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TELEPROMPTER CORP. v. POLINSKY

September 29, 1977

TELEPROMPTER CORPORATION, Plaintiff,
v.
JERROLD L. POLINSKY, a/k/a JERRY POLINSKY, FIRST NATIONAL BANK OF DULUTH and NORTHWESTERN BANK OF COMMERCE OF DULUTH, Defendants



The opinion of the court was delivered by: CONNER

MEMORANDUM AND ORDER

 CONNER, D.J.:

 This declaratory judgment action was commenced in the Supreme Court of the State of New York and removed to this court on defendants' petition pursuant to 28 U.S.C. § 1441. Plaintiff Teleprompter Corporation ("Teleprompter") is a New York corporation with its principal place of business in New York. Defendant Jerrold L. Polinsky, a/k/a Jerry Polinsky ("Polinsky") is a resident of Minnesota. Defendant First National Bank of Duluth ("First National Bank") is a national bank established in Duluth, Minnesota. Defendant Northwestern Bank of Commerce of Duluth ("Northwestern Bank") is a Minnesota bank, established in Duluth, Minnesota. Duluth, Minnesota, is the principal and only place of business of the defendant banks.

 Defendants have moved to dismiss this action pursuant to Rules 12(b)(2) and 12(b)(7), F.R.Civ.P., on grounds of lack of jurisdiction over the person and failure to join an indispensable party, or, in the alternative, to transfer the action to the District of Minnesota pursuant to 28 U.S.C. § 1404(a) and § 1406(a).

 The subject of the declaratory judgment action is a Stock Subscription and Transfer Restriction Agreement ("Stock Subscription Agreement") between Teleprompter, Polinsky, and Northeast Minnesota Cable TV, Inc. ("Northeast Cable"), a Minnesota corporation and subsidiary of Teleprompter. Pursuant to the Stock Subscription Agreement, Polinsky was issued twenty (20) shares of common stock of Northeast Cable, the remaining eighty (80) shares of which are owned by Teleprompter. Teleprompter also agreed to purchase Polinsky's shares according to terms set out in the Stock Subscription Agreement. Subsequent to the execution of the Agreement, Polinsky assigned his stock interest in Northeast Cable to Northwestern Bank as security for loans in the principal amount of $200,000 and assigned the same stock interest (which he claims to be worth at least $500,000) and his interest in the Stock Subscription Agreement to First National Bank as security for loans in the principal amount of $225,000. Polinsky has failed to pay these two loans and both Northwestern Bank and First National Bank have demanded payment. Polinsky sought to exercise his right to cause Teleprompter to purchase his twenty shares, claiming entitlement to a minimum purchase price of $500,000 under the Agreement. A dispute ensued among the parties to this action over the purchase price as well as other terms of the Agreement, and Teleprompter now seeks a declaration of its rights and obligations thereunder.

 Subsequent to the filing of this action, defendants Polinsky, First National Bank and Northwestern Bank, as plaintiffs, commenced an action against Teleprompter in the United States District Court for the District of Minnesota, asserting -- in addition to a count seeking declaratory judgment -- claims based on breach of contract, federal securities laws, state securities laws, and breach of fiduciary duty arising out of the Stock Subscription Agreement.

 Defendants' Motion to Transfer

 Where, as here, defendants have challenged a court's power over their persons and, at the same time, have moved alternatively for transfer, the interests of judicial economy are best served by initial address of the transfer issue. Such is the implicit instruction of Goldlawr, Inc. v. Heiman, 369 U.S. 463, 8 L. Ed. 2d 39, 82 S. Ct. 913 (1962), in which the Supreme Court ruled that a court might order transfer, if pertinent considerations so dictated, even in the absence of personal jurisdiction over the defendants before it. Thus, if the transfer presently proposed is warranted, there is no cause to reach the jurisdictional issue concurrently raised. *fn1"

 Defendants seek transfer of this action to the District of Minnesota pursuant to 28 U.S.C. § 1406(a) and 28 U.S.C. § 1404(a). Section 1406(a) provides:

 
"The district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought."

 Defendants assert that venue in the Southern District of New York is improper as to First National Bank because, under 12 U.S.C. § 94, a national bank may be sued only in the district in which it is established. *fn2" Plaintiff does not dispute that First National Bank is a national bank established in Duluth, Minnesota, and concedes that First National Bank may not be compelled to defend this action in New York over its objection. *fn3" Plaintiff acknowledges that the court must dismiss or transfer the case as to First National Bank for lack of proper venue, *fn4" but urges the court to retain the action with respect to those defendants who are properly sued here. Defendants ask that the entire case be transferred, thus allowing consolidation with the pending litigation in Minnesota, and a single trial of all issues with all parties present.

 Defendants contend that such transfer may be effected under either § 1406(a) or § 1404(a). It is suggested that although § 1406(a) does not explicitly authorize the transfer of a case as to all defendants in which venue is improperly laid as to only one, it speaks of transfer of "such case," indicating the whole case, and defendants point out that complete transfer has been ordered under § 1406(a) where the transferee district appeared to be the only district "able to deal with the case as a whole." Tiernan v. Westext Transport, Inc., 243 F. Supp. 566, 567 (S.D.N.Y. 1965). Alternatively, defendants assert that transfer of the case is warranted under § 1404(a), which provides:

 
"For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought."

 Without deciding its authority under § 1406(a), this court finds that the convenience of the parties and witnesses and the interest of justice are best served by transfer of the ...


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