American Aeronautics Corp. v. Grand Central Aircraft Co.
| Decision Date | 08 November 1957 |
| Citation | 155 Cal.App.2d 69,317 P.2d 694 |
| Court | California Court of Appeals Court of Appeals |
| Parties | AMERICAN AERONAUTICS CORPORATION, Plaintiff and Appellant, v. GRAND CENTRAL AIRCRAFT CO., a corporation; P. A. Johnson, S. Carpenter and L. A. Keithley, Defendants, Grand Central Aircraft Co., a corporation, Respondent. GRAND CENTRAL AIRCRAFT CO., a corporation, Plaintiff and Respondent, v. AMERICAN AERONAUTICS CORPORATION, Gordon Strube, Charles Frankel and Milton Cunha, Defendants, American Aeronautics Corporation, Appellant. Civ. 22170. |
N. E. Youngblood, Beverly Hills, for appellant.
Latham & Watkins, Ira M. Price II, John S. Welch, Los Angeles, for respondent.
Appeal from a judgment rendered in two consolidated actions. There was one set of findings and one judgment applicable to the two actions. American Aeronautics Corporation is plaintiff and cross-defendant in action 634602 and defendant and cross-complainant in action 637534. Grand Central Aircraft Co. is defendant and cross-complainant in action 634602 and plaintiff and cross-defendant in action 637534. The judgment was adverse to American in both actions and it appeals.
The complaint is in two counts: the first seeks recovery of an F-51D type aircraft; the second is for damages for detention of the aircraft. Grand Central answered, alleging a possessory right to the aircraft based on a lien for labor performed and materials furnished under the terms of an oral agreement with American embodied in a written contract. Grand Central cross-complained, alleging an oral agreement with American for reconstruction and assembly of two F-51D aircraft on a time and material basis; that the agreement was later reduced to writing; and that completion of work on one of the aircraft and prevention of completion of work on the other was due to failure of American to deliver necessary parts and notice from American to cease work. Grand Central prayed for a declaration of its right to possession of both aircraft, pending payment for labor performed and materials furnished, and also for damages. American answered the cross-complaint, admitted the making of an oral agreement, alleging it was for the reconstruction and assembly of two aircraft at an estimated contract price with an agreed maximum and a fixed delivery date, and that it refused to execute the written contract on the ground it did not conform to the oral agreement.
About July 12, 1954 Major Cerruto, representing the Republic of Bolivia, contacted Strube, president of American, with respect to the purchase by Bolivia of one F-51D fighter plane and one F-51D dual trainer. About a week later Cerruto and Strube agreed on prices. On July 26 Strube contacted Keithley, manager of operations of Grand Central, and told him American wanted Grand Central to build the planes by overhauling miscellaneous components and materials in the possession of American, and that he wanted a firm price on the job. Keithley told Strube he would take it up with Grand Central's management and contact him.
On July 27 Keithley met with Strube and Cunha of American. Keithley made a tour of American's shop and inspected parts to be used in construction of the planes. The engines were not there. Keithley told Strube he would not give him any fixed or ceiling price on the job; and that Grand Central would take the job on a time and material basis at $4.15 an hour for labor, and at cost plus 10 per cent for materials furnished by Grand Central. Strube stated the engines he had were new and would require only a top overhaul. Keithley told Strube that about 35 working days would be required to construct the fighter. There was no talk about a delivery schedule on the trainer.
On July 28 Keithley met with officials of American and checked various parts proposed to be used in construction of the planes. On July 29 Keithley wrote American 'that on the basis of our investigation of July 28, 1954 we have found you to be in possession of the components and assemblies which will allow the complete build-up of two (2) F-51D type aircraft.'
On July 29 Strube, Frankel, and Cunha of American met with Johnson, general manager of Grand Central, Keithley, and Carpenter, secretary-treasurer of Grand Central. Strube said he was going to put the job in Grand Central's hands. Johnson said Grand Central would take the job on a time and material basis at $4.15 an hour for labor, and it would furnish materials at cost plus 10 per cent. Strube said that was satisfactory. Keithley said Grand Central would be able to construct the fighter in 35 working days provided it was given the materials and the trainer would be delivered on receipt of the parts and a conversion kit as soon as possible after completion of the fighter.
Frankel and Carpenter left the July 29 meeting and went to Carpenter's office 'to arrange a contract.' Carpenter told Frankel Grand Central's regular contracts were time and material contracts and the rate would be $4.15 an hour with premium time for overtime, and materials furnished would be at cost plus 10 per cent, and Grand Central would require a deposit before starting work. Frankel said that would be satisfactory, and a deposit of $4,000 was agreed to. Carpenter told Frankel he would give him a memorandum and prepare a contract.
On July 30 Carpenter wrote Strube the $4,000 deposit would be made on delivery of the parts; further payments of $4,000 would be made each week starting August 9, 1954 until completion of the work; and Strube did not reply.
American delivered parts to Grand Central on July 31. Grand Central began the work on August 2, 1954. Somewhere between '7 to 14' days later Carpenter prepared a typewritten draft of a contract and submitted it to Frankel who took it with him. Somewhere 'around the 20th or 25th' of August, 'closer to the 25th,' Frankel took the draft to Carpenter and requested changes. Carpenter said he would make the changes and submit the contract to Frankel. Carpenter testified Frankel said 'with the changes, why, they would approve it, sign it.' Carpenter then drew a formal, typewritten contract making the changes, signed copies of it on behalf of Grand Central, and about August 30 advised Frankel it was ready. Several days later Cunha picked it up. In a few days Carpenter called Frankel and asked that the proposed contract be returned, signed. Frankel said Strube was out of town and as soon as he got back 'we would get the contract signed.' Around September 10, 15, 20, or 22 Carpenter again asked Frankel to have the proposed contract signed and sent over. Carpenter testified Frankel said it would be signed and sent over. Frankel testified he told Carpenter American would not sign it because it 'still did not comply with the original understanding that we had in our meeting with he and Mr. Johnson on the 30th of July.
'Q. What did he say? A. He said that it was necessary for them to have a signed contract and that I should overlook any difference that we might have at this time in view of the fact that the work was so far in progress, and sign this draft of the contract.
Carpenter testified:
'Q. Did Mr. Frankel ever tell you that he wouldn't sign Plaintiff's Exhibit No. 9 [the proposed contract] or any copy thereof? A. Not that I recall.
'Q. Would you say he did not tell you? * * *
'The Witness: I don't recall that he stated he would never sign it. * * *
'Q. What did Mr. Frankel say to you and you to him about the execution of this contract at that time? A. I asked him to execute the contract.
'Q. What did he say? A. He said that he would.
'Q. He said that he would? A. Yes.
'Q. Is that the way he stated it? A. He said that substantially. He didn't say that he wouldn't.
'Q. Wait a minute. Which did he say? Did he say, 'I will sign it,' or did he say, This was the last conversation Carpenter had with Frankel regarding the proposed written contract.
The proposed written contract was never signed by American or by anyone on behalf of American. Both the draft and the proposed contract contained a provision that in the event it became necessary for Grand Central by action to enforce the collection of any sum 'under this contract, Aeronautics' would pay all necessary expenses including court costs and reasonable attorneys' fees that Grand Central might incur in the event it was awarded judgment.
Grand Central continued to perform the work. On intermittent dates, beginning August 2, 1954 to and including September 18, 1954, all the work performed by Grand Central was authorized by a representative of American on a Grand Central form. On each authorization, except those for overtime and for a few pieces of equipment, there was the notation, 'T & M Labor $4.15 per hour, Material at cost plus 10%.' There were eleven authorizations for overtime work; one of them read: '(Subject to final settlement with Mr. P. A. Johnson) (per previous conversation between Mr. Frankel and Mr. P. A. Johnson)'; three of them read, 'Signed under protest.' The authorizations were prepared by a representative of Grand Central.
There were frequent shortages of parts and delay in delivery of parts by American. These were reported to it. Some needed parts which American had agreed to furnish were never furnished but had to be fabricated or otherwise supplied by Grand Central. Strube was told that unless various...
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