United States v. Transocean Air Lines, Inc.
| Decision Date | 23 February 1966 |
| Docket Number | No. 21877.,21877. |
| Citation | 356 F.2d 702 |
| Parties | UNITED STATES of America, Appellant, v. TRANSOCEAN AIR LINES, INC., et al., Appellees. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Harvey L. Zuckman, Sherman L. Cohn, Attys., Dept. of Justice, Washington, D. C., John W. Douglas, Asst. Atty. Gen., William A. Meadows, Jr., U. S. Atty., Alan S. Rosenthal, Attorney, Department of Justice, Washington, D. C., for appellant.
Joseph A. Perkins, John Houston Gunn, Miami, Fla., for appellees.
Before JONES and BELL, Circuit Judges, and JOHNSON, District Judge.
Transocean Air Lines, Inc., which is nominally an appellee in this cause, was one of several irregular air carriers which were engaged during the Korean conflict in transportation for the account of the United States. A dispute arose between the carriers, or some of them, and the Government resulting in litigation in the District Court for the Southern District of Florida. This Court, in 1960, set out the basis upon which the carriers were to be compensated. United States v. Associated Air Transport, 5 Cir., 275 F.2d 827. Transocean had intervened as a plaintiff in the action in August of 1957, more than eight years ago. It employed as counsel Messrs. Jeptha P. Marchant and Joseph A. Perkins of the Miami bar to represent it in the litigation and agreed to compensate them with a onethird interest in any judgment, with authority to collect the proceeds of any judgment and retain their one-third interest before remitting the balance. The judgment of this Court was issued on April 19, 1960. On July 14, 1960, the district court entered a judgment upon the opinion and mandate of this Court. It was provided in this judgment that the parties, the plaintiff-intervenors, including Transocean, and the Government should immediately confer and attempt to reach an agreement. In the event of a disagreement as to the amount due on any of the claims, a reference should be made to a commissioner or special master appointed in the judgment. At this juncture the Government filed an accounting showing the balance, as computed by it, of $69,785.70 owing by it to Transocean.
Transocean, after an unsuccessful effort to get its affairs worked out by a Chapter XI Bankruptcy arrangement, became a conventional bankrupt and John Costello was appointed as its Trustee. The bankruptcy proceedings are in the District Court for the Northern District of California. In the bankruptcy proceeding the United States asserted priority claims in excess of $500,000. The United States and the Trustee in Bankruptcy, in California, stipulated that the Florida litigation would be settled for $75,000 by a credit upon the claim of the Government. This agreement was approved by the district court in California. The next move was the filing, in the district court of Florida, of a paper which, before the adoption of the Rules, might have been styled a praecipe. It was styled "Dismissal with Prejudice" and was addressed to the clerk. It authorized and directed the entry of a dismissal with prejudice of the intervention of Transocean. It was signed by the Trustee and his California counsel. A motion was made in the names of "Transocean Air Lines, Inc., and/or Jeptha P. Marchant and Joseph A. Perkins" reciting that as a result of the compromise for $75,000 Marchant and Perkins became entitled to a minimum of $25,000 and that nothing remained to be done in the litigation except a simple accounting. The motion sought the "Dismissal with Prejudice" be stricken and that the clerk be instructed to file nothing except on order of the Court. In the alternative, Messrs. Marchant and Perkins asked for judgment of not less than $25,000. California counsel for the Trustee sent Marchant and Perkins a telegram stating that the latter were not authorized to move to vacate the dismissal on behalf of the Trustee.
A judgment was entered by the district court vacating the clerk's entry of dismissal, reciting a compromise settlement of $75,000, and adjudging that Transocean recover $75,000 from the United States. On the day after the entry of the judgment, Marchant and Perkins filed a petition asserting a charging lien for their attorneys' fees to the extent of the agreed third of the recovery. After a hearing, the court entered an order allowing "a charging lien to the extent of their fee to be determined upon the judgment and/or funds" due to Transocean. The Government has appealed from the judgment and the order allowing the lien.
The Government insists that it was error for the district court to strike the Trustee's dismissal. The adjudication in bankruptcy of Transocean did not, of itself, substitute the Trustee in bankruptcy in the litigation pending in Florida. There should have been a motion and an order. Since the Trustee did not seek to be substituted for Transocean, it did not become a party. Rule 25(c) Fed.Rules Civ.Proc., 28 U.S.C.A.; Liberty Broadcasting System v. Albertson, W.D.N.Y. 1953, 15 F.R.D. 121. In one of the hearings before the district court an attorney was present who announced that he was there as an observer for the California counsel for the Trustee but for no other purpose. It might be assumed that the Trustee wished to avoid any act that might be regarded as the act of a party to the cause. Even though the bankruptcy Trustee had become a party, which he did not, the dismissal could not have been effected without an order of the court. Only when there has been a notice of dismissal filed before the filing of an answer or motion for summary judgment, or when a stipulation of dismissal has been filed by all parties, can a dismissal be effected without a court order. Rule 41 (a) (1) Fed.Rules Civ.Proc. 28 U.S.C.A. Without a dismissal, properly obtained, the cause remained pending in the name of Transocean. Cf. Meyer v. Fleming, 327 U.S. 161, 66 S.Ct. 382, 90 L.Ed. 595. The motion to strike the dismissal was filed on March 6, 1964. In the record, filed on April 7, 1964, is a copy of an order of the California Referee in Bankruptcy authorizing the Trustee to compromise the Florida litigation, and annexed is a copy of a stipulation reciting that the United States had filed claims of more than $500,000, which are referred to as "contingent," purporting to settle the Florida litigation for a set off of $75,000 against the Government claims. The Rule requires that for a dismissal by stipulation to be effective, the stipulation must be filed. The stipulation was not apparently intended as a dismissal. It provides that "the trustee will forthwith dismiss." The contemplated dismissal was not to be effected by the stipulation but by an act of the Trustee to be done subsequently. The Trustee, not being a party, could not have stipulated under the Rule...
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