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July 30, 1976

John R. FREEMAN, Plaintiff,

The opinion of the court was delivered by: BRAMWELL


 BRAMWELL, District Judge.

 Defendant, Marine Midland Bank -- New York (the "Bank") moves for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. Plaintiff, John R. Freeman ("Freeman") cross moves to join the Aetna Casualty & Surety Company ("Aetna") as a party defendant and for partial summary judgment dismissing defendant's counterclaim pursuant to Rules 19 and 56 of the Federal Rules of Civil Procedure.


 In a complaint filed January 12, 1971, Freeman alleges that the Community Bank *fn1" extended credit to him for the purpose of purchasing and carrying stock registered and listed on national securities exchanges. Freeman contends that the extensions of credit were made in violation of Regulation U promulgated by the Board of Governors of the Federal Reserve System. 12 C.F.R. § 221 (1975). He further alleges that as a result of these loans he is indebted to the defendant and that this indebtedness is evidenced by certain "negotiable instruments" which he issued to the defendant. Freeman seeks a judgment declaring that these "negotiable instruments" are contracts which are void under Section 29(b) of the Securities and Exchange Act of 1934, 15 U.S.C. § 78cc(b). He also requests that the defendant surrender to the Court for cancellation any written instruments evidencing such debt. Defendant has counterclaimed in fraud for $88,943.77.

 By notice of motion filed January 12, 1973, the Bank moved to dismiss the complaint for failure to state a claim upon which relief could be granted. The ground for the motion was that the complaint did not allege that the credit purportedly extended to Freeman was directly or indirectly secured by stock. By order dated February 28, 1973, the Honorable Anthony J. Travia granted the motion and dismissed the complaint. In an opinion dated March 25, 1974, the Second Circuit reversed Judge Travia's decision and remanded the case for further proceedings, holding that the record discloses a triable issue of fact as to whether the extensions of credit to Freeman were indirectly secured by stock. Freeman v. Marine Midland Bank -- New York, 494 F.2d 1334 (2d Cir. 1974).


 As of May 10, 1968 Freeman was indebted to the Community Bank in the sum of $365,943.77 as a result of numerous extensions of credit. On that date Freeman executed a General Assignment for the Benefit of Creditors, naming the Community Bank as assignee. *fn2" In September, 1970 Jerome Murray, Esq. was appointed substitute assignee replacing the Community Bank. Among the claims presented to the assignee and substitute assignee was a claim for $365,943.77 by the Aetna Casualty & Surety Company as assignee of the Community Bank. By order to show cause dated January 23, 1973, the Marine Midland Bank -- New York (then successor to the Community Bank) petitioned the Nassau County Court for settlement of its account as assignee of Freeman's assets. Freeman raised numerous objections to the Bank's petition which resulted in hearings before Judge Frank Altimari of the Nassau County Court. *fn3" In an Order and Opinion dated November 21, 1973, Judge Altimari granted the Bank's petition for settlement of its account. *fn4" In so doing the Court approved the various claims presented to the Bank as assignee, including Aetna's claim for $365,943.77. *fn5" On March 12, 1975 the Appellate Term of the Supreme Court affirmed without opinion Judge Altimari's Order of November 21, 1973. *fn6"

 By order to show cause dated October 12, 1973, Jerome Murray petitioned the Nassau County Court for settlement of his account as substitute assignee. Included again in the schedule of claims presented to the Court for review and approval was the assigned claim of Aetna. Freeman raised numerous objections which were rejected by Judge Altimari in an Opinion dated December 24, 1973, granting the substitute assignee's petition. On the same day Judge Altimari issued an Order authorizing a pro rata distribution of Freeman's assets to various creditors. *fn7" On November 21, 1974, the Appellate Term affirmed Judge Altimari's Order of December 24, 1973. *fn8"

 In addition to the instant action there appears to be two pending state court proceedings which have flowed from Freeman's course of dealing with the Bank. In November, 1971 Freeman commenced another action against Marine Midland Bank -- New York in Supreme Court, New York County, seeking damages as a result of alleged misconduct by the Bank while it acted as assignee. *fn9" In November 1974, Aetna, as assignee of the Bank's claim against Freeman, brought an action against Freeman in Supreme Court, Nassau County seeking the sum of $260,405.59, the balance due on the original debt of $365,943.77. *fn10" It is averred that neither of these two state court proceedings has progressed beyond the pleading stage. *fn11"


 The Bank now moves for summary judgment on the following grounds: that the cause of action upon which the instant complaint is based was the subject of a prior, final state court adjudication and that therefore this action is barred by the doctrine of res judicata or, alternatively, collateral estoppel; that as a matter of law plaintiff is not entitled to the declaratory relief sought in the complaint; that plaintiff has failed to join the substitute assignee for the benefit of creditors and other indispensable parties; that plaintiff is not entitled to the remedy of rescission sought in the complaint; and that the addition of section 7(f), 15 U.S.C. § 78g(f) to the Securities and Exchange Act of 1934, 15 U.S.C. §§ 78a et seq., and the promulgation by the Federal Reserve Board of Regulation X, 12 C.F.R. § 224 (1975), has removed whatever basis may once have existed for the implication of a private cause of action for violation of the federal margin requirements.

 Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment shall be granted where the record shows "that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." In Heyman v. Commerce and Industry Insurance Company, 524 F.2d 1317 (2d Cir. 1975), the Second Circuit provided a thorough review of the principles relevant to the granting of summary judgment. There Chief Judge Kaufman stated in part:

. . . But, the "fundamental maxim" remains that on a motion for summary judgment the court cannot try issues of fact; it can only determine whether there are issues to be tried. American Manuf. Mutual Ins. Co. v. American Broadcasting-Paramount Theatres, Inc., 388 F.2d 272, 279 (2d Cir. 1967); Cali v. Eastern Airlines, Inc., 442 F.2d 65, 71 (2d Cir. 1971). Moreover, when the court considers a motion for summary judgment, it must resolve all ambiguities and draw all reasonable inferences in favor of the party against whom summary judgment is sought, United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S. Ct. 993, 8 L. Ed. 2d 176 (1962), with the burden on the moving party to demonstrate the absence of any material fact issue genuinely in dispute, Adickes v. Kress & Co., 398 U.S. 144, 157, 90 S. Ct. 1598, 26 L. Ed. 2d 142 (1970). This rule is clearly appropriate, given the nature of summary judgment. This procedural weapon is a drastic device since its prophylactic function, when exercised, cuts off a party's right to present his case to the jury. Donnelly v. Guion, 467 F.2d 290, 291 (2d Cir. 1972). Heyman, supra, at 1319, 1320.

 Furthermore, the showing of a "genuine issue for trial" is ". . . predicated upon the existence of a legal theory which remains viable under the asserted version of the facts, and which would entitle the party opposing the motion (assuming his version to be true) to judgment as a matter of law." McGuire v. Columbia Broadcasting System, Inc., 399 F.2d 902, 905 (9th Cir. 1968). The determination as to whether a material fact is in dispute is indeed a difficult task. In this regard the Second Circuit has stated ". . . The law provides no magical talisman or compass that will serve as an unerring guide to determine when a material issue of fact is presented. As is so often true in the law, this is a matter of informed and properly reasoned judgment." American Manufacturers Mutual Insurance Company v. American Broadcasting-Paramount Theatres, Inc., 388 F.2d 272, 279 (2d Cir. 1967), cert. denied, 404 U.S. 1063, 92 S. Ct. 737, 30 L. Ed. 2d 752 (1972). After having carefully ...

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