Petition for a Writ of Certiorari — Walter W. Johnson Co. v. Reconstruction Finance Corp.

Supreme Court brief1956

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In the Supreme Court of the

United States

Ocroper TERM, 1955

Wa ter W. JoHnson CoMPANY,

Petitioner,

VS.

RECONSTRUCTION FINANCE CORPORATION,

Respondent.

f Petition for a Writ of Certiorari to the United States

Court of Appeals for the Ninth Circuit

Epwin S. Pruusspury

Davin M. ATCHESON

564 Market Street

San Francisco 4, California

Attorneys for the

Petitioner

JUN 13 i956

PARKER PRINTING COMPANY, 180 FIRST STREET, SAN FRANCISCO 8

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SUBJECT INDEX

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Questions Presented ............ sett ae bseetaiialabiaas seein nataaaaalon 2

TORE GE SI iri nics sets ctireenierecne aetna 3

Reasons Relied on for the Allowance of the Writ.........0.............. 9

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I. The District Court made no attempt to determine

Il.

ILI.

whether there were genuine issues as to any material

facts, and wholly ignored issues which were plainly

IIIS casincigese,icsicinbianatidnsniguithatdicctineliehas aves ciuadin stpaaenchiaaoien

The Court of Appeals made the same error, and, instead

of ascertaining what the issues were, or considering the

conflicting evidence bearing thereon, merely stated that

it agreed with the lower Court. .................c:2:ccceeccseeeeeecenees

The net result of the two decisions is that the petitioner

has been deprived of his fundamental right to a trial

otk is TA, ea oe ce ee aku

The failure of both courts to give serious or any con-

sideration to the requirements of Federal Rule 56(c¢)

amounts to so gross a departure from the aecepted and

usual course of judicial proceedings as to call for an

exercise of this court’s power of supervision (Sup. Ct.

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TABLE OF AUTHORITIES CITED

Adams v. California Mutual B. & L. Association, 18 C. (2d),

yt TIDE RL aie ec CE OE CO

Begnaud v. White, 170 F. (2d) 323 (CCA 6-1948) 0... 13,

Ee ae Se La fe DG ||.) ee eeneeee en nCeneC NEN

Berkey v. Halm, 101 C.A. (2d) 62 (1950) —............. Velah EMS Tae

Bollinger v. National Fire Insurance Co., 25 C. (2d) 399 (1944)

Bowers v. E. J. Rose Mfg Co.. 149 F.(2d) 612, (CCA 9, 1945)

Carson Pirie Scott & Co. v. Parrett, 346 Ill. 252, 1748 N.E. 498

(OR Seat EL Daa A lea EE

Cf. Knox v. Kaelber, 140 N. J. Eq. 474, 55 A.(2d) 53 (1947)...

City of Richmond v. Goodloe, 308 Ky. 549, 215 S.W. (2d) 128

See gh Fp Geel eS Ne A NE a a

Colby v. Klune, 178 F. (2d) 872 (CCA 2, 1949) .....00000202...

I Wh, MI ME, CUE) osc vsscisncessnnnecnnnneosenmenrsinencanevvns

Doehler Metal Furniture Co. v. U.S., 149 F. (2d) 130 (CCA

a a lees aapiesncenainiabiniaienens

Hadley v. Vassaic, Nat. B & T Co., 113 NJ Eq. 548, 165 Atl.

/ ik: Geer AE ACS et RSE EE eee I A OR

Industrial Indemnity Co. v. 1. A. C., 115 C_A. (2d) 684 —........

Johnson v. Clark, 7 Cal. (2d) 529 (1936)....................................

Mitehell v. West End Park Co., 171 Ga. 878, 156 *.E. 888

5 pe oN IRAE A Ae ee EAS nie ee

National Surety Co. v. County Bd. of Edue., 15 F(2d) 993

(oh Ot Eke deie li seetAOIS aS P SEN EEE Se oeee See e

Niemann v. Nadelman, 136 Mise. 386, 240 N.Y.S. 47 (1930).

Northwestern Mut. Sav. & L. Ass'n v. Kessler, 66 N.D. 737.

oO BB elt aD "9 a elie ie ee eee ee ee

Oldland v. Gray, 179 F. (2d) 408 (CA 10, 1950)...

14, 23

TABLE oF AUTHORITIES CITED iii

Pages

Pacifie Ready-Cut Homes Inv. v. Title Ins. & Trust Co. 216

Cah, 447 (1982) u...a-ocnnncccnecnconconnvoeenencevernenecennesenersecsssueansensanenseneees 18

Sampson v. Bruder, 47 Cal. App. (2d) 431, 4385 (1941)............ 20

Sartor v. Arkansas Gas Corp., 321 U.S. 620, 88 L. Ed. 967

ee i sat classaccnasiatenlnisoecnshoorennarmi 10

Smith v. Anglo-Calif. Trust Co. 205 Cal. 496 (1928).........-.---. 18

Theatre Realty Co. v. Aronberg-Fried Co., Ine., 85 F. (2d)

383 (Sth Cir. 1936)..........--....---c--ccerecccerccensensrsecsnesssnrsensenseseeneoens 18

Title Guar. T. & S. Bank v. Clifton Forge Nat. Bank, 149 Va.

168, 140 8.B. 272 (1927) ......---.--0-:0-c-ccencneronensevenrernsnsvsensenerssaene 17

Tuolumne Gold Dredging Corporation vy. Walter W. Johnson

Company, 61 F. Supp. 62 (D.C. DR WR settcnctisectnancometeoeeen 5

Tuolumne Gold Dredging Corporation vy. Walter W. Johnson

Company, 71 F. Supp. 111 (D.C. Cal. 1947)... 5

Western Pipe & Steel Co. v. Tuolumne Gold Dredging Cor-

poration, 63 C.A. CR CA) isis since ceritasinsiiticcaniorinvese 5

Whitaker v. Coleman, 115 F. (2d) 305 (CCA 5, 1940) ~.......... 10

Whiting-Mead Co. v. West Coast B & M Co., 66 C.A. (2d)

AGO (1944) ..0.0--.cncnenencneceovascercoveereoscsersnenensvsnensnensboancansesncorosnensnenes 18

Wichita Fed. Sav. & L. Ass’n v. Jones, 155 Kan. 821, 130 P.

(Dd) BEG (1D42) ..2.0nno-cencecersrenrn-vesenneoneensnenrnencentencennvnsenvaccnnsosesore ..16, 18

Woodhead Lumber Co. v. E. G. Niemann Investments, Inc., 99

Cal. App. 456 (1929) ......-------------c-cececseeseseeeenenensnencnsaneneneneesenenens 15

BRETT ae.

iv TABLE OF AUTHORITIES CITED

STATUTES Pages

Reconstruction Finance Corporation Act (USCA Title 15. par.

neon tg ee EME LE AE EEN OSs SE jriestiadehisetnedbiee 3

United States Code, Title 28:

WI EES SBF toc ne 2

a ee |) Re ETE hijepdecek dee ae 2

RULES

IRIN TI NR cot eg rem cet ek, 4

OME HD TD TO oe ncn ees 10, 24

NC Se. SE Os EE ee rahe eee 10, 24

TEXTS

40 California Law Review 204, ‘‘Summary Judgment Under

Federal Practice’’ by Judge Yankwieh............. 10

9 California State Bar Journal, at page 246.000.0000 23

Corbin on Contracts, Vol. 4, Se. 776..0.0..0-.cccc0cccccccceseeeeeeeeeeeeec-.. 15

Pomeroy Equity Jurisprudence, Vol. VI, Section 1080 (Sth ed.

| ue MRS RN ETE RIES SOUL Sh Est IOC eee dk ve ore A ln 17

In the Supreme Court of the

United States

Ocrober Term, 1955

Watrer W. Jounxson Company,

Petitioner,

Vs.

Reconstruction Finance Corporation,

Respondent.

tf)

Petition for a Writ of Certiorari to the United States

Court of Appeals for the Ninth Circuit

To the Honorable, the Chief Justice of the United States

and the Associate Justices of the Supreme Court of the

United States:

Walter W. Johnson Company, a corporation, files this

petition for a writ of certiorari to the United States Court

of Appeals for the Ninth Circuit to review a judgment

affirming a summary judginent of the United States District

Court for the Northern District of California, Northern

Division, upon petitioner’s counterclaims to recover the bal-

ance of money due upon its construction of a gold dredge

financed by respondent.

ee ee

MS Pre, 28 ete Bete ee eo eh

OPINIONS BELOW

The Opinion of the United States District Court for the

Northern District of California, Northern Division, is re-

ported in 137 F. Supp. 855. The first opinion of the United

States Court of Appeals for the Ninth Cireuit which dis-

inissed the first appeal herein is reported at 223 Fed. (2d)

101. The second opinion of the United States Court of

Appeals for the Ninth Circuit which affirmed the summary

judgment of the District Court is reported in 230 Fed. (2d)

479.

JURISDICTION

The judgment of the Court of Appeals for the Ninth

Circuit was entered on February 10, 1956. A petition for

rehearing, filed in time, was denied on March 22, 1956.

Jurisdiction of this court is invoked under United States

Code, Title 28, Section 1254(1), the writ having been applied

for within ninety days as provided by United States Code

Title 28, Section 2101(¢).

QUESTIONS PRESENTED

(1) Whether the Court of Appeals erred when it affirmed

the summary judgment granted by the District Court dis-

missing petitioner’s five causes of counterclaim without con-

sidering the clear existence of many genuine issues of

material facts in the case;

(2) Whether the Court of Appeals erred when it failed

to specifically determine whether genuine issues of material

facts existed as claimed by petitioner:

(a) That the respondent herein waived the statute of

limitations and is estopped to assert laches;

(b) That petitioner had a lien upon the dredge ;

(¢) That respondent was unjustly enriched by ap-

propriating proceeds from the operations of the dredge

while petitioner remained unpaid:

(d) That respondent, by appropriating the proceeds

of the operations of the dredge, did so as a constructive

trustee for petitioner; and

(e) That respondent was liable for payment oi state

sales taxes incurred during construction of the dredge

which were paid by petitioner. B

STATEMENT OF THE CASE

Reconstruction Finance Corporation, plaintiff below and

respondent here, hereinafter referred to as REC, filed its

Complaint to Foreclose Indenture and Chattel Mortgage

(R. 3) on June 28, 1949. It invoked federal jurisdiction on '

grounds of the amount in controversy and as arising under

the Reconstruction Finance Corporation Act (USCA Title

15, par. 601-607). Defendant below and _ petitioner here,

Walter W. Johnson Company, a Nevada corporation, here-

inafter referred to as Johnson, filed its answer which

included five causes of counter-claim on June 30, 1950 (R.

74). Jurisdiction on the counterclaim was invoked on the ;

ground of the amount in controversy and on the ground that

Johnson was a Nevada corporation, whereas RFC was a

federal corporation (R. 77). REC filed its amended answer

to Johnson’s counter-claim on Mareh 31, 1952, admitting

the jurisdictional allegations (R. 91).

On June 5, 1953, pursuant to motion made by RFC and

without oral argument, the District Court entered its order

granting summary judgment to REC dismissing the counter-

claims (R. 243-274).

Johnson thereupon appealed to the Court of Appeals for

the Ninth Cireuit. That court dismissed the appeal because

the Distriet Court’s order granting summary judgment was

deemed not appealable because it did not dispose of the entire

case and the judgment lacked the certification required by

Pyert

’ |

Federal Rule 54(b). Johnson thereafter secured the neces-

sary certification from the District Court and a subsequent

appeal was taken to the Court of Appeals which, on Feb-

ruary 10, 1956, entered judgment affirming the summary

judgment upon the grounds specified in the memorandun

opinion of the District Court (R. 481-4, 485). A petition for

rehearing in the Court of Appeals was denied on March 22,

1956 (R. 486).

The record discloses the following factual situation:

In the latter part of 1936 RFC passed a resolution de-

claring its intention to make a loan to Tuolumne Gold

Dredging Corporation (hereafter called Tuolumne) for the

purpose of constructing a gold dredge (R. 78). Thereafter,

Tuolumne entered into negotiations with Johnson for a eon-

tract for construction of the dredge. On many occasions

the negotiations took place in the Washington offices of RFC

with RFC actively participating in the drafting of the con-

tract (R. 291, 292). On May 11, 1937 Tuolumne executed an

Indenture and Chattel Mortgage for the benefit of RFC

securing the payment of the principal sum of $600,000 to be

loaned by RFC and used for construction of the dredge and

related purposes (R. 78) (see Exhibit A to Complaint—R.

17-69).

On the same day, simultaneously with the execution of

said moitgage and with the approval of RFC, Tuolumne

entered into a contract with Johnson for the construction

of the dredge (see Exhibit D to Agreed Statement of Facts

—R. 192) specifying that the entire cost of the dredge would

not exceed $552,500.

Johnson asserts completion of the dredge on June 13,

1938, and delivery to Tuolumne on September 20, 1938 (R.

79-80). At all times until June 15, 1938, there were ample

monies in the Construction Fund established under the REC

loan to pay Johnson the balance due for the construction

of the dredge (R. 80) which in June 1938 amounted to

$51,203.99 and the further sum of $7,815.41 for necessary

parts and supplies furnished for the dredge (R.81).

Notwithstanding the fact that adequate monies remained

in the Construction und at that time to make payment of

these oblig tions, Tuolumne and RFC depleted the Fund so

that on September 24, 1938 there remained only $40,000

therein, which sum Tuolumne and RFC attempted unsuc-

cessfully to compel Johnson to accept in full payment of its

claims (R. 81).

Johnson thereafter brought an action against Tuolumne

in the state courts for the monies due it, which resulted in

protracted litigation between Johnson and Tuolumne, both

in the state and federal courts, as a result, it was not until

April 1949, that this litigation terminated and it was finally

determined that Tuolumne was indebted to Johnson for the

items in question (R. 81-83).

This litigation is reported as follows:

Western Pipe & Steel Co. v. Tuolumne Gold Dredg-

ing Corporation, 63 C.A. (2d) 21 (1944):

Tuolumne Gold Dredging Corporation v. Walter W.

Johnson Company, 61 F. Supp. 62 (D.C. Cal.

1944) ;

Tuolumne Gold Dredging Corporation v. Walter W.

Johnson Company, 71 F. Supp. 111 (D.C. Cal.

1947).

During the course of the litigation between Johnson and

Tuolumne. representatives of RFC had, on numerous ocea-

sions, represented to Johnson that if Jolinson prevailed

against Tuolumne, REC would arrange that the balance due

Johnson under the contract would be paid (R. 215-216, 123.

219, 417-419). However, when Johnson approached REC

for payment after successfully prevailing in the litigation

against Tuolumne, the RFC suddenly took the position for

the first time that the question of liability was a “close one”

and that, therefore, RFC could not inake payment (R. 239).

The liability of RFC in this case is founded not only upon

the Trust Indenture and Chattel Mortgage, but upon the

underlying factual situation which was involved in the tri-

partite transaction between RFC, Tuolumne and Johnson,

to arrange for the financing and construction of the gold

dredge. The Affidavit of Mr. Walter Johnson shows one

facet of this three-cornered relationship where he states

that it was the usual practice of his company to retain legal

title to a dredge until the work was completed and the pur-

chase price was paid (R. 213). When the RFC began to

finance the construction of gold dredges, however, it insisted

upon a first mortgage on the dredge, and Johnson Company

agreed to relinquish the title it normatly reserved, solely

upon the understanding that the RFC financing and the

“Construction Fund” which such financing established,

would unquestionably see that Johnson was paid (R. 213).

In three prior instances of building dredges under RFC

financing, Johnson had received full paynent from the Con-

struction Fund established under the Trust Indenture (R.

214).

The RFC was well aware of Johnson’s attitude and reli-

ance on the proceeds of the REC loan long before the docu-

ments were signed in the instant transaction (R. 241, 397,

398). The gist of the transaction was that since Tuolumne

was without funds or other assets, save for the value of

exploratory work it had done, RFC would provide $600,000

under its Indenture (R. 371, 396). The eost of the dredge,

$552,500, would thus be paid entirely out of the Construction

Fund (R. 371, 396). In fact, prior to execution of these

agreements the RFC prepared a list of the expenditures to

be made from the Construction Fund thus earmarking the

loan funds (R. 397-398). Tuolumne planned to raise only

$50,000 apart from the RFC loan (R. 396). Johnson was

expected to contribute $10,000 of this $50,000 (R. 371).

Tuolumne’s $50,000 was to be added to the Construction

Fund, and thus a total of $650,000 would be placed in the

Construction Fund subject to RFC control (R. 38-39).

Johnson looked to and relied upon the RFC loan for pay-

ment of the dredge (R. 212, 396-8). Johnson’s affidavit

states:

“* ** Upon many occasions during the course of prep-

aration of both documents, it was stated by me and

agreed to by others present representing RFC that |

was looking for payment to Johnson Company of any

money which might become due under the contract

solely to the proceeds of the loan to be made by RFC

and that I would not enter into such a contract for my

company unless the loan was made. It was understood

by all present and so stated, including to and by repre-

sentatives of RFC, that Tuolumne did not have suffi-

cient funds to pay for the construction of a dredge

unless a loan was made by RFC which would cover the

cost of such a dredge.” (R. 212-213)

An analysis of the Indenture (R. 17-73) together with the

construction contract (R. 192-206) bears out Johnson’s un-

mistakable reliance upon RFC. The Indenture contains

elaborate provisions as to the manner in which all of the

loan funds were to be placed in the Construction Fund over

which RFC reserved complete control (R. 38, 39, 41). The

procedure was for RFC to advance loan monies into the

Construction Fund from which it would authorize payment

to Johnson upon proper invoices and bills, approved by

eas |

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F Tuolumne, being presented to it for payment. Pursuant

to this procedure, RFC caused payments amounting to

| $510,000 to be made to Johnson up to and including May

| 28, 1938 (R. 119-120). After this date, RFC refused to

authorize any further payments to be made because of a

pay Johnson the balance of over $50,000 claimed to be due

for the dredge (R. 214). At this time, there was approxi-

mately $55,000 in the Construction Fund. However, some

time during the summer of 1938, RFC allowed Tuolumne

to withdraw $15,000 from the Construction Fund (R. 215).

In 1939, the RFC represented that $40,000 was still in the

Fund which would be kept intact (R. 215). Nevertheless,

RFC subsequently allowed this money to be withdrawn by

question raised by Tuolumne as to its legal obligation to

Tuolumne prior to the conclusion of the litigation between

Johnson and Tuolumne, and without safeguarding John-

son’s rights to receive payment of the balance due him from

the Fund.

The close working relationship between RFC and Tuo-

lumne is shown by the fact that in the course of the litiga-

tion between Johnson and Tuolumne, RFC was at all times

fully aware of its progress in all its phases (R. 242). RFC

| or its counsel had copies of the pleadings and transcripts

| in the litigation (R. 327, 331) and RFC itself advanced

funds for the payment of costs, fees, and other expenses of

Tuolumne, in the litigation (R. 236-7, 242).

In addition to the foregoing factors, RFC not only caused

the disbursement of the remaining $40,000 in the Construe-

tion Fund (R. 412) but it also loaned subsequently an

additional $120,000 to Tuolumne which it caused to be satis-

fied out of Tuolumne’s earnings, over which the Indenture

gave REC absolute control. While paying off its subsequent

loan from these earnings, RFC made no provision for pay-

CES

ment of Johnson’s claims for the balance due upon its con-

struction of the income producing property, viz: the gold

dredge (R. 48, 182-183).

From the foregoing, i: will be realized that Johnson’s

claims against RFC are founded upon a broad factual back-

ground which began prior to the execution of the 1937

Indenture and continued antil as late as the commencement

of this suit. The deposition of Walter W. Johnson, con-

sisting of 166 printed pages (R. 281-446), the Agreed State-

ment of Facts covering enly limited facts and basic docu-

ments (R. 176-206), Interrogatories addressed by RFC to

Johnson (R. 100-113) aad Answers thereto (R. 114-24),

Requests for Admissions addressed by RFC to Johnson (R.

124-68) and Answers thereto (R. 168-72) and four affidavits

filed on behalf of Johnsox, to wit, those of Walter W. John-

son, Harley Hise, DeLanty C. Smith, and William F. Kelly

(R. 211-242) all demonstrate that there are a multitude of

genuine issues as to mate‘ial facts present in this case which

involve the basie liability of RFC and the additional ques-

tion of whether RFC hadwaived the Statute of Limitations.

The single issue beforethis court is whether the summary

judgment was improperly granted, inasmuch as there were

many genuine issues as to material facts in the cause. It is

our conviction that this is a “fact” case and that it involves

a great many genuine wssues of fact which Johnson was

entitled to have heard in ¢ full trial on the merits.

REASONS RELIED ON FOR THE ALLOWANCE OF THE WRIT

l. The Distriet Couit made no attempt to determine

Whether there were genuine issues as to anv material facts,

and wholly ignored issues which were plainly triable.

Il. The Court of Appeals made the same error, and,

instead of ascertaining what the issues were, or consider-

}

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Seer y

DRYER eM MSR hin te eR

ing the conflicting evidence bearing thereon, merely stated

that it agreed with the lower court.

Ill. The net result of the two decisions is that the peti-

tioner has been deprived of his fundamental right to a trial

on the merits.

IV. The failure of both courts to give serious or any

consideration to the requirements of Federal Rule 56(c)

amounts to so gross a departure from the accepted and

usual course of judicial proceedings as to call for an exercise

of this court’s power of supervision (Sup. Ct. Rule 38, 4,

(b)).

ARGUMENT

I. The District Court made no attempt to determine whether there

were genuine issues as to any material facts, and wholly

ignored issues which were plainly triable.

We earnestly believe that the District Court misconceived

the scope of its duties in passing upon the motion for sum-

mary judgment. Rule 56(c) permits the granting of sum-

mary judgment only if it is determined that there is no

genuine issue as to any material fact. The inquiry on the

motion is to determine whether any such genuine issue ex-

ists, not to the weight of evidence bearing upon any such

issue.

Sartor v. Arkansas Gas Corp., 321 U.S. 620, 88 L. Ed.

967 (1944);

Whitaker v. Coleman, 115 F. (2d) 305 (CCA 5, 1940):

Doehler Metal Furniture Co. v. U.S., 149 F. (2d) 130

(CCA 2, 1945);

Colby v. Kluane, 178 F. (2d) 872 (CCA 2, 1949);

40 California Law Review 204—"Summmary Judgment

Under Federal Practice” by Judge Yankwieh.

We respectfully urge the members of this court to read

the District Court’s Memorandum Opinion (Tr. 245-274)

for the purpose of determining for vourselves that the Dis-

trict Court made no attempt whatever to determine whether

there were genuine issues as to any material facts.

Not only is there no reference whatsoever in the lengthy

Memorandum Opinion to the correct test for determining

whether a summary judgment should be granted, but there

is positive indication that the District Court’s decision was

motivated by two incorrect or improper considerations, Viz. :

First, the Distriet Court appeared to base its opinion

upon a certain “Agreed Statement of Facts” which the Dis-

trict Court erroneously conceived to be the entire factual

basis for decision, Thus paragraph 1 of the Memorandum

Opinion refers to the Agreed Statement of Facts and dis-

cusses its contents. Paragraph 2 of the Opinion further

states, at R. 251:

“In the Court’s view of the issues, and in the light of

the Agreed Statement of Facts and the factual recitals

contained in the above-mentioned reported decisions,

only a brief summary of the present pleadings is here

required.”

The probability that the District Court was thus acting

solely on the basis of the “Agreed Statement of Facts” (in

addition to the pleadings and the reported decisions) is

further substantiated by the fact that the lengthy Memoran-

dum Opinion makes no reference whatsoever to the inter-

rogatories and answers thereto, the requests for admissions

and replies thereto, one deposition, and four affidavits which

were before the Court and should have been considered. In

short, we assert that the Distriet Court overlooked all this

material, which plainly indicated the existence of conflicting

evidence, and looked only to the pleadings and the “Agreed

AR ESO TRE

per

PPE COS RRR OI

RUSE 400

Peters

Statement of Facts”’—whch dealt only with certain limited

facts.

Second, the District Cort exhibited injudicious irritation

and annoyance toward De Lancey Smith, Esq., who was

then, but is no longer, tht counsel for Johnson, for his fail-

ure to render a prompt reply to an inquiry from the District

judge after the motion for summary judgment was sub-

mitted (R. 267-268). In this connection, the court said:

“The court deploresthe fact that counsel for Johnson

has not seen fit to exert himself to supply promptly the

requested information. Frankness and punctuality are

obligations due the court from its officers.” (R. 268)

Such annoyance and iritation found further expression

when the District Cour intemperately characterized the

petitioner’s claim as an ‘appeal for alms” rather than for

“justice” (R., 243), andfurther characterized the claim as

“but another instance of grasping at straws in an effort to

make Uncle Sam pay fa Johnson’s own improvidence or

misfortune” (R. 273).

We submit that it ill »ecomes any court to address such

intemperate language ata striving litigant, and we submit

further that the fault is zrossly compounded when in doing

so the court wholly faik to give judicial consideration to

the issues at hand, and :t the same time denies the litigant

his fundamental right toa “day in court.”

The following resume of the petitioner’s principal con-

tentions herein demonsrates clearly the many issues of

material facts which existed and which were ignored by the

District Court.

1. Limitations and “aches. The Distriet Court held

that any claims Johnso: might have had against RFC for

diversion of monies inthe Construction Fund must have

accrued in 1938 when REC caused the balance of the Con-

struction Fund to be diverted to other purposes, and held

accordingly that the six vear statute of limitations on claims

against the United States barred Jolmson’s claims in 1944

(R. 261).

It is clearly established that the statute of limitations e

may be waived, and that a party (even including a public .

agency) may be estopped to assert limitations or laches by

statements or conduct.

Adams v. California Mutual B. & L. Association, 18

C. (2d), 487 (1941);

Benner vi 1. A.C., 26 C. (2d) 346 (1945):

Berkey v. Halm, 101 C.A. (2d) 62 (1950) :

Industrial Indemnity Co, v. 1. A. C., 115 CLA. (2d)

O84;

Bollinger v. National Fire Insurance Co., 25 C. (2¢)

399 (1944).

The record before this court contains numerous examples

of REC conduct which, if proved, would constitute a waiver

of the statute of limitations and estop RFC from success-

fully asserting laches. In this regard, Johnson must only

demonstrate that a genuine issue of fact exists on the point,

and if so, the summary judgment should not stand.

The ease of Beqnaud v. White, 170 F. (2d) 323 (CCA

§-1948) is remarkably similar to the instant case in that a

summary judgment had been granted on the ground that

there was no genuine issue as to the fact that the action was

harred by limitations. Plaintiff and appellant, however, had

filed an affidavit in opposition to the motion for summary

judgment, claiming that it had refrained from filing suit

within the statutory period in reliance on the statements

and conduet of the defendant. The Court of Appeals held

that this showing created a genuine issue as to a material

fact, saving:

“* * * Whether the jury would accept such testimony

at its face value or reject it is not the present question.

Taking it at its face value on the motion for summary

judgment, it clearly puts in sharp issue the defendant's

claim that the bank’s liquidators did not rely upon the

representations and negotiations of White.” (Begnaud

v. White, 170 F.2d 323, 327)

Just so in the instant case Jolinson’s showing in opposi-

tion to the motion for summary judgment contained abund-

ant evidence in support of the issue that the RFC was

estopped to assert the statute of limitations and had waived

the same. RFC promised on many occasions to pay John-

son if and as soon as the Tuolumne litigation was finally

determined in Johnson’s favor (R. 123, 219, 417-419). For

example, Mr. Johnson’s Answer to Interrogatory No. 64

states in part:

“* * * among other things stated by Mr. McCartney or

his subordinates, it was said that if Johnson Com-

pany won the appeal from the State Court decision in

Stanislaus County, RF'C would arrange that the bal-

ance due Johnson Company under the contract would

be paid.” (Italies ours) (R. 123)

And in his affidavit, Mr. Johnson stated:

“* * * TTpon many occasions between 1944 and 1947,

Mr. MeCartney, at the office of RFC at Washington,

told me that as soon as the Federal court case was

finally determined in our favor, if it was, RFC would

arrange to pay Johnson Company.” (R. 219)

In addition, there is evidence demonstrating a continuing

willingness of RFC to negotiate a settlement with Johnson

(R. 215, 217, 224, 227-8, 238).

There is not a single indication of any intention on the

part of RFC at any time to assert the statute of limitations

or laches as a bar to Johnson's claims. In view of the fore-

going it is clear that at the very least, a genuine issue of

material fact exists with respect to waiver of limitations

and estoppel to assert laches in this case.

2, First Cause of Counter Claim. The District Court

assumed, without deciding, that Johnson's claim as the bene-

ficiary of a third party contract was valid, but that such

claim was barred by limitations. If the question of limita-

tions is put to one side, we believe that the question whether

a party is a beneficiary of a third party contract depends

largely upon the “intent” of the parties thereto. The ques-

tion of intent must be determined by analyzing the docu-

ments theinselves as well as the factual situation surround-

ing their execution. In cases somewhat similar to ours, a

supplier has thus been held to be the beneficiary of such a

contract.

Carson Pirie Scott & Co. v. Parrett, 546 WM. 252, 1748

N.E. 498 (1931);

Woodhead Lumber Co. v. EB. G. Niemann Invest-

ments, Inc., 99 Cal. App. 256 (1929) ;

City of Richmond v. Goodloe, 308 Ky. 549, 215 S.W.

(2d) 128 (1948);

Niemann v. Nadelman, 136 Mise. 386, 240 N.Y.S. 47

(1930).