Hilgeman v. Nat'l Ins. Co. Of Am., 547 F.2d 298 (1977). · Go Syfert
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Hilgeman v. Nat'l Ins. Co. Of Am., 547 F.2d 298 (1977). Cases Citing This Book View Copy Cite
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cited 2× by 2 distinct cases · 2 courts · …the 'act' contemplated by the statute need not be crucial. ✓
123 citation events (28 in the last 25 years) across 36 distinct courts.
Strongest positive: In re Eastman Kodak Company Securities Litigation (nywd, 2021-05-27) · Strongest negative: Great Western United Corporation v. Kidwell (ca5, 1978-08-10)
Treatment trajectory · 1977 → 2026 · click a year to view as-of
1977 2001 2026
Top citers, strongest first. 33 distinct citers. How cited ↗
discussed Cited "but see" Great Western United Corporation v. Kidwell (2×) also: Cited "see, e.g."
5th Cir. · 1978 · signal: but see · confidence high
But see Hilgeman v. National Insurance Co. of America, 547 F.2d 298 (C.A.5, 1977) 14 Although some courts have required minimum contacts with the forum district, arguably the due process concerns raised when a state exercises extraterritorial jurisdiction have no application to a federal court's exercise of extradistrict jurisdiction when a federal statute authorizes nationwide service.
discussed Cited "but see" Langbein v. Kirkland (2×) also: Cited "see, e.g."
5th Cir. · 1978 · signal: but see · confidence high
But see Hilgeman v. National Insurance Co. of America, 547 F.2d 298 (C.A.5, 1977). .
discussed Cited as authority (quoted) In re Eastman Kodak Company Securities Litigation
W.D.N.Y. · 2021 · quote attribution · 1 verbatim quote · confidence low
the 'act' contemplated by the statute need not be crucial.
discussed Cited as authority (quoted) TANG v. EASTMAN KODAK COMPANY
D.N.J. · 2021 · quote attribution · 1 verbatim quote · confidence low
the 'act' contemplated by the statute need not be crucial.
discussed Cited as authority (rule) Scott v. Bluegreen Vacations Unlimited, Inc.
E.D. Cal. · 2020 · confidence medium
Corp., 583 F.2d at 430–32 (citing Hilgeman v. National Insurance Co. 7 of America, 547 F.2d 298, 300 (5th Cir. 1977)); see also, Salameh v. Tarsadia Hotel, 726 F.3d 8 1124, 1132 (9th Cir. 2013) (affirming dismissal of claims under state and federal securities laws 9 with prejudice for failure to state a claim under Rule 12(b)(6) on holding that “Plaintiffs ha[d] not 10 alleged the sale of a security and thus ha[d] not stated claims for relief under federal or state 11 securities law”); In re Nat’l Mortg.
cited Cited as authority (rule) Ramzan v. GDS Holdings Limited
S.D.N.Y. · 2019 · confidence medium
Co. of Am., 547 F. 2d 298, 301 (5th Cir. 1977)).
cited Cited as authority (rule) Gary Cooper v. Dao Hung
5th Cir. · 2012 · confidence medium
Co. of Am., 547 F.2d 298, 300 (5th Cir.1977)).
discussed Cited as authority (rule) Luallen v. McConnell (2×) also: Cited "see"
5th Cir. · 2008 · confidence medium
See, e.g., Busch, 11 F.3d at 1257 (concluding that a defendant who drafted a prospectus in New York, but did not mail the prospectus, was nonetheless subject to suit under § 78aa in a location where the prospectus was mailed and relied upon because the defendant "knew the prospectus would be marketed nationwide.”); Hilgeman, 547 F.2d at 302 (sending a premium payment notice to Alabama found sufficient to establish venue in Alabama where the notice was part of a *405 scheme designed to extract ongoing annual payments from a plaintiff who had been fraudulently induced to purchase a security);…
discussed Cited as authority (rule) Catholic Order of Foresters v. U.S. Bancorp Piper Jaffray, Inc.
N.D. Iowa · 2004 · confidence medium
Indeed, the Ninth Circuit Court of Appeals explained some time ago that “ ‘[t]he “act” contemplated by the statute need not be crucial, nor must “the fraudulent scheme be hatched in the forum district.” ’ ” Securities Investor Protection Corp. v. Vigman, 764 F.2d 1309, 1317 (9th Cir.1985) (quoting Hilgeman v. National Insurance Co. of America, 547 F.2d 298, 301 (5th Cir.1977), in turn quoting Hooper v. Mountain States Securities Corp., 282 F.2d 195, 204 (5th Cir.1960)).
discussed Cited as authority (rule) In Re AES Corp. Securities Litigation
E.D. Va. · 2003 · confidence medium
See, e.g., In re Triton, 70 F.Supp.2d at 686 ("information ... did enter [the district] and was relied on by persons [in the district.]”); Carty, 567 F.Supp. at 2-3 (plaintiffs allege receiving the information in the district); Mitchell, 446 F.2d at 95-96 (plaintiffs testified that they were aware of the information); Oxford First, 372 F.Supp. at 198 (defendants knew or had reasons to know that plaintiffs would rely on information); Nuveen, 1986 WL 5780 at *3-4 (defendants knew or should have known that plaintiffs would rely on the information); Hilgeman, 547 F.2d at 302 (plaintiff sent chec…
discussed Cited as authority (rule) Abeloff v. Barth (2×) also: Cited "see"
D. Mass. · 1988 · confidence medium
Hilgeman, supra at 302, n. 12 (5th Cir.1977) See also Bertozzi v. King Louie International, Inc., supra, 420 F.Supp. at 1171 .
examined Cited as authority (rule) GRM v. Equine Investment & Management Group (3×)
S.D. Tex. · 1984 · confidence medium
Hilgeman, 547 F.2d at 301-302; Hooper v. Mountain States Securities Corp., 282 F.2d 195, 205 (5th Cir.1960), cert. denied 365 U.S. 814 , 81 S.Ct. 695 , 5 L.Ed.2d 693 (1961).
discussed Cited as authority (rule) Bamford v. Hobbs
S.D. Tex. · 1983 · confidence medium
See id; Hilgeman v. National Insurance Co. of America, 547 F.2d 298, 301 (5th Cir.1977); cf. DeJames v. Magnificence Carriers, Inc., 491 F.Supp. 1276, 1282-83 (D.N.J.1980), affd. 654 F.2d 280 (3d Cir.1981) (accepting the national contacts test on principle, but holding it inapplicable in an admiralty action in which there is no federal statute permitting nationwide service of process.) Constitutional authority, however, is more problematic.
discussed Cited as authority (rule) Carole Hyman Burstein v. The State Bar of California
5th Cir. · 1981 · confidence medium
Co. of America, 547 F.2d 298, 300-01 (5th Cir. 1977) (áffirming dismissal for lack of proper service of process where the state statute, as interpreted by the court, was not meant to cover the situation involved in the case), questioned in A.L.
cited Cited as authority (rule) Fed. Sec. L. Rep. P 98,251 Ana Laing Meason v. Bank of Miami, a State Bank and Florida Corp., Edith Davis v. Bank of Miami, Errol S. Schutte and Gloria Schutte v. Bank of Miami
5th Cir. · 1981 · confidence medium
See Williamson v. Tucker, 645 F.2d 404 (5th Cir. 1981); Bell v. Health-Mor, Inc., 549 F.2d 342, 344 (5th Cir. 1977); Hilgeman v. National Insurance Co. of America, 547 F.2d 298, 300 (5th Cir. 1977).
cited Cited as authority (rule) Meason v. Bank of Miami
5th Cir. · 1981 · confidence medium
See Williamson v. Tucker, 645 F.2d 404 (5th Cir. 1981); Bell v. Health-Mor, Inc., 549 F.2d 342, 344 (5th Cir. 1977); Hilgeman v. National Insurance Co. of America, 547 F.2d 298, 300 (5th Cir. 1977).
discussed Cited as authority (rule) Griffin v. United States
5th Cir. · 1981 · confidence medium
On its face, this states a cause of action under the Federal Torts Claim Act and “[t]he only ground for dismissal for want of subject jurisdiction would have been that the claims are ‘wholly insubstantial or frivolous,’ ” Village Harbor, Inc. v. United States, 559 F.2d 247, 249 (5th Cir. 1977) (citation omitted), or that “the claim is clearly foreclosed by prior decisions of the Supreme Court.” Hilgeman v. National Insurance Co. of America, 547 F.2d 298, 300 (5th Cir. 1977).
discussed Cited as authority (rule) Griffin v. United States
5th Cir. · 1981 · confidence medium
On its face, this states a cause of action under the Federal Torts Claim Act and "(t)he only ground for dismissal for want of subject jurisdiction would have been that the claims are 'wholly insubstantial or frivolous,' " Village Harbor, Inc. v. United States, 559 F.2d 247, 249 (5th Cir. 1977) (citation omitted), or that "the claim is clearly foreclosed by prior decisions of the Supreme Court." Hilgeman v. National Insurance Co. of America, 547 F.2d 298, 300 (5th Cir. 1977).
cited Cited as authority (rule) Fadjo v. Coon
5th Cir. · 1981 · confidence medium
Hilgeman v. National Insurance Co. of America, 547 F.2d 298, 300 (5th Cir. 1977).
cited Cited as authority (rule) Fadjo v. Coon
5th Cir. · 1981 · confidence medium
Hilgeman v. National Insurance Co. of America, 547 F.2d 298, 300 (5th Cir. 1977).
discussed Cited as authority (rule) Hill v. Turner (2×) also: Cited "see"
M.D. Penn. · 1980 · confidence medium
Hilgeman v. National Insurance Company, 547 F.2d at 301; Bath Industries, Inc. v. Blot, 427 F.2d at 114 .
cited Cited as authority (rule) Gutierrez v. Raymond International, Inc.
S.D. Tex. · 1979 · confidence medium
Co. of America, 547 F.2d 298, 300-01 (5th Cir. 1977).
discussed Cited as authority (rule) Amfac Mortgage Corporation v. Arizona Mall Of Tempe, Inc.
9th Cir. · 1978 · confidence medium
Hilgeman v. National Insurance Co. of America, 547 F.2d 298, 300 (5th Cir. 1977). 5 THE SECURITY ISSUE 14 The term "security" is defined broadly under both the Securities Act of 1933 and the Securities Exchange Act of 1934.
discussed Cited as authority (rule) Amfac Mortgage Corp. v. Arizona Mall of Tempe, Inc.
9th Cir. · 1978 · confidence medium
Hilgeman v. National Insurance Co. of America, 547 F.2d 298, 300 (5th Cir. 1977). 5 THE SECURITY ISSUE The term “security” is defined broadly under both the Securities Act of 1933 and the Securities Exchange Act of 1934.
discussed Cited as authority (rule) A. L. Black v. Acme Markets, Inc., First National Stores, Inc. (2×)
1st Cir. · 1977 · confidence medium
Co. of America, 547 F.2d 298, 301 (5th Cir. 1977); Oxford First Corp. v. PNC Liquidating Corp., 372 F.Supp. 191, 192 (E.D.Pa.1974); Kramer v. Scientific Control Corp., 365 F.Supp. 780, 787 (E.D.Pa.1973); Emerson v. Falcon Mfg.
discussed Cited "see" Miller v. Asensio
D.S.C. · 2000 · signal: see · confidence high
See Hilgeman, 547 F.2d at 302 (finding that “the sending of [a] premium payment notice into [the forum state] was a step of material importance to [the] ... consummation of the ongoing scheme”); Mariash v. Morrill, 496 F.2d 1138, 1144 (2d Cir.1974) (finding that mailing something from the forum state was sufficient to satisfy venue when the item was an essential element in the alleged fraud); In re Triton Ltd.
discussed Cited "see" Hodgdon v. Needham-Skyles Oil Co.
D.D.C. · 1982 · signal: see · confidence high
See Hilgeman v. National Insurance Co. of America, 547 F.2d 298 (5th Cir.1977); Mariash v. Morrill, 496 F.2d 1138 (2d Cir.1974); Gilbert v. Bagley, 492 F.Supp. 714 (M.D.N.C.1980); SEC v. Geo Dynamics Oil and Gas, Inc., et al., 1978 Fed.Sec.L.Rep.
cited Cited "see, e.g." Truehart v. Blandon
E.D. La. · 1988 · signal: see also · confidence medium
See also Hilgeman v. National Insurance Co. of America, 547 F.2d 298, 303 (5th Cir.1977) (district court should set forth reasons for refusing to permit amendment).
discussed Cited "see, e.g." Equitable Bank v. Finn
D. Maryland · 1987 · signal: see, e.g. · confidence low
See e.g., Wyndham Associates v. Bintliff 398 F.2d 614, 619 (2d Cir.1968), cert. denied, 393 U.S. 977 , 89 S.Ct. 444 , 21 L.Ed.2d 438 (1968), Hilgeman v. National Insurance Co. of America, 547 F.2d 298 (5th Cir.1977), Securities Investor Protection Corporation v. Vigman, 764 F.2d 1309 (9th Cir.1985); Stewart v. Fry, 575 F.Supp. 753 (E.D.Mo.1983); DeMoss v. First Artists Production Co., Ltd., 571 F.Supp. 409 (N.D.Ohio 1983); Hill v. Turner, 492 F.Supp. 61 (M.D.Pa.1980); Securities and Exchange Commission v. Diversified Industries, Inc., 465 F.Supp. 104 (D.D.C.1979); Warren v. Bokum Resources Cor…
discussed Cited "see, e.g." Securities Investor Protection Corp. v. Vigman
9th Cir. · 1985 · signal: see also · confidence medium
See also, Hilgeman v. National Insurance Co. of America, 547 F.2d 298, 301 (5th Cir.1977); Mariash v. Morrill, 496 F.2d at 1142 ; accord, GRM v. Equine Investment and Management, 596 F.Supp. 307, 311 (S.D.
discussed Cited "see, e.g." Securities Investor Protection Corporation v. Vigman
1st Cir. · 1985 · signal: see also · confidence medium
See also, Hilgeman v. National Insurance Co. of America, 547 F.2d 298, 301 (5th Cir.1977); Mariash v. Morrill, 496 F.2d at 1142 ; accord, GRM v. Equine Investment and Management, 596 F.Supp. 307, 311 (S.D.Tex.1984); Clement v. Pehar, 575 F.Supp. 436, 438 (N.D.Ga.1983).
cited Cited "see, e.g." Lillian Willene Miller and Bobby Joe Miller v. Fred Stanmore and Fred A. Frey, Warden, Fci
5th Cir. · 1981 · signal: see also · confidence low
See also Hilgeman v. National Insurance Company of America, 547 F.2d 298 , 300 (5th Cir. 1977).
discussed Cited "see, e.g." Allegaert v. Warren
S.D.N.Y. · 1979 · signal: see, e.g. · confidence medium
See, e. g., Hilgeman v. National Insurance Co. of America, 547 F.2d 298, 301 (5th Cir. 1977); Mariash v. Morrill, supra, 496 F.2d at 1144-45 ; Hooper v. Mountain States Securities Corp., 282 F.2d 195, 204-05 (5th Cir. 1960), cert. denied, 365 U.S. 814 , 81 S.Ct. 695 , 5 L.Ed.2d 693 (1961).
Retrieving the full opinion text from the archive…
Fed. Sec. L. Rep. P 95,879 Edward W. Hilgeman, on Behalf of Himself and All Other Purchasers of \Security Charter Contracts\" Issued and Sold by National Insurance Company of America
Feb 18, 1977.
547 F.2d 298
R
1 passages pin-cited by 2 cases
Pinpoint authority: bottom 73%
Citer courts: D. New Jersey (1) · W.D. New York (1)

547 F.2d 298

Fed. Sec. L. Rep. P 95,879
Edward W. HILGEMAN, on behalf of himself and all other
purchasers of "Security Charter Contracts" Issued and Sold
by National Insurance Company of America, a North Dakota
Corporation, Plaintiff-Appellant,
v.
NATIONAL INSURANCE COMPANY OF AMERICA, etc., et al.,
Defendants-Appellees.

No. 75-1724.

United States Court of Appeals,
Fifth Circuit.

Feb. 18, 1977.

J. Vernon Patrick, Jr., Barton S. Sacher, Birmingham, Ala., for plaintiff-appellant.

Alan W. Heldman, Birmingham, Ala., for defendants-appellees.

Appeal from the United States District Court for the Northern District of Alabama.

Before GODBOLD, McCREE[*] and TJOFLAT, Circuit Judges.

GODBOLD, Circuit Judge:

[*~298]1

The facts of this case are set forth in our earlier decision, Hilgeman v. National Insurance Company, 444 F.2d 446 (CA5, 1971). In that appeal we were unable to determine the basis upon which the district court dismissed Hilgeman's complaint, and we remanded the case for clarification of the dismissal order.

2

The only additional facts of relevance to the disposition of the case before us are that while plaintiff resided in Alabama NICOA sent to him what it termed a "premium" notice and he paid that "premium."

3

On remand the district court added to its earlier dismissal order by holding that the Security Charter Contracts were not "securities" within the meaning of the federal Securities Acts and thus the court lacked subject matter jurisdiction. The district court has not reconciled its dismissal for lack of subject matter jurisdiction with the teachings of Bell v. Hood, 327 U.S. 678, 66 S.Ct. 773, 90 L.Ed. 939 (1946), as required by our earlier decision, 444 F.2d at 446. As we noted in Mobil Oil Corp. v. Kelley, 493 F.2d 784, 786 (CA5), cert. denied, 419 U.S. 1022, 95 S.Ct. 498, 42 L.Ed.2d 296 (1974), Bell v. Hood establishes the principle that "a complaint that alleges the existence of a federal question establishes jurisdiction, even though the court ultimately decides that the plaintiff's federal rights were not violated." Dismissal for lack of jurisdiction is appropriate only where the court decides that the federal claim is insubstantial, i. e., frivolous, or where the claim is clearly foreclosed by prior decisions of the Supreme Court. Mays v. Kirk, 414 F.2d 131, 135 (CA5, 1969). Plaintiff's claim has not been foreclosed by any decision of the Supreme Court, nor is it so lacking in plausibility that it can be said to be frivolous.[1] Therefore, the complaint cannot be dismissed for lack of subject matter jurisdiction. Nonetheless, if the contracts are not "securities" plaintiff's claims could still be dismissed for failure to state a claim upon which relief can be granted. Therefore, we reverse the dismissal by the district court with directions that it reconsider its decision in light of our holding today in Grainger v. State Security Insurance Co. (CA5, 1977) No. 75-3061, 547 F.2d 303.

4

The district court went on to say that assuming that the Security Charter Contracts were securities, it would still dismiss the plaintiff's complaint on the following grounds: (a) lack of sufficient service of process on NICOA, Moody and Sando; (b) lack of personal jurisdiction over NICOA, Sando and Moody; (c) lack of proper venue as to the claims against NICOA, Moody and Sando; and (d) failure to state a claim upon which relief can be granted against Moody and Empire on the ground that those two defendants did not become controlling persons of NICOA until two years after the alleged misrepresentations were made to the plaintiff.[2] Plaintiff appeals from the court's clarifying order as well as from its denial of plaintiff's motion to be allowed to amend its complaint to allege violations of the 1940 Investment Company Act.

5

Service of process was made on NICOA and Empire by substituted service upon the Alabama Superintendent of Insurance pursuant to state law.[3] Service of process under the Alabama Unauthorized Insurers Process Act is limited to suits, actions or proceedings "arising out of" contracts of insurance. While the courts of Alabama have not interpreted the "arising out of" language in the statute, the Alabama legislature in its statement of the Act's purpose, declared that "it is a subject of concern that many residents of this state hold policies of insurance issued or delivered in this state by insurers while not authorized to do business in this state, thus presenting to such residents the often insuperable obstacle of resorting to distant forums for the purpose of asserting legal rights under the policy."[4] (Emphasis supplied.) The appellant does not assert that he holds an insurance policy and that the policy gives rise to enforceable rights. Instead, he maintains that he was sold a "security" within the meaning of the federal Securities Acts, and that he has a cause of action arising under those Acts.[5] The Alabama statute used by plaintiff was meant to cover the former situation, not the latter.[6] The court below was correct in dismissing the claims against Empire and NICOA for lack of proper service of process.

6

Service of process was made on Moody and Sando by U.S. marshals pursuant to the service of process provisions of the federal Securities Acts,15 U.S.C. §§ 78v, 78aa. The court below held that service was insufficient because neither Moody nor Sando is "found or is an inhabitant or transacts business in Alabama nor is the suit based upon an offer or sale that took place in Alabama." Service of process under the 1933 and 1934 Acts is nationwide, and may be served "in any . . . district of which the defendant is an inhabitant or wherever the defendant may be found." Id. The language referred to by the district court is the language governing venue and in personam jurisdiction under the 1933 Act. Therefore, the court's conclusion that there was no adequate service of process upon Moody and Sando is incorrect.

[*~298]7

The court below also held that it lacked personal jurisdiction over NICOA as well as Sando and Moody, and that venue was improper with respect to these three defendants. In doing so, the district court erred. Both the personal jurisdiction and venue issues are governed by § 27 of the Securities Exchange Act of 1934, 15 U.S.C. § 78aa.[7] According to § 27 any suit to enforce liability under the 1934 Act may be brought in the district where "any act or transaction constituting the violation occurred."[8] The "act" contemplated by the statute need not be crucial, nor must "the fraudulent scheme be hatched in the forum district." Hooper v. Mountain State Securities Corporation, 282 F.2d 195, 204 (CA5, 1960). But, as we pointed out in Hooper, the jurisdictional act cannot be trivial; it must be "of material importance to the consummation of the scheme." Id. at 205.[9] According to the affidavits submitted by the plaintiff, NICOA sent an annual premium notice to the plaintiff at his home in the Northern District of Alabama, and the plaintiff paid the "premium" that was demanded by a check drawn on an Alabama bank. In spite of this mailing the district court concluded that "(n)o act or transaction constituting an important step in the transaction took place in (the Northern District of Alabama)." The court reached this conclusion not by examining the materiality of the "premium" notice, but by limiting the scope of plaintiff's complaint to the alleged misrepresentations made in the state of Washington.[10]

[*~299]8

The coverage of 10b-5 is not confined to misrepresentations and non-disclosures. 1 A. Bromberg, Securities Law: Fraud, § 4.3 (1975). Rule 10b-5 also prohibits any person from employing a "device, scheme or artifice to defraud" or from engaging in "any act, practice or course of business which operates or would operate as a fraud or deceit upon any person." 17 C.F.R. § 240.10b-5 (1976). Reduced to its essentials, the injury of which the appellant complains is not simply that he was fraudulently induced to purchase a security by making one lump sum payment, as is the usual case. Instead he complains that he is the victim of an ongoing scheme whose ultimate aim was to extract a "premium" from him each year on a continuing basis. In other words, each payment to the defendants represented, in the words of Hooper, a yearly "consummation of the scheme." Viewing the allegations in this manner, there can be little doubt that the sending of the premium payment notice into Alabama was a step of material importance to that year's consummation of the ongoing scheme, i. e., extracting an annual payment from the plaintiff.[11] Thus, jurisdiction and venue are proper as to NICOA and under the "co-conspirator theory" proper as to its co-defendants.[12]

[*~301]9

Finally, the court below dismissed the claims against Moody and Empire on the ground that they did not become controlling persons of NICOA until two years after the alleged misrepresentations took place. As we have already discussed, the Security Charter Contracts, if indeed they were securities, were not the usual type of security which is bought with a single payment. The arrangement allegedly made between the plaintiff and NICOA called for yearly payments. The plaintiff does maintain that Moody and Empire were controlling persons while these payments were being made, i. e., while NICOA was actively engaged in parting plaintiff from his money. Whether a defendant is a controlling person within the meaning of § 20 of the 1934 Act is a complex question of fact, Hill York Corp. v. American International Franchises, Inc.,448 F.2d 680, 694 n. 20 (CA5, 1971); Klapmeier v. Telecheck International, Inc., 315 F.Supp. 1360, 1361 (D.Minn.1970), and the facts of this case as developed may show that Moody and Empire were not controlling persons. Nevertheless, these two defendants cannot be eliminated as controlling parties merely by artificially limiting the scope of plaintiff's complaint to the alleged fraudulent misrepresentations.

10

Plaintiff also challenges the validity of the district court's refusal to allow him to amend his complaint to allege violations of the 1940 Investment Company Act. The district court set forth no reasons for its ruling. We will not speculate as to the district court's reasoning. If upon remand of this case the district court wishes to adhere to its earlier position, it should set forth its reasons for doing so, bearing in mind the mandate of F.R.Civ.P. 15(a) that leave to amend "shall be freely given when justice so requires."

[*~302]11

AFFIRMED in part, REVERSED and REMANDED in part.

*

Of the Sixth Circuit, sitting by designation

1

As Professors Wright and Miller have said,

"The test for dismissal is a rigorous one and if there is any foundation of plausibility to the claim federal jurisdiction exists."

C. Wright and A. Miller, 13 Federal Practice and Procedure § 3504 at 428 (1975).

2

The district court also dismissed the claims against Moody and Empire on the ground that the court lacked "subject matter jurisdiction" because the two were not "controlling persons" at the relevant times. Our comments concerning the dismissal for lack of subject matter jurisdiction because the contracts were not "securities" have equal applicability here

3

Ala.Code, Tit. 28A § 215 (Supp.1973), formerly Ala.Code, Tit. 28, § 413 (Recomp.1958)

4

Ala.Code, Tit. 28A § 214 (Supp.1973)

5

We do not imply that a state's provision for personal jurisdiction over insurance companies can never be used where federal securities claims are asserted. We base our decisions solely on our interpretation of the Alabama statute

6

Cf. Ross v. American Income Life Ins. Co., 232 S.C. 433, 102 S.E.2d 743 (1958), where it was held that a similar statute containing "arising under" language did not cover suits for fraud in the inducement

We have been given no explanation of why, given the liberal nationwide service of process provisions of the federal Securities Acts, particularly § 27 of the Securities Exchange Act of 1934, 15 U.S.C. § 78aa, the plaintiff made use of the Alabama insurance statute to effect service of process when the whole thrust of his action was that he held a security rather than an insurance policy. Plaintiff obtained service of process on the two non-corporate defendants under the federal statute.

7

While the plaintiff in this case states claims under the 1933 Securities Act as well as the 1934 Act, the general rule is that where a plaintiff states claims under both the '33 and '34 Acts, the less restrictive jurisdiction and venue provisions contained in § 27 of the 1934 Act are to be applied, e. g., Arpet Ltd. v. Homans, 390 F.Supp. 908, 911 (W.D.Pa.1975); Sohns v. Dahl, 392 F.Supp. 1208, 1214 (W.D.Va.1974); Burkhart v. Allson Realty Trust, 363 F.Supp. 1286, 1292 (N.D.Ill.1973); S.E.C. v. National Student Marketing Corp., 360 F.Supp. 284, 291 (D.D.C.1973)

8

15 U.S.C. § 78aa

9

Other courts have expressed this standard in slightly different terms, e. g., Bath Industries, Inc. v. Blot, 427 F.2d 97, 114 (CA7, 1970) ("All that is required is but one act within the forum district which represents more than an immaterial part of the allegedly illegal events.") We see no significant difference between such a formulation and the "material importance" language in Hooper

10

"It is clear from the complaint that the 'offer and sale' took place in the State of Washington. . . . The alleged securities law violation was misrepresentations allegedly made in Washington at the time of sale of the policy."

Hilgeman v. National Ins. Co. of North America, No. 69-602 (N.D.Ala., July 16, 1974).

11

To establish jurisdiction and venue under § 27 the defendant need not be physically present in the forum district nor need he commit more than a single act in the district if that act is important to the consummation of the scheme. E. g., Hooper v. Mountain States Securities, supra; Sarratt v. Walker, 405 F.Supp. 132 (D.S.C.1975); Mayer v. Development Corp. of America, 396 F.Supp. 917 (D.Del.1975); Oxford First Corp. v. PNC Liquidating Corp., 372 F.Supp. 191 (E.D.Pa.1974)

12

The "co-conspirator theory" was described by one court in the following terms:

"Plainly stated, this doctrine provides that in a multi-defendant securities proceeding, where a common scheme of acts or transactions to violate the securities act is alleged, if venue is established for any of the defendants in the forum district there is sufficient justification to establish venue as to the other defendants, even in the absence of any contact or substantial contact by any one defendant within that district." (Footnote omitted.)

S.E.C. v. National Student Marketing Corp., 360 F.Supp. 284, 291-92 (D.D.C.1973). This theory has been adopted by many federal courts, including this circuit, e. g., Sargent v. Genesco, Inc., 492 F.2d 750, 759 (CA5, 1974); Klepper Krop, Inc. v. Hanford, 411 F.Supp. 276 (D.Neb.1976); Zorn v. Anderson, 263 F.Supp. 745 (S.D.N.Y.1966).