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LUFF v. LUFF

January 30, 1958

Willard J. LUFF and John W. Slacks, Plaintiffs,
v.
Morris F. LUFF and Ruth K. Luff, Defendants



The opinion of the court was delivered by: THOMAS

This is a complex action to determine the proper distribution among the partners, intervenors, and others, of a $ 375,577.37 award made in 1954 by the United States government for the benefit of the partnership known as Willmore Engineering Company. The partnership had been formed solely for the purpose of producing winches for transport vessels during World War II.

Two brothers, Morris F. and Willard J. Luff, formed the partnership in 1943. In 1944, John Slacks became a partner. *fn1" In August 1945, the winch production project having been completed, the partnership was no longer active and it began winding up its affairs. Its only asset was a claim against the United States on account of work done for the Maritime Commission. Attempts to obtain payment through administrative channels failed and an action in the Court of Claims was unsuccessful. Subsequent to the unsuccessful action in the Court of Claims, a civil fraud suit was filed by the government against the two Luffs and Slacks. The fraud suit was successfully defended and a verdict for the defendants was directed by the court at the close of the government's case. It was after this action had been concluded that efforts were commenced to obtain relief through legislative channels.

 In 1954, two acts for the relief of Willmore Engineering Company were passed by the Congress, *fn2" and under the terms thereof arbitrators were appointed to determine and certify to the Secretary of the Treasury the amount required to satisfy the obligation of the government to the partnership. The amount was determined to be $ 375,577.37, and it has been paid by the government. This sum is being held in the registry of this court (on petition of plaintiffs Willard and Slacks) pending the entry of judgment directing its disposition.

 Morris claimed for himself and wife the right to collect the entire amount of the arbitration award. He asserted that Slacks ceased to be a partner about May 15, 1948; that Willard abandoned the partnership about October 1, 1949; that he, Morris, and his wife, Ruth, thereafter carried on all activity with respect to the partnership's claim against the government, and finally obtained the passage of the legislation for the relief of Willmore Engineering Company; and that he, Morris, and his wife were the sole remaining partners entitled to collect the money awarded by the arbitrators. These contentions on the part of Morris led to the filing, by Willard and Slacks, of this suit for a declaratory judgment and general relief.

 Among other claims to relief asserted, the court was asked by plaintiffs to declare that the Willmore Engineering Company, as referred to in the private laws and in the arbitration award, is a partnership composed of Willard, Slacks and Morris. On motion *fn3" for partial summary judgment to that effect, the court, acting through Judge Matthews, granted the motion and entered judgment accordingly. From this order, Morris and Ruth appealed; and the judgment was upheld by the Court of Appeals for the District of Columbia on May 17, 1956. *fn4" Certiorari was denied by the Supreme Court. *fn5"

 During the progress of the winch production, there had been entire harmony among Morris, Willard and Slacks. Some time subsequent thereto, a disagreement developed with Willard and Slacks on one side and Morris and Ruth on the other. This disagreement has grown into a violent breach which has worsened with time.

 On June 19, 1954, while the relief bills were pending before Congress, an arbitration agreement was entered into between Willard, Morris and Slacks, under which Eugene D. Hegarty was appointed arbitrator between themselves '* * * for the purpose of finally resolving, settling, and liquidating all our rights, interests, and obligations in the partnership known as Willmore Engineering Company * * * and as the arbitrator for Willmore Engineering Company on the Board of Arbitrators to be created under the pending bill in Congress, H.R. 7258, in the event it is enacted and becomes law.'

 On August 4, 1954, the arbitration agreement of June 19, 1954, was repudiated and rescinded by Willard and Slacks, in so far as the agreement permitted Hegarty to resolve the dispute between the partners, but not in so far as the agreement provided for the appointment of Hegarty to the Board of Arbitrators, as set up by the relief bill. Hegarty served in the capacity of one of the arbitrators under the relief bill.

 The answer filed by the defendants in the instant case, among other things, put in issue:

 (1) The legality of the partial revocation by Willard and Slacks of the arbitration agreement of June 19, 1954.

 (2) The legality of the formation of the Board of Arbitrators under the relief bill.

 (3) The validity of the award of the Board of Arbitrators.

 (4) The question of whether or not Ruth Luff was a partner to the agreement appointing Hegarty.

 (5) The question of whether or not the plaintiffs can be compelled to submit to the arbitration by Hegarty of the dispute between the partners.

 Hegarty, taking the position that the revocation by Willard and Slacks was void and that the arbitration agreement was irrevocable, proceeded to act as arbitrator between the parties, and on the 10th day of December 1956 filed his report. (This was after the ruling by the appellate court affirming the decision of Judge Matthews, but before the ruling of Judge Pine, referred to below.) Answer of the defendants attempts to sustain the Hegarty report.

 The foregoing issues, in one aspect or another, came up on motion before Judge Pine on February 1, 1957, and were determined by him in his oral ruling of that date as follows:

 An attempt was made to get me to reverse the ruling of Judge Pine of February 1, 1957, but, after reviewing the file, I declined to reopen the matter. The affirmative effect of Judge Pine's ruling is incorporated into the mixed findings of fact and law below, numbered 14 through 21.

 Several former employees of Willmore intervened, asserting claims for work and labor done during the winch production project. At the trial on the merits, the phase of the litigation raised by the intervenor-claimants was heard first. These claims are ...


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