Sunstream Jet Express, Inc., a Delaware Corporation v. International Air Service Co., Ltd., a California Corporation

734 F.2d 1258
CourtCourt of Appeals for the Seventh Circuit
DecidedJune 27, 1984
Docket82-3019
StatusPublished
Cited by106 cases

This text of 734 F.2d 1258 (Sunstream Jet Express, Inc., a Delaware Corporation v. International Air Service Co., Ltd., a California Corporation) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sunstream Jet Express, Inc., a Delaware Corporation v. International Air Service Co., Ltd., a California Corporation, 734 F.2d 1258 (7th Cir. 1984).

Opinion

COFFEY, Circuit Judge.

Plaintiff-appellant, Sunstream Jet Express, Inc., appeals the judgment of the United States District Court for the Northern District of Illinois, that the defendantappellee, International Air Service Co., did not breach the parties’ Aircraft Lease Agreement. We affirm.

I

The record reveals that Sunstream Jet Express, Inc. (“Sunstream”), is a Delaware corporation, with offices in West Chicago, Illinois, that leases, buys, and sells aircraft. Internationa] Air Service Co. (“IASCO”), is a California corporation that trains flight crews and operates commercial aircraft. In January 1979, Richard Jack, executive vice-president of IASCO, and Frederick Hatton, senior vice-president of IASCO, entered into negotiations with Norman Lively, president of Sunstream, concerning the sale of a certain “Falcon 20-D” jet aircraft, serial number 221, Federal Aviation Administration (“FAA”) registration number N 300 NL, owned by Sunstream. IASCO sought to purchase the aircraft from Sun-stream because it was one of only thirty-four “Falcon 20-D” aircrafts originally built with a custom cargo door, allowing for more efficient loading and unloading of odd-sized freight. 1 At the time of the negotiations with Sunstream, IASCO was attempting to secure business in the competitive freight shipping industry and IASCO viewed its acquisition of Sunstream’s custom “Falcon 20-D” aircraft as an opportunity to improve its freight shipping capacity. Following a series of negotiations, IASCO and Sunstream agreed, in May 1979, that IASCO would lease, rather than buy the aircraft as originally planned, for a two-year period, commencing June 1, 1979.

In October 1979, some four months after Sunstream delivered the aircraft to IASCO, the parties reduced the terms of their lease agreement to a written contract, entitled “Aircraft Lease Agreement.” According to the terms of that contract, the rental period extended from June 1, 1979, until May 31, 1981, with IASCO obligated to pay Sunstream $57,500 a month during the first year and $52,500 a month during the second year of the agreement. The contract further provided, in pertinent part:

“1. DEFINITIONS.
The terms defined in this section shall have the following meanings for all purposes of this Lease and shall be equally applicable to both the singular and plural forms of such terms:
(a) “Aircraft” as used herein shall mean that certain Falcon 20 jet airplane, serial number 221, F.A.A. registration number N 300 NL, including the Airframe (as hereinafter defined), the General Electric Engines (as hereinafter defined) presently installed on such aircraft and any and all appliances, parts, instruments, appurtenances, accessories, furnishings or other equipment of whatever nature incorporated or installed in or attached to the Airframe or the Engines.
(b) Airframe. “Airframe” as used herein shall mean the aircraft exclusive of the Engines.
(c) Engine. “Engine” as used herein shall mean the two General Electric CF 700 engines presently installed on the Airframe, as follows:
*1261 ENGINE SERIAL NOS.
AIRFRAME LEFT HAND RIGHT HAND NO. ENGINE ENGINE
221 299065 299110
or any engines which may be substituted therefore as hereinafter provided.
* * * * * *
8. MAINTENANCE AND OPERATION OF THE AIRCRAFT.
(a) Maintenance. Lessee shall at its sole cost and expense perform, or cause to be performed, all maintenance, service and repairs, including but not limited to, damage repair costs and premature failure costs, necessary to keep the Aircraft, its accessories and equipment, in a fully operable condition equivalent to its condition at the time of delivery (reasonable wear and tear excepted) so that such Aircraft is fully qualified at all times for United States operation under Lessee’s FAR 135 certificate. All inspections, maintenance, overhauls, repairs, and replacements shall be in accordance with a maintenance program approved by Lessee and in accordance with operating specifications and maintenance manuals and such other manuals, including those of any manufacturer, as may pertain to Lessee’s operation of the Aircraft. All repair, maintenance and replacement work with respect to the Aircraft shall be of good quality, free from defects, and shall be performed in a first-class manner by qualified personnel duly licensed to perform such work in accordance with the applicable regulations of the F.A.A.
(b) Compliance with Directives. Lessee shall, at its sole cost and expense, perform or cause to be performed, all airworthiness directives and mandatory notes of the F.A.A. and mandatory manufacturer’s service bulletins relating to the Aircraft.
* * * * * *
9. ALTERATIONS.
(a) Alterations, Service Bulletins. Lessee shall not, without the prior express written consent of Lessor, make any changes, alterations, additions, deletions or replacements to the Aircraft other than as is required for maintenance agreed to be performed hereunder or to maintain the airworthiness of the Aircraft. Service bulletins applicable to the configuration of the Aircraft, Engines and other accessories, equipment and parts installed on, or appurtenant to the Aircraft and issued by the manufacturers of the aforementioned items, shall be deemed Lessor approved changes or alterations. All changes and alterations shall be at the sole cost and expense of Lessee and record thereof shall be entered by Lessee in the appropriate aircraft log books.
(b) Equipment. All equipment parts and components of whatsoever kind or nature which are removed from the Aircraft, pursuant to Lessor’s approval, shall be replaced, by Lessee at its own cost and expense, with parts of like or better quality.
(c) Title. All additions, repairs, replacements and substitutions to, upon or within the Aircraft, shall be deemed accessions to the Aircraft and title thereto shall be in the Lessor and Lessee shall not suffer any accessions to be subject to any purchase money or other security interest nor to any lien or encumbrance, except as provided below.
(d) Surplus Equipment. Any part or piece of equipment removed from the Aircraft by Lessee and not traded-in, rebuilt, exchanged or reused, on the aircraft in the performance of its obligations under this Lease shall be shipped upon request by Lessor at Lessor’s sole cost and expense to Lessor to such place as Lessor may designate.
16. RETURN OF AIRCRAFT, MAINTENANCE, INSPECTION, RECORDS, REMEDIES AND DELIVERY RECEIPT.
* * * * * *
(c) Condition at Redelivery.

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Bluebook (online)
734 F.2d 1258, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sunstream-jet-express-inc-a-delaware-corporation-v-international-air-ca7-1984.