346 F.2d 424 (2nd Cir. 1965), 452, McFaddin Exp., Inc. v. Adley Corp.

Docket Nº:452, 29529.
Citation:346 F.2d 424
Party Name:McFADDIN EXPRESS, INCORPORATED, L & L Leasing Corporation and Louis DeBeradinis, Jr., Plaintiffs-Appellants, v. The ADLEY CORPORATION, Michael L. Adley, Donald A. Adley, Ralph J. Adley and Daniel J. Adley, Defendants-Appellees, and United States of America, Defendant.
Case Date:June 07, 1965
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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Page 424

346 F.2d 424 (2nd Cir. 1965)

McFADDIN EXPRESS, INCORPORATED, L & L Leasing Corporation and Louis DeBeradinis, Jr., Plaintiffs-Appellants,

v.

The ADLEY CORPORATION, Michael L. Adley, Donald A. Adley, Ralph J. Adley and Daniel J. Adley, Defendants-Appellees, and United States of America, Defendant.

No. 452, 29529.

United States Court of Appeals, Second Circuit.

June 7, 1965

Argued April 28, 1965.

Tobias Weiss, Stamford, Conn., for plaintiffs-appellants.

Joseph P. Cooney, Hartford, Conn. (John F. Scully, Hartford, Conn., of counsel), for defendants-appellees.

Before LUMBARD, Chief Judge, and WATERMAN and FRIENDLY, Circuit judges.

FRIENDLY, Circuit Judge.

In this action in the District Court for Connecticut between citizens of that state, plaintiffs sought to establish federal question jurisdiction under various

Page 425

sections of the Judicial Code, notably 28 U.S.C. §§ 1331, 1336, and 1337, see also 49 U.S.C. § 16(12). Judge Blumenfeld, in a well-reasoned opinion, 240 F.Supp. 791 (1965), decided that the effort had not succeeded and dismissed the complaint. We agree with his disposition.

The complaint alleged the making of two contracts, as of April 20, 1959, relating to McFaddin Express, Incorporated, a motor carrier holding a certificate from the Interstate Commerce Commission, and L & L Leasing Corporation, which leased equipment to it. One contract provided for the sale of all the stock of the two corporations to The Adley Corporation, also a certificated motor carrier; the other provided for temporary management and control of McFaddin and L & L by Adley for a period of 180 days from the effective date of an order of the ICC authorizing the contract 'or to such earlier or later date as shall be ordered by said Commission, and unless otherwise ordered by said Commission until a final order is made by said Commission' with regard to the sale. The contract of sale was subject to ICC approval of the management contract in accordance with 49 U.S.C. § 310a(b), and ultimate approval of the sale itself as required by 49 U.S.C. § 5. Appropriate applications were made to the ICC which, on May 21, 1959, issued an order, later extended, approving the temporary management contract. Serious disagreements occurred between the parties, federal tax liens on McFaddin's property were foreclosed, and McFaddin's service became largely dormant. In a report dated Oct. 15, 1963, the ICC denied approval, 93 M.C.C. 378, 1 and the management contract terminated in August, 1964.

The complaint charged, inter alia, that during the term of the management contract the defendants failed to pay current federal taxes and to comply with an agreement McFaddin had made for the discharge of past delinquencies; that at the time the contracts were made, defendants did not intend to comply with them in good faith; that they had mismanaged McFaddin and L & L, both deliberately and negligently, had diverted the former's business to their own account, had induced creditors to repossess assets of McFaddin, had appropriated assets of McFaddin and L & L, had terminated the employment of McFaddin's employees and hired some of them for Adley, had failed to segregate revenues or funds belonging to McFaddin and L & L, and had failed on the expiration of the management contract to return the property and business of McFaddin and L & L as the contract required. The first count of the complaint...

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