Bean v. Piedmont Interstate Fair Association

• Decision Date: 14 April 1955
• Docket Number: No. 6939.,6939.
• Citation: 222 F.2d 227
• Parties: John BEAN, Appellant, v. PIEDMONT INTERSTATE FAIR ASSOCIATION, Appellee. In the Matter of John Bean, Plaintiff, v. Piedmont Interstate Fair Association, Defendant, and Piedmont Interstate Fair Association, Third Party Plaintiff, v. Fireworks Corporation of America, a corporation, Jack Kochman and Jack Kochman, Inc., a corporation, Third Parties Defendants. C. A. 1268.
• Court: U.S. Court of Appeals — Fourth Circuit

222 F.2d 227 (1955)

John BEAN, Appellant, v. PIEDMONT INTERSTATE FAIR ASSOCIATION, Appellee.

In the Matter of John Bean, Plaintiff, v. Piedmont Interstate Fair Association, Defendant, and Piedmont Interstate Fair Association, Third Party Plaintiff, v. Fireworks Corporation of America, a corporation, Jack Kochman and Jack Kochman, Inc., a corporation, Third Parties Defendants. C. A. 1268.

No. 6939.

United States Court of Appeals Fourth Circuit.

Argued March 14, 1955.

Decided April 14, 1955.

Edwin W. Johnson, Spartanburg, S. C. (John C. Williams, Greenville, S. C., and Warren Justice, Spartanburg, S. C., on brief), for appellant.

Thomas B. Butler, Spartanburg, S. C. (Robt. F. Chapman, Spartanburg, S. C., on brief), for appellee.

Carlisle, Brown & Carlisle, and J. Hertz Brown, Spartanburg, S. C., on brief, for Jack Kochman and Jack Kochman, Inc., third parties-defendants.

Before SOPER and DOBIE, Circuit Judges, and STERLING HUTCHESON, District Judge.

SOPER, Circuit Judge.

This case, now on its second appeal, was brought by John Bean, a citizen of North Carolina, against Piedmont Interstate Fair Association, a South Carolina corporation, on account of injury sustained in an explosion of fireworks at a fair conducted by the defendant at Spartanburg, South Carolina. Various proceedings were taken in the District Court which are described in some detail in our opinion on the earlier appeal, 209 F.2d 942. The Fair Association moved to dismiss the complaint on the ground that it is a charitable corporation, immune from liability for tort under the laws of South Carolina; and while decision on this motion was withheld in the expectation of a controlling decision in another case by the Supreme Court of South Carolina, the Fair Association filed a third party complaint against certain non-residents, alleging that they were in charge of the display of fireworks and that they were bound to indemnify the Fair Association, if it should be held to be liable to the plaintiff. The third parties defendant were summoned and filed answers denying liability.

Subsequently other motions were filed, including a motion of the third party defendants to dismiss the third party complaint on the ground that it failed to state a legal claim for relief, and a motion of the plaintiff to dismiss his complaint without prejudice, both of which the court granted. On appeal to this court we held that the propriety of the order permitting the plaintiff to dismiss his complaint without prejudice and at the same time dismissing the third party complaint for the reasons stated could not be determined on the facts before us until certain interrogatories theretofore filed in the District Court had been answered, and certain discovery proceedings had been had. The case was therefore remanded to the District Court for further proceedings.

Upon remand the Fair Association renewed the defense set up in its motion to dismiss and also in its answer, that it is a charitable corporation, and also filed a supplemental motion to dismiss on the ground that the plaintiff was an employee of the Fair Association and hence if it had any liability to him by reason of the explosion, the matter was governed by the Workmen's Compensation Act of South Carolina and the rights and liabilities of the parties were within the exclusive jurisdiction of the Workmen's Compensation Commission and beyond the jurisdiction of the District Court. The plaintiff on his part moved to strike the defenses of contributory negligence and assumption of the risk set up in the defendant's answer on the ground that the defendant came within the terms of the Workmen's Compensation Act of the State but had failed to comply with its requirements, and was therefore subject to suit at common law in which the defenses of contributory negligence and assumption of the risk would not be available. After further hearing the District Judge granted the motion of the Fair Association to dismiss on both grounds therein set out and, having reached these conclusions, found it unnecessary to pass on the plaintiff's motion to strike the defenses as above described. 124 F.Supp. 385.

The material in the record bearing on the corporate character of the Fair Association is contained in the charter and bylaws of the corporation, the allegations of the complaint, and in a lease between the corporation and the City of Spartanburg. The charter purports to be issued under § 8158 to § 8168 of Article 3 of the South Carolina Code of 1942, now § 12-751 to § 12-765 of the Code of 1952. These statutes authorize the Secretary of State to issue certificates of incorporation to any church, college, school, lodge, society, company or other association having no capital stock divided into shares, but holding or desiring to hold property in common for religious, educational, social, fraternal, charitable or eleemosynary purposes other than for the insurance of life, health, accident or property. § 8158. Notice must be published by the Association desiring to be incorporated in one or more newspapers and a written declaration must be filed in the office of the Secretary of State, giving the names of the incorporators and the purposes of the proposed corporation, and the Secretary of State is authorized to refuse to issue the charter if he has reason to suspect that the Association will be operated in violation of the law. § 8159. Such a corporation has the power amongst others to make contracts, sue and be sued, to hold property and make bylaws: § 8161; and no irregularity in complying with the provisions of the statutes shall be held to vitiate the incorporation until a direct proceeding to annul the charter is instituted by the proper authorities of the State. § 8162.

The petition for incorporation and the certificate of incorporation of the Fair Association contained in effect the following allegations: The organization holds property in common for religious, educational, social, fraternal, charitable or other eleemosynary purposes. It is not organized for profit or gain to the members, nor for the insurance of life, health, accident or property; the purpose of the corporation is to operate a fair association for the education, refinement and betterment of the people at large. The bylaws repeat the statement as to the object and purpose of the corporation and in addition contain the statements that the enterprise is the maintenance in the counties of Spartanburg, Union, Cherokee and Laurens in South Carolina, and Polk and Rutherford Counties in North Carolina, of public fairs, expositions, race meets, entertainments and exhibitions; and sales of livestock, farm products, textile products, and machinery; the encouragement of dairying and livestock production; agricultural, horticultural, and industrial pursuits; the operation of a public amusement park; and the education, refinement and betterment of the people at large. The members are those who appear on the books as the holders of one or more memberships, who are allowed to vote at meetings by person or by proxy. The business and property of the Association are managed by a Board of Directors, who consist of the State Senators and County Agents of each of the above named counties, and also of one director for each 10,000 population from each of said counties.

The bylaws further provide that no dividend shall be paid to members in money and no member of the Association shall ever participate in any earnings or profits, all of which are to be used to further the purposes of the exposition, but each member is entitled to receive not less than two nor more than five tickets for general admission to the fair grounds. Certificates of membership may be sold, assigned or pledged by endorsement and delivery.

The lease between the Fair Association and the City grants to the Fair Association a tract of land in the City known as the Spartanburg Fair Grounds, with all the buildings thereon, for the term of ten years, at the rental of one dollar; and the Fair Association agrees to furnish a list of stockholders, officers and directors each year, and also to furnish a financial statement each year and to use so much of the funds derived from operations for the maintenance of the property and the race track as the receipts may warrant. The City reserves the right to use the grounds and facilities and to establish suitable athletic fields for the public as may be deemed necessary by the City Council. The City agrees to hold the Fair Association harmless on account of any claim for damages to persons or property during the time the City is using the premises, and in like manner the Fair Association agrees to hold the City harmless on account of claims resulting from the use of the premises by the Fair Association. The lease also provided that only the officers receiving salary or wages shall be paid out of the funds derived from the proceeds of the fair and other events staged by the Association; and if at any time the Association ceases to exist and operate as an eleemosynary corporation and ceases to foster those things such as agriculture, horticulture, industry, domestic arts and sciences, and public instruction in those matters, and entertainment usually conducted at fairs, the lease shall become null and void at the option of the City. The Association binds itself in the event of such a termination of the lease to pay all outstanding claims and reimburse the stockholders for the amount paid into the Association by them, provided the funds are sufficient for this purpose, and thereafter to turn the remaining assets of the Association over to the City. The original lease has been extended so as to expire on August 4, 1972.

The allegations of the complaint, which under the motion to dismiss must be taken as true, contain in effect the following statement: The corporation has issued capital stock in the amount of $18,690 in the form of 948 shares at $20 each. It annually...