First Surety Corp. v. Community Bank

MEMORANDUM OF DECISION

In this case plaintiffs allege that defendants have violated certain provisions of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. The case concerns the ownership of 391,906 shares of the capital stock of plaintiff First Surety Corp. [hereinafter First Surety], which shares are 26% of the First Surety shares outstanding. Defendant Community Bank [hereinafter Bank] acquired such shares in July of 1970 by foreclosure sale, such shares having been pledged to secure certain loans made by Bank. On September 2, 1971, Bank sold the shares to defendant Cook, a director of Bank.

Defendants have moved for a partial summary judgment on plaintiffs’ first and third claims in plaintiffs’ first amended complaint seeking the Court’s declaration that First Surety cannot be held liable as an issuer for the sale of First Surety shares by Bank to defendant Cook or for any distribution by Cook of said shares. Defendants also have moved for a partial summary judgment on plaintiffs' sixth and seventh claims seeking the Court’s declaration that defendants’ filing with the Securities and…