Charles B. Smith, as Special Administrator of the Estate of Edward S. Birn, Deceased v. Milton Sperling

This case was up on appeal previously. Smith v. Sperling, 9 Cir., 1956, 237 F.2d 317 , reversed, 1957, 354 U.S. 91 , 77 S.Ct. 1112 , 1 L.Ed.2d 1205 .

It started by the filing on December 15, 1948, of a typical minority stockholder’s derivative suit brought by the plaintiff, a citizen of New York, against Warner Bros. Pictures, Inc., and United States Pictures, Inc., both Delaware corporations, and against certain named individuals, Harry M. Warner, Jack L. Warner, and Milton Sperling, all citizens of California. Sperling was the son-in-law of Harry M. Warner. Originally the complaint contained three causes of action, but the third suit was dismissed without prejudice several years ago, and we are now concerned only with the first and second causes of action.

The first, brought against all the defendants, charged that a certain contract for the production of motion pictures, and subsequent modifications thereof, had been made improperly by Warner Bros. Pictures, Inc., with United States Pictures, Inc., as a result of domination of the former corporation by the stock control of the Warner brothers, for the purpose of enriching United States Pictures, Inc., and its president,…