Legal Document

377 U.S. 426 84 Supreme Court Reporter 1555 12 United States Reports Lawyer’s Edition 2d Series KF101.8 U54 423 Judge I. CASE COMPANY et al., Petitioners,v.Carl or Haw. Hawai‘i KFH45 A2 BORAK, etc. Number 402. Argued April 22 and 23, 1964. Decided June 8, Walter S. Davis Malcolm K. Whyte, Milwaukee, Wis., for petitioners. Alex Elson, Arnold Shure, Willard Lassers Aaron Wolff, Chicago, Ill., Bruno V. Bitker, respondents. Philip Atlantic Loomis, Jr., Securities Exchange Commission, as amicus curiae, by special leave of Court. Mr. Justice CLARK delivered the opinion 1 This is a civil action brought respondent, stockholder petitioner Case Company, charging deprivation pre-emptive rights respondent other shareholders reason merger between American Tractor Corporation. It alleged that was effected through circulation false misleading proxy statement those proposing merger. The complaint in two counts, first based on diversity claiming breach directors' fiduciary duty to stockholders. second count violation § 14(a)1 Act 1934 with reference solicitation material. trial court held this it had no power redress violations but limited solely granting declaratory relief thereon under 27 Act.2 Wis.Stat., 1961, 180.405(4), which requires posting security expenses derivative actions, applicable both except portion Count 2 requesting relief. ordered furnish bond amount $75,000 thereunder and, upon his failure do so, dismissed complaint, save part seeking judgment. On interlocutory appeal Appeals reversed holding District grant remedial Wisconsin statute not applicable. 317 Federal Reporter, 2nd 838. We granted certiorari. 375 901, 195, 11 143. consider only question whether authorizes federal cause rescission damages corporate respect consummated authorized pursuant use contain statements violative 14(a) Act. being sole raised petitioners their petition certiorari, we will questions subsequently presented. See Rule 40(1)(d)(2);3 Local 1976, Brotherhood Carpenters versus National Labor Relations Board, 357 93, 96, 78 1011, 1014, 1186 (1958); Irvine California, 347 128, 129—130, 74 381, 382, 98 L.Ed. 561 (1954). Respondent, owner 2,000 shares common stock acquired prior merger, suit jurisdiction enjoin proposed Corporation (ATC) various grounds, including duties directors, self-dealing among management ATC misrepresentations contained material circulated obtain proxies. injunction denied thereafter consummated. Subsequently successive amended complaints were filed case heard aforesaid two-count complaint. claims pertinent asserted predicated well They alleged: petitioners, predecessors, solicited permitted names be used proxies stockholders at stockholders' meeting voted upon; so 14a—9 Commission promulgated thereunder;4 approved small margin votes consummated; would have been material; damaged thereby. sought judgment void himself all similarly situated, such further 'as equity shall require.' ruled did apply since arose law. However, found its private, opposed government, alleging Since additional equitable prayed would, therefore, available state law, subject statute. After setting $75 000 representation counsel posted, declaration hence, void. II. 3 appears clear private parties right bring Indeed, section specifically grants appropriate Courts over 'all suits actions law enforce any liability created' make concessions, however, emphasizing Congress made specific 14(a); that, event, extend should prospective only. In addition, some argue can dissolved if fraudulent non-beneficial, issues bear. But causal relationship are fact resolved trial, here. therefore discuss point further. III. 4 While contends claim one, need embrace view, believe exists direct causes. 5 purpose prevent others from obtaining authorization means deceptive inadequate disclosure solicitation. stemmed congressional belief '(f)air suffrage an important attach every bought public exchange.' H.R.Rep. 1383, 73d Cong., Sess., 13. intended 'control conditions may view preventing recurrence abuses * (had) frustrated free exercise voting stockholders.' Id., 14. 'Too often without explanation real nature authority cast vote sought.' S.Rep.No.792, 12. These broad purposes evidenced language makes 'unlawful person solicit permit name consent registered national securities exchange contravention rules regulations prescribe necessary interest protection investors.' (Italics supplied.) action, chief 'the investors,' certainly implies availability judicial where achieve result. 6 injury suffers ordinarily flows damage done corporation, rather than inflicted directly stockholder. suffered results deceit practiced him alone stockh lders group. To hold within sweep tantamount denial Private enforcement provides supplement action. As anti-trust treble litigation, possibility injunctive serves most effective weapon requirements. advises examines annually each them must necessarily expedited. Time does independent examination facts set out Commission's acceptance representations therein face value, unless contrary file it. allegations respondent's failed disclose unlawful market manipulation ATC, apparent until after 7 We, circumstances here courts alert provide remedies purpose. said Sola Electric company Jefferson Co., 173, 176, 63 172, 174, 87 165 (1942): 8 'When condemns act unlawful, extent legal consequences condemnation, though left determination, nevertheless questions, answers derived policy has adopted.' 9 also Tunstall Locomotive Firemen & Enginemen, 323 210, 213, 65 235, 237, 89 187 (1944); Deitrick Greaney, 309 190, 201, 60 480, 485, 694 (1940). 'to adjust relief' federally secured invaded. 'And settled invaded, general sue invasion, remedy good wrong done.' Bell Hood, 327 678, 684, 66 773, 777, 90 939 (1946). Section 'of created title *.' passing almost identical 1933, words entirely sufficient fashion rescind sale, secure restitution even against third party assets vendor. Deckert Independence Shares Corp., 311 282, 61 229, 85 189 significant used: 10 'The recovery afforded And utilize procedures normally litigant according exigencies particular case.' At 288 U.S., 233 Porter Warner Holding 328 395, 1086, 1332 (1946); Mitchell Robert DeMario Jewelry, Inc., 361 288, 80 332, (1960); Schine Chain Theatres, States, 334 110, 68 947, 92 1245 (1948). 13 Nor find merit contention position taken Dann Studebaker-Packard Cir., 'preponderance interpreted applied order sought. great involved really negligible comparison.' 214. overriding h re required, control appropriateness despite provisions corporation 'is uncommon concerned.' Textile Workers Union America Lincoln Mills, 353 448, 457, 77 912, 918, 972 (1957). decided change character right; remains federal. Chief Marshall Osborn Bank Wheat. 738, 204 (1824): 14 'If withdraw Courts, case, although involving construction withdrawn 819—820 15 Moreover, relief, victims obliged go into State happened responsibility statements, whole might frustrated. Furthermore, hurdles victim (such separate suits, contemplated supra, statutes, bringing complete etc.) prove insuperable IV. 16 Our finding construed indication what case. concerned determination exist. Whatever await merits. 17 contentions denied. 18 Affirmed. 1934, 48 Statutes-at-Large 895, Code KF62 78n(a), provides: 'It person, mails instrumentality interstate commerce facility otherwise (other exempted security) (Securities Exchange) Act, 902—903, 78aa, part: district Columbia, Territory place exclusive thereunder, thereunder. Any criminal proceeding wherein transaction constituting occurred. regulations, defendant inhabitant transacts business, process cases served wherever found.' phrasing presented forth jurisdictional brief raise substance already documents. Questions paragraph disregarded, court, option, notice plain error presented.' Regulations 240.14a—9 'False statements. No §§ 240.14a—1 240.14a—10 statement, form proxy, meeting, communication written oral containing time light made, fact, omits correct earlier same matter become misleading.'

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