Appendix — Bangor Punta Operations, Inc. v. Bangor & Aroostook R. Co.
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UNITED STATES DISTRICT COURT
District oF Marne
NortHErRN Division
Bancork aNp ARroosTooK RatLRoaD
ComMPaNY AND Bancor INVESTMENT
Company,
Plowe¥s,) Civil Action
ad No. 1933
Bancor Punta Operations, Inc., anp
Bancogk Punta CoRporaTION,
Defendants.
AMENDED COMPLAINT
The Plaintiffs, The Bangor and Aroostook Railroad
Company and Bangor Investment Company respectfully
allege as follows:
1. This civil action arises between citizens of different
states, the amount in controversy, in each count, exclusive
of costs and interest, exceeding Ten Thousand Dollars
($10,000.00). In addition, Counts IV and XII herein arise
under Section 10 of the Clayton Act (Title 15, U.S.C. Sec-
tion 20). Counts VI, VIII, X and XIII arise under Section
10(b) and 27 of the Securities Exchange Act of 1934, as
amended (Title 15, U.S.C. Sections 78j(b) and 78aa) and
Rule 10b-5 (CFR Sec. 240.10b-5) as promulgated there-
under by the Securities and Exchange Commission. Ac-
cordingly, this Court has jurisdiction under Title 28 U.S.C.
Section 1332(a)(1) and Section 1337 and Title 15 U.S.C.
Section 77 (v).
2. Plaintiff, the Bangor and Aroostook Railroad Com-
pany (hereafter, BAR) is a Maine corporation organized in
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Amended Complaint
1891 for the purpose of constructing, maintaining and
operating a railroad for public use, and has its principal
place of business in Bangor, Maine. It operates a railroad
providing essential services for those persons and busi-
nesses located in the northern part of the State of Maine.
BAR connects within the State of Maine with other rail-
roads which serve the northeastern part of the United
States and which, in turn, connect with other railroads
serving the remainder of the United States. Freight ship-
ments of BAR consist of products grown and manufactured
in the State of Maine, including potatoes, pulp and paper
products, which are sold and used in other parts of the
United States.
3. Plaintiff, Bangor Investment Company (hereafter,
BIC) is a Maine corporation incorporated in 1904, having
its principal place of business at Bangor, Maine. Its total
authorized capital stock is 250,000 shares, of which 250,000
shares are outstanding and all of which are owned by
Plaintiff BAR and have been so owned during all the
period of time covered by this complaint. As will hereafter
appear in this complaint, BAR has used BIC for various
purposes. As the owner of all the outstanding stock of
BIC, BAR has totally dominated and controlled BIC which
in many instances acts as BAR’s alter ego.
4. The defendant, Bangor Punta Corporation (here-
after, Punta) is a Delaware corporation having its prin-
cipal place of business in Greenwich, Connecticut, and is
qualified to transact business within the State of Maine.
Its stock has been listed upon the New York Stock Exchange
since 1964. Punta previously operated under the names of
Punta Alegre Sugar Corporation and Bangor Punta Alegre
Sugar Corporation.
5. The defendant, Bangor Punta Operations, Inc. (here
after, Operations) is a New York corporation having its
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Amended Complaint
principal place of business in Greenwich, Connecticut, and
is qualified to transact business within the State of Maine.
Operations previously operated under the name of Punta
Alegre Commodities Corporation.
6. Since its incorporation, Operations has been a wholly-
owned subsidiary of Punta. During such period of time,
businesses acquired by or in behalf of Punta have been
held by and operated either as subsidiaries or divisions of
Operations.
7. At a meeting held on March 1, 1960, the directors of
BAR voted to undertake and complete a corporate reor-
ganization in order to achieve divetsification of BAR’s
business activities. Toward this end, the President of BAR
introduced Nicholas M. Salgo of New York City (hereafter,
Salgo) to the BAR board as a person able to effect a
diversification program and willing to do so in return for
options on BAR’s stock. At said time and at all times
thereafter relevant to this complaint, Salgo was an officer
and director and substantial stockholder of Punta. He is
presently Chairman of the Board of Punta.
8. On or about March 25, 1960, BAR and Salgo entered
into a formal employment contract for a term of not less
than ten years which provided that Salgo was ‘‘to suggest
and develop an overall program for diversification of
business activities of the Company (BAR), to explore
specific avenues of diversification, to carry approved proj-
ects through to execution and to perform such other
similar duties which may, from time to time, be required
by the Board or by the President’. At the same time,
Salgo was granted a qualified option to purchase up to
20,000 shares of BAR’s common stock as then constituted
at $26.50 per share. The number of shares which Salgo
could acquire upog exercise of said option depended upon
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Amended Complaint
the future non-carrier earnings of BAR, on the basis of
one share for each $100.00 of net income before taxes.
9. Onor about April 20, 1960, upon advice of Salgo, BAR
formed Bangor & Aroostook Corporation (hereafter, B&A)
under the laws of the State of Maine to become the holding
company of BAR and other non-carrier corporations to be
acquired. In addition, B&A assumed BAR’s employment
contract with Salgo and the obligations of the stock option
granted to him by BAR. Of BAR’s thirteen directors,
seven became directors of B&A. The two corporations had
the same chairman of the board, the same president, the
same vice president-finance and general counsel, the same
treasurer and the same comptroller. On or about Novem-
ber 29, 1960, at least 80% of BAR’s stock had been tendered
for B&A stock, and the acquisition was consummated. Be.
tween November 29, 1960 and September 21, 1964, B&A
increased its ownership of BAR’s issued and outstanding
stock to over 98%.
10. On or about October 13, 1964, upon advice of Salgo,
B&A sold all of its assets to Operations in exchange for
capital stock of Punta. The agreementprovided that Opera-
tions was to assume and pay, perform and discharge all of
the debts, obligations, contracts and liabilities of B&A,
whether or not reflected or reserved against in B&A’s bal-
ance sheets, books of account and records. Of BAR’s fif-
teen directors, eight became directors of Punta upon the
sale of B&A’s assets to Operations. These eight included
the chairman, the vice chairman and the president of BAR.
Effective October 2, 1969, Operations sold all its stock inter-
est in BAR to Amoskeag Company, a Delaware corporation.
11. Throughout the period 1960 to 1969, first B&A and
then its successor, Operations, the latter acting as the agent
and instrumentality of Punta, dominated and controlled
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Amended Complaint
BAR and exploited it solely for their own purposes, to the
injury of BAR and without regard to BAR’s future obli-
gations both to its creditors and to the public which it serves.
By such domination, control and exploitation, B&A, Opera-
tions and Punta calculatedly drained the resources of BAR
in violation of law for their own benefit, all as more speci-
fically set out in the allegations below. Such domination
and control resulted in fraudulent concealment of the sys-
tematic exploitation of BAR and, further, prevented any
effective investigation being made of such exploitation and
the commencement of any suit with respect thereto until
after BAR was sold in 1969. The causes of action asserted
in this Amended Complaint belong to BAR and are asserted
directly by it. The injury to BAR is a continuing one
surviving the aforesaid sale to Amoskeag.
12. Many of the acts complained of herein were never
approved, authorized or ratified by BAR’s directors and
some acts may never have been known to them until after
said sale to Amoskeag in October 1969. To the extent that
some of BAR’s directors did purport to approve, authorize
or ratify such acts, a number of them acted under the
domination and control of B&A, Operations, Punta and
Salgo, without a full disclosure being made to them of all
material facts. At no time, while B&A, Operations and
Punta dominated and controlled BAR was there any ratifi-
cation by BAR stockholders of any of the acts complained
of herein, after a full, complete and candid disclosure of
all material facts to them.
13. When Amoskeag acquired all of the common stock
of BAR held by Operations, effective October 1, 1969, which
amounted to 177,466 shares, Amoskeag took over the effec-
tive management of BAR. It acquired a railroad in seri-
ous financial condition. Net revenue from operations for
the year 1970 was a loss of $1,313,603. The new manage-
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Amended Complaint
ment’s first task was to turn the railroad around and make
it a going, viable common carrier, capable of serving the
public which it is required to do.
At the same time, the Interstate Commerce Commis.
sion was conducting an analysis of the relationship between
BAR, B&A, Punta and Operations as a follow-up to the
Bureau of Accounts Special Review of Railroad Conglome-
rates dated March 11, 1969. Under date of February
1971, the Bureau of Accounts of the Interstate Commerce
Commission filed an extensive report with the Interstate
Commerce Commission entitled ‘‘Review of Diversified
Holding Company Relationships and Transactions of
Bangor Punta Corporation’’, which did not become public
and, therefore, was not available to the new management
of BAR until July 1971. The Bureau of Accounts and
Controls recommended that all legal remedies be explored
to require the holding company (Operations) which sold
the carrier (BAR) to pay back to the carrier the (i) assets
taken with no compensation and (ii) charges made where
no services were performed. Management of the BAR have
reviewed extensively the report of the Bureau of Accounts
and Controls and the Inter-corporate relationships in detail.
All wrongs hereinafter complained of were discovered by
BAR’s new management’s investigation of all facets of the
inter-corporate relationships and were not previously known
to the new BAR management.
14. BAR has presently outstanding 179,810 shares of
common stock. Of this total, 177,466 shares were purchased
by Amoskeag from Operations by agreement effective Oc-
tober 1, 1969, for approximately $5 million. Since the for-
mation of B&A and the exchange of stock between the BAR
and B&A, there have been and are minority stockholder
interests which are still outstanding, and many of said
minority stockholder interests have been outstanding dar-
ing the entire period of time covered by this complaint. The
ee Es
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Amended Complaint
present minority stockholders of BAR and their names,
shares, and dates of respective acquisitions are shown on
Schedule A annexed hereto.
15. During all the period of time covered by this
Amended Complaint, BAR has had susbtantial creditors
holding BAR obligations, of which the following are indica-
tive, but not necessarily exclusive (principal amounts out-
standing as of December 31, 1970) :
(1) $6,322,000.00 444% First Mortgage Series A
Bonds, due February 1, 1976.
(2) $175,000.00 544% First Mortgage Series B
Bonds, due June 2, 1973.
(3) $2,716,000.00 514% Income Promissory Notes,
due October 1, 1995.
(4) $14,455,459.00 of equipment obligations.
16. By reason of Punta’s and Operations’ domination
and control of plaintiff BAR and, through its control of
plaintiff BAR, its effective domination and control of plain-
tiff BIC, Punta and/or Operations stood in a fiduciary
capacity as a Trustee for BAR and BIC and for the credi-
tors of both of said plaintiffs and for both the majority and
minority stockholders of the BAR and the stockholders of
BIC. Standing in this relationship, Punta and Operations,
acting through its officers, agents and servants, had the duty
when it had dealings with BAR and its wholly-owned sub-
sidiary, BIC, to treat BAR and BIC fairly and to act with
regard to the acquisition of the assets of either BAR or
BIC only after full disclosure of all material facts then
known in each transaction and to use the utmost good faith,
and to make a full and adequate accounting and justification
of all purchases and inter-corporate charges where Punta
and Operations were in a position of majority stockholder
to BAR and thus to its wholly-owned subsidiary, BIC, all
of which Punta and Operations failed to do.
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Amended Complaint
- COUNT I
Corporate Charges—Common Law
17. During the years 1962 through 1967 B&A and, later,
Operations, caused BAR to transfer the following amounts
of its cash to B&A and Operations:
Year Amount
$OGe ote ase a eae $ 70,000
1963 __ 7 96,000
TOG8 no oe eee 155,000
TOG oon eee ene 165,000
O66 eae 204,000
TO ieee ee ee 120,000
$810,000 Toran
Cash so transferred was stated by Operations and by officers
of BAR who were acting to the detriment of BAR to be in
payment for legal, accounting and printing services fur-
nished BAR by B&A and Operations and for salaries, wages
and travel expenses. In fact, BAR did not, at any time,
receive anything other than nominal services from B&A and
Operations, which were in no way commensurate with the
substantial amounts charged to it. During the same period,
BAR provided legal and other services for B&A and Oper-
ations for which BAR was not compensated.
18. Though requested to do so by agents of the new
management of BAR, representatives of Punta and Opera-
tions have never justified the inter-corporate charges set
forth in paragraph 17. In addition, the by-laws of the cor-
poration (Article II) required that all contracts in excess
of $5,000 be reported to the board of directors. In the case
of the aforesaid corporate charges, this was never done.
An analysis of the records of the BAR do not show any
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Amended Complaint
justification for the inter-corporate charges. The officers
of the BAR who authorized the payment of the inter-cor-
' porate charges for the amounts set forth in paragraph 19
to B&A and Operations were also officers and Directors of
both B&A and Operations and they authorized the pay-
ment of same knowing full well there was no justification
for said payments, that there were only nominal benefits to
BAR for the alleged services from B&A and Operations,
and the payment of these inter-corporate charges was con-
cealed and the true nature of same was never revealed to
the Board of Directors of BAR so that they could have
taken such action as would have been in the interests of
BAR.
19. Payment of these corporate charges caused by B&A
and Operations constituted a conversion and misappropria-
tion of the cash assets of BAR to the sole use and benefit
of B&A and Operations.
COUNT I
Corporate Charges—Maine Public Utilities Law
20. Plaintiff BAR re-alleges the allegations of para-
graphs 17-19 (Count I).
21. BAR is a ‘‘public utility’’ as defined in the Maine
Public Utilities Act, 35 Maine Revised Statutes Section 15.
At the time of these transactions, B&A and Operations
owned more than 25% of the common stock of BAR, to wit,
at least 80% thereof.
22. All corporate charges paid by BAR as set forth in
Count I were paid without prior written approval of the
Maine Public Utilities Commission, as required by 35 Maine
Revised Statutes Section 104, which provides, inter alia:
No public utility doing business in this State shall...
make any contract or arrangement, providing for the
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Amended Complaint
furnishing of . ... services... with any corporation...
owning in excess of 25% of the. voting capital stock of
such public utility . . . unless and until such contract or
arrangement shall have been found by the commission
not to be adverse to the public interest and shall have
received their (sic) written approval... .
Failure to obtain such approval rendered the transactions
void, so that all payments of corporate charges by BAR to
B&A and Operations are void under applicable Maine Lav.
COUNT Ill
St. Croix Paper Stock—Common Law
23. Prior to acquisition of BAR by B&A, BAR’s wholly-
owned subsidiary, Bangor Investment Company (hereafter,
BIC) had acquired shares of the common stock of St. Croix
Paper Co. at a cost of $2,127 000. Of this amount, BIC
was indebted in January 1960 to BAR for $1,927,000 and to
a Boston bank for $200,000.
24. As set forth in paragraph 23, BIC was indebted to
the BAR for $1,927,000 in January 1960 for the purchase of
the St. Croix stock. BAR was likewise indebted for all the
money that BIC owed BAR as BAR had borrowed same
and made it available to BIC, its wholly-owned subsidiary
for the purpose of acquiring the St. Croix paper stock.
During 1958, when BAR was short of cash, BAR issued
$500,000 in bonds, being the 54% First Mortgage Bonds
Series B, due June 2, 1973, pursuant to approval by Inter-
state Commerce Commission based upon representations
that the proceeds would be used for railroad purposes. Of
the $500,000 received from the sale of these bonds, $400,000
was advanced by BAR to BIC, for the express purpose of
purchasing more St. Croix stock. Thus, with respect to
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Amended Complaint
all matters alleged in paragraph 23 and this paragraph,
BIC acted as the alter ego of BAR and at its discretion and
under its control.
25. Commencing September 1962, B&A embarked upon
a scheme to obtain for itself the proceeds and benefits from
the ownership and disposition of a substantial portion of
the 67,789 shares of St. Croix Paper stock owned by BIC.
First, B&A caused the directors of BAR to sell BIC’s St.
. Croix stock to B&A in consideration of the following:
(a) | B&A assumed the $200,000 obligation to the
Boston bank.
(b) B&A issued 10,180 shares of its own stated
$100 par 5% cumulative non-voting preferred
to BAR and 4,820 shares of the same preferred
to BIC.
(c) B&A issued its note to BAR in the principal
amount of $427,000 with interest at 442%.
B&A agreed with BAR that if the St. Croix Paper stock
were sold by B&A at a profit within six months of the date
B&A acquired it, B&A would give its note to BAR for the
amount of the gain.
26. In January 1963, within 4 months of the date of
B&A’s acquisition thereof, the St. Croix Paper stock, as
a result of a tender offer, was exchanged for 54,231 shares
of the stock of Georgia Pacific Corporation (hereafter GP).
Plaintiff BAR believes and therefore avers that at the time
of the transfer of said 67,789 shares of St. Croix Paper
stock by BIC to B&A, negotiations between GP and said
St. Croix Paper Co. with respect to the aforesaid tender
offer were taking place and were known to B&A but not
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Amended Complaint
known or disclosed to BAR or BIC directors when they
authorized the exchange. The ‘‘paper’’ profit to B&A as
a result of these exchanges was approximately $585,700.
B&A then issued its promissory note to BIC in said amount.
27. During 1964, after transfer by BIC to BAR of
BIC’s 4,820 shares of the aforesaid $100 par value pre.
ferred of B&A, B&A repurchased all of its outstanding
$100 said par value preferred stock from BAR by trans-
ferring 27,735 shares of GP stock at a value of $1,554,114,
which was an excess of $54,114 over the stated par value
of the repurchased preferred. To compensate B&A for
this difference, BAR paid B&A $54,114 in cash. BAR also
paid B&A an additional $14,800 cash for 276 additional
shares of Georgia Pacific stock transferred to BAR. After
such transfer, B&A still owned 33,925 shares of Georgia
Pacific stock which it subsequently sold for $1,995,062. No
part of the proceeds of such sale was ever paid to BAR
28. During the period B&A and its successor, Opera-
tions, held GP stock it received cash and stock dividends
paid or distributed in respect of GP stock and, in addition,
Operations or Punta received 2,203.1425 shares of GP stock
as its proportional part of the settlement in Taylor v.
Georgia Pacific Corp. 67 Civ. 11 USDC SD of N.Y., all
which would otherwise have been paid to BIC for BAR’s
benefit.
29. The foregoing wrongful manipulations of the assets
of BAR and BIC, and the conversion and misappropriation
thereof by B&A, were done for the sole benefit of B&A to
provide it with cash and other assets which would have
otherwise been available to BAR. No benefit was derived
by BAR or BIC from such manipulations, conversion and
misappropriation nor were these acts of B&A motivated
or done in the interest of BAB or BIC.
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Amended Complaint
COUNT IV
St. Croix Paper Stock—Clayton Act
30. Plaintiffs BAR and BIC re-allege the allegations of
paragraphs 23-29 above, inclusive (Count IIT).
» 31. In September 1962, when the shares of St. Croix
Paper stock were transferred from BAR’s wholly-owned
subsidiary BIC to B&A, and B&A’s aforesaid stated $100
par value preferred shares were transferred by B&A to
BAR and BIC, nine of BAR’s fourteen directors were also
directors of B&A and at least a majority of BIC’s directors
were directors of B&A.
32. Title 15 United States Code Section 20 (Clayton
Act, Section 10) provides, inter alia, as follows:
‘*(N)o common carrier engaged in commerce shall have
any dealings in securities, supplies or other articles of
commerce ... to the amount of more than $50,000, in
the aggregate, in any one year, with another corpor-
tion ... when the said common carrier shall have upon
its board of directors or as its president ... any person
who is at the same time a director (or) manager... of
... Such other conporation unless .. . such dealings
shall be with the bidder whose bid is the most favorable
to such common carrier, to be ascertained by competi-
tive bidding.’’
33. The transfer of St. Croix Paper stock to B&A and
B&A’s transfer of its stated $100 par value preferred stock
without compliance with 15 USC Section 20 constituted a
violation of said Statute as to which plaintiffs BAR and BIC
are entitled by law to obtain treble damages and reasonable
counsel fees for the prosecution of this Count pursuant to
the provisions of 15 USC Section 15.
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Amended Complaint
COUNT V
St. Croix Paper Stock—Maine Public Utilities Law
34. Plaintiff BAR re-alleges the allegations of para-
graphs 23-29 above, inclusive (Count III).
35. At the time of these transactions, B&A owned more
than 25% of the common stock of BAR, to wit, at least
80% thereof.
36. BAR is a ‘‘public utility’’ as defined in the Maine
Public Utilities Act 35, MRSA Section 15.
37. BAR’s taking of B&A’s note in the amount of
$427,000 in paragraph 27 above and payment of $68,914 in
cash by BAR to B&A as set forth in paragraph 27 above,
were done without the prior written approval of the Maine
Public Utilities Commission and constitute a violation of
35 MRSA Section 104. Failure to obtain such prior
approval rendered the aforesaid note and payments void,
and hence the entire transaction as set out in paragraphs
23-29 is void.
COUNT VI
St. Croix Paper Stock—Securities Exchange Act
» Violation
38. Plaintiff BAR re-alleges the allegations of para-
graphs 23-29 above, inclusive.
39. The transaction involving the transfer of St. Croix
Paper stock by BAR’s wholly-owned subsidiary BIC to
B&A involved the use of ‘‘manipulative or deceptive device
or contrivance’’ in connection with the purchase or sale
of a security in violation of Section 10b of the Securities
Exchange Act, Title 15, USC Section 78(j)(b) and Rule
10b-5 thereunder in that (i) B&A did not disclose to either
BAR or BIC that negotiations were taking place between
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Amended Complaint
GP and St. Croix Paper Company for an exchange of stock,
(ii) B&A did not disclose to either BAR or BIC that
negotiations were taking place between GP and St. Croix
Paper Company for an exchange of stock and that the
management of B&A had a pre-conceived plan for disposing
of the St. Croix Paper stock that it proposed to keep after
ostensibly paying what appeared to be fair compensation
to BIC for the St. Croix Paper stock, and (iii) the value of
the said stated $100 par value preferred stock of B&A
issued to BIC and BAR in consideration of the St. Croix
Paper stock had a value which, even when added to the
other consideration received by BIC and BAR, was sub-
stantially less than the St. Croix stock transferred by BIC
and BAR.
40. The use of such manipulative or deceptive device
or contrivance entitles plaintiff BAR or BIC to rescission
or, in the alternative, to monetary damages in an equivalent
amount.
COUNT VIL“
Payment of Special Dividends—Common Law
41. Operations formulated.a /policy whereby plaintiff
BAR would declare special dividends in order to provide
working capital for Operations. First, on or about October
13, 1964, the effective date of the merger of B&A and
Operations, B&A and Operations caused BAR to declare
and pay a special cash dividend of $2.60 per share. As
owner of approximately 98% of the outstanding capital
stock of BAR, B&A received said dividend in cash and, in
liquidation, was able to transfer cash in the amount of
$336,978.75 to Operations.
42. In July 1966, Operations continued its special
dividend policy in order to reduce the substantial indebted-
ness owed by Operations to BAR. This consisted primarily
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Amended Complaint
of obligations assumed by Operations upon its merger with
B&A, including promissory notes to BAR aggregating
$602,000 and a promissory note to BIC, the wholly-owned
subsidiary of BAR, in the amount of $585,700. To reduce
or discharge these notes, Operations caused BAR to pay
special dividends in July 1966 and January 1967 each in
the amount of $2.50 per share. Thus, in July 1966, the
special dividend declared by BAR reduced Operations
debt to it from $602,000 to $158,772.50, the dividend being
$443,227.50. Again, on or about January 27, 1967, Opera-
tions first caused BIC to declare a dividend of $585,700 to
BAR, consisting, in its entirety, of the promissory note of
Operations in that amount held by BIC, and then simul-
taneously BAR declared a special dividend of $2.50 of
which $443,340 was applied against the aforesaid note of
Operations, leaving a balance due of $142,360. By pay-
ment of these two special dividends, Operations reduced its
indebtedness to BAR from $1,187,700 to $301,132.50.
43. The declaration and payment of these special
dividends by the board of directors of BAR was caused by
B&A and Operations misleading and deceiving the BAR
directors for the sole and exclusive benefit of Operations.
Prudent and informed directors exercising independent
judgment with all facts disclosed would never have declared
these dividends. The policy served to deprive plaintiff
BAR of a source of cash which could and would have been
utilized for necessary maintenance and equipment acquisi-
tions and replacements, all to the injury of BAR and the
public which it serves.
COUNT VIII
Payment of Special Dividend—Securities Law
44. Plaintiff BAR re-alleges the allegations of para
graphs 41-43.
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Amended Complaint
45. Said cancellation of notes and other matters relat-
ing to the payment of special dividends constituted a
purchase of securities by BAR, and was accomplished by
B&A and Operations using manipulative or deceptive de-
vices or contrivances in connection therewith in violation
of Section 10b of the Securities Exchange Act, Title 15,
USC Section 78(j) (b), and Rule 10b-5 thereunder.
“Bs
COUNT IX
Borrowing to Pay BAR Dividend—Common Law
46. The BAR balance sheet as of August 31, 1967, did
not meet the requirements governing payment of regular
dividends as set forth in the certain Supplemental Bond
Indenture of February 1, 1956 between BAR and the Old
Colony Trust Company of Boston, Massachusetts, Trustee,
relating to 444% First Mortgage Bonds of BAR. Spe-
cifically, Article 7, Section 11 of said Indenture provided
that BAR would not declare or pay any dividends if ‘‘after
giving effect thereto, Net Working Capital is less than the
sum of (y), Fixed Charges for the next ensuing twelve
months’ period and (z) the then annual sinking fund
requirements (on a non-cumulative basis) on all outstand-
ing bonds’’. As of August 30, 1967, BAR’s fixed charges
for the next twelve-month period were approximately
$1,300,000 and the sinking fund requirement was $125,000
so that in order to declare dividends, working capital would
have to exceed $1,425,000 and the dividends so declared
could only be in the amount of such excess. The aforesaid
balance sheet as of August 31, 1967, showed working capital
of only $1,070,000, and the balance sheet of September 30,
1967, showed working capital reduced to $795,000.
47. In order to ‘‘meet’’ the dividend requirement of
said Indenture on October 30, 1967, BAR’s wholly-owned
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Amended Complaint
subsidiary, BIC, on or about October 26, 1967, borrowed,
on demand, $1,200,000 from a bank. Immediately there.
after, BIC loaned said amount to BAR for a term of fifteen
months. Neither the borrowing by BIC nor the lending of
borrowed funds by BIC to BAR were approved by either
the directors of BAR or BIC. The loan to BAR of
$1,200,000, ostensibly being for a term in excess of one year,
was recorded on BAR’s books as a long-term debt and
BAR’s net working capital was thereby ‘‘increased’’ by
$1,200,000 on its balance sheet as of October 31, 1967. In
fact, BAR repaid the loan of $1,200,000, with interest
amounting to $3,667, on November 15, 1967. After the loan
had been repaid and BAR’s ‘‘working capital’’ reduced as
a result thereof, Operations caused BAR’s Executive Com-
mittee, on or about December 1, 1967, to declare a regular
dividend to be paid on December 29, 1967, in the amount of
20¢ per share, based on the balance sheet of October 31,
1967. The total amount of such dividend was $35,962, of
which Operations received approxiinately $35,500.
48. The aforesaid loan of $1,200,000 was obtained solely
for the express purpose of wrongfully appearing to satisfy
the dividend restriction contained in the Supplemental
Bond Indenture. Payment of said dividend was improper
under the Indenture in violation of the duties of the BAR
directors to BAR. The scheme constituted a conversion
and misappropriation of the assets of BAR.
“ COUNT X
Borrowing to Pay BAR Dividend—Securities Law
49. Plaintiff BAR re-alleges the allegations of para-
graphs 46-48.
50. Said borrowing and payment of dividend consti-
tuted a manipulative or deceptive device or contrivance in
19
Amended Complaint
violation of Section 10(b) of the Securities Exchange Act,
Title 15 USC Section 78(j)(b), and Rule 10b-5 thereunder,
and constituted a continuance of the underlying scheme to
wrongfully deprive BAR of its cash and assets.
COUNT XI
B&A Loan—Common Law
51. In July 1960, B&A caused BAR to loan B&A an
aggregate amount of $75,000, evidenced by two notes, each
bearing interest at 5%. On or about November 30, 1960,
B&A caused BAR’s board of directors to excuse payment
of all interest on the loan. Operations assumed the obliga-
tions on the loan when B&A was merged into it in 1964.
When BAR declared a special dividend on June 15, 1966,
the amount of the dividend was applied in reduction of the
amount owed by Operations to BAR. No interest was ever
paid by B&A or Operations on the two notes.
52. The non-payment of interest with respect to the
aforesaid loan was unfair to BAR, did not result from
arms-length bargaining and constituted wrongful exploita-
tion by B&A and Operations of BAR for the sole and
exclusive benefit of B&A and BAR.
COUNT XI
B&A Loan—Clayton Act
53. Plaintiff BAR re-alleges the allegations of para-
graphs 51-52 herein.
d4. At the time of making of the aforesaid loan, BAR
and B&A had seven common directors and the same
president.
dd. The aforesaid loan as evidenced by the two afore-
said notes constituted a violation of Section 10 of the Clay-
ton Act (Title 15 USC Section 20) and Plaintiff is entitled
to obtain treble damages and reasonable counsel fees for
20
Amended Complaint
the prosecution of this Count pursuant to the provisions of
15 USC Section 15.
‘COUNT XII
B&A Loan—Securities Law
56. Plaintiff BAR re-alleges the allegations of para-
graphs 51-52.
57. Said transaction constituted a manipulative or de.
ceptive device or contrivance in violation of Section 10(b)
of the Securities Exchange Act, Title 15 USC Section
78(j)(b), and Bule 10b-5 thereunder, in that B&A had no
intention of ever repaying the loan or any interest thereon
and that this was a part of the underlying scheme to wrong-
fully deprive BAR of its cash and assets.
Wuenerorg, Plaintiff BAR requests that it have jJudg-
ment jointly and severally against the Defendants as fol-
lows:
(1) Under Count I for $810,000.
(2) Under Count II for $810,000.
(3) Under Count III for $1,995,062 plus $54,114,
plus $14,800, plus the amounts realized by the
defendants on the sale of the 2,203.1425 shares
of G.P. stock received in the Taylor settlement,
less the amount of the obligations B&A assumed
in connection with the St. Croix transactions,
being $200,000 plus $585,700, leaving approxi-
mately $1,500,000 which BAR seeks as judgment
on this Count.
(4) Under Count IV for triple the damage under
Count II, totaling approximately $4,500,000
plus reasonable attorney’s fees.
(5) Under Count V for approximately $1,500,000.
(6) Under Count VI for approximately $1,500,000.
(7) Under Count VII for $1,223,546.25.
PRES 23 Sete,
OPS We Le >
21
Amended Complaint
(8) Under Count VIII for $1,223,546.25.
(9) Under Count IX for $39,629.
(10) Under Count X for $39,629.
(11) Under Count XI for fair and reasonable in-
terest on the $75,000 in loans from the date of
making.
(12) Under Count XII for triple the damages in
Count XI, plus reasonable attorneys’ fees.
(13) Under Count XIII for fair and reasonable in-
terest on the $75,000 in loans from the date of
making.
(14) And, in addition, wherever proper, for interest,
fair and reasonable attorneys’ fees, costs and
such other relief as appears just and equitable.
Dated at Portland, Maine, this 18th day of August, 1972.
Bancor anp Aroostook Rarroap
CoMPANY
AND
Bancor Investment CoMPANY
/s/ Rocer A. Putnam
Their Attorney
Vegrmt, Dana, PHILBRick
Putnam & WiLLiaMson
57 Exchange Street
Portland, Maine 04111
207-774-4573
Exy, Barttett, Brown & Proctor
225 Franklin Street
Boston, Massachusetts 02110
Auan L. LerKxowrrz, Esq.
Epwarp T. Rosryson, Esa.
617-482-2310
22
Amended Complaint
Bancor anp Aroostook Rarroap Company Er Ats
vs.
Bancor Punta Opgrations, Inc. Et Aus
Schedule A
to Amended Complaint
Number Date of
Stockholder of Shares Acquisition
Harry N. Ball __.--_---------—-- 50 5/29/56
Bangor Punta Operations, Inc._-_- 26 8/ 8/71
Adele Bevilacqua -_ 32 2/20/65
Dorothy H. Corbett - _ 300 12/ 4/45
| 15 4/ 1/55
Thomas C. Corbett __----------- 300 3/ 5/56
Mrs. Ruth M. Fox 1 4/ 1/55
Wilbar M. Hoxie ____----------- 2 8/ 9/49
Murray Kaplan - 2 100 12/10/59
Carl Lehr - 5 12/ 1/60
Theodore N. Levin 5 7/ 7/66
Carl M. Sangree, Jr. ----------- 9 3/ 5/56
Donald B. Smith, Jr. _---------- 2 6/21/61
Mrs. Ruth M. Sprague -_-------- 5 4/ 1/55
Stuart R. Stevenson __----_-_--- 3 1/17/63
Archibald Roy Thomson, Jr. __--- 1 8/26/65
Tweedy, Browne & Knapp ------- 1 2/ 3/71
Mrs. Beverly M. Wiggert _------- 67 10/ 5/65
Mrs. Edith E. Wiggert _--------- 50 9/12/51
10/31/51
4 4/ 1/58
rs PER POLIO EIA Rt Ae. SET ADA EGY POSEN PEI A al Lt gee BLES OG
23
Amended Complaint
Number Date of
Stockholder of Shares Acquisition
Mrs. Jeannie E. Wiggert ________ 15 10/ 5/65
Harry H. Wiggert ____--_-_______ 50 11/15/51
50 4/ 7/54
5 4/ 1/55
26 8/26/64
John Clayton Wiggert ___-_______ 20 9/12/51
30 12/ 3/51
50 11/15/51
5 4/ 1/55
26 8/26/64
Mrs. Mabel A. Wiebke __________ 10 2/15/34
24
UNITED STATES DISTRICT COURT
Distaict or Marz
Bancor aNp Aroostook RalLBoaD
Company AND Bancor [NvEsTMENT
ComPany,
Plaintiffs,\ Civil Action
—agamst— > No. 1933
Bayxcor Punta Operations, yc. anp
Bancor Punta CogPpoRaTION,
Defendants.
—
ANSWER
The defendants Bangor Punta Corporation (‘‘Bangor
Punta’’) and Bangor Punta Operations, Inc. (**BPO”’) for
their answers to the amended complaint, allege as follows:
Fimst;’ Deny each and every allegation contained in
Paragraph 1.
Szconp: Deny knowledge or information sufficient to
form a belief as to the truth of the allegations contained
in Paragraph 2, except admit that BAR is a Maine corpo-
ration organized in 1891 with its principal place of business
in Bangor, Maine, and is engaged principally in the railroad
business.
Trump: Deny knowledge or information sufficient to
form a belief as to the truth of the allegations contained
in Paragraph 3, except admit that between 1960 and October
2, 1969, BAR owned all of the outstanding capital stock of
BIC and BIC is a Maine corporation.
OS TEE Oe
25
Answer of Defendants
FovetH: Admit the allegations of Paragraph 9, except
deny knowledge or information sufficient to form a belief
as to the truth of the allegation that the BAR was formed
upon the advice of Salgo.
Frrrx: Admit the allegations of Paragraph 10, except
deny the allegations relating to the terms and conditions
of the Agreement between BAC and Bangor Punta and the
Court is respectfully referred to the Agreement between
BAC and Bangor Punta for the terms and conditions
thereof, and deny knowledge and information sufficient to
form a belief as to the truth of the allegation that BAC
sold its assets upon the advice of Salgo.
Sur: Deny each and every allegation contained in
paragraphs 11 and 12.
_ SgventoH: Deny knowledge or information sufficient to
form a belief as to the truth of the allegations contained in
Paragraph 13, except admit that effective as of October 1,
19%9 Amoskeag acquired 177,466 shares (or 98.3%) of the
Common Stock of BAR from BPO and Bangor Punta,
Amoskeag took over the effective management of BAR as
of October 1, 1969 and there is a report entitled ‘‘Review
of Diversified Holding Company Relationships and Trans-
actions of Bangor Punta Corporation’’.
Eicutu: Deny knowledge or information sufficient to
form a belief as to the truth of the allegations contained
in Paragraph 14, except admit that Amoskeag purchased
177,466 shares of Common Stock of BAR from BPO and
Bangor Punta by an agreement effective as of October 1,
1%9 for approximately $5 million, there were minority
stockholders (1.7%) of the BAR prior to October 1, 1969
and BPO is the owner of 26 BAR shares as reflected in
Schedule A.
26
Answer of Defendants
Nixto: Deny knowledge or information sufficient to
form a belief as to the truth of the allegations contained
in Paragraph 15, except admit that BAR had creditors dur.
ing the period of time covered by the amended complaint.
Tentu: Deny each and every allegation contained in
Paragraph 16.
Exeventu: Deny knowledge or information sufficient
to form a belief as to the truth of the allegations contained
in Paragraph 17.
TwetrtH: Deny each and every allegation contained in
Paragraphs 18 and 19.
TuretTeenTH: Repeat and reiterate their answers as set
forth in Paragraphs Eleventh and Twelfth herein to the
allegations of Paragraph 20.
Fourreentu: Deny knowledge or information sufficient
to form a belief as to the truth of the allegations contained
in Paragraph 22.
Firreenta: Deny knowledge or information sufficient
to form a belief as to the truth of the allegations contained
in Paragraphs 23, 24, 25, 26, 27, 28, 29, 30 and 31.
’ SrereenrH: Deny each and every allegation contained
in Paragraph 33.
SeveNTEENTH: Repeat and reiterate their answers as
set forth in Paragraph Fifteenth herein to each and every
allegation in Paragraph 34.
E:cutzentH: Deny knowledge or information sufficient
to form a belief as to the truth of the allegations contained
in Paragraph 37.
27
Answer of Defendants
NINETEENTH : Repeat and reiterate their answers as set
forth in Paragraph Fifteenth herein to each and every
allegation in Paragraph 38.
TwentreTH: Deny each and every allegation contained
in Paragraphs 39 and 40.
Twenty-First: Deny knowledge or information suffic-
ient to form a belief as to the truth of the allegations con-
tained in Paragraphs 41, 42, 43, 44, 45, 46, 47, 48, 49, 50,
51 and 52.
TWENTY-sECOND: Repeat and reiterate their answers as
set forth in Paragraph Twenty-first herein in respect of
Paragraphs 51 and 52 to each and every allegation in Para-
graphs 53 and 56.
TwenTy-THmmD: Deny each and every allegation con-
tained in Paragraphs 55 and 57.
As and For a First Affirmative Defense
Twenty-rourtH: The causes of action alleged in the
complaint are barred by the applicable statutes of limita-
tions.
As and For a Second Affirmative Defense
Twenty-FirtH: The complaint fails to state a cause of
action. ,
As and For a Third Affirmative Defense
Twenty-stxta: The Amoskeag Company having pur-
chased approximately 99% of the BAR shares from Bangor
Punta subsequent to the acts alleged herein, plaintiffs are
estopped from maintaining this action.
ae
28
Answer of Defendants
As and For a Fourth Affirmative Defense
TwENTY-SEVENTH: Plaintiffs had notice of all of the
facts and all of the acts of the defendants set forth in the
complaint and nevertheless have refrained from commenc-
ing this action until December 31, 1971 and have thereby
been guilty of such laches as should in equity bar the
plaintiffs from maintaining this action.
As and For a Fifth Affirmative Defense
TwENTY-EIGHTH: Plaintiffs, with full knowledge of all
of the facts relating to the transactions alleged in the
complaint, duly ratified and affirmed the acts of the defend-
ants alleged in the complaint.
As and For a Sixth Affirmative Defense
TWENTY-NINTH: Plaintiffs do not have the capacity to
maintain this action.
Dated: Portland, Maine
September 15, 1972
Beenstems, Sour, Sawyer & NELson
Attorneys for Defendants
Bancor Punta Operations, Inc.
and Bancor Punta CorporaTiox
One Monument Square
Portland, Maine 04111
Of Counsel: Telephone: (207) 774-6291
Wesster SHEFFIELD FLEISCHMANN
Hrrencock & BrookFieLp
One Rockefeller Plaza
New York, N. Y. 10020
Telephone: (212) 582-3370
29
UNITED STATES DISTRICT COURT
District or Maing
NortTHERN Drvision
Bancor aND Aroostook Ratroap
CoMPANY AND BanGor INVESTMENT
Company,
Plaintiffs,| Civil Action,
v. > Docket
No. 1933
Baxcok Punta Operations, Inc. anp
Bancok Punta CoRporaTIoN,
Defendants.
Motion For Summary Judgment
The Defendants respectfully move that summary judg-
ment be granted in favor of the Defendants pursuant to
F.R.C.P. Rule 56(b) :
(1) By dismissing the entire complaint, as amended,
herein, with prejudice, for the reason that the complaint
fails to state a cause of action on behalf of the corporate
Plaintiffs; or, in the alternative,
(2) By dismissing each of Count II and Count V of the
amended complaint herein, with prejudice, for the reason
that each of them fails to state a cause of action.
The Defendants’ Memorandum of Law in support of this
Motion dated September 15, 1972, is herewith submitted.
Dated at Portland, Maine, this fifteenth day of Septem-
ber, A.D. 1972.
Bancor Punta Operations, Inc.
and
Banoor Punta Corporation
/s/ Hersert H. Sawyer
Attorney for the Defendants
Begenstern, Sour, Sawyer &
NELSON
One Monument Square
Portland, Maine 04111
30
December 29, 1972, District Court Opinion
Bancork anp Aroostook Rarmroap Company and
Banocor InvestMENT CoMPANY,
Plaintifs,
v.
Bancor Punta Operations, Inc. and
Banoor Punta Corporation,
Defendants,
Civ. No. 1933.
Unrrep States District Count
D. Marngz, N. D.
DeceMBeER 29, 1972.
OPprINIon AND ORDER OF THE CouRT
Gienovx, District Judge.
This action arises under the Securities Exchange Act of
1934, the Clayton Antitrust Act, the Maine Public Utilities
Act, and the common law of Maine. Plaintiff Bangor and
Aroostook Railroad Company (BAR) is a Maine corpora-
tion which operates a railroad in the northern part of the
State of Maine. Plaintiff Bangor Investment Company
(BIC), a Maine corporation, is a wholly-owned subsidiary
of BAR. Defendant Bangor Punta Corporation (Bangor
Punta), a Delaware corporation, is a diversified holding
company with operating units in various industries. De-
fendant Bangor Punta Operations, Inc. (BPO), a New York
corporation, is a wholly-owned subsidiary of Bangor Punta.
On October 13, 1964, Bangor Punta, through its wholly-
owned subsidiary BPO, became the owner of approximately
98.3% of the stock of BAR when BPO acquired all the assets
of Bangor and Aroostook Corporation (BAC), a Maine
31
December 29. 1972, District Court Opinion
holding company which BAR had caused to be formed in
1960. From October 13, 1964 until October 2, 1969, Bangor
Punta owned through BPO approximately 98.3% of all the
outstanding stock of BAR. On October 2, 1969, BPO sold
all its stock interest in BAR to Amoskeag Company
(Amoskeag), a Delaware investment company controlled
by Frederic C. Dumaine, Jr., for a consideration of approx-
imately $5,000,000. Subsequently, Amoskeag has pur-
chased additional BAR shares, and now owns over 99% of
all the outstanding capital stock of BAR.
The complaint contains thirteen counts and seeks dam-
ages totaling appproximately $7,000,000 for misappropria-
tion and waste of corporate assets alleged to have been
caused to BAR by four intercompany transactions, which al-
legedly took place between BAC or Bangor Punta and BAR
during the period between 1960 and 1967, while BAC and
then Bangor Punta were in control of BAR. Counts I and
Il are brought, respectively, under the common law of Maine
(Count I) and Section 104 of the Maine Public Utilities
Act (35 M.R.S.A. § 104) (Count Il). They charge that
BAC, and later BPO, improperly charged BAR for nominal
legal, accounting, printing and other services furnished
BAR by BAC and BPO. Counts III, IV, V and VI are
brought, respectively, under the common law of Maine
(Count III); Section 10 of the Clayton Antitrust Act (15
US.C. ¢ 20) (Count IV) ; Section 104 of the Maine Public
Utilities Act (Count V) ; and Section 10(b) of the Securities
Exchange Act (15 U.S.C. §78j(b)) and Rule 10b-5 (17
CF.R. § 240.10b-5) promulgated thereunder by the Securi-
ties and Exchange Commission (Count VI). They are
based upon the charge that BAC improperly acquired St.
Croix Paper Company stock owned by BAR through its
wholly-owned subsidiary BIC. Counts VII, VIU, IX and
Xare brought, respectively, under the common law of Maine
(Counts VII and IX) ; and Section 10(b) of the Securities
32
December 29, 1972, District Court Opimon
Exchange Act and Rule 10b-5 thereunder (Counts VII
and X). They charge that BAC and BPO improperly
caused BAR to declare special dividends to its stockholders,
including BAC and BPO, and improperly caused BIC to
borrow so as to satisfy certain balance sheet ratios required
by an earlier loan agreement in order to pay a regular
dividend. Counts XI, XII and XIII are brought, respec.
tively, under the common law of Maine (Count XI) ; Section
10 of the Clayton Antitrust Act (Count XII); and
Section 10(b) of the Securities Exchange Act and Rule
10b-5 thereunder (Count XIII). They allege that BAC im
properly caused BAR to excuse payment by BAC and
BPO of the interest due on a loan made by BAR to BAC.
In substance, the complaint alleges that Bangor Punta and
its predecessor in interest, BAC, while they were in control
of BAR through ownership of 98.3% of its stock, ‘‘caleu-
latedly drained the resources of BAR in violation of law
for their own benefit’? during the period between 1960 and
1967, prior to the time Amoskeag purchased Bangor
Punta’s interest in BAR.
Presently before the Court is defendants’ motion for
summary judgment dismissing the entire complaint, or
in the alternative dismissing the two counts brought under
the Maine Public Utilities Act (Counts II and V). De
fendants seek dismissal of the entire complaint on the
ground that Amoskeag, which would be the sole beneficiary
of any recovery by the corporate plaintiffs, was not a
stockholder of BAR at the time of the alleged improper
transactions and itself has sustained no injury as a result
thereof. The Court agrees. Since the Court therefore
concludes that the entire complaint must be dismissed, it
does not reach defendants’ alternative motion for dismissal
of Counts II and V.
It is true that, as plaintiffs assert, the present action is
an action brought by the corporate plaintiffs in their ow
33
December 29, 1972, District Court Opinion
right, and does not purport to be a derivative action on
behalf of either Amoskeag or the 1% minority stockholders
in BAR. But, looking at the substance of the action, it is
evident that the real party in interest is Amoskeag, the
present owner of over 99% of the outstanding BAR shares.
And having purchased the stock of BAR from Bangor
Punta in 1969, long after the events complained of occurred,
Amoskeag is clearly attempting, by having the corporations
which it controls bring the action in their names, to recover
the full $5,000,000 consideration paid to Bangor Punta for
the BAR shares, plus $2,000,000 more, while still keeping
the BAR shares. Amoskeag does not claim that it was
deceived or defrauded by Bangor Punta when it purchased
its BAR stock, or that it did not get full value for its
purchase price. Nor do plaintiffs claim to bring this
action on behalf of any creditors or in the public
interest. It would accordingly be contrary to settled equi-
table principles to permit Amoskeag, by thus using the cor-
porate fiction, to acquire a windfall for any past misbehavior
on the part of Bangor Punta during the period when
Amoskeag had no interest in BAR and sustained no injury,
direct or indirect, as a result of Bangor Punta’s alleged
improper acts.
Plaintiffs admit that the alleged wrongs took place
before Amoskeag purchased its BAR stock from Bangor
Punta. Under these circumstances, there can be little doubt
that Amoskeag would be barred from maintaining a deriv-
ative suit on behalf of BAR for the wrongs alleged to have
occurred before Amoskeag purchased its BAR shares. As
to the claims asserted under the Securities Exchange Act
and the Clayton Antitrust Act, Fed.R.Civ.P.23.1 would
apply and in terms requires contemporaneous ownership
for maintenance of a stockholder derivative action. Suro-
witz v. Hilton Hotels Corp., 342 F. 2d 596, 604 (7th Cir.
ee ee
a ee ae ey
34
December 29, 1972, District Court Opinion
1965) ; Gottesman v. General Motors Corp., 28 F.R.D. 32
(S.D.N.Y.1961). To the extent that plaintiffs’ claims arise
under state law, jurisdiction being based upon diversity
of citizenship, there is doubt as to whether the federal rule
or state law applies. See 3B Moore’s Federal Practice (2d
ed. 1969) {| 23.1.15[2]. The majority of states, however,
also have adopted the contemporaneous ownership rule,
either by judicial decision or by statute. Jd. at note6. And
even in those cases where the rule has not been applied, it
has been held that a subsequent shareholder cannot sue
where, as in the present case, he acquired his stock from
the alleged wrongdoer, who himself would have been barred
by his participation and acquiescence.’ See, e. g., Blood-
worth v. Bloodworth, 225 Ga. 379, 387, 169 S.E.2d 150,
156-157 (1969); Babcock v. Farwell, 245 Ill 14, 40-41, 9
N.E. 683, 692-693 (1910) ; Home Fire Insurance Co. v. Bar-
ber, 67 Neb. 644, 661-662, 93 N.W. 1024, 1030-1031 (1903);
Bookman v. R. J. Reynolds Tobacco Co., 138 N.J.Kq. 312,
372, 48 A.2d 646, 680 (Ch.1946). Plaintiffs instituted the
present suit two days prior to the effective date of the new
Maine Business Corporation Act, which adopts the con
temporaneous ownership rule, 13-A M.R.S.A. § 627(1)(A)
(1972). It is an open question in Maine whether the con-
temporaneous ownership rule applied at the time the pres
ent suit was brought. See Field, McKusick & Wroth, Maine
1. Plaintiffs allege no facts which would support the allegation m
their complaint that “[t]he injury to BAR is a continuing one sut-
viving the aforesaid sale [from BPO] to Amoskeag.” There is thus
no basis for any suggestion that they may rely upon the “continuing
wrong” exception to the contemporaneous ownership rule, which per-
mits a subsequent stockholder to maintain a derivative suit if the
alleged wrongful acts and their effects continue and are injurious to
to him. Moreover, there is serious question as to whether such an
exception should be recognized at all. Compare Duncan v. National
Tea Co., 14 Ill.App.2d 280, 144 N.E.2d 771, 775 (1957) with Wen
haus v. Gale, 237 F.2d 197, 199-200 (7th Cir. peek Bowman v.
Alaska Airlines, 14 Alaska 62, 14 F.R.D. 70, 72 (1952).
35
December 29, 1972, District Court Opinion
Civil Practice (2d ed. 1970) § 23.2 at 393.2 But there is no
indication in the Maine cases that the Maine court would
not have followed the prevailing rule. In such situations,
where the law of the particular state is not shown to be in
conflict with the federal rule, federal courts will apply
Rule 23.1. Gallup v. Caldwell, 120 F.2d 90, 94-95 (3rd Cir.
1941); Mullins v. DeSoto Securities Co., 45 F.Supp. 871,
878 (W.D.La.1942); see 3B Moore’s Federal Practice,
{ 23.1.-15[2] at n. 13. Thus, whether the federal rule or
Maine law is applicable, Amoskeag could not maintain a
derivative action against the defendants.
From the foregoing, it is evident that Amoskeag,
by causing the plaintiff corporations to bring this action, is
attempting to accomplish indirectly what it could not do
directly. Plaintiffs contend that the Court cannot look
beyond the corporate form to the substance of the corporate
claims and the true beneficiary thereof. But the four inter-
company transactions that are the basis of plaintiffs’ claims
are typical stockholder claims seeking an accounting for
alleged misappropriation and waste of corporate assets by
controlling stockholders. Equitable considerations must be
applied in such actions. Amen v. Black, 234 F.2d 12 (10th
Cir. 1956) ; Matthews v. Headley Chocolate Co., 130 Md. 523,
2. Defendants point to Hyams v. Old Dominion Co., 113 Me.
294, 93 A. 747 (1915) as indicating the new Maine Business Cor-
poration Act merely codified pre-existing Maine law. In that case,
the defendant objected that the plaintiff could not complain because
the wrong, if any, was done se he became a stockholder. The
court said : “One answer to this, and a sufficient one, is that the wrong
is a continuing one.” 113 Me. at 302, 93 A. at 750. See also Jeffs v.
Utah Power and Light Co., 136 Me. 454, 465 12 A.2d 592 (1940).
Although it can be argued that by applying the continuing wrong
exception to the contemporaneous ownership rule, see note 1, supra,
the Maine court impliedly acknowledged that Maine law required
contemporaneous ownership in shareholder actions, the court’s cryptic
statement is indeed “too enigmatic to be very helpful.” Field,
McKusick and Wroth, Maine Civil Practice, supra.
36
December 29, 1972, District Court Opvmon
100 A. 645 (1917); Home Fire Insurance Co. v. Barber,
supra. Nor does characterizing the actions as claims arising
under federal statutes save them from the scrutiny of equity.
Columbia Nitrogen Corp. v. Royster Co. 451 F.2d 3, 15-16
(4th Cir. 1971) (antitrust laws) ; Royal Air Properties, Inc.
vy. Smith, 312 F.2d 210, 213-214 (9th Cir. 1962) (securities
laws). See also Edwin L. Wiegand Co. v. Harold E. Trent
Co., 122 F.2d 920, 925 (3rd Cir. 1941) (copyright laws).
The equitable principle that the corporate form ‘‘will not
be allowed to be pushed to the extent of furthering injustice
rather than justice’’ is well established, and has been ap
plied to cases where the plaintiff attempted to use the cor-
porate form to achieve results which he could not accom-
plish in his own right. Western Battery & Supply Co. v.
Hazelett Storage Battery Co., 61 F.2d 220, 230 (8th Cir.
1932), cert. denied, 288 U.S. 608, 53 S.Ct. 399, 77 L. Ed
982 (1933); Shamrock Oil and Gas Co. v. Ethridge, 159
F.Supp. 693 (D. Colo. 1958). Since Amoskeag, which did
not itself incur any damage as a result of defendants’ al-
leged wrongful acts, and not the corporate plaintiffs, is the
real beneficiary of any recovery which might be had in the
name of the corporate plaintiffs, the corporate claims must
fail for lack of equity on the part of those who would ult-
mately benefit from any corporate recovery.
The applicable principle was stated long ago by Dean
Roscoe Pound, then a Commissioner of the Supreme Court
of Nebraska, in the leading case of Home Fire Insurance
Co. v. Barber, supra:
Where a corporation is not asserting or endeavor-
ing to protect a title to property, it can only maintain
a suit in equity as the representative of its stockholders.
If they have no standing in equity to entitle them to
the relief sought for their benefit, they cannot obtain
such relief through the corporation or in its own name.
(citations omitted). It would be a reproach to courts
37
December 29, 1972, District Court Opinion
of equity if this were not so. If a court of equity could
not look behind the corporation to the shareholders,
who are the real and substantial beneficiaries, and as-
certain whether these ultimate beneficiaries of the relief
it is asked to grant have any standing to demand it,
the maxim that equity looks to the substance, and not
the form, would be very much limited in its application.
67 Neb. at 664-665, 93 N.W. at 1031-1032.
In Home Fire, the court sustained a corporate claim, which
it considered to be brought at law, to recover company
monies wrongfully withdrawn by Barber and converted to
his own use. But the court denied recovery by the corpora-
tion upon claims, which it considered to be brought in
equity, for corporate mismanagement and waste allegedly
committed by Barber, where the existing stockholders, who
would be the real beneficiaries of a recovery, had acquired
their stock subsequent to the acts complained of, and were
hence found to have no standing in equity.
The case of Amen v. Black, supra, presented facts
similar to the instant case. In Amen, a corporation,
through its receivers, asserted claims for recovery of the
profits allegedly realized by Black, its former president and
chairman of the Board, from the improper use of company
funds and from the sale of corporate stock which Black had
wrongfully obtained from the corporation and later sold to
N.C.R.A. The court denied relief to the corporation,
holding :
Looking at the substance of the corporate claims
and the beneficiaries thereof, it becomes readily ap-
parent that the principal beneficiary of any recovery
on behalf of the corporation would be the N.C.R.A.
who became the principal stockholder upon the pur-
chase of a majority of the stock in 1947. And having
38
December 29, 1972, District Court Opinion
purchased the stock of the corporation from Black in
an arms length transaction, and having received the
full value of its purchase, any recovery as stockholder -
beneficiary of the dissolved corporation would be tan-
tamount to recoupment of the legitimate purchase price
of the stock. Obviously there are no equities in sucha
result, and we therefore hold that the corporate claims
must fail for lack of standing to maintain the suit and
for want of equity on the part of the beneficiaries in
any corporate recovery. 234 F.2d at 23.
Similarly, in Matthews v. Headley Chocolate Co., supra
Headley Chocolate Company commenced an action against
Matthews and six other former directors and controlling
shareholders to recover damages for the alleged wrongful
misappropriation of corporate assets. Subsequent to the
alleged wrongs, Matthews had sold a controlling interest
} in the corporation to one Rodda and his associates. After
concluding that Rodda would be barred from maintaining
a derivative action, the court stated:
The question then is whether this bill can be sus
tained in the name of the corporation, and, if so, how
the defendants can be protected from claims we have
spoken of as not entitled to relief. Inasmuch as by
the change of the majority of stock those who were
minority stockholders at the time of the transactions
complained of are now able to have the suit brought in
the name of the company, we are of the opinion that
it can be maintiined, in that name, instead of in the
names of the minority stockholders but for their
benefit. But while that is so, if there be any recovery
by reason of the claims spoken of, it can only be to the
extent of the proportions of the sum recovered due
such minority stockholders, if any, as are not barred by
39
December 29, 1972, District Court Opinion
laches, limitations, acquiescence, or other way suf-
ficient to bar them in equity, and anything recovered
should be directed to be paid to them by the corpora-
tion. Any defense that could have been made against
the minority stockholders if they had sued in their own
names should be allowed, notwithstanding the fact that
the suit is in the name of the corporation. It seems
to us that that course is the only one which in equity
and justice can be adopted in this case. The pur-
chasers from Matthews have lost nothing, so far as the
bill discloses, and if he deceived them in the sale, they
have their remedy against him individually, but they
should not be permitted to use the corporate name to
veil defects in the title to the stock transferred to them
by the former stockholder who received about two-
thirds of the amounts claimed to have been improperly
paid. 130 Md. at 536-537, 100A. at 651.
Thus, the court in Headley Chocolate, while holding that
the corporation had standing to sue, held it could recover
only for those minority stockholders who held their shares
at the time of the alleged wrongs and who were not barred
by any equitable defenses In the present case, plaintiffs
have expressly disclaimed that they are seeking a pro-
portionate recovery on behalf of the 1% minority stock-
holders in BAR.
The principle that a suit cannot be brought by a
corporation where the ultimate beneficiaries of a corporate
recovery would be barred was also applied in Capitol Wine
and Spirit Corp. v. Pokrass, 277 App. Div. 184, 98 N.Y.S.2d
21 (Ist Dep’t. 1950), aff’d, 302 N.Y. 734, 98 N.E.2d 704
(1951).
Research has disclosed no case the holding of which is
contrary to that of the foregoing authorities. In Central
40
December 29, 1972, District Court Opinion
Railway Signal Co. v. Longden, 194 F.2d 310 (7th Cir.
1952), cited by plaintiffs, the court found that there had
been no change of ownership of the plaintiff corporation
subsequent to the time of the acts complained of. Id. at
321. The court’s comments on the present question were
dictum unnecessary to the decision of the case, and in any
event the court seems to be saying no more than that Fed
R.Civ.P. 23 (b) (the predecessor of Rule 23.1) does not
apply to a suit by a corporation. Idem. Furthermore, it
does not appear that Longden, the alleged wrongdoer, wasa
controlling stockholder, or that the owner of 99% of plain-
tiffs’ stock at the time of suit had acquired its shares-from
stockholders who had participated in Longden’s wrongdo-
ing.
Plaintiffs’ final argument is that defendants are in
no position to assert equity because if recovery is here de-
nied defendants will be able to keep the fruits of their
allegedly wrongful acts. The same argument was made by
the plaintiff and rejected by the court in Home Fire Insur-
ance Co. v. Barber, supra. In the words of Dean Pound:
But it is said the defendant Barber, by reason of
his delinquencies, is in no position to ask that the court
look behind the corporation to the real and substantial
parties in interest... . We do not think such a proposi-
tion can be maintained. It is not the function of courts
of equity to administer punishment. When one person
has wronged another in a matter within its jurisdiction,
equity will spare no effort to redress the person it-
jured, and will not suffer the wrongdoer to escape resti-
tution to such person through any device or technical- .
ity. But this is because of its desire to right wrongs,
not because of a desire to punish all wrongdoers. Ifa
wrongdoer deserves to be punished, it does not follow
that others are to be enriched at his expense by a court
41
December 29, 1972, District Court Opinion
of equity. A plaintiff must recover on the strength of
his own case, not on the weakness of the defendant’s
ease. It is his right, not the defendant’s wrongdoing,
that is the basis of recovery. When it is disclosed that
he has no standing in equity, the degree of wrongdoing
of the defendant will not avail him. 67 Neb. at 673, 93
N.W. at 1035.
For the reasons stated, defendants’ motion for summary
judgment dismissing the entire complaint is granted.
It is so ordered.
42
NOTICE OF APPEAL
UNITED STATES DISTRICT COURT
Distaict or Marne
NortHesn Division
)
Bancor aNp AroosTooK RarLRoaD
Company AND Bancor INVESTMENT
CoMPaNy, a ;
Plaintiffs,| Civil Action,
v. | Docket
Bancor Punta Operations, Inc. aND No. 1933
Baneork Punta CoRPoRATION,
Defendants.
Notice is hereby given that Bangor and Aroostook Rail-
road Company and Bangor Investment Company, Plain-
tiffs above named, hereby appeal to the United States Court
of Appeal for the First Circuit from the order of the Dis-
trict Court granting Defendants’ motion for summary
judgment dismissing the entire complaint entered in this
action on the 29th day of December 1972.
January 17, 1973
/s/ Rocer A. Putnam
Counsel for Plaintiffs
Verritt Dana PHILBRICK
Putnam & WILLIAMSON
57 Exchange Street
Portland, Maine 04111
207-774-4573
ad Tea? SS
43
UNITED STATES DISTRICT COURT
District or Marne
NortTHErEN Division
Bancor aNp Aroostook Ratroap
CoMPANY AND Bancor INVESTMENT
ComPany,
Plaintiffs, Qyil Action
vs. j
No. 1933
Baxcok Punta Operations, Inc. anp
Bancog Punta CoRPoRATION,
Defendants.
Affidavit
Strate or MaInE ;
County or PENosscot :
WiuuM M. Houston, being duly sworn, deposes and
says :
1. I am presently Vice President and General Counsel
of the Bangor and Aroostook Railroad Company (hereafter
BAR). I am a member of the Maine and Massachusetts
Bars and have been since 1954. I am also the Clerk of
BAR. I was the Assistant Clerk of BAR from 1956 to 1966,
at which time I was elected Clerk and have been employed
by the BAR since 1955.
2. I have regularly attended Board meetings of the
BAR since 1955 and know the Directors of BAR by sight
and by name.
3. As of the date of the last Board meeting (December
8, 1971) there were 17 Directors of the BAR. Their names,
44
Affidavit of William M. Houston
the dates they began to serve as Directors and the dates
of any resignations are as follows:
(a)
Elected Resigned
W. Gordon Robertson —---- 1953 2— 1-1972°
Fred L. Putnam ---------- 1940
W. Jerome Strout --------- 1956
George H. Seal ------------ 1960 1- 6-1972"*
William E. Hill ----------- 1962 1-12-1972"
Wendell L. Phillips --_----- 1963
Joseph R. LaPointe ------- 1965
John RK. MePis .._______ 1967
Richard K. Warren ------- 1967
Jack Roth _- 1968
Thomas E. Houghton, Jr.-- 1968
Frederic C. Dumaine, Jr.--_ 1969
Dudley B. Dumaine -------- 1969
Roger B. Prescott, Jr. ----- 1969 .
Harry C. Weed —....._.__.. 1960 1-10-1972"
Lawrence A. Thibodeau ---. 1970
Thomas S. Pinkham -_----- 1970
* Serves as General Trustee of Bangor Punta Employees
Profit Sharing Plan and Trust.
** Director of Bangor Punta Corporation.
4. Since the Amoskeag Company purchased some 99%
of the BAR stock from Bangor Punta Corporation i
October 1969, the question of possible legal proceedings
against Bangor Punta Corporation had been discussed by
the BAR Board twice at official meetings, once on July %,
1971 and once on December 8 1971. I was personally pre
sent at both meetings.
45
Affidavit of William M. Houston
5. Present at the first meeting were the following
Directors :
Frederic C. Dumaine, Jr. Wendell L. Phillips
Dudley B. Dumaine Joseph R. LaPointe
W. Gordon Robertson John R. McPike
Fred L. Putnam Thomas E. Houghton, Jr.
W. Jerome Strout Roger B. Prescott, Jr.
George H. Seal Harry C. Wood
William E. Hill Lawrence A. Thibodeau
Thomas S. Pinkham
6. At this meeting the report of the Bureau of Accounts
of the Interstate Commerce Commission, dated February
1971, and entitled ‘‘ Review of Diversified Holding Company
Relationships and Transactions of Bangor Punta Corpora-
tion’? was discussed. The Board was presented with a
resolution which would have authorized its officers to take
such action as might be necessary to recover for the BAR
such assets as were unlawfully taken from it by Bangor
Punta Corporation. Certain members of the Board were
not familiar with the ICC report. Accordingly, the Clerk
was instructed to send a copy of the ICC report to all
Directors, with the understanding that the matter would
be acted upon prior to the end of 1971. Also, at the request
of certain Directors, this item was not made a part of the
Minutes of that meeting. The report was mailed by me to
all Directors on August 26, 1971.
7. Present at the second meeting were the following
Directors :
Frederic C. Dumaine, Jr. John R. McPike
D. B. Dumaine Roger B. Prescott
W. Jerome Strout Harry C. Wood
Wendell L. Phillips Thomas S. Pinkham
Joseph R. LaPointe Richard K. Warren
46
Affidavit of William M. Houston
8. Also present was Mr. Roger A. Putnam, Esq. Mr.
Putnam went over, paragraph by paragraph, a proposed
form of Complaint against Bangor Punta. I had personally
mailed out to all Directors of the BAR six (6) days before
the meeting a copy of this draft, notifying all Directors that
at the meeting to be held on December 8, 1971 at Bangor,
consideration would be given to the authorization of legal
action on behalf of BAR vs Bangor Punta Corporation and
related companies. This draft is substantially the same
as the actual Complaint filed in this case. Mr. Putnam
discussed in detail the legal and factual phases of the case,
9. Following Mr. Putnam’s presentation, Mr. Frederic
C. Dumaine, Jr. introduced a resolution concerning litiga-
tion against Bangor Punta Corporation. Following some
discussion and some amendments, the resolution was
adopted unanimously. An accurate copy of this resolution
is attached to my Affidavit marked Exhibit A.
/s/ Wru14am M. Hovstox
Sworn to before me this 17th day
of February, 1972.
/s/ M. Lucuiz Brammer
Notary Public
Nite.
47
Affidavit of William M. Houston
Exhibit A
Vorep, That the Chief Executive Officer of this corpora-
tion be and he hereby is authorized for and in its behalf,
at such time as he may determine upon advice of legal
counsel, to commence and conduct litigation against Bangor
Punta Corporation and its subsidiary, Bangor Punta
Operations, Inc., which litigation shall be based upon the
alleged wrongful acts of said Bangor Punta Corporation
and its said subsidiary while they or their predecessor or
predecessors owned and controlled this corporation; and
that said chief executive officer, any vice president, or the
treasurer of this corporation be and each hereby is author-
ized to execute for and in behalf of this corporation, upon
advice of legal counsel, all pleadings, affidavits, motions,
notice and other documents requiring execution by an officer
of this corporation and relating to the maintenance and
prosecution of said litigation.
48
AFFIDAVIT OF FREDERIC C. DUMAINE, JR.
UNITED STATES DISTRICT COURT
District oF MAINE
NorTHErN Drvision
Frederic C. Dumaine, Jr., being duly sworn, says:
(1) My name is Frederic C. Dumaine, Jr. I am pres-
ently president and a director of The Amoskeag Company
(‘‘ Amoskeag’’) and also chief executive officer and a diree-
tor of the Bangor and Aroostook Railroad Company
(‘*BAR’’). I have been employed by Amoskeag since 1914
and have held my present positions with Amoskeag since
1951.
(2) I expressly deny that this lawsuit resulted from a
personal vendetta of mine. I have no desire to harass or
to embarrass the defendants.
(3) On a business level my company, Amoskeag, has
been a stockholder in Bangor Punta Corporation
(**Punta’’) from 1964 to 1970. In 1965 Amoskeag made a
$5,000,000 loan to Punta in connection with which Amos-
keag got some conversion privileges to convert the debt
into stock of Punta. .Amoskeag later exercised these rights
and realized substantial profit.
(4) On a personal level I consider myself an old friend
of Curtis Hutchins, who has been a director of Punta since
1964 and also a large shareholder in Punta. We have
known each other around twenty years. We frequently
lunch or dine together and have exchanged visits to each
other’s homes. Mr. Hutchins and I represented our re
spective companies in the negotiations in 1969 that lead to
the sale of the BAR by Punta to Amoskeag.
(5) Also I consider myself a friend of Gordon Robert-
son, who was president of the BAR in 1960-1962 and who
49
Affidavit of Frederic C. Dumaine, Jr.
was also president of Punta from 1964-1966 and a director
of Punta through 1969. Mr. Robertson has been a director
of the BAR from 1960 up until his recent resignation.
(6) Further when Amoskeag acquired the BAR in 1969
from Punta, all the directors who had served under Punta
continued to serve as directors including three gentlemen
who were also serving as directors of Punta, Harry C.
Wood, George H. Seal, and William E. Hill
(7) While I was a witness called by the S.E.C. in the
ease S.E.C. v. Bangor Punta Corporation, 70 Civ. 3940
(S.D.N.Y.), I was not an active participant in that law suit.
The S.E.C. sought me out. It sent people to the Amoskeag
ofices here in Boston to interview me, and I testified in
response to a subpoena.
(8) While I had had some prior inklings that all was not
right with the BAR, I never seriously considered suing
Punta until after my attorneys called my attention to the
LC.C. report on Punta’s dealings with the BAR, published
last summer.
(9) After that I directed Amoskeag’s general counsel,
Ely, Bartlett, Brown & Proctor to investigate the matter
and, at their suggestion, also retained Mr. Roger A. Put-
nam of Verrill, Dana, Philbrick, Putnam, & Williamson as
Maine counsel.
(10) Later I asked the firm of McGuire, Woods & Battle
of Charlottesville, Virginia, to review the work and the
conclusions of these other lawyers.
(11) In December, 1971, Curtis Hutchins contacted me
and asked if he and some other people from Punta could
meet with me to discuss the potential law suit. I agreed
50
Affidavit of Frederic C. Dumaine, Jr.
and subsequently met with Mr. Hutchins, Mr. David W.
Wallace, the present president of Punta, and two of Punta’s
attorneys, Mr. Ryan and Mr. Phillips.
(12) The next day Curtis Hutchins called again and
asked if Mr. Ryan could meet with my lawyers at McGuire,
Woods & Battle. I agreed, and I understand that Mr. Ryan
did in fact travel to Charlottesville and meet with my law-
yers there.
- (18) I did not finally make the decision to institute this
suit until after these meetings. I did not make this decision
on the basis of personal animosity or ill-will but on the
unanimous advice of all my lawyers that the suit had merit
and should be brought.
(14) On a personal level I found bringing this suit dis
turbing, because of my personal relations down through the
years with people involved with Punta, as set out in this
affidavit above.
/s/ Freperic C. Dumarne
Sworn to before me.
February 18, 1972
/s/ Illegible
Notary Public
My Commission Expires: 8/25/78
51
UNITED STATES DISTRICT COURT
District or Marne
NortTHEgN Drvision
Bancork aND Aroostook RaILRoap
Company AND Bancor INVESTMENT
Company, _ ;
Plaintiffs,| Civil Action,
v. + Docket
No. 19
Baycok Punta Operations, Inc. anpD —_
Bancok Punta Corporation,
Defendants.
}
MOTION RE: RECORD ON APPEAL
Now comes the Plaintiffs by their attorney, Howard
H. Dana, Jr., Esquire, and move this Honorable Court as
follows :
1. Attached to Plaintiffs’ Pre-Trial Memorandum was
a copy of the Report to the Commission—Review of Diver-
sifted Holding Company Relationships and Transactions of
Bangor Punta Corporation, prepared by the Bureau of
Accounts of the Interstate Commerce Commission. This
Report was offered to indicate the public interest and con-
cern involved in the treatment of the Plaintiffs by Defend-
ants. This Report included the recommendation that,
“(A)ll legal remedies be explored to require the holding
company, which sold the carrier, to pay back to the carrier
for assets taken with no compensation and charges made
where no services were performed.’’ Report, p. 2.
tt also stated:
‘‘While recognition is given to the adverse effect
of such restitution on Punta’s stockholders, and the
52
Motion Re: Record on Appeal
apparent gift to Amoskeag’s stockholders, our primary
concern is that carrier assets remain with the carrier
for use in maintaining or improving its transportation
service to the public.”’
Report, p. 9. The Affidavit of Frederic C. Dumaine, Jr.
referred to this Report as having been a factor in this
lawsuit being seriously considered. Affidavit, paragraph 8.
9. The decision of this Honorable Court which is
appealed from states at page 5 in its decision:
‘‘Nor do plaintiffs claim to bring this action . . . in the
public interest.’’
3. Plaintiffs intend to stress in their appeal the public
interest in this suit, as indicated by the Report.
4. Plaintiffs have been advised that absent an order
by this Honorable Court, the Report will not be included
in the ‘‘Record on Appeal.’’ Rule 10, F.R.A.P.
Wuenerore, Plaintiffs respectfully request that this
Honorable Court declare that the Report, above referred
to, be included in the official ‘‘Record on Appeal”’ to the
Court of Appeals.
Dated this 14th day of February 1973.
/s/ Howarp H. Dana, Jz
Counsel for Plaintifs
Venemyt Dana PHILBRICK
Poutrywam & WiL1aMs0N
57 Exchange Street
Portland, Maine 04111
207-774-4573
No. 73-1059.
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
Bancor anp Aroostook Ramzoap ComMPany, ET AL.,
Plaintiffs, Appellants,
v.
Bancor Punta Operations, INC., ET AL.,
Defendants, Appellees.
MEMORANDUM AND ORDER
Entered March 26, 1973
The appellant’s motion pursuant to Fed.R.App.P. 10(c)
to supplement the record on appeal by inclusion of a Report
by the Interstate Commerce Commission relating to the
appellees and the events involved in this suit is denied
without prejudice to the appellant’s right to argue that the
existence of the Report and its indication that there is a
public interest in the rectification of the alleged es
is judicially noticeable.
By the Court:
/s/ Dana H. Gatiup
Clerk.
[Cert. ee: Clerk, U.S.D.C., Maine; ce: Messrs. Robinson,
Putnam, Ryan, and Sawyer. ]
oF
August 3, 1973, First Circuit Opinion
UNITED STATES COURT OF APPEALS
For tHe Fimstr Crecurr
No. 73-1059
Bancor anp Aroostook RamzoaD CoMPANY, ET AL.,
Plaintiffs, Appellants,
v.
Bancor Punta Operations, Inc., ET AL,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
Before Corris, Chief Judge,
McEnrtez and Campset., Circuit Judges,
Edward T. Robinson and Alan L. Lefkowitz, with whom
Ely, Bartlett, Brown & Proctor, Roger A. Putnam, Howard
H. Dana, Jr., and Verrill, Dana, Philbrick, Putnam € Wit
liamson were on brief, for appellants.
James V. Ryan, with whom C. Kenneth Shank, Jr., Bruce
Topman, Webster, Sheffield, Fleischmann, Hitchcock ¢
Brookfield, Sumner T. Bernstein, Herbert H. Sawyer, and
Bernstein, Shur, Sawyer & Nelson were on brief, for ap
pellees.
August 3, 1973
CampBe.t, Circuit Judge. A Maine railroad corpore
tion and its wholly-owned subsidiary bring this action
55
August 3, 1973, First Circuit Opinion
against their former owners, seeking damages under the
federal anti-trust and securities laws, and under state
law, for the alleged ‘‘looting’’ of the railroad in 1960-67
when the defendants were in control. Over 99% of its
stock was purchased from the old owners after the alleged
wrongs. The district court granted defendants’ motion
for summary judgment, holding that the railroad could not
maintain what it termed ‘‘typical stockholder claims seek-
ing an accounting for alleged misappropriation and waste
of corporate assets by controlling stockholders’’ since the
present owner was not a stockholder at the time of the
alleged improper transactions and was not injured thereby.
353 F. Supp. 724, 728 (D. Me. 1972).
Plaintiff, Bangor and Aroostock Railroad Company
(BAR),' operates a railroad in northern Maine. Plaintiff,
Bangor Investment Company (BIC), a Maine corporation,
is a wholly-owned subsidiary of BAR. Defendant, Bangor
Punta corporation (Bangor Punta), a Delaware corpora-
tion the stock of which is listed upon the New York Stock
Exchange, is a diversified holding company. Defendant,
Bangor Punta Operations, Inc. (BPO), a New York Cor-
poration, is a wholly-owned subsidiary of Bangor Punta.
Bangor Punta, in 1964, through its subsidiary BPO,
acquired 98.3% of the stock of BAR, by acquiring all the
1It is alleged in the complaint that BAR “is a Maine Corpora-
tion organized in 1891 for the purpose of constructing, maintaining
and operating a railroad for public use, and has its principal place
of business in or, Maine. It operates a railroad providing es-
sential services for persons and businesses located in the northern
part of the State of Maine. BAR connects within the State of Maine
with other railroads which serve the northeastern part of the United
States, and which, in turn, connect with other railroads serving the
remainder of the United States. Freight shipments of BAR consist
of products grown and manufactured in the State of Maine, including
potatoes, pulp and products, which are sold and used in other
parts of the United | States.”
: 56
August 3, 1973, First Circuit Opinion
assets of Bangor and Aroostock Corporation (BAC), a
Maine holding company established by BAR in 1960. Ban-
gor Punta, through BPO, continued to own 98.3% of BAR’s
outstanding stock until October 2, 1969, at which time, for
$5,000,000, it sold its stock interest in BAB to Amoskeag
Company (Amoskeag), a Delaware investment corporation
controlled by Frederick C. Dumaine, Jr. Amoskeag later
bought additional BAR shares, and now owns over 9%
of all the outstanding stock of BAR.
The complaint contains thirteen counts. Damages total-
ling $7,000,000, for BAR only, are sought on grounds of
mismanagement, misappropriation and waste of corporate
assets caused by four intercompany transactions taking
place among BAC, Bangor Punta, BAR ‘and BIC during
the years 1960-67, while BAC and then Bangor Punta
were in control of BAR and BIC. The defendants are
said to have violated §10 of the Clayton Act, 15 USC.
§ 20, and 4 10(b) of the Securities Exchange Act, 15 U.S.C.
§ 78j(b), and Rule 10b-5 thereunder. They are also al
leged to have violated the Maine common law and Sec
tion 104 of the Maine Public Utilities Act, 35 MRSA
§ 104.
The wrongful acts allegedly included overcharge by
BAC and BPO for services to BAR; causing BAR to
excuse BAC and BPO from interest payments due om
loans and to pay improper dividends; the improper ac
quisition, of St. Croix Paper Company stock owned by
BAR through BIC; and causing BIC to engage in |
proper borrowings. In essence, defendants are Steged
have ‘‘dominated and controlled BAR and exploited it
solely for their own purposes, to the injury of BAR and
without regard to BAR’s future obligations both to its
creditors and to the public which it serves. By such dom-
mation, control and exploitation, [defendants] calcula-
*
57
August 3, 1973, First Circuit Opinion
tedly drained the resources of BAR in violation of law
for their own benefit... .’’
The defendants moved for summary judgment ‘‘dis-
missing the entire complaint, as amended herein, with
prejudice, for the reason that the complaint fails to state
a cause of action on behalf of the corporate Plaintiffs;
or in the alternative . . . dismissing each of Count II and
Count V [brought under the Maine Public Utilities’ Act]
of the amended complaint herein, with prejudice, for the
reason that each of them fails to state a cause of action.’’
The district court granted defendants’ motion, stating,
‘‘Defendants seek dismissal of the entire complaint
on the ground that Amoskeag, which would be the
sole beneficiary of any recovery by the corporate
plaintiffs, was not a stockholder of BAR at the time
of the alleged improper transactions and itself sus-
tained no injury as a result thereof.»The Court agrees.
Since the Court therefore concludes that the entire
complaint must be dismissed, it does not reach defend-
ants’ alternative motion for dismissal of Counts I
and ‘V.’’ 353 F. Supp. at 726.
Starting with the proposition that F.R.C.P. 23.1, the
so-called contemporaneous ownership rule, would apply
to a shareholder’s derivative action brought to enforce
the claims asserted here, the district court reasoned that
Amoskeag, by causing the plaintiff corporations (essen-
tially BAR) to bring this action, was attempting to ac-
complish indirectly what it could not do directly ; namely,
to bring ‘‘typical stockholder claims’’ for misappropria-
tion and waste. Since Amoskeag,
“‘which did not itself incur any damage as a result
of defendants’ wrongful acts, and not the corporate
plaintiffs, is the real beneficiary of any recovery
58
August 3, 1973, First Circuit Opinion
which might be had in the name of the corporate
plaintiffs, the corporate claims must fail for lack
of equity on the part of those who would ultimately
benefit from any corporate recovery.’’ 353 F. Supp.
at 728. :
The district court relied on Commissioner Roscoe
Pound’s opinion in Home Fire Ins. Co. v. Barber, 6
Neb. 644, 661-62, 93 N.W. 1024, 1030-31 (1903), and like
eases. See, e.g., Capitol Wine & Spirit Corp. v. Pokrass,
277 App. Div. 184, 98 N.Y.S.2d 291, aff’d, 302 N.Y. 734,
98 N.E.2d 704 (1951); Amen v. Black, 234 F.2d 12, 8
(10th Cir. 1956). Matthews v. Headley Chocolate Co., 130
Md. 523, 100 A. 645 (1917). Home Fire and its successors
hold that a person who was not a stockholder at the time
of the alleged mismanagement of a corporation may not
later sue derivatively, nor, if he becomes the sole stock-
holder, may he cause the corporation itself to sue. Central
to the conclusion that even the corporation may not sue
is the assumption that ‘‘the shareholders . . . are the real
and substantial beneficiaries of a recovery.’’ Home Fire
Ins. Co. v. Barber, supra, 67 Neb. at 664, 93 N.W. at 1031
Equity, ‘‘penetrating all fictions and disguises”’, treats
the corporation as the alter ego of its stockholders: be
cause it would be unjust to enrich them, the corporation
may not be enriched. A corollary is that the corporation
is barred from suing only if recovery would inure solely
to the benefit of the estopped stockholders. If other eligible
interests, such as creditors or minority shareholders, would
benefit, the corporation may sue; since recovery is for the
corporation the estopped stockholders would also benefit,
but that is ‘‘an injustice which might be necessary to be
suffered. . . .”? Capitol Wine & Spirit Corp. v. Pokrass,
supra, 98 N.Y.8.2d at 293.
59
August 3, 1973, First Circuit Opinion
The Home Fire rule prevents a purchaser of all or
most of the corporate stock, who probably purchased it
at a price tied to the value‘of the assets at the time of
sale, from recovering a windfall. Where maintenance of
the corporate cause of action serves no other interest, such
a result seems reasonable—although we leave open whether
the equities reflected in Home Fire should be permitted to
prevent suits under laws, such as the federal anti-trust
and securities acts, that were enacted to protect interests
other than, or in addition to, those of the current stock-
holders. Cf. Perma Life Mufflers, Inc. v. International
Parts Corp., 392 U.S. 134, 139 (1968).
Our difficulty here, however, is more fundamental. Even
accepting Home Fire, we doubt its applicability. We reject
the premise — critical both to the district court’s holding
and to the Home Fire rationale — that BAR’s chief
stockholder, Amoskeag, would be the ‘‘sole beneficiary’
of a recovery for BAR. The premise, applied to a rail
carrier, seems to us to be an over-simplification, although,
without doubt, BAR’s recovery would be highly beneficial
to Amoskeag. Because of the nature of their services and
of regulatory restrictions affecting them, and, more gen-
erally, because of their legal status as ‘‘quasi-public cor-
porations’’, railroads cannot realistically be described as
mere alter egos of their chief stockholders. If BAR’s man-
agement complies with the law, recovery of monies by
BAR may be expected not only to benefit its stockholders
but to improve the economic position of the carrier, en-
abling it to enhance its services and helping stave off the
fmancial crisis faced today by so many railroads. The net
result will be of likely benefit to the public. Such con-
siderations might be irrelevant in cases involving ordinary,
closely held businesses; their survival is not usually
deemed to be of public concern and they are typically
60
August 3, 1973, First Circutt Opinion
viewed as mere projections of their stockholders. But
courts — even before passage of extensive regulatory
laws — have for years held that the public has an idep-
tifiable interest in a railroad corporation and in its ability
— including its financial ability — to provide services
and, indeed, to survive.
The public’s interest, unlike the private interest of
stockholder or creditor, is not easily defined or quantified,
yet it is real and cannot, we think, be overlooked in de
termining whether the corporation, suing in its own right,
should be estopped by equitable defenses pertaining only
to its controlling stockholder. Here we think the public’s
interest in the financial health of BAR provides a separate
interest, quite apart from Amoskeag’s, which is served
by the corporate cause of action. Thus, regardless of
2 Under the view we take of the case, we need not consider the
district court’s conclusion that the gee suit is not being mair-
tained in any meaningful way half of the less than 1% of
stock not owned by Amoskeag.
Nor do we analyze the extent to which the contemporaneous
stock ownership rule is mandated, in a non-derivative action, by
FRCP. 23.1. Whether a stockholder is equitably barred from
suit because he did not own the stock at the time of the alleged
wrong or because he acquired it from wrongdoers is significant here
only if we accept the district court’s premige—as we do not—tut
BAR’s controlling stockholder is the sole beneficiary of the instant
litigation.
It can be ed, of course, that F.R.C.P. 23.1, dealing with
derivative suits, does not establish a federal rule of contemporaneous
ownership with respect to non-derivative proceedings. The
underlying policies for adoption of the Rule—preventing transfer
of a few shares to a non-resident to acquire diversity jurisdiction
and to discourage strike reg a Pog <
minority stockholder proceedings. See Hawes v. land, 1
450 (1882) ; 3B Moore’s Federal Practice, / 23.1.15. The Maine
Supreme Judicial Court has recently indicated willingness to relax the
contemporaneous ownership requirement where fairness and sound
omg? warrant. See Forbes v. Wells Beach Casin, Inc., et al., Docket
‘0. 930, Law Docket No. 1688, June 28, 1973.
RReae Bobs GG
RAR RMYES ARE &
61
August 3, 1973, First Circuit Opinion
the latter’s motivations or potential receipt of undeserved
benefits, BAR should be permitted, and indeed has a duty,
to recover for itself any assets which were divested from
it in violation of state or federal law.
A railroad is a ‘‘public’’ or ‘‘quasi-public’’ corpora-
tion. United States v. Trans-Missouri Freight Ass’n, 166
US. 290, 321-22, 332-33 (1897); Ratlroad Com’rs v. Port-
land and O.C.R.R., 63 Me. 269, 18 Am. Rep. 208 (1872) ;
for a recent state case reafirming the traditional concept,
see Louisville and Nashville Ry. v. Sutton, 436 S.W.2d
487, 490 (Ky. Ct. App. 1969); see generally 1 Fletcher
Cyel. Corps., § 63 (1963). According to the Maine Supreme
Judicial Court,
‘Railroad charters are contracts made by the legis-
lature in behalf of every person interested in anything
to be done under them.’’ Railroad Com’rs v. Portland
and O.C.R.R., supra, 63 Me. at 278.
The provision of roads and ‘‘other artificial structures’’
for travel is a duty of government recognized from earliest
times. Id. at 275. The granting of a franchise to operate a
railroad was seen by the Maine court as a farming-out
by government of a duty owed to the public.
‘*The fare is the consideration for the service per-
formed, whether done by the State directly, or by a
corporation under a grant from the State; it is simply
a substitute for the tax rendered necessary when the
State builds and conducts railroads at the public ex-
pense; the corporation, upon the payment of the fare,
is under the same obligation to render the required
service for the public, that the State would be, if rail-
roads were free, and conducted by State authority.
Nor does the ownership of railroads, whether it be
62
August 3, 1973, First Circuit Opinion
in the State or a private corporation, affect the nature
of their use, since in either case the function to be
exercised and the uses to be subserved are public.”
Id. at 275-76.
It can, of course, be argued that all manner of businesses
are affected with a public interest. See Munn v. Iinois,
94 U.S. 113 (1877) (regulation of private grain elevators).
However that may be, railroads, involving the use and
often the forced taking of interests in land*® and providing
essential transportation, have acquired a unique status in
our law; they were said by the Maine court in Railroad
Com’rs v. Portland and O.C.R.R., supra, 275, to be ‘‘pre-
eminent’? among private instrumentalities affected with
a public interest. While the development of other modes
of transportation has eroded this ‘‘preeminence’’, the
Maine courts have not modified their view of the unique
legal status of railroad companies, which are also reg-
ulated ‘‘public utilities’? under Maine law, 35 M.RS.A.
§ 15.13 et seq.
Federal courts, including the Supreme Court, early took
the same view of the public or quasi-public character of
railroads. In United States v. Trans-Missouri Freight
Ass’n, supra, 166 U.S. at 332-33, the Supreme Court said,
‘6... railways are public corporations organized for
public purposes, granted valuable franchises and
privileges, among which the right to take the private
property of the citizen in invitum is not the least,
... many of them are donees of large tracts of public
3 Beginning in 1850, Congress lavishly subsidized railroad coo-
struction by land grants: for example, an estimated 40,000,000
acres was ed to the Northern Pacific, Great Northern Ry.
v. United States, 315 U.S. 262, 276 (1942). Under Maine lay,
land may be taken for railroad purposes by eminent domam
35 M.R.S.A. §651 et seq.
63
August 3, 1973, First Circuit Opinion
lands and of gifts of money by municipal corpora-
tions, and . . . they all primarily owe duties to the
public of a higher nature even than that of earning
large dividends for their shareholders. The business
which the railroads do is of a public nature, closely
affecting almost all classes in the community ... .’’
More recently, the public importance of the rail car-
riers has been recognized in context of the economic crisis
threatening their continued existence. Indeed, since the
temporary nationalization of the railroads in World War
I, the preservation of the railroads has been a national
concern. Interpreting the Transportation Act, 1920, Mr.
Justice Brandeis said,
‘By that measure, Congress undertook to develop
and maintain, for the people of the United States,
an adequate railway system. It recognized that pres-
ervation of the earning capacity, and conservation
of the financial. resources, of individual carriers is a
matter of national concern;. . .’’ Texas & Pac. Ry. v.
Gulf, etc. Ry., 270 U.S. 266, 277 (1926).
In 1933, Congress added Section 77 to Chapter VIII of the
Bankruptcy Act, providing for the financial reorganiza-
tion of ailing railroads. A policy of Section 77 is ‘‘that
the operation of railroads as sound, economic units should
be achieved for the benefit of the public, regardless of
the interests of creditors and stockholders.’’ 5 Collier on
Bankruptcy, 14th ed., 77.02. p. 469. In Reconstruction
Finance Corp. v. Denver & R.G.W.R.R., 328 U.S. 495, 536
(1946), the Court said, ‘‘[B]y their entry into a railroad
enterprise, [security holders] assumed the risk that in
any depression or any reorganization the interests of the
public would be considered as well as theirs.’’ See New
Haven Inclusion Cases, 399 U.S. 392, 492 (1970). Cf. Note,
a
August 3, 1973, First Circuit Opinion
Takings and the Public Interest in Ratlroad Reorganiza
tion, 82 Yale L.J. 1004 (1973). Worry over the public effect
of the Northeastern railroads’ insolvency appears in the
Interstate Commerce Commission’s Northeastern Railroad
Order of Investigation (Ex Parte No. 293, Feb. 7, 1973,
38 Fed. Reg. 6253 (1973)), noting the entry into Section
77 reorganization of seven Class I railroads, and the
danger that acute cash crises of several might lead to the
even cessation and liquidation of the transport facil-
ities of the carriers. The LC.C. found these matters to
‘‘ereate implications of nationwide importance.”’ Similar
concern resulting from the Penn Central financial crises
was expressed in Senate Joint Resolution 59 approved
Feb. 9, 1973 (P.L. 93-5, 87 Stat. 5, 1973 U.S. Code Cong.
& Ad. News 379).
In 1960 the Maine Supreme Judicial Court concluded
that local freight lines (BAR is one such) were crucially
-important to the Maine economy. The court said, in Maine
Cent. R.R. v. Public Utilities Comm’n, 156 Me. 284, 163
A.2d 633, 637 (1960) :
‘There can be no question as to the very real need
which the whole public of Maine has for an efficient
freight service by rail. There are many raw materials
and products of great weight and bulk which can only
be carried efficiently in and out of Maine in freight
ears. This state is somewhat remote from the prin-
cipal markets and thus dependent on fast and eco
nomical transportation of goods. We are engaged in
spirited competition with our sister states for new
industry which will add to payrolls and taxes and
assure the economic health of Maine. Moreover, exist-
ing established industry must be encouraged and pre
served and agriculture must not be deprived of in-
dispensable freight service. Here we ‘are dealing with
65
August 3, 1973, First Circuit Opinion
the public interest in its broad sense for every citizen
of Maine has a stake in the industrial and economic
vitality of his state.’’
Given today’s circumstances of which we are all gen-
erally aware, and the legal history above cited, it would
be unrealistic to_treat a railroad’s attempt to secure the
reparation of misappropriated assets as of concern only
to its controlling stockholder. To do so grants to the de-
fendants an undeserved immunity from suit, to the dis-
advantage of the public, solely to avoid a windfall to
Amoskeag which, whatever its own lack of equity, is
neither a wrongdoer nor a participant in any wrong. We
see BAR and its management as seeking a corporate re-
covery in which the public has a real, if inchoate interest.
Amoskeag’s windfall is irrelevant to that interest, and
should not be the factor which determines whether or not
BAR may sue.
Moreover, to prevent BAR from suing to recover assets
wrongfully divested is to geject the use of private litiga-
tion as a deterrent to oilentiy undesirable conduct. . The
management of a rail carrier — whoever it may be and
whatever its private aims — is best situated to learn of
wrongs to the railroad and to take effective action to
redress them. The looting of a railroad and its possible
decline or even failure are so clearly violative of state
and federal policies, as expressed both in legislation and
in the decisions of courts, as to invite the encouragement
of private lawsuits as a supplement to public enforcement.
See J. I. Case Co. v. Borak, 377 U.S. 426, 432 (1964);
Perma Life Mufflers, Inc. v. International Parts Corp.,
supra, 392 U.S. at 139. The private financial incentive for
those bringing the action helps assure that it will be
brought; federal and state agencies, sometimes hampered
by inadequate funding or diverted by other concerns, may
not be able to take the necessary action.
66
August 3, 1973, First Circuit Opinion
Thus we hold that neither the federal nor the state
counts are foreclosed by the failure of BAR’s principal
stockholder to own its stock during the period of the
wrongful conduct nor by Amoskeag’s purchase of the
stock from the alleged wrongdoers.
We are left with a final major question which we do
not now attempt to resolve; namely, the extent, if any,
to which the district court should try to insure that re
covery, if any, does not benefit Amoskeag at the expense
of the railroad and the public which it serves. If BAR
should recover, Amoskeag’s BAR stock will increase in
value. An increase in stock value is a windfall which can
hardly be avoided; it would not be inconsistent with the
public’s interest in a healthier railroad. On the other
hand, a syphoning off of BAR’s recovery into the pockets
of present stockholders or others would be different. Hope-
fully, the very logic by which appellants are allowed to
sue here may help to deter at least illegal distributions
In any event, we have no doubt of the power of the district
court, in conjunction with any recovery, to enter orders,
if appropriate, prohibiting distributions by BAR that
would conflict with state or federal law. A more difficult
question arises with respect to its ability to enter more
sweeping prohibitions to ensure that BAR’s recovery is
not unreasonably diverted for the private enrichment of
its stockholders. es
If plaintiffs prevail, the latter is a matter which the
parties and the district court may consider further, pos-
sibly with the invited assistance of state and federal
agencies. Our ruling that the plaintiffs may sue is not
conditioned on the devising of court-imposed limitations
on the uses of any corporate recovery. Even without
limitations, the public interest is better served than were
civil immunity to be assured to those who may have
—
a eo Be vwe ee gee ee
— a
aa hh SBF. 8
67
August 3, 1973, First Circuit Opinion
syphoned funds from a rail carrier in violation of State
and federal law. Whether a court could properly or prac-
ticably regulate (beyond existing state and federal law)
the use which a carrier might make of any recovered
funds, we are not prepared to decide at this time.
We understand the district court’s order for summary
judgment to be based solely on its determination that
plaintiffs were barred from suing because of Amoskeag’s
failure to own stock at the time of the alleged wrongs
and its purchasing of stock from alleged wrongdoers. Our
decision reverses that determination; it leaves all other
issues open, including the merits of plaintiffs’ claims,
which have yet to be tried. The district court not having
ruled-thereon, we express no opinion on defendants’ mo-
tion, on different grounds, to dismiss Counts II and V.
Reversed and remanded for proceedings consistent
herewith.
a
68
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
No. 73-1059.
Bancor axp Aroostook Ratizoap CoMPANyY, ET AL.,
Plaintiffs, Appellants,
v.
Bancor Punta Operations, INC., ET AL.,
Defendants, Appellees.
JUDGMENT
Entered: August 3, 1973
This cause came on to be heard on appeal from the
United States District Court for the District of Maine, and
was argued by counsel. as
Upon consideration whereof, It is now here ordered,
adjudged and decreed as follows: The order of the district
court is vacated, and the cause is remanded to that court
for further proceedings consistent with the opinion filed
today. No costs at this time.
By the Court:
/s/ Dawa H. Gativp
Clerk.
[ec: Messrs. Robinson and Ryan.]
Supreme Court of the Hnited States
No. 73-718
Bangor Punta Operations, Inc., et al.,
Petitioners,
Ve
Bangor & Aroostook Railroad Company, et al.
OrDER ALLOWING CERTIORARI. Filed January 7 «cceseseecees , 1974,
The petition herein for a writ of certiorari to the United States Court of
Appeals for the First coccnnnwennnne Circuit is granted.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.