Air Leases, Inc. v. Baker

• Decision Date: 07 November 1958
• Docket Number: Civ. A. No. 1388.
• Citation: 167 F. Supp. 145
• Parties: AIR LEASES, INC., Plaintiff, v. William A. BAKER, Defendant.
• Court: U.S. District Court — Western District of Arkansas

167 F. Supp. 145

AIR LEASES, INC., Plaintiff, v. William A. BAKER, Defendant.

Civ. A. No. 1388.

United States District Court W. D. Arkansas, Fort Smith Division.

November 7, 1958.

D. L. Grace, C. R. Barry, James L. Langston, Ft. Smith, Ark., for plaintiff.

Daily & Woods, Ft. Smith, Ark., for defendant.

JOHN E. MILLER, Chief Judge.

As originally filed on December 12, 1957, this case was one by International Aircraft Maintenance Co., a California corporation, and Air Leases, Inc., a Nevada corporation, against Orion Air Transport, Inc., an Arkansas corporation, the First National Bank of Fort Smith, Arkansas, and a number of individuals, citizens and residents of Arkansas, including the present defendant, William A. Baker.

The International Aircraft Maintenance Co. alleged that Orion Air Transport, Inc., was indebted to it in the sum of $2,339.96 for maintenance and repairs on a certain airplane.

Air Leases, Inc., alleged that Orion Air Transport, Inc., was indebted to it in the sum of $13,532.09, under a lease agreement executed on the 31st day of October, 1953.

There were no allegations in the complaint of a claim against the present defendant, William A. Baker, and the other individuals, and apparently the present defendant, William A. Baker, was made a party defendant in an effort to fix the liability against the First National Bank of Fort Smith. No allegations or claims against the other individual defendants appear in the complaint other than the allegation that they were stockholders and officers of Orion Air Transport, Inc.

On December 24, 1957, the First National Bank of Fort Smith filed its separate answer, and on the same date the individual defendants, including the present defendant, William A. Baker, filed a motion to dismiss the complaint for failure to state a claim upon which relief could be granted. While the motion to dismiss filed by the individual defendants was pending, discovery depositions were taken by plaintiffs but not filed herein.

On May 7, 1958, upon application of Air Leases, Inc., the court granted leave to it to file an amended complaint, which was filed the same day. Also, on the date the amended complaint was filed, an order was entered dismissing the original complaint of International Aircraft Maintenance Co. for lack of jurisdiction. By the same order the original complaint of Air Leases, Inc., against Orion Air Transport, Inc., the First National Bank of Fort Smith, and the other individual defendants, except William A. Baker, was dismissed. Thus, after May 7, 1958, the only claim that was pending was the amended complaint of the present plaintiff, Air Leases, Inc., against the defendant, William A. Baker.

On May 24, 1958, the defendant, William A. Baker, filed his answer to the amended complaint, and on September 11, 1958, the said defendant, pursuant to Rule 56, Fed.Rules Civ.Proc., 28 U.S. C.A. filed his motion for summary judgment on the ground that there was no genuine issue as to any material fact, and that he was entitled to a judgment in his favor as a matter of law. The motion was based upon (a) the pleadings, exhibits, and other records in the case; (b) the affidavit of William A. Baker, together with its exhibit; and (c) defendant's brief in support of the motion. The brief in support of the motion for summary judgment was served upon the attorneys for the plaintiff, Air Leases, Inc., on September 10, 1958. Under Local Rule 8 the attorneys for plaintiff had ten days in which to file their answer brief, but on September 18 they requested and were allowed fifteen days additional time in which to file brief in opposition to the motion for summary judgment.

The plaintiff did not file any brief in opposition to the motion for summary judgment, but, in an effort to avoid the impact of the motion, on October 6, 1958, filed the motion for leave to file a second amended complaint, and as grounds therefor alleged:

"That in his answer to plaintiff's amended complaint filed May 7, 1958 herein the defendant for the first time presented a new defense to plaintiff's cause of action, in that, plaintiff pleaded the Arkansas Statute of Limitations in bar of plaintiff's action. That in order to meet this new issue presented to the court by the defendant, plaintiff finds it necessary to file its amended complaint which is herewith tendered to the court."

Thus, there are before the court the motion of defendant, William A. Baker, for summary judgment on the record as it existed on September 11, 1958, and the motion of plaintiff for leave to file the second amended complaint.

Prior to the filing of the motion for summary judgment there remained in the record only the amended complaint filed on May 7, 1958, and the answer of the defendant. The amended complaint alleged that the plaintiff was, at all times material, engaged in the business of leasing airplanes as lessor to lessees who operated the same for hire, and that the defendant was the president and a director of Orion Air Transport, Inc., an Arkansas corporation; that on October 31, 1953, the plaintiff and Orion Air Transport, Inc., entered into a lease contract in which plaintiff leased to Orion Air Transport, Inc., a certain airplane for the monthly rental of $5,000; that Orion Air Transport, Inc., had failed to pay all of the rental and that Orion Air Transport, Inc., was indebted to plaintiff in the sum of $13,532.09.

That on October 19, 1953, prior to the execution of the lease by plaintiff and Orion Air Transport, Inc., the defendant wrote a letter to plaintiff, in which he advised plaintiff that he had in his possession the sum of $14,600 in cash belonging to said corporation, and that these funds would be held by said corporation for the purpose of paying the first and last month's rental on said airplane, totaling $10,000; that said letter constituted the sole and only information plaintiff had as to the financial responsibility of the lessee corporation, and plaintiff relied upon the assurances, representations and promises of the defendant in entering into said lease contract, and would not have entered into the same but for the assurances, representations and promises made to it in said letter by the defendant. The plaintiff attached to the complaint a copy of the letter which, omitting the formal parts, is as follows:

"This will confirm our telephone conversation regarding lease of an airplane from your company to Orion Air Transport, Inc.

"Orion Air Transport is newly incorporated, and has not yet elected its officers, which will be done tomorrow so that by the time we receive a copy of the lease there will be officers qualified to execute it. Meanwhile, this is to assure you that $30,000.00 stock has been subscribed, and that I hold at the present time $14,600.00 in cash deposited with this bank which will be transferred to the Corporation at its organization meeting tomorrow, and that these funds are for the purpose of paying the first and last months' rental totaling $10,000.00 on the proposed aircraft lease, subject of course, to issuance of an operating certificate by the CCA and approval of Form 518 by the CAA and issuance of a membership in Air Coach Transportation Association.

"I hope the foregoing is what you require prior to execution of the lease by the competent officers of Orion Air Transport, Inc. As soon as we receive the lease we will try to see that it is approved and executed without delay."

The plaintiff further alleged:

"Plaintiff charges that by the false promises, assurances and representations and by the concealment and deception hereinbefore set out it was defrauded by defendant, all to its loss in the sum of $13,532.09.

"That the defendant became and was during its entire corporate existence the president of said corporation and was during all of said time a director of said corporation, and that by virtue of said office he was the chief managing officer of said corporation, and that as Vice-President of the First National Bank of Fort Smith, Arkansas, the bank which was the depository of said corporation, he was in a position to know and is charged with the knowledge of the disposition of the funds of said corporation, but that in violation of the assurances, representations and promises of the said defendant that the sum of $5,000.00 would be held by said corporation in cash for the payment of the last month's rental on said airplane, the defendant permitted and participated in the dissipation of said funds without notice to or knowledge of the plaintiff."

In paragraph 4 of the amended complaint the plaintiff alleges that the defendant became liable to it when Orion Air Transport, Inc., was dissolved by taking charge of and converting all of its assets.

The prayer of the amended complaint is that plaintiff recover the sum of $13,352.09 as the amount due for the rental of the airplane, and in the alternative that plaintiff recover of the defendant the sum of $5,000 on account of the false and fraudulent assurances, promises and representations by which plaintiff was induced to lease its airplane to said corporation....