This section contains the nature of the case and procedural background.

Leon and William Slavin (Ds) purchased P's stock in a Michigan corporation and then sold the bulk of the corporate assets to National Gypsum (D1). Morris and Eugene Kardon (Ps) were father and son and along with Ds owned all the stock in Western Board and Paper Co. and Michigan Paper Stock Co. with each party holding equal shares. Prior to March 18, 1946, Leon had agreed by written instrument to sell to D1 almost all the assets of the above-mentioned companies for $1.5 million. Leon then purchased the stock of Ps for $504,000 and at that time Ps knew nothing of the negotiations with D1. Ds then consummated the sale with D1 and got the $1.5 million subject to diminution for the unliquidated income tax liability. P sued for violation of 10b-5 and basically charging a conspiracy between the Ds and D1. Ds and D1 then moved to dismiss on the ground that service was not valid. Ds were served in Michigan, and D1 was served in New York.

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