the State of

Illinois. Defendant Wolff is a corpora-

tion incorporated under the laws of the

United Kingdom, and is a resident of

London, England, and the State of New

York. Defendant acts as a broker and

principal in London metal trading.

Plaintiff seeks damages for defen-

dant's alleged nonperformance of certain

London silver bullion contracts and for

common law fraud. Plaintiff contends that

many of the activities giving rise to his

claim took place in Illinois. Plaintiff

seeks to assert personal jurisdiction

over defendant under the Illinois long

arm statute, Ill. Rev. Stat. ch. 110,

§17.

Al6

DISTRICT COURT OPINION

Defendant asserts that all meaning-

ful contacts concerning the transaction

in question occurred in London and that

it transacted no business in Illinois

sufficient to satisfy the "minimum con-

tacts" test set forth in International

Shoe Co. v. State of Washington, 326 U.S.

310 (1945), and Hanson v. Denckla, 357

U.S. 235 (1958). Defendant therefore

moves to dismiss pursuant to Rule 12(b)

(2), asserting the lack of personal jur-

isdiction.

In order for long-arm jurisdiction

to exist the foreign defendant must have

voluntarily performed some act by which

it intentionally availed itself of the

privilege of conducting activities within

Illinois or by which it may be said to

have invoked the benefits and protection

Al7

DISTRICT COURT OPINION

of Illinois law. Defendant must have

"done business" here to such an extent

that it would be equitable to require

it to defend in this state. See,

E. Walton & Co., Inc. v. Interastra, S.A.,

67 F.R.D. 410, 411 (N.D. Ill. 1975).

There is no set formula or rule of

thumb for determining whether there are

sufficient minimum contacts short of

ascertaining what is fair and reasonable

in the circumstances of a particular case.

Hutter Northern Trust v. Door County

Chamber of Commerce, 403 F.2d 481 (7th

Cir. 1968). Some of the aspects courts

have considered when determining the pre-

sence or lack of minimum contacts are

whether defendant has offices or does

business in the state, solicits clients,

has a telephone listing, or sends mail or

Al18

DISTRICT COURT OPINION

makes telephone calls into the state.

Defendant contends it is not auth-

orized to do business in Illinois, has

no offices in Illinois, does not adver-

tise or solicit clients in Illinois,

and has no telephone listing in the state.

Defendant supports these statements with

the affidavit of its Secretary, Francis

Holford. Defendant admits for purposes

of this motion that a second defendant,

James Gourlay, purported to be defendant

Wolff's agent. Defendant Wolff contends

the fact that trading in London silver

was “generally discussed" by Gourlay and

plaintiff at a Chicago luncheon does not

cure the jurisdictional deficiency.

Plaintiff counters that Gourlay

"negotiated every aspect of the trades

which are the subject of this litigation,"

Al9

DISTRICT COURT OPINION

at the luncheon and that those actions

constituted solicitation of business

in Illinois. Plaintiff supports this

allegation with his own deposition and

affidavit, relying in particular on his

statement that he was told by a broker

for a member company of the Chicago

Board of Trade that one of the purposes

of Gourlay's visit to Chicago was to

discuss changes plaintiff wished to make

in certain standard documents presented

to plaintiff by this broker.

Both parties rely on plaintiff's

deposition to support their character-

ization of the discussion during the

October, 1974 luncheon. Thus, the Court

is faced with a dispute as to the inter-

pretation of undisputed statements.

A20

DISTRICT COURT OPINION

Assuming arguendo that preliminary

negotiations occurred at «he luncheon,

the Court must also decide whether those

negotiations were "substantial." See

Lehigh Valley Industries, Inc. v.

Birenbaum, 527 F.2d 87, 91 (2d Cir. 1975).

The Court finds that plaintiff's

testimony concerning the luncheon does

not clearly establish that a "lengthy

negotiating session" occurred. The

overall picture of the luncheon presented

by plaintiff's own deposition is not

sufficient to establish substantial

negotiations by which defendant invoked

the benefit and protection of Illinois

law. Moreover, plaintiff did not state

in his deposition that the meeting was

Gourlay's sole purpose for being in

Illinois.

A21

DISTRICT COURT OPINION

Plaintiff further argues that even

if jurisdiction in the case must be

gleaned from letters, telegrams and phone

calls there are sufficient contacts to

confer jurisdiction without offending

traditional notions of fair play and sub-

stantial justice inherent in due process.

For purposes of this argument this Court

disregards all communications initiated

by plaintiff from Illinois. It is the

acts of defendant which are relevant, not

the unilateral actions of plaintiff.

See Rosenthal v. Dodick, 365 F. Supp.

847, 850 (N.D. Ill. 1973). Defendaiit's

only communications to this state were

confirmations of executed transactions

which defendant sent to Illinois, and a

telex cable from defendant.

A22

DISTRICT COURT OPINION

Since the gravamen of plaintiff's

Complaint is that defendant failed to

deliver silver bullion to plaintiff in

London, this Court finds that the con-

tacts asserted above do not sufficiently

show that defendant invoked the benefit

and protection of Illinois law.

CONCLUSION

Accordingly, the Motion to Dismiss of

defendant Rudolf Wolff & Co., Ltd., is here-

by granted.

ENTER:

Alfred Y. Kirkland,

Judge

Dated: March 16, 1978

A23

District Court Opinion On Reconsideration

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

Coe, ye ee

§ C 2531

David Neiman v. Rudolf Wolff

et al. April 20, 1979

Plaintiff's Motion for Reconsideration

is denied.

Plaintiff has presented no new evi-

dence sufficient to change this Court's

opinion of March 16, 1978 that defendant

Wolff is not doing business in Illinois.

Defendant is not authorized to do business

in Illinois, and plaintiff's evidence fails

to disclose any continuous and systematic

business activity in Illinois by defendant.

Although the depositions submitted by

plaintiff show that a large volume of

business was transacted between Illinois

A24

DISTRICT COURT OPINION ON RECONSIDERATION

residents and defendant, they do not

establish that defendant had systematic

contacts with this state as a result of

that business. Rather, the depositions

indicate that all but one of the Illinois

residents solicited defendant to be their

executing broker for London commodities

transactions.

Plaintiff also has failed to estab-

lish that his cause of action arose out

of the transaction of business in Illinois

by defendant. See Ill. Rev. Stat. Ch.

110 §17(1) (a). The fact that plaintiff

asked a "jillion questions" of defendant

at.a luncheon in Illinois does not change

this Court's earlier determination that

substantial negotiations did not occur at

that luncheon, and that the luncheon did

not amount to an adequate jurisdictional

contact by defendant.

DISTRICT COURT OPINION on RECONSIDERATION

Finally, plaintiff's argument that

defendant committed a tort in Illinois

simply because an injury to plaintiffs

"pocketbook" occurred in Illinois is

without merit. Even assuming for pur-

poses of this motion that plaintiff's

alleged injury was caused by defendant's

activity, the situs of injury alone is

not in this case a sufficient minimum

contact by defendant to subject defendant

to this Court's jurisdiction.

Accordingly, plaintiff's Motion for

Reconsideration is denied.

A26

JUDGMENT OF COURT OF APPEALS

Opinion by Judge Tone

Untied States Court of Appeals »°

FOR THE SEVENTH CIRCUIT

Chicago, Illinois 60604

April 23, 19 80

Before

Hon. WALTER J. CUMMINGS, Circuit Judge

Hon. ROBERT A. SPRECHER, Circuit Judge

Hon. PHILIP W. TONE, Circuit Judge

DAVID NEIMAN d/b/a LONDON GROUP (1974),

Plaintiff-Appellant,

Appeal from the

Nos. 79-1622 and 79-1802 Unload Grane

RUDOLF WOLFF & CO., LTD., JAMES GOURLAY and District Court

INGLERAM INVESTMENTS, LTD., for the Northern

Defendants-Appellees. | District of 11 lino

Eastern Di

No. 75-C-253]

Thomas R. McMillen

This cause came on to be heard on the transcript of the record from the

United States District Court for the Northern District o!

I}linois , Eastern Division, and was argued by counsel

On consideration whereof, it is ordered and adjudged by this court tha’

the judgment of the said District Court in this cause appealed from be, anc

the same is hereby, AFFIRMED IN PART; REVERSED AND REMANDED IN PART, 17

accordance with the opinion of this court filed this date. Plaintiff sna?)

recover one-half of its costs against Gourlay and Wolff. Ingleram shal!

recover its costs against plaintiff.

A27

ORDER DENYING REHEARING

Anited States Court of Appeals

For the Seventh Circuit

Chicago, Illinois 60604

May 22 | y9_80,

Before

Hon. WALTER J. CUMMINGS, Circuit Judge

Hon. ROBERT A. SPRECHER, Circuit Judge *

Hon.

DAVID NEIMAN, d/b/a/ LONDON GROUP

(1974),

Plaintiff-Appellant,

Nos. 79-1622, 79-1802 vs. ,

RUDOLF WOLFF & CO., LTD, JAMES GOURLAY

and INGLERAM INVESTMENTS, LTD.,

Defendants-Appellees. |

) Appeal from the United

States District Court

for the Northern Dis-

trict of Illinois,

Eastern Division.

No. 75-C-2531

Thomas R. McMillen, Judge.

On consideration of the petition for rehearing and sugeges-

tion for rehearing en banc filed in the above-entitled cause by

defendant-appellee Rudolf Wolff & Co., Ltd., no judge in active

service has requested a vote thereon, and all of the judges on

the original panel* have voted to deny a rehearing. Accordingly,

IT IS ORDERED that the aforesaid petition for rehearing be,

and the same is hereby, DENIED.

* The panel which decided the appeal consisted <* Judges

Cummings, Sprecher and Tone. The petition for rehearing has

been considered and acted upon by the judges remaining on the

panel after April 30, 1980, the effective date of Judge Tone's

resignation.

OP-mae——t8 18 Fe-1ee 1168

BURKE & BURKE, DAI'E'.S. Lf! TON & REI

DOCKE rcv

A28

FIRST AMENDED COMPLAINT HED | RECEVED7 SENT cy «Ui.d (Ma

iu fae Ok. ccssnncigeiecnile

IN THE UNITED STATES DISTRICT COUR r) a

FOR THE NORTHERN DISTRICT OF ILLINORATE— INITIALS ...4

EASTERN DIVISION

DAVID NEIMAN d/b/a

LONDON GROUP (1974),

Plaintiff,

vs. No. 75 C 2531

RUDOLF. WOLFF & CO., LTD.,

an English corporation;

INGLERMAN INVESTMANTS,

LTD., an English

corporation; and JAMES

GOURLAY,

ee ee ee ee ee ee ee et ee ee ee ee ee ee

Defendants.

FIRST AMENDED COMPLAINT

Plaintiff, DAVID NEIMAN d/b/a LONDON GROUP (1974)

("Neiman"), by his counsel, complains of defendants as

follows:

FIRST CLAIM FOR RELIEF

Jurisdiction

1. This is a complaint for breach of contract and

for common law fraud. This Court has jurisdiction pursuant

to 28 U.S.C. §§1331 and 1391. The matter in controversy

exceeds, exclusive of interest and costs, the sum of ten

thousand dollars. Many of the material acts giving rise to

the various claims for relief took place in the Northern

District of Illinois, Eastern Division.

A29

FIRST AMENDED COMPLAINT

Parties

2. Plaintiff, David Neiman d/b/a London Group

(1974), is a citizen and resident of the United States,

the State of Illinois and the City of Chicago.

3. Defendant, Rudolf Wolff & Co., Ltd. ("Wolff"),

is a corporation incorporated under the laws of the United

Kingdom, and is a resident of London, England, and of the

State of New York. Wolff is a broker engaged in trading

on the London Silver Market and acts as a principal in the

purchase and/or sale of silver on the London Silver Market.

4. On information and belief, defendant,

Inglerman Investments, Ltd. ("“Inglerman"), is a corporation

incorporated under the laws of the United Kingdom and is

a resident of London, England.

5. Defendant, James Gourlay ("Gourlay"), is a

citizen of unknown nationality, and is a resident, on

information and belief, of London, England. Gourlay is

now or was from November, 1974, through July 31, 1975,

a shareholder, agent, representative, employee of, or

affiliated with, both Wolff and Inglerman.

Facts

6. On or about August or September of 1974, Neiman

asked William Casselman ("Casselman"), a broker for Stotler

é Company, a large trading and clearing member of the

Chicago Board of Trade, for information about trading in

silver bullion, in which Mr. Casselman and Stotler & Company

A30

FIRST AMENDED COMPLAINT

were then actively engaged.

7. Casselman described to Neiman the mechanics of

the silver trading he was engaging in and stated that the

trading was accomplished through Wolff. Casselman further

stated that he had been an employee of Wolff in London and

he was in large part responsible for designing the

mechanics of this particular type of trade, which had

certain tax advantages in terms of interest deductions

and capital gains treatment on income for those engaging

in such trading.

8. On October 14, 1974, Neiman met with Casselman

and Gourlay in Chicago, Illinois. At the meeting, Casselman

introduced Gourlay as a principal of Wolff who would

supervise the implementation of Neiman's silver contracts.

- Thereupon, Neiman agreed to purchase and to sell silver

bullion through Wolff. At the meeting, it was agreed that

the trades were to be financed by I. Rochester (Finance)

Limited ("Rochester"), a United Kingdom corporation which

finances transactions in silver to customers of Wolff, for

a commercial bank in the United States and that Gourlay

would arrange for the financing.

9. The trades contemplated are known as “cash and

carry” hedge transactions. In theory, they contemplate the

purchase of a certain amount of silver bullion for immediate

delivery ("spot purchase") and the sale of the identical

amount of silver bullion for delivery at a future date,

usually six or more months hence, in anticipation that the

~ a

A31

FIRST AMENDED COMPLAINT

forward sale would qualify as a long-term capital gain to

the trader. The price at which the "forward" sale is made

is slightly higher than the purchase price ("spot price")

to cover carrying (i.e., storage, insurance and interest)

charges between the date of delivery and the date of sale.

10. With’ respect to the specific transactions between

Neiman and Wolff, the initial purchases were to be financed

100% by Rochester, which was to pay the money directly to

Wolff. Neiman would then owe Rochester the interest on

the loan. Wolff and Rochester agreed that the payment of

this interest could be financed by a bank in the United

States with which Wolff represented that Wolff and Rochester

already had previous arrangements. The interest was to be

loaned to Neiman, paid by Neiman to Rochester, through its

account at the Dy. er United States bank, and Neiman

was to be out-of-pocket for only that amount which he

borrowed from the United States bank for interest on its

loan made for the purpose of paying interest to Rochester.

The difference in the price of silver on the forward

contract would offset the cost of the interest to Neiman,

leaving Neiman out-of-pocket only for brokerage fees to

Wolff, which fees were to be computed by a stated percentage

of the interest to be paid.

ll. In theory, the above described hedge transaction

could have different results:

(a) If the transactions were consummated at

maturity, Neiman's sale and purchase of

A32

FIRST AMENDED COMPLAINT vs

the silver would result in an income

tax deduction for interest paid and an

offsetting capital gain. Thus, Neiman's

risk in the transaction was limited;

(b) If, for any reason, the “spread” between

the purchase price of the spot purchase and

the forward sale price narrowed for reasons

other than the passage of time, profits would

be realized because the spot price and the

cost of covering the forward contract

normally do not rise at the same rate; and

of the spot purchase and the forward sale

price for reasons other than the passace cf

time, then the contracts are allowed to run

to maturity with) the attendant assured re-

sults.

12. Pursuant to the agreement reached as alleged in

q8, and on or about November 22, 1974, November 26, 1974,

November 27, 1974, February 24, 1975 (confirming an order

@f January 27, 1975, for delivery on January 29, 1975), and

March 11, 1975, Neiman and Wolff entered into agreements in

writing for the purchase and sale of silver bullion,

written confirmations of which are attached hereto as

Exhibits A, B, C, D, E and F.

13. Each of the above purchases was purportedly

financed by Rochester.

14. During March, 1975, the “spread” between the

A33

FIRST AMENDED COMPLAINT

purchase price of the spot urchase and the sales price

narrowed and, Neiman, while in London, England, on other

business met with Gourlay on March 26, 1975, at Wolff's -

London offices to advise Gourlay that Wolff would shortly

be instructed to sell the spot silver owned by Neiman and

to follow Neiman's instructions with respect to covering

his forward contracts.

15. Although Neiman had the right to give the instructions

referred to in 414 to Wolff, Wolff refused to follow said

instructions and confirmed said refusal by letter on April 10, 1975.

16. Neiman continued to negotiate with Wolff ... an attempt

to work out an agreement whereby Wolff would perform its

Obligations and sell or permit Neiman to sell his spot silver

and permit him to provide covering contracts on his forward

contracts.

17. On April 11, 1975, Neiman again instructed wolff,

immediately to deliver his spot silver and to permit him to

provide cover on his forward contracts, either through Wolff

or another London brokerage firm...

18. Wolff refused to obey Neiman's instructions.

19. As a result of the failure of Wolff to follow

Neiman's instructions, Neiman has been damaged in an amount

in excess of $3,197,000 representing lost profits which

would have accrued to Neiman if Wolff had followed Neiman's

instructions, sold his spot purchases and permitted Neiman

A34

FIRST AMENDED COMPLAINT

to provide cover on his forward contracts. Neiman was

further damaged in that significant profits in excess

of $7,300,000 due to currency fluctuation of which he

was unable to take advantage were denied him because

Wolff failed to follow his instructions.

WHEREFORE, Neiman demands:

(a) That judgment be entered in his favor and

against Wolff in an amount equal to at least $10,497,000; and

(b) That judgment be entered in his favor and against

Wolff for the costs of this action, together with such other

and further relief as this Court deems just and equitable.

SECOND CLAIM FOR RELIEF

20. This Claim for Relief against Gourlay and

Inglerman is pleaded in the alternative for breach of

warranty of authority and for breach of contract.

21-40. Neiman repeats and realleges Paragraphs 1 through

19 of the First Claim for Relief as Paragraphs 21 through

40 of the Second Claim for Relief.

41. According to Wolff, Gourlay was, at all times

relevant hereto an employee, officer, and/or owner of

Inglerman and was not an employee, officer, or agent of Wolff.

42. On information and belief, according to wolff,

Gourlay and/or Inglerman exceeded their authority to

represent Wolff in dealing with Neiman.

43. Neither Gourlay nor Inglerman informed Neiman

that he and/or it only had limited authority to represent

A35

FIRST AMENDED COMPLAINT

Wolff and that in dealing with plaintiff, he and/or it

exceeded its authority.

44. If and to the extent Wolff is not liable to

Neiman because Wolff was not bound by the representations

and conduct of Gourlay and/or Inglerman, then Gourlay and/or

Inglerman are liable to plaintiff for breaching their

warranty of authority to Neiman that they had authority to

represent and bind Wolff.

WHEREFORE, Neiman demands :

(a) That judgment be entered in his favor and against

Gourlay and Inglerman in an amount equal to at least

$6,375,000; and

(b) That judgment be entered in his favor and against

Gourlay and Inglerman for the costs of this action, together

with such other and further relief as this Court deems just

and eguitable.

THIRD CLAIM FOR RELIEF

45. This claim for relief against Gourlay and

Wolff is based in the doctrine of apparent authority

and/or estoppel.

46-65. Neiman repeats and realleges Paragraphs 1 through

19 of the First Claim for Relief as Paragraphs 46 through 65

of the Third Claim for Relief.

66. Gourlay held himself out as a principal or

agent of Wolff and Wolff permitted Gourlay to so hold

himself out by providing Gourlay with office space at

A36

FIRST AMENDED COMPLAINT

Wolff's London office with no separate identification, but

seemingly part of Wolff's business, providing Wolff

stationery for Gourlay to use, allowing Gourlay to be

reached as a matter of course at Wolff's telephone and telex

number without in any way advising callers that Gourlay

was not a principal or agent of Wolff, and in other ways.

67. A reasonable person would have assumed Gourlay

was a principal or agent of Wolff based on the facts alleged

in paragraph 66, and Neiman did so assume and did rely on

the reputation of Wolff, and thus Wolff's principals and

agents.

68. As a result of Neiman's reliance on Wolff's

reputation, Neiman entered into the silver transactions

alleged herein with Wolff, through Gourlay.

69. Gourlay had apparent authority to act for

and on behalf of Wolff, and neither Wolff nor Gourlay

may now deny such authority.

70. By entering into the silver transactions

arranged by Gourlay for Neiman Wolff ratified Gourlay's

already sufficient apparent authority.

71. Gourlay and Wolff, additionally, must be, on

the facts alleged herein, estopped to deny that Gourlay was

a principal or agent of Wolff.

WHEREFORE, Neiman demands:

(a) That judgment be entered in his favor and against

Wolff and Gourlay in an amount equal to at least $10,497,000;

and

A37

FIRST AMENDED COMPLAINT

(b) That judgment be entered in his favor and

against Wolff and Gourlay for the costs of this action,

together with such other and further relief as this Court

deems just and equitable.

POURTH CLAIM FOR RELIEF

72. This claim for relief is for common law fraud.

73-96. Neiman repeats and realleges as Paragraphs 73

through 96 of the Fourth Claim for Relief Paragraphs 1

through 19 of the First Claim for Relief and Paragraphs

41 through 44 of the Second Claim for Relief.

97. Wolff, Gourlay and Ingierman wilfully and

maliciously and in bad faith conspired to deprive Neiman

of the benefits of his contracts with wolff.

| WHEREFORE, Neiman demands:

(a) That judgment be entered in Neiman's favor and

against Wolff, Gourlay and Inglerman, jointly and

severally, for compensatory damages in the amount of

$10,497,000 and for punitive damages in the amount of

$20,996,000; and against Wolff, Gourlay, and Inglerman,

jointly and severally, for the costs of this action,

A38

rhTRST AMENDED COMPLAINT

together with such other and further relief as this Court

may deem just and equitable.

JAMES P. CHAPMAN

33 North Dearborn Street

Chicago, Illinois 60602

263-0789

MARTIN M, PHILIPSBORN

1l South LaSalle Street

Chicago, Illinois 60603

236-7103

EDWARD T. JOYCE

MARTHA M. JENKINS

77 West Washington Street

Chicago, Illinois 60602

726+3360

OF COUNSEL:

JAMES P. CHAPMAN, LTD.

EDWARD T. JOYCE, LTD.

A39

DEPOSITION TRANSCRIPT - DAVID NEIMAN

IM THE UNITED STATES DISTRICT COURT

MORTHERN DISTRICT OF ILLINOIS

BASTERN DIVISION

DAVID NEIMAN, Going )

business as THE LONDON )

GROUP (1974), :

Plaintiff, )

)

-ve- ) Bo. 75 C 2531

)

RUDOLF WOLFF AND CO., LTD., )

)

Defendant.

The deposition of DAVID WEIMAN, called by

. the Defendant for examination, pursuant to Notice

and pursuant to the Rules of Civil Procedure for

the United States District Courts pertaining to the

taking of depositions, taken before GERALYN M. DUDZIK,

@ notary public within and for the County of Cook

and State of Illinois, at 115 South LaSalle Street,

3let Floor, Chicago, Illinois, on the 18th day of May,

A.D., 1977, at the hour of 10:00 o'clock A.M.

APPEARANCES:

MR. EDWARD T. JOYCL,

Appearing on behalf of the Plaintiff;

MESSRS. BURKE & BURKE, DANIELS, LEIGHTON 6 REID,

Bi: ‘MR. ELLIOT PASKOIT,

Appearing on behalf of the Defendant.

A40

DEP. TRANSCRIPT - DAVID NEIMAN 170 }

substance than Mr. David Neiman, en individual; and

eccordingly, their understanding of what the London

Group was prior to the engagement or execution of

these transactions is critical, and I think it's

quite relevant, and it is made more relevant by

correspondence and communications between the law firm

of Gottlieb & Schwartz and my client; and accordingly,

I request that these documents be produce2. I don't

think I can hold a meaningZul depesition with a partial

Ccocument production. |

MR. JOYCL: We will procuce ther but nur Sessuse

they are relevant, not pecause they are callec for; just

to let this duposition start and end; that's ell.

MR. PASKOTT: I appreciate your gratuity’.

BY MR. PASKOF:’:

i) Mr. Neiman, @o you have your Tedera. Incore

Tax Returns for tae years 1972, 1973, 1974, 1475 ani 1976

with you?

A No.

MA. JOYCL: Again, We'll object on the yrounds of

relevancy to those documents.

BY MR. PASKOFF:

Q Did you file Federal Income Tax Returns for the

years 1972 through and including 1976?

A4l1

DEP. TRANSCRIPT - DAVID NEIMAN .9s: 3

A No.

Q Did you file income tax returns with the

Stete of Illinois?

ah No.

¢] Did you file estimated earnings for the years

*72 through °76 with the Federal Government?

a No.

2 It is your testirony tocay for the years 1972

through anc inclucing 1376 you have not fliec an:

Fecéeral Income Tax Keturns or Stete?

A That's correct.

uv acm was che last vezcr that you filec an incone

tax return with the Federal Government?

MRK. JOYCE: I woule Cirect him not to ansxcr thet

Guestion because there is no gucstion anything he dic

before 1972 is relevant. I Con't think '7z, '73 as

relevent tc this lawsuit.

BY MR. PASKOT?T:

2 Have you ever filed a Federal Income Tax Return?

PA Yes.

Hiow old are you, Mr. Neiman?

Fifty-two.

Are you a high school graduate?

ae a oe

Ye3.

A42

DEP. TRANSCRIPT - DAVID NEIMAN [ 104)

a The contezplation that an entity would

be formed or might be formed.

Q Have you ccmpleted your answer?

A Yes.

4 Mr. Neinan, did you have any gross incozre

Guring the calendar year 1972?

MR. JOYCE: i object to tne question, anc <i

instruct the witness not to enswer. You have askec

that question specifically; with respect to ‘72, ‘73

and ‘74 for about two hours yesterdey. He has

answered the question.

BY MR. PASKOFP:

Q Mr. Neiman, Gid you have any gross incozre

for the year 1975?

A Would you define “Gross incorce"””

~ Did you have any income for the year 1975?

A Woulé you define “Income”?

Q I will define income as for thé purpose

of wy question as monies which are flowing to Davic

Neizcan as a result of some form of exploymzent.

A No.

. Did you have any income for the year 1976?

a No.

G During the year 1972, G@id you complete sa

A43

DEP. TRANSCRIPT - DAVID NEIMAN [123 ]

BY MR. PASKOPP:

Q Pine. “r. Neinan, G14 you ever neet

within the United States a person known as Janes

Gourlay?

7 I 614d.

Q How many times 414d you meet Mr. Gourlay

in the United States?

A Once for a very lonr, lonsr lunch.

What was the date of that meetinr?

The 14th of October.

What year?

1974.

Where was that meeting held?

I believe at Binyon's Restaurant.

oe. Se ee oe Ce GS

Where is Binyon's Restaurant?

A Between Jackson Boulevard -- what's the.

street just west?

MR. JOYCE: It's on Plymouth Court.

BY MR. PASKOFF:

Q Is that in Chicago, Tliinois?

In Chicaro.

‘ Who arranrced that meeting?

William Kessellman.

o >} & >}

What time did you first meet Mr. James Gourlay?

A44 [ 235)

DEP. TRANSCRIPT - DAVID NEIMAN

was also present?

A TI am not sure.

Q What ds your best recollection?

a I would say that that wos my best recollectior,

but I am not positive of it.

Q At your luncheon meetinn with Mr. Gourlay

and Mr. Kasselimon, who first spoke about the subject

of silver transactions?

A I don't recall.

Q Do you recall whether you asked Mr. Courlay

any questions reletive to tradins silver on the London

Bullion Market?

A Yes.

Q Do you recall what you asked hin?

A Yes. i cold him the standard form loan

agreenert was unacceptable, generally.

Q Who had brought up the subject of a standard

Zoan form agreement?

A ZI had been given a copy of onc.

Q By whom?

A By Mr. Kasselinan.

Q When were you given that docunent? Did it

precede --

~ Some time in July, Aurust, September.

A45 [ 153)

DEP. TRANSCRIPT - DAVID NEIMAN

What was your next communication with Mr,

Kassellman relative to silver transactions with

Rudolf Wolff? Was it face to face or over the tele.

phone. in writinr, or by letter?

A I'm not sure, but I believe we had lunch

@rain, Mr.Kassellman and myself; and I said, “Where

are the changes to the documents, the loan documents?’

And, he said, “Look, I worked for Wolff &

Company for many years, and they are 80 slow on their

paper work as to drive you crazy, but they are coo?

when thoy say they will do something, they will do it.

In terns of an actuol silver transaction,

I called Bill Kassellman someplace in Florida anc

placed one order one Gay and then some more another

day and some more another day. Then, as I still

was waiting for the document chanres because I ap.

getting the samo documents that I objected to, and

finally, Mr. Kassellman said, “Look, why don't you

call James directly." He said, "It's very difficult

to Geol with hin.” He said, “Wolff & Company just

is extremely slow on their papor work.”

Q Mr. Neiman, in your testimony, you used

the term "Documents”,and previously you testified

that there was a sinrle document.

A46

DEP, TRANSCRIPT - DAVID NEIMAN 36)

A I would assume that that is corroct..

Q So that your instructions to Mr. Kassclinan

to couse a $150,000 interest deduction anc seven sont’

lonr term goin was the initial silver transaction

ongared by David Neiman or the London Group to the

beot of your recollection?

, A No, it resulted in that, but I made my

own calculation, and said, "Put it within this frane-

work." Kasscllman did his own convertin-s.

Q Prior to this framework of $159,090 interest

Aeduction and seven month long term gain, you had

not entered into any other oilver transactions for

spot or future with Rudolf Wolff & Company?

JA No.

Q Do you recall whether “Mr. Kasscliman

provided you with a covy of any sarees or writin,

which he may have sent to Rudolf Wolff?

A Yes.

MR. PASKOPF: I want to ask you to mark this

Plaintiff's Exhibit No. 9, for identification,

(Document marked as requested.)

BY “RR, PASKOPY: |

Q fia Neiman, I show you a copy of a letter

Gated November 6, 1974 on the letterhead of Stotler 3

A47

DEP. TPANSCRIPT - DAVID NEIMAN |. l)se)

Company, Stewart National Bank Buildine, Stewart,

Plorics, from William ©. Kasseliman to Janes Qourlay

which says, “Dear Janes, For the London Oroup 1974,

care of David Weiman,”" with your adéress “Work our

@ £150,000 interest deduction and a seven month loner

term gain” -- will you please look at this documer:,

Mr. Neimar?

A Yeo. There is orly one exception to that.

It's adéresscc¢é to James Gourlaoy, Rudolf Welfl & Conpar,

q Well, I am sure the document will be pers

cof the record so that there in no probler how it's

accressec.

B Correct.

C So that docunent represents the firs: writte.

communication confirming your initial transactior.

with Rudolf Wolff & Company in Londor?

A No, sir.

q What does that represent?

A That represents instructions to Wolff &

Company to do something. That's no confirmation at

@ll. Thies is worthless as it sits by iteel!.

Q All right,,.Mr. Neiman, you did authorize

Mr. Kasseliman to so instruct Rudolf Wolff & Company

in London, is that correct?

A48

DEP. TRANSCRIPT - DAVID NEIMAN -f1se

A I did. I did.

Q Have you soen the handwritinc?

A I have.

Q Was that handwritinr on that document when

you received it?

A Yes.

Q Were you to reccive a commission for placingr

this business from Rudolf Voiff & Company?

h I thought of it but on advise of Counse:,

they said "Don't do it. Do not receive any commission

beceuse in the future it could prevent a conflict

of interest."

Q Mr. Neiman, I am askins you what your

arranzerment wo. or rather your instructions were

to Mr. Kasseliman at the tire that you advised hin

to communicate with Rudolf Wolff?

A That is correct.

Q When you ssy, “That is correct,” can you

tell me what those instructions were? Were your

instructions that you were to receive a three percert

conmission on the initial transaction?

A Correct.

Q When 614 you first advise either “r.

Kassellzan or someone else that you, David Noinman,

A49

DEP. TRANSCRIPT - DAVID NEIMAN [164 ]

Group 1974 would purchase 1,008,000 ounces of silver?

A Correct.

6 When was that determination made?

A In December, I believe.

q I ask you the same question with respect

to the purchase of 2,139,000 ounces of silver; did

you make that determination?

A The exact number of ounces?

c Yes, sir.

a Is that what yop have been asking me all

throurph here?

Q Yes, sir.

A Then I have to change the answers.

q Please do.

The exact amounts were determined by Wolff &

Company.

Q Based uvon what instruction and fron whom?

A On an approximate interest deduction for

the period involved.

Q Could you describe in detail what you dic

ané the method by which you issue instructions to

either Mr. Kassellman or Rudolf Wolff & Company

with respect to the transactions upon which your

complaint is premised?

jibe |

A50

DEP. TRANSCRIPT - DAVID NEIMAN

A To Mr. Kesseliman.

c Wos that instruction with respect to the

ultimate purchase or the purported purchese of

748,000 ounces of silver?

A Correct.

Q The next purchose scers to be one of 1,908,900»

Ounces of silver?

A Correct.

Q How was that information given to Rudolf

Wolff? Was it throurh Mr. Kassellman?

A Throurth Mr. Kasseliman.

Q The next purchase involves 2,002,135 ounces

of silver. Was thit throurh Mr. Kasselinsn’

A Correct.

Q The next purchase involves 1,060,352 ounce’

of silver?

A That was not the noxt purchase.

Q What was the next purchase?

A 10,666,000 ounces.

Q How was that information givon to Rudolf

Wolff & Company?

A By telephone.

Q Did you call Rudolf Wolff & Company?

A Correct.

A51l

DEP. TRANSCRIPT - DAVID NEIMAN [167 )

Where 61d you make that eall from?

I don't recall.

Was it from Chicaro, Tllinois?

It was from Chicaro.

Was it from your hone?

r DD > © F BO

Possibly. It could have been from ry hore

or from Mr. Ettlinrer's office.

G Prom that point on, did you then communicate

with Rudclf Wolff & Company directly by telephone?

B£ [Ps telephone and Tel-Ex.

Q Do you have copies of those Tel-Fx's that

you sent to them with you?

A Yes.

MR. JOYCE: They have been delivered to you.

THE WITNESS: There are only two more trans-

actions.

BY MR. PASKOPP:

q Mr. Neiman, would you show me the Tel-I'x's

which constitute the communications with Rudolf Wolff &

Company from among, the documents that you have produced?

A Let me see. The orders were given by telephore

Q So you are now telling me that you did not

issue instructions by Tel-Ex but only telephone,

instructions relative to the orders for spot purchssé

A52

DEP. TRANSCRIPT - DAVID NEIMAN [ 168 }

and future salic?

A Correct. There are only two more. It was

the 10,666,000 and the 1,365,000.

Q At the time you issued these instructions

or caused instructions to be issued to Rudolf Wollf? &

Company, were your purchases of silver and future

Solics of silver contigent upon anything?

A No, sir.

Q In your own mind, di¢ you feel odlicated

to complete those transactions with Rudolf Wolff &

Companys?

A wh, yes.

q At all times?

A At all tines.

Q When @id you Geternine that there would not

be an offerinr of limited partnership interests in

the London Oroup 1974?

A In March of 1975.

Q What caused you to make that deterrination?

A My evaluation that interest rates were poinrc

to fall and with the falling of the interest rates,

there would be a profit for which there was no purpese

in hevins any partners.

c Are you saying that when there is a profit

A53 { 173]

DEP. TRANSCRIPT - DAVID NEIMAN

Q Was Rudolf Wolff & Conpany, Ltd. ever

apprise of the fact that the limited partnership

wos not so organized?

A Wo, not to my knowledce.

MR. JOYCE: Iam foing to odfect somewhst be-

latedly to the last two questions because it's rether

Clear from the record that sone form of partnership

was ormanizec and dealt with Rudolf Wolff & Company.

MN. PASXOVFP: Your objection is noted, but

the witness' testimony is taken on its facc.

DY MR. PASYOFPP:

Q Mr. Neimen --

A May I add somethin; to that?

Q Mr. Neiman, I would appreciate it if you

would respond to py questions. You will have an

Opportunity to add anything you wish.

MR. JOYCE: Well, are you completing your answer?

THE WITNESS: TI am completing my answer.

MR. JOYCD: He's permitted to complete his

answer.

BY MR. PASKOFF:

Q You are completing, your answer to what

question?

A To your question whether or not an offerin"

A54

DEP. TRANSCRIPT - DAVID NEIMAN [174]

was wade.

Q That was not my question, but ro ahead

and conplete your answer.

A The offerinr was never -- an offerinr, as

I understand an offerinr under Rule 14f, wes never

made.

Q But Mr. Neinan, was it your understancirnr

in Decender of 1974 that the silver purchases an¢

silver future sales made by the London Groun 1574

with Rudolf Wolff or without obligation to either

the London Group or yourself?

A It was clearly --

“aR. JOYCE: What do you rean by “Obtifiratics *

MR. PASKOPP: That neither the Londen Crozur

nor Mr. Neiman was oblirated to conplete those

transactions.

MR. JOYCE: Okay, you can answe> the question.

THE WITNESS: Absolutely. I was under odliratior.

BY MR. PASKOTF:

Q Both with respect to the spot purchases

and the future sales?

A Correct.

Q Mr. Neiman, Gid you authorize Mr. Sernard

Zeisberr of Gottlieb & Schwartz to write the Rudolf

A55 »

DEP. TRANSCRIPT - DAVID NEIMAN {a7s ]

Yolff & Company Ltd. and state "You have silreacy

effectcd certain of the contemplated silver purchases

and silver future sales for the sccount of the

partnership without, however, obdliratine the partner-

ship or “ir. David YIcinan, the provosed general partner,

to conplete such transactions unless the partnership

43 orgenized and then only to the extent the vertner-

ship Praises capital an set forth above throush the

sale of Linites partnership interes<.”

BE I do not recall authorizinz hin.

Q Is there anyone else affilinted with the

London Group 1974 that may heve issued -- that you

know issued those instructions to Mir. Weisberr?

A No.

Q Your statenent that you do net recoll, does

that mean you have no recollection one way or the other

or your present recollection leads you to conclude

thet you 4id not authorize him to make that statenent?

A Well, I know I never would have written

that letter.

g Were you provided with a copy of that letter

by Mr. --

o Yes, I was.

Q -- Weisbe ”

A56

]

DEP. TRANSCRIPT - DAVID NEIMAN Lirg

Did you Protest to Nr. Veisberr rclative

to its contents?

A No,

Q Did you have any occision to Giscuss the

contents of that letter?

A No,

Q Were you cCiven a Copy of the letter of

December 16, 1974 approxinately aroun: that dete?

A Approxinately, yes.

MR. PASKOPP: would like to have the reporter

mari: as Plaintifrr's Exhibit No, 10, for identification.

® letter dateg December 16, 1974 consistinr of three

P3Ceo with the typewritten Birnature of Costises

& Schwartz by Bernard Weisber;..

(Document marked as resuestes,

BY MR. PASXOFP:

Q Mr. Neiman, I ask yOu to loo} sat Plaintirf¢'s

Exhibit No. 10 and tell ne whether this docurent

constitutes the Copy of the letter which you have

received from Mr. Bernard Weisbers?

- Yes.

& I ask you to look at Item 7 thereir.

A Yes.

o Tell me when was the first tire that you

A57

DEP. TRANSCRIPT - DAVID NEIMAN [177]

recall seein-~ this statenent.

A When I received a copy of the letter.

2 Did you discuss that statement with “Mr,

Weisberr?

A Ho, not thet I recall. Althoush, core to

think of it, I did. Come to think of St. 3 Ge.

I said "This 48 ridiculous."

Q dnen did you say that?

is e#nen I talxed to hir.

Q Cun you five me an approximate Gate?

A Some time in Decenbder.

3 Did he reply to your characterization?

4 ie paid, "Well, let's just --" he Baic,

“It's in there.”

Q Did you ever send any follow-up conmmuni-

cation to Rudolf wolff?

A No.

Q Mr. Neiman, I show you what I will ask

the court reporter to mark as- Plaintiff's Exhibit

Wo. 11 for identification which is a letter dated

Decomber 31, 1974 to Rudolf wolrr « Company Ltd.

by Bernard Weisberc.

Have you secn that letter before, sir?

(Record marked as requested.)

A58

DEP. TRANSCRIPT - DAVID NEIMAN [ 178)

TiS WITNESS: Yes, I have.

BY MR. PASZOTF:

9) Woe the Tllinois limited nartnershin

organized in 19757

A No, the limited partnership, azain, I ret

confuned. The limited partnershin that is referred

to in there -«-

A Would be under the terns of a 146,

Q It was not orranized?

h Wo.

MR. JOYCE: You ere asking specifically about

the partnership referred to in that letter’

MR. PASKOFFP: Absolutely correct.

MR. JOYCE: All right.

BY MR. PASKOP?:

Q Was Rudolf Wolff & Company ever advised

that the partnership as described in that letter

Gated Decenvder 31, 1974, was not organized?

MN. JOYCE: Reread ‘that question.

(Record read as requested.)

THE WITNESS: Yes.

A59

DEP. TRANSCRIPT - DAVID NEIMAN [179 }

BY MR. PASKOFP:

Q When was Rudolf wWolrr & Company so advised?

A For certain, when the suit was filed,

q Prior to the filing of the instant liti-

gation, do you recoll, you or anyone else advised

Rudolf Wolrf & Company that the partnership wos not

Organized as either set forth in the letter dated

December 16th or its follow-up, the letter dated

December 31, 1974?

a I am not sure.

~ During December of 1974, was 4t your intent

to raise a million dollars by sales of limited partner.

Ship interest in the London Group 19747

a Yes,

Q Correspondingly, was it your intent to pur-

chase approxipately $35 Million worth of silver, spot

Silver in the London market and concurrently etyle an

@qual amount of silver for future delivery approximately

seven months subsequent to the Gate of purchase?

A No, not necessarily,

q Did you authorize mr. Bernard Weisberg to

state in his letter dated December 16, 1974, "If the

partnership raisos less than ¢) Million through the

Sale of limited partnership interest, then the avount

A60

DEP. TRANSCRIPT - DAVID NEIMAN { 1eo )

of silver purchases and sales wil) be reduces pPro-

portionately.”

A I did not authorize that.

Q Did Mr. Weisberg dream this up?

MR. JOYCE: I object to the form of the question.

BY MR. PASKOPF:

Q Did you consult with Mr, Weisbergs relative

to the contents of this letter dated December 16th,

1974 before it was sent?

A I never sow the letter before it went out.

Q Mr, Neiman, when dia you first receive a

copy of the draft entitled "The comrodities atratery

Group, an Illinois linitea partnership."

A I don't recell. Some time, I believe, in

December of ‘74. I think there is a date up on the

top.

Q The date is 11/18/74,

ee Then it would be within a couple days of that.

u Mr. Neiman, what was the total amount of

Gollars raised by the entities known as the London

Group 1974 prior to the date of the filing of this

lawsuit?

MR. JOYCE: Which London Group are you referring to?

MAR. PASKOPP: Are there two different entities

A61

[ 182)

DEP. TRANSCRIPT - DAVID NEIMAN

of this lawsuit and also described as the London Group

1974?

MR. JOYCE: The Plaintiff?

MR. PASKOPF: The Plaintiff in this lawsuit.

THE WITNESS: It's not the London Group 1974.

MR. JOYCE: Just refer to it as the Plaintiff

and deal with it that way.

THE WITNESS: All right. The Plaintiff, I would

say, about $35,000. It wouldn't dare atternpt to raise

any more. I am glad that's all that was raisec..

MR. JOYCE: Mr. Neiman, there is no question

pending.

BY MR. PASKOFF:

Q Mr. Neiman, when dic you first decide --

strike that question.

Mr. Neiman, when dia you first request thet

Rudclf Wolff & Company would deliver to you the spot

silver that you purchased?

A I advised James Gourlaoy in March of 1975.

Q How was thet advice communicatec to hin?

Over the telephone?

A Pace to face.

Q Did you meet with him in London, Englan-?

A Yes. I hed «= let me ecentinue. I advises

A62

DEP. TRANSCRIPT - DAVID NEIMAN

[ 183]

bis that within a wery short period, we would want

to take delivery and cover our short position.

Q Will you describe or explain what you mean

by your “Short position"?

A Well, if you make @ sale of somethine

in a forward position, and you no longer have @ spot

position, you're short the forward position.

q Are you using the term forward to equate

the future obligation?

& Correct.

“ So that are you saying that once you no

longer have the immediate silver, you still have ar

obligation to produce the silver in the future?

A Absolutely, that is, in trade terms. I don't

think there is any contractual requirement, that is

just the way you do business.

Q Did you arrange for the satisfaction of

the indebtedness owed to I. Rochester finances on

the spot purchase?

AR. JOYCE: When?

THE WITNESS: Spot purchases.

AR. JOYCE: When?

THE WITNESS: Whet date?

BY AR. PASKOPP:

A63 [185 }

DEP. TRANSCRIPT - DAVID NEIMAN

MR. JOYCE: Again, I will odject to the form

of the question since you don't have ®& tise frase

fn it.

BY MR. PASKOFF:

Prior to the inetitution of this lawsuit.

Besides the market, seilf-providing?®

Yes, sir.

Yes, I aic.

With whom 416 you make that arrangement?

Sharps-Pixziey-

Is that the full name of the entity? .

Nc, that’s & pubsidiary of -- 1 forget the

Merchant Bank.

where is Sharps-Pixiey located?

In London.

with whom 616 you make those arrangexents?

I wade those arrangements sudject to the

approval of wolff. I believe the nane is Mr. Bagar.

Can you tell me approximately when you

mace those arrangenents, the approximate Gate?

Some time in June.

of what year?

1975.

Specificelly what arrangements 414 you make

[ise )

A64

DEP. TRANSCRIPT - DAVID NEIMAN

with Mr. Edgar?

a Specifically 1x @xzplained whet our Positions

were.

Did you provide bis with confirmations?

Ho, we just talked over the phone.

Were you in London at the time?

I was.

Who introducea you to Mr. Edgar?

> 3D >» © > DD

I don't recall.

Q Do you know whether Mr. Edgar hac @ pedal

like Sharpe-Pizley?

A No, but he was head of the Silver tracing

Gepartment.

Q Ie Sharps-Pizley & brokerage fire?

A Among other things, yes. They are dealers

end brokers.

G Could you relate to ne the subdstance of

your conversation with mr. Edger?

A ZI explained the long hassle that had been

g0ing on since April, and I saia, *y Want to elose

the positions out. 1 have the Confirmetions. Wil}

you handle it?r*

i] Are you, sir, are you referring to the Spot

positions er the future positions?

[188 )}

A65

DEP. TRANSCRIPT - DAVID NEIMAN

MR. JOYCE:

If he sold it on the short side,

they ove his money.

BY MR.

Mr. Neimen?

A That if wolff agreed,

the positions

What was the

PASKOFP:

arrangement with Sharps-Pixley,

they would take over

for wpe and handle it as brokers.

G Bo that Sharps-Pizley would then take over

the forward or short?

a And

. Did

a No.

~ bid

nanédle the spot sales.

Mr. Edgar confirm that arrangenent

you meet Mr. Edgar face to face tc

é Wo.

io} Was that the subdject of the single telephone

call?

b I think it was the sudject of two telephone

calls.

Gq and, there is nothing in writing relating

to this conversation with Mr.

A Be.

Edger et Sharpe-Pixley?

Mr. Eagar avere e? the amount of Britienr

A66

DEP. TRANSCRIPT - DAVID NEIMAN

Q Di4 you engare counsel in London to represent

you?

4 I did.

< Was that counsel known as Coward Chance?

a Correct.

MR. JOYCE: Mr. Neiman, make an audible response,

if you would’. You can't shake your head.

THE WITNESS: Yes.

BY MN. PASKOPP:

C Did you authorize your counsel to write tc

the attorneys for Rudolf Wolff in substance and state,

“Our clients will procure the immediate discharce of

the interest of I. Rochester (finance) Lt4. in these

positions by rerpayinre ell loans made by that company

at the arreed premium of one percent.”

a No, sir.

Q Did you authorice your attorney, Cowcrée

Chance, to write to the attorneys for Rudolf wWolf!,

“Pull coverage of all short positions totallin-~ 16,601,09°

Ounces will be provided to your cliient.”

A Yes.

Q I show you ea document which I will ask this

court reporter to mark ee Plaintiff's Fxhibit ‘io. 12.

I will esx you to read the exhibit.

A67 ees

DEP. TRANSCRIPT - DAVID NEIMAN

(Document marked as requested.)

THE WITNISS: The one percent they are visitas

to is on balance because they have the full record.

BY MR. PASKOPP:

Q Would you describe what you mean by that

statenent.

A Let's say you fo into a bank and the typical

practice on certain kinds of loans put a penalty to

the prepayment. The penalty is on a@ per annum basis

on the balance of the loan. You have been throursh

it many times yourself.

Q Did you see that letter before it was sent

our?

A No.

Q Did you authorize your attorney to sené

that letter?

A No.

: You can see that Coward Chance was encared

by you as your attorney in London?

A AdDsolutely.

Q Por the purpose of nerotiatinr your interest

with Rudolf Wolff & Coxpanv?

a Correct.

Q Is that correct, sir?

pa [193 ]

DEP. TRANSCRIPT - DAVID NEIMAN

with Gourlay, Coward Chance, the counsel for Rudolf

Wolff & Company, and the counsel for I. Rochester.

Q Did you mention to them the name Sharps-

Pixley at that meeting?

A No, I mean, if you are goinr, to give cover

and you are in the business --

Q I am just askinr you a simple questicn.

MR. JOYCE: He's giving you an answer.

Read back his answer.

(Record read as requeste?:.)

THE WITKESS: One could go to Bache or Merré::

Lynch or anybody and provide the cover.

BY MR. PASKOPP:

C Mr. Neiman, did you go to Bache or Merri::

Lynch to provide cover in these transactions”

A No, I just knew I could do it.

Q Did Rudolf Wolff & Company through their

attorneys ask for the identity of the source of your

covering the future transactions?

A No, not that I recall.

MR. PASKOFP: I'm goinr, to ask the reporter

to mark this as Plaintiff's Exhidit No. 13, for

Adentification, which is a letter dated the 12th

of June, 1975 from Radcliffes & Company to Messrs.

[as4

A69

DEP. TRANSCRIPT - DAVID NEIMAN

Coward Chance.

(Document marked as requested. )

THE WITNESS: Yes.

MR. JOYCE: I would like to look at that.

MR. PASKOPF: Mr. Joyce, the document that I

have given to Mr. Neiman bes come from the production

which you made yesterday.

MR. JOYCE: Okay.

MR. PASKOPF: What is the last pending question?

MR. JOYCE: There is none. You just handed him

the document.

MR. PASKOPP: May I see the document?

BY MR. PASKOFF:

Q Do you now recall whether Rudolf Wolff

through their attorneys requested of you through your

attorneys the identity of the source for the cover

on the future positions?

MR. JOYCE: Rudolf Wolff is not represented by

Radcliffes, are they?

MR. PASKOPF: Yes, they are.

THE WITNESS: Yes.

BY AR. PASKOFF:

Q Did you so inform Rudolf Wolff & Company

through its attorneys of the identity of the entity

wos [ass }

DEP. TRANSCRIPT = DAVID NEIMAN

who you hoped would provide the cover on the future

positions?

om No, not to my knowledge. They answered it,

but I wouldn't attain to answer that letter.

Q Mr. Neiman, did you institute a lawsuit

in London, England, against Rudolf Wolff & Company?

A No. "

Q Did you threaten to institute a lawsuit

Qgainst Rudolf Wolff & Company in London?

A Did I?

Q Did your counsel? You‘or your counsel?

a Threaten?

. Yes, sir.

MR. JOYCE: Well, I will object to the use of

the word, "Threaten". Did they make that staterent*

BY MR. PASKOFF:

Q Did you advise through your attorneys

Rudolf Wolff & Company Ltd. in London that unless

they complied with certain demands that you would

institute a legal proceeding in London, England?

a I ap not sure.

Q Do you presently recall who introduced you

to Mr. Edgar?

o No.

‘[1g96]

DEP. TRANSCRIPT - DAVID NEIMAN

Q Head you done any business with Sharps-

Pizley or Mr. Edgar prior to your telephone call?

A No.

Q How G14 you become aware of Mr. Edgar?

A I was familiar with Sharps-Pixley as one

of the five members of the Bullion Silwer Exchange.

At that time there were only five, to the best of

my knowledge. Well, people will deal with ther,

but there are only five members, and I don't recall

how or whom, but I know who was friendly with the

vice-president of the New York branch of the bank

of which Sharps-Pixley is a subsidiary.

Q Did you make any notes or writing of your

conversation with Mr. Edgar?

7 No, just his name and address.

Q Do you have that writing with you?

A No.

Q Is that contained in your file at hone?

A I believe that's in my Giary.

MR. PASKOFFP: Unequivocally, Mr. Joyce Mr.

Neiman's Giary is called for in the Notice of Production.

MR. JOYCE: We will not object to producing it,

but I Gon't beliewe it's called for under any stretch

of the imagination.

A72

DEP. TRANSCRIPT - DAVID NEIMAN [197)

MR. PASKOFF: Without burdening the record to

the extent, you will not object to producing it.

I accept your statement.

MR. JOYCE: We will produce portions that relate

to what you are inquiring about. We will not produce

the entire diary.

MR. PASKOFF: ‘Mi long as you produce that part

of the diary which is permissible under Rule 26.

You know what the scope of discovery is under Rule 26.

SY MR. PASKOPP:

Q How many conversations did you have with

Mr. Edgar?

A I believe two.

Q How long did those conversations last?

Let's take the first conversation, if we may.

4 Maybe about five minutes, the first one.

& Did you make Mr. Edgar aware that you were

requesting cover for approximately 32 million pounds?

A 32 million pounds of what?

s That was the value of the forward sales.

That wasn't the walue of the forward sales

at all. You have got your numbers cockeyed.

GQ To your recoilection what was the number

of the forward sales?

A73 [ 198)

DEP. TRANSCRIPT - DAVID NEIMAN

a At what time?

conversation with Mr. Edgar.

os I don't recall. I would have to go back.

~ Approximately?

” This is June 20th. I would have to go back

to a Wall Street Journal or a financial time for the

walue. If I am not mistaken, it was well over 70

million.

Q $70 million, U.S. Dollars?

’ On the 20th.

Q Was Mr. Edgar made aware of that?

a Oh, he knew the whole thing.

Q And, this was all told to him within the

five minutes, five minute conversation, and did he

agree during that five minute telephone call to pro-

wide cover for those forward positions?

+ He stated that he would take on the sale

and the cover providing Wolff would agree.

~ What was the interest or commission of

Sharps-Pizley for taking on that obligation?

& That was to be subject to negotiation.

Q Between you and Mr. Edgar?

A Right.

[ 202]

A74

DEP. TRANSCRIPT - DAVID NEIMAN

A ils

Q Did they tell you that they would not

provide you with a financing?

A They did.

Q Did they tell you that in writing?

A Ro.

Q In Answer to Interrogatory No. 16, there is

a reference to something known as "merchant banks

for refinancing,” are you using that term as a proper

noun?

MR. JOYCE: No.

THE WITNESS: No, not as @ proper noun, as a

generic tern.

BY MR. PASXOFF:

Q Can you Gescribe the components of that

generic term?

A I have to get a telephone directory.

Q Rather than guessing, I am really trying

to find out who or what banks you spoke with and

when relative to satisfying the spot purchases?

. Schroeder Bank.

Q Who 414 you speak with at that institution?

a I can't recall his name.

Q Do you recall approximately when you

communicated?

Aq75 [203 }

DEP. TRANSCRIPT - DAVID NEIMAN

> oO oe

cing that

with?

In March.

of 1975?

Correct.

Where is that bank located?

London.

Did they offer to provide you with a finan-

you requested?

They turned it down completely.

What other bank or banks did you communicate

Barcley's.

Ir. London, England?

Correct.

Do you recall the person with whom you spoke?

Chuck Love.

Had you done business with him before?

No. We have mutual acquaintances.

Did Barclay's offer to satisfy the financial

requiremcnts that you asked for?

MR. JOYCE: Reread that last question.

(Record read as requested.)

THE WITNESS: For what purpose?

BY MR. PASKOFF:

Por the purpose of satisfying the security

A76

\f Moveaber 6, 1974

\) NEIMAN'S FIRST SILVER ‘TRANSACTION

— NV stuant NATIONAL BANK BUILDING, STUART, FLA. 33494 - 305-283-2420

{ iN ? 7

Nol auld Oomypetty

SOUTHEAST “'N COUNTRY ELEVATOR HIDGING DIVISIUN .

saves Courlay

Rudolf Wolff and Company

Knollys House

11] Byward Street

London, England EC3RS5CD

Dear Janes,

For The Lonédun Group-1974, c/o David Nieman, 2150 Lincoln Parkvay, West Chica

Illinois, 60614, work out a $150,000 inieres: deduction and a 7 montn sone te

Beasie

‘Pay the 22 commission to Stotler and Company.

Rincere)y

Williem E. Casselman

Newin Qurke Hv

G0 ned St

fll

be dle

A77

Rete ee he bbc”

ia ies Roycx House

Ro smoot ton NEIMA LICITO

Arent sutman TO WOLFF'S “Ridermanbury —

a eens SOLICITORS London ecav 7p

mecsenseen = Aw suse ; TELEPHONE 01-600 5688

yer ie Au Gan TELZEORAMs & CARLYS

eae aati COCHANOOY LONDON £C2

Sossecs. AO warms va.ex 6812884

——— tow onustiie susan

(CORB AST 20 04 BatO8eD EAP VRAAPWOrel 8P88415 OD 60 Aw TELkn 2047)

@t AEPLY PLEASE OVOTE

Q/AM _ PLR.366/PJO —*_—.. 20th May 1975.

DEPT ee pd? §

“aqgnvis ¢

\ 4

For the attention of Mr. C. L. Simon rors!

Le cree —

Dear Sirs,

ondon Group 1974

Thank you for your letter of 15th May.

Because your delay in responding positively to

the suggestions made in our letter of 7th May for the

Gelivery of certain of our clients' silver purchases is,

we are advised, causing our clients significant damage

we are instructed to inform you of the following:

(i) Our clients demand immediate delivery of the

whole of their long silver positions, totalling 16,601,000

ounces.

(ii) Our clients will procure the immediate dis-

charge of the interest of I. Rochester (Finance) Limited

("Rochester") in these positions by repaying all loans

made by that company at the agreed premium of 1 per cent.

(441) Interest on each loan will be paid to Rochester

five days be” »* the original maturity date, pursuant to

Rochester'. ~-e2lex of 16th January.

(iv) ' all cover of all short positions, totalling

16,601,° 4 ounces, will be provided to your client.

(v) You will shortly be advised of the time and

place at which the necessary funds will be tendered to

Rochester and your client.

A78

Conuinusuon trom Coward Lnance Dee 20th May 197!

NEIMAN'S SOLICITORS TO WOLFF'S SOLICITORS

In the event that your client fails to attend

or fails to dcliver warrants for 16,601,000 ,of silver

upon tender of such funds, we have instructions to conm-

mence legal proceedings. We understand that legal and

administrative proceedings will also be commcmed by

our clients in the United States.

Yours faithfuliy,

Cor. C2

Messrs. Radcliffes & Co.,

10, Little College Steet,

Westminster,

London SW1P 3SJ.

A79

NEIMAN'S ANSWERS TO INTERROGATORIES

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

DAVID NEIMAN d/b/a

LONDON GROUP (1974),

Plaintiff,

NO. 75 C 2531

Vv.

RUDOLF WOLFF & CO., LTD.,

ee ee eee ee ee ee ee ee

Defendant.

PLAINTIFF'S ANSWERS TO DEFENDANT'S

INTERROGATORIES

NOW COMES the plaintiff, David Neiman d/b/a LONDON GROUP

(1974), by his attorneys, James P. Chapman, Edward T. Joyce

and Martha M. Jenkins, and in answer to defendant's Interrog-

atories, states as follows:

Interrogatory No. 1: State whether, at any time prior

to the filing of the complaint in this action, The London

Group (1974) (hereinafter “London Group"), was organized or

formed as:

(a) a partnership;

(b) a corporation;

(d) a sole proprietorship;

(e) any other business entity; and

(f) the state and statutes under which it was organized.

ANSWER TO INTERROGATORY NO. 1: London Group was not organ-

ized as a corporation. The exact legal status of the London

Group is not clear. It is either a sole proprietorship or

limited partnership. The London Group was organized pursuant

to and its conduct is governed by the laws of the State of I1ll-

inois.

A80

NEIMAN'S ANSWERS TO INTERROGATORIES

(a4) the substance of each oral communication.

ANSWER TO INTERROGATORY NO. 7: See answer to Interroga-

tory No. 6.

Interrogatory No. 8: With respect to each written comrun-

ication referred to in Interrogatory "6," identify each document:

(a) sent by David Neiman to others;

(b) sent by the London Group to others;

(d) received by the London Group from others.

ANSWER TO INTERROGATORY NO. 8: See answer to Interrogatory

No. 6.

Interrogatory No. 9: Identify all persons who, on be-

half of David Neiman or the London Group, communicated instruct-

ions to defendant, either orally or in writing, to purchase the

silver bouillon described at Paragraph "3" of the complaint and

to sell the silver bouillon as described in defe dants' answer

as exhibits "1" - "5" thereto.

ANSWER TO INTERRROGATORY NO. 9: William Kasselman of

Stotler & Co.; Coward Chance; and David Neiman.

Interrogatory No. 10: With respect to each oral commsnica-

tion referred to in Interrogatory "9," state:

(a) whether the oral communication for each purchase

or sale was telephonic or face to face:

(b) the identity of all persons present during any

part of any such oral communication;

(d) the substance of each such oral communication.

ANSWER TC INTERROGATORY NO. 10: All communications between

William Kasselman and the defendant were, to plaintiff's belief,

through telex or telephone. Plaintiff does not have copies of said telexes.

Further, plaintiff communicated with defendant via telephone, telex ans face to

face cammmnication. The only face to face canmunication was between Davis

Neiman, on behalf of London Group, and James Gourlay, on behalf

of the defendant. It took place in London, England at the off-

ice of James Gourlay at Rudolf Wolff & Co., Ltd. and at Mr. Gaurlay'’s

A81

NEIMAN'S ANSWERS TO INTERROGATORIES

club. With the exceptior. of one or two clerks who were not parties to the

conversation, no one else was present. The meeting took place late in

March, 1975. After the meeting, Mr. Neiman instructed Mr. Gourlay that he

wished to sel] the spot silver and purchase covering contracts for his future

silver. Mr. Gourlay, on behalf of Rudolf Wolff & Co., Ltd., refused to follow

Mr. Neiman's instructions. Coward Chance contacted defendant and its attorneys

both orally and in writing. Copies of said written conmmications have been

delivered to counsel for defendant.

Interrogatory No. ll: With respect to each written comnun-

ication referred to in Interrogatory "9," identify each document:

(a) sent by or for David Neiman to others;

(b) sent by or for the London Group to others;

(d) received by or for the LondonGroup from others.

ANSWER TO INTERROGATORY NO. 1]:

(a) through (ad) All instructions by David Neiman, in his

own name or in the name of London Group, were by telex or through letters from

Coward Chance, copies of which have been delivered to counsel for defendant.

Interrogatory No. 12: State the facts and identify the

documents which formed the basis of David Neiman's knowledge

that the spot silver purchased by the London Group (identified

as Exhibits "A" through "F" in the complaint) would be used as

security for the financing of the London Group's spot silver

purchases from defendant and security for the London Group's con-

tract... to deliver silver in the future to defendant (identified

as Exhibits "1" through "5" in the answer).

ANSWER TO INTERROGATORY NO. 12: Plaintiff does not now believe and

never did believe that the spot silver was security for the financing of the

London Group's contract to deliver silver in the future. David Neiman had con-

versations with Messrs. Kasselman and Gourlay in which they advised him regard-

ing the facts stated in Interrogatory No. 12. Further, Mr. Kasselman gave him

written documents containing an example of the transaction. The documents are

attached hereto.

Interrogatory No. 13: Identify all persons who communicat-

ed with the defendant, either orally or in writing, that David

Neiman or the London “roup could or would satisfy the security

interest or encumberance existing on the spot silver bouillon.

A82

NEIMAN'S ANSWERS TO INTERROGATORIES

ANSWER TO INTERROGATORY NO. 13: _ David Neiman, 2300

Lincoln Park West, Chicago, Illinois, and Coward Chance, London,

England.

Interrogatory No. 14: With respect to each oral cormzen:ca-

tion referred to in Interrogatory "13," state:

(a) whether each oral communication was telephonic or

face to face;

(b) the identity of all persons present during any part

of each oral communication;

(ad) the substance of each oral communication.

ANSWER TO INTERROGATORY NO. 14: Mr. Neiman had oral com-

munications face to face with Mr. Gourlay during March, 1975.

Mr. Neiman explained to Mr. Gourlay that he wanted to sell spot

silver and purchase covering contracts for his future obliga-

tions. Further discussions were had between Mr. Neiman, his

attorneys, Coward Chance, Mr. Gourlay, and Rudolf Wolff é& Co.'s

attorneys, Radcliffes & Co. The meeting took place at Raj-

cliffes & Co.'s offices. Representatives of I. Rochester F:--

ance, Berwin Leighton, were also present. The conversa::2-

was substantially the same as the conversation which Mr. Ne:ma>

had with Mr. Gourlay.

Interrogatory No. 15: With respect to each writter cor-

munication referred to in Interrogatory "13," identify each

document:

(a) sent by or for David Neiman to others in any way

relating to the satisfaction or release of the

security interest or encumberance upon the spo:

silver;

(b) sent by or for the London Group to others in ary

way relating to the satisfaction or release of the

security interest or encumberance upon the spot

silver;

any way relating to the satisfaction or release

A83

NEIMAN'S ANSWERS TO INTERROGATORIES

of the security interest or encumberance upon the

spot silver; and

(ad) received by or for the London Group from others in

any way relating to the satisfaction or release of

the security interest or encumberance upon the

spot silver.

ANSWER TO INTERROGATORY NO, 15: Numerous letters and

telexes were sent to defendant and its agents by plaintiff

and Coward Chance. Likewise, numerous letters and telexes were

sent hy defendant and its counsel to plaintiff and Coward Chance.

Copies of said documents have been delivered to counsel for de-

fendart.

'" ‘Interrogatory, No. 16: Identify all persons with whom —

David Neiman, or the London Group or others acting on their

behalf, communicated, either orally or in writing, for the

purpose of arranging the satisfaction or release of the security

interest or encumberance upon the spot silver.

ANSWER TO INTERROGATORY 0. 16: Sharps, Pixley, London,

England, Harris & Co., and several Merchants Banks for refinancing.

Interrogatory No. 17: With respect to each oral communica-

tion referred to in Interrogatory "16," state:

(a) whether each oral communication was telephonic

or face to face;

(b) the identity of all persons present during any

part of each oral communication;

and

(ad) the substance of each oral communication.

ANSWER TO INTCRROGATORY NO. 17: Communications with

Sharps, Pixley were oral. None were face to face. On informa-

tion and belief, the only persons present were Mr. Neiman and

a Mr. Edgar for Sharps, Pixley. Mr. Neiman had one conversa-

tion with Sharps, Pixley during March, 1975 in London, England

A84

DEP. TRANSCRIPT - WILLIAM CASSELMAN

It) THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

}

DAVID NEIMAN, d/b/a LONDON

GROUP (1974), )

Plaintiff, ]

Vv. ) No. 75 C 2531

RUDOLF WOLFF & CO., et al, )

Defendants. )

Washington, D. C.

August 31, 1978

Deposition of:

WILLIAM E. CASSELMAN, SR.,

awitness called for examination pursuant to subpoena, by

counsel for the Plaintiff, at the offices of William E. Cassei=

II, Esquire, at 888 - 17th Street, N.W., Suite 204, Washingtsn,

D. C., beginning ie ‘eoeeineely 10:30 o'clock a.m., before

Judith B. Moore, Notary Public, when were present:

) A85

DEP. TRANSCRIPT - WILLIAM CASSELMAN [12]

some background questions, but you seem to be going very far

afield here from the activities of Gourlay and Inglerman in

the Northern District of Illinois, to ask about his office

arrangement in London.

S0 I will make that into an objection.

BY MR. JOYCE:

Q Do you know if the physical suite that Mr. Gourlay

was in was the same suite as Rudolf Wolff & Co.?

A They were on the same floor.

Q Were they separated by a wall, do you know?

A Yes, definitely. He had a separate extrence to

his offices.

Q Now, did you see Mr. Gourlay in 1974?

Yes.

Did you see him in Chicago in 1974?

Yes.

Probably *.

Q On how many occasions did you see him in Chicago?

Q Oo you recall the first occasion, when it was?

It might have been '73 when I first saw him in

Chicago, when I was at the ACLI.

And the gecond time I saw him in the summertime

A86 ;

DEP. TRANSCRIPT - WILLIAM CASSELMAN

[ a3)

of ‘74.

The first meeting, I'm not sure -- I was at Acil

-and I moved from ACLI to Stotler in April ‘74, so it coulc have

been late ‘73, early ‘74.

Q ‘What was the purpose of your meeting with I>.

‘Gourlay during late '73 or early ‘74?

A He just came in to see me.

Q Why was he in to see you?

AR Well, after all, he was my boss at one tine ans

he was an ole friend and he came in to see me at AC...

Q Where was Gourlay your boss?

A When I was managing director of Rudelt Welt.

in New York. I responded to him on the London sice.

Q During 1973, when you met with i. Goursey in

Chicago, did he ask you to send any business to Rudoss Weiss &

Co.?

R No, he wasn't actively soliciting business

because he knew ACLI were clearing members of London then-

selves.

Q Now, you met Gourlay again in 1974; is that

right?

A Right’.

A87

DEP. TRANSCRIPT - WILLIAM CASSELMAN [ 16]

Q Do you know how Neiman knew about Gourlay?

A I think that he probably had heard about Gourlay,

probably from myself, but I'm not sure of that.

Q Now, on the occasion of Gourlay's visit in 1974,

did he ask you to send any business to Rudolf Wolff & Co.,

Ltd.?

A No, he didn’t because he was not actively solicit-

ing business for Rudolf Wolff & Co., at the time. He was no

longer an active partner in the day-to-day business of Rudolf

Wolft 6&6 Co.

Q Do you know why Neiman and Gourlay met --

A Yes.

Q — in 1974?

Why adid they meet?

A To discuss the silver cash and carry.

Q Do you know how Neiman came to know Mr. Gourlay

and Rudolf Wolff in relationship to the silver cash and carry?

a As I say, I have to assume it's because I told

Dave about it.

MR. VIVIANI: Dave being?

THE WITNESS: Neiman. I'm sorry.

A88

DEP. TRANSCRIPT - WILLIAM CASSELMAN [20

time and how they divided the spoils up and so forth, and who

was employed and who they saw, I never knew.

Whether he was any longer a partner or not, I

assumed he was a stockholder, but I didn't know.

Q When you introduced Gourlay to Neiman in '74,

aid you think that Gourlay would put the trades that were being

Giscussed through Wolff?

A Yes, very definitely, because I wouldn't --

I certainly wouldn't have proposed any business that wasn't put

through a reputable house.

Now, he could just as‘well have put them through

Maccatta or any other house, but as long as it's a repztable

house.

Q Did you think that Gourlay was meeting Neiman

as an agent of Rudolf Wolff?

MR. PASKOFF: I will object to the form of the

question. That calls for a legal conclusion. I would ask his

counsel to instruct him not to answer it unless you can rephrase

the question.

BY HR. JOYCE:

Q During 1974 when you introduce2Z Neiman to Gourlay,

gid you think that Gourlszy was soliciting Neiman's business

gone off on his own in other areas and that -- I knew he was

A89 [ 21)

DEP. TRANSCRIPT - WILLIAM CASSELMAN

on behalf of Wolff?

A I don't think so and I'll tell you why. There

had been a rift in the family and Gourlay had more or less

getting ready to do something, Until he showed up in '73 or

'74, I didn't know what it was that he was going to do.

Q Well, in '74 why didn't you just direct Neiman

to Wolff yourself instead of going through Gourlay?

MR. PASKOFF: I will object to the form of the

question. It calls for speculation.

BY MR. JOYCE:

Q Do you want to answer it, sir?

THE WITNESS: Shoule I answer it?

MR. VIVIANI: I wonder if you can save that

question and we can meet that perhaps later in the deposition,

if you could just move on. I'm just asking that out of courtesy

and we could discuss it at the very end.

If you can make a note of the question so we

car. have an opportunity to discuss it with Mr. Casselman.

BY HR. JOYCE:

Q Have you ever heard of a company known as

Inglcrman Investment Compsny, Ltd.?

(as)

A90 | qi

DEP. TRANSCRIPT - WILLIAM CASSELMAN

I'm not sure but I don't think he did.

Q Now, after you gave Hr. Neiman information about

this tax shelter did he continue to discuss it with you,

between the time of your first discussion about the shelter anc

the time you met with Gourlay?

A Well, as you know, Dave, being as eccentric as

he is, had nine jillion questions, all of which I couldn't

answer, and rather than me calling London every 15 minutes,

I said, "Well, look, Gourlay is going to be over here sometime

this summer. Why don't you save them all for him?"

Q What did Neiman say?

a "All right. Fine. We'll have lunch."

Q Now, did Gourlay tell you why he was in Chicago

on tie occasion of your meeting?

MR. LOW: Objection. Asked and answerec.

BY MR. JOYCE:

Q Mr. Casselman?

A No, he didn't come flat out and say, “I'm here

to do this or that or so forth." He let me know when he was

going to be in Chicago. I told him -- to the best of my

knowledge, it's tho only client he met of mine there at all.

I -- jute because I said, “You know, this fellow has questions

A91 . [as]

DEP. TRANSCRIPT - WILLIAM CASSELMAN

BY MR. JOYCE:

Q Now, calling your attention to the luncheon between

‘Mr. Casselman, yourself, Gourlay and Neiman, do you recall

when that luncheon took place?

A It took place after the grain market closed in

Chicago, which would place it at about 1:30. It was at Binyon's

Restaurant. I don't recall whether it was May, June or July.

Q Could it have been in October, 1974?

A It could have been October, because I didn't move

to Florida until late October, early November.

Q Now, the only people present at this luncheon

were yourself, Neiman and Gourlay; is that right?

A Correct.

Q Now, during the course of this luncheon, €o you

recall whether Mr. Gourlay and Mr. Neiman discussed the

possibility that a profit could be derived from the transaction

Gepicted in Exhibit No. 1, which profit was not associated with

the tax laws?

MR, PASKOFF: I will object to the form of the

question, for a number of purposes, lir. Joyce.

Pirst of all, I think you are putting your own

words into a characterization of what Mr. Gourlay may have done

A92

' [52]

DEP. TRANSCRIPT - WILLIAM CASSELMAN

Q Do you recall if Mr. Weiman asked Mr. Gourlay

whether changes could be made in that form agreement?

A That might have been one of the many questions

that Dave had asked him but I can't specifically come out and

say “Yes, that is one of the ," because <-- I don't know that

but Dave did have an awful lot of questions for him.

Q Do you recall anything Mr. Gourlay told Mr. Neiman

at this luncheon?

A No, I really don't because it, you know, it

was just along the general lines of the tax shelter and --

Q Did Gourlay explain the tax shelter to Neina:?

MR. PASKOFF: Mr. Joyce, would you per-it the

witness to finish his answer?

BY MR. JOYCE:

Q Were you finished, Mr. Casselman?

A As I recollect it, Gourlay told Dave exactly what

I told him about how it was structured and so forth and Dave

Gid have a lot of questions about it and what they were I don't

know, and I don't remamber because they were questions that

were not going to apply to any of my other clients so they were

irrelevant.

I mean he had all kinds of ideas how to do this

| A93

DEP. TRANSCRIPT - WILLIAM CASSELMAN [83

and do that which I didn't really pay much attention to,

because I felt that they were, a lot of them were frivolous

aad 50 forti: at the time.

Q Gourlay did explain the tax shelter to him?

A Oh, sure, he outlined it.

Q Now, at any tine when you resided in Chicago,

Illinois, did you receive any correspondence from James

Gourlay on the Rudolf Wolff & Co. letterhead?

A I ddén't recall getting any, no. If I did, it

would be in the files.

Q Did you suggest to Mr. Neiman that he use the

tax shelter which is depicted as Exhibit No. 1 here?

a . I told him if he was looking for a tax shelter

it was the best thing I had seen, yes. After all, I was going

to make a handsome commission if he ever did all this business

he was talkiny about.

w When you say you would have made the commission,

would Stotler make the’ commission or would you make it?

A No, I was more or less moonlighting this situation.

Q Let me show you a document that's been marked as

Cassolman [xhibit No. 2 for identification, and ask you whether

this may refresl) your recollection os to whether Stotlcr was to

A94

DEP. TRANSCRIPT - WI1.LIAM CASSELMAN 2;

A Stotler was not. It was coming to them but it

would all be credited to my account.

Q Well, was it to be credited to your account one

hundred percent or only --

A One hundred percent.

Q Ana did you clear that with someone at Stotler

before you made this arrangement?

A Well, I'm certain I talked to somebody, Moward

Stotler or one of the partners, and said, “Look, I'm going to

@o this situation and it's a way for me to make some commission

and I will apply it against my deficit.”

You must ramember that they had no interest in this

situation per se as Stotler because they are not certain --

they weren't certain that the Board of Trade of the Chicago

Mercantile were in favor of it.

Q Now, at any time while you resides in Chicago,

Illinois, did anyone acting on behalf of Rudolf Wolff & Co.

ask you to trade through Wolff?

RK No, not at all.

Q Anyone ask you to have Stotler trade through

Wolff?

A No, not at all.

A95 ( 6s)

DEP. TRANSCRIPT - WILLIAM CASSELMAN

A No, I don't.

Q But they would have paid it from Chicago to --

a No. You must remember that Neiman and one other

were the only ones in Chicago. Tho rest of them were all over

the country.

Q How many were in the Chicago metropolitan area

other than Neiman?

A Offhand, I only recall one other one.

Q Who was that?

A A fellow named Bob Jamison.

Q Now, the people who engaged in this tax shelter

@id they deal through you in Gealing with Gourlay?

A Yes.

Q And they called you in Chicago and you, in turn,

contacted Gourlay?

A The majority of this business was all done after

I got to Florida. Because, if you know anything about the tax

shelter business, everyone wants to do it in December

unfortunately. You can explain it until you're blue in the

face from January until October and until their accountant

tells them what thoir tax bill is, then they all get panicky

and, you know, “What can you do for mc?"

DEP. TRANSCRIPT - WILLIAM CASSELMAN

particular contracts.

Q Are these the transactions which you describe

before, where you visited Rudolf Wolff to act as the executing

broker?

A They are.

Q To your knovledge, in any of these transactions

Gepicted in Exhibits 3 through 7, do you recall whether Rudolf

Wolff solicited vou for the business?

A No, I had no — actually I had no contact in the

sense that all of this was Gone with Rudolf Wolff in New York

and I would get up at 5:00 o'clock every morning end stars

trading. Talk to their -- only rarely 4id I ever ever talk

to management over there, because, you know, the telex ope>ator

is the important guy in these trades. As you know, they have

an open line between New York and London and speed is of the

essence.

MR. PI SKOFF: I have no further questions.

MR. JOYCE: I have one or two.

REDIRECT EXAHIWATION

BY MR, JOYCE:

Q The two percent cormission you were to rece:ve

on these tax shelter transactions --

(72 ]

A97

DEP. TRANSCRIPT - WILLIAM CASSELMAN

Q Do you recall who you gave it to at Stotler?

4 I would assume I sent it to somebody in account-

ing.

Q . Would it have been Ed Hanson?

A Could have been.

Q Was it sent to Chicago?

& Yes, I'm sure it was. I was already in Florida.

Q The transactions depicted in the bound volumes 3

through 8 were originated in Chicago, Illinios; is that correct,

Mr. Casselman?

MR. PASKOFF: I will object to the form of the

question.

THE WITNESS: No. ‘The majority of this business

was done after I moved to Florida. You will note here that

here is May ‘75 through March, '76. I really concentrated on

this business after I got to Florida, on the London business.

BY MR. JOYCE:

Q Well, now, who originated the order, you or the

Chicago office?

a I originated the order.

Q And when you were in transactions that occurred

-~ November lst, ‘74, would they have been from Chicago?

2. a oe oe}

A98

DEP. TRANSCRIPT - JOSEPH KLEIN

IN THE UNITED STATES DISTRICT COvAT

WONTEERN DISTRICT OF ILLINOIS

EASTERN DIVISION

DAVID NEIMAN 4/b/a

LONDON GROUP (1974),

Plaintiff,

vs. NO. 75¢ 2531

RUDOLPH WOLFE & COMPAKT,

LTD., JANES GOURLAY, and .

INGLORAM INVESTMENTS, LTD.,

ee Fe ee ee ee ee eee

Defendants.

The Ciscovery deposition of JOSLIPE ELIIN catied

for exaninetion pursuant to subpoena and pursuent to

the Rules 67? Civil Procedure for the Unitcd Stetes

District Courts perteining to the teking cf depocitcioz.

taken before MARIE A. CRISSIE, a notary pubdlic within

and for the County of Cook and Stete of Iilénoic,

at 141 West Jackson Boulevard, Suite 4100, Chiceg>,

Illinois, on the 26th Gey of Septender, 1s7@, as

the hour of 3:00 o*elock p.n,.

: A99 [22]

DEP. TRANSCRIPT - JOSEPH KLEIN

with Gourlay and his company, and you responded in

the affirmative by his company; do you mean Rudolph

Wolfe & Company, Limited?

A To the best of my knowledge, I dealt with

“Wolfe, yes.

MR. LOW: No other questions.

EXAMINATION

BY MR. PASKOPP: |

q Mr. Klein, how tong heve you been in

the comnodities business?

AR I have been in the commccities enc securities

business for 51 years. You heard me, I am 68.

Q With vespect to the transactions reflected

in Exhibits 1 through 6, did Rudolph Wolfe & Corpeny,

Limited, solicit your business for those trensections?

MR. JOYCE: I would object to the form of the

question since it calls for a conclusion es opposed to

facts. It is improper for this gentleman to make the

conclusion. He can tell you what Rudolph Wolfe &

Company did or didn't do, but it is up to the court

to decide whether they solicited his business.

MR. PASKOF?: Tou may answer,

THE WITNISS: Wo, they did not.

A100 . [26]

DEP. TRANSCRIPT - JOSEPH KLEIN

TRE WITNESS: I was buying cash silver. I was

operating @ cash and carry operation. I bought cash

silver end I sold the future against it, and I put

and sold the put ageinst it. So, my position was -

even as to market risk, and I ras attempting to, over

that period, to pay charges Bgeinst storage, insurcnce,

et cetera, and then hopefully to liquidate in the

futures’ merket, siz months later.

MR. PASKOPP: I have no further questions,

EXAMINATION

BY MR. JOTCE:

Q Mr. Klein, in the trensactions reflected

by Exhibits 1 through 6, did you finance eny pertion

of these ieokwbascsons through I. Rochester (Pinencc )

Limited?

A Yes, I did.

< Did Mr. Gourley arrance that finaneing?

a It was part of thet transection.

c It wos arranged by Mr. Oourlay, wes it net?

A The answer is yes, or Wolfe or Londen.

S You say you sought out Rudolph Wolfe &

Company, Limited, as executing broker on these trens-

actions?

A Yes.

AlOl

DEP. TRANSCRIPT - MARSHALL PERSKY

InN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

DAVID NEIMAN d/b/a

LONDON GROUP (1974),

Plaintiff,

RUDOLPH WOLFE & COMPANY, LTD.,

JAMES GOURLAY, and IJNGLERAH

INVESTMENTS, LTD.,

i a i

"Defendants.

The discovery deposition of MARSHALL PERSKY,

called for ezeminetion pursuant to the Rules of

Civil Procedure fr the United States District Court

pertaining to the taking of depositiong, taken

before MARIE A. CRISSIE, a notary pubdlic within

and for the County of Cook and State of Illinois,

at Suite 4100, 141 West Jackson Boulevard, Chicego,

Illinois, on the 26th day of September, 1978, at

the hour of 4:00 o'clock p.m.

ALO2 al

DEP. TRANSCRIPT - MARSHALL PERSKY

Casselman?

A Tes.

. How did you go about initiating that

transaction?

A Either I asked Mr. Casselman to initiate

it on my behalf because of his familiarity with it,

or I called and spoke with Mr. Gourlay or one of his

assistants about it.

c Did Mr. Gourlay initiate any conversation

with you about cash and carry transectionst

A He initiated no conversation whats

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