author: BRIGHT, District Judge.

text:
    BENWARD v. AUTOMOBILE INS. CO.
    District Court, S. D., New York.
    March 6, 1945.

      Hill, Rivkins & Middleton, of New York City (Gregory S. Rivkins and Robert J. Andrews, both of New York City, of counsel), for plaintiff.
    Bigham, Englar, Jones & Houston, of New York City (John M. Aherne, of New York City, of counsel), for defendant.
   BRIGHT, District Judge.

Plaintiff, an exporter of merchandise from New York to Central and South American countries, brings this action to recover $13,574.10 and interest, under three separate certificates of insurance, two issued by defendant on April 20, 1942, and the third on May 12, 1942, insuring plaintiff against all risks of loss or damage from external causes, including perils of war, of three shipments of merchandise at and from the interior of this country via New Orleans to Guatemala City, Guatemala. These three shipments were laden on board the S/S Baja California on July 14, 1942, which, while proceeding on her voyage, was sunk on July 18, 1942, as a result of enemy action, and the insured’s cargo lost.

The facts are stipulated. The Gallie Corporation was engaged in the business of freight forwarding and cargo insurance broker, and for some time before the dates and transactions in question, was the broker for plaintiff. It was the holder of two policies issued by defendant, both of which were in force at the time of the loss, one an open marine cargo policy, dated February 15, 1932, which insured shipments of merchandise against loss by marine perils, and the second, dated November 9, 1938, an open war cargo policy, which insured against loss by war perils on designated shipments.

Twice on April 20, 1942, and again on May 12, 1942, Gallie delivered to defendant on behalf of plaintiff, as it had done on previous occasions, and defendant accepted as provisional declarations of insurance, three certificates which certified that defendant insured the three shipments mentioned under the open marine policy “under deck of the S/S via U. F. Co.”, but the date of the bill of lading was left blank. Under the practice, defendant was to be advised of the name of the vessel as soon as known to plaintiff or Gallie, as well as the sailing date of the vessel. By reason of the secrecy at that time imposed by naval war time regulations on the sailing of vessels, the practice then existing was for defendant to accept the bill of lading date in lieu of the date of sailing. On July 20, 1942, Gallie informed defendant that the vessel nominated with respect to the three shipments was the Baja California, and that the date of issue of the bill of lading covering each shipment was July 14, 1942. , Thereupon, defendant attached a printed war risk endorsement to each of the insurance certificates mentioned, wrote in the name of the vessel, duly countersigned each of them, and delivered the three to Gallie. When so delivered on July 20, 1942, and accepted by Gallie, the documents originally issued became certificates of insurance. The certificates then insured the three shipments against destruction or damage by men of war and other warlike operations, and acts of kings, princes and peoples in the prosecution of hostilities.

In July, 1942, enemy submarines were actively operating in the Gulf of Mexico and in the waters through which the Baja California would pass on her voyage, and she was the victim of such enemy action on July 18, 1942, as stated.

Previously, however, and on May 2, 1942, the plaintiff had instructed Gallie, with reference to war risk insurance, that he wanted all of such insurance on his shipments to be taken out with the Government, as there would be a considerable saving to him in rates. On July 20, 1942, when Gallie informed the plaintiff that he had procured war risk insurance upon the three shipments mentioned, it was advised that it was contrary to the plaintiff’s instructions, and later in that day, Gallie applied to the' Insurance Division of the War Shipping Administration for war risk insurance upon each of the three shipments described covering the same voyage, and obtained from that Administration, by telegraph, binders of war risk insurance. On July 21, 1942, policies covering these three shipments were issued to plaintiff by the War Shipping Administration and plaintiff was so notified.

On July 24, 1942, without knowledge on the part of any of the parties to this action as to whether or not shipments had been laden aboard the Baja California, and whether or not she had sailed, and prior to any known or reported loss of the vessel, Gallie, on plaintiff’s behalf, returned to defendant the three certificates of insurance, informed defendant that war risk insurance was not wanted on the three shipments, and instructed defendant to delete war risk coverage from the certificates. Defendant thereupon physically removed the printed war risk endorsement from each certificate, wrote across the face of each the words “excluding war”, and struck out from the upper left hand corner of each certificate the symbols “& W”. At the same time defendant stamped upon the face of each certificate the following:

“War Risk Policy No. 5442

“At the request of the Assured, and by special agreement and in consideration of the waiving of any premium this shipment is hereby excluded from and is not covered under this policy without regard to whether risk may have attached or loss occurred or may hereafter occur.”

The certificates of insurance as thus changed were redelivered to Gallie on July 24, 1942, accepted by it, and on July 25, 1942, were delivered to the plaintiff along with three documents indicating that war risk insurance on the three shipments had been bound with the War Shipping Administration. The three certificates of insurance ' so changed were accepted by the plaintiff without question.

On August 3, 1942, it first became known to all concerned that the Baja California, while at sea, had become a total loss through enemy action on July 18, 1942.

Plaintiff filed his claim for the loss with the War Shipping Administration, which was rejected on the grounds that the policies were issued when the vessel was not in good safety in port.

On December 8, 1942, Gallie, on behalf of plaintiff, filed with the defendant proofs of loss and made claim upon the defendant for the sum now sought, offering to pay the premium previously waived. On the same day defendant returned the proofs of loss to Gallie disclaiming all liability.

The war policy mentioned contained the following provisions: “This insurance may be cancelled by either party upon forty-eight hours written or telegraphic notice to the other party, but such cancellation shall not affect any shipment which has been loaded on the overseas Vessel prior to the effective date of such notice.”

It is plaintiff’s contention that on July 24, 1942, when the war risk insurance was eliminated, (1) defendant’s liability to the plaintiff had already vested and there was nothing to cancel; (2) that, in any event, there was an inadequate consideration for the cancellation of a liability of $13,574.10 by a waiver of premiums of $2,036.11; (3) that the cancellation was nugatory, in that under the terms of the policy last quoted, such cancellation would not affect any shipment loaded prior to the effective date of notice of cancellation; (4) that the open war policy provided that there shall be “automatic War Risk coverage with respect to all shipments applicable to the policy”, which contemplated that whenever there was marine insurance on plaintiff’s goods, as there was here, such goods would likewise be insured against war risks; and (5) the certificates of insurance should be reformed, because of a mutual mistake of fact, so as to restore to them the war risk coverage previously thereon.

The important question which seems the first to be raised is whether or not there was any consideration for the contract by which the shipments were excluded from the war risk policy. There is no question of the capacity of the parties to contract. And it is clear that those who make contracts are competent to unmake them, the discharge of one party from the obligation to perform being sufficient consideration for the discharge of the other. Ætna Life Insurance Co. v. Dodd, 8 Cir., 103 F.2d 793-795, certiorari denied 308 U.S. 573, 60 S.Ct. 87, 84 L.Ed. 480. Where there are mutual promises, the promise of one is a good consideration for the promise of the other. Savage Arms Corp. v. United States, 266 U.S. 217-220, 45 S.Ct. 30, 69 L.Ed. 253; United States v. Bethlehem Steel Corp., 315 U.S. 289, 299, 62 S.Ct. 581, 86 L.Ed. 855; Fidelity & Deposit Co. v. Wheeler, 8 Cir., 34 F.2d 892-895; Union Central Life Insurance Co. v. Imsland, 8 Cir., 91 F.2d 365-370; Coleman v. Eyre, 45 N.Y. 38; Tradesmen’s Nat. Bank v. Curtis, 167 N.Y. 194-197, 60 N.E. 429, 52 L.R.A. 430. Generally, gain' or advantage to the promisor, or loss or disadvantage to the promisee, or the relative values of a promise and the consideration for it, do not affect the sufficiency of consideration. Restatement, Contracts, § 81. The words of Judge Cardozo in Walton Water Co. v. Village of Walton, 238 N.Y. 46-49-51, 143 N.E. 786, 788, may well be applied here — “We think the argument against this contract is aimed at the adequacy of the consideration rather than at its existence. With adequacy we are not concerned. 1 Williston Contracts, §§ 115, 137; Anson Contracts, (Corbin’s edition) § 123. * * * Courts are slow to say that promises, bearing upon their face the outward or formal tokens of a contract with mutual obligations, shall be set at naught on the assumption that the parties were oblivious of the advantages and burdens of their reciprocal engagements. 1 Williston, Contracts, § 112, p. 233.”

Substantially the same text may now be found in Williston, Contracts, Revised Ed., Vol. 1, §§ 112, 115, p. 359; An-son’s Law of Contracts, 18th Ed., p. 85. Even though the condition in a promise relates to an unknown fact which is already determined, so that if the parties knew the truth it would be apparent that the promisor really bound himself for notñmg, me consideration is sufficient. Williston Contracts, Revised Ed., Vol. 1, § 103(f), p. 346. Outlet Embroidery Co. v. Derwent Mills, 254 N.Y. 179, 172 N.E. 462, 70 A.L.R. 1440. The rule that the law will not enter into an inquiry as to the adequacy of the consideration, is almost as old as the law of the consideration itself, and anything which fulfills the requirement of the consideration will support a promise, whatever may be the comparative value of the consideration and of the thing promised. Williston, Contracts, Rev.Ed., Vol. 1, § 115, p. 389; Vol. 3, § 663, p. 1906; Youssoupoff v. Widener, 246 N.Y. 174-188, 158 N.E. 64.

This was not the compromise of a doubtful claim. It was not the compromise of anything. There was clearly the making of a new contract, not the settlement of any liability to take the place of one that had been unauthorized and repudiated. If the matching of the value of that forgiven or surrendered by the parties is of any concern at all, it is obvious that what was surrendered was a present and fixed liability for a premium and the possibility of a recovery that might or might not materialize. It was not the forgiving of the premium for a similar surrender of the value of the goods. The amount of the premium was known; the risk of loss was conditional. By hindsight, we cannot be furnished with a yardstick measuring the worth of the consideration. There was obviously no matching of values. The situation must be considered in the light of what was then obvious, not what afterwards transpired.

I am satisfied that the contract of July 24, 1942 stamped upon the three certificates was based upon a legal and sufficient consideration.

Under the circumstances, the terms of the policy relating to cancellation and automatic war risk coverage are not controlling. If the contract mentioned properly excluded the war risk coverage, such exclusion was equally applicable to these two clauses. And, in any event, plaintiff having requested such exclusion, he cannot now say that defendant’s compliance was nugatory, . .

There remains but the fifth contention, that the contract should be reformed. Reformation is sought on the basis of mutual mistake. No fraud is alleged or proven. The mutual mistake asserted is that, at the time, neither party knew that the Baja California and the goods were a total loss and no longer in existence.

Mistake on the part of one party is not ground for a reformation. Hearne v. Marine Insurance Co., 87 U.S. 488-491, 20 Wall. 488-491, 22 L.Ed. 395; Ruston Drilling Co. v. United States F. & G. Co., 8 Cir., 81 F.2d 943-946. Where the parties treat on the basis that the fact which is the subject of the agreement is doubtful and the consequent risk each is to encounter is taken into consideration in the stipulations assented to, the contract will be valid notwithstanding any mistake of one of the parties. 17 C.J.S., Contracts, § 144, sub-sec. a, page 498. Denver & S. L. R. Co. v. Moffat Tunnel Improvement Dist., D.C., 35 F.2d 365-372, modified on other grounds 10 Cir., 45 F.2d 715, certiorari denied 283 U.S. 837, 51 S.Ct. 485, 75 L.Ed. 1448; Russell v. Shell Petroleum Corp., 10 Cir., 66 F.2d 864-867. Where there is an absolute unconditional contract concerning a matter about which there is or may be some doubt, and it appears that the existence of the thing was an implied condition, but that the parties intended to take the risk, then it is no answer to the enforcement of the agreement that the thing did not actually exist. 17 C.J.S., Contracts, § 144, subsec. c, page 499.

Here the parties did not know whether the goods had been actually laden on the ship, or whether the ship had sailed, or whether she was lost. They did know that the plaintiff did not want that particular war risk insurance and had not authorized it. They certainly could contract validly even though they were ignorant of the loss at the time the contract was made. Insurance Company v. Folsom, 85 U.S. 237-251, 18 Wall. 237-251, 21 L.Ed. 827. And they did so contract in words which are plain and specific. Plaintiff, carrying out his idea that the insurance should have been placed with the War Shipping Administration, requested the exclusion from the defendant’s policy of the three shipments. The shipments were excluded, and it was expressly understood and written in the agreement that such exclusion was “without regard to whether risk may have attached or loss occurred or may hereafter occur”. The possibility of the very loss that occurred was the subject of the agreement. Obviously, the plaintiff took whatever risk there was of a loss having occurred and made no express reservation to protect himself against such a loss. Surely plaintiff could have cancelled, reserving any claim for any accrued loss, of which, if he desired to avail himself, he should have done but which he did not do. Soper v. Atlantic Mutual F. & M. Ins. Co., 120 Mass. 267. He did not want the insurance because he had never authorized it. Its very placing was contrary to his authorization and instructions and he repudiated it. And the defendant, conforming to his request and wishes, cancelled his then liability for the premium. I cannot see how there was any mistake of fact. Both parties got exactly what they bargained for, and they made their bargain knowing that neither had any information as to whether the goods were laden, whether the ship had sailed, or whether she was safe or lost.

Plaintiff cites Duncan v. New York M. Insurance Co., 138 N.Y. 88-92, 33 N.E. 730, 20 L.R.A. 386, and Steamship Samana Co. v. Hall, D.C., 55 F. 663. I do not think that these cases, which arise out of the same loss, are in point. The insurance was paid for and the policies were in force by agreement up to a date subsequent to the loss. Here, the risk was excluded from the very beginning. In Magaliff v. New York Life Insurance Co., 247 App.Div. 810, 285 N.Y.S. 303, affirmed without opinion 272 N.Y. 521, 4 N.E.2d 428, no provision was made that accrued benefits should be disregarded. And Seidman v. New York Life Insurance Co., 162 Misc. 560, 296 N.Y.S. 55, affirmed without opinion in 253 App.Div. 804, 2 N.Y.S.2d 634, and 279 N.Y. 620, 17 N.E.2d 680, was of a similar character. The same situation existed in Riegel v. American Life Insurance Co., 153 Pa. 174, 26 A. 1070, 19 L.R.A. 166. In none of these cases did the cancellation contain the language found in the present one, obviously contemplating and excluding a loss which might previously have occurred. Here there was express agreement that the exclusion of the shipments from the policy was to be had regardless of whether loss had or might occur.

Accordingly, the complaint will be dismissed upon the merits, with costs. Proposed findings may be submitted by the defendant within ten days, and plaintiff may have five days after the service of them upon his counsel in which to object to any thereof.


source: Caselaw Access Project

author: CONGER, District Judge.

license: Public Domain

text:
    DRITTEL v. FRIEDMAN et al.
    District Court, S. D. New York.
    May 11, 1945.

      Morris Kirschstein, of New York City, for plaintiff.
    I. Gainsburg, of New York City (Joseph P. Segal, of New York City, of counsel), for defendants.
   CONGER, District Judge.

Action by plaintiff against defendants for alleged infringement of a trade mark. The trade mark “Juliana” was registered by plaintiff’s predecessor in the United States Patent Office on March 4, 1941. Plaintiff is in the business of manufacturing and selling housecoats and uses the said trade mark by applying it to the housecoats by a label bearing the said trade mark.

Defendants are in the business of manufacturing and selling lingerie, consisting of ladies’ night gowns, slips and ensembles.

Although plaintiff alleges that he is a citizen of New Jersey and does business in that state, it does appear from the papers that both parties herein have business places and do business in the City of New York and in interstate commerce.

The defendants have answered herein and generally deny plaintiff’s right to use the name “Juliana” as a trade mark and assert that they have the right to so do as against plaintiff. The answer of defendants also contains certain special defenses.

Plaintiff in his complaint asks for an injunction against the defendants and an accounting for profits and damages.

Defendants ask that plaintiff be enjoined from using the trade mark and for damages and an accounting and that the registration by plaintiff of his trade mark be declared invalid.

The issue is over the right to use the name “Juliana”. Plaintiff has a registered trade mark and defendants claim to have an unregistered trade mark.

There are two motions here:

(a) Plaintiff has moved to strike the Fifth defense and for summary judgment dismissing the counterclaim set forth in Paragraphs 14 to 26 of the Answer, designated “For a Fifth Defense and for a Counterclaim.”

(b) Defendants have moved for summary judgment dismissing the plaintiff’s complaint, and for judgment for the defendants on the defenses and counterclaim in the defendants’ answer.

On these motions, there is before me the complaint, answer and reply to defendants’ counterclaim. In addition there has also been filed with me by each party affidavits and exhibits. I have also the stenographic minutes of the examination before trial of the plaintiff..

I shall take up first the motion made by the plaintiff since it was first in point of time. On this motion I have also before me the judgment roll of a previous action in the Supreme Court of New York County. This consists of the complaint, answer, testimony, certain exhibits, decision of the trial judge, findings of fact and conclusions of law and judgment.

The point is this: With reference to the fifth special defense and counterclaim, plaintiff in his reply thereto sets up the defense of res judicata. He bases his defense on the following: That in March 1942 defendants’ predecessor, Juliana Underwear, Inc., brought suit in the Supreme Court in New York County against plaintiff’s predecessor, Julius Drittel, Inc. ; that the case was tried and judgment rendered therein on the merits by said Court on or about June 10, 1942, dismissing the complaint; that all the issues presented by defendants’ counterclaim and plaintiff’s reply have been or could have been determined in said suit and that by reason thereof defendants are barred and estopped from asserting said counterclaim.

It should be noted here that whatever right either of these parties has to the use of this name or trade mark comes through their predecessors.

It might be pertinent here to note that Anna Friedman was one of the organizers of this underwear business since its inception in 1920 and down through the years has been the owner or one of the owners thereof.

It appears from the papers that the judgment in question has not been vacated, set aside or modified in any manner and is still in full force and effect.

I realize that summary judgment should only be granted in very clear cases. I have been chary about granting them in the past.

Feeling this way I have gone over this motion as one might say with a fine tooth comb. I can’t find any genuine issue of fact raised by the counterclaim which was not passed on by the Supreme Court of New York County.

The judgment in the Supreme Court of New York still stands. It is a judgment against defendants’ predecessor and binds them until it is vacated or set aside. It may not be attacked collaterally.

The State Court had jurisdiction of the parties and the subj ect matter of the action.

The rule is well settled that a former judgment of a court of competent jurisdiction is final and conclusive between the parties, not only as to the matters actually determined, but as to every other matter which the parties might have litigated and have decided as incidental to or essentially connected with the subject matter of the litigation within the purview of the original action, either as a matter of claim or defense. Griffin v. Long Island R. R. Co. 102 N.Y. 449, 7 N.E. 735.

As I read it the cause of action alleged in the counterclaim is essentially the same as that set forth in the complaint in the State Court. In the last analysis in each, the Juliana Underwear concern is claiming the right as against Drittel or his predecessor to use the name “Juliana” in connection with merchandizing goods.

In each the relief asked for is the same, the enjoining of Drittel and/or his predecessor from using the name. The right to use the name is the sole issue in each. The State Court decided against the underwear concern and in favor of Drittel. I think the chapter is closed on that issue.

I quote from the complaint in the State Court action to indicate just what defendants’ predecessor was litigating:

“Sixth:- — -That by reason of the great care exercised by plaintiff and its predecessors in the manufacturing of ladies’ silk and rayon underwear, plaintiff has developed a very substantial good will, and that the name of ‘Juliana’ as applied to Ladies’ silk and rayon underwear is associated in the minds of the purchasing public with its business.”

“Eighth: * * * and that the defendant, in violation of the exclusive right of plaintiff to use the name ‘Juliana’ and for the purpose of injuring plaintiff herein, and to deceive, mislead and impose upon the public in general, used the name ‘Juliana’ as a name, trade mark and marker.” and

“Ninth: That the said use of ‘Juliana’ by the defendant as a name, as an alleged trade mark, as an alleged trade name and in its business, is not only an infringement of the plaintiff’s lawful trade name but will cause irreparable loss and injury to plaintiff.”

I now quote Paragraphs 24 and 26 of defendants’ counterclaim in this action:

“24. That upon information and belief the plaintiff and plaintiff’s predecessor, with knowledge of defendants’ rights and intending to secure to the plaintiff and plaintiff’s predecessor the benefits and advantages of the business and good will which the defendant and defendants’ predecessors have created, and to induce the purchasing public to believe that the ladies’ garments sold by the plaintiff were of defendants’ origin, the plaintiff and plaintiff’s predecessor without the knowledge or consent of the defendants used the said name and trade mark ‘Juliana’ and plaintiff continues such use to the injury of the defendants’ good will, name and credit, and also thereby preventing and interfering with the essential and necessary expansion of the defendants’ said business and trade.”

“26. That by reason of the premises the plaintiff has infringed and continues to infringe on the defendants’ rights, their name and trade mark aforesaid and is engaged in unfair competition with the defendants herein, for which the defendants have no adequate remedy at law.”

While the verbiage varies a bit, these charging paragraphs in each are essentially alike.

At the trial in the State Court, Anna Friedman for the plaintiff gave testimony that since January 1920 she had been in business either as an individual or with a corporation whose name was Juliana Underwear Co. or Juliana Underwear Co., Inc.; that from that time until the date of the trial the business was that of manufacturing ladies’ underwear and that the name “Juliana” was always used in connection with the business and that the business was known to the trade as “Juliana.”

The plaintiff in the State Court action introduced testimony of buyers who had dealt with it for many years. They testified that they always knew the plaintiff as “Juliana” and that when they saw the name “Juliana” used in connection with ladies’ underwear they always associated it with the plaintiff and plaintiff’s goods.

The defendant in the State Court action in its defense introduced testimony of its use of the name “Juliana”, which it claimed to have used in connection with its business of manufacturing and selling housecoats since 1939, as a trade mark; that subsequently and in or about September 1940 it applied to the U. S. Patent Office for a registered trade mark of the name “Juliana”, and that subsequently andón or about March, 1941, this petition was granted and it received a certificate of a registered trade mark which was offered in evidence.

Defendant in the State Court trial gave testimony of the use of this name both as a registered and unregistered trade mark both in advertising and by application to its garments by affixing thereto a distinctive label with the name “Juliana” thereon.

The defendants here urge nothing new in support of ‘he counterclaim that was not before the Judge in the State Court action, except that it is now claimed that a rubber stamp was used by defendants and her predecessor since shortly after the establishment of the business in 1920; that the rubber stamp was used to stamp on boxes used to send out garments and bore the legend “From Juliana Underwear.” I can’t see that this helps defendants. This fact could or should have been part of the proof in the State Court action. Defendants may not urge it now as the basis of another action. Griffin v. Long Island R. R. Co., supra.

Defendants rely on Paragraph 25 as in some way justifying the counterclaim. In substance it charges that by reason of the registration (which defendants charge was illegally granted) by plaintiff and his predecessor of the name “Juliana” as a trade mark, defendants have been prevented from and interfered with in the registration of said trade mark by defendants. This Paragraph 25 is entirely irrelevant to any of the other paragraphs of the counterclaim. I can’t quite visualize what defendants’ claim is under this paragraph. Certainly it adds nothing to the counterclaim which defendants assert in their brief is based upon their prior right and title to the name “Juliana” as a common law trade mark. Defendants have nothing more now than they had in the State Court action, i. e. an unregistered trade mark.

Defendants contend that the • counterclaim is “well pleaded and essential to the defendants’ right for a decree adjudicating the invalidity of plaintiff’s registration of the mark ‘Juliana’ whether absolutely or qualifiedly.”

They may not do this by this counterclaim. If there is merit to the contention asserted in Paragraph 25, it has been raised in other paragraphs of the complaint outside of the counterclaim.

Defendants also contend that there has been a change in the situation since the State Court action because defendants now use a label on their goods; that this label features the name “Juliana”. I can’t see that this adds one bit of strength to this counterclaim. If it is good as a defense it may be proved at the trial under the other allegations of the answer.

Defendants further contend that in the trial in the State Court action, the only issue tried was that of unfair competition ; that the counterclaim goes beyond that and is really a claim of infringement of defendants’ common-law trade mark and name. “The main contention of the defendants is having adopted and used the corporation name and trade mark successively with the word ‘Juliana’ as the principal feature, they thereby gained an exclusive right to the name.” (From defendants’ brief).

Under certain circumstances defendants might be correct. A cause of action for unfair competition may be distinguished from an action for infringement of a trade mark and an action for unfair competition may not involve the right or title to a name. Unfortunately for defendants, the action in the State Court, assuming it sounded in unfair competition, was based on an alleged infringement. The State Court action did involve the question of these defendants and their predecessor’s right to use the name “Juliana” as against the instant plaintiff and his predecessor.

In the State Court action there was no actual palming off or deceit or fraudulent representation charged or attempted to be proved, except only in so far as it was reflected by the use of the label on the garments made and sold by the Drittel corporation.

From the pleadings and from the affidavits submitted by the defendants here, it appears that they are attempting to use, to sustain this cause of action for common-law trade mark infringement the same testimony (except as above noted) that was used by their predecessor to sustain the action in the State Court based on unfair competition. The wrong complained of in each was the alleged unlawful use of the name “Juliana”.

I am convinced that defendants’ counterclaim may not survive. If it is bad as a counterclaim it is also bad as a defense.

Plaintiff’s motion is granted.

I now take up defendants’ action for summary judgment.

Defendants’ motion is for summary judgment on the counterclaim and defenses in the answer.

Plaintiff charges that defendants are, in their business, infringing his registered trade mark. Plaintiff alleges that defendants “commenced to sell and now sell their lingerie in commerce among the several states of the United States by affixing to the slips and other ladies’ undergarments sold by them a label bearing said notation Juliana and by advertising their said lingerie under the trade mark Juliana — all in infringement of plaintiff’s registered trade mark aforesaid and in unfair competition.”

Defendants admit that they now sell their lingerie with a label affixed thereto bearing the name “Juliana” and they also advertise their lingerie in connection with the name “Juliana.” They deny that in so doing they infringe plaintiff’s alleged trade mark or that they unfairly compete with the plaintiff.

In defendants’ answer there are several affirmative defenses: that the name “Juliana” was not subject to appropriative and exclusive use by plaintiff or plaintiff’s predecessor because defendants’ predecessor had used the name long prior and had adopted its corporation name, including “Juliana” in its business; that said plaintiff’s trade mark registration was procured by false statements and misrepresentations; that similar names have been registered by others (the names and dates are set forth); that plaintiff’s claim is res judicata by reason of the State Court action hereinbefore referred to.

The defendants by their answer have raised issues which can only be settled by a trial. These defenses alone, if good, will require evidence to support them. The plaintiff stoutly resists the defendants’ defenses. In the pleadings and in the affidavits submitted by each side there are contradictions and counter-contradictions of material facts. It would serve no useful purpose for me to detail each one of these. This is peculiarly a case which should be tried to the Court and not upon papers. This case comes well within.the sentiment expressed recently by the United States Circuit Court of Appeals of the Second Circuit in Doehler Metal Furniture Company v. United States of America, 149 F.2d 130: “We take this occasion to suggest that trial judges should exercise great care in granting motions for summary judgment. A litigant has a right to a trial where there is the slightest doubt as to the facts, and a denial of that right is reviewable; but refusal to grant a summary judgment is not reviewable. Such a judgment, wisely used, is a praiseworthy time-saving device. But, although prompt despatch of judicial business is a virtue, it is rfeither the sole nor the primary purpose for which courts have been established.”

It might be argued that the counterclaim might stand if the same rule were applied to it. I am convinced contra. The same issue raised in the State Court action and decided against defendants is raised in the counterclaim.

In connection with defendants’ motion I do not propose to discuss to what extent the judgment in the State Court action affects the plaintiff in this action. His complaint against the defendants is based at least in part on elements that transpired after the State Court action was tried, i. e. the use of the label by the defendants and the advertising in which the name ■“Juliana” featured. This is entirely new. In the State Court action, Anna Friedman testified that her firm used no label and did no advertising. This may change the situation.

There was no finding in the State Court action as to just how far the Juliana Underwear, Inc., might go in the use of the name “Juliana.” This was not raised apparently. I am not prepared to say that Julius Drittel, Inc., had the opportunity to raise the issue and having failed to do ■so its successor in interest (plaintiff here) is estopped from now raising it. Certainly the issue of the labeling and the advertising could not be raised. This occurred after the action had been decided.

Nothing was said in the former trial about the use of the rubber stamp by the underwear corporation although it is claimed now by defendants that it was in use shortly after 1920. If defendants are to obtain any advantage from its use, it certainly will depend on the manner and extent to which it was so used. Surely that is a question of fact which defendants will have to prove.

I feel that I should leave this whole question of plaintiff’s claim and defendants’ defenses thereto (except the counterclaim) to the trial court.

Defendants’ motion for summary judgment denied.

Settle order on notice.

       No opinion for publication.


author: STRUM, District Judge.

text:
    WALLING v. NASHVILLE, CHATTANOOGA & ST. LOUIS RY.
    Civ. No. 524.
    District Court, M. D. Tennessee, Nashville Division.
    June 18, 1945.

      George W. Jansen and Paul M. Cadra, both of Washington, D. C., and Jeter S. Ray, of Nashville, Tenn., for plaintiff.
    Walton Whitwell and Edwin F. Hunt, both of Nashville, Tenn., for defendant.
   STRUM, District Judge.

The question here presented is whether or not persons in training for positions with the defendant railway are, during their training period, “employees” within the meaning of the Fair Labor Standards Act of 1938, 29 -U.S.C.A. § 201 et seq. Asserting that they are employees, and that defendant is in violation -of the Act with respect to them, plaintiff Administrator seeks injunctive relief to compel future obedience to the Act.

The controversy concerns: First, persons in training for firemen, brakemen and switchmen, both in the yards and on the main line, called “cubs.” Second, persons in training for clerks, stenographers, callers, messengers, and the like, called “posters.” The Administrator contends, while defendant denies, that during their training period these trainees are “employees” within the meaning of the Act and that they should be compensated, and records kept for them, as required by the Act and regulations thereunder.

It is obvious that an inexperienced person cannot safely perform the intricate and hazardous duties of a railway fireman, brakeman or switchman. Experience and specialized learning are essential, not only to efficiency, but to the public safety and to the safety of the trainmen. Even though a person is generally experienced in rail-reading, he must still learn the yards, tracks, signals, engines, mechanical devices, and many other things pertaining to the particular railroad on which he is employed, before he can perform his duties with safety to himself and to the public. In these vocations, proficiency depends upon manual as well as theoretical training.

In keeping with the custom of all railroads, this defendant requires applicants for employment as trainmen to undergo a period of preliminary training, called “cubbing,” under the tutelage of a regular employee performing the same type of work. This training period covers from one to three weeks, depending upon the student’s aptitude, during which time the trainee accompanies a regular crew who show him on the job how to perform the duties of that employment. The student learns not only by observation, but by actually performing the duties of the employment he seeks, always under the immediate supervision of a regular employee. When the student has apparently become proficient he is given an examination touching his qualifications. If he thus demonstrates his proficiency, he is then, but not before, placed upon the “extra board” as an employee, and called into service as needed. It is only from that time that they assume the responsibility of employees and are regarded as employees. Their seniority with other employees dates from that time, not from the time they commenced training. This practice is approved by the Railway Brotherhoods who bargain with the employer on behalf of its employees. Under these contracts one is not deemed an employee until he has finished his training and has been listed on the extra board.

As experience is also necessary in the second classification (clerks, messengers, etc.), though perhaps not to the same extent as in the case of the trainmen, applicants for these positions are required, in the same manner, to undergo a brief period of preliminary training, called “posting,” under a regular employee performing that type of work. Although their duties are clerical or non-operational in character, many of them are frequently required to be in and about the yards, where their own personal safety is at stake. Even the purely clerical employee must have the necessary training to fit him to work harmoniously as an integral part of a highly specialized transportation system. The training period for these students is from three to ten days, after which they are put into a regular job when needed. During this training period these students accompany a regular employee, or under the guidance of a regular employee perform the duties of the job for which they are fitting themselves.

When a trainee enters upon his training, he does not regard himself as an employee, nor does the Company so regard him. He is under no obligation to become an employee when he finishes his training, nor is the Company under any obligation to so retain him. Whether or not he remains as an employee is entirely optional with him. During the training period the Company exercises no authority or control over his activities, nor the manner in which they are performed. He is not subject to discipline as an employee. No orders are issued to him, although trainmen trainees are given a suggested schedule to follow, which authorizes them to join a certain crew at a designated time. He is at liberty to do so or not, at his election. If he is absent, such absence does not in the slightest degree affect the movement of trains, or other work, as the trainee does no independent work and assumes no responsibility. There is always a regular employee to perform the duties of the job, who is responsible for the proper performance of the duties being learned by the student, and who receives standard pay therefor under the labor contracts. Students are present on the job solely for their own benefit and advantage, in order to qualify themselves for future employment. They are under no obligation to do any work whatever, nor even to report for duty, and when they do perform work it is not to serve the Company, but to enable them to learn the job. The regular paid employee is always there to do the work, and would do it but for the intervention of the student in his own interest. The Company gains nothing from his presence as a student, other than the remote potential advantage of building up a pool of trained persons who will be available as employees when needed. This advantage is diminished to the vanishing point by the fact that it is wholly optional with the trainee whether or not he enters the Company’s employ when called.

For the purpose of this Act, whether or not the relationship of employer and employee exists is to be determined upon the principles of contract. Tort cases relating to that relationship are inapplicable. In order that wages become due, to which the protection of this Act applies, there must be a contract of employment, either express or implied. It is indispensable to the existence of such a contract that the employee perform some service for the benefit of the employer, or in his interest, of which the payment of wages is the quid pro quo. The performance of such a service is here wholly lacking, as is all other indicia of employment, including the authority to direct and control the activities of the trainee. Thus during their training period these trainees act only for their own benefit and in their own interest. Their activities are wholly voluntary. No measurable benefit flows to the Company, for which the law would imply an obligation to pay. It is in this respect that this case fundamentally differs from Walling v. American Needlecrafts, 6 Cir., 139 F.2d 60, relied upon by plaintiff. There the workers labored and produced for the benefit of the employer in circumstances in which the law will imply an obligation to pay them, even though their work was not performed under the direct supervision of the employer. Here, the trainee works, not for the Company, but for himself and produces nothing of benefit to the Company. The law therefore implies no obligation to pay him.

Save in one particular, the “cub” or trainman students here involved are the exact counterparts of those held to be students, not employees, in Walling v. Jacksonville Terminal Company, 5 Cir., 148 F.2d 768. In the Jacksonville Terminal case the trainees received no compensation whatever. Since about December 1, 1943, the “cub” trainees here involved have received a flat $5 per day, except for a short period when such payments were made only to those who completed their training. This payment is now made to all “cubs,” regardless of whether or not their training is completed. The Company is endeavoring to also pay those from whom such payments were formerly withheld because they did not complete their training, as rapidly as these former uncompensated trainees can be located.

The payment of wages is one of the indicia of a contract of employment. This $5 per day paid to “cub” trainees, however, is more a gratuity than compensation, for these trainees render no beneficial service to the Company to earn any “wages”. The recipients of these payments are working for themselves, not for the Company. Nor are they under the direction or control of the Company as an employee would be.

These payments were commenced in 1943, not because the Company considered that the trainees performed services of value, but pursuant to the recommendation of a joint committee of railway and labor executives, which committee referred to the payment as “pre-employment” pay, and recommended that the payments be made because many of these trainees were married men with dependents who could not afford to uridergo a period of training without some source of income. In making the payments the Company regards them as incentive pay, not wages.

The Court therefore holds that these trainess are not employees within the meaning of the Act, for the reasons so well stated by Judge Sibley in the Jacksonville Terminal Company case, supra. The gratuitous payments made to them by the Company do not constitute them employees, nor does it fundamentally distinguish them from the trainees involved in the Jacksonville case.

But even if they were employees, this payment substantially complies with the requirements of the Act. Most of these “cubs” devote eight hours a day, at most, to their training, so these are paid at the rate of 62%0 per hour. Some of them, while “cubbing” on local main line trains, are in training twelve hours per day, which produces a compensation of a little more than 400 per hour. It is only in the relatively small number of cases where “cubs” are training on local main line trains, with a 12 hour schedule and which are late in reaching their ultimate destination, that they are training more than 12 hours per day so that the sum actually received by them in such instances falls slightly below the 400 per hour minimum required by the Act. These instances are relatively few. So in a broad and substantial sense, and subject to occasional exceptions, these “cubs” actually received compensation in accordance with the Act.

As to the “poster” (office) trainees: For the same general reasons above stated, the Court holds that these are not “employees” within the meaning of the Act. But even if they are, the Company is now and for several years past has been complying with the Act as to them, and apparently intends in good faith to do so in the future.

Originally, these trainees were not compensated during their training period. Beginning about 1941, however, the management of the Company, although not conceding then or now that they are “employees,” issued instructions to pay them a sum equal to the minimum requirement of the Act, and to keep the records on them required by the Act. These instructions were generally carried out over the defendant’s system, and still are. Due, however, to a misunderstanding of these instructions at the Craven Yards at Chattanooga, these “poster” trainees were not paid for a substantial period of time after the custom of paying such trainees was instituted. When this omission was discovered, it was immediately corrected by issuing pay vouchers covering this period, many of which have been delivered to the payees, and the remainder are being delivered as rapidly as the former trainees can be located for that purpose. All such trainees have been paid in accordance with the Act, and proper records kept for six months or more last past. So even if they are “employees,” which the Court holds that they are not, there is no necessity for an injunction, the purpose of an injunction being to prevent future violations, not to punish past violations.

Nor are these trainees “learners” as contemplated by the Act. A “learner” is an employee who labors in the interest and for the benefit of his employer, and who produces something, or performs a service in the employer’s interest, but due to inexperience or some other handicap the product of his labor is inferior to that of an experienced worker. The point of cleavage is that the “learner,” though his product be inferior or limited, is nevertheless working for the benefit of his employer and contributing to the employer’s interest as far as the learner’s capabilities permit, while the trainees here involved are working solely for themselves. The Company gains no measurable benefit from their activities.

The Court holds that none of these trainees are “employees” within the meaning of the Act. But even if they are employees, the payments voluntarily made to them, and the records now kept, are sufficient to satisfy the requirements of the Act.

Judgment for defendant.


author: GIBSON, District Judge.

text:
    BOWLES, Administrator, O. P. A., v. KITMAN.
    No. 4198.
    District Court, W. D. Pennsylvania.
    June 25, 1945.
    John A. Metz, Jr., Dist. • Enforcement Atty., Thomas F. Garrahan, Chief Fuel and Consumer Goods Unit, and A. Morris Ginsburg, Enforcement Atty., all of Pittsburgh, Pa., for plaintiff.
    Benjamin H. Rosen, of Pittsburgh, Pa., for defendant.
   GIBSON, District Judge.

This matter having come on for hearing on plaintiff’s motion for preliminary injunction, the Court makes the following findings of fact and conclusions of law:

Findings of Fact

1. Since April 15, 1944, defendant, Irwin Kitman, trading as Forbes Electrical Appliance Company, has been engaged in the business of selling used household mechanical refrigerators, used domestic washing machines and other household commodities at retail, and of repairing electrical appliances, in the City of Pittsburgh, County of Allegheny, Commonwealth of Pennsylvania, within the jurisdiction of this Court, and in the conducting of said business is and has been subject to the provisions of Revised Maximum Price Regulation 139, Maximmum Price Regulation 372 and Revised Maximum Price Regulation 165, as amended.

2. In the operations referred to in paragraph 1 hereof,

(1) Defendant has failed to attach a tag to the commodities he offers for sale, as provided for in Section 6 of RMPR 139 and Section 12 of MPR 372, as amended;

(2) Defendant has failed to give the purchaser a written guarantee for the reconditioned commodities he sold, as provided for in Section 3(c) of RMPR 139 and Section 3(c) of MPR 372, as amended;

(3) Defendant has failed to file a proper statement of his maximum prices, rates and pricing methods as provided for in Section 14(b) of RMPR 165, as amended.

3. Since July 1, 1944, the defendant has sold and delivered at retail, used household mechanical refrigerators and a used domestic washing machine at prices higher than the maximum prices permitted for the same by the applicable regulations hereinbefore recited.

4. The defendant, on or about July 29, 1944, sold at retail, one used Voss washing machine, E-59, for $75, which was $65 over the ceiling price, and one used Grisby-Grunow refrigerator, Model 140, for $75, which was $63 over the ceiling price.

5. The defendant, on or about February 24, 1945, sold at retail, one used household mechanical refrigerator, Frigidaire model AP-6, 1929, for $142.30, which was $132.80 over the ceiling price.

Conclusions of Law

I. Jurisdiction of this action is conferred upon this Court by Section 205(c) of the Emergency Price Control Act of 1942, as amended, 50 U.S.C.A.Appendix § 925(c).

II. Defendant has violated the provisions of RMPR 139, MPR 372 and RMPR 165, as amended, by failing to affix tags to commodities he has for sale, by failing to give purchasers written guarantees for the reconditioned commodities he sold, by failing to file a proper statement of his maximum prices, and by selling used mechanical refrigerators and a used domestic washing machine at prices higher than the maximum prices permitted by the applicable regulations.

III. A preliminary injunction, as prayed for by plaintiff, is required to prevent further violations of the Act and Regulations.

And now the motion of counsel for Chester Bowles, Administrator, Office of Price Administration, for a preliminary injunction having come on to be heard, upon consideration thereof .it is ordered, adjudged and decreed that, said motion be, and hereby is, granted, and that the defendant be directed forthwith,

(1) To attach a tag to the commodities he offers for sale as provided by Section 6 of Revised Maximum Price Regulation 139 and Section 12 of Maximum Price Regulation 372, as amended.

(2) To give a written guarantee, to the purchasers for the reconditioned commodities which he sells, as provided for by Section 3(c) of Revised Maximum Price Regulation 139 and Section 3(c) of Maximum Price Regulation 372, as amended.

(3) To file a proper statement of his maximum prices, rates and pricing methods as provided for by Section 14(b) of Revised Maximum Price Regulation 165.

It is further ordered that defendant be restrained from engaging in or causing any of the following acts or omissions to act:

(1) Selling, delivering or offering to sell or deliver any household commodities or repairing any electrical appliances, as covered by Revised Maximum Price Regulation 139, Maximum Price Regulation 372 and Revised Maximum Price Regulation 165, as amended, unless and until the defendant first complies with the directions contained in the demands designated “A” immediately above; and

(2) Directly or indirectly selling, delivering or offering to sell or deliver any household commodities, or repairing any electrical appliances, at prices in excess of the maximum price permitted by Revised Maximum Price Regulation 139, Maximum Price Regulation 372, and Revised Maximum Price Regulation 165, as amended, or hereafter amended, or by any other regulation promulgated by the Office of Price Administration giving the maximum prices for household commodities and for said repair services; and

(3) Doing or omitting to do any other act in violation of Revised Maximum Price Regulation 139, Maximum Price Regulation 372 and Revised Maximum Price Regulation 165, as amended; and

(4) Offering, soliciting, attempting or agreeing to do any of the foregoing;

(5) Otherwise violating the Emergency Price Control Act of 1942, as amended.


author: WALLER, Circuit Judge.

text:
    AMERICAN FEDERATION OF LABOR et al. v. WATSON, Attorney General, et al.
    Civil Action No. 881.
    District Court, S. D. Florida, Tampa Division.
    June 11, 1945.

      Pat C. Whitaker and Tom Whitaker, both of Tampa, Fla., Joseph A. Padway and Herbert S. Thatcher, both of Washington, D. C., Edwin C. Coffee, of Jacksonville, Fla., and J. Dress Pannel, of Harrisburg, Pa., for plaintiffs.
    J. Tom Watson, Atty. Gen., of Florida, and Howard S. Bailey, Sumter Leitner and George M. Powell, Asst. Attys. Gen. of Florida, for defendants.
    Before WALLER, Circuit Judge, and BARKER and DE VANE, District Judges.
   WALLER, Circuit Judge.

The 1943 session of the Legislature submitted to the people of Florida the following amendment as an addition to Section 12 of the Declaration of Rights of their Constitution :

“The right of persons to work shall not be denied or abridged on account of membership or non-membership in any labor union, or labor organization; provided, that this clause shall not be construed to deny or abridge the right of employees by and through a labor organization or labor union to bargain collectively with their employer.”

The people, at the General Election of 1944, adopted the proposed amendment.

The American Federation of Labor, other State and national labor unions affiliated therewith, certain individuals suing as such and in their capacities as presidents of certain local unions, and certain corporate and individual employers of labor in Florida, all as plaintiffs and representatives of a class, brought suit in the United States District Court for the Southern District of Florida, Tampa Division, against the Attorney General and the Governor, as well as the State Attorney, County Solicitor, and Sheriff of Hillsborough County, as defendants and representatives of a class, and also against certain corporations named as nominal defendants, asserting that said amendment was in conflict with several provisions of the Federal Constitution and statutes and praying temporary and permanent injunctions against the defendants in said suit.

The District Judge granted the temporary restraining order and caused this three-judge court to be assembled.

Jurisdiction of the Federal Court was predicated upon the allegations that the suit arises under Section 10 of Article 1, Article VI, and the First and Fourteenth Amendments to the Constitution of the United States as authorized by Section 41(1) of Title 28, U.S.C.A., and that it is also a suit for redress for the deprivation of civil rights as permitted by Section 41(14) of Title 28, and Section 43 of Title 8, U.S.C.A. Jurisdiction of the three-judge Court is asserted under Section 380, Title 28, U.S.C.A.

The motion of the Attorney General of Florida to dismiss presents the legal issues upon which the case has been heard and which form the basis of the controversy, to wit:

I. Whether the allegations of the complaint are sufficient to vest jurisdiction in the District Court of the United States:

(a) As a controversy arising under the Constitution and the laws of the United States involving an amount in excess of $3,000 under Section 41(1) of Title 28, U.S.C.A.; or

(b) As a suit for the redress of the deprivation of civil rights under Section 41(14) of Title 28, U.S.C.A. or Section 43 of Title 8, U.S.C.A., under which sections the amount in controversy is not material to a suit; and

(c) Even if the District Court of the United States has jurisdiction under either of the aforementioned sections, whether a case for the convening and consideration of a three-judge Court under Section 380, Title 28, U.S.C.A., has been shown.

II. Whether the amended section of the Constitution of the State of Florida deprives the plaintiffs of any rights under the following provisions of the Constitution and laws of the United States:

(a) Section 10 of Article I of the Federal Constitution, prohibiting any state from passing any law impairing the obligation of contracts;

(b) Article VI of the Federal Constitution, providing that the Constitution, and laws of the United States which are made in pursuance of the Constitution, shall be the supreme law of the land;

(c) The First Amendment of the Constitution of the United States prohibiting Congress from making any law abridging the freedom of speech or of the press or the right of the people peaceably to assemble and to petition the Government for redress of grievances;

(d) The Fourteenth Amendment, which prohibits any state from making or enforcing any law abridging the privileges or immunities of citizens of the United States or from depriving any person of life, liberty, or property without due process of law or from denying to any person the equal protection of the law;

(e) Sections 151 to 166 of Title 29, U.S.C.A., commonly known as the National Labor Relations Act.

III. Whether or not the allegations of fact in the complaint, as distinguished from conclusions of law, show irreparable injury on the part of the plaintiffs, or either of them.

IV. Whether or not the plaintiffs, or any of them, are entitled to maintain a suit for the deprivation of civil rights under the Constitution and laws of the United States.

V. Whether or not the constitutional amendment is a valid and lawful exercise of the police power reserved to the State under the Constitution.

VI. Whether or not there is any conflict between the provisions of the National Labor Relations Act and said constitutional amendment.

There are certain minor, and more or less collateral, questions as to the propriety or legality of joining certain parties as plaintiffs making certain others defendants, nominal or otherwise, but in contrast to the importance of the issues presented here it seems unnecessary to give them particular attention. We prefer to come as promptly as possible to the real issues in the case, with the idea of expediting the progress of this case to the Supreme Court, knowing full well that what we here say will not be long remembered.

We are of the opinion that under the allegations of the complaint the United States District Court for the Southern District of Florida, as distinguished from a three-judge Federal District Court, has jurisdiction under the allegation that the suit arises under the Constitution and laws of the United States and where the amount in controversy is required to exceed $3,000, exclusive of interest and costs, and that such Court also has jurisdiction of the controversy as a suit to redress alleged deprivation of civil rights under Section 43 of Title 8 and section 41(14) of Title 28, U.S.C.A.

The question of whether or not a three-judge Court has jurisdiction is more difficult. The controlling statute is Section 380 of Title 28, U.S.C.A., which prohibits a single District Judge from entering an “interlocutory injunction suspending or restraining the enforcement, operation, or execution of any statute of a State by restraining the action of any officer of such State in the enforcement or execution of such statute, * * (Emphasis added.) Nothing is said in this statute as to restraining the enforcement of a provision in the constitution of a state. There is, of course, a wide distinction between a constitutional amendment, adopted by the people, and a statute passed by the Legislature. A mere majority of the Legislature may enact a statute, with the Governor’s approval, but it takes three-fifths of the members of both Houses of the Legislature of Florida even to propose an amendment to the Constitution, and the proposed amendment must then be published in a newspaper in every county of the state for three months before the next general election, and at which it must receive a majority of those voting thereon in order to become a part of the organic law of the state. Article 17, Section 1, Constitution of the State of Florida. A state statute is an inferior source of law to that of a state constitution and cannot stand in opposition to it.

United States District Courts are courts of limited jurisdiction, and particularly is this true of a three-judge Court. It is wholly statutory and all questions as to its jurisdiction must be strictly construed. Phillips v. United States, 312 U.S. 246, 61 S.Ct. 480, 85 L.Ed. 800.

Cognizant that a three-judge Court is without jurisdiction to grant an injunction in a case involving a municipal ordinance which is alleged to be unconstitutional and that the same is true where an injunction is sought against a state statute which is not statewide in its scope, we entertain grave doubt as to whether or not we, as a three-judge Court, have jurisdiction of the case here for the reason that the constitutionality of no statute of the State of Florida is involved. Were it not for certain language in the case of Phillips v. United States, supra, and an appreciation of the fact that the dictum of today may, perhaps, be the law of tomorrow, we would hold that this Court is without jurisdiction. In the Phillips case neither the State Constitution nor statutes were under attack, but only the acts of the Governor which had been done under color of general provisions of the Constitution and laws of Oklahoma; however, the Supreme Court said that in order to bring the procedural device of the three-judge Court into play a suit is required “which seeks to interpose the Constitution against the enforcement of a state policy, whether such policy is defined in a state constitution or in an ordinary statute or through the delegated legislation of an ‘administrative board or commission’” [312 U.S. 246, 61 S.Ct. 483], although the statute mentions neither state constitutions nor state policies, nevertheless the Court held that the law in reference to the jurisdiction of the three-judge Court could not be liberally construed but could only be construed “as an enactment technical in the strict sense of the term and to be applied as such.” The decision inveighed against stretching the three-judge Court statute, meanwhile apparently stretching it to include state constitutions and state policies. As we interpret the language in the Phillips case the scope of the three-judge Court statute has been enlarged from an injunction restraining the enforcement of “any statute of a State” to the “enforcement of a state policy, whether such policy is defined in a state constitution or in an ordinary statute” So in conformity to the inharmonious language in the Phillips case, quoted above, we hold that a three-judge Court has jurisdiction. We doubt not that the statute ought to have prohibited a single judge from enjoining action under a state constitution, for it seems incongruous that a single judge should be able to enjoin action under a constitutional provision but that he could not do so under a state statute.

The motion to dismiss, admitting all of the facts appropriately alleged in the complaint, _ but not legal conclusions, presents three important legal questions:

1. Is the Florida constitutional amendment in violation of any provisions of the Federal Constitution?

2. Is the constitutional amendment a valid exercise of the police power of the State of Florida?

3. Is the constitutional amendment in conflict with the provisions of any Federal statutes which were enacted within the power delegated to Congress?

No substantial question of fact is involved requiring the taking of testimony or the making of express findings of facts,

The authority of the United States is supreme on all subjects which the Constitution has committed to it, and a state constitution, like a state statute, must fall if it is contrary to any provisions of the Federal organic law, or if it is in conflict with any provisions of the Federal statutes that were enacted within the scope of the power conferred upon Congress by the Constitution.

The wording of the Florida Constitutional amendment is difficult, but it definitely does not violate the First Amendment by abridging freedom of speech or of the press or of the right of assembly, or the right of petition to the Government for redress. The assaulted amendment undertakes to preserve to employees, in full vigor, the right of collective bargaining. Instead of preventing or abridging the rights of speech, press, assembly, and petition, the amendment seeks to preserve it to those who do not join a labor union as well as to those who do. This amendment has no similarity to anti-picketing statutes nr statutes which require the payment of a license by a labor organizer. The amendment is not in violation of the First Amendment to the' Federal Constitution. The same is true of the allegations as to its violation of the Fourteenth Amendment. There is no prohibition against a citizen belonging to any union that he chooses, but the prohibition seems to be against requiring membership in the union in order for a citizen to be eligible for work. Under statutes of the United States, such as Section 102, Title 29, U.S.C.A., a citizen is declared to be free to join a union or not, and one of the purposes of that statute, as well as the National Labor Relations Act, was to accord to employees full freedom to belong, or not to belong, to a union. The Florida constitutional amendment prohibits no one from joining a union but undertakes to declare that it shall not be a condition precedent to the right to work. It does not deny the labor union member the equal protection of the law, but appears to be designed to give to the non-union worker a protection of law which he had not theretofore enjoyed.

There is no vested right to have the police power of a state remain static. Every contract, involving subject matter that affects the public interest, into which a citizen may enter, is subject to the right of a state to regulate or to prohibit whenever it is deemed by the state to be essential in the public interest, and when it violates no provision of the superior national or state law. Contracts entered into prior to state and Federal prohibition against the manufacture or sale of intoxicating liquor were not held to have been illegally impaired by the adoption of prohibition when the states, and subsequently the nation, deemed prohibition to be in the public interest.

There are general allegations in the complaint as to contracts entered into prior to the amendment and alleged to have been impaired by it, but even if these allegations meet the requirements for definiteness and specificity in order to call forth the injunctive processes of the Court, the question first to be answered would be whether or not the state was without authority in the exercise of its police power to adopt the amendment in question.

There are certain principles relating to the police power of the states so axiomatic as not to need a statement as to their source, that might well be restated here.

1. The United States is a government of limited, enumerated, and delegated powers, having only such authority as has been granted to it by the Constitution or necessarily implied therefrom.

2. In construing a law of the United States we look to see if power has been granted, but in construing a law of the state we look to see if it has been prohibited, realizing that all attributes of the government that have not been surrendered by the adoption of the Federal Constitution and its amendments have been retained by the state.

3. It is fundamental that state laws must yield to the superior force of Federal laws which were passed within the sphere of delegated powers. However, a state law is superseded by a congressional law only to such an extent as the two are inconsistent.

4. An act passed under the police power of a state cannot be cast aside as inconsistent with an act of Congress unless there is .an actual repugnancy or a complete taking over of the legislative field by Congress, and the rule has been laid down that a state statute is in conflict with a Federal statute when one may incur the penalty of the Federal statute by obeying the state statute, or vice versa.

5. The police power of a state is very broad and comprehensive and is liberally understood and applied. This principle is so well recognized and the police power is of such elasticity that the principle of stare decisis has no application to an exercise of this power. This position is justified, for if it were not thus mistaken decisions might destroy the power of society to protect itself. The state cannot contract away its police power and the courts cannot decide away that which the state itself cannot contract away.

6. The courts cannot create a new Constitution. Laws and court-made rules of expediency must not be placed above the Constitution.

7. Labor and labor unions are affected with a public interest and are subject to the regulatory power of the states for any reasonable regulation which will not be inconsistent with the Constitution of the United States and statutes enacted within the scope delegated by the Constitution to the Congress.

8. Collective bargaining, self-organization, and other kindred union activities necessarily involve the rights of free speech, freedom of the press, freedom of assembly, and freedom of petition, which may not be denied by state statute or constitution, but we also must recognize that the total of union activity is directed toward economic objectives which involve purely commercial activities and which may be regulated by the state upon any reasonable basis when not in conflict with superior law.

9. The very existence of the state as well as “the security of the social order, the life and health of the citizen, the comfort of existence in a thickly populated community, the enjoyment of private and' social life, and the beneficial use of property,” depend upon the police power of that state.

10. “The powers are not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” The states existed before the Constitution of the United States, and they possessed the police power before the adoption of that organic document, and that police power was not by the Constitution delegated to the United States, and hence under the Tenth Amendment it is reserved in the states or in the people.

11. There is, in the strict sense, no Federal police power.

12. Rule by the majority is the essence of democracy. Members of a labor union are citizens first and subject to the will of the majority, lawfully exercised, and where that will has been exercised by a direct expression of the people at the polls the result is the fullest exercise of the democratic process and the fullest expression of the source of all political power — the people. “All rights are derived from the purposes of the society in which they exist; above all rights rises duty to the community.” Dissenting opinion of Justice Brandeis in Duplex Co. v. Deering, 254 U.S. 443, 41 S.Ct. 172, 184, 65 L.Ed. 349, 16 A.L.R. 196.

13. The wisdom or lack of wisdom of a state statute or of a provision in a state constitution is not a matter for the courts. The people, through their representatives in the Legislature and through their vote for an amendment to their constitution, have the right to commit folly if they please, provided it is not prohibited by the Federal Constitution or antagonistic to Federal statutes authoritatively enacted concerning the matter involved. “The conditions developed in industry may be such that those engaged in it cannot continue their struggle without danger to the community. But it is not for judges to determine whether such conditions exist, nor is it their function to set the limits of permissible contest and to declare the duties which the new situation demands.” Dissenting opinion of Justice Brandeis in Duplex Co. v. Deering, supra.

14. It is the duty of the court to indulge in the presumption that the amendment is not in conflict with the organic law unless the contrary is clearly made to appear.

A consideration of these fundamental concepts impels the conclusion that the Florida constitutional amendment does not contravene any provision of the Federal Constitution and for aught that now appears it is a valid exercise of the police power of the State of Florida. Definitely labor unions are affected with a public interest as exemplified by the National Labor Relations, the Norris-LaGuardia, and Fair Labor Standards Acts, 29 U.S.C.A. §§ 151 et seq., 101 et seq., and 201 et seq., passed by Congress in and about the regulation of interstate commerce, and by numerous acts by state legislatures regulating labor unions in phases not embraced within the scope of the power of the national Congress.

In view of the fact that no labor legislation by Congress has required an employee to belong to a labor union or has made the closed shop mandatory, but on the contrary the Federal public policy in regard to compulsory membership in labor unions is stated in Section 102 of Title 29, U.S.C.A., as follows:

“ * * * the individual unorganized worker is commonly helpless to exercise actual liberty of contract and to protect his freedom of labor, and thereby to obtain acceptable terms and conditions of employment, wherefore, though he should be free to decline to associate with his fellows, it is necessary that he have full freedom of association, self-organization, and designation of representatives of his own choosing, to negotiate the terms and conditions of his employment, * * (Emphasis supplied.)

and in view of the provisions of the Florida amendment that it shall not be construed to deny or abridge the right of employees by and through a labor union to bargain collectively with an employer, there does not appear to be any provision of the Federal labor regulatory statutes with which the constitutional amendment collides. So long as the right to organize into a union and to bargain collectively' is not abridged, there is no denial of freedom of speech, press, assembly, and petition. Whatever was traditionally a part of the process of collective bargaining seems to have been left unabridged by the second clause in the amendment.

The amendment makes it possible for the non-union worker to have “a free ride”, that is, to have the benefit of the gains and advantages that have accrued through the planning, the effort, the expense, the struggle, and the influence of the unions, without bearing any of their burdens, but this permissive incidence of poor sportsmanship is not new in the law. A substantial portion of the population in many communities have all the benefits of government, yet pay no taxes. Occasions are not singular when free riders in government are the recipients of its greatest solicitude, and the fact that the law gives an unearned advantage to the dissident or disinterested is but slightly dissimilar to the building of a school house largely from taxes paid by corporations which have no children to educate. This ground of objection was one for the Legislature and the people rather than the courts.

It will be observed that the constitutional amendment is not self-executing and no enforcing legislation has been enacted. No prosecution under a criminal statute is involved, and although the Attorney General contends that a closed shop was illegal under Section 1 of Chapter 4144, Laws of Florida, Acts of 1893 (Sec. 833.02, Florida Statutes, 1941, F.S.A.), nevertheless, it is noted that the Supreme Court of Florida, in the case of Jetton-Dekle Lumber Co. v. Mather et al., 53 Fla. 969, 43 So. 590, held that the Act “will not be applied to the case of union laborers who strike in order to secure all the labor for themselves,” which seems to say that the statute did not prohibit a closed shop. This decision under Erie R. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487, is binding upon the Federal Court.

A three-judge court cannot be convened merely to prevent a multiplicity of suits in the state courts by the Attorney General against employers of labor. But it does not seem necessary for us to determine whether or not irreparable injury to plaintiffs can result, nor do we here undertake to decide what complications might arise out of the operations of the National Labor Relations Act and the Florida constitutional amendment, but deem it necessary only to say that the Federal Act and the amendment on their face do not appear to be in conflict, and it will be time enough to judge of such conflicts if and when they actually arise. This is not an action for a declaratory judgment but an injunction suit in anticipation of irreparable injury.

From the foregoing it appears that the temporary injunction granted herein should be dissolved and vacated, and the motion of the Attorney General to dismiss the complaint should be sustained.

Let an appropriate order be submitted.

         Rule 17(b) of the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c, provides:
      “That a partnership or other unincorporated association, which has no such capacity by the law of such state, may sue or be sued in its common name for the purpose of enforcing for or against it a substantive right existing under the Constitution or laws of the United States.”

       See Form 2 of the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c, as to allegation of amount in controversy.

       Ex parte Collins, 277 U.S. 565, 48 S.Ct. 585, 72 L.Ed. 990.

       H. C. Rorick v. Board of Commissioners of Everglades Drainage District, 307 U.S. 208, 59 S.Ct. 808, 83 L.Ed. 1242.

       “The very purpose of the Bill of Rights was to withdraw certain subjects from the vicissitudes of political controversy, to place them beyond the reach of majorities and officials and to establish them as legal principles to be applied by the court. One’s right to life, liberty, and property, free speech, a free press, freedom of worship and assembly, and other fundamental rights may not be submitted to vote; they depend on the outcome of no elections.” Justice Jackson in West Virginia State Board of Education v. Barnette, 319 U.S. 624, 63 S.Ct. 1178, 1185, 87 L.Ed. 1628, 147 A.L.R. 674.

       Article VI, TJ. S. Constitution; Panhandle Oil Co. v. Mississippi, 277 U.S. 218, 48 S.Ct. 451, 72 L.Ed. 857, 56 A.L.R. 583.

       See discussions in 11 Amer.Jur., Const.Law., Police Power, See. 245, et seq.

       Stone v. Mississippi, 101 U.S. 814, 25 L.Ed. 1079.

       Slaughterhouse cases, 16 Wall. 36, 21 L.Ed. 394.

       Tenth Amendment, Federal Constitution.

       Mayor, Aldermen and Commonalty of City of New York v. Miln, 11 Pet. 102, 9 L.Ed. 648.


author: BYERS, District Judge.

text:
    THE LEHIGH VALLEY NO. 477. THE LT-233. LEHIGH VALLEY R. CO. v. UNITED STATES.
    No. A-16801.
    District Court, E. D. New York.
    June 18, 1945.
    Pyne & Lynch, of New York City (Warner Pyne, of New York City, of counsel), for libelant.
    T. Vincent Quinn, U. S. Atty., of Brooklyn, N. Y. (Leo J. Curren, Sp. Asst, to U. S. Atty., of New York City, of counsel), for respondent.
   BYERS, District Judge.

The libelant’s gas hoist lighter, being in tow of the tug LT-233 owned and operated by the United States, was caused to collide with the S. S. Ocean Valor moored port side to the south side of Pier 4, Brooklyn, near the outshore end of the pier, on the afternoon of January 19, 1943, sustaining damage for which recovery is sought in this cause, which is both in rem and in personam.

The facts are scarcely in dispute and may be thus capitulated:

1. Ownership and operation as pleaded are stipulated.

2. The tug (size and horse-power not stated in the testimony but informally represented after the trial to be 110' by 25' by 12.2'; 805 horse-power) took the C.R.N. J. barge No. 218 (80' by 30') and the L. V. gas hoist No. 477 (106' by 33') in tow on January 19, 1943, at about 3:00 P. M., E. W. T., out of the slip between Piers 3 and 4, Brooklyn, for the purpose of shifting them from the bulkhead inshore, to the end of Pier 4; both vessels were light, drawing about 2 feet of water.

3. The tug backed out of the slip, having two bow lines (size undisclosed) out about 25 feet from the tug to the respective stern bitts at the stern corners of the No. 218 which was being towed stern foremost; the latter was close-coupled at the bow, to the bow of the L.V. No. 477.

4. At about the end of Pier 4 the tug let go the bow line leading from her port side to the port stern bitt of the No. 218, intending to wind the tow around the end of Pier 4, and make both vessels fast abreast, outside of two scows already at the pier end.

- 5. In order to accomplish the foregoing purpose, the L. V. No. 477 had to be brought close enough to the said pier end to enable her to put a line on one of the scows lying there, which, when secured, would have accomplished the first step in the desired result.

6. As the maneuver was conducted, the No. 477 was not brought sufficiently close to the said pier end or to the said scows to permit of a line’s being so handled, and the tow passed obliquely off the pier end, the only towing line then being one bow line leading from the tug’s starboard bow to the starboard stern post of the No. 218.

7. In this shape, the tug first started ahead, intending apparently to push the tow back into the slip, but that movement was arrested, perhaps to avoid the collision which actually took place, and the tug started astern again, whereupon the said bow line parted under the strain thus imposed, leaving the barges free to move as best they could.

8. The No. 477 promptly fetched under the stern of the S. S. Ocean Valor, striking hard enough to sustain the damage complained of.

9. Piers 3 and 4 are about 1300 feet long, and extend in a northwesterly direction from the shore front; the width of the slip between these piers is about 300 feet.

10. The S. S. Ocean Valor (estimated beam 50 feet) lay alongside Pier 4 as stated, reducing the width of the slip for present purposes.

11. There was another vessel lying halfway up the slip alongside Pier 3, and her beam, added to that of the Ocean Valor, left not less than 200 feet width of the slip available to the tug in shifting these two barges or lighters.

12. At about 3:00 P. M., E. W. T., on the day in question the tide was slack (according to stipulation).

13. From noon until 4:00 P. M., E. W. T., on that day the wind was N.; N. W.; N. W.; W.; N. W., of a force of 11, 19, 19, 36, and 42 M. P. H., respectively. Between 2:00 and 3:00 P. M. the greatest velocity was 27 miles; and between 3:00 and 4:00 P. M., 56 miles. Those periods of greatest velocity were 5 minutes in duration.

14. Storm warning was displayed in the New York district, pursuant to instructions issued at 5:00 A. M. on that day, reading in part: “Increasing winds becoming 35 to 45 miles per hour this afternoon and tonight”.

15. The temperature between 1:00 and 2:00 P. M., E. W. T., was 36° F. and between 2:00 and 3:00, 40°, and between 3:00 and 4:00, 41°; and between 2:00 and 3:00 o’clock there was a precipitation of sleet in the vicinity of the Battery.

16. The striking of the libelant’s gas hoist No. 477 against the stern of the S. S. Ocean Valor was not the result of inevitable accident.

The foregoing recital admits of but little discussion.

To quote from the opinion in New England Steamship Co. v. City of New York, 2 Cir., 67 F.2d 865, 1933 A. M. C. 1670, at page 1673: “There is the usual inference of fault that attends the collision of a moving with an anchored vessel.”

No burden of explanation or exculpation has been assumed by the tug to account for the happening as set forth; all that is offered is the argument that this was a case of inevitable accident. Perhaps the striking of the No. 477 was the inevitable result of the manner in which the maneuver was conducted, but there was nothing inevitable about the lack of nautical skill displayed by the tug, so far as the testimony shows; it does not appear whether the two bow lines which were used as towing hawsers were of such size as to be adequate for the job; there is no testimony tending to show that one of those lines had to be dropped in order that the tow might have been brought into position for making these barges or lighters fast to the scows already in position at the pier end.

There is no testimony to justify the action of the tug in backing out of the slip the second time, without first putting out the line which had been dropped, leading from the port bow of the tug, to the inside stern bitt of the No. 218, so that the second stage of the maneuver would not have to be conducted with but one towing line.

The weather conditions were not so unexpected or so unusual as to constitute an element of inevitable accident under the conditions shown, or some one qualified to express an opinion on the subject would have been called as a witness to demonstrate the contrary.

The position of these piers exposed the slip between them to the force of a northwest wind, and there is no testimony to the effect that the sole remaining towing line carried away because of the force of any unusual gust of wind, or other condition not reasonably to have been foreseen by those possessing customary skill in conducting towing operations in the harbor of New York.

The respondent cites a few cases involving the breaking of a hawser, in each of which the Court was assisted by testimony concerning the size and characteristics of the towing line involved; there is no such testimony in this cause.

The libelant is entitled to the usual interlocutory decree with costs.

A request has been made for correction of the minutes, or to reopen concerning testimony of the witness Ostrander, the captain of the No. 477, respecting the mooring of his vessel at the end of Pier 3 after this collision, apparently because of its possible bearing upon other litigation involving the subsequent adventures of his vessel.

He was somewhat adroitly asked a question as to how he was tied up in that position, which had nothing to do with this cause, and that testimony has simply been disregarded in making this decision. Whether he would wish to change either its form or content, would be of no present consequence.

It is thus deemed unnecessary to change the present record, or to amplify it in the sole interest of other matters not now involved.

The Commissioner to be appointed will satisfy himself according to the evidence, as to the nature and extent of the damage sustained by the libelant’s gas hoist lighter No. 477 as the result of its collision with the S. S. Ocean Valor.

Settle interlocutory decree.