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RYAN v. JONES

July 13, 1950

RYAN et al.
v.
JONES



The opinion of the court was delivered by: MCGRANERY

This suit was brought by the trustees in bankruptcy against a former director to recover the sum of $ 33,000 representing corporate funds alleged to have been fraudulently diverted by the bankrupt corporation to the defendant. The amended complaint avers that the defendant invested $ 33,000 for shares of stock in the corporation, and that subsequently transfers totaling that sum were made to him by the corporation, amounting to a return of his entire investment, but suppressed upon the corporate books and records through fictitious entries; that the defendant nevertheless at all times retained his shares of stock; and that the diversion and transfer of the $ 33,000 was fraudulent as to existing and future creditors, under the terms of Sections 67 and 70 of the Bankruptcy Act, 11 U.S.C.A. §§ 107, 110. The defendant moves for a dismissal or, in the alternative, for a more definite statement of certain portions of the complaint.

 The defendant also urges that certain allegations of the amended complaint are so vague as to be unintelligible, in so far as they assert that 'defendant contrived with the other officers and directors' to procure return of his capital contribution; that a 'collusive arrangement' was entered into to effect a withdrawal of the remainder of defendant's contribution; and that pursuant to the 'scheme and purpose aforesaid' a meeting of the board of directors was held. I cannot agree that these allegations are unintelligible. On the contrary, I believe they are statements of the transaction adequate to identify it with reasonable certainty, and no more is required under our system of notice pleading. It is unnecessary to set forth evidentiary details on the theory that the parties know nothing of the matters in litigation except what is said in the pleadings. In fact, for the plaintiffs to have pleaded the details asked by the defendant might well have done violence to Rule 8, Fed. Rules Civ. Proc., 28 U.S.C.A., which requires 'a short and plain statement of the claim'; and certainly, the allegations of the complaint are not 'so vague or ambiguous that a party cannot reasonably be required to frame a responsive pleading,' under Rule 12(e). The defendants' further objection that the amended complaint does not state whether the bankrupt corporation was solvent or insolvent at the time the payments were made (or whether they were made out of capital or earned surplus, or what were the capital and surplus) is entirely without merit. If the transfers were fraudulent under the applicable statutes, those considerations are irrelevant.

 Accordingly, the motions to dismiss and for a more definite statement will be denied.

19500713

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