Webster Eisenlohr, Inc. v. Kalodner – Case Brief
Webster Eisenlohr, Inc. v. Kalodner, 145 F.2d 316 (3d Cir. 1944), cert. denied, 325 U.S. 867, 65 S.Ct. 1404, 89 L.Ed. 1986 (1945).
Procedural Background: This is an application for a writ of mandamus brought by Webster Eisenlohr, Inc. against District Court Judge Kalodner to vacate an order appointing a special master to conduct an investigation in the underlying case.
Facts: Speese (plaintiff in the underlying case) brought a class action suit against Webster Eisenlohr (defendant in the underlying case) on behalf of preferred stockholders. According to Webster Eisenlohr’s certificate of incorporation the holders of preferred stock were not entitled to vote unless two quarterly dividends were in arrears, whereupon full voting rights would be vested in the preferred stock. At a shareholder meeting, Speese appeared and demanded that the preferred stock have sole voting rights in electing directors. The corporation refused and ruled that the preferred and common stock together shared the voting power to elect directors.
After Speese filed suit Webster Eisenlohr decided to purchase the outstanding preferred stock and distributed the financial statement and an offer to purchase the preferred shares to the shareholders. Judge Kalodner received a copy of the financial statement and believed that it was misleading. Speese’s attorney informed the court that his client had sold his shares and that there was no plaintiff remaining. Judge Kalodner was dissatisfied with Speese’s actions and appointed a special master to investigate. Webster Eisenlohr sought a writ of mandamus to compel Kalodner to vacate the appointment of the special master.
Issue: May a judge initiate an investigation into matters not before the court?
Holding and Rule: No. A judge may not initiate an investigation into matters not before the court.
The issues before the court involved voting rights and not the sale of the preferred stock to the company. Neither the report to the stockholders nor the sale of their stock was involved in the litigation. They were therefore outside the scope of investigation of the court and the Special Master.
See Will v. United States for a case brief presenting issues of civil procedure and constitutional law in which the United States Supreme Court held that a writ of mandamus may only be used to compel a lower court to confine its actions to the scope of its jurisdiction, or to exercise its authority within that scope when it has a duty.