This case is an SEC enforcement action alleging that Senex Corporation and associated defendants violated the antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934 in connection with the offer and sale of over $4 million in municipal health care revenue bonds for a nursing home project. The court held a hearing to determine whether to grant a preliminary injunction against the remaining defendants after consent judgments had been entered against others. Based on evidence that the defendants had made misleading statements and omissions about feasibility studies for the project, the court found that securities violations had occurred, that the public interest was threatened, and that there was a reasonable likelihood of future violations, and therefore granted the requested injunctive relief under the relevant statutes.
This case was a civil rights lawsuit brought by a horse farm owner against the Jockey Club, alleging that the private organization's rules imposing deadlines for registering thoroughbred horses were unconstitutionally arbitrary and capricious under the Civil Rights Act, 42 U.S.C. § 1983. The court granted the defendant's motion for summary judgment. It held that the Jockey Club, as a private New York corporation maintaining the American Stud Book, did not engage in state action because there was no sufficiently close nexus with government involvement. The court further reasoned that even if the statute applied, the registration cutoff dates were rationally justified to reduce horse misidentifications over time and thus not arbitrary.
This case involved a shareholder in a Subchapter S small business corporation who sought a refund of 1963 federal income taxes, claiming that the IRS improperly treated certain undistributed corporate funds tied to percentage depletion deductions as taxable dividends. The court addressed two main issues: whether Subchapter S corporations could distribute cash payments nontaxable because they represented percentage depletion amounts, and how to allocate undistributed earnings and profits between taxable income and other computations. The court granted summary judgment for the United States, holding that Subchapter S entities remain subject to the same earnings and profits rules as other corporations under IRC Sections 312 and 1373, so percentage depletion does not reduce earnings and profits for dividend classification purposes. It further ruled that allocations of undistributed taxable income must follow the statutory formula without adjustment for prior distributions to individual shareholders. The decision relied on Treasury Regulations interpreting Subchapter S as preserving corporate tax treatment for these calculations.
In Smith v. Manausa, the plaintiff sought recovery of expenses and lost profits from the defendants, alleging that misrepresentations in an unsigned corporate balance sheet and the sale of unregistered Frontier Enterprises stock violated the Securities Act of 1933, the Securities Exchange Act of 1934, and parallel Kentucky statutes. The court first addressed subject matter jurisdiction, holding that pendent jurisdiction over the state-law claims was proper because the federal securities claims were substantial and both sets of claims arose from a common nucleus of operative facts involving the stock transaction and restaurant leases. On the merits, the opinion analyzed liability under the acts' antifraud and registration provisions, as well as theories of controlling-person and aider-and-abettor responsibility, while noting that the defendants had issued stock exceeding the corporation's authorized shares and failed to deliver promised notes or complete a public offering.
This case challenged Kentucky's implied consent statute, which deems drivers to have consented to chemical alcohol tests and mandates a six-month license revocation upon refusal, effective immediately upon an officer's affidavit without prior notice or hearing, though a post-revocation hearing is available. The plaintiff claimed his license was revoked based on a false affidavit of refusal despite his compliance with the test, arguing the lack of pre-revocation due process violated constitutional protections. The court ruled the statute unconstitutional insofar as it denies notice and hearing before revocation. The reasoning centered on the fact that revocation stems from alleged refusal rather than proof of intoxication, no emergency justifies summary action, and drivers who submit to tests retain driving privileges until conviction, making post-revocation review insufficient.
This case involved a corporate officer, Garnett, seeking a refund of a penalty assessed under 26 U.S.C. § 6672 for his company's failure to pay federal income and social security taxes withheld from employees' wages during 1965, with the IRS counterclaiming for the unpaid balance. The court dismissed the complaint and awarded the government recovery on its counterclaim. The ruling was based on the determination that Garnett was a responsible person under the statute because of his authority as vice-president and general manager over daily operations, personnel, payroll, and financial decisions, combined with his awareness of the tax liability, which satisfied the willfulness requirement even without exclusive control over all disbursements.
