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Johnston v. Edward B. Baker. Appeal of Albert B. Poe

decided: July 20, 1971.


Kalodner, Freedman*fn* and Adams, Circuit Judges.

Author: Adams


ADAMS, Circuit Judge.

This is an action brought in the District Court of the Virgin Islands by Johnny Johnston against Edward B. Baker, Albert B. Poe, and Island Hotels, Ltd. The complaint charged Baker with false arrest and malicious prosecution and also alleged that Baker, Poe and Island Hotels, Ltd. conspired to injure, embarrass, harass and hinder the plaintiff in the conduct of the restaurant and bar business which he was operating in the Yacht Haven Hotel, St. Thomas. Poe and Island Hotels answered and denied the charges; Island Hotels filed a counterclaim against Johnston for $5,851.07, for amounts claimed by Island Hotels for rental. Before trial, the Court granted a motion to dismiss, without prejudice, Baker as a party defendant, leaving only the conspiracy charges for adjudication by the jury.

At the times in question, Poe was both president of the corporation which owned the hotel, and general manager of the hotel. In May, 1966, Johnston, a professional entertainer who had been in the restaurant and bar business previously, negotiated with Poe for the right to operate the restaurant and bar. In June, 1966, they entered into a preliminary agreement which was signed by both parties. Subsequently, Johnston and Poe retained Harry Dreis, Esquire, to draft a formal lease agreement for them. After Mr. Dreis submitted the lease, Johnston made two principal requests: that the lease include an option to permit Johnston to extend its term, and that the rental be based on a uniform percentage of the aggregate income from the sale of both food and beverages rather than on a given percentage for the food and a different percentage for the beverages. The parties then waited for a corrected lease to be prepared by Mr. Dreis. In the meantime, Johnston proceeded with the operation and for all practical purposes put into effect the understanding that had been reached by the parties, at least so far as the rental was concerned. After three or four weeks, the business began to develop and Johnston succeeded in attracting local trade. He conducted dances for the younger persons in the community, wedding receptions, and other social functions. On the basis of this experience, Johnston projected a very profitable winter season.

At about this time, Baker, who had been residing on a boat moored at Yacht Haven, began working with Poe and the hotel as a "non-salaried employee." Beginning in September, 1966, Poe and Baker, together with Miss Ann-Britt Holmes, the fiancee of Baker, and Elizabeth Smith, who had a lease on a portion of the hotel property for the sale of liquor and boutique items, initiated a campaign of harassment against Johnston. The hotel did not pay plaintiff monies due him, and took other steps to cause plaintiff financial difficulty. The individuals blocked the entrance to the restaurant with an automobile, shut off the restaurant's electricity, obstructed the water drain, advised hotel guests that the restaurant was closed when in fact it was open, refused the services of an electrician and plumber, and filed six criminal complaints against Johnston.

As a result of the criminal accusations, Johnston was arrested, held in jail temporarily until bond could be posted, and subsequently cleared on five of the six charges brought against him. On the sixth charge, he was convicted of loud and boisterous conduct against Poe, and fined $25.

Eventually, on December 19, 1966, Johnston left the premises, and four days later Baker began operating the business.

The jury rendered a verdict for Johnston of $20,000 compensatory damages and $15,000 punitive damages, and judgment was entered for the plaintiff on the counterclaim. The District Court denied the defendants' motion for a directed verdict and for judgment n.o.v., and defendants appealed.

The defendants' first contention is that a corporation may not be guilty of a conspiracy with its officers and agents when they are acting solely for the corporation and not for their own purposes. The conspiracy claimed by Johnston, however, consisted of acts done by the corporation, Poe, Baker, Ann-Britt Holmes and Elizabeth Smith. Poe and Miss Holmes were paid employees of the corporation, Baker was an "unpaid employee," and Miss Smith was not an employee but a lessee of the liquor shop and boutique. In addition, there was testimony indicating that Poe and Ann-Britt Holmes acted as a result of personal motives.

In support of their position, defendants cite Maddox Motor Co. v. Ford Motor Co., 202 F. Supp. 103 (W.D.Tex., 1960), and Nelson Radio and Supply Co., Inc. v. Motorola, Inc., 200 F.2d 911 (5th Cir. 1952), cert. denied, 345 U.S. 925, 73 S. Ct. 783, 97 L. Ed. 1356 (1953), which support the position that "it is basic in the law of conspiracy that you must have two persons or entities to have a conspiracy. A corporation cannot conspire with itself anymore than a private individual can, and it is the general rule that the acts of the agent are the acts of the corporation." 200 F.2d at 914. And this court, in Goldlawr, Inc. v. Shubert, 276 F.2d 614 (3rd Cir., 1960) approved in dicta this holding.

We are aware that common ownership or control of corporations does not insulate them from the antitrust laws. See e.g., Timken Roller Bearing Co. v. United States, 341 U.S. 593, 71 S. Ct. 971, 95 L. Ed. 1199 (1950); Kiefer-Stewart Co. v. Seagram & Sons, 340 U.S. 211, 71 S. Ct. 259, 95 L. Ed. 219 (1950); United States v. Yellow Cab Co., 332 U.S. 218, 67 S. Ct. 1560, 91 L. Ed. 2010 (1947). In Yellow Cab, a conspiracy was found between several corporations and the person who controlled them. The Supreme Court, however, has not yet decided whether a corporation could conspire with its unincorporated division and officers where there was evidence that independent parties conspired with the corporation. Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 82 S. Ct. 486, 7 L. Ed. 2d 458 (1962).

Similarly, Johnston does not take exception to the principle expressed in Nelson Radio, but instead contends that there is evidence to support the finding that Poe and Baker were acting for personal reasons and that at least one of the parties to the conspiracy was not an employee or an agent of the corporation. Since the evidence supports these contentions,*fn1 this case does not come under the rule set forth in Maddox and Nelson Radio, and we do not have to pass on the viability of those cases.

Because of the well-established principle that all conflicts of evidence must be resolved in favor of the party for whom the jury decides, the first ...

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