# Petition — Starr v. Pring

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition
- **Published:** January 1, 1981
- **Citation:** 451 U.S. 1017

## Text

Office Supreme Court, U.S
FILE D

80-1618 MAR 7% 1981

{. STEVAS,

Xx
ABE $0 btwn owee-

No. ——-

IN THE
SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1980

CHARLES E. STARR and SOPHIE STARR, his wife,
Petitioners,
Vv.
JOHN A. PRING, SR.,

Respondent.

PETITION FOR WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

Ray G. Brown

Attorney for Petitioners
430 S.W. Morrison Street
Portland, Oregon 97204
(503) 222-1734

— t ~—~~+ +-—o ————

QUESTIONS PRESENTED

The questions presented by this appeal
are:

1. Whether the court of appeals
failed to give full effect to Department
of Transportation regulations on airworthi-
ness of aircraft, promulgated pursuant to
49 U.S.C. § 1348, in violation of
the Commerce Clause, art. I, § 8, cl. 3,
and the Supremacy Clause, art. VI, cl. 2,
of the United States Constitution?

2. Whether the decision of the court
of appeals that no failure of consideration
occurred under the terms of the airplane
lease contract executed by the parties was
based upon an incorrect interpretation of
Idaho state contract law?

3. Whether the court of appeals

applied Fed. R. Civ. P. 52(a), specifically,

that findings of fact shall not be set aside
unless clearly erroneous, to the ultimate
issue before it for decision, thereby violat-

ing the interpretation given to the "clearly

a tu

erroneous rule" by the federal courts?

-iii-

TABLE OF CONTENTS

Questions Presented . .. ++ + « »
Table of Authorities ..... -»

Opinions Below ... +++ «© © « »
JuriesGicticon («6s s+ « ee oe © 68

Constitutional and Statutory
Provisions Involved gis. cae =. Se 2

Statement of the Case ...+ + « «
Reasons for Granting the Writ...

I. The court of appeals
failed to give full effect
to Department of Transpor-
tation regulations on air-
worthiness of aircraft, pro-

mulgated pursuant to 49 U.S.C.

§ 1348, in violation of the
Commerce Clause, art. I, § 8,

cl. 3, and the Supremacy Clause,

art. VI, cl. 2, of the United
States Constitution: .... -

II. The decision of the

court of appeals that no
failure of consideration

from the respondent to the
petitioner occurred under
their airplane lease contract
was based upon an interpreta-
tion of state law, as required
by this Honorable Court

under the principles of

Erie Railway v. Tompkins,

304 U.S. 64 (1938), which
interpretation was incorrect .

10

20

-iv-

Table of Contents, Cont. Page

III. The court of appeals
applied the portion of Fed.

R. Civ. P. 52, that findings

of fact shall not be set.
aside unless clearly erroneous,
to the ultimate issue it

was to decide and thereby
violated the interpretation
which has been given to

the "clearly erroneous rule"

oy tame federal courts ... s+. 26

SRS! Cran ei Sea 2 fe ig, 2 34

-V-

TABLE OF AUTHORITIES

Cases

Baker v. United States, 417 F. Supp.
471 (W.D. Wash. 1975).

Bandy v. United States, 492 F. Supp.
13 (W.D. Tenn. 1978) ... .

Baumgartner v. United States, 322
U.S. 665 (1944). . « «

Blinzler v. Andrews, 91 Idaho 215,
485 P.2d 957 (1971).

Bogardus v. Commissioner, 302 U.S.
DEORBEeEes 6 « « * «

British Airways v. Port Authority
of New York and New Jersey,
431 F. Supp. 1216 (S.D.N.Y.),
modified on other grounds,
564 F.2d 1002 (2d Cir. 1977)

City of Burbank v. Lockheed Air
Terminal, Inc., ¢ll U.S. 624
ih hi 6 « « 6 © # 6 e

Commissioner v. Duberstein, 363 U.S.
a SEeeee « «¢ @ « «

Cordovan v. Dayton Rubber Co., 290
F.2d 858 (6th Cir. 1961)

Daily v. Bond, 623 F.2d 624 (9th
Car. 2960) . « c es

Downing v. Williams, 624 F.2d 612
(Sth Cir. 1980). ,

Erie Railway v. Tompkins, 304 U.S.
—- Raeeehes © 6 6 © © 0 a

- 16, 17

. 2

» 23

. 29

. 16

» ae

- 28

- 29

- 17

- 20, 21

-vi-

Table of Authorities, Cont.

Cases, Cont. Page

Huggins v. Green Top Dairy Farms,
75 Idaho 436, 273 P.2d 399

Drs 695 gle 6 s 6) 0 « «© » 23

Joseph Lupowitz Sons, Inc. Vv.
Commissioner, 497 F.2d 862
EE ROPES 5 4 5 ste et Shy 52

Securities and Exchange Commission
v. Bausch & Lomb, Inc., 565
MU @) @4 °°) |

Transamerica Leasing Corp. v. Van's
Realty Co., 91 Idaho 510,
427 P.2d 284 (1969). ...... 20, 21, 22

United States v. City of New Haven,
496 F.2d 452 (2d Cir. 1973),
appeal dismissed sub nom.
Town of East Haven v. United
States, 419 U.S. 958 (1974). . . 14,'15

United States v. Haas & Haynie Corp.,
577 F.2d 568 (9th Cir. 1978) .. 33

United States v. United States Gypsum
Co., 333 U.S. 364 (1948) .... 28

United States v. Weingarden, 473
F.24g 454 (6th Cir. 1973) ....- 31, 32

Weisel v. Singapore Joint Venture,
Inc., 602 F.2d 1185 (5th Cir.
1979) 7 7 7 . . + 7 . . © © > + 7 32, 33

Zabala Clemente v. United States,
567 F.2d 1140 (lst Cir. 1977),
cert. denied, 435 U.S. 1066
[awe 6. 2 2° 6 « ae

16

-vii-

Table of Authorities, Cont.

Statutes, Rules and Regulations

U.S. Const. art. I, § 8, cl.

Vemse Conee. art. VI, cl. 2.

28 U.S.C. § 1254(1)

28 U.S.C. § 1332 (a) (1)

#8 U.S.C. § 1652. . ...
28 U.S.C. § 2101 (c)

49 U.S.C. § 1348 (a)

rea. &. Civ. PB. S2(ap)...

14 C.F.R. § 91.3 (a)

14 C.F.R. § 91.29

Other Authority

3

1 Corbin on Contracts § 133 (1963).

H.R. Rep. No. 2360, 85th Cong., 2d
Sess., reprinted in [1958]

U.S. Code Cong. & Ad. News

PIS bs Se Ke 8

Restatement (Second) of Contracts

§ 262 (Tent. Draft No. 8,

SUteEs. %.% 6 Hee 8

6 Williston, Contracts § 814 (Jaeger

OG. L9B8s. 2 6 te

Wright, Law of Federal Courts (3d

ed. 1976).

24

12,

23

10
10

21

10

26, 27
10, 11

10, 1l

13

No.

IN THE
SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1980

CHARLES E. STARR and SOPHIE STARR, his wife,
Petitioners,
Vv.
JOHN A. PRING, SR.,

Respondent.

PETITION FOR WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO

December 8, 1978, Judgment
in favor of the Plaintiff
entered.

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

December 12, 1980, Judgment of
district court affirmed.

_—

OPINIONS BELOW

The opinion below by the Circuit
Court of Appeals for the Ninth Circuit is
an unpublished memorandum decision. A copy
of the opinion is set out in full as Appendix
A. The opinion below by the District Court
for the District of Idaho is also an un-

published opinion read in open court.

JURISDICTION

The judgment of the Court of Appeals
for the Ninth Circuit was entered on December
12, 1980. This petition for certiorari
was filed within ninety days of that date.

28 U.S.C. § 210l1(c). This Court's jurisdic-

tion is invoked under 28 U.S.C. § 1254(1).

CONSTITUTIONAL, STATUTORY PROVISIONS
AND RULES INVOLVED

Ueme Comer. art, I, $ 8, el. 3

The Congress shall have

Power .. . [3] To regulate
Commerce with foreign nations,
and among the several States,
and with the Indian tribes

Vee. Consett, art. VE; Gl. 2

This Constitution, and the
Laws of the United States
which shall be made in Pursuance
thereof; and all Treaties
made, or which shall be
made, under the Authority
of the United States, shall
be the supreme Law of the
Land; and the Judges in
every State shall be bound
thereby, any Thing in the
Constitution or Laws of

any State to the Contrary
notwithstanding.

~

28 U.S.C. § 1332(a) (1)

(a) The district courts
shall have original jurisdiction
of all civil actions where
the matter in controversy
exceeds the sum or value
of $10,000, exclusive of
interest and costs, and
is between—

(1) citizens of different
BCGeese « + 2

28 U.S.C. § 1652

The laws of the several
states, except where the
Constitution or treaties
of the United States or
Acts of Congress otherwise
require or provide, shall
be regarded as rules of
decision in civil actions
in the courts of the United
States, in cases where they

apply.
49 U.S.C. § 1348 (a)

The Secretary of Transporta-
tion is authorized and directed
to develop plans for and
formulate policy with respect
to the use of the navigable
airspace; and assign by
rule, regulation, or order
the use of the navigable
airspace under such terms,
conditions, and limitations
as he may deem necessary
in order to insure the safety
of aircraft and the efficient
utilization of such airspace.
He may modify or revoke
such assignment when required

==

in the public interest.

Fed. R. Civ. P. 52(a)

In all actions tried
upon the facts without a
jury or with an advisory
jury, the court shall find
the facts specially and
state separately its conclusions
of law thereon, and judgment
shall be entered pursuant
to Rule 58; and in granting
or refusing interlocutory
injunctions the court shall
similarly set forth the
findings of fact and conclusions
of law which constitute
the grounds of its action.
Requests for findings are
not necessary for purposes
of review. Findings of
fact shall not be set aside
unless clearly erroneous,
and due regard shall be
given to the opportunity
of the trial court to judge
of the credibility of the
witnesses. The findings
of a master, to the extent
that the court adopts them,
shall be considered as the
findings of the court. If
an opinion or memorandum
of decision is filed, it
will be sufficient if the
findings of fact and conclu-
sions of law appear therein.
Findings of fact and conclusions
of law are unnecessary on
decisions of motions under
Rules 12 or 56 or any other
motion except as provided
in Rule 41(b).

14 C.F.R. § 91.3 (a)

The pilot in command
of an aircraft is directly
responsible for, and is
the final authority as to,
the operation of that aircraft.

14 C.F.R. § 91.29

(a) No person may operate
a civil aircraft unless
it is in an airworthy condition.
(b) The pilot in command
of a civil aircraft is responsible
for determining whether
that aircraft is in condition
for safe flight. He shall
discontinue the flight when
unairworthy mechanical or
structural conditions occur.

STATEMENT OF THE CASE

On or about July 24, 1975, the petitioners
and the respondent entered into an agreement
in which the respondent agreed to lease
a 7-place Cessna twin-engine aircraft to
the petitioners in consideration for monthly
rental payments of a minimum of $1,900.00.
No difficulties occurred in this arrange-
ment until late September and early October
of 1975 when the petitioners observed struc-

tural problems with the aircraft. The

respondent had the airplane repaired shortly
thereafter and returned it to the petitioners.
No further problems were encountered until
the spring of 1976 when structural problems
were again discovered. At this time, petitioner-
pilot Charles Starr discovered structural
difficulties of such magnitude that, in

his judgment, the aircraft was not airworthy.
Because of the aircraft's condition, the
petitioners were forced to take it out of
service on June 6, 1976. At this time,

the petitioners refused to make further
payments under the lease. The aircraft

was eventually repossessed by the respondent
and leased to another aircraft operator.

The respondent thereupon brought an
action for damages against the petitioners
for rent due under the lease contract and
for additional expenses incurred. The juris-
diction of the District Court was invoked

pursuant to 28 U.S.C. § 1332(a) (1), as the

petitioners and the respondent are citizens

of different states, and the amount in contro-
versy was over $10,000.00. The District

Court ruled in favor of the respondent.

It made the following findings, produced

in relevant part, which it labelled Findings
of Fact and Conclusions of Law:

FINDINGS OF FACT

xk

9. In January or February
1976, defendants began the
proposed non-scheduled air
service from Coeur d'Alene,
Idaho, to Boise, Idaho,
using the Cessna. After
approximately three weeks
of trial runs and unscheduled
activity it was abandoned
for the reason that it proved
to be economically unfeasible.

10. By about the month
of May 1976, it was evident
to the defendants that they
were unable to obtain sufficient
income from the use of the
Cessna aircraft to meet
the $1,900.00 per month
minimum lease payments.

They ceased making the payments
for this reason.
x k *

12. Defendants claim,
and defendant Charles E.

Starr testified, that the
reason for the termination

of the Lease Contract by

the defendants was the problem

with the rivets which he
claimed was never properly
cured. I find from the
evidence that the alleged
dangerous condition caused

by loose rivets was not

the reason for the termination
of the lease payments by

the defendants.

CONCLUSIONS OF LAW

es

3. That the defendants
without legal cause breached
the said Contract and refused
to pay the lease payments
except that the defendants
paid the sum of $19,000.00.
Rr @

6. That in order to
preserve the Cessna and
carry out his duty to mitigate
damages, plaintiff advanced
the sum of $4,027.46, all
as set out in the Findings
of Fact.

7. That the plaintiff
is entitled to damages against
the defendants for a sum
equal to the unpaid lease
payments, together with
the expenses necessarily
advanced and less rentals
received and to be received
from the second lessee.

The petitioners appealed the judgment
of the district court to the Court of Appeals
for the Ninth Circuit. The petitioners

raised the three grounds which are asserted

aliq

herein in support of their argument for
reversal. On December 12, 1980, the judgment

of the district court was affirmed.

REASONS FOR GRANTING THE WRIT

I

THE COURT OF APPEALS FAILED

TO GIVE FULL EFFECT TO DEPARTMENT
OF TRANSPORTATION REGULATIONS
ON AIRWORTHINESS OF AIRCRAFT,
PROMULGATED PURSUANT TO

49 U.S.C. § 1348, IN VIOLATION
OF THE COMMERCE CLAUSE,

ART. I, § 8, CL. 3, AND

THE SUPREMACY CLAUSE, ART.

VI, CL. 2, OF THE UNITED
STATES CONSTITUTION.

In their brief before the court of
appeals, the petitioners placed emphasis
on the Department of Transportation regulations
(hereinafter referred to as Federal Aviation
Administration regulations) codified at
14 C.F.R. §§ 91.3(a) and 91.29. The relevant
language of these regulations, promulgated
pursuant to 49 U.S.C. § 1348, is as follows:

The pilot in command
of an aircraft is directly

responsible for, and is
the final authority as to,

elie

the operation of that aircraft.

14 C.F.R. § 91.3(a).
(a) No person may operate
a civil aircraft unless
it is in an airworthy condition.
(b) The pilot in command

of a civil aircraft is responsible

for determining whether

that aircraft is in condition

for safe flight. He shall

discontinue the flight when

unairworthy mechanical or

structural conditions occur.

14 C.F.R. § 91.29(a), (b).

The petitioners submitted that according
to the authority of the aircraft pilot under
these sections, the pilot's determination
of lack of airworthiness should have excused
their failure to pay rent under the lease
contract. The court of appeals, however,
completely disregarded these regulations
in its decision to affirm the district court's
judgment in favor of the respondent. No
mention of the regulations is included in

the court of appeals' opinion. The petitioners

respectfully contend that the court of appeals’

failure to give these regulations their

o1%=

full effect requires reversal of its decision.
When Congress passed the Federal

Aviation Act, the statute pursuant to which

the above regulations were promulgated,

the Congress made it clear that the Federal

Aviation Administration was being given

a broad power to adopt much needed air safety

regulations.

The most careful consideration
must be given in the drafting of
these [FAA] regulations. An
understanding of the system
sought to be achieved and
a knowledge of the problems
faced at the operations
level are necessary if the
regulations are to accomplish
their purpose. Once promulgated,
the regulations must be
applied and enforced, and
if need be, modified or
repealed to meet changing
conditions. Rulemaking
processes should not lag
far behind advances in equipment
and techniques.

How to insure the maximum
possible safety and efficiency
under proper regulations,
impartially enforced, is
one of the major problems
in connection with this
legislation.

H.R. Rep. No. 2360, 85th Cong., 2d Sess.,

=} 3<

reprinted in [1958] U.S. Code Cong. & Ad.

News 3741, 3747.

This Honorable Court has recognized
the broad power of the Federal Aviation
Administration. This broad statutory grant

was recognized in City of Burbank v. Lockheed

Air Terminal, Inc., 411 U.S. 624 (1973),

where this Honorable Court held that the
Federal Aviation Administration's broad

power to regulate airspace preempted a city
ordinance on airplane noise. Preemption

was held to have occurred because of Congress'
broad power to legislate in this area pursuant
to the Commerce and Supremacy Clauses of

the United States Constitution. This Court

so held even in light of the traditionally
broad police power of the states in the

area of noise regulation. The federal interest
in controlling air commerce was held to

be so great as to require conflicting state
regulations to yield to federal authority.

Lower: courts have also analyzed the

extensive powers of the Federal Aviation

allée

Administration. The decision in United

States v. City of New Haven, 496 F.2d 452

(2d Cir. 1973), appeal dismissed sub nom.

Town of East Haven v. United States, 419

U.S. 958 (1974), is illustrative. There,
the City of New Haven had extended an airport
runway in violation of state law. The city
was sued in state court, and the court enjoined
New Haven from using the extended runway.
The decision was eventually affirmed by
the Connecticut Supreme Court. The City
of New Haven continued to use the extended
runway despite the adverse state court deter-
mination, and was, as a result, cited for
contempt. The United States then inter-
vened and applied, in federal court, for
an injunction against the enforcement of
the state court orders. The district court
enjoined the enforcement of the state court
orders and the injunction was affirmed on
appeal.

The Second Circuit Court of Appeals

began by noting that the Federal Aviation

==

Administration has been given extensive
power to regulate air commerce. 496 F.2d
at 454. It then observed that the runway
extensions were specifically governed by
Sedaral regulations on "clear zones." The
state court decisions, since they conflicted
with the federal regulations, were held

to be preempted.

The clear zones, as part

of the navigable airspace,

are subject to federal regula-
tion, and the orders of

the Connecticut courts in-
fringed upon the federal
power. Chief Judge Blumenfeld
wrote:

Thus, the order of the

New Haven Superior Court
was directed to and con-
flicted squarely with

the regulation of navigable
airspace which Congress

has reserved for exclusive
federal control. To

the extent that it pre-
vents aircraft from using
navigable airspace it

is unenforceable under

the supremacy clause

and may properly be enjoined
by a federal court, despite
the broad sweep of the
anti-injunction statute,

28 U.S.C. § 2283. 367

F. Supp. 1338 at 1341.

-16-
Id. Even though there had been a violation
of state law, the state court decisions
were of no effect because of the overriding
federal interest in regulating navigable

airspace. See also British Airways v.

Port Authority of New York and New Jersey,

431 F. Supp. 1216 (S.D.N.Y.), modified on

other grounds, 564 F.2d 1002 (2d Cir. 1977).

When the regulations specifically
at issue in the petitioners' case have been
discussed in the lower courts, they have
been given very broad effect. In a number
of decisions, the lower courts have strongly
stressed that the aircraft pilot is the
ultimate arbiter of airworthiness. For
example, despite the negligence of other
persons contributing to the crash of an
airplane, the responsibility of the pilot
to determine that the aircraft is in a safe
condition for flight has barred tort actions

in many cases. See Zabala Clemente v.

United States, 567 F.2d 1140 (lst Cir. 1977),

cert. denied, 435 U.S. 1066 (1978); Bandy

oi Ju

v. United States, 492 F. Supp. 13 (W.D.

Tenn. 1978); and Baker v. United States,

417 F. Supp. 471 (W.D. Wash. 1975). Indeed,
the failure to conduct an appropriate pre-
flight airworthiness inspection is grounds
for suspension of an aircraft pilot certi-

ficate. Daily v. Bond, 623 F.2d 624 (9th

Cir. 1980). The regulations at issue in
the instant case are intended to be strictly
applied and given the fvll and broad effect
necessary to prevent the operation of airplanes
when they are determined by their pilots
to be in an unsafe condition.

It is respectfully submitted that
to let stand the decision of the court of
appeals which disregarded the F.A.A. regula-
tions here at issue would be to drastically
undermine the policy of the F.A.A. calling
for the insurance of the safe operation
of aircraft. If aircraft lessees, such
as the petitioners, are viewed to be required

under a lease contract either to pay for

olG=

an aircraft which is not airworthy? or to
Operate an unsafe aircraft, economic consi-
derations may often require unsafe aircraft
Operation. The important federal require-
ments of safe aircraft operation would be
required to give way to state contract princi-
ples in such cases. This, it is submitted,
is not the intent of the federal regulation
of air commerce. When a lessee has been
provided by the lessor with an aircraft
which is not airworthy, according to the
aircraft pilot, the federal regulations
should be interpreted as establishing that no
consideration has been given to the lessee

because of the airplane's unsafe condition.

1

This is the reasoning of the district
court and the court of appeals. In the
petitioners' second reason supporting the
grant of a writ of certiorari, the petitioners
assert that this is an erroneous interpreta-
tion of state law. It is assumed here
arguendo.

=19=

This, it is submitted, is the only way to

fully effectuate the strict requirements

of aircraft safety mandated by federal statutes
and regulations.

Because the court of appeals gave
greater effect to its interpretation of
state contract principles than to important
Federal Aviation Administration regulations
and the federal policies enunciated therein,
the petitioners respectfully submit that
the court of appeals' decision to affirm
the district court's judgment should be

reversed.

=30=

If

THE DECISION OF THE COURT OF
APPEALS THAT NO FAILURE OF
CONSIDERATION FROM THE RESPONDENT
TO THE PETITIONER OCCURRED UNDER
THEIR AIRPLANE LEASE CONTRACT WAS
BASED UPON AN INTERPRETATION OF
STATE LAW, AS REQUIRED BY THIS
HONORABLE COURT UNDER THE PRIN-
CIPLES OF ERIE RAILWAY V.
TOMPKINS, 304 "J.S. 64 (1938),
WHICH INTERPRETATION WAS
INCORRECT.

The court of appeals, in passing,
rejected the petitioners’ argument that
there had been a failure of consideration
from the respondent which justified the
petitioners’ refusal to continue payment
under the lease contract. It cited one case

in support of this conclusion, Transamerica

Leasing Corp. v. Van's Realty Co., 91 Idaho

510, 427 P.2d 284 (1969). The petitioners
contend that this case is not properly dis-
positive of the petitioners' failure of con-
sideration claim and that the Idaho Supreme
Court would have reasoned differently on the

issue. It is thus respectfully submitted

that the dictates of the Rules of Decision

a 2a

Act, 28 U.S.C. § 1652, as interpreted by this

Honorable Court in Erie Railway v. Tompkins,

304 U.S. 64 (1938), were not correctly ap-
plied by the court of appeals.

The Transamerica case would not be

viewed as authority in Idaho beyond its
limited fact situation. In that case, the
lessor and lessee entered into a transaction
in which the lessor would purchase a machine
which was selected by the lessee, who also
participated in the building of the machine.
The transaction was labelled by the Supreme
Court of Idaho as a speculative venture.

427 P.2d at 287. No technical study had
ever been made of the machine. Id. No one
knew whether the machine would work at all,
even at the beginning of the lease period.
Id. The only role of the lessor in the trans-
action was to furnish money to buy the
machine.

The facts in Transamerica, it is sub-

mitted, are readily distinguishable from

_

~2Be

those in the petitioners' case. When the
petitioners entered into a lease agreement
for an airplane, they were not entering into
a speculative transaction in which the pos-
sible performance capabilities of the bar-
gained-for consideration were in question to
all concerned. The petitioners bargained
for an airworthy airplane which could be
relied upon for use in their business. In
the petitioners' case, it was not, as it was

in Transamerica, the efforts of the respon-

dent to finance the purchase of an airplane
which was the consideration bargained for;
rather, it was the airplane itself that was
the consideration. When the petitioners’
case is so properly viewed, it is contended,

the Transamerica case ceases to be relevant.

The petitioner contends that the Idaho

Supreme Court would apply law on failure of
consideration in a way which would require
a different result to be reached from that

reached by the court of appeals.

o 2 Ben

The Idaho Supreme Court has decided
no case which would control the determina-
tion of the instant case. The two closest

cases decided by that court are Blinzler

v. Andrews, 91 Idaho 215, 485 P.2d 957

(1971), and Huggins v. Green Top Dairy Farms,

75 Idaho 436, 273 P.2d 399 (1954). Both
cases support the notion that rescission is
proper when one party has materially breach-
ed the contract. They thus are consistent
with, although not authority in and of them-
selves, for the proposition that failure of
consideration from one party relieves the
other of his contractual duties. Thus,
other sources should be consulted to deter-
mine the law which Idaho would apply to the
petitioners' failure of consideration claim.

See Wright, Law of Federal Courts 270-71

(1976).
Two highly persuasive authorities
which Idaho would likely follow are the

Restatement (Second) of Contracts, and

o%hea

Corbin on Contracts. Corbin defines failure

of consideration in the following way:

In innumerable cases, however,
a promise has been declared to be
unenforceable because there has
been a "failure of the consider-
ation." This does not mean lack
of consideration; nor does it
often mean that the promise, now
unenforceable, was never a valid
contract. It does méan, on the
other hand, that a performance for
which the promisor bargained has
not been rendered; in many cases,
though not in all, that failure
is a good legal excuse for his
refusal to perform his own
promise, and it may be a good
reason for compelling restitu-
tion if he has already performed.

1 Corbin on Contracts § 133 at 572 (1963).

The on-point Restatement section states:

Except as stated in § 265,
[dealing with corresponding
part performance pairs], it is
a condition of each party's re-
maining duties to render per-
formance to be exchanged under
an exchange of promises that
there be no uncured material
failure by the other party to
render any such performance due
at an earlier time.

Restatement (Second) of Contracts § 262

(Tent. Draft No. 8, 1973); accord, 6 Will-

iston, Contracts § 814.

o25-

The petitioners respectfully submit
that had the court of appeals relied on such
authority that this case would have been de-
cided differently. As stated earlier, the
petitioners bargained with the respondent
for an airplane which was airworthy. When
the condition of the leased airplane deter-
iorated to a non-airworthy state the entirety
of that for which the petitioners had bar-
gained vanished. Since an airworthy air-
plane was not delivered by the respondent,
the duty of the petitioners to continue mak-
ing rent payments should have been viewed to
have been extinguished. It is submitted
that this Honorable Court should reverse the
judgment of the court of appeals because of
its failure to apply the law that the

Supreme Court of Idaho would have applied.

o26—

Iil

THE COURT OF APPEALS APPLIED
THE PORTION OF FED. R. CIV. P.
52, THAT FINDINGS OF FACT
SHALL NOT BE SET ASIDE UNLESS
CLEARLY ERRONEOUS, TO THE
ULTIMATE ISSUE IT WAS TO
DECIDE AND THEREBY VIOLATED
THE INTERPRETATION WHICH

HAS BEEN GIVEN TO THE "CLEARLY
ERRONEOUS RULE" BY THE FEDERAL
COURTS.

The court of appeals essentially
ciueed acide all of the petitioners' defenses
to the alleged breach of the airplane lease
contract when it decided one issue. The
issue was whether the petitioners stopped
making rent payments under the lease because
they could not use the aircraft profitably,
or on the other hand, whether they stopped
payment because the aircraft was not air-
worthy. The court resolved the issue by
refusing to reject the district court's
holding that the petitioners stopped making
payments because they could not use the
aircraft profitably. The court of appeals

deferred to the district court's judgment

-27-

based upon the following language contained

in Fed. R. Civ. P. 52(a): "Findings of fact

shall not be set aside unless clearly errone-
ous... ." It is respectfully submitted
that in so deferring to the district court,
the court of appeals improperly applied

Fed. R. Civ. P. 52(a) and denied the peti-

tioners a meaningful opportunity for appellate
review on their claim that the F.A.A. air-
worthiness regulations had not been properly
considered and applied.

The district court judgment which
was deferred to by the court of appeals
essentially decided the entire case on appeal.
The district court's finding that the peti-
tioners stopped payment under the contract
because they could not use the aircraft
profitably is merely another way of stating
the proposition that the petitioners breached
the contract because they refused, without
justification, to continue to pay according
to its terms. The two propositions are

indistinguishable in their meanings and

=) =

the court of appeals applied the district
court's finding as meaning that the petitioners
breached the contract. The petitioners
contend that when the "finding" in question
of the district court is viewed in light
of its real meaning and effect, it is clear
that it was not a factual finding but was
a holding on the ultimate issue of the case.
As such, the petitioners contend that the
court of appeals should not have deferred
to the district court's judgment under the
"clearly erroneous" rule.

The "clearly erroneous" rule has
never been held to extend beyond findings
of fact or inferences from undisputed facts.

See Commissioner v. Duberstein, 363 U.S.

278 (1960); United States v. United States

Gypsum Co., 333 U.S. 364 (1948). The rule

has never been extended to legal determina-
tions, to determinations involving mixed
questions of fact and law, or to determina-
tions of the ultimate question before the

court.

=29-

When it comes to conclusions
of law and inferences to
be drawn therefrom, the
appellate court is free
to act independently and
draw its own legal conclusions
and inferences. ... If
this were not so, the appellate
court would be stripped
of its power of review.
Moreover, not all findings
labeled as findings of fact
are binding on an appellate
court. Where a finding
designated as a finding
of fact is not in reality
a finding of fact, but is
a conclusion of law or a
mixed finding of fact and
conclusion of law, it is
not binding on the appellate
court... . Where a finding
is of an ultimate fact in
the making of which is involved
the application of legal
principles, it is subject
to review.

Cordovan v. Dayton Rubber Co., 290 F.2d

858, 859-60 (6th Cir. 1961) (citations omitted).
This Honorable Court has recognized these
principles ever since its decisions in

Bogardus v.- Commissioner, 302 U.S. 34 (1937),

and Baumgartner v. United States, 322 U.S.

665 (1944).

A number of lower court decisions

=3Q~

are persuasive examples of why the "clearly
erroneous" test was improperly applied in

the instant case. Downing v. Williams,

624 F.2d 612 (5th Cir. 1980), is one such
example. There, the question was whether
the appellate court should apply the "clearly
erroneous" rule to a jury determination
that an employee had been dismissed from
his job "with good cause." The court held
that the rule would not properly be appliec.
It began by noting that the ultimate question
in the case was whether the employee's dis-
missal had violated his first amendment
rights. Since the determination of the
"good cause" issue would necessarily decide
the constitutional issue, the "clearly errone-
ous" rule was held inapplicable.

[W]e are not bound by the

jury's findings that Dr.

Downing [the employee] was

dismissed "with good cause."

. « - (T]he ultimate question

of whether Dr. Downing was

fired for reasons that imper-

missibly abridged his first

amendment rights is a question
of law for the trial court...

ali

In this inquiry, there are some
factual matters which a

jury could decide, for example,
the extent of a disruption

[the employee was said to

have caused]. But any questions
of fact which a jury could
decide which might relate

to the ultimate questions

of law are nonetheless subject
to careful review by the

Court of Appeals which has

the power to "conduct an
independent review of consti-
tutional claims when necessary."

Id. at 621-22.

The decisions in Joseph Lupowitz Sons,

Inc. v. Commissioner, 497 F.2d 862 (3d Cir.

1974), and United States v. Weingarden,

473 F.2d 454 (6th Cir. 1973), are also instruc-

tive. Joseph Lupowitz Sons, Inc., supra,

was an income tax case in which the issue

was whether the "clearly erroneous" rule
should apply to the determination of whether
a certain money transfer was a loan or a
contribution to capital. The clearly errone-
ous rule was held to be inapplicable. The
court observed that the review of basic

facts in a district court's decision must

= 3 Pe

be distinguished from a review of the ultimate
issue decided. The latter was held to be

the case in Joseph Lupowitz Sons, Inc.,

and so the finding was reversible just as
an issue of law would have been,that is,
through full appellate review.

Weingarden, supra, was a tax case

also, but at issue was the propriety of

a summons issued against the defendant by

the I.R.S. According to the applicable

law, the propriety of the summons would

be determined depending upon the purpose
behind its issuance. The district court
found that it had been issued solely for

the purpose of a criminal investigation

and was thus improper. On appeal, the question
was whether the clearly erroneous rule should
apply to this finding. The court held that
it should not. Again, the finding was held
to be either a mixed question of law and

fact or a determination of ultimate fact

which is fully reviewable. Accord, Weisel

=33-

v. Singapore Joint Venture, Inc., 602 F.2d

1185 n. 11 (5th Cir. 1979); United States

v. Haas & Haynie Corp., 577 F.2d 568 (9th

Cir. 1978); and Securities and Exchange

Commission v. Bausch & Lomb, Inc. 565 F.2d

8 (2d Cir. 1977).

The instant case is very similar
to those cited above. When the district
court found that the petitioners stopped
paying rent installments because they could
not use the aircraft profitably, the issue
of breach, which is the ultimate issue in
the case, had been decided. Merely because
the term breach was not explicitly used
by the court changes nothing. The district
court's determination was entirely disposi-
tive of the case. The petitioners, it is
respectfully submitted, should have heen
afforded full appellate review of the issue
of breach. To allow the "clearly erroneous"
rule to be construed otherwise would be

to allow this exception to vastly diminish

ago

the opportunity for meaningful appellate

review.

CONCLUSION

Based on the foregoing, the petitioners
pray that a writ of certiorari be granted.

Respectfully submitted,

Raymond G. Brown
Attorney for Petitioners
905 Executive Building
811 S.W. Sixth Avenue
Portland, Oregon 97204

APPENDIX A

DO NOT PUBLISH

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

JOHN A. PRING, SR., No. 79-4048
Plaintiff-Appellee, D.C. No. CIV. 77
2025
vs. MEMORANDUM

CHARLES E. STARR and
SOPHIE J. STARR, et. al.,
Defendants-Appellants.

Submitted — December 10, 1980
Decided — December 12, 1980

Appeal from the United States
District Court for the
District of Idaho
Ray McNichols, Chief District Judge,
Presiding

Before: WRIGHT and FLETCHER, Circuit Judges,
and
PECKHAM,* District Judge

We affirm the judgment in this diver-
sity case. Idaho law governs the rights and
Obligations of the parties under a contract
formed and carried out in that state.

Pring agreed to purchase and lease an
aircraft to Starr who agreed to pay a min-
imum monthly rental for use of the plane,
and to provide storage, insurance and oper-
ational maintenance.

*Honorable Robert F. Peckham, Chief United
States District Judge of the Northern District
of California, sitting by designation.

ican aman raeeraati el

2 Pring vs. Starr

Starr located a Cessna 414 acceptable
for his purposes and Pring bought it. The
district court found that Starr breached the
contract when he stopped making monthly pay-
ments on the lease.

Star contends the aircraft was not air-
worthy, and that there was a failure of con-
sideration relieving him of his obligation
to pay.

The district court found that he
stopped paying because he could not use the
aircraft profitably. That was a factual
finding, which we will not disturb unless
Clearly erroneous.

In a letter to Pring, Starr explained
he would make no more payments because the
airplane was not profitable and was going to
be sold. In light of that letter the Starr's
testimony on cross-examination, the factual
finding was not clearly erroneous.

Moreover, even if we assume the craft
was not airworthy, there was no failure of
consideration. Pring furnished the consid-
eration required by the contract when he
purchased the airplane selected by Starr.
See Transamerica Leasing Corp. v. Van's
Realty Co., 91 Idaho 510, 427 P.2d 284, 291
(1969).

AFFIRMED.

Recorder-Sunset Press, San Francisco,CA
12-29-80—550

APPENDIX B
UNITED STATES DISTRICT COURT FOR THE

DISTRICT OF IDAHO

JOHN A. PRING, SR., )
)
)
)

Plaintiff,
Civil No. 77-2025
vs. )
)FINDINGS OF FACT
CHARLES E. STARR, and_ ) AND
SOPHIE J. STARR, husband) CONCLUSIONS OF LAW
and wife, and COEUR )

D'ALENE AIRWAYS, INC., )
)
)

Defendants.

This matter came on for a bench trial
on the merits on Septmeber 18, 1978. Each
party was represented by counsel of record.
Evidence, both oral and documentary, was
received. Post-Trial Briefs were filed and
the matter stands submitted for final deter-
mination. The Court, being fully advised,
makes the following Findings of Fact and

Conclusions of Law:

FINDINGS OF FACT

1. The plaintiff is a citizen of the
State of Washington; defendants Charles E.

Starr and Sophie J. Starr are husband and

wife and are citizens of the State of Idaho;
the defendant Coeur d'Alene Airways, Inc.,
is an Idaho corporation with its principal
place of business in the State of Idaho; the
amount in controversy exceeds $10,000 over
and above interest and costs.

2. Defendants at all times pertinent
hereto operated a fixed-base air service oper-
ation at an airport at Coeur d'Alene, Idaho.
Flight training, aircraft maintenance, and
air taxi service was offered to the public.
Defendant Charles E. Starr was an exper-
ienced aircraft pilot.

3. Defendants desired to obtain the
use of a relatively large aircraft for use
in the charter air taxi service and to
utilize in a proposed non-scheduled air
service between Coeur d'Alene and Boise,
Idaho.

4. On or about July 28, 1975, the
parties hereto entered into a Lease Contract.

By the terms of the Contract, plaintiff was

to purchase an acceptable airplane for his
use and that of the defendants. Defendants
agreed to utilize the aircraft for charter
at a rental of $100.00 per hour with a mini-
mum rental of $1,900.00 per month. Defend-
ants were to provide storage, maintenance,
and insurance for the aircraft with a pro
rata arrangement based on the amount of use
of the airplane by the plaintiff.

5. Defendants selected a 7-place
Cessna twin-engine aircraft, equipped with
deicers, hot prop, pressurized cabin, in-
strumentation, and like features necessary
for charter and non-scheduled airline serv-
ice. Plaintiff purchased the plane at a
cost of $185,000.00 in July, 1975.

6. Defendants took charge of the
airplane, and it was utilized by the parties
under the Lease.

7. Defendants, with reasonable regu-
larity, made the monthly minimum payments

of $1,900.00 for the month of August, 1975,

through May, 1976; a total of ten payments
in the total amount of $19,000.00. The last
payment was made on June 6, 1976.

8. In October, 1975, defendants re-
ported to plaintiff that certain rivets in
the fuselage had become loose. The plane
was returned to the manufacturer, or the
agent of the manufacturer, and ultimately
returned to the defendants, reportedly in
safe condition.

9. In January or Feburary, 1976, de-
fendants began the proposed non-scheduled
air service from Coeur d'Alene, Idaho, to
Boise, Idaho, using the Cessna. After ap-
proximately three weeks of trial runs and
unscheduled activity it was abandoned for
the reason that it proved to be economically
unfeasible.

10. By about the month of May, 1976,
it was evident to the defendants that they
were unable to obtain sufficient income

from the use of the Cessna aircraft to meet

the $1,900.00 per month minimum lease pay-
ments. They ceased making the payments for
this reason.

ll. In the fall of 1976, defendants
sold their fixed-base operation. Defendant
Charles E. Starr was found physically dis-
qualified from flying in the fall of 1976.

12. Defendants claim, and defendant
Charles E. Starr testified, that the reason
for termination of the Lease Contract by the
defendants was the problem with the rivets
which he claimed was never properly cured.

I find from the evidence that the alleged
dangerous condition caused by loose rivets
was not the reason for the termination of
the lease payments by the defendants.

13. The aircraft was, at all times
pertinent hereto, certified to be airworthy
by the Federal Aviation Authority.

14. Defendants contended, and offered

some evidence to the effect, that they had

a contemporary oral agreement with the

6

plaintiff to the effect that, if the Lease
Contract plan did not work out, the Contract
would be mutually terminated, the aircraft
sold, and the profits, if any, equally
divided. Plaintiff specifically denies that
any such agreement existed contemporaneously
with the Contract or prior to the breach by
the defendants. I find that no such oral
agreement was entered into by the parties
providing for any termination of the lease
obligation as claimed by the defendants.

15. On October 19, 1976, plaintiff
wrote to the defendants and demanded payment
of the delinquent June, July, August, Septem-
ber and November payments under the lease in
the sum of $9,500.00, computed as five pay-
ments of $1,900.00 each. Defendants raised
no objection to this demand, made no response
to the letter, and did not make any further
payment.

16. On January 6, 1977, plaintiff

again wrote to the defendants, and again

demanded payment of delinquent payments for
June, 1976, through January, 1977, a total
of eight payments of $1,900.00 each for a
total of $15,200.00.

17. On January 12, 1977, defendants
answered the demand made by plaintiff's let-
ter of January 6, 1977. For the first time,
defendants denied owing the delinquent lease
payments.

18. In the January 12, 1977, letter,
defendants raised the defense of an oral
agreement to terminate the lease which the
Court has found was not entered into.

19. In April, 1977, this suit was
filed by the plaintiff demanding payment of
all back lease payments plus the balance of
the lease payments for the entire term of
the Lease Contract.

20. In July, 1977, plaintiff recovered
possession of the Cessna. In order to obtain
possession, he had to pay a six-months' han-

gar storage charge in the sum of $700.00

8

made by the company which had purchased
defendants’ business.

21. The Cessna needed repairs and an
inspection in order to be airworthy. Plain-
tiff paid the sum of $3,177.46 for such re-
pairs and inspection, which sums I find to
be reasonable for the services performed.

22. Plaintiff paid $150.00 as insur-
ance premiums on the plane during the time
defendants had custody and were required to
furnish insurance.

23. Plaintiff made a reasonable at-
tempt to find another lease in order to
mitigate damages. On or about August l,
1977, plaintiff leased the aircraft to Felts
Field Aviation, Inc. (Felts) at the best
terms he could arrange.

24. Plaintiff received $12,084.00
from Felts for such rental through August,
1978. Assuming that future income remains

at this level, which the Court finds to be

a reasonable inference from the evidence,

plaintiff will receive $17,930.00 addition-
al rental from Felts up to the date when the
lease between plaintiff and defendants would
expire by its terms.

25. The total minimum rental called
for by the lease was a sum of $114,000.00
($1,900.00 per month for sixty months).
Defendants paid under the lease the sum of
$19,000.00. Plaintiff has received from
Felts the sum of $12,084.00. Plaintiff will
likely receive from Felts an additional
$17,930.00 over the balance of the five-
year lease. The plaintiff has properly ex-
pended the following sums: Hangar storage,
$700.00; insurance, $150.00; repairs and

inspections, $3,177.46.

CONCLUSIONS OF LAW

Based on the foregoing Findings of
Fact I conclude as a matter of law:
1. That the Court has jurisdiction

over the parties and the subject matter.

2. That on or about July 28, 1975,

10

the parties entered into a binding Lease
Contract whereby the defendants agreed to
pay at the rate of at least $1,900.00 per
month for the lease of a Cessna aircraft
owned by the plaintiff. This was a total of
lease payments over the life of the lease of
$114,000.00.

3. That the defendants without legal
cause breached the said Contract and refused
to pay the lease payments except that the
defendants paid the sum of $19,000.00.

4. That no modification of the Lease
Contract was entered into by the parties.

5. That in accordance with his legal
duty to mitigate damages, plaintiff took
possession of the Cessna and leased the same
to a third party.

6. That in order to preserve the
Cessna and carry out his duty to mitigate
damages, plaintiff advanced the sum of

$4,027.46, all as set out in the Findings

of Fact.

1l

7. That the plaintiff is entitled
to damages against the defendants for a sum
equal to the unpaid lease payments, together
with the expenses necessarily advanced, and
less rentals received and to be received
from the second lessee.

8. That plaintiff is entitled to have
a money judgment against the defendants in
the sum of $69,013.46, together with interest
thereon from the date hereof at the rate of
eight percent (8%) per annum.

Such damages being recapitulated as
follows:

Sixty payments of $1,900.00 each=$114,000.00
Advances = 4,027.46

Total $118,027.46

Less:
Lease payments by the defendant =$ 19.000.00

Payments by Felts = 12,084.00
Future payments by Felts = 17,930.00
Total $ 49,014.00

DAMAGES $ 69,013.46

12

9. Plaintiff is entitled to his

costs necessarily incurred herein.

RAY McNICHOLS, CHIEF JUDGE
UNITED STATES DISTRICT COURT

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385007_1529%3A1. Public record. Not legal advice.