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BOND & SHARE TRADING CORP. v. INSURANSHARES CORP.

August 9, 1941

BOND & SHARE TRADING CORPORATION
v.
INSURANSHARES CORPORATION OF DELAWARE et al.



The opinion of the court was delivered by: CAMPBELL

CAMPBELL, District Judge.

This action was brought by the plaintiff against a large number of defendants, but on the trial before this Court, without a jury, it was tried only as against the defendant, Francis X. Mancuso.

The plaintiff limited itself on this trial, as against the defendant, Francis X. Mancuso, to the first cause of action.

 Plaintiff contends that the defendant Mancuso, with the other defendants, without the knowledge and consent of plaintiff's minority stockholders, conspired unlawfully to convert plaintiff's portfolio securities, and other assets by obtaining control of plaintiff, and transferring its securities to themselves, and by turning such securities into cash and diverting the proceeds to their own use and benefit, by purchasing, with plaintiff's assets, worthless securities of other corporations, owned or controlled by defendants, the Boston group, by paying unlawful commissions and fees, and by other fraudulent devices, and that all of the acts and transactions alleged in complaint were successive steps in the conspiracy, in which all of the defendants participated.

 Plaintiff further contends that the commission paid to defendant, Mancuso, was not earned, and must be paid back.

 The evidence convinces me that the defendant, Mancuso, was not an employee of the plaintiff, Bond & Share Trading Corporation, or of the Gutekunst interest.

 The Boston Group defendants, Robb, Morris and Solomont, were, on the basis of what had been told him by Morris and Robb, believed by the defendant, Mancuso, to be men of means, Robb and Morris being members of a successful and reputable firm of lawyers in Boston, and Solomont a successful lawyer in Boston and an attorney for one of the largest brokerage houses in the country.

 The Boston group acquired a controlling interest in Insuranshares through the employment of Mancuso and Davidson as brokers.

 Thereafter the Boston group requested Mancuso and Davidson to bring to their attention for purchase any investment trust they might learn was for sale, thereby Mancuso and Davidson became the brokers and employee solely of the Boston group and the defendant, Insuranshares.

 The defendant, Mancuso, was not an officer, director or stockholder of the plaintiff, Bond & Share Trading Corporation, the defendant, Insuranshares, or any of the corporations controlled by the Boston group. The defendant, Mancuso, acted as broker and finder for the Boston group, and Insuranshares.

 The defendant, Mancuso, is and was a lawyer, but the defendant, Mancuso, did not act as the attorney for any person, firm or corporation in the sale or purchase of the stock of the plaintiff.

 The contract for purchase of the stock of the plaintiff was drawn by the defendant, Morris, of the Boston group, and the defendant, Mancuso, did not counsel or advise in the drawing of that contract. The defendant, Mancuso, did not make any representations as to the purchase of the share of plaintiff being a good thing,

 The defendant, Mancuso, knew that the principal stockholders of the plaintiff company intended immediately upon selling their stock to acquire some of the assets of the company mentioned in the letter of the defendant, Mancuso, Ex. 8, and, to pay about $131,000 therefor, and there is no evidence that such sum was not the full value of such assets, and an adequate price therefor. This information he received from his co-broker Davidson. He did not know what was to be done about notice to minority stockholders, and did not consider he should as a mere broker. He did not know what disposition was to be made of the sum received for such assets.

 There is no evidence that the defendant, Mancuso, had any knowledge, information or belief that any of the defendants would perform any of the alleged acts subsequently performed by them, or caused by them to be performed by others, or even that the sale of assets to the Gutekunst group was ...


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