Petition for A Writ of Certiorari — Barkey Importing Co. v. Iravani Mottaghi (No. 1089)

FILED

Nia 19

JOHN J. FEY, C

IN THE

Supreme Court of the United States

Oocrosrr Term 1956

nc 1089

BARKEY IMPORTING CO.,

Petitioner,

V.

M. SHAFI IRAVANI MOTTAGHI

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE SECOND CIRCUIT.

Ismpor J. KRESEL,

Attorney for Petitioner,

15 Broad Street,

New York 5, New York.

TABLE OF CONTENTS.

Orrmnions BeLow

JURISDICTION

Questions PRESENTED .

SraTEMENT

(A) The Basic Facts.

The Settlement

(B) The Causes of Action

First Cause of Action

Second Cause of Action

Third Cause of Action

Fourth Cause of Action.

Sixth Cause of Action.

Tenth Cause of Action

Fifth Cause of Action

Seventh and Eighth Causes of Action

The Counterclaim

(O) The Decision of the Court of Appeals

Basis ror FEpERaL JURISDICTION

Reasons ror Grantine THE Writ.

Conciusions

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o

ii

Taste or Cases.

Barnsdall Refining Corp. v. Birnamwood Oil Co., 32 F.

Supp. 308, 313 (D. C. E. D. Wisconsin)

Bulky v. Kaolin Products Co., Inc., 187 App. Div.

(N. v.) 103, 108

Coffin v. The President etc. Hydraulic Co., 136 N. Y.

655 yi)

Farley v. Hill, 150 U. S. 572 17

Gideon v. Hinds, 238 F. 140 (2 Cir.) 21

Gindorff v. Prince, 189 F. 2d 897 (2 Cir.) 0... 20

Harding v. Federal Nat. Bank, 31 F. 2d 914, 917

(1 Cir.)

Historical Pub. Co. v. Jones Bros. Pub. Co., 231 Fed.

638, 644 (3 Cir.)

Libbey-Owens-Ford Glass Co. v. Sylvania Indust.

Corp., 154 F. 2d 814, 816 (2 Cir.) 20

Lindheimer v. Illinois Telephone Co., 292 U. S. 151

176

Patent & Licensing Corp. v. Olsen, 188 F. 2d 522, 525

(2 Cir.) 20

New York Life v. Graham, 92 F. 2d 377, 380 (9 Cir.). 20

Snell Isle, Incorporated v. Commissioner, 90 F. 2d

?

481, 482 (5 Cir.), Cert. den. 302 U. S. 734. 22

Summa v. Masterson, 215 App. Div. IN. V.] 159. E. 17

Tisdale v. R. Co., 116 N. V. 416, 419 20

United States v. U. S. Gypsum, 333 U. S. 364, 395

(1948) 20, 23

AUTHORITIES.

32 C. J. S. $774, p. 700 22

Wigmore on Evidence, Second Edition, Vol. 2,

$1064, p. 536 19

IN THE

Supreme Court of the United States

Ocroser Term 1956

No.

Barxsy Importine Co.,

Petitioner,

v.

M. Swarr IRAva NI Morracar

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE SECOND CIRCUIT.

To TRR HonoraBLe THE CHIEF JUSTICE AND THE Asso-

CUTE JUSTICES OF THE SupREME Court oF THE UNITED

Srares.

Your petitioner, Barkey Importing Co., respectfully

prays that a writ of certiorari be issued out of and under the

seal of this Court to review the decision of the United States

Court of Appeals for the Second Circuit, rendered on March

29, 1957, as amended on April 29, 1957 and May 15, 1957,

which reversed a judgment of the United States District

Court in favor of petitioner, the defendant below, on an

admitted counterclaim for $139,723.31 and remanded the

same for further proceedings; the said Court of Appeals

also reversed the action of the District Court in dismissing

nine of ten causes of action of respondent’s amended com-

plaint on the merits, directed the entry of judgment for

. —

2

the respondent on four of those causes of action and

remanded the other five causes of action to the District

Court for further proceedings. The Court affirmed the

action of the District Court in dismissing the ninth cause

of action on the merits.

Opinions Below.

The opinion of the district court is reported in 134 F.

Supp. 719.*

The opinion of the Court of Appeals, as well as the

amendments thereto have not yet been officially reported.

The original opinion appears in the record (V-391-430)**

as do the amendments (V-452-453, VI-4).

Jurisdiction.

The opinion of the Court of Appeals for the Second

Cireuit was filed on March 29, 1957 ; petition for rehearing

denied, opinion amended by opinion filed on April 29, 1957.

On May 15, 1957 an order was made by that Court staying

the mandate for thirty (30) days pending the filing of

this petition for certiorari, and at the same time the original

opinion was again amended. The final judgment as

amended is dated May 15, 1947.

Jurisdiction to review this case upon writ of certiorari

is conferred upon this Court by 28 U. S. C. §1254(1).

* Inasmuch as nine additional copies of the record as printed

for the use of the Court of Appeals have been filed pursuant to

Rule 21(4), the opinion of the District Court is not appended to

this Petition. Rule 23 (Ii). However, in view of the length of

said opinion, for the convenience of the Court nine additional

copies are filed herewith.

** References to the certified record will be to volume and

page.

3

Questions Presented.

1. Whether a Court of Appeals has the power to

reverse, set aside and remand a judgment in favor of the

defendant on a counterclaim, that had been admitted in

the plaintiff’s pleadings, his brief submitted to the trial

court and in his oral testimony.

2. Whether a Court of Appeals has the power to permit

a party for the first time to contest in that Court, a counter-

claim conceded at the trial.

3. Whether a Court of Appeals may set aside the

findings of fact of a District Court without holding that

such findings are ‘‘clearly erroneous’’.

4. Whether a Court of Appeals may, by reversing a

final finding in favor of a defendant, reinstate tentative

findings against him, from which he had no right of appeal;

direct that judgment be entered thereon and thus cast the

party into judgment with no right of appeal.

5. Whether a Court of Appeals may take a written

exhibit, offered without qualification by a plaintiff, give

effect to the part thereof favorable to such party while

refusing to take cognizance of part of the same exhibit

harmful to the party offering the same.

Statement.

(A) The Basic Facts.

This is a contract action by M. Shafi Iravani Mottaghi

(hereinafter Travani), a citizen of Iran, against Barkey

Importing Co. Inc., a New York corporation (hereinafter

BIC).

4

The amended complaint contained ten causes of action,

The answer put in issue its material allegations. It also

pleaded, among other defenses, an agreement of settle

ment and a counterclaim in two counts.

Trial of the action began on October 4, 1954, before

Noonan, D. J. and a jury. After eight days of trial, the

jury, at the request of counsel for both sides, was dis-

missed, and the trial then was continued before the Trial

Judge alone for five additional court days.

In addition to oral testimony offered by each side,

there were received in evidence approximately 200 exhibits,

Upon the conclusion of the trial, briefs were submitted to

the Court by each of the parties.

The Trial Court wrote an opinion of 84 pages that

included its findings of fact and conclusions of law (134

F. Supp. 719-802). In it, the Court ultimately found against

the plaintiff on each of his ten causes of action, and in

favor of the defendant on the latter’s counterclaim as

admitted by the plaintiff. Consequently, the trial resulted

in a judgment for BIC not only dismissing the plaintiff's

ten causes of action but, granting a judgment for

$139,723.31 on the defendant’s counterclaim.

The action arises out of a number of carpet wool trans-

actions between the plaintiff and the defendant. Iravani

was an importer and exporter of various commodities. His

place of business was in Teheran, Iran, while BIC was an

importer of carpet wools located in New York City.

Travani did business on a large scale. The transactions

that gave rise to this controversy were his first efforts in

the export of wool (I-3). In New York City, he was rep-

resented by one Randolph Valensi, a broker or agent for

various exporters of wool and other commodities to the

United States. Valensi had been Iravani’s agent since

February of 1947 or 1948—about two or three years before

Iravani’s first transaction with BIC.

—

Iravani entered into four written contracts with BIC

to sell to the latter wool to be shipped by plaintiff from Iran.

The first three contracts were made in New York City

through Iravani’s agent, while the fourth was made with

Iravani personally at Teheran through BIC’s agent, one

Kitching, who died before the trial.

The first contract, dated December 8, 1949, provided for

350 tons of greasy white wool at a price of 60¢ per net

pound clean basis (i. e., the pounds yielded after scouring

and removal of impurities in the United States) (I-45).

The second contract, dated April 17, 1950, provided for 300

tons of white wool at 70¢ per clean pound (I-5). The third

contract, dated April 21, 1950, provided for 100 tons of

cream wool, or second white, at 60¢ per clean pound (I-6).

The fourth contract, dated June 30, 1950, provided for 200

tons of white wool at 85¢ and 200 tons of cream wool at 75¢.

This fourth contract was by its terms made contingent upon

performance by Iravani of his obligations under the first

three contracts (I-6-7).

Each of the written contracts contained the seller’s

estimate of the yield. This was necessary, because the

amount eventually to be paid was to be calculated on a per

net pound clean basis i. e., the pounds yielded after the

scouring and removal in the United States of impurities in

the wool as shipped.

BIC opened a letter of credit in connection with the first

contract. In connection with the second contract, a letter

of credit was opened but was made unavailable until the

first credit had been fully utilized (I-10).

Caught in a rising market, Iravani succeeded in gaining

concessions from BIC, among them, the deletion of the

restrictive clause on the second letter of credit on June 19,

1950, and the opening of a letter of credit applicable to the

fourth contract on or about October 9, 1950 (I-11, 66).

6

Although the first contract required shipment not later

than February 15, 1950, Iravani made his first partial ship-

ment against said contract on April 7th, 1950. Even before

this date, BIC, because of Iravani’s defaults, early in 1950,

sent Valensi and Kitching, at its own expense, to Teheran,

in order to hasten shipments of the wool. In spite of this,

on July 7, 1950, after his return to this country, Valensi

informed Iravani that although the first contract was then

seven months old, BIC had received only 75 tons of off-

grade wools and was in default with its customers (I-27).

Included among said wools were quantities of colored

wools. On or about August 18, 1950, BIC contracted with

Iravani to purchase colored wools at a price of 42 cents

(I-14).

After the first shipment Iravani refused to accept pay-

ments of 60 cents per pound for white wool. Consequently,

he held back on forwarding his invoices. The Lemsterkirk,

for example, sailed on May 21, 1950. Iravani drew three

invoices against said shipment, one dated July 6th, at 60

cents; one dated July 6th at 70 cents; and one dated

December 5th, 1950 at 60 cents (III- 205, 219, 257).

The Settlement: Iravani arrived in the United States

on January 28, 1951. At that time, the Bankers Trust Co.

presented to BIC two drafts drawn by Iravani totalling

approximately $430,000 (III-209, 230). According to BIC’s

allocation of Iravani’s shipments, there was insufficient

credit in his favor to pay said drafts. In addition, confu-

sion had been engendered by Iravani’s delays in shipping

and by the several special agreements and modifications

of Iravani’s obligations to perform. The condition was

such as to amply justify the District Court’s findings that

the disputes between the parties which are the subjects of

the early causes of action developed before or shortly after

Travani’s arrival, so that the existing situation required

some sort of settlement (I-107).

7

The correspondence in November and December of

1950 indicates that Iravani was urged to come here speci-

fically to settle ‘‘all pending accounts including unfinished

contracts’’ (Barkey’s cable of November 22nd at I-91; see

also I-68, 93 and III- 268).

On March 8, 1951, Iravani’s agent, Valensi, drew a

memorandum of a conference at which Valensi, Iravani

and Barkey had been present, wherein he reported Mr.

Barkey stating: ‘‘that he and Mr. Iravani had arrived at

a final settlement concerning their old business’’. This

memorandum was offered in evidence by Iravani (I-120,

150) and is quoted at length (post p. 16).

On March 14, 1951, Valensi wrote to Iravani in

respect of the 142 bales consignment (Third Cause of

Action), stating: ‘‘We are now given to understand that

you have arrived at a final settlement with Barkey Import-

ing Company, in which is included this accounting’’ (I-57,

58).

As to the terms of the settlement, the District Court

found as follows in respect of BIC’s testimony thereon.

„Barkey testified as to the terms of the settle-

ment agreement that Iravani was to ship 150 tons of

white wool at $1.10 per pound, the half-and-half

agreement was to be set aside, Iravani was to get

billed values* less 5% for wool in fulfilling his second

formal contract, and the fourth formal contract was

to be cancelled’’ (I-140).

And in respect of Iravani’s testimony, the Dictrict

Court found (I-140):

* * The term ‘‘billed values meant that on all future shipments

with the shipment on the Steel Artisan, which arrived

February 4th, 1951, other than shipments on account of the 150

tons arrangement, Iravani was to be paid at the rate per pound

which BIC received from the mills to which it sold he particular

wool in question less 5%.

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8

„He was to ship 150 tons of white wool at $1.25,

the half-and-half agreement and the four formal

contracts as amended were to remain in effect as far

as already executed and be cancelled to the extent

that he still owed wool under them and the 395 ton

consignment arrangement remained valid with prices

at 95% of Barkey’s prices.

The Court of Appeals not only accepted Iravani’s ver-

sion of the settlement, but, indeed, went a step further to

include in the settlement agreement an alleged additional

contract of joint venture between the parties which Iravani

had never claimed to have been part of the settlement

(V-405, 419, 422). It refused to credit the documentary

proof that Iravani himself had offered.

The Court of Appeals also found that at the time Ira-

vani arrived in New York, i. e., prior to the settlement, he

had shipped 850 tons against the four written contracts

which called for a ictal of 1,140 tons (V-404). Thus, prior

to the settlement, BIC had the right to receive 290 tons at

prices of 70 cents and 85 cents. As the Court of Appeals

decided the case, the position of BIC following the settle-

ment, was that it had the right to receive 150 tons of white

wool at $1.25 and to continue to remain obligated on claims

that had theretofore accrued in Iravani's favor.

(B) The Causes of Action.

Note: The District Court found that the first, second,

third and fourth causes of action were released and dis-

charged by the agreement of settlement made by the parties.

First Cause of Action: The first cause of action is based

on a separate agreement, distinct from the four written

contracts, which may be referred to as the color-averaging

agreement. This agreement purportedly made about August

9

23, 1950, related to portions of the shipments aboard

three specific ships, two of which had already arrived in

New York City (Lemsterkirk had arrived July 17, 1950;

Designer had arrived July 20th; and the third, Lindekirk

had sailed August 5, 1950). The agreement provided for

invoicing said portions at sixty cents per pound, being the

average between sqventy cents for white, and forty two

cents for colored wools (I-15). Although the agreement was

made about August 23, 1950 nothing further was heard with

respect to same until three invoices covering the balance

of wools on said three ships arrived in January of 1951.

At the same time Iravani deiivered a fourth invoice cover-

ing wools on the Laagkirk, a ship that was not included in

the color-averaging agreement. All of the invoices were

dated December 5, 1950 and billed the wools at the rate of

60 cents. There was no allocation as between white and

colored wools, and there was nothing to indicate that they

were indeed drawn pursuant to the color-averaging agree-

ment (III-205, 207, 209, 211).

When these particular wools were delivered to it months

earlier, BIC had charged them off against wools due under

the first written contract and had credited Iravani there-

for at 60 cents. In making its allocations to contracts,

BIC proceeded to allocate chronologically, i.e., against the

first written contract until fully performed. It did so

because it was utterly impossible to do otherwise. In the

first place Iravani consistently was late in his invoicing.

In the second place he withheld documents. In the third

place his shipments were forwarded with incomplete or

untintelligible documentation (I-44; III. 183, 186, 187, 188,

190, 204, 259).

The gravamen of the first cause of action is Iravani’s

claim that he was entitled to 70 cents per pound on the white

wools covered by the four invoices. The District Court

10

disallowed the claim on the fourth invoice relating to the

S. S. Leagkirk and the Court of Appeals also rejected the

claim. However, the District Court tentatively found that

Iravani was entitled to ten cents per pound on the three

other invoices, unless his claim therefor had been exting-

uished by a subsequent settlement. Concluding ultimately

that the settlement agreement did extinguish the claim,

the District Court held for BIC on this cause of action

(V-412).

Second Cause of Action: The second cause of action is

predicated upon a second special agreement between the

parties to give financial assistance to Iravani. The corre-

spondence in early August of 1950 evidences a price-aver-

aging agreement whereby Iravani was authorized to invoice

half of a shipment at 60 cents and the other half at 70

cents, contingent, however, upon Iravani delivering the

balance of wool due to BIC under the old contracts by

shipping them by the first available steamer from Khor-

ramshah (I-12).

In June and July of 1950, Iravani in Iran delivered four

invoices at 70 cents to Kitching, BIC’s representative, and

BIC paid the amounts as invoiced.

Though performance by BIC of the price-averaging

agreement was subject to the condition precedent that

Iravani must first complete the first and second contract

by the first available steamer, he failed to do so. Also,

said agreement required Iravani to invoice at 60 cents

in respect of half of all future shipments. This in

effect, he likewise failed to do. While he did invoice at

60 cents in respect of the four invoices covered by the first

cause of action, he proceeded to demand 70 cents thereon.

Now, if Iravani had performed said price-averaging

agreement, both the first and second written contracts

=

11

would have been fulfilled and the accounting would have

evened itself out. Iravani failed to perform and BIC has

been penalized because of such failure.

The District Court tentatively allowed additional credit

to Iravani on three of the four invoices and denied recovery

on the Designer invoice, holding that it had not been suffi-

ciently identified. It concluded ultimately that said claim

was extinguished by the subsequent settlement. The Court

of Appeals reversed said finding on the ground that the

claim was not embraced within the settlement, and granted

additional credit at the rate of ten cents per pound on the

three invoices and on the fourth as well (V-413).

In respect of the fourth invoice (Steel Designer, dated

July 6, 1950), the Court of Appeals relied upon a letter of

BIC to Kitching dated June 7th, which long antedated the

price-averaging agreement and also antedated the deletion

of the restrictive clause from the second letter of credit.

Third Cause of Action: Iravani’s claim is based upon

another special agreement which involved a consignment

of 142 bales to be sold for his account and for which he

was to be credited at the market price on the day of arrival,

provided that he completed the written contracts (1-53-54).

BIC credited him thereon at 85 cents for white wool. The

District Court found the market price for white wool on

the arrival date to be 91 cents, and tentatively granted

Iravani additional credit at the rate of 6 cents per pound.

However, the District Court made a specific finding that

Valensi’s letter of March 14, 1951 (1-57) pointed to the

disposition of said claim in the settlement (I-58). The

Court of Appeals reversed, and granted Iravani additional

credit in the amount tentatively found by the District Court

(V-414).

12

Fourth Cause of Action: This cause of action is based

upon the half-and-half agreement of September 25, 1950.

Under it Iravani was authorized to allocate his future

shipments, half against his written contracts and half to

be sold for his account at market (I-38).

In a letter dated November 23, 1950, Iravani stated that

he was invoicing, pursuant to the half-and-half agreement,

wool on two earlier shipments (i. e., SS. Lissekirk and S8.

Lindekirk notwithstanding the fact that both had been

expressly excluded from that agreement (Exh. 115, I-38)

and he urged that said agreement covered all previous

shipments (I-44).

The four invoices drawn pursuant to the half-and-half

agreement included the two that had been excluded. Both

Courts disallowed additional credit thereon.

In respect of the two remaining invoices (SS. Designer

and SS. Artisan) the District Court tentatively found addi-

tional credit in the sum of $73,017.94, but finally held that

it was wiped out by the settlement agreement. BIC had

contended at the trial that the limit of Iravani’s claim

should be $54,643.77. The Court of Appeals reversed the

District Court’s finding as to the settlement, and directed

the entry of judgment in the amount tentatively found by

the District Court.

Note: Because the Sixth and Tenth causes of action are

closely related to the settlement agreement, we beg leave

to interrupt the chronological order of discussing the causes

of action in order to consider the Sixth and Tenth causes

at this point.

Sixth Cause of Action: This cause of action is founded

on Iravani's claim that 395 tons of wool were shipped to

BIC on a consignment basis. BIC contended that the ship-

ments were delivered and applied against Iravani’s con-

13

tractual obligations as modified by the settlement agree-

ment reached early in 1951. This is the same settlement

that we have referred to at length at pages 6-8 hereof.

BIC, in performing the settlement agreement, paid

Iravani $388,833.94 more than he would have received had

he been held strictly accountable to his written contracts

(II- 275). However, Iravani asserts that he was entitled

te best January prices regardless of BIC’s billed prices,

as provided in the settlement agreement; and thus, is

entitled to an additional $107,152.67 (III. 283).

The District Court, without directly ruling on Iravani’s

contention that there was a consignment, assumed, only

for the purpose of its decision, that the contentions of

Iravani were correct.

The Court concluded that the consignment could not

exceed 375 tons, since Iravani had claimed 395 tons but had

later admitted to delivering 20 tons less (I-116). Then, since

a totai of 619 tons had been delivered commencing with the

Steel Artisan (III- 274), and since 148 tons thereof were

applied to the 150-ton phase of the settlement at $1.10, that

left remaining 471 tons. Deducting therefrom 375 tons of

alleged consignment wools, BIC would have had 96 tons

that it could do with as it chose.

The District Court proceeded to analyze Iravani’s itemi-

zation (III- 283) and concluded that Iravani had received

“best January prices on all wools except at the very

most, 72 tons (I-118).

The Court of Appeals did not accept the foregoing

conclusion, even though it concurred with the District Court

on the elimination from Iravani’s claim those items in

which he demanded additional credit based on $1.55 as the

alleged price of cream wool, as against $1.35 actually

credited.

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14

Tenth Cause of Action: In this cause of action Iravani

claimed that the settlement agreement which allegedly

required delivery of 150 tons of white wool at $1.25 was

subsequently modified, in June of 1951, to provide for 120

tons at a total price of $150,000. According to BIC it

received virtually the entire 150 tons and paid therefor at

the rate of $1.10. Included in said 150 tons are the 70 tons

which Iravani allegedly applied to the joint venture.

According to Iravani, BIC accepted only 80 tons of the

alleged 120, and refused to accept 40 tons thereof. The

Tenth Cause of Action seeks recovery for damages

measured by the difference between approximately $1.15

as the contract price and the resale price received by

Iravani after BIC’s alleged default, totaling $15,400.

The District Court found that the claimed modification

was not borne out by the preponderance of the credible

evidence. The Court of Appeals stated: Although we do

not find this decision unwarranted, we think that it ought

to be left open for further consideration in the light of

further proceedings after remand on the other phases of

the settlement and on an over-all allocation’’ (V-426-7).

Fifth Cause of Action: In this cause of action, Iravani

claims that a 292 bale shipment aboard the Steel Artisan,

arriving in February 1951 was sent to BIC upon its oral

agreement to sell the same as Iravani's agent (II-157-8).

The agency was denied by BIC.

When Iravani arrived in New York in January, 1951,

he represented to BIC that he had entered into a contract

with Bijarchi (the shipper) for the purchase of said 292

bales; that he had paid a down payment thereon; and that

the balance was to be paid against documents (I-80).

The Court of Appeals found that Bijarchi shipped the

goods and sent the bills of lading to Murad, but this time

not for Iravani’s account (V-416).

15

Prior to shipment, the bales had been marked for Bar-

key Importing Co. (I-81). Iravani neglected to reveal to

BIC that his check to Bijarchi’s agent for approximately

$2,000 had been returned by Iravani’s bank with a note:

“‘Refer to Drawer! (I-85).

There was a title dispute between Iravani and Murad

who held the documents. In the meantime, BIC obtained

possession of the 292 bales by posting with the steamship

company a letter of guaranty from his bank which indemni-

fied the steamship company for parting with possession

without receiving the bill of lading.

BIC sold the goods and credited Iravani therefor at

the sale price, less 5%, pursuant to the ‘‘billed price’’ phase

of the settlement (Pro Forma Account #12, III- 236). When

it became apparent, however, that Iravani was not and

could not deliver the documents, BIC eliminated the credit

(Final Account #12, III- 238). Thereafter, after Iravani

had commenced his lawsuit, BIC was required to protect

itself and purchased the documents from the then holder

thereof (I-82-84).

Iravani claims the price realized by BIC on the sale

of the wool, less the price paid by it for the documents, on

the theory that as consignee and as Iravani’s agent, BIC

was required to account for the proceeds of the sale; was

estopped from denying the principal’s title to the goods;

and was at no time permitted to purchase the documents

for its own account.

The District Court made no express finding as to either

the consignment or the agency, but examined the legal con-

sequences of Iravani’s claim on the hypothesis that an

agency relationship existed; and determined that the

failure by Iravani to reveal the fact of the dishonoured

check constituted such a fraud as to debar him from

recovery. The Court of Appeals clearly overlooked the

— —

16

genesis of the relationship and it decided the issue as

though the agency had been established and as though the

issue were purely one of law (Footnote V-407).

Seventh and Eighth Causes of Action: These causes of

action are based upon a claim by Iravani, denied by BIC,

that in February 1951 the parties entered into a joint

venture agreement to buy and sell wool with profits and

losses to be shared equally.

These causes of action, as well as the reversal of the

first four, depend to a great measure upon the effect tobe

given to a memorandum made by Iravani's agent, Valensi,

of a conference between himself and Mr. Barkey at which

Iravani was present. This exhibit, dated March 8, 1951,

was offered in evidence by Iravani (Ex. 270; I-120-121).

Its pertinent parts are as follows:

„This morning Jack Barkey called me by phone

and subsequently I interviewed him in the presence

of Mr. Iravani (emphasis supplied) at his office con-

cerning future business between Barkey and Iravani.

““(1) It was stated by Mr. Barkey that he and

Mr. Iravani had arrived at a final settlement con-

cerning their old business (emphasis supplied) and

that although Mr. Barkey had felt that the settle-

ment was not very favorable to himself, under the

circumstances it was the best that could be expected.“

4. In reply to my inquiry concerning the modus

operandi in which Mr. Barkey and Mr. Iravani would

conduct their business Mr. Barkey indicated that it

would probably (emphasis supplied) assume the

form of a profit sharing venture.“

This exhibit is most important because of the effect

which the Court of Appeals gave to it. The court ignored |

17

paragraph 1“ with respect to the settlement although it

is definite and clear, and accepted the indefinite paragraph

*4’? as the main prop in determining that the parties had

entered into a joint venture.

The Court of Appeals thus construed a prospective

and possible profit sharing arrangement as a present and

actual contract of joint venture, and this although the

parties did not agree upon, or even consider the normal

and usual terms of a joint venture agreement such as: (a)

its duration, (b) the total of capital contribution; (e) the

name; (d) place of doing business; (e) mechanics of

handling funds; (f) books to be kept; (g) time to divide

profits and share losses; (h) interest of the parties in the

event of death or early termination.

The District Court found that there was no joint ven-

ture because, among other things, it could not ‘‘overlook

the prior dealings, misunderstandings and hard feelings

that had arisen between the parties.“ (I-136). Such deci-

sion was in line with prior decisions both Federal and

New York State, Farley v. Hill, 150 U. S. 572; Summa

v. Masterson, 215 App. Div. [N. V.] 159, 162. However,

the Court of Appeals came to a contrary conclusion.

Note: The ninth cause of action was affirmed (V-430).

The Counterclaim: The answer of BIC to the amended

complaint set up a counterclaim in the amount of $177,039.86

for money laid out and expended for Iravani and for ser-

vices (III-21-22, 28-37). The final amendment to Iravani’s

complaint, admitted that BIC was entitled to $133,736.14

for moneys that BIC generally advanced for Iravani’s

account, which could not be allocated to any of the causes

ok action alleged in the plaintiff’s complaint (III-51). At

the trial Iravani testified that he only challenged one item

of $1,010.41 out of payments by BIC for his account of

18

$1,161,000 (III-84). Later in the trial Iravani’s counsel

withdrew the denial to the nine items of the counterclaim

set forth at III-28 (III-181-2). In the brief submitted by

Travani’s counsel at the conclusion of the case, they

admitted that there was due to BIO $139,724.71, but on

BIC’s claim for only $139,723.31, judgment was awarded

in that amount (I-151).

The Court of Appeals conceded that the plaintiff had

made the admissions in his final amended complaint and

in his brief (V-428), nevertheless it called attention to the

fact that the counterclaim was contested on the appeal; held

that the Court was not bound by a party’s admission

(V-429) ; and reversed and remanded (V-430).

(C) The Decision of the Court of Appeals.

To summarize the decision of the Court of Appeals, we

find that the first four causes of action were reversed and

the District Court was directed to enter judgment in favor

of Iravani; with respect to the fifth, sixth, seventh, eighth

and tenth causes of action and the counterclaim, the judg-

ment in favor of BIC was reversed and remanded. The

ninth cause of action was affirmed (V-430).

Basis for Federal Jurisdiction.

The basis for Federal jurisdiction in the first instance

is diversity of citizenship between the parties, the respond-

ent being a citizen of the Kingdom of Iran and the peti-

tioner a corporation organized and existing by virtue of

the laws of the State of New York.

Reasons for Granting the Writ.

The petitioner is not seeking certiorari merely because

there was a reversal of a judgment in its favor. Certiorari

19

is sought because the reversal was so erronious that the

decision, until corrected, will create a chaotic condition at

least in the Second Circuit. This decision is not only in

conflict with the decisions of other circuits and of the State

of New York on the same matter, but the Court of Appeals

has so far departed from the accepted and usual course of

judicial proceedings, as also to call for the exercise of this

Court’s power of supervision pursuant to Rule 19(b) of

the Revised Rules of the Supreme Court of the United

States.

1. The Court of Appeals presumed that it had the

power to disregard the admissions of a party and thus

reversed and remanded a judgment in favor of BIC on a

counterclaim that had been admitted in Iravani’s plead-

ings, his brief to the trial court and in his oral testimony

(III-51, 84, 181-2).

The Court concluded that it was not bound by such

admissions because ‘‘a party’s admissions are only evi-

dence and not necessarily the truth’’ (V-429).

Professor Wigmore clearly demonstrated the effect to

be given to such admissions when he wrote (Vol. 2 Wigmore

on Evidence, Second Edition 51064 p. 536):

„The pleadings in a cause are, for the purposes

of use in that suit, not mere ordinary admissions, but

judicial admissions; i. e. they are not a means of evi-

dence, but a waiver of all controversy (so far as the

opponent may desire to take advantage of them) and

therefore a limitation of the issues. Neither party

may dispute beyond these limits. Thus, any refer-

ence that may be made to them, where the one party

desires to avail himself of the other’s pleading, is

not a process of using evidence, but an invocation

of the right to confine the issues and to insist on

treating as established the facts admitted in the

pleadings.’’

See also Tisdale v. R. Co., 116 N. Y. 416, 419; New York Life

v. Graham, 92 F. 2d 377, 380 (9 Cir.) ; Historical Pub. Co.

v. Jones Bros. Pub. Co., 231 Fed. 638, 644 (3 Cir.), and

Coffin v. The President etc. Hydraulic Co., 136 N. V. 655, 657.

2. The Court of Appeals also erred with respect to the

counterclaim, when it presumed that it had the power to

permit Iravani to contest the counterclaim for the first time

in that Court (V-428). Permitting a party to raise a con-

tention not raised before the trial court, for the first time

on appeal, is not only contrary to the rules laid down gen-

erally by appellate courts, but it has been so decided by the

Court of Appeals for the Second Cirenit. Patent & Licens-

ing Corp. v. Olsen, 188 F. 2d 522, 525 (2 Cir.); Libbey-

Owens-Ford Glass Co. v. Sylvania Indust. Corp., 154 F. 2d

814, 816 (2 Cir.).

3. The Court of Appeals (V-406-7) called attention to

the fact that pursuant to Rule 52(a) Federal Rules of Civil

Procedure, the ‘‘findings of fact shall not be set aside unless

clearly erroneous’’. The Court then defined the meaning of

‘*clearly erroneous’’ under the decisions of this Court in

United States v. U. S. Gypsum, 333 U. S. 364, 395 (1948);

and of the Second Circuit in Gindorff v. Prince, 189 F. 2d

897 (2 Cir.).

Having defined its powers, the Court of Appeals never,

in any instance in its thirty page opinion, says that the

findings of fact by the District Court were „clearly erron-

eous’’. Thus with respect to the first four causes of action

the Court held that it disagreed with the conclusion of the

District Court that such causes of action were discharged

by the settlement agreement (V-412, 414, 415); fifth cause

of action, remanded to determine whether the wool was

sent on consignment (V-417); sixth cause of action, “we

disagree with the district court’? (V-421); seventh and

eighth causes of actions, ‘‘Iravani has sustained his burden

_

21

of proof“ (V-424); and with respect to the tenth cause of

action, the District Court rejected the claim of Iravani of

an oral modification of the settlement that required him to

furnish 150 tons of white wool at $1.25 per pound to 120

tons at $1.15 per pound of which Barkey accepted only 80

tons. The District Court held (V-426), We do not believe

that that has been borne out by the preponderance of the

credible evidence in this case’’, Far from holding that such

finding was ‘‘clearly erroneous’’ the Court of Appeals held

(V-426), ‘‘although we do not find this decision unwar-

ranted, we think that it ought to be left open for further

consideration in the light of further proceedings after

remand of the other phases of the settlement and on an

over-all allocation’’.

4. The petitioner concedes that the Supreme Court is

not primarily concerned with the correction of all errors of

a lower court. However, the determination of the Court of

Appeals, with respect to the first four causes of action was

not only erroneous, but it cast the petitioner into judgment

without the right of even one appeal.

As we have pointed out (pp. 8-12), the District Court

tentatively found in favor of Iravani on each of these causes

of action, but held that any claim of Iravani was discharged

by an agreement of settlement between the parties.

Since the result in the District Court was in favor of

BIC, it had no right to appeal from the tentative finding in

each cause of action in favor of Iravani. Lindheimer v.

Winois Telephone Co., 292 U. S. 151, 176; Gideon v. Hinds,

238 F. 140 (2 Cir.); Harding v. Federal Nat. Bank, 31 F.

20 914, 917 (1 Cir.). And now the Court of Appeals has

affirmed the District Court’s tentative findings in favor of

Iravani by holding that these claims were not discharged

by the settlement. Thus, BIC is cast in judgment with all

right of appeal gone.

The final result is startling when we realize aat in not

one instance did the Court of Appeals say that the prior

determination was ‘‘clearly erroneous’’; in at least one

instance (Fourth Cause of Action) the Court of Appeals

held that there was very little evidence on the claim

(V-415); and all of this came about because the Court

either by error, or for a reason that is not apparent in

the opinion, refused to give credence to Iravani’s own

exhibit that spelled out the settlement (Supra, p. 16).

The reversal of the District Court’s judgment on these

four causes of action becomes even more inexplicable when

we find that LIC is criticized for not having appealed from

the finding with respect to the Third Cause of Action

(V-414), when, as we have shown, it had no right of appeal.

5. The Court of Appeals gave effect to paragraph 4 of

Ex. 270, that was offered in evidence by Iravani, as its

main prop in reversing the District Court with respect to

the Seventh and Eighth Causes of Action (supra, pp. 16-17).

At the same time the Court disregarded paragraph 1 of the

same exhibit which proved the existence of the settlement

agreement, as found by the District Court, and disposed of

Causes of Action numbers One, Two, Three, Four and like-

wise affected Six and Ten.

By this strange separation of an exhibit offered by the

plaintiff, the Court of Appeals departed from the accepted

and usual course of judicial proceedings which require a

court to hold that a document must be considered in its

entirety, ‘‘the parts operating against the interest of the

party offering it as well as the parts in his favor’’ 32 C. J. .

§774, p. 700. See also Snell Isle, Incorporated v. Commis-

sioner, 90 F. 2d 481, 482 (5 Cir.), Cert. den. 302 U. 8.

734; Bulkly v. Kaolin Products Co., Inc., 187 App. Div.

(N. V.) 108, 108; Barnsdall Refining Corp. v. Birnamwood

Oil Co., 32 F. Supp. 308, 313 (D. C. E. D. Wisconsin).

Conclusions.

The ruling of the Court of Appeals creates an intolerable

condition in the Second Circuit. Until corrected, every trial

and appeal will be fraught with uncertainty in the following

respects :

1. No litigant will be able to rely on the admissions of

an opponent and will be obliged to be prepared to prove

all issues whether contested or not. By the same token

courts will be required to examine the truth and merits of

every admission, and pleadings will no longer define the

issues.

2. No party to an appeal can safely ignore issues not

raised in the trial court.

3. All rules relating to the effect to be given to docu-

mentary proof offered by a party will be destroyed.

4. Unless the clearly erroneous’’ doctrine laid down

by this Court in United States v. U. S. Gypsum, 333, U. S.

869, 895 is clearly defined and limited, appellate courts

will, as here, reverse matters merely because of disagree-

ment with the trial court and not because such determina-

tion was in fact either ‘clearly erroneous’’ or failing in

evidence to support it.

5. The Court of Appeals has not only rendered a deci-

sion in conflict with its own prior decision and with the

decisions of this Court and the Courts of Appeal of other

circuits, but has so far departed from the accepted and

usual course of judicial proceedings as also to call for the

exercise of this Court’s power of supervision pursuant to

24

Rule 19 of the Revised Rules of the Supreme Court of the

United States, Title 28 U. S. C. A.

Dated: New York, June 13, 1957.

Ismor J. Kreset,

Ismor J. Kress,

Attorney for Petitioner,

15 Broad Street,

New York 5, New York.

Savi Gorpon,

HAROID I. Meyerson,

Irvine L. WErNseERceEr,

of counsel.

‘

IN THE

Supreme Court of the United

Ocroser Term, A. D. 1956.

No. 1089.

BARKEY IMPORTING CO.,

Petitioner,

v.

M. SHAFI IRAVANI MOTTAGHI,

Respondent.

BRIEF OF RESPONDENT IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI.

Tomas F. MEEHAN,

Counsel for the Respondent,

36 West 44th Street,

New York 36, N. Y.

Supreme Court of the United States

Ooroszn Tzrm, A. D. 1956.

No. 1089.

Barxey Importine Co.,

v.

M. Swart Inavaxtr Morra,

Respondent.

BRIEF OF RESPONDENT IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI.

Respondent respectfully addresses himself to the five

questions (Petition, p. 3) presented by Petitioner and

refrains from a discussion of some inaccurate statements

of fact contained in the Petition, relying that the disposi-

tion of the points presented by the Petitioner will make

unnecessary the imposition upon the Court’s time that a

detailed consideration of the facts would cause.

AS TO QUESTIONS 1 AND 2:

Petitioner had counterclaimed in its answer for

$177,039.86 (III-21). Respondent had not admitted this

counterclaim in its reply but in fact had denied it (III-43).

Yet Petitioner quotes Wigmore on judicial admissions’’

when in fact it has to deal with a judicial denial. It is true

that in another part of the complaint (III-51), Respondent

had declared, in the Wherefore Clause“ that as against

its claim of $420,537.05 he was deducting a credit due to

Petitioner of $133,736.14. But for the District Court to

say that that statement constituted proof of a counterclaim

can be shown very simply to be erroneous. For example,

Respondent had actually received from Petitioner, for

goods sold and delivered, more than $1,000,000 (See ITT-83),

If respondent had made the mistake of ssserting in the

‘‘Wherefore Clause that he should have received from

Petitioner the sum, say, of $1,420,537.05 but was giving

credit to Petitioner of $1,133,736.14 already paid, would

the District Court have given Petitioner judgment upon

an amended counterclaim for 51, 133, 736.147 And this,

despite that the counterclaim was specifically denied in

the pleading? Of course not.

Again, Petitioner cites the statement of Respondent's

attorney in the course of the trial (III- 181-2) that he with.

drew his denial of nine items in Exhibits I to IX. These

items add and subtract to a figure of $7913.79 due Peti-

tioner. This constituted a connecting of this $7913.79 as

part of the $133,736.14 which Respondent had credited

Petitioner with in the Wherefore Clause.“ The fact that

Petitioner admits making up his counterclaim of such items

as these is evidence to the contrary of what is intended.

It shows that a counterclaim cannot be founded upon money

which had been paid and should have been paid. Notice

that in that same statement at trial (III-181-2) Respond-

ent’s attorney again denied the counterclaim.

It is clear then that these credits to Petitioner by.

Respondent were mere manifestations of arithmetic, rather

than admissions, and certainly not judicial admissions”

of anything. And in the light of their proper analysis,

the Court of Appeals is shown to be eminently fair to Peti-

tioner in sending its counterclaim back to the District Court

for disposal with the entire case.

AS TO QUESTION 3:

The Petitioner uses the words clearly erroneous as

if they possess mystical power. But this Court, in the very

case cited by Petitioner, U. S. v. Gypsum Co., 333 U. S. 364

(1947) states at page 395: A finding is clearly erroneous’

when although there is evidence to support it, the review-

ing Court on the entire evidence is left with the definite

and firm conviction that a mistake has been committed.“

Can there be any doubt that the Court of Appeals thought

that a mistake had been committed? Indeed there can be

no doubt of mistake on the District Court’s part. The Dis-

trict Court’s decision was largely based upon its belief

that Respondent had lied in two important particulars.

Petitioner in its briefs to the Court of Appeals belabored

this alleged false testimony at great length and for many

pages. But the Court of Appeals showed that the District

Court (See Vol. V—p. 423 and also pp. 425-6.) had misun-

derstood Respondent’s testimony and that Respondent

had in fact not contradicted himself or the record. Here

then is conclusive proof of clearly erroneous’ find-

ings by the trial Court which are pervasive of the whole

record and not mere disagreements of opinion between two

Courts.

AS TO QUESTION 4:

The District Court had found for Respondent on his

first four causes of action. Then, in deciding the tenth

cause of action, the District Court found that Respondent

had disposed of those four claims by a settlement, and so

finally gave Petitioner judgment dismissing the same.

Though Petitioner did not formally appeal from the trial

Oourt's decision thereon, it argued the merits of those

four causes of action at length both in its briefs and

orally before the Court of Appeals. The opinion of the

4

latter Court shows that the merits of those four causes of

action were considered and acted upon by that Court (Vol.

V, pp. 409-415). Despite that Petitioner had full hearing,

therefore, on these four causes, it now complains it did not

have a hearing. And it compounds the pretense by con-

tending that it could not have appealed therefrom because

it was the victor therein; but that is not correct. The test

of whether they could have been appealed from is whether

the adverse findings therein would be res judicata. (See

N. T. Telephone Co. v. Maltbie, 291 U. S. 645-1933.) And,

of course, they are res judicata, obviously, since the issues

involved were fully litigated and incorporated in a final

judgment. -

AS TO QUESTION 5:

Petitioner contends that Exhibit 270 (I. 120-121) was

given effect to prove joint venture in favor of Respondent

but that its effect as proof that a settlement was entered

into was ignored. The Court of Appeals did not reverse

the District Court’s finding of a settlement. But it found

the District Court in error as to the terms of the settlement,

the terms testified to by the Petitioner having rightly been

found by the Court of Appeals to be inherently impossible.

But since Exhibit 270 did not mention the terms of the

settlement it refers to, it was given full credence by the |

Court of Appeals. This complaint by Petitioner is thus

completely baseless.

How then in the light of above can Petitioner seriously —

say that this is a case where the Court of Appeals has

so far departed from the accepted and usual course of

judicial proceedings as to call for the exercise of this

Court’s power of supervision pursuant to Rule 197 And

5

of course, no conflict has been shown either with other

circuits or with prior decisions of the Second Circuit.

It is therefore respectfully submitted that this case is

not a proper one for review by Certiorari in this Court

and that the petition for a writ of Certiorari should be

denied.

Dated June 17, 1957

Tsomas F. Meznan

Counsel for Respondent

36 West 44th St.

New York 36, N. Y.