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SCHENIN v. MICRO COPPER CORP.

July 12, 1967

Jack SCHENIN d/b/a I. J. Schenin Company, Plaintiff,
v.
MICRO COPPER CORP., Vanura Uranium, Inc., William T. Swift and E. R. Cook, Jr., Defendants


Herlands, District Judge.


The opinion of the court was delivered by: HERLANDS

HERLANDS, District Judge:

Defendants Swift, Cook and Micro Copper Corporation [hereinafter "Micro"] have moved for an order:

 
"(a) Pursuant to Rule 12(b) of the Federal Rules of Civil Procedure dismissing the complaint on the ground that the Court lacks jurisdiction over the person, and
 
(b) Pursuant to Rules 12(b) and 56 of the Federal Rules of Civil Procedure granting judgment to William T. Swift and E. R. Cook, Jr. on the ground that the complaint fails to state a claim upon which relief can be granted."

 In the event that their motion for dismissal and/or summary judgment is denied, defendants have asked for a protective order under Rule 30(b) in respect to the depositions of Cook and Micro by Cook, noticed for New York City.

 Having concluded that there is an absence of jurisdiction over the persons of the defendants, the Court shall not reach the other issues raised. Arrowsmith v. United Press International, 320 F.2d 219, 221, 6 A.L.R.3d 1072 (2d Cir. 1963).

 The present action was commenced in the Supreme Court of the State of New York by service of two copies of the summons and complaint upon defendant Ellis R. Cook, Jr. at his office in Moab, Utah. The proof of service indicates that one copy was directed to defendant Cook, individually, and the other to defendant Micro. Because Cook was the Secretary of Micro at the time of service, there is no question that service on Micro was proper if the corporation was amenable to suit in New York.

 Cook and Micro removed the action to this Court on the basis of diversity of citizenship. Thereafter, defendant William T. Swift was served with a summons and complaint delivered to his wife at their home in Stratford, Connecticut. The fourth defendant Vanura Uranium, Inc. [hereinafter "Vanura"] has not been separately served in this action. Moreover, it is stated in the affidavits of Cook and Swift, and conceded in plaintiff's memorandum of law (p. 18), that Vanura - a Nevada corporation never authorized to do business in New York - was dissolved in October, 1958.

 Plaintiff nevertheless insists that Vanura is before this Court (plaintiff's memorandum of law p. 18), erroneously relying upon § 1006 of the New York Business Corporation Law, McKinney's Consol.Laws, c. 4 [hereinafter BCL] relating to the survival of remedies against dissolved domestic corporations. See BCL § 102(a)(4). In view of the fact that Vanura is not a party to the present motions, it is unnecessary to elucidate upon the Court's conclusion that Vanura has not and could not be brought before this Court except through a receiver of its assets in New York appointed by a New York court, or perhaps through a trustee or receiver appointed by a Nevada court. See BCL § 1218; Nevada Revised Statutes §§ 78.585-78.610.

 A brief chronology of the pertinent facts is helpful to an understanding of the jurisdictional question.

 Vanura was incorporated in Nevada in February, 1955, for the purpose of engaging in the mining business. In exchange for fifty unpatented mining claims in Colorado, the corporation issued a total of 3,000,000 shares of common stock to Swift and Cook. By agreement dated May 31, 1955, Vanura engaged plaintiff Jack Schenin, doing business as I. J. Schenin Company, to underwrite a public offering of an additional three million shares of Vanura at a price of 10 cents per share. A modification and clarification agreement was executed on August 15, 1955.

 In essence, the agreements provided that Schenin would undertake to sell the issue on a best-efforts basis for a commission of twenty-five per cent of the price to the public. In addition, the underwriter received an option to purchase up to 1,000,000 shares of Vanura from the corporation at a price of one mill per share on the basis of one share for each three shares sold to the public. The earlier agreement recited that the one million shares had been previously donated to the corporation by Cook and Swift for this purpose.

 Schenin commenced selling shares of Vanura to the public. By December, 1956, almost the entire issue had been sold. On December 7, 1956, the Securities and Exchange Commission temporarily suspended Vanura's exemption from the registration requirements of the Securities Act of 1933. In effect, this order barred further issuance of Vanura stock. The adverse parties to the present action blame one another for the suspension, but apparently no interested party ever filed a request for a hearing before the SEC.

 Thereafter, by check dated February 20, 1957, Schenin tendered one thousand dollars to Vanura in attempted exercise of his option to purchase one million shares from the corporation. The check was accepted by Vanura, but Schenin's demand for transfer and delivery of the shares was not honored by the corporation. In July, 1957, pursuant to Vanura's request, its transfer agent mailed, from its office in New Jersey to the corporation in Utah, a certificate for one million shares registered in the corporate name. The transfer agent is a New Jersey corporation; and the affidavit of ...


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