author: WILKIN, District Judge.

text:
    BARNARD et al. v. CAREY, Collector of Internal Revenue.
    Civil Action No. 22716.
    District Court, N. D. Ohio, E. D.
    March 20, 1945.

      Victor S. Leanza, of Cleveland, Ohio, for plaintiffs.
    Samuel O. Clark, Jr., Asst. Atty. Gen., Andrew D. Sharpe and Frederic G. Rita, Sp. Assts. to Atty. Gen., and Don C. Miller, U. S. Atty., and F. B. Kavanagh, Asst. U. S. Atty., both of Cleveland, Ohio, for defendant.
   WILKIN, District Judge.

This case was presented on a motion for an order enjoining and restraining the defendant from enforcing any of the provisions of the Act of August 2, 1886, as amended, 26 U.S.C.A. Int.Rev.Code, § 2300 et seq., until final adjudication of the case. The complaint alleges that the plaintiff Barnard is a dealer in and the plaintiff Butler is the manufacturer of “Soya Butter”, a product made exclusively from soya beans and other vegetable products; that the defendant is the Collector of Internal Revenue and as such is threatening to impose a tax upon such product and require it to be labeled “oleomargarine”.

The complaint further alleges that the Federal Security Agency had analyzed plaintiffs’ product and found it to be a wholesome and nutritious article of food, but nevertheless threatened plaintiffs with penalties imposed by the Federal Food, Drug, and Cosmetic Act, Title 21 U.S.C.A. § 301 et seq., if said product be labeled “oleomargarine”. Because of such conflicting findings, orders, and threats, plaintiffs have been unable to market their product in spite of an insistent demand for it.

At the hearing on the motion plaintiffs offered in evidence a photostatic copy of a letter dated November 13, 1942, addressed to the Butler Food Products, attention H. O. Butler, and signed by D. S. Bliss, Deputy Commissioner, stating that according to the analysis of the Treasury Department the product was found to be oleomargarine and that it would be necessary therefore for the manufacturer to comply with the provisions of “Section 2302 of the Code and Regulations No. 9”, Title 26 U.S.C.A. Int. Rev.Code, § 2302(b). Plaintiffs also offered in evidence a photostatic copy of letter dated October 31, 1942, addressed to H. O. Butler, Director Butler Food Products, and signed by C. W. Crawford, Assistant Commissioner of Food and Drugs, stating: “It is our understanding that you are familiar with the standard for oleomargarine promulgated under the terms of the Federal Food, Drugs & Cosmetic Act. The product you describe is not in conformity with that standard and can not be sold as oleomargarine within the jurisdiction of that Act”, etc.

These conflicting administrative orders were admitted by counsel for defendant. It was argued, however, that this court was without power to grant relief; that this court was prohibited by Title 26 U.S.C.A. Int.Rev.Code, § 3653, from issuing any order restraining the assessment or collection of the tax by the Collector of Internal Revenue. It was further argued that the sections of the Code under which the Collector acted gave him express authority to determine what was oleomargarine and to assess and collect the tax imposed upon that product and issue a distraint against any dealer who attempted to sell such product unless it be labeled “Oleomargarine”; and that therefore this court was without power to interfere with the exercise of such authority by the Collector.

When the court inquired whether all the arguments advanced for the Collector could not also be advanced in support of the order of the Commissioner of Foods and Drugs, it was admitted that they could be. The court therefore found itself in the position where, if it adopted those theories, it would today be obligated to sustain the order of the Collector distraining the plaintiffs’ product because not labeled “oleomargarine”, and then tomorrow might be obliged to sustain the order of the Commissioner of Foods and Drugs distraining the product because it was labeled “oleomargarine”. United States v. 2 Bags,—Each Containing 110 Pounds, Poppy Seeds, 6 Cir., 147 F.2d 123.

Such is the natural outcome of regulation by unrestrained and uncoordinated administrative orders instead of by principles of enacted law. When different administrative agencies are empowered by Congress to make rules and regulations applying to the same subject matter there is bound to be conflict and confusion. If such conflicting orders are absolute and must be enforced, property is in effect confiscated without compensation and citizens are put out of business. Where, however, the laws applicable to a product or business are enacted by Congress, the processes of legislation tend to exclude and avoid contrary provisions.

As to the power of this court to grant relief so far as the conflicting orders regarding labeling are concerned, it seems that the general equitable jurisdiction conferred by Title 28 U.S.C.A. § 41(1) is sufficient. The Hecht Co. v. Bowles, Price Admr., 321 U.S. 321, 64 S.Ct. 587, 88 L.Ed. 754; Meredith v. Winter Haven, 320 U.S. 228, 235, 64 S.Ct. 7, 88 L.Ed. 9; Sprague v. Ticonic Bank, 307 U.S. 161, 164, 59 S.Ct. 777, 83 L.Ed. 1184, note 1; Miller v. Standard Nut Margarine Co., 284 U.S. 498, 510, 52 S.Ct. 260, 76 L.Ed. 422; 1 Pomeroy’s Equity Jurisprudence, Sec. 294. The very inception of equitable jurisdiction was based in humanity’s need for relief against the severity of arbitrary rules. The history of Roman law proves this, and that history has been repeated in Anglo-Saxon and American jurisprudence. In countries adhering to that system of jurisprudence it has long been considered an inherent power of courts to grant relief against legislative enactments or executive orders which were found to be impossible of performance, contradictory in terms, or contrary to the accepted dictates of right reason and good conscience. The benefits of constitutional government would be far removed ’from the people if such power should not vest in local courts or courts of first instance.

The plaintiffs are not entitled to an order restraining the assessment or the collection of the tax because the law affords them an adequate remedy if the tax should be invalid. Title 28 U.S.C.A. § 41 (20). ■ There is no adequate remedy at law, however, against the conflicting orders concerning labeling. This court therefore denies the motion in part and sustains it in part. The Collector' should be restrained from distraining the plaintiffs’ product, provided the tax upon such product is paid. The Collector should be restrained, moreover, from requiring that the product be labeled “oleomargarine” before sale. The plaintiffs should be permitted to sell their product pending the final determination of this case provided they label the product “Soya Butter” and set forth in such label its principal ingredients according to law.

The Federal Security Agency now charged with the administration of the Federal Food, Drug, and Cosmetic Act, ought, if possible, to be made a party defendant herein or at least afforded the opportunity to come into this case in order that all interests might be before the court and all parties heard before it is determined which if either of the conflicting orders is lawful and enforcible.

       Sohm’s Institutes of Roman Law (Led-lie) 2d Ed., 74, 75 et seq.
      Serutton: “Roman Law Influence in Chancery”, etc., I Select Essays in AmgloAm. Leg. Hist., 214, 216,218.
      Spence: “Hist, of the Court of Chancery”, II Select Essays in Anglo-Am. Leg. Hist., 219, 220.
      Wilson: “Courts of Chancery in the American Colonies”, II Select Essays in Anglo-American Leg. Hist. 779.
      Eislier: “The Administration of Equity”, etc., II Select Essays in Anglo-American Leg. Hist. 810.

       Pound: “The Spirit of the Common Law”, Chap. Ill, The Courts and the Crown.

       Pound: “The Development of Constitutional Guaranties of Liberty”,-Notre Dame Lawyer-.


source: Caselaw Access Project

author: PORTERIE, District Judge.

license: Public Domain

text:
    COURMIER v. SUPERIOR OIL CO. et al.
    Civil Action No. 1254.
    District Court, W. D. Louisiana, Lake Charles Division.
    April 30, 1945.
    J. E. Bass, Jr., of Lake Charles, La., for plaintiff.
    Thomas F. Porter, of Lake Charles, La., for defendants.
   PORTERIE, District Judge.

On May 19, 1938, the plaintiff in the present suit filed in the state district court for the parish of Cameron, State of Louisiana, a suit to recover against the present defendants the sum of $8000, which he claimed was due him under the compensation laws of the state of Louisiana, as compensation for injuries received in an accident which he allegedly suffered on February 15, 1938, while working as a roughneck for the Superior Oil Company.

In June of 1938, the suit for compensation was removed to this court, and on August 18, 1938, a compromise settlement of the suit was entered into by the parties to the suit, with approval of the court shown by a signed judgment.

This is an action to set aside the judgment of this court and then to recover from the defendants the sum of $8000, less $3120, $3000 of which was paid in compromise and $120 of which was paid to plaintiff prior to the compromise settlement.

As grounds for the attack on the judgment, the plaintiff alleges:

1. That at the time of the compromise settlement he was “laboring under a misapprehension as to the law with reference to the said settlement, in that he did not know that under the Workmen’s Compensation Law of the State of Louisiana * * *, he was entitled to more than was paid him.”

2. That “Plaintiff was mistaken in his belief that he would be able to resume work.”

3. That the compromise agreement and judgment were based “upon error of law and fact in that it involved not only speculation as to the extent and duration of plaintiff’s disability, viz., that it would continue for 294 weeks from the date of the accident, but also fixed compensation payments at approximately Ten and 20/100 ($10.20) Dollars per week, whereas the proper compensation was the maximum allowed by the Workmen’s Compensation Law of Louisiana, i. e., Twenty and no/100 ($20.00) Dollars per week, and was and is null and void, and contrary to and incompatible with the law of Louisiana.”

4. That the compromise settlement was one attempted under Section 17 of Act 20 of 1914, as amended by Act No. 38 of 1918; that the defendant contended the plaintiff’s disability was not the result of the accident, but was the result of other causes.

The defendants have filed an answer to the present suit to set aside the judgment, their first defense being that the complaint fails to set forth a claim against the defendants upon which relief can be granted.

Under this defense, the defendants urge that the judgment approving the compromise settlement, and which judgment is attacked in the present suit, is res adjudicata, (a) under the state laws and the jurisprudence urged by the plaintiff, and (b) because a judgment, of the federal court can only be attacked within the time and for the reasons set forth under the federal law.

By stipulation, the relevant parts of the record of the case in the state court, and of the record after it was removed to the federal court, were filed.

We shall consider under this motion to dismiss, predicated on a plea of res adjudicata, firstly, Item A thereof, that under the state laws and the jurisprudence urged by the plaintiff, the motion should be sustained.

We grant that the state laws are to control in this case. Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487.

We believe that the Louisiana cases in full must be applied by us — even the consequent obligation to set aside and annul the compromise judgment of this federal court, because of the case of Erie v. Tompkins, supra, and the subsequent and dependent case of Klaxon Co. v. Stentor Electric Mfg. Co., Inc., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477, from which we quote:

“We are of opinion that the prohibition declared in Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487, against such independent determinations by the federal courts extends to the field of conflict of laws. The conflict of laws rules to be applied by the federal court in Delaware must conform to those prevailing in Delaware’s state courts. Otherwise the accident of diversity of citizenship would constantly disturb equal administration of justice in coordinate state and federal courts sitting side by side. See Erie Railroad v. Tompkins, supra, 304 U.S. at pages 74-77, 58 S.Ct. at pages 820-822, 82 L.Ed. 1188, 114 A.L.R. 1487. Any other ruling would do violence to the principle of uniformity within a state upon which the Tompkins decision is based. Whatever lack of uniformity this may produce between federal courts in different states is attributable to our federal system, which leaves to a state, within the limits permitted by the Constitution, the right to pursue local policies diverging from those of its neighbors. It is not for the federal courts to thwart such local policies by enforcing an independent ‘general law* of conflict of laws. Subject only to review by this Court on any federal question that may arise, Delaware is free to determine whether a given matter is to be governed by the law of the forum or some other law. Cf. Milwaukee County v. M. E. White Co., 296 U.S. 268, 272, 56 S.Ct. 229, 231, 80 L.Ed. 220. This Court’s views are not the decisive factor in determining the applicable conflicts rule. Cf. Funkhouser v. J. B. Preston Co., 290 U.S. 163, 54 S.Ct. 134, 78 L.Ed. 243. And the proper function of the Delaware federal court is to ascertain what the state law is, not what it ought to be.” 313 U.S. at page 496, 61 S.Ct. at page 1021, 85 L.Ed. 1477.

See, also, Ruhlin v. New York Life Ins. Co., 304 U.S. 202, 58 S.Ct. 860, 82 L.Ed. 1290, and Griffin v. McCoach, 313 U.S. 498, 61 S.Ct. 1023, 85 L.Ed. 1481, 134 A.L.R. 1462.

Our first duty, therefore, is to analyze the case of Puchner v. Employer’s Liability, 198 La. 921, 5 So.2d 288.

The Supreme Court in that case examined the whole record (the district court and the circuit court of appeals had expressed themselves; the latter with a full opinion on facts and law — 199 So. 799) to determine whether or not at the time the compromise proceedings were instituted there was a dispute at law between the plaintiff and his employer relative to the plaintiff’s right to recover any compensation. The particular facts analyzed in the case were whether or not the plaintiff was intoxicated at the time of the accident, and also, as to the disability of the plaintiff. The Court came to the conclusion that the alleged intoxication was disproved by the record, and then, 5 So.2d at page 292, says:

“The only possible matter which could have been uncertain was the duration of plaintiff’s disability, and in our opinion it would be in direct violation of the letter and spirit of the act to sanction speculation with respect to the duration of an employee’s disability, for the primary object of the act ‘was to provide an employee, whose wages were discontinued as a result of an injury sustained while serving his master, with funds to subsist on until he could return to work. * * * ’ Barr v. Davis Bros. Lumber Co., 183 La. 1013, 165 So. 185, 188.”

We think the above quotation gives us the legal measure of the Puchner case, and this legal measure we must apply to the instant case.

The first paragraph at the beginning of this opinion gives a part of the recital of plaintiff’s first petition in the state court. This petition shows further that the plaintiff was a rough-neck working for the defendant in the drilling of wells for oil, gas, and other minerals, and that while so employed in work at a certain well “the .very heavy metal tongs were jerked loose when the driller attempted to tighten the pipe, and hit your petitioner a severe blow across his back from the right side down and across it to the left side; that, immediately, after he was struck, as aforesaid, he walked from the rotary to the opposite side of the derrick and fell.” Paragraph 4.

The plaintiff alleges further that he was immediately treated by a local doctor for two or three days, and was then advised to go back to his work; that he did go back to his work on February 21, 1938, at seven in the morning, but was compelled to quit work at three o’clock in the afternoon because of suffering and sickness; that on February 24, 1938, he was brought to a local sanitarium at Lake Charles for an X-ray examination, but that after returning home he had to be immediately brought to the sanitarium again, on February 26, 1938, where he remained in bed, he alleges, until the date of his filing the state suit, to-wit, May 17, 1938; that previously to his beginning work for the defendant on January 11, 1938, he had been subjected to a thorough physical examination by a surgeon of the defendant company and was permitted to go to work.

Then the petition of plaintiff discloses numerous injuries described in the following language:

“ * * * that tjje jick jjg recejvecj across his back, as hereinabove set out, injured him internally, seriously injured his left thigh and groin, his left hip, the muscles of his back and his legs, his left knee and ankle, and the blood vessels of his body; that the lick he received, as aforesaid, inflicted, in addition to the injuries named above, other serious, painful and disabling injuries upon your petitioner.” (Paragraph 9.)

Plaintiff further claims that when injured he weighed 173 pounds and that at the time of filing suit he Yveighed 110 pounds.

Then follows paragraph 11, which we quote:

“Petitioner, in the alternative, and only-in the alternative, further' shows that if the accidental injuries he received are not the direct cause of his total and permanent disability, that they were the exciting, aggravating and contributing factor thereto.”

This paragraph 11 from plaintiff’s original petition in the state court, from being only a flying straw indicative perhaps of the direction from which the wind is blowing, becomes a real gale in the answer of defendants when, after denying the main allegations of the petition, they aver, as follows:

“That plaintiff suffered a slight injury on the date as alleged, but said injury did not disable him for more than five (5) days and at the end of that time plaintiff returned to work and continued to work until he was discharged because of the reduction of the force. It was only after his discharge that plaintiff claimed an injury resulting from said accident and defendants allege that if plaintiff suffered a disability as alleged that it was not caused or aggravated by any accident occurring while in the employ of the Superior Oil Company, and that defendants are not liable therefor.”

And with this answer the following letter from Dr. R. Gordon Holcombe is attached and made a part:

“Aug. 16, 1938

“Mr. C. E. Hardin,

“C/O Pujo, Hardin and Porter, Attorneys,

“Weber Building,

“Lake Charles, Louisiana.

“Dear Mr. Hardin:

“I beg to advise that at your solicitation, I examined Mr. Percy Courmier somewhere during the latter part of February or early part of March 1938.

“At this time, as you know, he was under the observation of Dr. Seale. The history given me at the time of visiting this patient was that he was struck in the back in the Bosco Field, as well as I remember, having some straining effect with this injury to his back.

“The visible signs at my visitation were more or less confined to the hip, at which time he had a general sweating of his thigh. It was very evident that he had an acute arthritis, and I could not see any connection of this condition with the injury. At a later date, he developed a semi-condition of his left knee joint, and still later a repetition in the ankle joint.

“In view of the number of joints involved, I necessarily concluded that it was a bacterial infection of the blood stream in effect, and it had no connection whatever with the trauma.

“As you know, Mr. Courmier had a very long siege dating from February to June of this year, and had no permanent defect with his vertebra or his back following the injury. The total disability, therefore, is confined more or less to the three joints already referred to.

“There is going to be a total ankylosis of the hip with some destruction of the bone at this area, and also a complete ankylosis of the knee joint. I was unable at this time to identify the focus causing this infection of his limb, but, casually, I was of the opinion that it was oral in nature.

“As stated before, I do not connect this illness with any trauma either directly or indirectly.

“Yours very truly,

“(Signed) R. Gordon Holcombe”

The Court knows of the fine personal reputation and of the high professional standing of Dr. R. G. Holcombe. His statement is sincere and disinterested. We are satisfied the local attorneys for the plaintiff were of the same mind.

With the legal issues of the case thus drawn, we now come to the joint petition of the plaintiff and defendant, and we quote the following articles:

“2. That the case is one of disputed liability, the plaintiff claiming that his condition, which he alleges caused permanent, total disability, is the result of an accident while in the employ of The Superior Oil Company, and defendants, while admitting that the plaintiff suffered an accident, deny that it was of the severity alleged by plaintiff, deny that plaintiff’s condition is one of permanent, total disability, and also deny that plaintiff’s condition is the result of the accident as alleged, but claim that it results from an entirely different cause, and one that was in no wise connected with the employment, all of which is shown by the petition and the answer filed herein.

“3. That defendants’ denial of the extent of disability and of the fact that whatever disability exists is the result of the alleged accident, is based upon the examination and report of competent physicians who have examined plaintiff at defendants’ request, and defendant hereto annexes report of Dr. R. G. Holcombe on an examination made by him, and makes the same a part hereof.

“4. That because of the disputed questions of liability and extent' of disability, this case is the lawful subject of a compromise, and defendants have agreed to pay and the plaintiff has agreed to accept the sum of Three Thousand ($3000.00) Dollars in addition to One Hundred Twenty ($120.00) Dollars compensation already paid, and the additional sum of Two Hundred Fifty ($250.00) Dollars for medical expenses, making a total payment of Three Thousand, Two Hundred Fifty ($3250.00) Dollars, which represents two hundred ninety-four (294) weeks at the rate of approximately Ten and 20/100 ($10.20) Dollars per week, in addition to medical expenses, these amounts to be in compromise of the question of liability for compensation and the extent of disability.”

The most favorable thing that might be said in favor of the plaintiff from the compromise is that it had two bases: (a) Whether or not plaintiff was suffering from an injury arising during or out of his employment, that is, whether or not there was any liability at all, or (b) whether or not the compromise settlement may have been founded also on the duration and extent of injuries to the plaintiff.

Our study convinces us that situation (a) may be settled under Section 17 of the Act and situation (b) may be settled only under and controlled by subsection 9 of Section 8 of the Act as amended by Act No. 242 of 1928.

The Puchner case does not do away with Section 17 of the Act, as amended by Act No. 38 of 1918, which specifically provides that the interested parties may “settle all matters of compensation between themselves,” and that the settlement shall be reduced to writing approved by the Court and “shall be * * * in accord with the various provisions of this act * *

From the body of the decision we quote:

“Under subsection 9 (formerly subsection 8) of Section 8 of Act No. 20 of 1914, as amended, by Act No. 242 of 1928, where there is no dispute, the parties, by agree ment, may have the amounts payable as compensation commuted to a lump sum settlement provided (1) the approval of the court is secured, and (2) the amount due is not discounted at a rate greater than 8 per cent per annum. Another form of lump sum settlement has been developed in our jurisprudence under the guise of a compromise whereby the amount payable as compensation may be commuted to a lump sum settlement at a rate of discount greater than 8 per cent per annum. In such cases the parties at interest merely present a joint petition to the court for its approval alleging the existence of a dispute between them and their agreement to settle their difference as therein outlined.”

We note what Chief Justice O’Niell has said in his concurring opinion:

“There should not be any more objection to the making of amicable settlements of claims for workmen’s compensation than there is for the making of an amicable settlement of any other claim, provided, of course, that the amicable settlement of a claim for a workman’s compensation must be made in conformity with section 17 of the Workmen’s Compensation Law. And there should not be any objection to the reducing of such a settlement to a cash settlement, or lump sum settlement, providing it is done in conformity with subsection 9 of section 8 of the statute. In fact there are cases where amicable settlements in a lump sum are very advantageous to the injured employee, or to the dependents of a deceased employee, as well as being desired by the employer or his insurer.”

We do find that in the instant case there was a serious and bona fide dispute as to the employer’s liability, and, concurrently, a speculation on the duration and extent of the plaintiff’s disability.

We should examine, also, the several cases which have followed the Puchner case, three in number, and determine their respective significance.

In Langston v. Hanbury, La.App., 11 So.2d 415, upon a judgment of the First District Court, sustaining an exception of want of or no cause of action, dismissing the suit of plaintiff, when essentially the facts were that there never was a question but that the accident had happened and that the legal liability of the defendant had never been placed at issue, the doctrine of the Puchner case was fully applied by the Circuit Court of Appeals and the lower court was reversed and the case remanded with directions. This case states that the Puchner case “emphatically laid down the principle that the duration of an injured workman’s disability could not be made the subject of speculation and could not be foreclosed by compromise.” 11 So.2d 419.

A very strong directive is given to us to apply in the instant case in the following language at the same page:

“It is also argued that there was a real dispute between plaintiff here and the defendant as regards liability for any compensation in that defendant contended that the injuries to the foot were not the result of accident but were intentionally inflicted. Whether this contention has any basis in fact may only be determined by trial on the merits. Since it appears that plaintiff recovered compensation from the Red Iron Drilling Company, his other employer, in the United States District Court, evidently this defense of no accident, if tendered, was rejected.” (Italics ours.)

The second case we are given that has the Puchner case doctrine as a predicate is that of Stewart v. Brown Paper Mill Co., La.App., 11 So.2d 627, where the same judge who signed the compromise was the author of an opinion in the district court for the Fourth Judicial District annulling his own previous compromise judgment. The basis of that decision is that “the big question from a legal stand->oint at the present in this case is whether there was such a compromise settlement as would place this case in a class which the Supreme Court has said could be compromised.” page 631, supra.

Further, the court, at the same page, establishes the following fact:

“The unique feature of this case, from start to finish as the Court sees it, is the fact that this plaintiff, until this present suit was filed, had never throughout his employment before or since the injury made any claim on the defendant for compensation arising from an injury. In other words, the testimony is clear that he did not report the accident; that he made no claim for compensation and that the only thing bringing the compensation element into the picture was his statement to the nurse on his return that his disability was due to an accident and not sickness and the nurse then reported it as a compensation case and the compromise settlement was entered into.”

Indubitably, the decision of the judge in annulling his former judgment is that there was never any legal dispute between the parties whatsoever, and, correctly, he sets aside the former compromise signed by him, and upon appeal the circuit court affirms him, giving the Puchner case doctrine as the ground and, in fact, adding one hundred more weeks of payment to the plaintiff.

The third case is that of Smith v. Maier, La.App., 16 So.2d 682, in which the .circuit court affirms the lower court of the First Judicial District, where a former compromise had been set aside. From a reading of the case it is disclosed that there was no actual legal dispute between the parties as to liability as such; the compromise was purely and only a speculation as to how long the disability would last, mutually fixed by the parties.

In the instant case, as we have already outlined, the dominant issue was the legal liability of the employer, vel non. The plaintiff was confronted with ominous evidence on that point: the unqualified position of a reputable doctor, fully conversant with the case and in a position to have observed the physical condition of the plaintiff, that the trauma to plaintiff’s back was not connected, either directly or indirectly, with his ailment, acute arthritis. That we believe in the main was the basis for the compromise between the parties. We believe that type of compromise is not only permitted by the Civil Code, Article 3071, but, what is really controlling here, it is permitted by Section 17 of the Act itself.

We admit that in the joint petition for compromise there are mentioned, as if on a parity, the two points (1) liability and (2) duration and degree of disability; and that furthermore after the lump sum of $3000 is definitely stated, and the $120 already paid, and the $250 provided by the Act for medical expenses, added, there is an attempted explanation of the amount of compromise by the statement, “which represents 294 weeks at $10.20 per week.”

Does the fact that speculation as to the duration and degree of disability entered into the settlement set aside the whole compromise? In answering this question we must bear, in mind the facts and the conclusions of the Puchner case.

We grant that since we have to apply the Louisiana law, the theory of laches of the common law is not applicable. This is a personal action and alive for ten years.

The Puchner case doctrine relies for its soundness upon the theory that a compromise settlement, based solely on the speculation of the duration and the degree of disability, is in violation of public policy and, consequently, null and void. This doctrine is not inflexibly cold for in the opinion of one of the justices, on rehearing, it is stated, when the penalty provision of the Act is not imposed, that:

“We are not unaware of the mandatory provision of the statute with respect to the penalty and were it not for the circumstances in this case we would be compelled to invoke it. The parties attempted to make the compromise believing they were complying with the Compensation Act. It is not disputed that they were acting in good faith. The defendant herein was relying upon certain expressions contained in the cases of Musick v. Central Carbon Company, supra [166 La. 355, 117 So. 277]; Young v. Glynn, supra [171 La. 371, 131 So. 51] and vai-ious decisions of the Courts of Appeal to the effect that compromises of the nature involved herein were authorized. There is no question that the defendant was of the impression that Section 17 of the Act authorized the compromise and that it was in no way connected with the provisions of the Act authorizing lump sum settlements.”

We believe that this case, since the basis of the compromise is a dual one (legal liability vel non, plus duration and degree of disability) does not fall strictly under the ban of the Puchner doctrine or of the three subsequent circuit court cases, because in each of the four cases there is a total absence of the question of legal liability and in each case the compromise is a speculation solely on the duration and degree of disability.

May we ask, in a case such as this one, if the plaintiff is to set aside the former judgment, why he should not be required to return the $3000 to the defendant before he has the right to enter and remain in court seeking the annulment of the judgment of the court, already six years old?

In not one of these four cases has the question of the return of the amount received'been made a requisite to the maintenance of the action of annulment of the former judgment. But in the instant case, in the face of the payment of $3000 out of a maximum claim made for $8000, where there was a serious question of legal liability, supported by apparently credible and relevant evidence, for us to permit the plaintiff to set aside a former judgment of compromise made in good faith by all parties and where the plaintiff was represented by competent counsel of high repute, without the $3000 being returned to the defendant, would seem to be certainly unjust, if not illegal. It is futile to say that as a practical result it is quite likely that a judge or a jury would give the plaintiff at least what he has already received. Suppose he does fail legally to establish any liability; the $3000 must be returned. Who gives the guarantee that a subsequent judgment against the plaintiff for $3000 would be good? The plaintiff in his present petition with apparent generosity says he would subtract the $3000 already collected, but this does not satisfy the point.

The requirement is just plain fairness. The following cases will support, if not specifically, at least persuasively, our holding: Johnson v. Shreveport Water-works Co., 1903, 109 La. 268, 33 So. 309; Beck v. Continental Casualty Co., La.App.1933, 145 So. 810; Sly v. New Orleans, Texas & Mexico Ry. Co., La.App.1932, 142 So. 276; Harrison v. First National Life Insurance Company, La.App.1938, 179 So. 123; Ackerman v. McShane, 43 La.Ann. 507, 9 So. 483; Walding v. Caldwell Brothers & Hart, La.App.1940, 193 So. 501; Young v. Glynn, 171 La. 371, 131 So. 51; and Louisiana Civil Code, Art. 3078, 14 Tulane Law Review 282, 289.

An examination of the four cases given to us by able counsel for plaintiff discloses that amounts taken by plaintiff in compromise were insignificant as compared to the final awards made; additionally, there is absence, in at least three out of the four cases, of active legal representation; for any and all of the above reasons, we think that legally, and certainly conscientiously, the instant case is a variation of the Puchner case. We say this, even though personally and officially we have been constantly very sympathetic with labor, and especially in accord with the broad public policy of the acts on workmen’s compensation, federal and state.

The general public, or, at least, the business world has not endorsed the Puchner case, for at the very next session of the Louisiana legislature, Section 17 was substantially changed to avoid the Puchner case doctrine. The present suit would be legally impossible today. See Act No. 96 of 1942.

Accordingly, the Court will allow the plaintiff until June 10, 1945 — a period of over thirty days- — to return the amount of $3000 to the defendant, or, in default thereof, the Court will sign a judgment then sustaining the motion to dismiss, because the complaint of plaintiff does not set out a case upon which relief can be granted.


text:
    WALLING, Administrator of Wage and Hour Division, United states Department of Laber, v. GENERAL INDUSTRIES CO.
    No. 22449.
    District Court, N. D. Ohio, E. D.
    April 16, 1945.
    Charles A. Reynard and Frank R. Dittoe, both of Cleveland, Ohio, for plaintiff.
    Reese Dill and Glenn O. Smith, both of Cleveland, Ohio, for defendant.
   WILKIN, District Judge.

The complaint sought an injunction to restrain defendant from violating Section 15(a) (1), 15(a) (2), and 15(a) (5) of the Fair Labor Standards Act of 1938, 29 U.S.C.A. § 215(a) (1, 2, 5). The amended answer admitted jurisdictional facts and said that the operations of the defendant had at all 'times complied with the provisions of said Act. The case was presented upon the evidence, arguments, and briefs.

The primary issue is whether the four employees involved in this action are exempt from the overtime provisions of Section 7 of the Act by virtue of Section 13(a) (1), 29 U.S.C.A. §§ 207, 213(a) (1), and the regulations promulgated thereunder. A secondary issue is whether the monthly salary paid to the employees satisfies the overtime compensation requirements of Section 7. In other words, the court must determine, first, whether the employees were bona fide executive or administrative employees, and, second, if it finds that they were not, whether the amount paid for overtime was less than the minimum required by the Act.

Three of the employees, Jasper Page, Peter Spooner, and Fred Stegman, were operating engineers. They had engineer’s licenses. They manned in three successive shifts the power plant of the defendant and were all under the direction of one Lattiman, who was “boss” over the whole power plant and boiler room. The defendant generated its own power and required high pressure steam in connection with the manufacture of plastic products. , It was the duty of the engineers to keep the machinery of the power plant in good operating condition. They did packing, wiping, mopping, oiling, repairing, and such other duties as are generally performed by engineers in similar positions. There were in the power plant three generators, two compressors, pumps, engines, and other equipment. The engineers read the gauges, listened for sounds indicative of any disorder, made minor adjustments, and reported to their immediate superior any failure or breakdown for which they were unable to provide. Time was when the engineers gave directions to the employees in the boiler room. But recently because of Union difficulties the boiler stokers declined to take orders from the engineers, except Lattiman, the chief engineer. It was of course the duty of the engineer in charge to take appropriate action to keep a supply of steam necessary to operate the plant. The power plant was dependent on steam from the boiler room.

Each of the three engineers was paid a salary of $210 a month and allowed certain other benefits, such as insurance, etc.

The fourth employee involved in this action, Clarence Payne, was assistant paymaster and worked directly under L. J. Monroe, who was paymaster. Most of his working time was spent in operating and adjusting tabulating machines. Two other employees served under the direction of Payne. The tabulating machines had to be altered and changed from time to time to meet the requirements of different reports. This employee had been given special training so that when he was informed as to what information was required by the various reports he would know how to shift and alter the tabulating machines in order to meet the requirements. He had necessarily to understand the purpose and requirements of the reports requested by government and company officials. The detail work of assembling the information was done by machinery rather than by clerks. The employees under Payne were machine operatives, whose work was conceded to be manual. This employee received a salary of $230 a month and other benefits.

It seems to the court that the three engineers meet the requirements of Section 541.1 of the regulations made pursuant to Section 13(a) (1) of the Act; in other words, it seems to the court justifiable for the company to class the engineers as executives. It may fairly be said that:

(A) Their primary duty was the management of the department or subdivision where they were employed.

(B) There were no other employees in that department or subdivision, but through the chief engineer they did direct the work of the boiler stokers. They had authority from the company to do so directly-

(C) Their recommendations as to change of status of other employees would be given particular weight. A boiler stoker would necessarily be subject to their suggestions.

(D) They customarily and regularly exercised discretionary powers. Complicated machinery vital to the plant was entrusted to their care.

(E) Their salary basis was not less than $30 a week.

(F) In the very nature of the situation it is difficult to say what per cent of the work done was of the same nature as that performed by non-exempt employees. But ■the evidence failed to convince the court that it exceeded 20% of the number of hours worked in the work week. It is questionable whether (F) should apply to these employees because they are in sole charge of the power plant, which is a rather independent establishment from the rest of the factory.

It seems to the court that the fourth employee, Payne, is justifiably classified as an administrative agent under Section 541.2 of said regulations:

(A) He is compensated for his services on a salary basis at a rate not less than $200 a month.

(B) (1) He regularly and directly assists an employee employed in a bona fide executive or administrative capacity (the paymaster), and a great deal of assistance is non-manual in nature and requires the exercise of discretion and independent judgment.

(2) He performs, under only general supervision, responsible non-manual work along specialized or technical lines requiring special training, experience, and knowledge and which requires exercise of discretion and judgment. The adjustment and alterations of the tabulating machines is technical and requires special training.

The main contention of the plaintiff was that the classification given to these employees was unwarranted and in violation of the regulations promulgated by the Administrator of the Act. The evidence failed to support that contention. Some latitude must be allowed employers.

The evidence fails wholly to convince the court that there was any intention on the part of the employer to circumvent or evade the requirements of the Act or that the total payments made to these employees are below the minimum required by the Act if figured on the original unit labor cost basis. The evidence shows that the salaries were arrived at after negotiations with Union representatives and that in fixing the amount the company gave consideration to regular pay and time and a half for overtime. Subsequently they were increased to the amount now being paid. It was approved by the Salary Stabilization Agency. The contention, therefore, that the present salaries fail to take account of the requirement for time and a half for overtime is not sustained by the weight of the evidence. If that arrangement is to be set aside, then, in all fairness, the original rate should be restored or a new hour-rate would have to be agreed upon.

With reference to Payne, the company wrote a letter to the Wage and Hour Division setting forth the duties of the employee and asking how he should be classified. The Regional Attorney at that time thought the company would be justified in classifying the employee as exempt. The court does not mean to imply that the Administrator is bound by the opinion of the Regional Attorney based upon an ex parte presentation, but the court does consider that the action of the company sustains the finding of the court that the classifications were bona fide. The court furthermore feels that there is a necessity for considering certain employees as executives or administrators when they are entrusted with the complex and delicate machinery of modern times. It often requires as much skill, discretion and judgment to keep such machinery in harmonious operation as to keep subordinates in cooperation. Payne had charge not only of delicate and complex machinery but also other employees. The case for his exempt classification is even stronger than the case for the engineers.

The court does not discuss and distinguish the numerous cases cited. As courts have remarked, each stands upon its own facts. This court, however, relies on the principles announced in Walling v. A. H. Belo Co., 316 U.S. 624, syl. 1 and 2, 62 S.Ct. 1223, 86 L.Ed. 1716; St. Clair v. Russell & Pugh Lumber Co., D.C. Idaho, 51 F.Supp. 47; Lynch et al. v. Vincent et al., D.C.Mo. 55 F.Supp. 44; Stanger et al. v. Glenn L. Martin Co., D.C.Md., 1944, 56 F.Supp. 163; H. H. Allen v. Atlantic Co., 5 Cir., 145 F.2d 761.


author: DE VANE, District Judge.

text:
    SHIPLEY v. KOMER.
    Civ. No. 770-M.
    District Court, S. D. Florida, Miami Division.
    April 23, 1945.

      Abe Aronovitz, of Miami, Fla., for plaintiff.
    Dewey Knight (of Knight, Underwood & Cullen), all of Miami, Fla., for defendant.
   DE VANE, District Judge.

This is a suit to recover for personal injury sustained by the plaintiff as a result of being struck by an automobile operated by the defendant. The complaint alleges that on the 4th day of January, 1939, at about 10:30 p. m., plaintiff was walking “easterly along the northerly side of that certain road, situate, lying and being in Broward County, Florida, commonly known as Hallandale Beach Road.” It further alleges that the defendant was driving his automobile easterly along said road and ran the plaintiff down, severely injuring him and that as the result of the injury received by plaintiff he suffered a concussion of the brain, a fractured skull, a. tumor or blood clot on the brain and other injuries.

The defendant interposed nine defenses. The fourth, fifth, sixth, seventh, and eighth defenses set up a release executed by the plaintiff shortly after the accident. A separate trial was had on the issue raised by these defenses and the Court found that plaintiff was suffering from amnesia at the time he executed the release and that Same, therefore, was not binding upon him. The case is now before the- Court on the merits.

Defendant interposed three defenses to the merits: (1) the defense of not guilty; (2) that plaintiff was guilty of contributory negligence; and (3) that plaintiff ratified and affirmed the release specifically pleaded and set forth in other defenses interposed.

As pointed out above, plaintiff alleges in the complaint that at the time of the accident he was walking along the northerly side of the paved portion .of the highway, in an easterly direction and he testified to the same effect at the trial. The paved portion of Hallandale Beach Road is approximately 16 to 18 feet in width. Plaintiff testified that he was walking off the paved portion of the road on the northerly side thereof at the time he was run down by the defendant. Defendant testified that he was driving along the southerly side of the highway at a moderate rate of speed when plaintiff, without looking, started to cross to the south side of the road, that plaintiff walked into the side of his car and that the accident was due entirely to the contributory negligence of the plaintiff. Defendant’s wife and other witnesses who were in the car with the defendant corroborate this testimony of the defendant.

From other evidence produced at the trial the Court finds that both the plaintiff and the defendant were mistaken as to how the accident happened. The parties are agreed that within one minute or less before plaintiff was struck by the defendant’s car that an automobile going in a westerly direction along the Hallandale Beach Road passed'both the plaintiff and the defendant. Plaintiff testified that he was off the pavement on the northerly side of the road when the car going in a westerly direction passed him and this testimony is not disputed by any of the witnesses produced by the defendant.

Plaintiff’s memory as to what occurred from that time on is very hazy. He testified that he saw the lights of another approaching car, traveling in a westerly direction, about a quarter of a mile down the road and thfit he saw some black object lying in the road near him and that he took from his pocket a small flashlight to examine the object to ascertain what it was and found it to be a dead bird. He remembers nothing after that until he regained consciousness in a hospital the following day. The testimony of all the witnesses places the carcass of this dead bird near the northerly edge of the paved portion of the road. It was the carcass of a large bird and some of the witnesses thought it was the carcass of a crane. All of the witnesses agree that it was well within the northern half of the road and nearer the northern edge than the center line of the road. The testimony of all the witnesses also establishes the fact that plaintiff was struck at or near the spot where the carcass lay in the road.

A police officer was called to the scene of the accident soon after it occurred and defendant called him as a witness. The officer testified that he arrived at the scene of the accident within a short time after it occurred; that he found the defendant’s car on the southerly side of the road in the position where defendant stopped the car after the accident. With the aid of lights from other cars and with his flashlight he was able to trace the skid marks of defendant’s car from the point where defendant applied brakes to the point where the car was brought to a stop. His testimony was that the defendant’s car was traveling along the center of the road with the left wheels of the car somewhere between one and two feet north of the center line of the road. The skid marks began west of the carcass of the dead bird and continued easterly for several feet, beyond where the car was brought to a stop.

The Court accepts the testimony of the police officer as more accurately describing what actually occurred at the time of the accident than the testimony of the plaintiff or the testimony of the defendant, and other witnesses for the defendant. A careful analysis of the testimony of the police officer satisfies the Court that the defendant was not driving south of the center line of the highway, as testified by him and some of his witnesses, but was driving along the middle of the highway, and that the left wheels of defendant’s car were north of the center line of the highway at the time of the impact between plaintiff and defendant’s car.

The diagram of the scene of the accident prepared by the police officer (Defendant’s Exhibit No. 2) shows that the body of the plaintiff, after being knocked unconscious, lay well within the northern portion of the highway and only a few feet east of the dead bird. The testimony also shows that plaintiff was not struck by the front of the car, but rather that the ventilator window glass of the front door, which extended out, struck some portion of plaintiff’s body, and that the top of the car, right at the top of the ventilator window, struck plaintiff’s head. Pictures taken of the car the day after the accident show a dent in the top of the car, level with the top of the front door of the car.

Reconstructing what actually occurred from the testimony of all the witnesses the Court is satisfied that as soon as the automobile traveling in a westerly direction along the road passed the plaintiff that plaintiff went back upon the northerly side of the paved portion of the road and when he reached the carcass of the dead bird he walked around the same to the right— there being more room to walk around the same on that side and still stay within the northerly half of the paved portion of the road — and that it was at this point that defendant’s car struck the plaintiff. The fact that plaintiff was struck by the ventilator window and the top of the automobile, instead of by the front fender, convinces the Court that he was veering to the right to pass the object in the road just as defendant’s automobile reached the point where he was in the highway. The fact that defendant applied his brakes several feet west of the dead bird also convinces the ■ Court that the plaintiff began to veer to the right to pass the object in the road while the car of the defendant was still some distance behind him. Whether or not any liability attaches to the defendant for the accident will be determined upon this summary of the evidence as to the manner in which the Court finds the accident actually happened.

A Florida Statute, Title XXII, Sec. 317.25, F.S.A., requires the operator of an automobile to operate his car upon the right half of the roadway, with certain exceptions not important here. The Supreme Court of Florida has held that a pedestrian has equal rights with an automobile driven upon the highway. The Supreme Court of Florida has also held that the driver of an automobile is required to exercise reasonable care to avoid injury to others lawfully upon the highway. See Florida Motor Transport Co. v. Hillman, 87 Fla. 512, 101 So. 31. The Court holds, upon this authority, that defendant was guilty of negligence in operating his automobile on the wrong side of the highway at the time of the accident in this case.

The Court knows of no Statute in Florida that requires a pedestrian using a public highway to walk facing traffic at night, although this is common practice and is what plaintiff was doing, as he had the right to do, on the night of the accident. Contributory negligence is a complete defense in Florida in a case of this character and this case presents the question of whether the action of the plaintiff at the time of the accident constituted contributory negligence.

In Mathers v. Botsford, 86 Fla. 40, 97 So. 282, 32 A.L.R. 881, the Supreme Court of Florida held that where a party walking along the public road at night was run down by an automobile traveling in the same direction he was not guilty of contributory negligence and was entitled to recover despite the fact that he stayed on the highway and the defendant was blinded by the lights of an approaching automobile traveling in the opposite direction, which made it impossible to see the plaintiff on the highway. In that case the Supreme Court of Florida said: “Pedestrians have rights in the proper use of public roads for traveling, and drivers of vehicles should exercise due care so as not to injure others.”

In Florida Motor Transport Co. v. Hillman, supra, the accident there involved occurred very much in the same manner as did the accident in this case, except that the accident in that case occurred in the daytime instead of at night. The second count of the declaration in that case alleges that the plaintiff stopped his automobile on the right-hand side of the road facing south, that he was on the left-hand side of the machine, that he “stepped back from his said automobile about 18 inches, but was still to the right of the middle of said road” [87 Fla. 512, 101 So. 32] when the defendant ran its bus negligently upon the plaintiff. While the pleas of contributory negligence were stricken by the trial court and this action of the Court was not assigned as error on appeal in that case, nevertheless, under the law of Florida if the testimony of the plaintiff supported this allegation of the second count of his declaration and his act of stepping back from his automobile had constituted contributory negligence this would have defeated plaintiff’s right to recover, even though the trial court had stricken the pleas of contributory negligence. The Supreme Court of Florida affirmed a verdict and judgment in favor of the plaintiff in that case and in so doing, in effect, held that the act of the plaintiff in stepping back from his automobile toward the center of the highway did not constitute contributory negligence as long as he stayed to the right of the middle of the road. Upon the authority of that case the Court holds plaintiff, in this case, was not guilty of contributory negligence in veering to the right to pass around the carcass of the dead bird, as the evidence shows that in so doing he remained, and was struck down by the defendant, within the northern half of the highway.

The third defense interposed to the merits is that plaintiff ratified and affirmed the release executed shortly after the accident and while plaintiff suffered from amnesia as a result of the accident.

The record shows that shortly after the tumor or blood clot was removed from plaintiff’s head, and while plaintiff was still in the hospital, he sent for local counsel to discuss his claim for damages against the defendant. This counsel thought himself in no position to handle the case as plaintiff was a resident of the State of New York and defendant was a resident of the State of Michigan, and recommended that plaintiff get other counsel. After returning to New York plaintiff did seek other counsel who attempted to negotiate a settlement with the defendant but defendant stood upon the release executed by the plaintiff and refused to reopen the case. Not being satisfied plaintiff saw a third attorney and testified that he was not advised until he saw this third attorney that it would be necessary for him to refund the $250 paid him in settlement of the case before he could bring suit against the defendant and the record shows that he promptly made the tender, which defendant refused to accept. This all required time and the defense is based upon the elapsed time between the date of the execution of the release and the time the refund was tendered.

Plaintiff is not a lawyer and it was necessary for him to depend upon the advice of counsel as to his obligation to make the refund. The record shows that the refund was tendered promptly upon plaintiff being advised as to his obligation to do so. The tender made to defendant at the time has since been deposited in the registry of this court. Upon all the facts disclosed by the record, touching the matter, the Court holds that this defense is not good in this case, and is not a bar to plaintiff’s right to recover against the defendant.

The question of damages in a case of this character always troubles the Court. The evidence shows that as a result of the accident plaintiff suffered a fractured skull and was rendered unconscious for twenty-four hours, more or less. As it was feared a blood clot would form, plaintiff remained in the, hospital until January 18, 1939, when he was discharged. On March 14, 1939, he again lost consciousness and was taken to the hospital where he remained in an unconscious condition until an operation was performed and a blood clot, described as being the size of a small orange, was removed from his brain. That the blood clot resulted from the injury plaintiff received is not seriously, controverted. The physician participating in performing the operation testified that when he arrived on the scene plaintiff’s condition was critical and that an immediate operation was necessary to save his life. He had been allowed to remain in the hospital for approximately thirty-six hours, under observation of the hospital physicians, before a specialist was called in to see him.

Plaintiff responded satisfactorily to the operation and despite his age made a speedy recovery and was able to resume his normal business activities within a few months.

Plaintiff incurred expenses of approximately $2,000 in connection with his hospitalization as a result of the injuries, and lost his earnings for some three or four months amounting to $600, according to the bill of particulars filed in this case. Plaintiff claims permanent injuries, but the testimony shows that such permanent injuries as he now suffers have not, to date, interfered with his earning capacity. Plaintiff is entitled to recover, in addition to the expenses incurred by him and his loss of earnings, something on account of the pain, suffering, nervous shock and such permanent injuries as he suffers, and the Court assesses plaintiff’s damages in the sum of $7,500.

Findings of fact, conclusions of law and final judgment will be entered in conformity with this memorandum opinion.


author: MOSCOWITZ, District Judge.

text:
    VERNON LUMBER CORPORATION v. HARCEN CONST. CO.
    Civil Action No. 4781.
    District Court, E. D. New Vork.
    April 19, 1945.

      Max Omstein, of New York City, for plaintiff.
    Gresser & Walker, of New York City (Nathan Walker, of New York City, of counsel), for defendant.
   MOSCOWITZ, District Judge.

Defendant has moved to strike from the plaintiff’s reply to its counterclaim, as insufficient, the first, second and third affirmative defenses contained therein. Plaintiff asserts the objection that the relief sought is in the nature of a demurrer, which has been expressly abolished by Rule 7(c) of the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c, and that there is no authority to strike part of a pleading as insufficient. On the contrary, there is extensive and undoubted authority to the effect that a motion to strike an affirmative defense in a reply as legally insufficient'is proper under Rule 12 (b) 6. Moore’s Federal Practice, Vol. I, Supplement, page 659, and cases cited.

The action is to recover the amount unpaid for lumber delivered by plaintiff to defendant under a written contract, which defendant substantially admits is due. The counterclaim seeks damages arising from the failure of plaintiff to deliver all of the lumber called for by the contract. Nondelivery is conceded by plaintiff; the excuses which are offered in exoneration are the subject matter of this motion.

Plaintiff claims that it placed an order with the Sitterding-Carneal-Davis Company of Richmond, Virginia, which, if it had been fulfilled, would have enabled plaintiff to complete its contract with defendant. It is further alleged that the Sitterding mill was unable to supply plaintiff because the United States Navy, under a higher priority rating, requisitioned and took the entire output of the Sitterding mill.

The first affirmative defense alleges that duly promulgated rules and regulations of tie War Production Board make it mandatory that any mill must accept and supply orders with the highest priority ratings first and that it is compulsory that orders with the highest priorities shall be given preference and completed before any of the mill’s output may be applied to an order with a lower priority rating. This defense rests upon War Production Board Regulation No. 944.13, which states in part:

“No person shall be held liable for damages or penalties for any default under any contract or order which shall result directly or indirectly from compliance with any rule, regulation or order of the War Production Board. * * *”

Plaintiff claims that the absorption of its supplier’s output by the Navy excuses plaintiff from further performance of its contract with defendant solely by virtue of Regulation 944.13.

The Regulation obviously does not apply to plaintiff. The exoneration provided is to a contracting party whose performance is interfered with by a requirement that its output, previously destined for delivery on its contract, shall go to another customer with a higher priority. This defense might well be available to the Sitterding mill in an action against it by plaintiff (such an action has been commenced), since its output was diverted by a Regulation of the War Production Board, but it is not available to plaintiff here. The cases cited by plaintiff in support of its first defense in reality are authority for the defendant’s position, since they are examples of situations in which performance by the primary contracting supplier was prevented by war regulations or necessity, i. e., Martin Ross Mfg. Corporation v. Ulius, 181 Misc. 995, 48 N.Y.S.2d 756; Mawhinney v. Millbrook Woolen Mills Inc., 231 N.Y. 290, 132 N.E. 93, 15 A.L.R. 1506.

It also appears that the Regulation under which plaintiff seeks to be excused provides by its own terms (No. 944.7) that an order with a lower rating shall nevertheless be accorded priority over an order with a higher rating if the former calls for delivery at an earlier date and it is possible that both may be completed in time. No allegation is made to show that this provision does not negative the excuse offered.

To the extent that the first affirmative defense may be said to rest upon ordinary frustration of contract principles rather than upon the Regulation, there is no allegation of any attempt whatever having been made by plaintiff to procure the lumber elsewhere. Thus the disposition of this defense would be the same as of the second defense. Town of North Hempstead v. Public Service Corporation of Long Island, 107 Misc. 19, 176 N.Y.S. 621, affirmed 192 App.Div. 924, 182 N.Y.S. 954.

The second affirmative defense consists of two main parts. Firstly, it is alleged that the parties agreed that plaintiff would be relieved from performance of its contract with defendant if the Sitter-ding mill failed in its deliveries to plaintiff or if plaintiff was unable to procure the lumber from its regular sources. A pre-trial conference has been held by the Court in this case and a great saving of time has once more been effected, evidencing the advantages of this new federal procedure. Facts and admissions adduced at the pre-trial may properly be considered in the determination of this motion. Upon the pre-trial it developed that these alleged agreements were oral and it is thus obvious that they cannot alter or vary the written contract entered into. Having been prior to the written contract, the alleged oral agreements have been merged and no longer have any legal efficacy. Union Mutual Life Ins. Co. v. Mowry, 96 U.S. 544, 24 L.Ed. 674.

Plaintiff argues that the specific agreements were in fact embodied in the written contract in its provision that the ■order was accepted “subject to conditions beyond control” and urges that plaintiff should be permitted to show by -parole evidence that this is what the parties intended by the use of this phrase. It is a settled principle that when parties to a written contract employ language in the writing which is ambiguous and cannot be properly construed without ascertaining what the parties had in mind when they chose the word, their intention may be shown by parole evidence. But “conditions beyond control” is not an ambiguous term which will require resort to parole evidence to explain it. While its meaning might be doubtful if this were the first time it had been employed in a contract, it has by repeated use assumed an indisputable connotation which it will be presumed the parties intended in adopting it just as would be so with any ordinary and well-understood word or series of words. “Conditions beyond control" refers to an unforeseeable act of God or other extraordinary cause which could not reasonably be anticipated by the parties. It would cover an unforeseeable change in the-law which made performance impossible. But it does not refer to difficulties in performance which have developed since the making of the contract but which could have been anticipated. The Regulation of the War Production Board-under which plaintiff seeks to be relieved of its duty to deliver the lumber was in existence when the contract was made and the withdrawal of plaintiff’s contemplated supply by operation of the Regulation is a development which it is presumed plaintiff anticipated or could have anticipated. Crown Embroidery Works v. Gordon, 190 App.Div. 472, 180 N.Y.S. 158; Balfour Guthrie & Co. v. Portland & Asiatic S. S. Co., D. C. Or.1909, 167 F. 1010; Companhia De Navegacao Lloyd Brasileiro v. C. G. Blake Co., 2 Cir.1929, 34 F.2d 616; Cannistraci v. James Chieves & Co., App.T.1917, 165 N.Y.S. 933.

Secondly, exoneration is sought under the provision alone of the contract which states that the order is accepted “subject to conditions beyond control,” relying on frustration without reference to the alleged oral agreements. After setting forth the development which prevented Sitterding from making delivery to plaintiff, it is alleged that “the plaintiff used diligent efforts, and at a large expense to it, sought to procure the lumber specified in the counterclaim from its usual and regular channels as well as elsewhere. * * *” This allegation is not sufficient to excuse plaintiff from performance of its contract with defendant.

If conditions beyond the control of plaintiff have made it impossible for plaintiff to procure the required lumber, performance of the contract has been frustrated and plaintiff would not be liable for its default. If rules and regulations of the War Production Board made it impossible for plaintiff to procure the lumber, the rules and regulations would be a bona fide excuse. But the reply does not allege “impossibility” and, in failing to do so, is insufficient as a defense and must be stricken.

This is not quibbling over technicalities and the Court is mindful of the liberality by which federal pleading need state only “a claim upon which relief can be granted.” Dioguardi v. Durning, 2 Cir. 1944, 139 F.2d 774, 775. Here the very substance of the defense is the development of a condition “beyond the control” of plaintiff. The withdrawal of its contemplated supply is not placing beyond plaintiff’s control its obligation to furnish lumber to defendant. The contract was not one under which the continued availability of the Sitterding supply was an implied condition of performance by plaintiff. Plaintiff was obliged to furnish lumber of prescribed specifications to defendant and could obtain it wherever it could be procured. There is no suggestion in the contract that plaintiff was to furnish lumber only from the Sitterding mill, which is corroborated by plaintiff’s own' allegation in Paragraph 16 of its reply that it did in fact procure a large amount of lumber elsewhere after the Sitterding mill had terminated its supply to plaintiff, which was delivered to defendant and accepted by it. Thus, all the decisions cited by plaintiff concerning the explanation by parole evidence of an implied condition of continued existence of subject matter have no application. Here such a condition would be inconsistent with the express contract, which makes no mention of a particular source.

The term “impossible” does not mean an absolute inability; if it did, impossibility of performance could be negatived merely by showing that the required lumber was available at some backwoods source not known to any one but the inhabitants of the surrounding area. “Impossible” must be given a reasonable and practical construction (see 20 Words & Phrases, Perm.Ed., “Impossible”), but it is not satisfied by the allegation employed herein that plaintiff sought to procure the lumber “from its usual and regular channels as well as elsewhere.” James Pels Co. Inc. v. Republic Chemical Corporation, Sup., 31 N.Y.S.2d 857; Cannistraci v. Chieves, supra. Under the contract as it is presently written, plaintiff is under obligation to furnish the lumber if it can be obtained. To be excused from this obligation, plaintiff must allege “impossibility” of obtaining that lumber. Only then would the defense have merit. Companhia v. Blake, supra; Jacksonville, M. P. Ry. & Nav. Co. v. Hooper, 160 U.S. 514, 527, 16 S.Ct. 379, 40 L.Ed. 515; The Harriman, 9 Wall. 161, 172, 19 L.Ed. 629. The burden of proving the allegation — which is not being weighed by this Court — would require plaintiff to show that it made every attempt which would be considered reasonable in the trade to find an alternative source. Merely trying its regular and usual channels would not suffice.

The third affirmative defense reasserts the alleged oral agreements heretofore referred to and seeks reformation of the written contract to incorporate them, stating that they were omitted by the mutual mistakes of the parties or by the mistake of one and fraud of the other. The allegation on its face is sufficient and must stand. This was admitted by defendant at the pre-trial. It will probably be necessary for the trial court first to determine whether the action to be litigated before the jury shall be based upon the present contract or upon one which has been reformed as sought.

The motion to strike the first and second affirmative defenses in plaintiff’s reply is granted, with leave to amend the reply in accordance with this opinion. The motion to strike the third affirmative defense is denied.

Settle order on notice.


author: BYERS, District Judge.

text:
    THE COLLEGE POINT. THE MONTCLAIR.
    No. A-17162.
    District Court, E. D. New York.
    May 14, 1945.

      Foley & Martin, of New York City (Christopher E. Heckman, of New York City, of counsel), for libelant.
    John E. Morrissey, of New York City (Harold Gilmartin, of New York City, of counsel), for claimant.
   BYERS, District Judge.

This cause presents a single question of fact, whether the libelant’s scow College Point was struck by the claimant’s tug Montclair, in the slip between piers 4 and 5, Hoboken, New Jersey, on the night of August 5, 1943, at about 11:30 p. m.

The evidence is not necessarily in conflict because the claimant’s witnesses assert that no such striking occurred, since hone was on the stern of the tug and thus in a position to refute the testimony of the scowman, who said that he observed the striking and promptly reported it to the claimant on the following morning.

He impressed me as a truthful witness, as did those called by the tug, and I accept his positive testimony because the libelant’s case, while meager, is sufficient.

The damage could have been sustained as the scowman relates, by reason of the position of the scow as the outboard vessel in a tier of 4 or S lying near the end of pier 5, bow in the slip. The fact that he was able to identify this tug among those working in and out of this busy slip that night, and reported the fact of the striking as soon as possible on the following day, and claimed that his scow had been damaged, tends to corroborate his narrative, and leads to its acceptance.

Findings.

1. Ownership and operation of the respective vessels are found to be as alleged in the pleadings.

2. On the night of August 5, 1943, the libelant’s scow College Point, loaded to about one-half capacity with soft coal, was the -outboard vessel in a tier of 4 or 5 similar craft, lying near the end of pier S, Hoboken, but not at the extreme end.

3. The claimant’s tug Montclair, running light, while maneuvering in and out of the slip between piers 4 and S, struck the said scow at about 11:30 p. m. on the starboard side near the stern, and damaged the second plank below the top log.

4. The said damage was not due to any fault on the part of the College Point.

Conclusion.

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

Settle decree.


author: FORD, District Judge.

text:
    MUISE v. ABBOTT.
    No. 1084.
    District Court, D. Massachusetts.
    May 28, 1945.
    A. L. Kaplan, of Boston, Mass., for libelant.
    Albert T. Gould and Bingham, Dana & Gould, all of Boston, r Mass., for respondent.
   FORD, District Judge.

This is a libel in admiralty for maintenance and cure brought by Levi J. Muise against James L. Abbott, part owner of the schooner American.

On or about April 6, 1943, the libellant was a member of the crew of said schooner, which was tied up for unloading at the Slade-Gorton Plant in East Gloucester, Massachusetts. At 5 p. m. the work of unloading had ceased and libellant went ashore. On his way back to the schooner that night and while in libellee’s employ, libellant travelled along a passageway of the Gorton Pew Fisheries Company, Ltd. (hereinafter referred to as the Gorton Company), in order to get from the nearest highway to the vessel; on said premises he was injured by falling into an unguarded pit.

Thereafter on August 26, 1943, the libellant brought an action at law against the Gorton Company for injuries sustained as a result of the latter’s negligence. Before the case went to trial, it was settled for $5,500 and a general release, presented in this trial, was given to the Gorton Company on April 13, 1944, discharging the Gorton Company from all claims the libellant had arising out of personal injuries, damages, expenses, and loss alleged to have been sustained as a result of the accideni of April 6, 1943. An agreement for judgment and judgment satisfied in the amount of $5,500 were filed. Judgment was entered accordingly.

The question to be decided here is whether the release and satisfied judgment against the Gorton Company precludes the libellant from recovering in whole or in, part against the shipowner on his right t<r maintenance and cure.

It is a fundamental principle of the law of damages that one who is injured by a tortious act or a breach of contract is entitled to compensatory damages, 3. e., pecuniary remuneration commensurate with the damage or loss caused by the defendant’s act giving rise to the cause of action. In the absence of circumstances warranting the allowance of exemplary damages, the court will not allow a plaintiff to recover more than one satisfaction in damages — enough to put him in status quo. The limitation is undoubtedly based upon a theory of unjust enrichment.

This principle unjust enrichment is present in situations analogous to the instant case. Cases involving joint tortfeasors and concurrent tort-feasors are illustrative of the rule. The recovery and full satisfaction of a judgment against one tort-feasor is a bar to an action against another. Sessions v. Johnson, 95 U.S. 347, 24 L.Ed. 596; Lovejoy v. Murray, 3 Wall. 1, 18 L.Ed. 129; Savage v. Stevens, 128 Mass. 254; Eberle v. Sinclair Prairie Oil Co., 10 Cir., 120 F.2d 746, 135 A.L.R. 1494; see Cain v. Quannah Light & Ice Co., 131 Okl. 25, 267 P. 641; Prosser on Torts, p. 1106; 27 A.L.R. 805-822; 65 A.L.R. 1087-1092; Restatement, Judgments, Sec. 95b; Restatement, Torts, Sec. 886. Likewise a valid release of one tort-feasor discharges all others liable for the same harm, unless the parties to the release agree that the release shall not discharge the others. Restatement, Torts, Sec. 885. Of course it is obvious here we.are dealing not with joint or concurrent tort-feasors but with a tortfeasor and a shipowner, the latter obligated under the circumstances to pay damages under a contract implied in law, Aguilar v. Standard Oil Co., 318 U.S. 724, 730, 63 S.Ct. 930, 87 L.Ed. 1107; Cortes v. Baltimore Insular Line, 1932, 287 U.S. 367, 371, 53 S.Ct. 173, 77 L.Ed. 368; Pacific S. S. Co. v. Peterson, 278 U.S. 130, 137, 138, 49 S.Ct. 75, 73 L.Ed. 220; yet the same equitable principle of unjust enrichment is involved.

The cases cited by the respondent, Krey v. United States, 2 Cir., 123 F.2d 1008; The Rolph, 9 Cir., 299 F. 52, 55; John A. Roebling’s Sons Co. v. Erickson, 2 Cir., 261 F. 986, 988; Owens v. Hammond Lumber Co., D.C., 8 F.Supp. 392, do not, as the respondent contends, stand for the proposition that maintenance and cure as elements of damages are necessarily included in recoveries in indemnity suits for unseaworthiness or damages under the Jones Act. Unless it is definitely shown that the elements of maintenance and cure have actually been included in such suits, whether against a third party or the shipowner, the libellant is not barred from recovery in a subsequent suit against the shipowner for maintenance and cure. Smith v. Lykes Brothers Ripley S. S. Co., Inc., 5 Cir., 105 F.2d 604, 605; Ottinger v. Walling, 335 Pa. 177, 5 A.2d 801; The W. H. Hoodless, D.C., 38 F.Supp. 432, 433. Nothing in the case of Jones v. Waterman S. S. Co., D.C., 60 F.Supp. 30, is contrary to the principle stated. In that case the court pointed out that maintenance and cure were specifically included in the release given.

In the instant case the libellant has released and satisfied a judgment against the Gorton Company, the third-party tortfeasor. If that recovery included damages for cure and maintenance, it would be manifestly unjust to allow the libellant-seaman to recover for the same items in this action against the shipowner.

In the release given to the Gorton Company the libellant released the Gorton Company from liability for all loss, damage, and expenses resulting from the injury. It is certain that medical' expenses and maintenance, as part of lost wages, could have been elements of damages in that suit.

There is nothing in the pleadings in the Gorton Company suit that is helpful in deciding these issues. However, a letter was introduced in evidence by the respondent which had been sent to counsel for the ■Gorton Company by the libellant’s attorney (same attorney here) seeking a compromise of that suit wherein the medical expenses and other expenses for cure incurred by the libellant with respect to his injuries were specifically set forth in itemized form in the amount of $1,039.78. There is no evidence in that communication that maintenance as such was specifically included. However, concerning lost wages there was a statement in the letter that in 1942 the libellant had earned $2,640 “plus approximately $300 additional for food consumed.” These items were offered as a basis for his lost earnings for the year following his accident on April 6, 1943. There was a further statement that the earnings of fishermen in 1943 and 1944 had increased one-third to one-half. Counsel then estimated lost wages as $4,000 (36+% in excess of earnings and food consumed) in a detailed statement concerning his items of loss. It is fairly inferable that there was included in this $4,000 wage item, an item for food in the amount of $408.16.

The parties have stipulated that the value of the maintenance item during the libellant’s convalescence was $910.

I reach the conclusion that the item of cure was specifically included in the amount reflected in the release and judgment, and the maintenance item has been included and satisfied to the extent of $408.16. Thus, the result reached is not to allow further compensation as respects cure, and to mitigate the maintenance damages in the sum of $408.16.

Judgment will be entered for the libellant in the amount of $501.84, with costs.


author: MILLER, District Judge.

text:
    OHIO RIVER SAND CO. v. UNITED STATES.
    No. 695.
    District Court, W. D. Kentucky, Louisville Division.
    May 25, 1945.
    McAfee, Grossman, Hanning & Newcomer, of Cleveland, Ohio, and Squire R. Ogden, of Louisville, Ky., for plaintiff.
    Samuel O. Clark, Jr., Asst. Atty. Gen., Andrew D. Sharpe and Fred J. Neuland, Sp. Assts. to the Atty. Gen., and David C. Walls, Acting U. S. Atty., of Hardinsburg, Ky., for defendant.
   MILLER, District Judge.

The plaintiff, Ohio River Sand Company, brought this action to recover $725.-23 which it claims was illegally assessed against and collected from the plaintiff under the provisions of Section 3475 of the Internal Revenue Code, as amended by Section 620(a) of the Revenue Act of 1942, 26 U.S.C.A.. Int.Rev.Code, § 3475, which imposes a three per cent, tax on the transportation of property by rail, motor vehicle, water or air. A timely claim for refund was made by the plaintiff and disallowed by the Commissioner of Internal Revenue.

The plaintiff is a Kentucky corporation with its principal office in Louisville, Kentucky. It was engaged in the business, among others, of owning, operating, and chartering to others for operation, sometimes with and sometimes without a full or partial crew, towboats and motor vehicles constructed and designed primarily for operation on the Mississippi and Ohio Rivers. On or about June 27, 1941, the plaintiff entered into a written agreement with the Standard Oil Company of Ohio to furnish and operate a tug motor vessel owned by the plaintiff and bearing the name “J. H. Duffy” for the towing of barges belonging to the Standard Oil Company between points on the Ohio and Mississippi Rivers. The tugboat “J.‘ H. Duffy” was not itself a cargo carrying vessel and was during the period involved used exclusively for the purpose of towing empty or loaded barges containing crude petroleum or petroleum products between various points on the Mississippi and Ohio Rivers as the Standard Oil Company from time to time directed. Pursuant to the terms of the agreement plaintiff furnished not only the tugboat “J. H. Duffy” but also the operator and other crew members and all necessary fuel and operating supplies. The plaintiff carried on its own payroll the Captain and all members of the crew, paid all expenses for repair work, supplied all fuel, supplies and spare parts for the maintenance and operations of the tugboat. The crew of the boat was to assist in making connections in loading and discharging of cargos, but was not to be required to perform any shore work whatsoever. The plaintiff was to be responsible for the navigation of the boat while engaged in towing the barges, but was not to be held to common carrier liability, being only responsible for loss of or damage to the barges or cargos therein to the extent that such loss or damage was attributable to willful acts or negligence on the part of the officers or crew on the towboat. The Standard Oil Company was to furnish the master of the boat from time to time with instructions and sailing directions, and had the right to place a representative on the towboat during any trip while the towboat was towing barges for it. The Standard Oil Company agreed to pay as a daily charge for the' use of the towboat the sum of $365 which was to begin on the date of delivery of the boat to it and continue until its return to its home port at Louisville, Kentucky. If the cost of labor for operating the boat should increase or decrease the daily charge was to be increased or decreased in such amount as might be necessary to reflect the actual daily increase or decrease as the case might be. Reductions in rental payments were provided for in the event of loss of time from breakdown of machinery, 'stranding or damage to the boat or its equipment preventing the use thereof for more than twenty-four consecutive hours on any one occasion. In the event ice or river conditions or-other natural conditions precluding the use of the boat the plaintiff agreed to effect such reductions in the maintenance, fuel, crew and other operating cost during said period as might be reasonably possible, and to credit the Standard Oil Company with the full amount of such reductions so effected.

Pursuant to the terms of the agreement Standard Oil Company paid to the plaintiff as and for the rentals reserved therein the sum of $13,108.19 for the month of December 1942 and $11,066.10 for the month of January 1943. A tax of 3% was assessed and collected on these payments, for the recovery of which this action was filed.

Section 3475 of the Internal Revenue Code as amended provides that there shall be imposed upon the amount paid within the United States after the effective date of the Act" for the transportation of property by rail, motor vehicle, water or air from one point in the United States to another, a tax equal to three percentum of ■the amount so paid, except that in the case of coal a rate of four cents per short ton was to apply. It further provides that “such tax shall apply only to amounts paid to a person engaged in the business of transporting property for hire, including amounts paid to a freight forwarder, express company, or similar person, * * *.” The defendant contends that the towing of barges carrying petroleum products is transportation of property by water, and that under -the contract in question the plaintiff performed this service. The plaintiff contends that it leased the towboat, equipment and crew to the Standard Oil Company and that it thereafter transported its own product by use of the leased towboat.

It seems clear that the.towing of barges containing petroleum products constitutes transportation of property by water within the provisions of the statute. It is not necessary that the motive power applied to move the barges be in the barges themselves. The movement of barges by tugs is similar to the transportation of freight over highways in trailers attached to motor trucks. Transportation implies the taking up of persons or property at some point and putting them down at another. Gloucester Ferry Co. v. Pennsylvania, 114 U.S. 196, 203, 5 S.Ct. 826, 29 L.Ed. 158.

This leaves as the real question in the case whether the plaintiff was furnishing to the Standard Oil Company under the contract in question transportation service or leasing to it a tugboat with which it could do its own transportation. In order for the plaintiff to be liable for the tax it is necessary under the statute that it be “engaged in the business of transporting property for hire.” There are several provisions in the contract which lead to the conclusion that the plaintiff leased its boat on a rental basis rather than engaging in the business of transporting property for hire. It was specifically provided that the plaintiff was not a common carrier. No origin points or destination points for any towing service was specified, nor was there any provision with reference to the number of barges which the vessel might tow or to the quantity or specific quality of the contents of the barges being towed. These items were under the exclusive control of the Oil Company. The compensation was not based upon mileage, number of trips made, number of barges towed, or the number of days or hours in any day that the towboat was actually in use. The daily rental of $365 was payable regardless of whether the Standard Oil Company made use of its services or not. The provisions for deductions in the rental charge when the towboat was not useable due to breakdowns or river conditions indicate a rental arrangement rather than a towing contract. The court is accordingly of the opinion that under the contract in question the plaintiff was not “engaged in the business of transporting property for hire.”

The plaintiff is entitled to recover the amount of the tax which it was required to pay, with interest from date of payment.


author: RIDGE, District Judge.

text:
    HANS v. RAILWAY EXPRESS AGENCY, Inc., et al.
    No. 2878.
    District Court, W. D. Missouri, W. D.
    May 23, 1945.
    Arthur Popham, of Kansas City, Mo., for plaintiff.

      Winston H. Woodson and James Walsh, both of Kansas City, Mo., for defendants.
   RIDGE, District Judge.

Defendant, Railway Express Agency, Inc., a non-resident of the State of Missouri, caused removal of this action for personal injuries from the State Court, on the ground of fraudulent joinder of the individual defendant, who is a resident of the State of Missouri.

The allegations in the plaintiff’s amended petition state a joint cause of action against both defendants, if not fraudulently made.

Originally plaintiff sued the corporate defendant alone, and claimed damages for his injuries in the amount of Three Thousand Dollars ($3,000), exclusive of costs. Thereafter plaintiff obtained the depositions of certain employees of the corporate defendant, under State Court practice. Subsequently thereto, an amended petition was filed in which the individual defendant was joined as a party, and the claim for damages increased to Fifteen Thousand Dollars ($15,000).

At the hearing on plaintiff’s motion to remand this cause to the State Court, the deposition of plaintiff, and those of the corporate defendant’s employees, were introduced in evidence in support of contra contentions of the parties on the issue of fraudulent joinder. The evidence establishes this to be what is commonly termed, “A Hit and Run Case,” of which both defendants deny knowledge or any participation.

The defendant Railway Express Agency, Inc., operates numerous express delivery trucks in Kansas City, Missouri, mostly over certain designated routes. From 31st Street, to 48th Street, on Troost Avenue in said city, is designated as Route 26-X; and, from 31st Street to 47th Street, beginning at Troost Avenue, and projecting east, is designated as Route 26 by said defendant. The regular driver of the truck used by said defendant on Route 26-X is Mr. Frederick C. Senft; and the regular driver of the truck used by said defendant on Route 26 is the individual defendant, Mr. Eugene V. Heider. Mr. Senft testified, in his deposition, that if he was working on Route 26-X on the day in question, he arrived thereon about noontime; that he makes only one trip south, and one trip north, each day over the route; that he, generally, leaves 48th Street, driving north on Troost Avenue, around 4:15 or 4:30 P. M.; that he is due to make a pickup of express at a place, some distance off his regular route, at 4:30 P. M., but generally arrives at said place about 4:45 P. M.; that he and the truck he drives are never on his regular route at any time after 4:30 P. M. Mr. Heider, the individual defendant, testified that, ordinarily, in covering Route No. 26 he leaves 47th Street and Troost Avenue, driving his truck north, at about 4:30 P. M.; that he is due at the Union Station at 5:00 P. M.; that in driving his truck north on October 6, 1944, the date in question, he did not have any accident with a street car at or near 34th and Troost (the place where plaintiff claims he was injured) around 4:30 or 4:45 P. M. (the time of the collision, as set by plaintiff). Plaintiff’s testimony is that he, personally, does not know who owned the truck that struck the street car on which he was riding, breaking his arm in two places.

The.removing defendant’s contention is that because there is no evidence before the Court that one of defendant’s trucks struck the street car in question and injured plaintiff, and from the positive statement of its driver, Mr. Heider, that on the day in question he did not have a collision with a street car near 34th and Troost Avenue, the joinder of the individual resident defendant compels the conclusion that it was fraudulently made. Such a conclusion does not reasonably follow from the record made at the hearing.

The motion to remand joins issue on the question of fraudulent joinder, claimed in the petition for removal; therefore, the burden of proof, as to such issue, is on the removing defendant. Polito v. Molasky, 8 Cir., 123 F.2d 258. To justify the removal of this case from the State Court the conclusion must be reached that there is no basis for the assertion of liability against the resident defendant. Morris v. E. A. duPont de Nemours & Co., 8 Cir., 68 F.2d 788, 792. The evidence at the hearing on the motion to remand did not establish the identity of the truck that struck the street car and injured plaintiff. The premise for liability, charged against the removing defendant, is that it was one of said defendant’s trucks that struck the street car and injured plaintiff. Whether proof of such fact can be made at the trial on the merits is not a subject of inquiry in this removal proceeding. If, on the face of plaintiff’s amended petition, a cause of action is stated against the removing defendant (and one is so stated) we must assume, for the purpose of this action, that it is honestly made. The fraudulent charge to sustain this removal is directed to the joinder of the individual resident defendant as a party, and not that plaintiff has no cause of action against the removing defendant on the face of his petition.

The proposition for decision is: Is there any reasonable basis for the assertion that the defendant Heider was the driver of the removing defendant’s truck, which we assume was the truck that caused plaintiff’s alleged injury? The testimony of Mr. Heider, a driver of one of the removing defendant’s trucks, circumstantially places Heider, and said truck, in the vicinity of the place where plaintiff claims the collision occurred at the approximate time plaintiff claims that he was injured. At the trial on the merits, if evidence is introduced, tending to prove that it was a truck owned by the corporate defendant that struck the street car and injured plaintiff, the further circumstantial evidence that Mr. Heider, an employee of said defendant, was driving one of its trucks, at the time and place where plaintiff claims to have been injured, would warrant a jury in finding that the defendant Heider was the driver of such truck. Such circumstantial evidence was ascertained by plaintiff after investigation and before Mr. Heider was made a party-defendant. Under these circumstances it cannot be said that there is no reasonable basis for the assertion of liability made against the individual defendant in this case, and that his joinder, as a party-defendant, was fraudulently made to prevent removal. The removing defendant has not sustained the burden of proof cast upon it to establish bad faith and fraudulent joinder of Mr. Heider as a party-defendant.

In the instant case, the removing defendant states in its petition for removal that: "At the time of filing plaintiff’s said second amended petition; (plaintiff or his attorney) knew or, by reasonable investigation, could have known that defendant Eugene V. Heider, did not drive or operate a truck into collision with the street cár mentioned in plaintiff’s said second amended petition.” This is the only statement in the petition for removal tendering the issue of fraudulent joinder. It is a mere conclusion and, consequently, insufficient to present such issue to this Court. No facts are there alleged that will compel a conclusion that had the plaintiff made an investigation, such as the removing defendant may have in mind, it would reveal any fact proving the defendant Heider was not the driver or operator of a truck of the removing defendant, at the time and place in question. If an investigation, such as the removing defendant concludes plaintiff should have made, would reveal a fact, to the effect, that defendant Heider was not in the employ of the removing defendant at the time and place in question, or some other similar fact, it should have so alleged in the petition for removal. A petition for the removal of a „cause from the State Court should set out the facts on which the right of removal is claimed, and not conclusions of the pleader. Carson v. Dunham, 121 U.S. 421, 7 S.Ct. 1030, 30 L.Ed. 992. The statement, contained in the instant petition for removal, is not analogous to the allegations of fact contained in the petition for removal, under the situation in Polito v. Molasky, 8 Cir., 123 F.2d 258, as conténded by the removing defendant.

For the reasons above stated, the motion to remand is sustained and this cause is remanded to the Circuit Court of Jackson County Missouri.