Peitzman v. City of Illmo, 12696.

• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)
• Citation: 141 F.2d 956
• Docket Number: No. 12696.,12696.
• Parties: PEITZMAN et al. v. CITY OF ILLMO.
• Decision Date: 06 May 1944

141 F.2d 956 (1944)

PEITZMAN et al. v. CITY OF ILLMO.

No. 12696.

Circuit Court of Appeals, Eighth Circuit.

April 17, 1944.

Rehearing Denied May 6, 1944.

COPYRIGHT MATERIAL OMITTED

Jacob M. Lashly, of St. Louis, Mo. (R. Wallace Karraker, of Jonesboro, Ill., Rush H. Limbaugh, of Cape Girardeau, Mo., and Whitworth Stokes, of Nashville, Tenn., on the brief), for appellants.

J. Grant Frye, of Cape Girardeau, Mo., for appellee.

Before GARDNER, WOODROUGH, and VAN VALKENBURGH, Circuit Judges.

GARDNER, Circuit Judge.

This is an appeal from a judgment in favor of the City of Illmo, which was plaintiff in the trial court. The nature of the cause of action alleged is one of the controversies on this appeal, it being claimed by appellants that the action was on contract, while the appellee contends that it sounded in tort. We shall refer to the parties as they were designated in the trial court.

Plaintiff is a municipal corporation located in Scott County, Missouri. On July 7, 1941, it entered into a written contract with the U. S. Elevated Tank Maintenance Company, by which the latter agreed to do certain work on the city's elevated steel water tank. The nature of the work to be performed on this tank is described in the written contract as follows: (1) "to mechanically scale, brush, clean, wash and test tank for public safety, and paint inside two (2) coats of U. S. Asphalt Tank Reliner" at a cost of $185; (2) "to remove all loose paint and rust scale from outside of tank, tower, riserpipe, everything from ground up, and given two (2) coats of One Coat Red Lead and one coat Aluminum paint" at a cost of $290; (3) "to furnish labor to remove and replace all loose and defective rivets and weld all pits regardless of size, also tighten and adjust all rods to put tank in first class condition at Two Dollars per hour per man and to furnish compressor at Two Dollars and Fifty Cents per hour and arc welder at Two Dollars and Fifty Cents per hour for all work other than the above described, also to furnish rivets at 10¢ per pound and electrode welding rods at 35¢ per pound."

Following the signing of the contract, a crew of eight or ten men arrived in Illmo with a large tractor-trailer equipped with air-hammers, compressors and other machinery and tools. The water tank was drained and work commenced by this crew. City officials, discovering that rivets were being removed from the tank, ordered the work stopped, and on July 22, 1941, this action was commenced in the Circuit Court of Scott County, Missouri, aided by an attachment of property. The U. S. Elevated Tank Maintenance Company was named as the sole defendant, and it was alleged that it was a foreign corporation. On July 23, 1941, however, plaintiff amended its complaint so as to allege that E. H. Peitzman and William Peitzman did business under the name of U. S. Elevated Maintenance Company, and these individuals were named as defendants. Plaintiff gave notice for the taking of depositions of certain witnesses in the office of Fred M. Craig, Secretary of the Scott County Building and Loan Association, at Illmo, on the 26th day of July, 1941, at ten a. m. At that time the depositions of several employees of defendants, who had been working on the job, were taken, as was also the deposition of defendant William Peitzman, he and his wife, E. H. Peitzman, having in the meantime by amendment to the pleadings been named as defendants. Defendants removed the cause to the United States District Court.

On August 2, 1941, by amendment, the allegations of the original bill were amplified and exemplary as well as actual damages were claimed. This amended complaint set forth the written contract in substance and alleged that an agent of defendants had inspected the tank about the time of the execution of the contract and that the agent stated to plaintiff's officials that the tank and standpipe were in good condition and did not need any rivets, except a few in the standpipe, and that the total expense to the city, including the cost of cleaning and painting, would not exceed $600. Unskillfulness in the performance of certain of the work is alleged, and paragraphs 11, 12, 14 and 17, containing allegations which are here material, read as follows:

"11. That purporting to act under said written agreement, the defendants, through the said B. R. Hinchman and their other aide employees, and in furtherance of a scheme to defraud plaintiff, unnecessarily removed several hundred large rivets from the floor of said tank and other parts thereof, and in the process of removing same, due to carelessness and lack of skill of their employees, tore the holes where said rivets had been, made them oval shaped instead of circular so that new rivets placed therein would not fit tightly; that the rivets removed were in good condition and did not need to be removed, and removal thereof was not within the agreement or contemplation of the parties, but was done maliciously and with the fraudulent intent of defendants and under their direction, of running up an excessive charge against plaintiff thereof all to the great damage of said tank and stand pipe and injury to plaintiff.

"12. That in removing such rivets, the edges of the steel plates were kinked, warped, twisted, and damaged so that upon replacing new rivets therein, the steel plates will not fit together so as to be water-tight, and the rivet holes will be so enlarged, torn, and lacking in roundness so that the riveting will not hold the plates securely nor can water leakage be reasonably prevented without great cost to plaintiff to repair and replace same."

"14. That the defendants through their agents and employees, wantonly and maliciously took out great numbers of rivets and tore apart sections of said tank and stand pipe, all of which were in good condition and were unnecessary to be removed, and fraudulently and maliciously run up a labor account, which they purported to charge against this plaintiff, in the sum of several hundred dollars and as a part of their scheme to defraud plaintiff, demanded that plaintiff approve and pay the same."

"17. That on account of the wrongful acts and conduct of the defendant, their agents, and employees, plaintiff's tank and stand pipe have been greatly damaged by the carelessness and lack of skill of defendants' employees and the willful, malicious, and fraudulent acts and conduct of defendants and their agents and servants in doing the work on said tank and stand pipe and by the wrongful, fraudulent and malicious taking out of rivets which did not need to be taken out, and by the kinking and warping, marring, scarring, and tearing said steel, and by their failure to clean and paint said tank and stand pipe, and on the further account of the fact that plaintiff has been required, from the time defendants undertook said work, to procure at great expense, water for its citizens from the City of Fornfelt; that on account of the breach of said agreement by the defendants and on account of the wrongful malicious and fraudulent acts and conduct aforesaid, and on account of the damages and injury to plaintiff's property, plaintiff has been actually damaged in the sum of $5,000.00."

At the trial on the question of damages, at which defendants and their counsel were present and offered testimony on that issue, on motion of plaintiff the claim for exemplary damages purports to have been increased from $10,000 to $20,000.

Defendants filed separate answers to the amended complaint, the defendant E. H. Peitzman denying generally the allegations of the complaint and alleging that she was the sole owner of the U. S. Elevated Tank Maintenance Company. She also interposed two counterclaims, in the first of which she sought to recover from plaintiff $918.50 as the value of the work done on the tank up to the time of being stopped. By the second counterclaim she claimed $20,000 actual and exemplary damages for libel, alleging that plaintiff, through its authorized agents, attorneys and representatives, without just cause or excuse and for the purpose of maliciously harming, damaging, intimidating, injuring and defaming her, on various and diverse occasions had wilfully, wantonly, and maliciously conveyed false statements and accusations to numerous third parties, falsely charging her with dishonesty and incompetency, and falsely accusing her of operating under various assumed names, and falsely charging and accusing her of having changed her name, all with the wilful and malicious intent to damage, harm, slander, defame and intimidate her. The counterclaim sets forth certain specific "words and items of correspondence," and then alleges that as a direct result of such defamatory words and statements she was injured to her damage in the amount of $20,000. Plaintiff replied, denying the allegations of both counterclaims, and as to the alleged libelous words pleaded truth and justification.

On October 7, 1942, plaintiff filed a motion based on Rule 37(d) of the Rules of Civil Procedure, 28 U.S.C.A. following section 723c, to strike the answers and counterclaims because of the alleged failure of defendants to appear at the taking of depositions duly noticed, refusal to testify, avoidance of process, and the obstruction of plaintiff in procuring evidence. After hearing the motion was sustained and default of the defendants was entered. The case was set down for hearing before a jury on the question of damages. At the trial of this issue, on which both parties submitted evidence, the jury returned a verdict for plaintiff in the sum of $4,000 as actual damages, and $10,000 as punitive damages. From the judgment entered on this verdict, defendants prosecute this appeal. Their contentions as disclosed by their brief are substantially as follows: (1) The court erred in striking the answers of the defendants; (2) the court erred in permitting amendments of the petition; (3) punitive damages were not recoverable...