American Airlines, Inc. v. Louisville & Jefferson CAB
Citation | 269 F.2d 811 |
Decision Date | 18 September 1959 |
Docket Number | No. 13626-13628.,13626-13628. |
Parties | AMERICAN AIRLINES, INC., Trans World Airlines, Inc., Eastern Air Lines, Inc., Appellants, v. LOUISVILLE AND JEFFERSON COUNTY AIR BOARD, Appellee. |
Court | United States Courts of Appeals. United States Court of Appeals (6th Circuit) |
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Arthur W. Grafton, Louisville, Ky., Wilson W. Wyatt and Gordon B. Davidson, Louisville, Ky., of counsel; Wyatt, Grafton & Grafton, Louisville, Ky., on brief, for appellants.
T. Kennedy Helm, Jr., Louisville, Ky., James W. Stites, Louisville, Ky., of counsel; Stites, Wood, Helm & Peabody, Louisville, Ky., on brief, for appellee.
Before MARTIN, Chief Judge, SIMONS, Circuit Judge, and MATHES, District Judge.
These joint appeals are from like judgments of the District Court in separate actions for declaratory judgment 28 U.S.C. §§ 2201, 2202, entered upon orders sustaining motions of appellee Air Board for a summary judgment, decreeing that three substantially identical lease agreements covering facilities at the Louisville, Kentucky airport, executed in 1947 between appellee Air Board and appellant Airlines, "terminated and became no longer effective October 31, 1957"; also from like interlocutory orders in each action denying motions of appellant airlines to stay proceedings and order arbitration pursuant to §§ 3 and 4 of the Federal Arbitration statute 9 U.S.C. §§ 3 and 4, 61 Stat. 669 (1947).
Although other claims to relief are asserted by appellee Air Board as plaintiff in the District Court, they are not the subject of the present appeals, the District Judge having made an "express determination that there is no just reason for delay" and having directed entry of final judgment in each case, as permitted by Rule 54(b) Fed.R.Civ.P. 54 (b), 28 U.S.C., solely on the Air Board's claim for a declaration that the leases in question had terminated. Appellate jurisdiction as to the summary judgments so entered on only one of the Air Board's multiple claims is invoked under § 1291, and as to the interlocutory orders under § 1292(1), of the Judicial Code. 28 U.S. C. §§ 1291 and 1292(1); see: Shanferoke Coal & Supply Corp. of Delaware v. Westchester Service Corp., 1935, 293 U.S. 449, 55 S.Ct. 313, 79 L.Ed. 583; Hoover Motor Express Co. v. Teamsters, etc., 6 Cir., 1954, 217 F.2d 49, 51.
Each of three actions was originally commenced by the filing of a "Petition for a Declaration of Rights" under Kentucky's declaratory relief statute K.R.S. Chapter 418, in the Chancery Branch of the Jefferson Circuit Court at Louisville in the State of Kentucky, and thereafter removed from the State court upon petitions of appellant airlines under 28 U.S.C. § 1441 on the ground of diversity of citizenship. 28 U.S.C. § 1332; see: 28 U.S.C. § 2201; Skelly Oil Co. v. Phillips Petroleum Co., 1950, 339 U.S. 667, 671-672, 70 S.Ct. 876, 94 L.Ed. 1194. Following removal, the Air Board sought to remand the cases to the State court on the ground that "this declaratory judgment action involves a fundamental question of state policy requiring interpretation of a Kentucky statute which can be fully determined in the State Courts", but the motions to remand were overruled by the District Court.
Appellant airlines then made their answers to the Air Board's petition, with a counterclaim in each case seeking not only a declaration of rights, but also coercive relief by way of specific performance of the renewal provisions of the lease agreements in question. Appellee Air Board thereupon moved in each case for a summary judgment declaring that "the airport agreement terminated on October 31, 1957", and appellant airlines moved to stay the proceedings and compel arbitration. It is the District Court's "Order and Judgment" granting the former and denying the latter motion in each of the three cases which serves as the basis for these joint appeals.
The facts essential to decision are not in dispute and are fairly set forth in the findings of the District Court, as follows 160 F.Supp. 772:
The District Court declared in a memorandum opinion that the arbitration provisions of the leases were invalid and unenforceable because "the Air Board was without authority to contract to delegate to arbitrators its public and discretionary duty to fix rentals for the use of the facilities of the airport." The memorandum opinion concludes: "Having reached the conclusion the arbitration provisions of the leases are unenforceable and void and the Airlines are not entitled to specific performance of the void covenants of their leases, it is not necessary to consider the question of whether or not the establishment of renewal rentals is an arbitrable issue."
The leases were hence declared terminated as of the end of the original ten-year term on October 31, 1957, for lack of agreement by the parties as to an essential provision of the renewal term, namely, the rental fees and other charges to be paid by appellant airlines for facilities at Louisville airport during the forthcoming ten-year period.
Although the leases evidence "a transaction involving commerce among the several states", thus bringing the Federal arbitration statute into play see 9 U.S.C. §§ 1-14, 61 Stat. 669 (1947), the validity and enforceability of the renewal provisions, including those as to arbitration, were determined by the District Court in accordance with Kentucky law. On these appeals there is presented at the outset, then, the problem whether Federal or State law governs.
However, it should first be noted that above-quoted Article XIX of the lease agreements declares that "any controversy or claim arising out of or relative to the arbitration provisions * * * of this agreement * * * shall be settled by arbitration in accordance with Chapter 417 of the Kentucky Revised Statutes * * *." Although Chapter 417 includes provisions as to the validity and enforceability of agreements to arbitrate, appellant airlines in their briefs take the position that Chapter 417 "is merely to govern * * * procedure", and not "validity or enforceability." Moreover, appellee Air Board apparently acquiesces in this interpretation of the contractual language. Hence we need not now confront the interesting question whether parties to an arbitration agreement "evidencing a transaction involving commerce * * * among the several states" 9 U.S.C. §§ 1 and 2 may by mutual agreement waive the benefits of the Federal law insofar as validity and enforceability are concerned, and choose instead State law more to their liking.
The Federal arbitration statute, 9 U.S.C. §§ 1-14, 61 Stat. 669 (1947), was enacted in exercise of the Congress' plenary power over interstate commerce. U.S.Const. Art. I, § 8, clause 3; 9 U.S.C. §§ 1 and 2; cf. Bernhardt v. Polygraphic Company, 1956, 350 U.S. 198, 76 S.Ct. 273, 100 L.Ed. 199; Jackson v. Kentucky River Mills, D.C.E.D.Ky. 1946, 65 F.Supp. 601. Within the scope of the statute circumscribed by the Constitution, Federal law is of course paramount under the Supremacy Clause, and State law must give way. Kentucky River Mills v. Jackson, 6 Cir., 1953, 206 F.2d 111, 117, 47 A.L.R.2d 1331; Jackson v. Kentucky River Mills, supra, 65 F.Supp. at page 603; see Note, ...
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