General Houses, Inc. v. Marloch Manufacturing Corp.

239 F.2d 510
CourtCourt of Appeals for the Second Circuit
DecidedDecember 26, 1956
DocketNo. 153, Docket 24260
StatusPublished
Cited by9 cases

This text of 239 F.2d 510 (General Houses, Inc. v. Marloch Manufacturing Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
General Houses, Inc. v. Marloch Manufacturing Corp., 239 F.2d 510 (2d Cir. 1956).

Opinions

LUMBARD, Circuit Judge.

The action before us, in which jurisdiction rests on diversity of citizenship as to the defendant-respondents and on federal question jurisdiction as to the other defendant, 50 U.S.C.Appendix, §§ 1821, 1832, U.S.Code Cong.Service 1946, pp. 199, 206, is for breach of contract, for inducing a breach of contract, and for a declaratory judgment as to the present validity of a security assignment by the plaintiff to one of the defendants before us. The defendant-respondents sought to examine plaintiff’s “President or other officer * * * having knowledge of the facts” under Rule 30(a) of the Federal Rules of Civil Procedure, 28 U.S.C.A. Upon plaintiff’s failure to produce in accordance with the demand, the District Court dismissed its complaint with prejudice as to the defendant-respondents under Rule 37(d), subsequently entering a final order under Rule 54(b) upon a finding of no just cause for delay.

In 1947 General Houses, Inc., incorporated in Delaware, contracted with the Reconstruction Finance Corporation for the R.F.C. to guarantee the sale of 2,000 prefabricated houses to be constructed by General Houses and sold to the general public. General Houses then subcontracted with Marloch Manufacturing Corp., a New York corporation, to manufacture the houses. General Houses later executed to Marloch Manufacturing Corp. an assignment of all monies to be paid by the R.F.C. General Houses was unable to sell the houses to the general public and tried to tender them to the R.F.C. in accordance with the guarantee. When the R.F.C. refused either to provide forms for tendering the houses, or to accept the houses when tendered informally, General Houses sued the R.F.C. in the federal court in Chicago. That suit was dismissed for failure to join Marloch Manufacturing Corp. which was held to be an indispensable party. General Houses, Inc., v. Reconstruction Finance Corporation, D.C.D.Ill.1948, 81 F. [512]*512:Supp. 202. In 1950 General Houses sued Marloch Manufacturing Corp., its parent corporation, Greenport Basin and Construction Co., and Marshall Tulloch, president of Marloch Manufacturing Corp., (hereinafter all designated as “Marloch”) and the R.F.C. in the Eastern District of New York.

The complaint contains 6 counts: (1) Against the R.F.C. for breach of contract; (2) against Marloch Manufacturing Corp. for breach of contract; (3)-against the R.F.C. for inducing Marloch Manufacturing Corp.’s breach; (4) against Marloch Manufacturing Corp. for inducing the R.F.C.’s breach; (5) against both and the other Marloch defendants for inducing each other’s breach; (6) for a declaratory judgment against the R.F.C. and Marloch Manufacturing Corp. declaring the security assignment null and void.

In 1953 General Houses served interrogatories on Marloch. Marloch claims that, pursuant to a tacit agreement between them, these have not yet been answered because Marloeh’s files have been in Washington, D. C. in connection with related litigation between the R.F.C. and Marloch. General Houses denies the existence of such an agreement.

Following the death of Marshall Tul-loch in November 1954, Marloch evidently decided to speed the case along in order to settle Tulloch’s estate. In February 1955 Marloch served notice to take the ■deposition in March 1955 “of the plaintiff, General Houses, Inc., by its President or other officer thereof having knowledge of the facts and circumstances relating to the allegations of the complaint herein.” General Houses moved to quash this notice on the affidavit of its New York counsel which alleged:

“There are no present officers of Plaintiff who have any direct personal knowledge of any matters relative to the issues in this action or who could testify in this action relative thereto. The prior officers of Plaintiff who had such knowledge and who can testify in this action relative to said books, documents, records or memoranda are scattered across the United States from California to Florida, and none of such prior officers are within the control of Plaintiff at the present time, so that Plaintiff could not produce them in New York even if ordered to do so.”

Furthermore, Thomas Fisher, plaintiff’s Chicago counsel, stated in an affidavit dated April 5, 1955 that General Houses had no present officers, and indeed, no present place of business because it was put out of business allegedly as a result of the matters complained of.

These statements under oath are nowhere contradicted. Therefore we must take it as- a fact that at the time the deposition was noticed in 1955 the plaintiff no longer had any officers who knew about the transactions nor any control over the former officers who had such knowledge.

Notwithstanding General Houses’ un-contradicted statements, Judge Bruch-hausen denied its motion to quash and set the examination for April 5, 1955. General Houses failed to produce anyone but instead moved for a reargument of its motion to quash. Reargument was denied and the examination reset for April 27, 1955. When plaintiff again defaulted Marloch moved for a dismissal of the complaint under Rule 37(d) and plaintiff’s entire complaint was dismissed with prejudice as to Marloch for “wil-fully and deliberately default [ing] in failing to appear for examination.” One year later in May 1956, Marloch moved for entry of final judgment under Rule 54(b). On May 31, 1956 Judge Bruch-hausen signed the order for final judgment upon finding that “there is no just reason for delay in entering final judgment” as to Marloch.

On this appeal General Houses contends (1) that it was excused from producing “its President or other officers” because it had none; (2) that ordering the examination was an abuse of discretion since the notice of deposition was too ambiguous; and (3) that General Houses’ interrogatories should have been [513]*513answered first. Several other issues were also raised and will be dealt with below,

Before discussing the merits, we must first deal with the preliminary question of whether the dismissal of the complaint and entry of a final order under Rule 54 (b) was proper, for on that hinges the appealability of the dismissal. Rule 54 (b) provides that “when more than one claim for relief is presented in an action * * * the court may direct entry of final judgment upon one or more but less than all of the claims.” Here, Judge Bruchhausen entered a certificate of final judgment dismissing the entire complaint as to Marloeh, without distinguishing between those claims in which it was sole defendant and those in which its interest might be so closely related to t e • • • that severance would violate the unitary nature of that claim.

Of the four counts of the complaint in which Marloeh is a defendant —(2) against Marloeh Manufacturing Corp. for breach of the sub-contract; (4) against Marloeh Manufacturing Corp. for inducing R.F.C.’s breach; (5) against all the defendants for conspiring to induce each other’s breaches; (6) for a declaratory judgment on the validity of the assignment — (2) and (4) are clearly separate claims and hence appealable. Count 5 presents a much more difficult problem, particularly on this inadequate record, but it seems to us to be appeal-able under our decisions in Lopinsky v. Hertz Drive-Ur-Self Systems, 2 Cir., 1951, 194 F.2d 422 and United Artists Corp. v.

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239 F.2d 510, Counsel Stack Legal Research, https://law.counselstack.com/opinion/general-houses-inc-v-marloch-manufacturing-corp-ca2-1956.