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Atlantic Northern Airlines Inc. v. Schwimmer

Decided: April 27, 1953.


On appeal from the Law Division of the Superior Court, certified by this Court on its own motion.

For affirmance -- Justices Heher, Oliphant, Wachenfeld, Burling, Jacobs and Brennan. For reversal -- None. The opinion of the court was delivered by Heher, J.


The action is in tort for conversion on August 12, 1948 of plaintiff's DC-4 airplane, NC 58021, and for the value of its use during the succeeding five months. Defendant was a nonresident, and the proceeding was instituted by the issuance of a writ of attachment on June 13, 1949 against two airplanes in defendant's name, under N.J.S.A. 2:42-86 et seq., superseded by N.J.S. 2 A:26-1 et seq.

The complaint alleged the conversion of the subject airplane and defendant's subsequent promise "to pay the plaintiff for the use of the aircraft the sum of $57,000 per month, from August 12, 1948," or a total of $285,000, and default in payment. Defendant answered denying the averments of the complaint save as to his nonresidence, and pleaded, inter alia, plaintiff's execution and delivery to a corporate third party, Alsam, Ltd., a private domestic corporate being under the laws of the State of Israel, of a general release inclusive of the claim in suit, in consideration of $300,000 paid to it by one Hay Issaharow, who was then president of Alsam, Ltd., of whom more hereafter. Defendant thereupon posted a bond; and the attached airplanes were returned to him, and the cause proceeded to trial in the

usual course on the complaint and answer. At the pretrial conference, the complaint was supplemented by a count alleging that "the reasonable rent for" the airplane, for the period of use "after its illegal taking, would have been $285,000." Defendant's answer was amended to contain a denial of the additional count.

The issue came on for trial before Judge Woods, sitting without a jury, and there was judgment for defendant. It was found that plaintiff had not sustained the burden of proving that defendant had taken possession of the airplane, or had had the use of it, or had agreed to pay for the value of the use; and, moreover, that plaintiff's release served to discharge defendant from liability on the claim in suit, if such there was when the release was given.

The points made are: (1) error in the denial of plaintiff's motion made at the pretrial conference to strike out the defense of release, and in the admission at the trial of what is conceived to be evidence in violation of the terms of the release; (2) error in the admission of the testimony of witnesses not included in the response to a demand made pursuant to Rule 3:26-2; and (3) that the "verdict" was against the weight of the evidence.

The contention of defendant is that it was not he but Alsam, Ltd. who made use of the airplane, and that the stated sum of money was paid by that company to plaintiff in full reimbursement for the loss of the airplane and its use, and the release was designed to and did in fact comprehend both elements of property.

This is the history and the circumstances:

On May 15, 1948 the State of Israel was formally established following the withdrawal of the Government of Great Britain from Palestine and was accorded immediate recognition by the Government of the United States. The Israeli Government and the Arab nations were then in a state of war. A vice-president of the plaintiff corporation, Rowland, testified that in February 1948, in Paris, France, he rented the aircraft in question to one Freddikins, acting for "the Jewish Movement which was interested at that time in flying

cargo to Palestine from Czechoslovakia," later identified by the witness as "gun-running," a hazardous enterprise which brought a return designed to be commensurate with the risk. Another vice-president of plaintiff, Lerner, said that shortly thereafter, in April 1948, the contract was renegotiated in Paris with Freddikins and one Breiger, representing the "Israeli Government, or what was at that time representing the Jewish people in the country of Palestine," and "later became the Israeli Government." Plaintiff's president, Cox, testified that Breiger was then "representing the Palestinian movement." The State of Israel had not then come into being. On July 3, 1948, following the formation of the new state, plaintiff leased the airplane to Issaharow, then also Deputy Minister for Air of the State of Israel. The agreement provided for compensation at the rate of $380 per hour with a minimum guarantee of 150 flight hours per month, or a minimum payment of $57,000 per month. Issaharow undertook to pay for "gasoline, maintenance, oil and crew support east of Paris." But it seems that plaintiff supplied a crew of five; indeed "everything but the gasoline and maintenance." The contract contained a cancellation clause. The last flight of the airplane under the contract was made August 11, 1948, and the contract was cancelled by letter dated September 11, 1948, as of September 26, 1948. All obligations under this contract seem to have been discharged.

It is established -- the evidence in this regard is uncontradicted -- that during this period defendant was an employee of the Jewish Agency for Palestine, assigned to the American section. The Jewish Agency for Palestine was a creature of the mandate for Palestine granted by the League of Nations shortly after the close of World War I. Following the withdrawal of the British Government from Palestine, and the partition of the land, the American section of the Jewish Agency deemed it prudent to have at hand a number of large four-motor transport planes, as a means of keeping "at least one lifeline open to bring out American citizens and bring in medicines, and so forth," in the event that Jewish Palestine, which subsequently became Israel, "would be cut

off from the rest of the world." The technical skill and expert knowledge of defendant in this field were enlisted by the Agency; and it would seem that defendant did not act for the Israeli Government or on his own account in the transactions now made the basis of the claim of conversion and use against him.

The airplane was wrecked January 2, 1949, in the Mediterranean Sea off the coast of Israel. Plaintiff's president, Cox, said the airplane crashed off the shore of Tel Aviv on a return flight from "an urgent military mission" to Czechoslovakia. He was then at Tel Aviv, negotiating for the repossession of the airplane. He arrived there December 14, 1948, but his efforts had not borne fruit when the airplane was destroyed. Continued negotiations eventuated on January 10, 1949 in the settlement and release which are now in controversy. Defendant was in attendance at the conference preceding the settlement, but it is reasonably inferable from the circumstances that he was merely there as a technical advisor and not as a principal or participant in either the conversion or the use of the airplane. No unfavorable inference material to the issue is derivable from this circumstance.

The airplane was purchased from the War Assets Board in June 1946 for $90,000, "unconverted," and was reconditioned at an additional expense of between $50,000 and $60,000. It was carried on the books of the company as a capital investment of $150,000, and at the time of the mishap was insured with Lloyds of London for "between $130,000 and $160,000." Plaintiff's president explained that ...

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