William J. Kelly Co. v. Reconstruction Finance Corp., 4382.

Citation172 F.2d 865
Decision Date29 March 1949
Docket NumberNo. 4382.,4382.
CourtUnited States Courts of Appeals. United States Court of Appeals (1st Circuit)

Jack Goodman, of Albany, N. Y. (Paul T. Smith, of Boston, Mass., on the brief), for appellant.

Edward H. Hickey, Sp. Asst. to Atty. Gen. (H. G. Morison, Asst. Atty. Gen., William T. McCarthy, U. S. Atty., of Boston, Mass., and Richard E. Guggenheim, Atty., Dept. of Justice, of Washington, D. C., on the brief), for appellee.

Before MAGRUDER, Chief Judge, and MARIS (by special assignment) and WOODBURY, Circuit Judges.

MAGRUDER, Chief Judge.

William J. Kelly Company (hereinafter called Kelly), a Massachusetts corporation, brought suit in the United States District Court for the District of Massachusetts against the Reconstruction Finance Corporation and the United States. By stipulation, the action was subsequently dismissed as against the United States without prejudice.

In so far as is now material, the complaint alleged that on January 13, 1947, Kelly and the RFC entered into two written agreements (photostatic copies were attached to the complaint) by the terms of which Kelly "agreed to purchase and the defendant Reconstruction Finance Corporation agreed to sell certain cable and certain tractors, all of which was then in a deliverable state, for the sum of One Hundred Nine Thousand Four Hundred Forty-five Dollars and Seventy Cents ($109, 445.70); and both of the aforesaid parties agreed that delivery was to be made on January 22, 1947." The complaint further stated that Kelly had made timely payment of the agreed sum to the RFC, but that the RFC had "failed and refused and continues to fail and refuse to deliver said cable and tractors to the plaintiff". It was alleged that on the date of breach "the fair market value of said cable and tractors exceeded the aforesaid purchase price" and judgment was demanded for said purchase price plus the excess of the fair market value on the date of breach over the purchase price.

The RFC appeared specially and moved to dismiss on several grounds, some of which were waived prior to the hearing before the district court, and others of which were rendered moot by the subsequent dismissal of the action as against the United States. Though the motion did not explicitly set forth as one of its grounds that the complaint failed to state a claim upon which relief could be granted, the arguments of counsel at the hearing on the motion tacitly assumed that such ground of dismissal was presented, and the district judge evidently so regarded the motion. In support of its motion, the RFC submitted an affidavit of Chauncey Y. Dodds, Chief of the Small Business Division of the RFC. At the hearing, the plaintiff asked for and obtained leave to present within one week "a brief and such counter affidavits with respect to the facts as we deem required by the motion and affidavit already submitted." The brief was filed, but plaintiff did not avail itself of the opportunity to submit counter affidavits. Thereafter, the district court filed its memorandum allowing the motion to dismiss the plaintiff's action, on the ground that it failed to state a cause of action against the defendant, the RFC. On June 10, 1948, the court entered its judgment reciting that, in accordance with the memorandum allowing defendant's motion to dismiss, it is ordered "action dismissed, judgment for the defendant with costs". Kelly appeals from this judgment.

Since the district court did not exclude the affidavit of Dodds, but upon the contrary received it and accorded to the plaintiff an opportunity to submit counter affidavits, the motion to dismiss was in substance converted into a motion for summary judgment, even though the district court did not denominate it as such. Revised Rule 12(b) of the Rules of Civil Procedure, 28 U.S.C.A., provides: "If, on a motion asserting the defense numbered (6) to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56." The action of the district court was in substantial compliance with the requirements of this rule, and there is no basis for a claim of surprise on the plaintiff's part. On this appeal we shall therefore treat the case as though a formal motion for summary judgment had been made by the defendant.1 "The sufficiency of the allegations of a complaint do not determine the motion for summary judgment." Lindsey v. Leavy, 9 Cir., 1945, 149 F.2d 899, 902. Rather, it must be determined whether there is a "genuine issue as to any material fact. In many cases there is no genuine issue of fact, although such an issue is raised by the formal pleadings. * * * If there is no genuine issue of fact in controversy, the parties are not entitled to a trial and the court, applying the law to the undisputed material facts may render a summary judgment." 3 Moore, Federal Practice, § 56.01 (1938).

A brief statement of the background of this controversy will indicate, we think, that this case was a proper one for summary judgment.

When Congress enacted legislation for the disposal of surplus war property, special provision was made for small...

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