United States v. Skinner & Eddy Corporation, 5 F.2d 708 (W.D. Wash. 1925)

*709 *710 Oliver P. M. Brown, Sp. Asst. Atty. Gen., and Clarence L. Reames, of Seattle, Wash. (Thos. P. Revelle, U. S. Atty., and John A. Frater, Asst. U. S. Atty., both of Seattle, Wash., Chauncey G. Parker, of Newark, N. J., MacCormac Snow, of Portland, Or., and Chas. E. Allen, of Seattle, Wash., of counsel), for the United States.

Louis Titus, of San Francisco, Cal., and George Donworth, of Seattle, Wash. (Hastings & Stedman, Donworth, Todd & Higgins and Wm. Edris, all of Seattle, Wash., of counsel), for defendant.

NETERER, District Judge (after stating the facts as above).

"In the construction of a pleading, for the purpose of determining its effect, its allegations shall be liberally construed, with a view to substantial justice between the parties." Section 285, Rem. Code Wash. 1915. See, also, Duryee v. Friars, 18 Wash. 55, 50 P. 583; McKinley v. Min. Hill Mining Co., 46 Wash. 162, 89 P. 495; Lawson v. Sprague, 51 Wash. 291, 98 P. 737; Bank of Metropolis v. Guttschlick, 14 Pet. 19, 10 L. Ed. 335; Childress v. Emory, 8 Wheat. 642, 5 L. Ed. 705.

The demurrer admits facts well pleaded, and the allegation of knowledge of the defendant that the Fleet Corporation was acting for the plaintiff is a statement of fact admitted by the demurrer. Fidelity & Deposit Co. v. Bank of Charleston (C. C. A.) 267 F. 367; Sullivan v. Iron Silver Mining Co., 109 U.S. 550, 555, 3 S. Ct. 339, 27 L. Ed. 1028; Tobin v. Seattle, 127 Wash. 664, 221 P. 583; Harris v. Halverson, 23 Wash. 779, 63 P. 549; Shannon v. Grindstaff, 11 Wash. 536, 40 P. 123. And, this fact being admitted, there can be no question, if there could be without such knowledge, that the principal, the plaintiff, may sue for the contract of its agent, the United States Shipping Board Emergency Fleet Corporation. The statutes of the United States also entered into and became a part of the contracts set *711 out, as did also the executive orders of the President authorized by the provisions of law.

The decision of the Supreme Court in the Sloan, etc., Case, 258 U.S. 567, 42 S. Ct. 386, 66 L. Ed. 762, and allied cases, holding it to be a corporate entity, can have no relation to this issue because of the established relation disclosed by the record between the plaintiff, the Fleet Corporation, and the defendant. That a principal may sue on the contract of his agent has been repeatedly held. Stinson v. Sachs, 8 Wash. 391, 36 P. 287; First Nat. Life Assurance Society v. Farquhar, 75 Wash. 667, 135 P. 619; Campbell v. Gowans, 35 Utah, 268, 100 P. 397.

Whether there may be exception to contract No. 10 entered into prior to the Act of June 15, 1917, is not now material, because all of the other contracts are set out in count 1 and have the statement that the contract is entered into by the Fleet Corporation, "representing the United States of America." Aside from the stipulation in the contracts, the Supreme Court, in the Lake Monroe Case, 250 U. S. at page 251, 39 S. Ct. 460, 63 L. Ed. 962, said that the Fleet Corporation was but an operating agency of the Shipping Board, financed with public funds. In the Sloan Case, supra, the court did not say that the Fleet Corporation was not an agent of the government, nor am I conscious of any case which would prevent the plaintiff, upon the allegations of the complaint under the demurrer, from maintaining this suit. See, also, U. S. v. Powers (D. C.) 274 F. 131; U. S. v. Gordin, 287 F. 565; U. S. v. Hodges (D. C.) 218 F. 87; Buffalo Union Furnace Co. v. U. S. S. B. E. F. Corp. (C. C. A.) 291 F. 23; State v. Williams (Wash.) 233 P. 285; Hunter v. U. S., 5 Pet. 173, 8 L. Ed. 86; Pine River Logging Co. v. U. S., 186 U.S. 279, 22 S. Ct. 920, 46 L. Ed. 1164; Utah Power & Light Co. v. U. S., 243 U.S. 389, 37 S. Ct. 387, 61 L. Ed. 791; Anderson v. Spriestersbach, 69 Wash. 393, 125 P. 166, 42 L. R. A. (N. S.) 176; Seattle National Bank v. Emmons, 16 Wash. 585, 48 P. 262; section 4, Merchant Marine Act June 5, 1920.

The legislation permitting the President to dispose of the property acquired by the Fleet Corporation as he might direct is an assertion that the property belongs to the United States, and, if it is its property, it is the real party in interest. Section 179, Rem. Code Wash. See, also, United States v. Clallam County (D. C.) 283 F. 645, affirmed 263 U.S. 341, 44 S. Ct. 121, 68 L. Ed. 328. Justice Holmes, in affirming, said the plaintiff was merely the corporate instrumentality of the United States. U. S. Grain Corp. v. Phillips, 261 U.S. 109, 43 S. Ct. 283, 67 L. Ed. 552. U. S. v. Matthews (C. C. A.) 282 F. 266, is distinguished in this: That recovery was sought from Matthews for money paid through "its agent or governmental department," the Fleet Corporation. There was no express contract declared upon, nor disclosed agency alleged.

This court, in U. S. v. Sloan Shipyards Corp., Anacortes Shipbldg. Co., Capital City Iron Works, et al., decision filed May 23, 1921 (not reported), in an action for the foreclosure of a bond or mortgage in the sum of $1,000,000 to secure damages in the event of default for like contracts for shipbuilding as in this case, where the contracts were executed by the Fleet Corporation as in this case, and the bond was taken to the Fleet Corporation, each reciting that the Fleet Corporation was "representing the United States of America," held the United States could sue as the real party in interest, appointed a receiver, and took possession of the properties of the Sloan Shipyard Corporation and allied concerns, and sold all of the assets, amounting to many hundreds of thousands of dollars. The Fleet Corporation was made in that case a party defendant, and this court held that, all parties being before the court, the ultimate rights of all parties could be protected by the decree, and a court of equity, necessity appearing, can arrange the parties plaintiff and defendant, and administer relief as their respective rights may require.

The plaintiff, possessing the contracts, being the real party in interest see Kerr v. Watts, 19 U. S. (6 Wheat.) 550, 5 L. Ed. 328; Elmendof v. Taylor, 23 U. S. (10 Wheat.) 152, 6 L. Ed. 289; Mechanics Bank v. Seton, 26 U. S. (1 Pet.) 299, 7 L. Ed. 152, may maintain this action. Under the Supreme Court holding in Erickson v. U. S., 264 U.S. 246, 44 S. Ct. 310, 68 L. Ed. 661, the Fleet Corporation is not a necessary party. Whether it may be a proper party is not before the court.

I think it is apparent from the complaint that the United States is the real party in interest, the Fleet Corporation, a corporate instrumentality, is a mere agent, with no beneficial interest, and that sufficient facts are stated in the several causes of action, and the demurrer to the several causes of action should be overruled.