United States SBEF Corp. v. South Atlantic Dry Dock Co.

• Decision Date: 23 May 1927
• Docket Number: No. 4954.,4954.
• Citation: 19 F.2d 486
• Parties: UNITED STATES SHIPPING BOARD EMERGENCY FLEET CORPORATION v. SOUTH ATLANTIC DRY DOCK CO.
• Court: U.S. Court of Appeals — Fifth Circuit

19 F.2d 486 (1927)

UNITED STATES SHIPPING BOARD EMERGENCY FLEET CORPORATION v. SOUTH ATLANTIC DRY DOCK CO.^*

No. 4954.

Circuit Court of Appeals, Fifth Circuit.

May 23, 1927.

Francis L. Poor, Asst. U. S. Atty., of Jacksonville, Fla., and I. V. McPherson, Sp. Asst. Atty. Gen. (William M. Gober, U. S. Atty., of Tampa, Fla., Chauncey G. Parker, Gen. Counsel U. S. Shipping Board E. F. C., of Washington, D. C., on the brief), for plaintiff in error.

John W. Dodge, of Jacksonville, Fla., for defendant in error.

Before WALKER, BRYAN, and FOSTER, Circuit Judges.

WALKER, Circuit Judge.

When this suit, which was an action by the defendant in error, South Atlantic Dry Dock Company, a Maryland corporation (herein called the plaintiff), against the plaintiff in error, United States Shipping Board Emergency Fleet Corporation, alleged in the declaration to be a corporation organized and existing under the laws of the District of Columbia (herein called the defendant), was in this court on a former writ of error, the judgment for plaintiff then under review was reversed because of errors in giving and refusing instructions with reference to the asserted right of the defendant to set up, by way of recoupment or reduction of damages against the claims asserted by plaintiff for work and materials performed or furnished by plaintiff and its assignors, two partnerships called, respectively, Duval Ship-Outfitting Company and Duval Dry Dock Company, the amounts of profits paid to those firms, while it was unknown to and concealed from defendant that they were composed of its employees, on contracts with said firms in which such employees, as members thereof, had interests adverse to those of their employer, the defendant. United States Shipping Board E. F. Corp. v. South Atlantic Dry Dock Co., 300 F. 56.

The opinion then rendered sets out the plea, called the amended third plea, which alleged the fraud committed on defendant by the Duval Ship-Outfitting Company, composed of defendant's employees L. W. Walter, James H. Strang, and H. C. Thomas, and by the Duval Dry Dock Company, composed of said Walter and Strang, in securing contracts with defendant and obtaining profits therefrom, while concealing from defendant that it was dealing with its own employees having interests adverse to those of the employer. In the trial which resulted in the judgment now under review, issue was joined on that plea, and also on a plea filed on February 25, 1925, which set up, by way of recoupment or in reduction of damages, the amounts paid by defendant to the firms mentioned on account of wages paid by those firms to other employees of the defendant, captains and engineers of ships, who were receiving wages from the defendant while they, without the knowledge of the defendant, were also receiving wages from those firms.

In the last trial, by stipulation between the parties, which was submitted before the taking of testimony was begun, admissions including the following were made:

Prior to May 31, 1919, the date alleged in said amended third plea of defendant's discovery that its employees were members of said firms, defendant paid to said firms $19,028.28 as profits under said contracts with said firms for labor and work done and materials furnished under those contracts. Prior to May 31, 1919, defendant paid to said two firms sums amounting to $6,815.91 on account of the employment by said firms of persons who were employees of defendant as officers of ships and were paid by defendant monthly salaries as such officers (the aggregate of the two just mentioned amounts, $25,844.22, is the total amount of the principal claimed by plaintiff, as shown by its bill of particulars as amended).

"It is further stipulated that the amount sued for by the plaintiff, as shown by its bill of particulars as amended, is correct as to the amount of said claims and as to the performance of the work represented by such claims, and the same was due by the defendant to the plaintiff at the time of the commencement of this suit, in the amount and for the work and labor set forth, unless the defendant is entitled to a recoupment against said claim, or a reduction in damages therefrom by reason of the facts alleged in its amended third plea and its additional plea filed herein on February 25, 1925."

In the last trial there was evidence tending to prove the following:

The Duval Ship-Outfitting Company was organized about the last of December, 1918; the partners comprising it being L. W. Walter, H. C. Thomas, and Charles Strang. At that time Walter and Thomas were employees of defendant. From the time that firm made its first contract with the defendant Walter did nothing as an employee of the defendant which had any connection with a contract between the defendant and a firm of which Walter was a member. Officials of the defendant who acted for it in giving contracts to the Duval Ship-Outfitting Company and to the Duval Dry Dock Company knew, when those contracts were given, that Walter was a partner of the firm contracted with. Under the terms of the employment of Thomas by the defendant, he had the privilege of contracting for work done by himself or by a firm of which he was a member. James H. Strang, an employee of the defendant, took part in the organization of the Duval Ship-Outfitting Company. He did so for his brother, Charles Strang, who was absent from Jacksonville when that firm was organized, but reached there soon afterwards, and was active in the conduct of the business of that firm and of its successor, Duval Dry Dock Company. James H. Strang never had any...