United States v. Finn

• Decision Date: 05 November 1954
• Docket Number: Civ. A. No. 14309.
• Court: U.S. District Court — Southern District of California
• Parties: UNITED STATES of America, Plaintiff, v. George C. FINN, Charles C. Finn, International Airports, Inc., Peter A. Bancroft, Vineland Elementary School District of Kern County, and Seaboard Surety Company, a corporation, Defendants.

127 F. Supp. 158

UNITED STATES of America, Plaintiff, v. George C. FINN, Charles C. Finn, International Airports, Inc., Peter A. Bancroft, Vineland Elementary School District of Kern County, and Seaboard Surety Company, a corporation, Defendants.

Civ. A. No. 14309.

United States District Court, S. D. California, Central Division.

November 5, 1954.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Laughlin E. Waters, U. S. Atty., Max F. Deutz, Louis Lee Abbott, Leila F. Bulgrin, Asst. U. S. Attys., Los Angeles, Cal., for plaintiff.

George C. Finn, Charles C. Finn, Hollywood, Cal., in pro. per.

A. J. Blackman, Los Angeles, Cal., for defendant International Airports, Inc.

Roy Gargano, County Counsel Kern County, Kit L. Nelson, Asst. County Counsel, Kern County, Bakersfield, Cal., for defendants Vineland Elementary School Dist. and Peter A. Bancroft.

Wallace & Cashin, Los Angeles, Cal., for defendant Seaboard Surety Co.

MATHES, District Judge.

The United States sues for declaratory relief, 28 U.S.C. §§ 1345, 2201, 2202, breach of contract, and claim and delivery, Calif.Code Civ.Proc. §§ 509-521; Fed.Rules Civ.Proc. rule 64, 28 U.S.C.A., alleging the Government to be "the owner and * * * now entitled to the immediate possession of a certain C-46A Curtiss-Commando airplane bearing United States Army serial number 42-3645." C.A.A. Reg. No. 111 H; 58 Stat. 765, 50 U.S.C.A.Appendix, §§ 1611-1646; 40 U.S.C.A. §§ 471-492. Plaintiff also seeks damages from defendant Vineland Elementary School District for breach of contract, and from defendants Finn and Bancroft for inducing breach of contract.

After World War II the War Assets Administration was engaged in the disposal of war-surplus aircraft and, to effect the greatest public use of such aircraft, gave preference to public bodies and educational institutions such as defendant Vineland Elementary School District near Bakersfield, California. In June and July of 1946 defendant School District evidenced an interest in acquiring one of these war-surplus aircraft, and possession of the C-46A transport airplane in suit was transferred to the School District on July 25, 1946, by virtue of a "Release of Custody" executed pursuant to an "Agreement" W.A.A. Form 65 signed a month earlier. Defendant School District paid the Government a cash consideration of $300, and thereafter used the airplane as a classroom for over four years.

In 1950 defendants Finn desired to acquire the airplane from the School District and offered cash and certain labor and materials in exchange for it. Defendant School District published an invitation for bids and, defendants Finn being the only bidders, on February 28, 1951 defendant Bancroft, the Superintendent of Schools, transferred possession of the airplane to defendants Finn.

Thereafter defendants Finn, following negotiations in Washington with officials of the War Assets Administration and the Civil Aeronautics Administration, procured the issuance in their names by the C. A. A. of a certificate of ownership of the aircraft.

Because the airplane needed substantial repair before it could be considered airworthy, defendants Finn had defendant International Airports, Inc. do the necessary work. On August 31, 1951, defendants Finn, as mortgagor, and defendant International, as mortgagee, executed a chattel mortgage on the airplane as security for a loan of $15,000. On the same date and as part of the same transaction, defendants Finn leased the airplane to defendant International.

By virtue of the provisions of rule 64 of the Federal Rules of Civil Procedure, the Government invoked the summary procedure known in the law of California as "Claim and Delivery of Personal Property" Calif.Code Civ.Proc. §§ 509-521, and thereby was enabled to cause the Marshal of this Court to seize possession of the aircraft in suit prior to trial. Id. §§ 511, 512, 518, 521. The seizure took place on September 15, 1952, and the Government has been in possession of the aircraft since that date.

Defendant Seaboard Surety Company filed a disclaimer of any interest. The remaining defendants answered and asserted claims prior to those of the Government. Defendants Finn filed a counterclaim for damages for the Government's alleged wrongful seizure and detention of the aircraft.

These are the facts in brief. The demand of defendants Finn for a jury trial having been tardily filed, an advisory jury was empaneled. Fed.Rules Civ. Proc., rules 38(b), 39(c), 28 U.S.C.A. Upon the close of the evidence, a form of special verdict comprising twenty interrogatories was submitted to the jury. The unanimous findings of the jury in answer to the interrogatories will be adopted as findings of the Court, and are appended hereto.

The Government's claim of ownership and for breach of contract depend on the documents signed by the various parties as governed by the applicable statutes and regulations. The claim of ownership will be discussed first.

At the time of the transaction between the Government and defendant School District, the Surplus Property Act of 1944 provided in part: "Disposal to Local Governments and Nonprofit Institutions. * * * The Surplus Property Board shall prescribe regulations for the disposition of surplus property to States and their political subdivisions and instrumentalities, and to tax-supported and nonprofit institutions * *. In formulating such regulations the Board shall be guided by the objectives of this Act and shall give effect to the following policies to the extent feasible and in the public interest: (1)(A) Surplus property that is appropriate for school, classroom, or other educational use may be sold or leased * * *." 58 Stat. 770, 50 U.S.C.A.Appendix, § 1622(a) (1944).

The applicable regulation then provided in part that: "The disposal agency shall compile a list of such items and shall ascertain fixed prices. * * * The disposal agency is authorized to dispose of such property to educational or public-health institutions or instrumentalities at the prices so approved. * * The property will not be resold to others within three years. * * *" 32 C.F.R.1946 Supp. § 8304.11. Emphasis added.

In determining, first of all, the nature of the interest in the airplane acquired by defendant School District, the intention of the parties as disclosed by the documentary evidence must be noted. The War Assets Administration, in its form sheet of instructions addressed to the School District, outlines in Instruction III "How to Purchase", and refers in Instruction VI to the "Price" of the airplanes. U. S. Govt. Printing Office XX-XXXXX-X. Moreover the quoted regulation itself refers to "prices" and "resold". 32 C.F.R.1946 Supp. § 8304.11. Defendant Bancroft filled out a "Purchase Order" W.A.A. Form 66 on June 25, 1946. On July 10, 1946, the War Assets Administration issued a "Sales Receipt" which mentions "purchases" in the name of defendant School District, and the "price". WAA-LA-12.

The authority of the War Assets Administration to pass title is made clear by the above-quoted provisions of the statute that: "Surplus property * * * appropriate for school, classroom, or other educational use may be sold or leased * * *." 58 Stat. 771, 50 U.S. C.A.App. § 1622(a)(1)(A)(1944).

But most important, at the time the airplane was delivered to defendant School District, a sale was the only permissible method of disposal; for the regulation then provided: "After June 30, 1946, transport aircraft shall be disposed of only by sale." 32 C.F.R. 1946 Supp. § 8304.7. Interpreted in the light of the statute and the regulation, the documentary evidence compels the conclusion that in 1946 full title to the airplane in suit was transferred by the War Assets Administration to Vineland Elementary School District.

The contention is made, however, that violation by defendant School District of restrictions upon use and disposal of the aircraft caused title to revert to the Government. Form 65 contains no reservation of power in the Government to revest title to the property, nor any provision that title will automatically revest on violation of the restrictions. Moreover restrictions upon title which restrain alienation and use are not favored by the law. See: Davis v. Gray, 1872, 16 Wall. 203, 230, 83 U.S. 203, 230, 21 L.Ed. 447; Los Angeles University v. Swarth, 9 Cir., 1901, 107 F. 798, 803, 54 L.R.A. 262. So where, as here, there are "no express terms creating a condition, no clause of re-entry nor words of any sort indicating such purpose, the conclusion is unavoidable that the obligation in question is a covenant * * *." Columbia Railway, etc., Co. v. South Carolina, 1923, 261 U.S. 236, 248, 250, 43 S.Ct. 306, 310, 67 L.Ed. 629, for the breach of which damages would be the only remedy. See: United States v. Michigan, 1903, 190 U.S. 379, 23 S.Ct. 742, 47 L.Ed. 1103; Northern Pacific Railway v. Townsend, 1903, 190 U.S. 267, 23 S.Ct. 671, 47 L.Ed. 1044; American Emigrant Co. v. County of Adams, 1870, 100 U.S. 61, 71, 25 L.Ed. 563.

It is conceded that defendant School District on February 28, 1951, by a C.A.A. form bill of sale signed by defendant Bancroft, did "hereby sell, grant, transfer, and deliver to defendants Finn all of * * * its right, title, and interest in and to such aircraft. * * *" Earlier, on October 9, 1950, defendant Bancroft had signed a "Bill of Sale" which was typed on the letterhead stationery of the School District and, referring to the rules and regulations of the W.A.A., declares: "We hereby sell * * *." These documents show a plain intention on the part of defendant School District to pass title to the airplane to defendants Finn.

It is urged nonetheless that the sale to defendants Finn is void because the consideration included labor and materials as well as cash. The applicable California statute provides in part that the "board of any school district may sell * * * for cash * * *." Cal.Education Code, § 18701. This statute is...