author: DAWKINS, District Judge.

text:
    DALCHE et al. v. BOARD OF COM’RS OF ORLEANS LEVEE BOARD et al.
    No. 20395.
    District Court, E. D. Louisiana, New Orleans Division.
    Feb. 9, 1931.

      See, also, 46 F.(2d) 340.
    Pierre D. Olivier, Paul W. Maloney, Jewell A. Sperling, and D. A. McGovern, Jr., all of New Orleans, La., for plaintiffs.
    James Wilkinson, N. H. Polmer, and George Piazza, all of New Orleans, La., for defendants.
   DAWKINS, District Judge.

Richard Dalehe, alleging himself to be the administrator “of the consolidated successions of Nicholas La Vergne et als, No. 92,-666, and Alliam La Vergne, et al, No. 92,-924,” on the docket of the civil district court for the parish of Orleans, and more than two hundred other individuals, alleging themselves to be heirs of Jean La Vergne, Sr., “who died December 1st, 1774,” bring this suit against the levee board of Orleans parish, and Weil, Roth & Irving Company of Cincinnati, Ohio, claiming ownership of certain property, amounting to approximately thirty-seven acres, bordering on the shore of Lake Pontehartrain, in said parish, and allege in detail the means by which the property was acquired from their said ancestors; that the defendant levee board had admitted, in a certain suit in the civil district court for the parish of Orleans, that the property which it was “endeavoring to mortgage as collateral security for these bonds, was in the ownership of and belonged to petitioners herein”; and that its sole purpose was the placing of petitioners’ property on the market to be sold, leased or otherwise disposed of at a price .of not less than thirty cents per square foot, which petitioners allege is “a-violation of their constitutional rights.”

I quote from the petition as follows:

“V. That, your petitioners, by reason of the aforesaid, have the right to be protected in the ownership of said property, and to have declared null, void, and of no effect, the said Act 292 of 1928 of the Constitution adopted at the General Election by the voters of this State, on November 6, 1928, and Section 2 of Article 16 of the Constitution of this State, the said Constitutional amendments and laws being repugnant and violative of the provisions of articles 4 and 5 of the Amendments of the Constitution of the United States for the protection of which your petitioners humbly pray for relief,' herein, insofar as the taking of your petitioners’ property is concerned by the so-called and arbitrary method of appropriation.”
“VI. Now, your petitioners specially aver that they aré made secure in the ownership of their property rights by the express provisions of said Articles 4 and 5 of the amendments of the Constitution of the United States, and particularly against any so-claimed right of appropriation without due process of law as distinguished from expropriation as is set out in the said Act 292 of 1928, Section 2, Article 16, and the amendment of 1928 of the Constitution adopted at the General Election of the voters of this State on November 6, 1928, and some of them now live and have always lived outside of this State, and were not citizens thereof, as will be shown on the hearing, hereof.”
“VII. That, the so-called work of reclamation on the part of the plaintiff, herein, is nothing more than a real estate speculation of an ingenious sort, and does not involve any work of a summary character, otherwise required by a necessity, the gravity of which would authorize the taking of private property for publie purposes, upon payment thereof and for the benefit of the public weal —a contingency which is too far remote and removed to deserve the slightest consideration on the part of the Courts of this State and of the United States, especially as the property involved, belonging to petitioners, and intended to be taken by the plaintiff, under the scheme, aforesaid, w.as guaranteed by the Treaty of Sessions; proclaimed October 21, 1803.”
“VIII. That, the plaintiff has never offered to your petitioners any adequate compensation for their property, have taken possession of it, and intended to ■ be mortgaged under the financial scheme set out-in our petition, and the ordinance, attached thereto, and there exists no reason for the exercise of the police power of the State, either directly or indirectly by the plaintiff, a body politic created by Act 93 of 1890, and Act 79 of 1902 amending Section 6 of the said Act 93 of 1890, nor can the ownership of your petitioners’ said property be affected by the so-called taxing power of the said Board, to be exercised ill the event that the said financial scheme, for some reason should fail, the right of the said taxing power, being here, specially denied.”
“IX. Petitioners further aver that the said Board of Commissioners was without authority to make any sale of the said bonds for the further reason that they were not properly and legally authorized so to do by the State Board of Liquidation, and the Minutes of the said Board are not sufficiently authoritative and comprehensive to warrant the sale, as will appear by a certified copy of the said minutes, hereto attached as part, ¡hereof.”
“X. Petitioners further aver that, notwithstanding, that the said Board of Commissioners was without authority to make any sale of the said bonds, they have nevertheless, after the rejection of bids called for on July 8, 1930, proceeded to make private sale of the same to the amount of one million dollars to Weil, Roth and Irving Co., and the said Board has publicly proclaimed the fact of the said sale, and its intention to consummate the same although the same is illegal, null, and void, and to the consequent injury to petitioners in their ownership of their property which is described in the foregoing petition.”
“XI. Petitioners further aver that Weil, Roth & Irving Co., is a corporation, domiciled in the city of Cincinnati, State of Ohio, codefendant herein, and, on account of such diversity of the citizenship, and because of the fact that this suit involves the construction of the Federal Statutes and Laws as well as the conflict between the same and the State and Federal Constitutions, and the extent, force and effect to be given to the provisions of the Treaty of Sessions, proclaimed Oct. 21, 1803, this Honorable Court is seized of jurisdiction to adjudicate upon the issues, herein set out and petitioners further aver that the amount involved herein exceeds the sum of Three Thousand Dollars.”
“Wherefore, the premises considered petitioners pray that said Board of Commissioners of the Orleans Levee District and Weil, Roth and Irving Co., of Cincinnati, Ohio, through their proper officers, be duly cited to appear and to answer this petition and, after due proceedings had, that there be judgment in favor of your petitioners and against the said defendants decreeing petitioners to be the owners of the property described in the foregoing petition and further decreeing null and void the said sale of the bonds, described in the foregoing petition, and that there be, further judgment in their favor and against the said defendants denying the right of the said Levee Board to appropriate the property of your petitioners or to mortgage or to tax the same in any manner shape or form and to declare null and void and of no effect the said Act 2921 of 1928, of itself, and as an amendment to the Constitution of 1921 adopted by the voters at an election held on November 6,1928 as being violative of Arts. 4 and 5 of the Amendments to the Constitution of the United States and of the Treaty of Sessions proclaimed October 21, 1803.”
“Petitioners further pray for all necessary orders, costs and for general relief.”
Attached to and made part of this petition is what purports to b'e a copy of the minutes of the meeting of the state board of liquidation, authorizing the issuance of $2,-200,000 of “Pontehartrain Lake Front Improvement Bonds,” for the purpose of building a sea wall around Lake Pontehartrain, in the locality in question. At said meeting it was agreed that five of said bonds should be sold “at private sale in order that a test case might be presented to the Supreme Court as to the validity of said bonds and of the right of the Board to increase its special levy of taxes from three mills to five mills, to guarantee the payment of the principal and interest thereon, the remainder of the issue of bonds to be sold at competitive bids, at public sale.”

Defendant levee board excepted to the original petition of July 28, 1930, on the ground “that on the face of the papers, the petition and exhibits attached thereto, this court is without jurisdiction to entertain, hear, try and determine this suit”; that Dalche, administrator, “is an officer of the Civil District Court, whose domicile is in the Parish of Orleans”; that the petition does not disclose where the other plaintiffs reside, and while it is alleged the defendant Weil, Roth & Irving, is domiciled in Cincinnati, Ohio, no allegation is made as to the domicile of the levee .board, although it was well known to plaintiffs ánd their attorneys that it was in the state of Louisiana; and, in as much as some of the plaintiffs are residents of the state of Louisiana and their domicile is the same as that of the defendant Board, this court is without jurisdiction.

On July 29, 1930, an amended petition was filed, the pertinent portions of which are as follows:

“II. That your petitioners amend Articles 5 and 6, of the original petition to read as follows, to-wit:
“V. That, your petitioners, by reason of the aforesaid, have the right to be protected in the ownership of the said property, and to have declared null, void and of no effect, the said Act 292 of 1928 of the Constitution adopted at the General Election by the voters of this State, on November 6, 1928, and Section 2 of Article 16 of the Constitution of this State, the .said Constitutional amendments and laws being repugnant and violative of the provisions of Articles 4, 5 and 14 of the amendments of the Constitution of the United States for the protection of which your petitioners humbly pray for relief herein, insofar as the taking of your petitioners’ property is concerned by the so-called and arbitrary method of appropriation.”
“VI. Now, your petitioners specially aver that they are made secure in the ownership of their property rights by the express provisions of said Articles 4, 5 and 14 of the amendments of the Constitution of the United States, and particularly against any so-claimed right of appropriation without due process of law as distinguished from expropriation as is set out in the said Act 292 of 1928, Section 2, Article 16, and the amendment of 1928 of the Constitution adopted at the General Election of the voters of this State on November 6, 1928, and some of them now live and have always lived outside of this State, and were not citizens thereof, as will be shown on the hearing, hereof.”
“III. Petitioners further amend Article 8 of the original petition, to read as follows; to-wit:
“That, the plaintiff has never offered to •your petitioners any adequate compensation for their property, taken possession of it, and intended'to be mortgaged under the financial scheme set out in its petition, and the ordinance, attached - thereto, and there exists no reason for the exercise of the police power of the State, either directly or indirectly by the said Levee Board a bqdy politic created by Act 93 of 1890, and Act 79 of 1902 amending Section 6 of the said Act 93 of 1890, nor can the ownership of your petitioners’ said property be affected by the so-called taxing power of the said Board to be exercised in the event that the said financial scheme, for some reason should fail,, the right of the said taxing power, being here, specially denied.”

A second amended petition was filed on August 6, 1930, from which I quote as follows :

“II. That they aver and show that the Levee Board has publicly and judicially declared that the property of your petitioners has been appropriated not for public uses, but for the purposes of mortgaging and selling the same, the former with a view of raising money to exploit a financial scheme and the latter to permit it to indulge in speculation by converting it into building sites upon which residences can be erected, and possession enjoyed by the purchasers to the consequent injury and damages to your petitioners who will be forced to sit idle by while this process of confiscation is going-on for the-benefit of individuals other than your petitioners, the true and lawful owners of the property involved in this proceeding.”
“IV. That, under the terms of the ordinance, forming part of the proposed sale of bonds, to be secured by mortgage on the property of your petitioners, it is expressly set out, therein, that the property will be-sub-divided into residential sites and sold by the Levee Board and its use will not be limited to public purposes such as parks, streets, etc., but on the contrary, extended for private exploitation and confiscation insofar as any rights of your petitioners are concerned, which the Levee Board has refused to recognize in any maimer, shape or form in its present scheme of speculation with the property of your petitioners as the only asset, although it has, in other judicial proceedings, and in the instant one, admitted the ownership in petitioners, insofar as title is concerned, but no further.”
“V. That the State has no right, either directly or indirectly, to take the property of an individual as has been attempted here, and turn it over to another individual no matter what might be the method of transmission and any such claim as is here proposed by the Levee Board is illegal, null and of no effect.”
“VI. That all of the acts and things charged herein, in the foregoing articles on the part of the said Levee Board, constitute an invasion of the Constitutional rights of your petitioners and a direct and positive violation of the 14th Amendment, Section 1, of the Constitution of the United States, and should be so declared by judgment of this-Honorable Court.”

Thereafter, both defendants excepted to the amended petitions, on the ground that the court, after the original exception to the jurisdiction had been filed, “was without jurisdiction, power or authority to permit the filing of said supplemental and amended petitions until the question of its jurisdiction was determined”; “* * * that this court cannot entertain on the law side of this court a petition for injunction which could only be urged on the equity side of the court.”

The exceptions were submitted, and the amendments were allowed. The plea to the jurisdiction was overruled for the reason that, although the petition discloses some of the plaintiffs and the defendant levee board were both citizens and residents of this state and district, and the pleadings of the petitioners were inartifieially drawn, still, when analyzed, they constituted an attack upon an amendment to the state Constitution as being-in conflict with the Fourteenth Amendment to the federal Constitution, and hence the court had jurisdiction to determine the matter without regard to the citizenship of the parties. See opinion (D. C.) 46 F.(2d) 340. This opinion, passing upon the plea to the jurisdiction, was filed August 28,1930, and on the following day the defendants appeared and filed a plea, which they denominate “Exceptions, Answer and Rejoinder to Plaintiffs’ Bill in Equity,” addressing the •court “sitting as a court of equity.” They first reiterated their former exceptions and alleged that the supplemental petition changed the issues and violated the rules of equity practice, and that the petition did not dis'.close a cause of action “known to the laws of this state or of the United States.” Defendants admitted the capacity of Dalehe, as administrator, and the heirship of the other plaintiffs; denied some of the allegations with respect to the acquisition of title, and that the property was worth the amount alleged as its value. Other allegations were denied, particularly the claim that Act No. 292 of 1928, adopted as an amendment to the state Constitution, was invalid under Amendments 4, 5, and 14 of the federal Constitution. Defendant levee board further averred that it “had the right to take over and appropriate the said property for the protection and welfare of the residents of the city of New Orleans, and to fill up the stagnant water and foreshore situated behind the said levee for the purpose of perfecting the drainage system of said levee, and to abolish a nuisance and prevent disease in the city of New Orleans, and in the event and after the final appropriation of said property and improvements thereof, tc mortgage and sell the same so as to provide means to partially pay for said improvements and to prevent the location of shacks and hovels in the rear of said park, authorized by said constitution, behind the levee”; that no demand was ever made by plaintiffs for compensation “and the only attempt ever made by the plaintiffs was to recover the property in its improved condition without tendering the costs or any part of same, in changing the character of this property, from the bottom of the lake or the unhealthy marshy foreshore of the lake to a dean, salubrious tract of land, and that this suit is one to hamper, annoy and delay your respondents in the completion of said vast improvement in the hope that your respondents may offer something beyond the petty amount which your plaintiffs might obtain as the value of them alleged holdings.”

Defendants further alleged in part as follows:

“That respondents will shortly take over and fill several lots of small value claimed by the plaintiffs situated in the rear part from what is known as Spanish Fort, and which has been covered with high water from the high tides of the lake, and has been willing to compensate the plaintiffs on proof of their ownership and of the value of the property, for whatever sum it may be worth, but that the said plaintiffs have never offered said proof or stated said value and the monstrous pretentions of the said plaintiffs as to the said alleged value of their holdings proportionately would make the reclamation of the lake.front impossible. * * *”
“And further answering your respondents say that the aforesaid Constitutional Amendment, Act No. 292 of 1928, is good, legal and valid in every respect and that any other issues set up in this cause which are not pertinent thereto cannot be "passed upon by this Court and that the decision of the constitutionality of said Article will carry with it a dismissal of all other matters and things set up in this cause.”

Defendants prayed that their exceptions be maintained, plaintiffs’ suit be dismissed, “and that Act No. 292 of 1928 adopted, as a constitutional amendment of the state of Louisiana be declared legal and valid in every respect. * * *”

At the instance of the defendants, the case was set for trial on November 25, 1930. On that date, after hearing statements and arguments of counsel, plaintiffs seeking to have it continued, the court concluded that the cause was one properly cognizable in equity, and accordingly transferred it to the equity side of the court, plaintiffs objecting and tljeir exceptions being noted. A special master was then appointed to hear and report upon the evidence, to which plaintiffs also reserved an exception.

During the hearing before the master, plaintiffs filed a plea of estoppel, alleging that, through one of the defendants’ witnesses, it had proven that the property was worth more than $3,000, and the levee board, through its president, had admitted that it had appropriated and taken possession of the property “and intended to parcel it out and sell it to private investors for the purpose of ereeting homes upon it, at a price of not less than thirty cents per square foot, without any compensation previously paid to petitioners as owners * * * and in consequence of said admissions, * * * together with that of the ownership of the property in petitioners,” defendants were es-topped from “contesting either the value * * * or the purpose of such appropriation,” and should not be permitted to proceed further. ' They attempted to have the hearing stopped, but the court declined to follow that course.

On December 8th, counsel for defendants filed what were termed “Peremptory Exceptions of Res Adjudicata and Estoppel,” in which “the defendant” excepted to that portion of plaintiffs’ elaim, west of the Old Spanish Port levee, “comprising ninety percent of the area claimed by plaintiffs,” as follows:

“That in the suit of Arthur Lavergne, et al. v. Board of Commissioners of the Orleans Levee District, No. 67,858 of the Civil District Court of the Parish of Orleans, Division ‘E’, the said plaintiffs herein brought an ejectment suit against defendant, and in said suit set up and made a part of the record, that the appropriation thereof under the provisions of the Constitution of this State were in violation of the Constitution of the United States, and the taking of private property for a private purpose all without due process of law.”
“That said cause was heard and determined by the Hon. W; H. Byrne, Judge of said Court, all in accordance with the judgments and opinions made a part of this exception. Certified copies being attached hereto.”
“That said judgments specifically overruled plaintiffs attack on the Constitutional provisions of this State relied on by defendants, and that said judgment unless reversed on appeal to the Supreme Court of the State of Louisiana is binding and Res Adjudicata against plaintiffs and they are estopped from urging any such Constitutional attack in this ease.”

It has been necessary to make this long statement of the pleadings and developments of the case in order to clearly show its nature. I think the plaintiffs have proven their ownership of all that portion of the property claimed, which is above 20.7 Cairo datum, the remainder being a part of the bed. of Lake Pontchartrain. The plea of res judicata cannot be sustained, since it appears the decision was by the trial court of the state, from which appeal was prosecuted, and the case is not final.

An analysis of the original bill and its prayer, as well as the amendments, discloses that, while not specifically alleged, the proceedings taken by the levee board for the appropriation of the property under Act No. 292 of 1928, adopted as an amendment to the state Constitution, amounted to a cloud upon plaintiffs’ title, and the substance and effect thereof can be construed in no other way; and, when considered in connection with the prayer for judgment “decreeing petitioners the owners of the property * * * and further decreeing null and void the'sale of the bonds * * * and that there be judgment * * * denying the right of the said Levee Board to appropriate the property of your petitioners or to mortgage or tax the same in any manner, shape or form, and to declare null and void and of no effect, the said Act No. 292 of 1928, of itself and as an amendment to the constitution of 1921 * * * as being violative of articles 4, 5 and 14 of the Amendments to the Constitution of the United States, and of the Treaty of Sessions, proclaimed October 21, 1803,” it seems clear that the demand was for the removal of this cloud from the title and the prohibiting or enjoining of the levee board from carrying out the proceedings which it had undertaken pursuant to the said amendment to the state Constitution.

My view is, therefore, that the cause was properly transferred to the equity side of the court.

The ease has been presented in a manner very much confused, but, overlooking the inartificial character of the pleadings and the way in which it has been handled, I believe that the principal issue is as to whether the plaintiffs have shown any violation of the provisions of the Fourteenth Amendment to the federal Constitution, in that their property has been taken for a private purpose. Needless to say, the Fourth and Fifth Amendments have no application, for it has been held repeatedly that they are restraints upon agencies of the federal government only, and can not be invoked against the state or its subdivisions.

If the levee board has taken plaintiffs’ property for a private purpose, the due process clause of the Fourteenth Amendment has been violated. Missouri Pacific Ry. Co. v. Nebraska, 164 U. S. 403, 17 S. Ct. 130, 41 L. Ed. 489. The right of a state itself, or through its subdivisions, to appropriate or expropriate private property for public purposes, is inherent, and without which it could not well perform its functions. This power is not affected by the Fourteenth Amendment, if it be exercised with due process of law and provision be made for compensation. City of Cincinnati v. Louisville & Nashville R. Co., 223 U. S. 390, 32 S. Ct. 267, 56 L. Ed. 481. The federal courts are vested with the duty of determining for themselves what is due process under this amendment, and are not bound by the rulings of state courts thereon. Rindge Co. v. Los Angeles County, 262 U. S. 700, 43 S. Ct. 689, 67 L. Ed. 1186; Milheim v. Moffat Tunnel Improvement District, 262 U. S. 710, 43 S. Ct. 694, 67 L. Ed. 1194. So that, in the present case, the all-important question is as to whether or not plaintiffs’ property is being taken for a public use in the sense that it is to be devoted to or disposed of for the benefit of the general public or that part of it to be affected by the seheme.

The Louisiana Legislature, having conceived a plan for the reclamation and improvement of a portion of the shore and adjacent lands bordering on Lake Pontehartrain, within the city of New Orleans, and for the building of a levee or sea walk for the protection of the inhabitants of that city, submitted the seheme, in the form of an amendment to section 7 of article 16 of the state Constitution, to the people, and it was duly adopted at the general election in November, 1928. The joint resolution is found on page 578 of the Acts of the Regular Session of the Louisiana Legislature of 1928, No. 292, and reads as follows: “A joint resolution proposing an amendment to Section 7 of Article XVI of the Constitution of Louisiana, as amended by Act No. 106 of the Legislature of 1922, subsequently approved as an amendment to the Constitution of Louisiana, granting to the Board of Levee Commissioners of the Orleans Levee District certain rights, powers, duties, authority and jurisdiction in, along and over and pertaining to the shores, bed and bottom of Lake Pontehartrain, within certain limits in the Parish of Orleans, authorizing and empowering' said Board to do and perform certain works of reclamation, construction and improvement thereon and on other lands acquired or to be acquired by said Board in connection therewith; authorizing and empowering said Board to sell, lease, and otherwise dispose of, all or any part of said lands and improvements not dedicated to public use, and to construct and operate places of amusement and recreation in connection therewith; to issue bonds, notes and certificates of indebtedness, ■ and to secure same by mortgage and pledge; creating a sanitary district and defining the powers and duties thereof.”

The language thus quoted forms the title to an act approved July 20, 1928, and found at phge 35 of the Supplement to the Acts of the Legislature of 1930, embracing the amendment to the Constitution, certified by the secretary of state as having been adopted at the election held on November 6; 1928. The first section of this act declares that, “subject to the adoption of the proposed amendment,” the said section 7 of article 16 of the Constitution, as amended by Act No. 106 of 1922, which had also been adopted as an amendment to said provision of the Constitution, should be amended “so as to read as follows”: Subsection (a), § 1, declares: “(a) The Board of Levee Commissioners of the Orleans Levee District shall have and exercise all and singular the powers now conferred upon said Board by law, as well as such powers as are herein granted. Said Board shall have full and exclusive right, jurisdiction, power and authority to locate, relocate, construct, maintain, extend and improve levees, embankments, seawalls, jetties, breakwaters, water-basins, and other works in relation to this project, and to conduct all dredging operations necessary in connection therewith and/or incidental thereto, along, over and on the shores, bottom and bed of Lake Pontehartrain in the Parish of Orleans from its western boundary to the boundary line separating township 11 south, range 12 east, from township 11 south, range 13 east, at a distance not to exceed three miles from the present shore line, as the said Board may determine, and along and on the shores adjacent to said lake and along the canals connected therewith;, the said levees, embankments, sea-walls, jetties, breakwaters, water-basins and other works to be of such character and extent and of such height, width, slope, design and material as said Board may determine, with power and authority to improve and to protect the same with such other structures as may be deemed necessary and proper by said Board. * * *”

The plan was made, subject to approval by the board of state engineers, as to its soundness.

Subsection (b) further declares that the board shall have authority and be under the duty to “execute, maintain and administer all of the works, and all of the phases of the project and improvements undertaken hereunder”; and that, for the purposes of construction, the area should be divided into five zones and the work thereon prosecuted consecutively.

Subsection (e) is quoted in full, as follows: “(c) In planning, designing and executing of said project, the said Board shall have jurisdiction, power and authority, within the territorial limits of said project to dedicate to publie use and to lay out, construct, embellish and maintain a system of parks, beaches, tracts of land and streets, with the necessary and related or unrelated buildings, and the usual adjuncts to the kind of development contemplated hereunder; to construct and equip and maintain playgrounds, places of amusement and entertainment, golf links, gymnasiums, swimming pools, bathing beaches, aviation fields and other like places.”

Subsection (d) authorizes the board to contract with the sewer and water board of the city of New Orleans, and with any other publie utility, for the financing and construction of water, sewerage, and drainage facilities and other utilities.

Subsection (d) declares that the board may acquire, “by donation, purchase, exchange, expropriation, or appropriation, * * * any private property” (italics by the writer of this opinion), within certain boundaries, and, further, that: “In the event of expropriation or appropriation the compensation to be paid shall be the actual cash value of the property before the contemplated improvement was proposed and begun; provided, that nothing contained herein shall require the said Board to pay for any lands taken for purposes other than the Lakefront improvement project herein contemplated any greater compensation, than that provided by Section 6 of Article XYI of this Constitution.”

Subsection (f) is unimportant to this case, and subsection (g) merely provides that the work shall be done by letting contracts, according to law.

Subsection (h) declares that, to enable the board “to perform the work herein provided for and to assist in defraying the cost and expenses thereof,” there is granted and released to the board “the title of the State in and to all publie property necessary for the purposes hereof and all lands reclaimed or filled in within any levee embankments, slopes, retaining walls, sea walls, and breakwaters constructed hereunder and in and to all lands lying within the territorial limits of said project and hereby releases said land from any publie trust or dedication and said Board shall have jurisdiction, power and authority to sell and lease, or sell or lease, or otherwise dispose of such portion of the lands reclaimed and other property acquired for the purpose of said improvement except the land herein required to be dedicated by it for publie use,” on such terms as it may deem proper, “and to establish and impose such servitudes, restrictions, rules and regulations as to such lands sold and leased, or otherwise disposed of as said Board may determine; provided that said lands may be subdivided in lots and may be offered for sale or lease or sold or leased as soon as practicable after the adoption of the amendment without awaiting the completion of said project,” but that none of said lands should be sold for less than 30 cents per square foot and with the further restriction that none should be sold “until its general plan with respect to selling, leasing, or otherwise disposing of said land” had been approved by a majority of the members of a commission composed of persons appointed by the Orleans Real Estate Exchange, New Orleans Clearing House, the New Orleans Association of Commerce, the commission council of the city of New Orleans, and the board^ of liquidation of the state debt; and, further, that there should “be reserved and dedicated forever by said Board for publie parks, parkways, boulevards, play-grounds and places of amusement and beach purposes, exclusive of roads and streets, an area, or areas, comprising not less than thirty (30%) per cent, of the total land area of the project; and provided further that along the entire Lake Pontchartrain frontagp of the project there shall be reserved and dedicated forever by said Board for publie parks, parkways, boulevards, play-grounds, aviation fields and/or places of .amusement and/or beach purposes, a continuous strip of land averaging at least 500 feet in depth and at no point less than 350 feet in depth. * * * ”

This subsection further authorizes the employment of agents “for the sale and disposal of the said property,” and that their compensation shall be fixed by the levee board at a rate not to exceed the maximum in force by the Orleans Real Estate Exchange.

Subsection (i) is quoted, as follows:

“(i) In order to carry out the objects and purposes of this section and to enable said Board to finance and carry on the work of development, improvement, maintenance and operation herein authorized, or otherwise authorized by law, said Board is authorized and empowered, and shall have the authority and power, to issue, sell and deliver, from time to time bonds, notes and/or certificates of indebtedness, not exceeding Fifteen Million Dollars ($15,000,000.00) in aggregate principal amount at one time outstanding, to be signed in its behalf by its duly authorized officers, to be payable in gold coin of the United States of America of the weight and fineness existing at the date thereof or its equivalent, to bear such rate of interest not to exceed 6% per annum, to be payable at such times and at such place or places, and to be issued under all such terms- and conditions not inconsistent herewith, as said Board may determine; and to secure such bonds, notes and/or certificates of indebtedness, at any time issued, or to be issued, and outstanding, but not to exceed the sum of $15,000,000.00 principal amount at any one time outstanding, the said Board is authorized to mortgage and pledge.
“(1) Any and all lands reclaimed, or to be reclaimed, or otherwise acquired by said Board as part of said development, except such part of such land as is required by the provisions hereof to be reserved and dedicated for public parks, parkways, boulevards, playgrounds and/or places of amusement, and/or beach purposes, together with all buildings and improvements made or constructed, or to be made or constructed thereon, and all rights, ways, privileges, servitudes or appurtenances thereunto belonging or in anywise appertaining, and
“(2) Cash, notes and/or other evidences of indebtedness received, or to be received, by said Board in consideration for the salé or sales, of any lands, lots and improvements forming part of said development; and
“(3) Any lease or leases, and the rents, incomes and other advantages, arising out of any lease or leases, made or granted by said Board in connection with said development; and
“(4) Generally any and all rights of said Board in and to any lands, property, incomes, revenues, claims, and other ehoses in action, forming part of and/or arising out of said development.”

Subsection (j) requires that no part of the bonds or other evidences of debts shall be negotiated or money borrowed except upon the approval of three-fourths of the members of the state board of liquidation. The total amount of indebtedness outstanding at one time, including bonds, obligations on contracts, etc., is fixed at a maximum of $15,-000,000.

- Subsection (k) declares that: “The provisions hereof are self-executing and the Board of Levee Commissioners of the Orleans Levee District is authorized and empowered to earry same into effect.”

The statute then proceeds to create a sanitary district, to include the parishes of St. Charles, Jefferson, and Orleans, under the name of the Lake Pontchartrain sanitary district, to be governed by a board of eleven members, selected by the police juries of said, parishes, the Jefferson drainage district, city board of health, the sewerage and water board of New Orleans, the levee commissioners of the Orleans parish levee district, and the board of port commissioners of New Orleans. This board is then authorized to prevent the pollution of the waters of Lake Pontchartrain by the adoption of rules and regulations covering the discharge of drainage, sewerage, and trade waters, into the lake and into the canals or channels which empty into it, within the limits of said parishes. Further provision is also made for the organization, control, and functioning of said board, with the right reserved by the Legislature to confer upon it additional powers.

This extended analysis of the statute and constitutional amendments has been made for the purpose of showing the character of the project and the procedure by which it is to be carried out. Its validity has been submitted to and sustained by the Supreme Court of the state in a suit by another owner of property within the area affected'. New Orleans Land Co. v. Board of Levee Commissioners of Orleans Levee District, 132 So. 121, being No. 30,718, on the docket of that court, and decided December 1, 1930. See, also, Board of Levee Commissioners v. "Whitney Trust & Savings Bank, 171 La. 28, 129 So. 658.

The action of the Legislature and its approval by the people through constitutional amendment is conclusive evidence of the necessity for the taking of the property, and while the federal courts, as previously stated, are not bound by the declaration of the Legislature or decisions of the state courts as to the publie character of the purpose for which the property is taken, within the meaning of the Fourteenth Amendment, still a determination of that issue is necessarily influenced by local conditions, and the national courts “should keep in view the' diversity of such conditions and regard with great respect the judgments of state courts upon what should be deemed publie uses.” Rindge Co. et al. v. County of Los Angeles, 264 U. S. 700, 43 S. Ct. 689, 692, 67 L. Ed. 1186; Milheim v. Moffat Improvement District et al., 262 U. S. 710, 43 S. Ct. 694, 67 L. Ed. 1194.

The record shows that the project involved here has two main purposes, to wit, the building of a levee or sea wall to protect the city of New Orleans from inundation by the waters of the lake, which will be greatly increased at flood stage of the Mississippi river because of the discharge from the spillway now being constructed by the government engineers at Bonnet Carre; and, secondly, to reclaim a portion of the lake bottom and the low marshy lands adjacent thereto. The scheme contemplates the conversion of the area so reclaimed and protected into a desirable residential section, with a passageway on the front next to the sea wall of an average width of five hundred feet, permanently dedicated to publie use; and that at least 30 per cent, of the entire property, exclusive of roads and streets, shall be likewise dedicated to the publie for parks, parkways, boulevards, playgrounds, places of amusement, beach purposes, etc. Several million dollars have already been expended upon the work, and there has been and will be, in some of the zones, considerably more than 30 per cent, of the property used for the purposes above mentioned. The undertaking also contemplates efficient drainage and the prevention of pollution of the waters of the lake, canals, and other channels emptying into it, so as to render the shore and \eaeh a healthy and attractive place for public boating, bathing, etc. The result will also be to eliminate the marshy areas and low places for the breeding of mosquitoes and other disease-bearing inseets, and thereby to benefit materially the health and comfort of the city and especially this particular section.

All of the property claimed by plaintiffs, except approximately four acres, is of a low, swampy character, and below Cairo datum 20.7, insusceptible to use for residential or business purposes other than the trapping of muskrats, etc. It and the other property within the district similarly situated will have the surface raised several feet by pumping sand in from the lake, at an approximate cost of 10 cents per square foot, or $360 for the average city lot of 30'xl20\ In its natural state, the value is small compared to what it will be when the work has been finished.

The state, through its proper agency, undoubtedly has the right, both under its police power for the protection of the citizens of New Orleans from the waters of the lake, and as a matter of health and comfort, to build the levee or sea wall and to drain and fill in these marshy lands; and, by virtue of its sovereignty, can condemn and appropriate the property necessary for streets, parks, parkways, playgrounds, for amusement purposes, etc. For either purpose it could levy general.taxes, within the limits of the state Constitution, to pay bonds or other obligations issued to that end. In the nature of things, it would have been impracticable to carry the plan through on the comprehensive scale contemplated,' without having control of the whole area. The location of parks, playgrounds, amusement centers, streets, etc., had to be determined with relation to each other in a manner calculated to best meet the needs and requirements of the public. With the large number of claimants to the approximately 2,000 acres involved, to have proceeded by separate condemnation suits, as and when the project progressed, would not only have made the cost prohibitive, but would doubtless have deterred the Legislature from initiating it altogether. The scheme was conceived as a matter of legislative judgment, approved by constitutional amendment, and although portions of the property may be, after reclamation and improvement, sold to private persons, the entire proceeds will be used to pay the cost of its execution or other public purposes. The board is a state agency, all of whose revenues are devoted to levee building or similar publie needs. It is supported by taxation and cannot contribute one penny to private persons or enterprises.

In determining the question of whether the object in appropriating property by a state agent is a public one, not prohibited by the Fourteenth Amendment, the courts may consider the circumstances and conditions peculiar to the locality in which the taking is sought. In addition to the evidence in this record, it is a matter of common knowledge that much of the land along the shore and adjacent to Lake Pontchartrain in the city of New Orleans and parish of Orleans, is of a low swampy nature, not susceptible to human habitation or cultiva^ tion without drainage or other artificial reclamation, through the ingenuity of man. Hence the project under consideration here cannot be viewed in the same light as would be done if it was undertaken in a locality where the property was not so situated. See Clark v. Nash, 198 U. S. 361, 25 S. Ct. 676, 49 L. Ed. 1085, 4 Ann. Cas. 1171. No single individual owning property in an area like the one now under consideration could afford to reclaim it by the means necessary and to be used by the defendant levee board. Must it, for this reason, remain undeveloped, as well as a menace to the safety and health of a large city? I think not.

Having found that the appropriation is for a public purpose, does the law make reasonably certain and prompt provision for payment? In the first place, plaintiffs do not allege that the levee board has not made provision for or is unable to pay for the property. However, it is seen from the above-quoted language of the last sentence of said subsection (e) that “in event of expropriation or appropriation the compensation to be paid shall be the actual cash value of the property before the contemplated improvement was proposed and begun. * * *’ ” Subsection (h) grants to and authorizes the board to use all the property belonging to the state within the district, “to assist in defraying the cost,” and subsection (i) authorizes the issuance of not more than $15,000,000 of bonds “to carry out the objects and purposes of this section and to enable said Board to finance and carry on the work of development, improvement, maintenance and operation herein authorized. * * * ” Should the plaintiffs and the board be unable to agree upon the value of the property, it may be sued and the other judicial processes of the state are available to compel payment. See section 3, Act No. 93 of the Legislature of 1890. The amendment to the Constitution authorizes the board to acquire the property within the district, either by expropriation or appropriation. Of course to appropriate it means that the board may take possession, if it has made provision for paying the value of the property, and reasonably adequate procedure is afforded for the determination and collection of the sums due to the proprietors. In this ease the board has proceeded by appropriation, and there being not only no constitutional provision against that course, but the same being specifically authorized by the amendment under consideration, it may proceed in that manner and leave the owner to his remedy under the law. See Bickham v. Shreveport, 156 La. 648, 101 So. 8.

Under the view I have taken, it is not necessary to go into the mass of evidence upon the character and value of the property. Plaintiffs have asked for no judgments therefor, and such a claim could not be considered in a proceeding of this nature. Having construed it as a bill in equity, to quiet the title to the property and to enjoin the defendants from proceeding with the scheme of reclamation, and finding that that contention is not sustainable under the law, it results' that the demand should be rejected and the suit dismissed. at the cost of the complainants. Their right to proceed in a proper tribunal for the recovery of the value of their property will be reserved.

Proper decree may be presented and the rights of all parties to present and have settled exceptions or other matters necessary to the perfecting of an appeal are reserved^


source: Caselaw Access Project

author: STEUM, District Judge.

license: Public Domain

text:
    SAUCER v. WILLYS-OVERLAND, Inc.
    No. 3511—J.
    District Court, S. D. Florida.
    April 15, 1931.

      James H. Bunch, of Jacksonville, Fla., for plaintiff.
    Lee Guest, of Jacksonville, Fla., for defendant.
   STEUM, District Judge.

This is an action at law to recover damages for the alleged wrongful death of plaintiff’s husband. Section 7047, Comp'. Gen. Laws Fla. 1927.

The declaration alleges that “ * * * the defendant, Willys-Overland, Incorporated, a corporation, by and through its agent, servant, and/or employee, carelessly and negligently propelled and ran an automobile with great force and violence against and upon * * * ” the deceased, causing his death.

Defendant demurs to that allegation upon the ground that it is not alleged that the servant of defendant was acting within the scope of Ms employment at the time of the negligent act complained of.

In an action resting upon the doctrine of respondeat superior, when the tortious act complained of was committed by the defendant ttorough an agent or servant, the primary test to determine the master’s liability therefor is whether or not the servant was then acting within the scope of Ms employment. It is elementary that the master is not liable for his servant’s tortious act, unless such an act was committed in the course of the servant’s employment and while such servant was carrying out Ms master’s business. That such was the case must appear from the evidence, expressly or by necessary inference, before plaintiff can recover.

We are not concerned, however, with the proof. The question now under consideration is one of pleading.

It is quite generally held that where the tortious act is alleged to have been committed by a servant, without naming or referring to the defendant, such an allegation must be followed with the additional allegation that the act was committed by the servant while acting within the scope or course of his employment, or of his master’s business, or (and perhaps more properly) the facts should be alleged in the declaration from which those matters are necessarily inferred.

Instances of such form of allegation are that the tortious act was committed by “A. B. , the servant of C. D., the defendant; or by C. D., his agent, or servant.” When these, or like allegations, are employed, they are insufficient unless accompanied by other allegations showing that the acts were within the course and scope of the servant’s employment. For, non constat, the tort-feasor may have been the servant of the defendant, and yet the tortious act not be committed while engaged in his master’s business. Illinois Cent. R. Co. v. Elliott, 17 Ala. App. 134, 82 So. 582; Daniels v. Carney, 148 Ala. 81, 42 So. 452, 7 L. R. A. (N. S.) 920, 121 Am. St. Rep. 34, 12 Ann. Cas. 612; Addington v. American Casting Co., 186 Ala. 92, 64 So. 614; Wise v. Curl, 177 Ala. 324, 58 So. 286.

The allegation now before us, however, vitally differs from those just mentioned. This allegation charges that “the defendant,” by and through its agent, servant, and/or employee, committed the tortious act.

In 39 C. J. 1352, it is said: “To state a cause of action against the defendant for a wrong committed by his servant, the ultimate fact necessary to be alleged is that the wrongful act was committed by defendant. This may be alleged either by alleging that defendant, by his servant, committed the act, or without noticing the servant, by alleging that defendant committed the act.”

Under an allegation of the latter character, that is, that “the defendant” committed the tortious act, proof is admissible that the act was committed by a servant while engaged in the course and scope of his employment. 39 C. J. 1354. Where, therefore, it is charged that “the defendant” committed the tortious act, the further allegation that it was committed by and through an agent or servant is nonessential. Being a nonessential allegation, it is unnecessary, as a matter of pleading, to amplify it by adding the further allegation — which is perhaps a conclusion at best — that the servant was acting within the scope of his employment. Alabama Power Company v. Conine, 207 Ala. 435, 93 So. 22, illustrates quite clearly the distinction between the two general classes of averments. See also Metropolitan Life Insurance Company v. Carter, 212 Ala. 212, 102 So. 130; Lewis v. Chicago, etc., Co. (C. C.) 35 F. 639.

The demurrer is therefore overruled.

Amongst other items of damage, plaintiff’s declaration also claims damages for the funeral expenses of deceased. Defendant interposes a motion to strike such claim from the declaration.

The pertinent part of the statute (section 7048, Comp. Gen. Laws Fla. 1927), with respect to damages recoverable, is that the person to whom a right of action may survive “shall recover such damages as by law such person or persons are entitled in their own right to recover.”

At common law, no right of action for wrongful death survives. Liability to a survivor for the wrongful death of a decedent, as well as the measure of recovery, must be found in the statute above. F. E. C. Ry. v. Hayes, 66 Fla. 589, 64 So. 274; Id., 67 Fla. 101, 64 So. 504, 7 A. L. R. 1310.

The statute makes no express mention of funeral expenses as an item of recovery. The statute is in derogation of the eommon law arid the same rules of construction applicable to other such statutes must be applied. The statute does not confer upon a widow a right to succeed to causes of action existing in the deceased or his personal representative. Under the statute, a widow may recover only the damages to which she is entitled “in her own right,” that is, to compensate her for a loss she has sustained flowing from the nature of her relation with the deceased, amongst which are loss of protection, support, consortium, and her expectancy from decedent’s estate. Dina v. S. A. L. Ry., 90 Fla. 558, 106 So. 416. The widow, as such, sustains no loss on account of the funeral expenses of her husband. Liability for such funeral expenses rests upon the husband’s estate, and can be recovered, if at all, onljr by the personal representative in an action on behalf of deceased’s estate. 17 C. J. 1338.

It is very generally held under similar statutes that the widow of one killed by another’s negligence cannot ordinarily recover for medical services to the deceased. Regan v. Davis, 290 Pa.. 167, 138 A. 751, 54 A. L. R. 1073.

The same reasoning applies to funeral expenses. The rule, of course, is otherwise in the case of the death of a minor child, or in an action by a surviving husband, to recover the funeral expenses of a deceased wife, for which the husband would be liable. Brady v. Haw, 187 Iowa, 501, 174 N. W. 331, 7 A. L. R. 1306 et seq.; Consolidated Traction Co. v. Hone, 60 N. J. Law, 444, 38 A. 759. See, also, the following cases decided under the Federal Employers’ Liability Act (45 USCA §§ 51-59): Philadelphia & R. R. Co. v. Marland (C. C. A.) 239 F. 1, affirmed (.C. C. A.) 246 . F. 91; D. L. & W. R. Co. v. Hughes (C. C. A.) 240 F. 941, modifying (D. C.) 233 F. 118.

In The Maueh Chunk (D. C.) 139 F. 747, 748, involving a maritime claim, it was held that funeral expenses were allowable “if the law imposes upon the relatives for whose benefit the suit is brought the obligation to bear them.” Different considerations control in applying that statute, besides which the statutes of Florida impose no liability upon the widow for her husband’s funeral expenses. See sections 5541, 5610, Comp. Gen. Laws Fla. 1927. See, also, The .Samnanger (D. C.) 298 F. 620.

The motion to strike those portions of the declaration claiming funeral expenses as an item of damage to the widow is therefore granted.


author: STRUM, District Judge.

text:
    THE BRILLIANT.
    No. 3605—J.
    District Court, S. D. Florida.
    April 15, 1931.
    Kay, Adams, Ragland & Kurz, of Jacksonville, Fla., for petitioner.
    Knight & Frazier, Gov Hutchinson, and Doggett, Christie & Doggett, all of Jacksonville, Fla., for answering claimants.
   STRUM, District Judge.

Petitioner herein, the Atlantic Refining Company, filed its petition for'limitation of liability as owner of the motor vessel, Brilliant, a Diesel-electric driven tanker, aboard which an explosion and fire occurred, August 16,1930, resulting in certain losses, damages, and destruction, including the death of several persons. 46 USCA § 181 et seq. Liability for said deaths is denied in the petition.

Certain survivors of the deceased persons have filed answers to said petition for limitation of liability and claims against said vessel for the death of four of those persons who lost their lives. Petitioner' excepts to said answers.

The only exception urged upon argument is that relating to the averment in the several answers as to the circumstances under which the deceased persons in question were aboard the vessel at the time of the explosion.

The averment in question is that these deceased persons, “* * * were then and there on board said vessel with the knowledge and consent and with the express invitation of petitioner (the owner of the vessel), acting by and through its duly authorized officer and agent, the said Robert W. Wimbrow, First Assistant Engineer of said vessel, who shortly before said explosion occurred had invited the said A. D. Haltiwanger, H. C. Jenkins, C. P. Morgan, and J. B. W. Jeffords (the deceased persons), to come aboard said vessel. * * *”

The objection urged by the petitioner to that allegation is that it does not charge that Wimbrow, the assistant engineer, was acting within the course and scope of his employment, nor upon his master’s business, in so inviting the deceased persons on board the vessel.

An analogous question was presented in Saucer v. Willys-Overland, Incorporated (D. C. ) 49 F.(2d) 385, this day filed. In the latter ease, it was held that in a declaration for wrongful death, an allegation' charging that “the defendant, Willys-Overland, Incorporated, a corporation, by and through its agent, servant, and/or employee,” committed the tortious act there in question, was sufficient to charge that such act was committed by “the defendant,” and that the further allegation “by and through its agent, servant, and/or employee,” was nonessential, so that there was no necessity to further amplify such allegation by charging that the servant was acting within the scope of his employment. See, also, Alabama Power Co. v. Conine, 207 Ala. 435, 93 So. 22; 39 C. J. 1352.

We notice that the averment here in question relates, not to the commission of the tortious act, but to the status of the deceased persons on board the vessel, that is, whether they were on board said vessel as trespassers, as mere licensees, or as invitees. The same reasoning will apply to both eases, however, for the purpose here under consideration.

This answer avers that the deceased persons were on board said vessel with the knowledge and consent and with the express invitation of “petitioner,” the owner. That allegation is sufficient to charge an invitation from the owner, the remainder of the allegation in question being nonessential, as in the Saucer Case, supra.

The court, therefore, holds that the allegation is sufficient, as against the exceptions, for the purpose of pleading an invitation from the owner. If the answering claimants rely upon an invitation of the owner extended through an agent or servant, the claimant, of course, must adduce facts in evidence from which it will appear, expressly or by necessary inference, that such servant was acting within the course and scope of his employment and was carrying out the master’s business, as to which, see Silverado S. S. Co. v. Prendergast (C. C. A.) 31 F. (2d) 225. See also Standard Oil Co. v. Anderson, 212 U. S. 215, 29 S. Ct. 252, 53 L. Ed. 480.

To support its exceptions, the petitioning owner relies upon the Silverado (D. C.) 14 F.(2d) 243. The allegation there held insufficient was the “simple, bald allegation” that “the libellant was requested and directed by ‘the master’ to come aboard” the vessel. The infirmity of that allegation lies in the fact that it does not necessarily charge an invitation from the owner. The owner is nowhere mentioned. The charge is merely an invitation from “the master.” Such an allegation, standing alone, is not tantamount to an allegation of an invitation from the owner, but charges merely an invitation from “the master” of the vessel. It is of that character of allegation which requires the charging of additional facts to show that the servant, upon whose invitation the libelant relied in being aboard the vessel, was aetmg within the scope of his employment. Such an allegation differs vitally from that here in question, which charges an invitation from “the petitioner” (the owner), acting through its servant. See the eases cited in Saucer v. Willys-Overland, supra.

As other exceptions were not Urged in argument, they will be treated as abandoned.

Exceptions overruled as to each answer.


author: GIBSON, District Judge.

text:
    In re FRANKS.
    No. 16068.
    District Court, W. D. Pennsylvania.
    Feb. 5, 1931.
    J. Salem Flack, of Washington, Pa., for bankrupt.
    Harry A. Jones, of Washington, Pa., for Philip Sahady.
    W. R. Dennison, of Washington, Pa., referee in bankruptcy.
    George J. Modrak, receiver.
   GIBSON, District Judge.

The referee, pursuant to petition of the bankrupt, issued an order temporarily restraining Philip Sahady, plaintiff in an action of trespass brought against bankrupt prior to petition, from proceeding in a writ of ca. sa. issuing out of the court of common pleas of Washington county, this district. [The hearing upon the motion for restraining order was made returnable before this court. Upon hearing it developed that plaintiff’s ■claim, upon which the judgment underlying the writ had been obtained, alleged that the defendant (now the bankrupt) had sold a certain automobile to plaintiffthat the purchase price thereof had been practically all paid and the papers evidencing the transfer of title had been delivered to plaintiff at the same time the automobile had been turned over to him. It further alleged that several days after the transfer of the papers and automobile, the defendant secured the return of the certificate of title to him upon promise to cause to be issued by the proper authorities at Harrisburg, a new certificate of title for the car. Defendant’ failed to have the transfer made, as promised, and later caused the certificate to be issued to himself. In the meantime, having found the automobile unoccupied and unlocked upon the street, without the knowledge and consent of the plaintiff, he took the same into his possession and has since refused to deliver to plaintiff either the car or the certificate of title. Upon trial, judgment was rendered in favor of the plaintiff for the value of the ear, with an allowance for detention. In charging the jury the court instructed it that the evidence did not justify their bringing in any allowance of punitive damages. After the writ of ea. sa. .'had issued from the court of common pleas, the defendant filed his voluntary petition in -bankruptcy in this court, and the temporary .restraining order issued, as aforesaid.

The continuance of the restraining ortder, as it seems to us, depends upon the status of plaintiff’s judgment. If as claimed by bankrupt’s counsel, plaintiff has a provable claim in bankruptcy against, the bankrupt, then the restraining order should be continued ; and if, as contended by plaintiff’s counsel, the judgment do.es not constitute a provable debt, then the restraining order should be vacated.

It is our conclusion that the judgment is not a provable debt, and one from which the defendant may be discharged in bankruptcy. Under the old practice the suit would have been in trover and conversion. The claim sets forth an unlawful taking of the automobile and a conversion to the use of the defendant.

Counsel for the bankrupt, in support of his contention that the judgment was a provable debt, has cited to us Crawford v. Burke, 195 U. S. 176, 25 S. Ct. 9, 49 L. Ed. 147, and Tindle v. Birkett, 205 U. S. 183, 27 S. Ct. 493, 51 L. Ed. 762, and contends that those cases are authority for the proposition that where a plaintiff may waive a tort and sue upon an open account or implied contract, his judgment, no matter whether obtained in an action for the tort, or upon the contract or open account, is a provable debt. Both of these eases were based upon section 17 of the Bankruptcy Act prior to its amendment by the Act of February 5, 1903 (32 Stat. 798). Each case set forth a conversion on the part of brokers who had a running account with the plaintiffs in the respective cases. Assuming that they may be quoted as authorities under the peculiar facts presented by them subsequent to the decision in the ease of MacIntyre v. Kavanaugh, 242 U. S. 138, 37 S. Ct. 38, 40, 61 L. Ed. 205, it would seem plain that they have no proper application to the facts in the ease before us since the decision last mentioned.

In MacIntyre v. Kavanaugh, supra, the defendant below was a broker who had received from plaintiff certain stock certificates, which he undertook to hold as security for the plaintiff’s indebtedness, and which amounted to about one-sixth of the market value of the certificates. Shortly after receiving the certificates, without the authority or knowledge of the plaintiff, he sold the stocks and appropriated the proceeds to his own use, and shortly thereafter he was adjudged a bankrupt. -In the opinion, by Mr. Justice MeReynolds, which held that the judgment was not provable in bankruptcy, and was not a debt from which the bankrupt might be discharged, it is stated: “And this [injury by conversion] we understand is not controverted; but the argument is that an examination of our several Bankruptcy Acts and consideration of purpose and history of the 1903 amendment will show Congress never intended the words in question to include conversion. We can find no sufficient reason for such a narrow construction. And instead of subserving' the fundamental purposes of the. statute, it would rather tend to bring about unfortunate if not irrational results. Why, for example, should a bankrupt who had stolen a watch escape payment of damages, but remain obligated for one maliciously broken? To exclude from discharge the liability arising from such transactions as those involved in Crawford v. Burke, 195 U. S. 176, 25 S. Ct. 9, 49 L.. Ed. 147, and here presented, not improbably was a special purpose of tbe amendment.” In tbe same opinion, Mr. Justice McReynolds, quoting from Tinker v. Colwell, 193 U. S. 473, 24 S. Ct. 505, 48 L. Ed. 754, disposed of one of tbe contentions of the bankrupt in this case, as we think. It has been urged that plaintiff’s judgment herein is a debt from which bankrupt may be discharged, because section 17 of the act (11USCA § 35) excepts from dis-chargeable debts only those wherein the injury inflicted upon the plaintiff in the judgment has been willful and malicious; and that the injury alleged had not been willful or malicious, it is contended, is established by the fact that the court of common pleas, charging the jury, instructed it that the evidence did not justify the imposition of punitive damages. The definition of “malicious injury” contemplated by section 17, as quoted in the opinion, plainly shows that the statute is not to be confined to such acts as would justify special damages.

It might be pointed out that the facts in the instant ease are quite different from those in Crawford v. Burke, supra, and other cases cited by the bankrupt, wherein running accounts were maintained. In the present case the statement of claim alleges possession of the title certificate by fraud of the defendant and an unlawful and surreptitious taking and conversion of the automobile. Under such circumstances, it is somewhat difficult to imagine how the plaintiff could have brought an action of assumpsit which would have been reconcilable with his allegations of fact in his instant statement of claim.

As to effect given MacIntyre v. Kavanaugh, supra, see Rogers Brown & Co. v. Tindel Morris Co. (D. C.) 271 E. 475; In the Matter of John Brier, Bankrupt (D. C.) 3 F.(2d) 709, 5 A. B. R. (N. S.) 756.

The temporary restraining order issued by the referee will be vacated, and the petition of the bankrupt for an injunction will be denied.


author: JAMES, District Judge:

text:
    MOSIER v. GOODCELL, Former Collector of Internal Revenue. SAME v. WELCH, Collector of Internal Revenue.
    Nos. 3190-J, 3191—J.
    District Court, S. D. California, Central Division.
    March 19, 1931.
    Dana Latham, Joseph D. Peeler, and Melvin D. Wilson, all of Los Angeles, Cal., and Miller & Chevalier, of Washington, D. C., for plaintiff.
    Samuel W. McNabb, U. S. Atty., and. Alva C. Baird, both of Los Angeles, Cal.,, and C. M. Charest, Counsel, Bureau of Internal Revenue, of Washington, D. C., for defendants.
   JAMES, District Judge:

The suits as ab.ove entitled are to recover the amount of income tax as fixed by a deficiency assessment made by the Commissioner of Internal Revenue. They affect the taxable income of the plaintiff for the year 1917 only, and are separately brought because of payments made to the two defendants, Collector Welch having succeeded to the office formerly held by defendant Goodeell.

The question presented is solely as to whether, by reason of the limitation periods fixed by the several revenue acts which were operative in 1917 and 1918 and which became of effect prior to the date when the deficiency assessment was made, the commissioner had power to make the assessment at the date stated. Incidentally, there is involved the sufficiency of certain waivers signed by the taxpayer. If the waivers were properly executed, it would seem that the plaintiff has no right to recover. Since the date of the bringing of these actions, the Supreme Court of the United States has passed upon every question argued by counsel for the plaintiff touching the matter of the alleged lack of power on the part of the commissioner under several time limitations fixed by the statute, and has determined those questions adversely to the position here taken by the taxpayer. It would seem useless to do more than to cite those eases. See Charles H. Stange v. U. S., 282 U. S. 270, 51 S. Ct. 145, 147, 75 L. Ed. -; Aiken v. Burnet, 282 U. S. 277, 51 S. Ct. 148, 149, 75 L. Ed. -; Burnet v. Chicago Railway Equipment Co., 282 U. S. 283, 51 S. Ct. 137, 75 L. Ed. -; W. P. Brown & Sons Lumber Co. v. Burnet, 282 U. S. 283, 51 S. Ct. 140, 75 L. Ed.-, each decided on January 5, 1931.

Duly certified photostat copies of the waivers, signed by the taxpayer, were admitted in evidence, and I think that they were sufficient in form to entitle them to be received without additional proof -as to their receipt by the internal revenue office. The first waiver was dated December 22, 1922, and approved by the commissioner March 10, 1923. It was a consent signed by the taxpayer that the commissioner might assess and collect the income tax of the taxpayer under his return made for the year 1917 irrespective of any period of limitations. On April 11, 1923, the commissioner issued his order determining that waivers theretofore made containing no limitation as to the time for assessment on 1917 returns should be held to expire April 1, 1924. A further written waiver, in similar form to the one above referred to, except that it contained the proviso that it should expire on March 15, 1925, was made on February 7, 1924. In December, 1924, the commissioner’s office addressed a letter to the plaintiff calling his attention to the fact that the last waiver made by him Would expire within a short time, and inclosing a further form of waiver, which it was requested should be signed and returned. Under date of December 30, 1924, the plaintiff addressed a letter to the commissioner stating that he was complying with the latter’s request and inclosing the waiver. This waiver was dated December 30, 1924, and purported to waive the time prescribed by law for “making any assessment of the amount of income, * * * taxes due under any return made by or on behalf of said taxpayer for the year 1917 under existing revenue acts, or under prior revenue acts.” The deficiency assessment, as before noted, was made prior to the expiration of the period fixed in the last waiver. Each of the waiver forms as signed by the taxpayer bore an approval stamp of the Commissioner of Internal Revenue, with the signature of Blair, commissioner, affixed by some person, whose initials appear. The point is made that the waiver of December 30, 1924, transmitted by the taxpayer accompanying a letter of the same date, does not appear to have been approved until May 14, 1925, by the commissioner, which would be after the expiration date of the preceding waiver, which was March 15, 1925. There seems to be no contention but that the waiver last referred to was transmitted and received in due course with the taxpayer’s letter of December 30, 1924. Judging from its date, it was dispatched promptly in response to the commissioner’s request letter of December 24th of the same year.

It would seem by the decisions that the written approval by the Internal Revenue Commissioner is not deemed indispensable to the validity of a waiver. As was said in Stange v. U. S., hereinabove cited: “A waiver is not a contract, and the provision requiring the Commissioner’s signature was inserted for purely administrative purposes and not to convert into a contract what is essentially a voluntary, unilateral waiver of a defense by a taxpayer.” Also in Aiken v. Burnet, above cited: “The requirement in section 250 (d) of that act that the Commissioner sign the consent was inserted to meet exigencies of administration, and not as a grant of authority to contract for waivers.” It should be held, in my opinion, that where a taxpayer deposits with the Internal Revenue Commissioner a written waiver in due form and that waiver is accepted and acted upon, the date when the commissioner actually indorses thereon his written approval does not change the date when the waiver becomes effective. Hence in these eases, the waivers covered a continuous period from the date that the first one was executed up to and past the time when the deficiency assessment was made. Nor should it be held that the mere fact that the commissioner’s signature of approval seems to have been attached by'some person whose initials follow his name would invalidate the waivers. The documents constituting the waivers were deposited in the office of the commissioner, and having been there received as a result of suggestions to the taxpayer that they be forwarded, the presumption ought to be that any approval indorsement thereon made was duly authorized. The Circuit Court of Appeals for the Ninth Circuit has so held. Pantages Theater Co. v. Lucas, 42 F.(2d) 810. See also Liberty Baking Co. v. Heiner, 37 F.(2d) 703 (C. C. A. 3d).

Findings and judgment are directed to be entered in favor of the defendant in each case.


author: GODDARD, District Judge.

text:
    In re RITE’S CLOTHES, Inc.
    District Court S. D. New York.
    Feb. 24, 1931.
    Thomas & Friedman, of New York City (by Joseph D. Karp, of New York City), for claimants.
    David W. Kahn, of New York City, for trustee.
   GODDARD, District Judge.

Petition to review order of referee reducing claim for rent against the bankrupt estate from $22,500 to $675.

Facts.

On January Iff, 1929, David Garber, Barney Toretsky, Joseph H. Wiegel, and Israel Garber, as lessors, entered into a lease with Rite’s Clothes, Inc., as lessee, for a store at #155 Asylum street, Hartford, Conn., for a period of ten years beginning March 1,1929, at a yearly rental of $8,100 per annum for the first five years payable in advance in equal monthly installments of $675, and $8,700 per annum for the remaining five years payable! in equal monthly installments of $725. The lease contained a clause reading as follows r “Second: And it is agreed that if any rent shall be in arrear and unpaid by the space of ten (10) days after the same shall be and become due and payable as aforesaid, or if default shall be made in any of the covenants herein contained, and by the lessee agreed to be kept and fulfilled, and said default shall continue after written notice to the lessee of the same for a period of ten (10) days thereafter, then this lease shall thereupon, by virtue of this express stipulation, expire and terminate and the lessors at any time thereafter and without any previous demand or notice whatever, shall have the right to re-enter and take possession of said leased premises and the same have and possess as of their estate.” The lease did not contain provisions frequently included in leases to the effeet that in the event the landlord terminates the lease for default on the part of the lessee, the landlord reserves a right of action for damages or that the landlord might re-enter and relet the premises for the account of the tenant.

The rent was duly paid up to and including June, 1930, in which month the tenant moved out of the premises and the rent was not paid for July. On July 12, 1930, the following communication was sent by registered mail from the lessors to the lessee:

“July 12,1930
"Rite’s Clothes Corp.
“275 Seventh Ave.
“New York City. Registered
"Gentlemen:
“You are hereby notified that your rent for the month of July, in accordance with your lease, has not been received by us. We therefore, request that you kindly send same to us by return mail.
“Respectfully yours
“David Garber et al.
“JHW :MC Per J. H. Wiegel”

Although the testimony before the referee offered by the lessors is confusing and conflicting, he has found that there was a reentry upon the premises by the lessors, and that this re-entry occurred before the end of July, and after an examination of the testimony, I believe this finding to be correct.

A voluntary petition in bankruptcy was filed by Rite’s Clothes, Inc., on August 12, 1930. .

In the early part of September, the lessors entered into a lease with a new tenant, Markson Bros., beginning September 15, 1930, the rent stipulated in this lease amounting to $21,200 less than the amount of rent payable for the corresponding period under the lease to Rite’s Clothes, Inc., and the claim of $22,500 filed includes, this $21,200 and $1,350, the rent for July and August, 1930, at the rate of $675 a month.

If this lease expired or was surrendered ■or was terminated, it is clear that thereafter -no liability for future rent could be based upon that lease, for it had come to an end. And It seems to me that the lease was terminated in accordance with clause “second.” The penalty or consequences of the failure of the tenant to pay the rent or to observe any of the covenants of the lease were expressly provided for in the “Second” clause (part of which was written in apparently by a representative of the lessor), and says: “if any rent shall be in arrear and unpaid by the space of ten (10) days after the same shall be and become due and payable as aforesaid or if default,shall be made, in any of the covenants herein contained, and by the lessee agreed to he kept and fulfilled, and said default shall continue after written notice to the lessee of the same for a period of ten (10) days thereafter, then this lease shall by virtue of this express stipulation, expire and terminate. * * * ” This clause is explicit and clearly means that if the rent is not paid for ten days the landlord may give the tenant written notice of the default and in the event the default continues for ten days, the lease is then terminated. There was a default in the payment of rent for and on the 12th day the lessors gave written notice of the default, the default continued for ten days more, and so the lease terminated. Whether this was a desirable provision from the standpoint of the landlord, or whether it was wise to give the written notice and to terminate the lease, is perhaps open to question, but the lessors may have had their own good reason for so doing; perhaps, the fact that the lessee had contributed $2,000 or more toward building a new front for the premises entered into the situation as well as the general business conditions then prevailing.

While counsel urge that the notice of July 12th was merely a request for rent and nothing more, however, the testimony of Wiegel before the referee was that they went to their lawyer when the rent was not paid and he told them what to do and that he told us “we couldn’t go into that place until after that ten days went by.”

Counsel for claimants refer to several Connecticut decisions, among them, the case of Bowman v. Foot, 29 Conn. 331, where a lease contained the following clause: “Provided however, that if the lessee shall neglect to pay the rent as aforesaid, then this lease shall thereupon, by virtue of this express stipulation, expire and terminate; and the lessor may, at any time thereafter, re-enter said premises, and the same possess as of his former estate.” And the court said: “It is well understood that such expressions as these in leases for years do not designate the nonpayment of rent as an event, like a death or a marriage; at the date of which an estate shall cease at all events. If so, it would be in the power of the tenant, whenever his leasehold property became unprofitable or onerous, to relieve himself, at any pay-day, of his duty to retain it, by simply violating his own covenants. Such a construction would be a plain perversion of the intent of the parties. Accordingly, such stipulations are now universally taken to be for the advantage of the landlord * * 51 where a lease is thus voidable, the landlord’s option to avoid it should be exercised * * * and * * * should be brought home to the tenant’s knowledge through some unequivocal act. * *

In the case at bar there was the “unequivocal act.” First, the sending of the written notice as provided for in the lease itself, and afterwards, some time in July, the re-entry by the landlord. Counsel for the landlord urge that the ease at bar comes within the rule laid down by the Circuit Court of Appeals of this circuit in Re Mullings Clothing Co., 238 F. 58, basing their contention on the ground that there had been an abandonment of the premises by the tenant prior to bankruptcy. But even if there had been an abandonment, a conclusion which in my judgment is not supported by the record, the landlord chose to terminate the lease and did terminate it without any reservations. So that at the time of the bankruptcy, there was no lease in existence, nor was any claim reserved by the landlord. In the lease it had been expressly provided that in the event of a default by the tenant, the landlord had the right to terminate the lease and re-enter and the landlord exercised that right. That ended it.

Therefore, I think the claimants have no claim beyond that for rent and for rent only up to the time of the termination of the lease and re-entry by the landlord, which was before the first of August. The order of the referee is therefore confirmed.