Capitol International Airways, Inc. v. Civil Aeronautics Board

392 F.2d 511, 129 U.S. App. D.C. 187, 1968 U.S. App. LEXIS 7782
CourtCourt of Appeals for the D.C. Circuit
DecidedMarch 8, 1968
Docket21062
StatusPublished
Cited by6 cases

This text of 392 F.2d 511 (Capitol International Airways, Inc. v. Civil Aeronautics Board) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Capitol International Airways, Inc. v. Civil Aeronautics Board, 392 F.2d 511, 129 U.S. App. D.C. 187, 1968 U.S. App. LEXIS 7782 (D.C. Cir. 1968).

Opinion

TAMM, Circuit Judge:

I

Petitioner, an air carrier holding certificates authorizing it to engage in supplemental (charter) air transportation, seeks review of two Civil Aeronautics Board orders, both of which were effec *513 -tive April 18, 1967. Order E-24998 found that petitioner, in operating a charter flight: (a) collected greater compensation than provided in its tariffs; (b) failed to obtain parts of the Statement of Supporting Information required by Board regulations; and (c) failed to obtain a regulation-required Certified Passenger Manifest. This order also directed petitioner to cease and desist from: (a) charging transportation at rates different from its effective tariffs and (b) operating pro rata charter flights without obtaining information and manifests required by Board regulations. The second Board order here involved, E-24999, denied petitioner’s application for discretionary review by the Board of the initial decision of the hearing examiner and made effective the initial decision of the hearing examiner as the decision of the Board.

Action before the Board was initiated by its Bureau of Enforcement with the filing of a complaint charging petitioner specifically with violations arising from petitioner’s conduct and action in the handling of a charter European flight contracted for by the New York State Teachers Study Group. After petitioner had filed its answer to the complaint, and in due course, hearings were held before an examiner, at which hearings testimony was taken from various witnesses; exhibits were filed, and briefs submitted at the close of the testimony. The examiner issued his decision, ruling that petitioner had; in fact, received payment of the full charter price prior to its assessment and collection of an additional $92.-50 from each passenger and had, in fact, failed to obtain parts of the Statement of Supporting Information and the Certified Passenger Manifest as charged in the Bureau of Enforcement’s complaint. The examiner entered an order directing petitioner to cease and desist from these violations. Thereafter, Capitol International Airways filed a timely petition for discretionary review of the examiner’s decision with the Board. The Board declined to review, thereby effectuating the examiner’s decision as the final order of the Board.

II

Petitioner’s challenge to the Board action is based upon the role of one Friedman and the question of whether the testimony and exhibits establish him as the agent of the carrier. The Board, by sustaining the examiner’s ruling, held that Friedman was the agent of petitioner and consequently that funds paid to him by the chartering group were in fact paid to petitioner, even though the record established that Friedman’s wife, as president of the New York State Teachers Study Group, turned the funds collected for several group trips over to her husband as the owner of the travel agency which handled the details of the several tours. The problem crystallized when Friedman was indicted by the grand jury of Bronx County, New York, for grand larceny of some $165,000 in money belonging to the Study Group and was ultimately convicted of this violation.

Our review of the record discloses detailed testimony of the relationship and the dealings between Friedman, and his wife, and between Friedman and petitioner. The record is replete with evidence which supports the examiner’s conclusion that Friedman was petitioner’s agent in collecting the funds. There existed a written contract between petitioner and Friedman entitled “Charter Agency Agreement,” 1 wherein petitioner appointed Friedman as “agent to solicit and develop aircraft charter traffic on its behalf * * * ” (emphasis supplied) with reference to the charter flight herein involved. This contract appointed Friedman, who “accepts appointment,” and provided for a commission compensation to him “for all services rendered by [a] gent to carrier. * * * ” The contract provided that it “constitutes a personal contract * * * ” which could not be transferred without petitioner’s written consent and that “[a]gent agrees to represent the carrier with the charter *514 er as directed by the carrier * * * " in the completion and transmission of all documents required for the charter service. The contract contained provision for the means and payment of funds through Friedman to the carrier and required that Friedman not accept funds in his own name. This last provision was overtly violated by Friedman, but the record is strong and convincing that petitioner knowingly acquiesced in his conduct, and by its conduct so effectively modified the terms of its agreement with him as to permit him to receive payments from the Study Group and intermingle them with his own funds. In the correspondence and enumerated check transactions, petitioner constructively approved Friedman’s deviations from the payment terms of the agency contract. “Although an agent is not authorized to act as he does, if the principal, with knowledge of the facts acquiesces in it, permitting the agent to do similar acts, there is normally ratification as to past acts * * and authority to do similar acts in the future. * * * ” (Emphasis supplied.) Seavey, Agency, § 21H at 39 (1964). See also: Restatement (Second) of Agency §§ 43(1), 94 (1957). The evidence relating to petitioner’s receipt of partial payments of the charter flight price drawn upon Friedman’s travel agency checking account is adequate to establish notice and knowledge on petitioner’s part that Friedman was receiving funds from the Study Group, commingling them with his own funds, and ignoring the agency contract provision prohibiting his acceptance of charter funds in his own name. “[T]he law imputes knowledge when opportunity and interest, combined with reasonable care, would necessarily impart it.” Ives v. Sargent, 119 U.S. 652, 661, 7 S.Ct. 436, 441, 30 L.Ed. 544 (1887), quoting with approval Wollensak v. Reiher, 115 U.S. 96, 99, 5 S.Ct. 1137, 1139, 29 L.Ed. 350 (1885). “[A] party to a transaction, where his rights are liable to be injuriously affected by notice, cannot wilfully shut his eyes to the means of knowledge which he knows are at hand, and thereby escape the consequences which would flow from the notice if it had actually been received. * * * ” The Lulu, 77 U.S. (10 Wall.) 192, 201, 19 L.Ed. 906 (1869). “[Wjhere there is enough to put those concerned upon inquiry, the means of knowledge and knowledge itself are, in legal effect, the same thing.” Jones v. Guaranty and Indemnity Co., 101 U.S. 622, 633, 25 L.Ed. 1030 (1879). Thus, with knowledge of this conduct, petitioner, by continuing to deal with Friedman, not "only failed to repudiate his original proscribed conduct and revoke his agency contract, but instead, by a continuing course of tolerance (and consequently acceptance) acquiesced in his deviation from the terms of the contract and legally authorized him to continue these practices. The fact that Friedman may have been the Study Group’s general agent does not require a contrary conclusion.

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392 F.2d 511, 129 U.S. App. D.C. 187, 1968 U.S. App. LEXIS 7782, Counsel Stack Legal Research, https://law.counselstack.com/opinion/capitol-international-airways-inc-v-civil-aeronautics-board-cadc-1968.