268 F. 575 | S.D.N.Y. | 1920
(after stating the facts as above).
“The second difference between the allegations of the first and second causes of action is that in the first the basis is the wrongful inducement of a contract with the plaintiff’s vendee, and in the second the wrongful entry into a con*581 tract with the plaintiff's vendee with fall knowledge of the facts, in both utilizing the wrongful activity of the defendant’s president. The second cause of action suggests, under the cireumsianees alleged, the violation of a duty on the part of the defendant, with knowledge of the facts alleged, to abstain from preventing the vendee carrying out its contract with the plaintiff. The third cause of action alleged is based upon the same elementary facts, which are reiterated; but it, is also alleged that the defendant, with knowledge of these facts, and a wrongful design to deprive the plaintiff of the benefit of its contract with its vendee, not only made the wrongful representations that no sugar could be exported unless purchased through the defendant, but further that the defendant had taken over all contracts, and the defendant would fill tho plaintiff’s contract, and the defendant would secure a license for export and fill the said contract on behalf of the plaintiff, and that the defendant induced the belief on the part of the vendee that the defendant was fulfilling the plaintiff’s contract, and relying thereon the vendee refused to complete with tiie plaintiff, and the plaintiff received no profit therefrom. Thus tho third cause of action presents the additional element of estoppel, in that defendant actually represented and induced the belief on the part of the vendee that defendant was fulfilling the plaintiff’s contract.”
Tlie law of quasi contracts, so called, has as one of its vital features the aim of the courts to apply a suitable remedy for the results flowing from certain kinds of wrongs. Thus it is that an action, in some circumstances, will be regarded as ex contractu, even though there has not been agreement between the parties. The broad principle is succinctly stated in 13 C. J. 244, as follows:
“Contracts implied in law, or more properly quasi or constructive contracts, are a class of obligations which are imposed or created by law, without regard to the assent of the party bound, on the ground that they are dictated by reason and jusliee, and which are allowed to be enforced by an action ex contrac-tu. They rest solely on a legal fiction, and are not contract obligations at all in the true sense, for there is no agreement; but they are clothed with the semblanco of contract for the purpose of the remedy, and the obligation arises not from consent, as in the case of true contracts, but from the law or natural equity. * * * Among the instances of quasi or constructive contracts may be mentioned eases in which one person has received money which another person ought to have received, and which the latter is allowed to recover from the former in an action of assumpsit for money had and received, or money received to tho use of plaintiff. * * * ”
See, also, Miller v. Schloss, 218 N. Y. 400, at page 407 et seq., 113 N. E. 337.
The implied promise springs up by virtue of or follows the commission oí a wrong. In each of the causes of action here a wrong is alleged. In the first and third causes of action, the wrong alleged is clearly of the kind discussed in Angle v. Chicago, St. Paul, etc., Railway, 151 U. S. 1, at page 13 et seq., 14 Sup. Ct. 240, 38 L. Ed. 55, and American Malting Co. v. Keitel, 209 Eed. 351, at page 358 et seq., 126 C. C. A. 277. In the second cause of action the wrong alleged is the failure to abstain from preventing the Norwegian Commission from carrying out its contract with plaintiff, when its duty was so to abstain.
Of course, the wrong must have been the proximate cause of failure of the Norwegian Commission to perform its contract, else plaintiff has no case; and it is earnestly contended by defendant that its conduct as alleged was not such cause. I am unable to follow this contention. As the three causes of action are drawn, they plainly attribute the fail
A further contention of defendant, earnestly urged, is based on the expressions of Keener and Woodward in their works on Quasi Contracts. Woodward, Quasi Contracts, § 274, referring in part to Keener, says:
“Perhaps it was arguable at one time that the obligation of a tort-feasor in assumpsit is analogous to that of a constructive trustee, and that he should be held accountable for any profits derived by him from his wrongful act. It seems to be now taken for granted, however, that the obligation is not to account for profits but to make restitution. It follows that it is not enough that the defendant has been enriched by his wrong; it must further appear that the benefit received by defendant has been taken from the plaintiff. As Prof. Keener puts it, there must be ‘not only a plus but a minus quantity.’ ”
Plaintiff’s counsel analyze these propositions of the writers, and, finding that Keener’s reference (followed by Woodward) is to one English case, Phillips v. Homfray, L. R. Ch. Div. 439, they dissect that case to ascertain the real point decided. But, laying aside the case referred to, the principle announced is illogical in its limitations. The point is not whether a definite something was taken away from plaintiff and added to the treasury of defendant. The point is whether defendant unjustly enriched itself by doing a wrong to plaintiff in such manner and in such circumstances that in equity and good conscience defendant should not be permitted to retain that by which it has been enriched.
The whole trend of the law points to the aspiration of the courts to find an adequate and orderly remedy for wrongs as to which redress was elusive until this theory of quasi contracts was developed. Mr. Justice Brewer, early in the Angle Case, said:
“Surely it would seem tbe recital of these facts would carry with it an assurance that there was some remedy, * * ’i and that such remedy would reach to the party * * * by whose acts these losses were caused.”
Judge Collin, in Miller v. Schloss, supra, speaks of natural equity and good conscience, and of the circumstances under which money ex aequo et bono belongs to another. Indeed, this is one of those develop-
“Tire most that can be said is that ordinarily, and apart from some rule of policy which dictates the contrary result, recovery should be allowed where there has been actual enrichment at the plaintiff’s expense. * * * ”
In the case at bar it might further be contended, not without merit, that the case comes even within the limitations stated by Keener and Woodward; but I prefer to rest my conclusion on the broader ground.
It is further urged that, unless plaintiff has been actually damaged, it lias no grievance, and that the complaint should have alleged ability profitably to perform plaintiff’s contract with the Norwegian Commission. This position misconceives the nature of an action for money had and received as framed in this' complaint. Whether inability to perform is a defense need not now be determined. The action is not for damages for breach of contract, but for the profit which defendant is alleged to have made as the result of its alleged wrongful acts. Ability to perform, in such circumstances, is no part of plaintiff’s case. Angle Case, supra, 151 U. S. 12, 14 Sup. Ct. 240, 38 L. Ed. 55.
In any event, at any time prior to October 1, 1918, the date to which the performance of plaintiff’s contract had been extended, the necessary license might have been obtained. It was within Rolph’s power to grant the license before October 1st; but prior thereto (i. e., on September 20th) the Norwegian Commission notified plaintiff that it would not take the sugar from plaintiff, because defendant had filled its requirements. In other words, defendants’ alleged tort having been committed prior to October 1st (i. e., prior to September 20lh), ability of plaintiff to perform after September 20th becomes immaterial as a necessary requirement of plaintiff’s causes of action.
Finally, in respect of the third cause of action, there is neither a question of estoppel nor a question of ratification. Its allegations are not of the kind where a principal ratifies the unauthorized acts of an agent in order to avail of the benefits of those acts. In principle this cause is like the first cause of action, in that it alleges misrepresentations which induced the breach of the contract between plaintiff and the Norwegian Commission.
For the reasons thus outlined, I am of opinion that the complaint is not demurrable.
Demurrer io Defenses. — At the outset, it is apparent that the transactions described in the defenses .were not transactions between the goverments of the United States and Norway. Such international transactions, if in pursuance of treaty powers, must have the constitutional consent of the Senate. Any other international transaction,
Before such and similar results can be justified, it must be clear, both on reason and authority, that, where the corporation used as an agency is created and organized under a state statute, it may be relieved of all the responsibilities usually attached to it. Section 2 of the Act of August 10, 1917 (Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 3115%ee), provided:
“Sec. 2. That in carrying out the purposes oí this act the President is authorized to enter into any voluntary arrangements or agreements, to create and use any agency or agencies, to accept the services of any person without compensation, to co-operate with any agency or person, to utilize any department or agency of the government, and to co-ordinate their activities so as to avoid any preventable loss or duplication of effort or funds.”
The agency here concerned is a Delaware corporation. Nothing in section 2, supra, purports to change (if there were power so to do) the rights, duties, obligations, and liabilities of such a corporation. The Congress did not enact any statute incorporating the defendant or specifically providing for its incorporation. Its incorporation was under the laws of Delaware, and the Revised Code of Delaware of 1915 (chapter 65, §' 1916) provides:
“Sec. 2. Fowers. — Every corporation created under the provisions of this chapter shall have -power. * * *
“2. To sue and be sued, complain and defend in any court of law or equity. * * *
“8. To conduct business in this state, other states, the District of Columbia, the territories and colonies of the United States and in foreign countries. * * * ”
If the sovereign thus chooses as its agent a state corporation which can be sued it cannot by ipse dixit deprive one injured by such an agent of the right to sue. The state of Delaware allowed defendant to be created, but as a condition of its creation and existence it afforded the right to any one to sue the corporate being which it thus created.. It is alleged that, upon “the direction”’of the President, defendant was incorporated. This is but another way of saying that the President directed that the necessary number of persons required under the Delaware statute should take the steps necessary under that statute to incorporate a defendant subject to the liabilities of that statute. Neither the Executive nor any person acting with authority under him had the power to change the Delaware statute, and hence no power to change the obligations, rights, or liabilities of a corporation which was
If Ballaine v. Alaska Northern Ry. Co., 259 Fed. 183, 170 C. C. A. 251, is to be deemed an authority, it must be on the special facts of that case. The mere fact that the United States was a stockholder in the Alaska Railway is not enough. Bank of the U. S. v. Planters’ Bank of Georgia, 9 Wheat. 904, 6 L. Ed. 244; Panama Ry. Co. v, Curran, 256 Fed. 768, 168 C. C. A. 114; Salas v. United States, 234 Fed. 842, 148 C. C. A. 440. In the Ballaine Case certain express powers were conferred upon the President with reference to the acquisition of railroads in a territory, and the court held that by virtue of the act of Congress, taking its provisions together, the United States acted in its sovereign capacity in acquiring the stocks, bonds, and property of the railway, and employed the corporate organization as an agency through which to execute the purposes of the statute.
By citing Luxton v. North River Bridge Co., 153 U. S. 525, 14 Sup. Ct. 891, 38 L. Ed. 808, it is apparent that the court regarded the Alaska Railway as owned as a direct governmental agency to carry out a governmental purpose in the territory. But in the Ballaine Case the court was not called upon to determine whether the laws of a state may be regarded as inoperative and inapplicable merely because a corporation of the state is used as a governmental agency. See Gould Coupler Co. v. U. S. Shipping Board Emergency Fleet Corporation (D. C.) 261 Fed. 716, which, though somewhat different from the case at bar, expresses the reluctance of the courts to extend the doctrine of immunity beyond limits clearly defined.
In the case at bar the Congress did not create the corporation. In the Ballaine Case it was stated that the United States, acting in its sovereign capacity, “merely employed the corporation as an agency through which to execute the purposes o f the statute”; but the court necessarily held that the purpose of the statute and its execution were not commercial, and pointed out that the Alaska Railway was acquired for the settlement of public lands and other governmental purposes..
In the case at bar it is also claimed by defendant that the profit was an incident foreign to the performance of defendant’s duty and the purposes of its incorporation. But the incorporation under a state statute of a business corporation cannot deprive the agent thus created of its right as a corporation to make a profit nor relieve it of its corporate liabilities. It may be, as was held in the Panama and Commercial Cable Co. Cases, supra, that when the government itself creates its own agent, and owns part or all of the stock of the agent thus created, the test as to whether the corporation is suable, or whether the agent is a department of government, is the nature of the business done; but when the sovereign uses an agency created, not by itself, but under a state statute, he takes his agent as he finds it.
No case has been nor can be cited which authorized the President of the United States to change a state statute, or the powers conferred thereby, or the liabilities necessarily flowing therefrom. The property of the corporation cannot become the property of the stockholders until all provable claims are liquidated, no matter what the purpose of the stockholder may be, and the government’s position as a stockholder is no different from that_of a sovereign state which is a stockholder. As was said by the Chief Justice in Bank of U. S. v. Planters’ Bank of Georgia, supra:
“The state of Georgia, by giving to the bank the capacity to sue and be sued, voluntarily strips itself of its sovereign character, so far as respects the transactions of the bank, and waives all the privileges of that character. As a member of a corporation, a government never exercises its sovereignty. It acts merely as a corporator, and exercises no other power in the management of the affairs of the corporation, than are expressly given by the incorporating act. The government of the Union held shares in the old Bank of the United States; but the privileges of the government were not imparted by that circumstance to the bank. The United States was not a party to suits brought by or against the bank in the sense of the Constitution. So with respect to the present bank. Suits brought by or against it are not understood to be brought by or against the United States. The government, by becoming a cor-porator, lays down its sovereignty, so far as respects the transactions of the corporation, and exercises no power or privilege which is not derived from the charter.”
Here the case, if anything, is not so strong. The United States is not an incorporator, but a stockholder in a corporation, which, • as a condition or necessary accompaniment of its existence, can be sued and can engage in business. In enacting the statutes, supra, Congress intended, inter alia, to conserve necessaries during the war, and therefore, conferring large and almost unlimited powers to select agencies
There is not even in this case the creation of a corporation by act of Congress nor an express direction to incorporate, such as is found in the Shipping Act (Comp. St. §§ 8146a-8146r). Gould Coupler Co. Case, supra. But here the Executive, in pursuance of the discretion vested in him, chose an agent which by its very nature and existence had the right to engage in a commercial business. The whole tendency is against the extension of the immunity of the sovereign as against proper suitors, as is evidenced by such legislation as the Tucker Act (24 Stat. 505) and the Shipping Act (construed in certain respects in The Cake Monroe, 250 U. S. 246, 39 Sup. Ct. 460, 63 L. Ed. 962), and by cases such as are cited supra. This is not a case which invites a step in the opposite direction.
The demurrer to each and all of the affirmative defenses is sustained.
“Unjust enrichment” is now a familiar expression used to describe a result in different relations and in differing forms of litigation. Schall v. Camors, 251 U. S. 239, 40 Sup. Ct. 135, 64 L. Ed. 247; Eastern Extension Co. v. United States, 251 U. S. 355, 40 Sup. Ct. 168, 64 L. Ed. 305; Miller v. Schloss, supra; Matter of Wilson (D. C.) 252 Fed. 631.
It is, of course, not practicable to discuss all the points, such as the claimed analogy with infringement suits. They have received consideration, but only the more important features of the controversy have been stated.