Smith v. Industrial Securities Corp.

SMITH, District Judge. The complaint in this action seeks to enjoin a proposed merger of defendant, Industrial Securities Corporation, with defendant, Standard Industrial Corporation. It also seeks the avoidance of the contract of merger and damages on behalf of the Industrial Securities Corporation against the defendants, some of whom are its officers and directors, based on their alleged breach of fiduciary duty in respect to the terms of the proposed merger. The merger which the complaint sought to enjoin has been abandoned. There are no-allegations of any facts on which to base a recovery against the defendants for damages to the corporation in any other manner than through the proposed merger [960] which has been abandoned, and no showing of injury incurred by the corporation. The questions raised by the complaint have, therefore, become moot and the complaint should be dismissed. Although the abandonment of the proposed merger and substitution for it of another plan has met with the approval of all the shareholders of the Industrial Securities Corporation who have cared to make known their views after notice to all shareholders of the proposed new merger agreement, dismissal herein is on the merits rather than by agreement. It appears that no valid claim exists against the defendants on the facts alleged in the complaint, the proposed merger attacked therein having been withdrawn from consideration. There is no compromise or abandonment of any existing valid claim. It appears, therefore, that notice to all shareholders of the motion for dismissal would involve a needless expense, and is not required by Rule 23(c), Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c. Hutchinson v. Fidelity Investment Association, 4 Cir., 1939, 106 F.2d 431, 436, 133 A.L.R. 1061; Massaro v. Fisk Rubber Corporation et al., D.C. Mass.1941, 36 F.Supp. 382, 386. The motion to dismiss the complaint is granted.