The opinion of the court was delivered by: John E. Miller, District Judge.
Plaintiff, Bay Aviation Services, Co., filed its complaint on
March 15, 1962, in which it alleged that commencing in September
1960 it performed services and furnished engineering and
materials in connection with the conversion of a single-engine
Beechcraft Bonanza aircraft into a twin-engine aircraft, which
was done at the request and order of and for defendant, Southland
Aviation, Inc.; that on April 15, 1961, the work to be done by
the plaintiff was completed and the converted aircraft was
returned to Southland Aviation, Inc., that the charges for the
work done and the materials furnished amounted to $17,601.50, and
Southland Aviation, Inc., has agreed that this amount is due and
payable from it to the plaintiff; that this amount has been due
and payable from Southland to the plaintiff since April 15, 1961,
and demand has repeatedly been made for payment of the amount
due, and that Southland has refused and continues to refuse to
make payment of the amount due from it to plaintiff.
The plaintiff prayed that it have and recover of and from
Southland the sum of $17,601.50, plus interest thereon at the
rate of 6 percent per annum from April 15, 1961, and its costs.
The defendant, Southland Aviation, Inc., filed its answer on
April 28, 1962, in which it denied the above allegations. On the
same date it filed a "Counterclaim for Interpleader," in which it
alleged that at the request of one W.D. Johnson, the plaintiff
Bay Aviation Services Co., undertook to modify a single-engine
aircraft belonging to the said W.D. Johnson, and converted the
same into a twin-engine aircraft, and that the defendant,
Southland Aviation, Inc., had nothing to do with the modification
and conversion of said aircraft nor was it obligated to pay for
the same. The defendant in its counterclaim further alleged that
after the plaintiff, Bay Aviation Services Co., had purportedly
converted said aircraft, it undertook to make delivery to the
said W.D. Johnson; that the work was not completed and was not
properly done, and at the request of W.D. Johnson the aircraft
was flown to Hope, Arkansas, pending compliance by the plaintiff
with its obligation to complete its work on the aircraft; that
said aircraft has remained stored in defendant's hangar in Hope,
Arkansas, for the
past year, and during that time the defendant repainted the
aircraft at the request of the plaintiff and the said W.D.
Johnson; that the said W.D. Johnson sent to the defendant a check
of the Southard Production Co. in the principal sum of
$17,601.50, but instructed this defendant not to deliver said
check to the plaintiff until the plaintiff had fully completed
its work on the aircraft in a satisfactory manner, and both the
said W.D. Johnson and the plaintiff, Bay Aviation, have
instructed the defendant not to deliver the aircraft to the other
and the defendant has repeatedly requested the plaintiff and the
said W.D. Johnson to instruct it as to what disposition to make
of the said $17,601.50 and of the said aircraft.
In its counterclaim the defendant prayed as follows:
"(1) That the Court order W.D. Johnson and the
Southard Production Company to be made party
Defendants to respond to the complaint and to this
"(2) That the Court order the Plaintiff and W.D.
Johnson and The Southard Production Company to
interplead their respective claims.
"(3) That the Court adjudge whether the Plaintiff
or W.D. Johnson or The Southard Production Company is
entitled to the sum of money or what part thereof.
"(4) That the Court adjudge whether the Plaintiff
or W.D. Johnson or The Southard Production Company is
entitled to the aircraft.
"(5) That the Court discharge the Defendant from
all liability in the premises except to the person,
firm or corporation it shall adjudge entitled to the
sum of money and the person, firm or corporation it
shall adjudge entitled to the aircraft.
"(6) That the Court award to the Defendant a
reasonable sum for repainting said aircraft and for
storing the same until said aircraft is delivered
under the orders of this Court.
"(7) That the Court award to the Defendant its
costs and attorneys' fees."
On July 11, 1962, W.D. Johnson and the Southard Production
Company filed their joint answer to Southland Aviation, Inc.'s
counterclaim for interpleader, in which they stated that all
actions alleged to have been taken by W.D. Johnson were taken by
him on behalf of Southard Production Co., the owner of the
aircraft in question; that the agreement for modification of such
aircraft was an agreement between Southard Production Co. and
Southland Aviation, Inc., it being the understanding of the
parties thereto that the modification work actually would be
performed by the Oakland Airmotive Co., predecessor of Bay
Aviation Services Co. W.D. Johnson and Southard admit the
allegations of the counterclaim for interpleader with the
exception that they denied "want of knowledge that the aircraft
in question has been repainted."
On the same date W.D. Johnson and Southard Production Co. filed
their counterclaim against Bay Aviation Services Co., in which
they stated their willingness that Southland pay over to Bay
Aviation the $17,601.50 now in possession of Southland at such
time as the modification of the aircraft in question is completed
pursuant to the original contract between Southard and Southland.
On July 12, 1962, Bay Aviation filed its reply to the
counterclaim of W.D. Johnson and the Southard Production Co., in
which it alleged that the conversion of the aircraft in question
has been satisfactorily completed and that Southland is liable to
Bay Aviation in the amount of $17,601.50, plus interest.
On August 29, 1962, it was ordered by this court that the
defendant, Southland Aviation, Inc., forthwith deposit in the
registry of the court the sum of $17,601.50 which had been sent
to it by W.D. Johnson.
On September 26, 1962, the defendants to the interpleader filed
their amended and substituted counterclaim against Bay Aviation,
in which they stated that W.D. Johnson, individually, withdraws
as a complaining party against the plaintiff since all alleged
actions taken by him with respect to the matters pleaded in
plaintiff's complaint and defendant's answer and counterclaim
were taken by him on behalf of Southard, the owner of the
aircraft in question.
In the amended and substituted counterclaim, Southard alleged
that the plaintiff, Bay Aviation, had breached and failed to
perform the contracts and agreements with Southland Aviation for
the conversion of the aircraft in question, and therefore is not
entitled to recover on said contracts and agreements. Southard
further alleged that on April 15, 1961, and subsequent thereto
the plaintiff agreed with Southard and with Southland Aviation to
complete the conversion as contracted and to repair and replace
all defective items at its own cost and expense, and to pay
Southard the sum of $1,874.50 as agreed damages for the failure
of the plaintiff to return to Southard the propeller which was on
the aircraft when delivered to the plaintiff for conversion; that
the plaintiff, Bay Aviation, has failed to perform said
agreements and that in making said agreements the plaintiff was
at all times acting by and through its duly authorized officers
Southard specifically alleged that the plaintiff has failed to
perform its contracts and agreements in that it:
"1. Failed to pay $1,874.50 for loss of propeller.
"2. Failed to install fuel injection engines on
"3. Installed A1C engines instead of A1A engines on
"4. Installed improperly designed exhaust stacks in
"5. Installed improperly designed air intake
manifolds and systems in said engines.
"6. Installed improperly designed electrical system
in said aircraft, or alternatively, failed to install
an electrical system sufficient in capacity and size
"7. Installed poorly designed cowlings on said
engines, and failed to install cowlings on said
engines in a good and workmanlike manner.
"8. Installed improperly designed oil breather
"9. Failed to repaint said aircraft in a good and
"10. Failed to install fuel filters and a fuel
filtering system on said engines."
In the alternative, Southard alleged that if the plaintiff has
substantially performed its contracts and agreement, which is not
admitted but which is denied, then Southard is entitled to
judgment against the plaintiff for a reasonable cost of
completing said contracts and agreements and repairing the
defective work as heretofore specifically set out, which cost is
alleged to be $25,000.00.
Southard further alleged that it has suffered damages because
of plaintiff's breach of the said contracts and agreements, which
damages are specifically set forth as follows:
"1. $1,874.50 for lost propeller.
"2. $25,000.00, being the reasonable cost to
complete said contracts and agreements and to repair
"3. The loss of use of its said aircraft from
October 1, 1960, to date, a period of 24 months, in
the sum of $33,600.00 calculated at the rate of
$35.00 per hour and 40 hours per month for each
month's loss of use, the reasonable rental value of
"4. The loss of services of its secretary-treasurer
and agent, W.D. Johnson, during six trips to Hope,
Arkansas, and one trip to California, for a period of
seventeen days total, to its damage in the sum of
"5. $2,000.00, being the expense of travel to
California on one occasion and to Hope, Arkansas, on
On October 1, 1962, the defendant, Southland Aviation, Inc.,
filed its motion to dismiss against W.D. Johnson.
On October 3 and 4, 1962, the case was tried to the court. At
the beginning of the trial the attorney for the plaintiff stated
in open court that the name of the plaintiff, Bay Aviation
Services Co., had become Lawrence Properties Co. since the
institution of this suit, and in accordance with such statement
the name of Bay Aviation's successor was duly entered on the
record to reflect the change; but for purposes of the trial the
name of its predecessor, Bay Aviation Services Co., was used
since that was the name of the plaintiff during the course of the
dealings in question. At the same time, by consent of the counsel
for the parties, it was ordered by the court that the claim of
Southland Aviation, Inc., against the defendant to the
interpleader, W.D. Johnson, be dismissed without prejudice.
At the conclusion of the presentation of the testimony the case
was taken under advisement by the court, subject to submission by
the parties of briefs in support of their respective contentions.
The briefs have been received, and the court, having considered
the pleadings, the testimony adduced at the trial, the exhibits
and briefs of counsel, now makes and files herein its findings of
fact and conclusions of law, separately stated.
The plaintiff, Bay Aviation Services Co., is a corporation
organized under the laws of the State of California with its
principal place of business in San Francisco, California. Its
successor, Lawrence Properties Co. is a California corporation
with its principal place of business in said State. Defendant,
Southland Aviation, Inc., is a corporation organized under the
laws of the State of Arkansas with its principal place of
business in Hope, Arkansas. The defendant to the interpleader,
Southard Production Co., is a corporation organized and existing
under the laws of the State of Ohio with its principal place of
business in Dayton, Ohio. The amount in controversy in this case,
exclusive of interest and costs, exceeds $10,000.00.
The predecessor of Bay Aviation was Oakland Airmotive Co.,
which was incorporated as a California corporation on March 15,
1954. Pursuant to an agreement dated July 2, 1958, Oakland
Airmotive acquired the rights to convert Beechcraft Bonanza
single-engine aircraft to twin-engine aircraft from the original
developer of the conversion plan, one David Peterson. The name of
Oakland Airmotive Co. was changed to Bay Aviation Services Co.,
(hereinafter called Bay) on July 8, 1960, and all of the
activities regarding the conversion of the aircraft in the
present case was carried on by Bay.
The defendant, Southland Aviation, Inc., (hereinafter called
Southland), had its first business dealings with Bay on July 20,
1960, at which time it purchased a Beechcraft Bonanza that had
been converted to a twin-engine aircraft (hereinafter referred to
as a Super-V), delivery of which was accepted in August or early
September 1960. On August 10, 1960, Southland and Bay entered
into distributor agreements at a meeting attended by the
principal officers of both corporations. During the remainder of
1960 and 1961, Southland flew its Super-V conversion to a number
of airports in Southwestern United States pursuant to its
distributor agreement with Bay. This was one of the services
in relation to preparing to merchandise the Super-V in a
five-state area, as provided by the distributor agreement with
Bay. The original plan was for Southland and other distributors
to install the conversion kits as supplied by Bay as