Ets-Hokin & Galvan, Inc. v. Maas Transport, Inc.

• Citation: 380 F.2d 258
• Decision Date: 11 July 1967
• Docket Number: No. 18628.,18628.
• Parties: ETS-HOKIN & GALVAN, INC., Appellant, v. MAAS TRANSPORT, INC., and B. L. Lawrence, d/b/a Lawrence Transportation, Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

380 F.2d 258 (1967)

ETS-HOKIN & GALVAN, INC., Appellant, v. MAAS TRANSPORT, INC., and B. L. Lawrence, d/b/a Lawrence Transportation, Appellees.

No. 18628.

United States Court of Appeals Eighth Circuit.

July 11, 1967.

Frank J. Magill, of Nilles, Oehlert, Hansen, Selbo & Magill, Fargo, N. D. for appellant.

Frank F. Jestrab, of Bjella, Jestrab, Neff & Pippin, Williston, N. D. for appellees. Fred C. Rathert, and Dean Winkjer, of Rolfstad, Winkjer, Suess & Herreid, Williston, N. D. were with him on the brief.

Before MEHAFFY and GIBSON, Circuit Judges and STEPHENSON, District Judge.

STEPHENSON, District Judge.

This action was instituted by Maas Transport, Inc. (Maas) against Ets-Hokin & Galvan, Inc. (Ets-Hokin) for transportation charges of $90,990.75 arising from services rendered by Maas from August 31, 1962 to March 5, 1963. B. L. Lawrence, d/b/a Lawrence Transportation (Lawrence) subsequently intervened in the lawsuit as a party plaintiff and joined Maas in seeking compensation of $90,990.75.¹ Jurisdiction exists by diversity of citizenship and involvement of the requisite jurisdictional amount. 28 U.S.C. § 1332. After a non-jury trial in the district court, pursuant to Federal Rule of Civil Procedure 52, judgment was entered in favor of Maas and Lawrence for the full amount sought.

During May 1962, Ets-Hokin contracted with the Air Force for the installation of approximately 1,500 miles of buried cable for the missile complex near Minot, North Dakota. This cable was manufactured in Bonham, Texas and then shipped to certain railheads near Minot. After obtaining the installation contract, Ets-Hokin entered into negotiations with various carriers for the purpose of obtaining an agreement concerning, primarily, the transportation of the cable from the railheads to the point of installation. Maas was one of the carriers involved in negotiations with Ets-Hokin at this time. Maas was ultimately awarded the cable transportation and, on August 31, 1962, the cable hauling was commenced. Maas continued to transport cable until March 5, 1963 when its services were terminated. The controversy herein arises out of a dispute as to the compensation to be awarded Maas and Lawrence for services performed during this period.² Maas contends that the transportation services were performed under an express oral contract providing for compensation in accordance with the hourly rate set forth in its intrastate tariff on file with the North Dakota Public Service Commission. On the other hand, Ets-Hokin denies the existence of such an express oral contract and further contends that even if such a contract existed, it would be illegal and unenforceable.

The trial court herein found that during the negotiations between Maas and Ets-Hokin regarding transportation services, the former submitted an oral offer to perform the desired transportation services at an hourly rate. The court further found that Ets-Hokin accepted this offer when it instructed Maas to commence hauling operations — thereby finding that an express oral contract based on an hourly rate of compensation existed between Maas and Ets-Hokin. In considering a trial court's factual determinations, due regard must be given to the opportunity of the trial court to evaluate the credibility of the witnesses. Such factual determinations should not be set aside on appeal unless the Court of Appeals determines that they are clearly erroneous. General American Life Ins. Co. v. Yarbrough, 360 F.2d 562 (8th Cir., 1966). After reviewing the record in this matter, the Court finds that there is substantial evidence supporting the trial court's determination that an express oral contract for transportation services existed between Maas and Ets-Hokin and that compensation was to be based on the hourly rate set forth in Maas' North Dakota intrastate tariff. The trial court's determination on this point is affirmed.

Ets-Hokin further contends that even if an express oral contract based on an hourly rate existed, it was illegal and thus unenforceable. Ets-Hokin premises its contention upon the fact that a three judge federal court previously rendered a decision that the truck movement of cable manufactured in Texas from the railheads located in North Dakota to the installation point near Minot, North Dakota was interstate commerce since the movement was a portion of the transportation of the cable from Texas to its ultimate destination. Great Northern Ry. v. Thompson, 222 F.Supp. 573 (D. N.D.1963). It is thus now apparent that Maas was engaged in interstate commerce in hauling the cable from the railheads to installation points.³ In this connection, the trial court found that Maas did not, "at the critical time, have or rely on any applicable interstate tariff." This finding is not disputed by Maas. It is thus obvious that in hauling the cable pursuant to its agreement with Ets-Hokin, Maas was in violation of federal laws governing interstate commerce. See 49 U.S.C. § 301 et seq. Ets-Hokin urges that this violation renders any express oral contract it may have had with Maas illegal and, thus unenforceable. We disagree.

A contract in violation of a statutory provision generally is void or illegal only if the legislative body enacting the statute evidences an intention that such contracts be considered void or illegal. See, e. g., McCullough Transfer Co. v. Virginia Sur. Co., 213 F.2d 440 (6th Cir. 1954); Macco Const. Co. v. Farr, 137 F.2d 52 (9th Cir. 1943); Guffey-Gillespie Oil Co. v. Wright, 281 F. 787 (8th Cir. 1922); Talco Capital Corp. v. Canaveral Int'l Corp., 225 F.Supp. 1007 (S.D. Fla.1964); 17 C.J.S. Contracts § 202 at p. 1007 (1963). Otherwise, even though the parties to a contract may be subject to a statutory penalty as the result of performing a contract, the contract itself remains in full force and effect. In the instant case, Maas was in violation of the Motor Carrier provisions of the Interstate Commerce Act when it transported cable under its contract with Ets-Hokin and was subject to penalties for such violations. The cable transportation contract itself, however, would be void, illegal or unenforceable only if Congress, in passing the Motor Carrier provisions of the Interstate Commerce Act, intended that contracts resulting in violations of that portion of the Act be illegal and void. A review of the statutory provisions involved herein reveals no congressional intention to make contracts in violation thereof void or illegal.⁴ The contract between Ets-Hokin and Maas was valid and enforceable.

Appellant further contends that:

"The court erred in the following conclusion of law (R. 491): `that by the terms of the contract, plaintiff\'s services were subject to termination by defendant at any time upon notice, and that any inefficiencies which might have existed in the plaintiff\'s performance under the contract were waived by knowingly acquiescing in the continued performance by plaintiff\' (This assigned error covers like errors in conclusions of law 3-6, R. 492.)⁵" Brief for appellant p. 55.

This being a diversity action, the law of North Dakota governs the estoppel issue. James Talcott, Inc. v. Associates Discount Corporation, 302 F.2d 443, 446 (8th Cir. 1962); Kelly Tire Service, Inc. v. Kelly-Springfield Tire Co., 338 F.2d 248 (8th Cir. 1964). In Rath v. Armour and Company, 136...