Ingalls Iron Works Company v. Ingalls, Civ. A. No. 7651

• Decision Date: 18 August 1959
• Docket Number: Civ. A. No. 7651,8450.
• Citation: 177 F. Supp. 151
• Parties: INGALLS IRON WORKS COMPANY, Plaintiff, v. Ellen Gregg INGALLS et al., Defendants. INGALLS IRON WORKS COMPANY, Plaintiff, v. Ellen Gregg INGALLS, Defendant.
• Court: U.S. District Court — Northern District of Alabama

177 F. Supp. 151

INGALLS IRON WORKS COMPANY, Plaintiff, v. Ellen Gregg INGALLS et al., Defendants.

INGALLS IRON WORKS COMPANY, Plaintiff, v. Ellen Gregg INGALLS, Defendant.

Civ. A. Nos. 7651, 8450.

United States District Court N. D. Alabama, S. D.

August 18, 1959.

COPYRIGHT MATERIAL OMITTED

Charles W. Greer, Harvey Deramus and Harvey Elrod, of Deramus, Fitts & Johnston, and Donald W. Strickland, Birmingham, Ala., for plaintiffs.

Lange, Simpson, Robinson & Somerville, James A. Simpson, and Reid B. Barnes, Birmingham, Ala., for defendants.

William K. Murray, Birmingham, Ala., for intervenors, Elesabeth Ingalls and Barbara Gregg Ingalls.

Spain, Gillon & Young, Birmingham, Ala., for Hamilton Nat. Bank, trustee, intervenor.

GROOMS, District Judge.

The Court, having heretofore entered its Findings of Fact, Conclusions of Law, and Interlocutory Judgment, and having this day rendered its final decree herein, deems it appropriate to state its views of the applicable legal principles involved.

Propriety of Procedure Employed

The Ingalls Iron Works Company, "respondent" to the consolidated petitions of Ellen Gregg Ingalls and James A. Simpson as Executors (defendants and counterclaimants in Civil Action No. 7651) and of Ellen Gregg Ingalls in her individual capacity (defendant and counterclaimant in Civil Action No. 8450), challenges the jurisdiction, authority and power of this Court to entertain a proceeding in these two pending original actions to enforce a written agreement of compromise and settlement, entered into in open court between the parties to both said actions, deposited with the Court as evidencing an agreement of compromise and settlement having for its purpose the final termination of both of said actions, and providing that this Court should at the instance of either party fix and determine the time for performance of said agreement. Ample authority is found not only for entertaining a proceeding in the original action to enforce an agreement for compromise and settlement of the subject matter of such action, but also for the more simple procedure of a motion or petition to effectuate such enforcement; 15 C.J.S. title Compromise and Settlement § 48, page 770, citing authorities: McKenzie v. Boorhem, D.C.W. D.Ark., 117 F.Supp. 433; Beirne v. Fitch Sanitarium, D.C.S.D.N.Y., 167 F. Supp. 652.

It is further observed that the proceeding in general conforms to Rule 15(d) of the Federal Rules of Civil Procedure, 28 U.S.C.A., conferring the power to allow supplemental pleading in order to assert a right occurring subsequent to the filing of the original action. This procedure has ample precedent in Federal practice, even antedating the adoption of the present Federal Rules.

Perhaps the leading Supreme Court case on the matter is Knott v. Chicago, etc. Railroad Co., 1912, 230 U.S. 474, 33 S.Ct. 975, 978, 57 L.Ed. 1571. The Court, in the first paragraph of the opinion of Mr. Justice Hughes, said:

"The contention of the appellants that the court erred in permitting the filing of the amended and supplemental bills is without merit. Although the commodity rate act of 1907 repealed that of 1905, it saved the penalties and liabilities incurred under the repealed statute. Both the original and supplemental bills proceeded upon the broad ground that the returns of the companies from their intrastate business, prior to the act of 1905, were unreasonably low, and that any reduction in rates would only diminish the income, already inadequate. The additional legislation pending the suits, and the substitution of slightly higher rates on certain commodities embraced in the earlier act, did not alter the essential features of the controversy. There was identity of parties and subject-matter, although nominally different acts were involved. To have required original bills would have involved double litigation, double costs, and great delay. The ends of justice were advanced by allowing the amended and supplemental bills, and we are not inclined to interfere with the reasonable discretion of the trial judge in a matter of practice which in no way violated any of the substantial rights of the appellants."

The defendants and counterclaimants in the two original actions were granted leave to seek enforcement of the contract of settlement by petition. As to the propriety of such a petition as ancillary to the jurisdiction in the original action, 15 C.J.S. Compromise and Settlement § 48, page 770, has this to say in part:

"A compromise agreement ordinarily may be enforced by petition or motion in the original action asking for such enforcement, and if the agreement is filed with the papers in the cause, no further pleading would seem to be necessary, unless, perhaps, some fact affecting the decree to be rendered may have occurred after the agreement was executed. Where, pending a suit in equity, an agreement of settlement is made, defendant may obtain a rule to compel plaintiff to enter satisfaction of record on defendant's performance of the agreement, and such rule is not in effect a bill for specific performance, so as to make applicable the principle that a decree will not be entered in such case if it would be unconscionable to do so."

Especially apt is a quotation from the Pennsylvania case of Melnick v. Binenstock, 318 Pa. 533, 179 A. 77, 78, cited in the note under the above-quoted excerpt from 15 C.J.S.:

"A compromise or settlement of litigation is always referable to the action or proceeding in the court where the compromise was effected; it is through that court the carrying out of the agreement should thereafter be controlled. Otherwise the compromise, instead of being an aid to litigation, would be only productive of litigation as a separate and additional impetus."

Federal decisions have approved such a procedure. In McKenzie v. Boorhem, 117 F.Supp. 433, supra, the suit was filed in the District Court seeking to enforce certain contract rights. After the filing thereof the plaintiff by a motion in the same action sought enforcement of an oral agreement between counsel on both sides for a settlement of the litigation and for judgment accordingly. It was contended in behalf of the defendant in opposition to such motion that there was a lack of authority in the attorney for the defendant to settle the matter and also that no settlement had actually been reached. The Court found the facts against the defendant on both issues and entered a judgment for the enforcement of the agreement. The oral agreement contemplated not only the payment of money, but the transfer of stock to the plaintiff. Under the oral agreement the case was to be dismissed, but, the defendant refusing to perform, the Court entered a judgment against him. There is nothing in the opinion which shows even that the agreement was made in the presence of the Court or that by its terms it was to be made a part of the court record. Nevertheless, the trial court enforced its performance by judgment as a means of effecting an end to the litigation.

In Beirne v. Fitch Sanitarium, 167 F. Supp. 652, 653, supra, a personal injury action against several defendants was involved. While the case was awaiting trial the parties reached an agreed settlement as the result of considerable negotiation. A written stipulation was filed, signed by all of the attorneys, settling the entire litigation. The Court, in its opinion, noted:

"The settlement stipulation provided that upon the payments by the various defendants, and the delivery of releases by plaintiffs, an order was to be submitted discontinuing the action. The settlement and stipulation was orally approved by this Court and was filed in the court record. Though no formal judgment was entered at that time the settlement and stipulation had the cloak of the Court's approval. It was negotiated during and encouraged by the pre-trial conference, which is an integral and useful aspect of the procedures of this court."

All of the defendants except Maraventano performed the agreement in due course by payment of the sum agreed to be paid by each. Maraventano, however, failed to pay the amount agreed upon by him and concealed himself in order to evade payment. A motion was filed by plaintiffs for an order authorizing the severance of the action against the defendant, Maraventano, and the entry of a judgment against him for the stipulated amount on his part to be paid. Upon a hearing of the motion the Court found that, although under the law of the jurisdiction (New York) an attorney had no implied authority to settle or compromise a claim for a client, the said defendant actually authorized the attorney to make the settlement. The trial Court further said (at page 654 of 167 F.Supp.):

"Moreover, plaintiffs' attorney made repeated efforts to contact Dr. Maraventano in order to collect the agreed amount of the settlement. Dr. Maraventano did not respond in any way. It is a client's duty to express disapproval of a settlement within a reasonable time, if he has a basis for disapproval. If he does not object he makes the settlement his own. In this action there has been no claim either that Dr. Maraventano did not know of this settlement, or that he objected to it. Further, Maraventano's counsel informed this Court that he had authority to settle this claim. Such settlement was arrived at in good faith, and was fair and equitable. A reasonable compromise, even if unauthorized, under special circumstances, should not be disturbed by the Court. Holker v. Parker, 1813, 7 Cranch 436, 11 U.S. 436, 3 L.Ed. 396; In re Gsand, 3 Cir., 1946, 153 F.2d 1001.

"(5) Compromises of disputed claims are favored by the courts. Where the parties, acting in good faith, settle a controversy, the courts will enforce the compromise without regard to what the result might or would have been had the parties chosen to litigate rather than settle. Hennessy v. Bacon, 1890, 137 U.S. 78, 11 S.Ct. 17, 34 L.Ed. 605; J. Kahn & Co. v. Clark, 5

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