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BAY AVIATION SERV. CO. v. SOUTHLAND AVIATION

December 4, 1962

BAY AVIATION SERVICES CO., PREDECESSOR OF LAWRENCE PROPERTIES CO., PLAINTIFF,
v.
SOUTHLAND AVIATION, INC., DEFENDANT, THE SOUTHARD PRODUCTION CO., DEFENDANT TO INTERPLEADER.



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
  counterclaim.
    "(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 and agents.

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
  said aircraft.
    "3. Installed A1C engines instead of A1A engines on
  said aircraft.
    "4. Installed improperly designed exhaust stacks in
  said engines.
    "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
  of wiring.
    "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
  systems.
    "9. Failed to repaint said aircraft in a good and
  workmanlike manner.
    "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
  defective work.
    "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
  said aircraft.
    "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
  $1,700.00.
    "5. $2,000.00, being the expense of travel to
  California on one occasion and to Hope, Arkansas, on
  six occasions."

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.

FINDINGS OF FACT

1.

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.

2.

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.

3.

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 rendered 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 manufacturer. ...


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