Le Mieux Bros. v. TREMONT LUMBER CO., LIMITED

• Decision Date: 26 January 1944
• Docket Number: Civ. A. No. 841.
• Citation: 52 F. Supp. 116
• Parties: LE MIEUX BROS., Inc., v. TREMONT LUMBER CO., LIMITED.
• Court: U.S. District Court — Western District of Louisiana

52 F. Supp. 116

LE MIEUX BROS., Inc., v. TREMONT LUMBER CO., LIMITED.

Civ. A. No. 841.

District Court, W. D. Louisiana, Alexandria Division.

October 20, 1943.

Judgment Affirmed January 26, 1944.

Deutsch, Kerrigan & Stiles, of New Orleans, for plaintiff.

Theus, Grisham, Davis & Leigh, of Monroe, La., for defendant.

Judgment Affirmed January 26, 1944. See 140 F.2d 387.

PORTERIE, District Judge.

The Treasury Department of the United States and the Tremont Lumber Company, Limited, a Louisiana corporation, during or about the year 1923, agreed as to the value of the timber owned by the Company on March 1, 1913. The purpose of this agreement was to determine the amount the Company would be entitled, for tax purposes, to deduct annually from its income on account of depletions resulting from the future cutting of the timber owned by the Company on March 1, 1913. It was agreed that there was 1,200,000,000 board feet of timber, that the value of the timber was $5.5625 per thousand feet, and that the total depletion value was $6,675,000. The Company exhausted this depletion value by the end of 1937, but it continued thereafter to take the same unit depletion allowance on its income tax return. These deductions were not allowed by the Collector of Internal Revenue. The Company contended that the value of the timber owned by it on March 1, 1913, was much greater than that reached in its agreement with the Treasury Department in 1923.

We now quote, to complete our narrative of facts, from the petition.

"(Article IX) At the request of defendant (Tremont Lumber Company, Limited), said LeMieux Brothers, Incorporated, a Louisiana corporation, hereinafter referred to simply as said LeMieux Brothers, Incorporated, performed for defendant various services for the purpose of establishing that said timber had a greater value on March 1, 1913, than that arrived at in said 1923 agreement, as aforesaid, and for the purpose of obtaining an additional depletion allowance for said timber for income tax purposes. (Article X) Said services rendered by said LeMieux Brothers, Incorporated, were many and varied, and included, among others, the making of a complete study and research of the problems presented, making various timber estimates and investigations, appearing before boards and representatives of the Treasury Department, both in New Orleans and in Washington, and in actively participating in the prosecution of said claim for additional depletion allowance. (Article XI) Said LeMieux Brothers, Incorporated, was engaged in performing said services from time to time from the early part of July, 1940, to the early part of the year 1942, (Article XII) As a result of said services and of the efforts of said LeMieux Brothers, Incorporated, in the handling of the matter, said LeMieux Brothers, Incorporated, succeeded in obtaining from the United States Treasury Department a substantial additional depletion allowance for said timber owned by defendant on March 1, 1913. (Article XIII) The additional net depletion allowance granted by said Treasury Department was approximately $681,000. (Article XIV) Said services rendered by said LeMieux Brothers, Incorporated, are well worth the sum of $68,000. (Article XV) Said LeMieux Brothers, Incorporated, has received $2,689.75 on account of the amount due for said services."

An important fact is that LeMieux Brothers, Incorporated, the Louisiana corporation whose services had been requested and furnished, was dissolved by notarial act, after its work had been completed and after all of its assets, including the claim sued on herein, had been transferred and assigned by it to the plaintiff (LeMieux Brothers, Incorporated, a Delaware corporation). The record discloses that the Louisiana corporation thereafter surrendered its charter and went out of existence. This ends the narrative of facts.

A motion to dismiss for want of jurisdiction has been filed by Tremont Lumber Company, Limited, on several grounds, but only one ground is now being urged and that is based on section 24 of the Judicial Code, 28 U.S.C.A. § 41, reading (quoting only the applicable parts) as follows: "No district court shall have cognizance of any suit * * * to recover upon any * * * chose in action in favor of any assignee * * * unless such suit might have been prosecuted in such court to recover upon said * * * chose in action if no assignment had been made. * * *"

The Delaware corporation contends that (a) there was no assignment in the instant case, but simply a reorganization and change of domicile, and that (b) the words "chose in action" in the statute are restricted to contract claims and that the claim at issue is not one to fall within the meaning of the above-quoted exception.

How may or can there be a "reorganization" when there are two corporations? A reorganization has to be within one corporation; we have here the concurrent existence of two corporations when the assignment is made by the first-born to the second-born. We are unable to follow the argument offered to support the claim that there is no assignment.

Nor may we subscribe to the view that the situation here is identical with the one that exists in those cases when an individual moves from one state to another and there is permitted to maintain an action against the citizen of his former state in the federal court on grounds of diversity. Williamson v. Osenton, 232 U.S. 619, 34 S.Ct. 442, 58 L.Ed. 758; Anderson v. Splint Coal Co., D.C.E.D.Ky., 20 F.Supp. 233. The case of Black & White Taxicab & Transfer Co. v. Brown & Yellow Taxicab & Transfer Co., 276 U.S. 518, 48 S.Ct. 404, 72 L.Ed. 681, 57 A.L.R. 426, involved a change of residence of a corporation— not a person — but within the meaning of Judicial Code, § 37, 28 U.S.C.A. § 80—not within the meaning of section 24.

The person leaving one state and going to another is still the same person; the parallel does not hold, for the Louisiana corporation is a legal entity of its own and the Delaware corporation is entirely a new creation, a separate and absolutely dissociated entity. Much has been done by our courts to give to corporations the attributes of persons under the provisions of our federal Constitution but we do not think that any court may go this far. We certainly will not. We conclude, therefore, as a matter of law, that the Delaware corporation, the plaintiff in the instant suit, is an assignee of the Louisiana corporation.

On the next point made, (b), we find that under the Louisiana law we are confronted with a civil obligation (a true contract) which arose from the consent and from the common intention of the two parties. The Tremont Lumber Company wanted this work done; it was the business and within the ability of the LeMieux Brothers, Incorporated, the Louisiana corporation, to perform the work and it agreed to do the work; no price was fixed in advance; there was a meeting of the minds on these three points; and in time the work was done. Obviously, no exact price was fixed in advance because of the difficulty of determining the amount of work necessary and of predicting the degree of its success. It is clear by the agreement that the price to be paid to LeMieux Brothers, Incorporated, the Louisiana corporation, by the Tremont Lumber Company, Limited, was to be gauged, first, by the success attained, that is, the amount of money saved, and secondly, by the length of time and amount of labor devoted to the case. The determination of the price is the only issue of this suit between the two corporations. As a matter of law, we have no misgivings but that this is a suit on simple contract.

Article 1760 of the Louisiana Civil Code reads as follows:

"Civil obligations, in relation to their origin, are of two kinds:

"1. Such as are created by the operation of law.

"2. Such as arise from the consent of the parties who are bound by them, which are called contracts or conventional obligations.

"Each of these divisions will form the subject of a separate title."

Title IV, Of Conventional Obligations, Article 1761, reads as follows: "A contract is an agreement, by which one person obligates himself to another, to give, to do or permit, or not to do something, expressed or implied by such agreement."

Louisiana lawyers admit generally that the above is not a full list of our types of contracts; that Article 2292 describes other and additional types: "Certain obligations are contracted without any agreement, either on the part of the person bound, or of him in whose favor the obligation takes place. Some are imposed by the sole authority of the laws, others from an act done by the party obliged, or in his favor. The first are such engagements as result from tutorship, curatorship, neighborhood, common property, the acquisition of an inheritance, and other cases of a like nature. The obligations, which arise from a fact, personal to him who is bound, or relative to him, result either from quasi contracts, or from offenses and quasi offenses."

The contract we have for interpretation is classified purely and unqualifiedly under Article 1760 (2), supra, as well as under the definition of 1761, but certainly not under Articles 2292 and 2293 (Title V, Of Quasi Contracts, and Offenses and Quasi Offenses) of the Civil Code of Louisiana. Students of our Code, when discussing Articles 2292 and 2293, generally refer to Article 1965 as being the real kernel of Louisiana quasi-contracts. We see no quasi-contract in the instant case.

It follows clearly, therefore, that this court may not have cognizance of this suit to recover upon this chose in action in favor of the assignee, the Delaware corporation, since this suit might not have been prosecuted in this court by the Louisiana corporation, from whom the Delaware corporation derived by assignment.

Though we believe the law of contracts of Louisiana controls this case, no different conclusion is reached if the terms of the common law be...