Kan v. Tsang, 25864.

• Decision Date: 13 November 1947
• Docket Number: No. 25864.,25864.
• Citation: 74 F. Supp. 508
• Court: U.S. District Court — Northern District of California
• Parties: KAN v. TSANG et al.

74 F. Supp. 508

KAN v. TSANG et al.

No. 25864.

District Court, N. D. California, S. D.

November 13, 1947.

Frank J. Hennessy, U. S. Atty., and R. J. Scholz and Joseph Karesh, Asst. U. S. Attys., all of San Francisco, Cal., for petitioner.

Robert E. Hatch, of San Francisco, Cal., for respondent Ernest Tsang.

ROCHE, District Judge.

This is an action brought under Section 8 of the Selective Training and Service Act of 1940, as amended, 50 U.S.C.A.Appendix § 308. The petitioner originally sought employment reinstatement together with compensation for loss of wages and benefits resulting from respondents' alleged refusal to reinstate him, but he now asks only a money judgment for such compensation, waiving other rights that he may have under the Act.

Respondents defend on two grounds: First, that the issues herein have already been decided adversely to petitioner in certain proceedings in the superior court of the state of California, and second, that respondents offered to re-employ the petitioner at the salary he was receiving when he entered the armed forces but that petitioner refused to accept the offer unless it would include a three year contract of employment.

The record discloses that the petitioner Kan was not only one of the founders of the Cathay House, a restaurant in San Francisco, but its active head and the man whose energy and ability were largely responsible for its phenomenal success. After its founding the respondent Tsang bought shares of stock in the business and he and the petitioner became the President and Secretary, respectively, of the corporation. They were co-managers, each receiving the same salary. When Kan received a salary increase, Tsang likewise received an increase. When Kan enlisted in the armed forces on July 23, 1943, he and respondent Tsang were both making $500 a month. At that time, Tsang, by additional purchases of shares of stock, had gained a controlling interest in Cathay House.

While petitioner was in the service the corporation was changed to a partnership, Tsang becoming a general partner and petitioner a limited partner, along with others. This change was agreed to by petitioner's wife, who was also employed at Cathay House and to whom petitioner had given power of attorney, but the evidence is conflicting as to whether she and her counsel endeavored to have the change delayed until the petitioner came home on leave. In any event, the change was one of form only. The interested parties remained the same and the restaurant business was conducted as before. Such a reorganization was ineffective to cut off the petitioner's rights under the Selective Service Act.

The petitioner was honorably discharged from the service on November 26, 1943, and shortly thereafter asked respondent Tsang to re-employ him. Tsang was then earning $750 per month.

From this point on the record contains much conflicting testimony but it does clearly appear that at no time during the negotiations that followed petitioner's request for re-employment was the petitioner offered the position of co-manager with the same salary as Tsang was then receiving. The most that was offered was his old salary of $500 a month and there is persuasive evidence that even that offer was conditioned on Kan's signing what the parties denominated a "waiver" or "release." The situation culminated in Tsang's filing an action for declaratory relief in the state court, in which Kan filed an answer and cross-complaint. Judgment was given in favor of Tsang. Kan and three others...