Jatco, Inc. v. Charter Air Center, Inc.

527 F. Supp. 314, 33 U.C.C. Rep. Serv. (West) 240, 1981 U.S. Dist. LEXIS 10092
CourtDistrict Court, S.D. Ohio
DecidedDecember 10, 1981
DocketC-1-79-412
StatusPublished
Cited by4 cases

This text of 527 F. Supp. 314 (Jatco, Inc. v. Charter Air Center, Inc.) is published on Counsel Stack Legal Research, covering District Court, S.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Jatco, Inc. v. Charter Air Center, Inc., 527 F. Supp. 314, 33 U.C.C. Rep. Serv. (West) 240, 1981 U.S. Dist. LEXIS 10092 (S.D. Ohio 1981).

Opinion

FINDINGS OF FACT AND CONCLUSIONS OF LAW AND JUDGMENT

SPIEGEL, District Judge:

This case came before the Court on November 2,1981, and continued until November 9, 1981, when both parties rested. The Court, having heard all of the testimony during the trial, examined all documents submitted into evidence, and considered the briefs and arguments of counsel, now makes the following Findings of Fact and Conclusions of Law as set forth in the body of this Opinion, consistent with Rule 52(a), Fed.R.Civ.P.

FINDINGS OF FACT

Plaintiff, Jateo, Inc., (Jateo) was at all times relevant to this action a corporation organized and existing under the laws of the State of Ohio with its principal place of business located in Cincinnati, Ohio.

Defendant, Charter Air Center, Inc., (Charter) was at all times relevant to this action a corporation organized and existing under the laws of the State of Florida with its principal place of business located in Gainesville, Florida. Charter did not maintain a business office in Ohio, did not have or retain an agent, servant or employee to do business in Ohio, and was not licensed to do business as a foreign corporation in Ohio.

Jateo owned a Lockheed Electra airplane, Serial Number 1085, Registration Mark N-124US. Jateo filed this lawsuit on July 19, 1979, charging Charter with breach of a contract to purchase this airplane by failure to make payment for the airplane according to the terms of a contract between the parties. The matter in controversy exceeds the sum of $10,000, exclusive of interests and costs, and this Court has jurisdiction pursuant to 28 U.S.C. § 1332(a).

Negotiations between the parties started in late January or early February 1974. At that time, Jateo was a leasing corporation which had been formed for the purpose of leasing aircraft to Vagabond, a non-profit air travel club. Jateo had purchased the airplane in question, N-124US, in June 1972 and was operating it under an FAR 123 certificate issued by the Federal Aviation Administration (FAA). Mr. Thomas Moore was the president of Vagabond and an officer of Jateo at the time in question. His duties were primarily concerned with financing and marketing. He became involved with those organizations in October 1971. He hired a director of operations and a director of maintenance to ensure that Vagabond’s responsibility to maintain the airplane under their FAR 123 certificate was complied with, as he had no personal knowledge of this aspect of Jatco’s or Vagabond’s operations. The airplane, N-124US was serviced by Overseas National Airlines (ONA) and Equitoriana Service Company while Jateo owned and Vagabond leased it.

In late January 1974, Mr. L. T. “Red” Kitchens called Mr. Moore. Mr. Kitchens was an FAA licensed airframe and power-plant (A & P) mechanic who serviced Electras and had worked on N-124US while he was employed by ONA during 1973. Mr. Kitchens told Mr. Moore that he was going to work for Charter, and that Charter was interested in acquiring Vagabond’s Lockheed Electra N-124US. About that time, *316 or early in February of 1974, Mr. Moore also spoke to Mr. William Cousins, president of Charter, about Charter’s possible purchase of the airplane.

Charter was in the business of aircraft maintenance, sales, and service. Mr. Cousins himself was a licensed A & P mechanic, and he employed approximately 20 licensed inspectors and mechanics at Charter. He told Mr. Moore that he was interested in purchasing N-124US to transport the University of Florida’s athletic teams and/or for leasing the airplane for other charter group flights. Mr. Moore, on the other hand, wanted to sell the Electra in order to be able to acquire a Boeing jet which he felt would be a more viable plane for the air travel club’s needs.

The aircraft, N-124US, was purchased by American Flyers Corporation in September 1966 from Northwest Airlines, Inc., for $1,200,000. Charter’s president, Mr. Cousins, had been employed as a flight engineer by American Flyers from September 1966 to May 1971, as was his chief inspector at Charter, Mr. George Suddath. Mr. Cousins was familiar with N-124US from working on it while he was at American Flyers. In May 1971, American Flyers sold the plane to Falair, Inc., who immediately sold it to International Air Lease. International Air Lease sold the plane to Jateo in June 1972. This was the first plane which Jateo had purchased.

When Mr. Moore and Mr. Cousins discussed the possible sale and purchase of the airplane, Mr. Moore described the configuration of the airplane (passenger and crew seating capacity, galley locations, lavoratory and over-water equipment), which he stated was in above average condition in appearance, and told Mr. Cousins what they had been using the plane for and approximately how many hours per year it had been flown. He also told him where the plane had been serviced, and that it was operating under an Airworthiness Certificate issued under FAR 123. At no time did Mr. Cousins rely on any statement by Mr. Moore or the plane’s pilot, Harvey Sturdevant, concerning the plane’s airworthiness condition.

Pursuant to these discussions, the parties arranged for the Electra to be flown to Charter’s facilities in Gainesville, Florida, so that Charter could inspect it. The plane was delivered to Charter sometime between February 14 and' 17, 1974 for this purpose. When the aircraft was delivered, it was operating under an FAA certificate of airworthiness. Mr. Cousins was aware that N-124US was due for a regularly scheduled “heavy inspection” in March 1974, and that several of its engines were near or had exceeded “run out” time.

Mr. Cousins assigned three or four Lockheed Electra mechanics to go over the plane. Mr. George Suddath, an FAA licensed A & P mechanic who had worked up to be an inspector, was Charter’s chief inspector and an expert on Lockheed Electras. He had had control over all the inspections on N-124US while it had been owned by American Flyers. When N-124US was flown in, he was instructed to give the plane a prepurchase inspection. The plane was flown in with the right wing stripped of paint. The airplane’s logs were with it, and Charter had previously been furnished with a specifications sheet by Jateo.

Work orders reflected that the center dry bay section of the right wing was opened for inspection and closed and that the right-hand fillets (fairings) were removed for corrosion inspection prior to February 20,1974. When the righthand wing fillets were removed, it could be observed that an area of the wing had been covered with a reddish-brown sealant which had bubbled, and Mr. Suddath observed this himself. Another work order reflected that the right wing had been inspected for corrosion to determine the type of repair required, that the center section was opened to determine the type of repair required for corrosion, and that the dry bay area was closed prior to February 24. Mr. Suddath stated that his initial external inspection of the plane indicated, because of the external corrosion present, that there was probably interior corrosion which would require an indepth *317 inspection. He had the impression, based on the condition of the plane, that he would find stress crack corrosion.

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Bluebook (online)
527 F. Supp. 314, 33 U.C.C. Rep. Serv. (West) 240, 1981 U.S. Dist. LEXIS 10092, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jatco-inc-v-charter-air-center-inc-ohsd-1981.