Before SWAN, MEDINA and HARLAN, Circuit Judges.
The District Court in an action tried without a jury has held the defendant liable for breach of contract in the amount of $46,500, together with interest. The plaintiffs appeal, contending that the Court applied the wrong rule of damages and that their recovery should have been greater. The defendant cross appeals, arguing that the Court had no jurisdiction of the action, and that in any event it was not guilty of breach because of the plaintiffs' failure to perform their obligations under the contract.
The facts surrounding the transaction, as found by the District Court are essentially these: On December 23, 1946 the plaintiffs, a partnership doing business in Delhi, India, contracted to purchase from the defendant, a New York corporation, 10,000 war surplus cargo rayon parachutes at $7.00 each, plus a commission for plaintiffs' purchasing agent of 35 cents on each chute. The parachutes were to be shipped by steamer from New York and were deliverable F.A.S. dockside New York upon receipt from the plaintiffs of irrevocable letters of credit covering the purchase price, freight, and insurance.
On January 7 and 8, 1947 two letters of credit, one for $64,000 and the other for $30,000, expiring February 10, 1947, were duly furnished by plaintiffs. On February 5, the defendant notified the plaintiffs that space had been procured for shipment of the parachutes on the "Steel Advocate" sailing February 15, 1947, and requested extension of the letters of credit for another 30 days. Actually the plaintiffs on February 3 had already set in motion extensions to February 28, which the defendant accepted, informing the plaintiffs that the parachutes would be shipped by the SS "Steel Director" on February 24.
Following this, the defendant's shipping agents put in process the necessary papers for shipping the parachutes on the SS "Steel Director" to the plaintiffs at Delhi, via Karachi. However, on February 25 the defendant, without notice to the plaintiffs, sold the parachutes to another Indian concern at an advanced price, and shipped them to that concern, via Bombay, on the "Steel Director," whose sailing date had been postponed to March 2. On March 4 the defendant received from plaintiffs' New York bank an extension of the $64,000 letter of credit to March 15, which the defendant returned to the plaintiffs on March 5.
On these facts the Trial Court found that the defendant had breached its contract, and that the only question was one of damages. The defendant seeks to avoid the consequences of what it did on two grounds which we shall consider before coming to the plaintiffs' contention that they were entitled to larger damages.
The first ground is that the District Court had no jurisdiction of the action under 62 Stat. 930, 28 U.S.C.A.§ 1332(a)(2) giving the Federal Courts jurisdiction over civil actions between "Citizens of a State, and foreign states or citizens or subjects thereof", where the jurisdictional minimum amount is involved, since there was a failure of proof that the plaintiffs were "citizens or subjects" of a foreign state.
Initially the complaint, which was filed on July 14, 1947, alleged, and the plaintiffs sought to prove, merely that each of them was "an alien and a subject of Great Britain," and the District Court on December 1, 1952, dismissed the complaint without prejudice, for failure of such proof. Thereafter, on December 29, 1952, the Court granted the plaintiffs' motion to reopen the case on the issue of jurisdiction, and on January 14, 1953, after the taking of additional evidence, the Court granted plaintiffs' motion to amend their complaint so as to allege that "each plaintiff is an alien and a British Indian citizen." After a trial on the merits in October 1953, the Court found that "each plaintiff was an alien, British Indian citizen and subject of Great Britain."*fn1
It is not altogether clear whether the finding that each plaintiff was a "British Indian citizen" was regarded by the Court as an alternative basis for jurisdiction, rather than merely the foundation for the finding that each was a "subject of Great Britain."*fn2 Be that as it may, the status of India at the time the complaint was filed (July 14, 1947), and certainly at the time of the amendment of the complaint (January 14, 1953), was such that in our opinion, the finding that each plaintiff was a "British Indian citizen," if supported by the evidence, was a fully adequate basis for jurisdiction, even though in our view the evidence did not warrant the finding that each plaintiff was a "subject of Great Britain." As to the latter finding, it is sufficient to say that British law was neither pleaded nor proved, see Chicago Pneumatic Tool Co. v. Ziegler, 3 Cir., 1945, 151 F.2d 784, 793; United States ex rel. Zdunic v. Uhl, 2 Cir., 1943, 137 F.2d 858, 861; Iafrate v. Compagnie Generale Transatlantique, D.C.S.D.N.Y.1952, 106 F.Supp. 619, 622, that satisfactory evidence of the place of birth of the several plaintiffs was lacking, and that no other evidence that any of the plaintiffs was a British subject as a result of naturalization or otherwise was offered at the trial.*fn3
Our first inquiry must be as to the status of India at the time of the filing of the complaint and thereafter. We may take judicial notice of the essential historical facts. The long standing aspirations of both Hindus and Moslems in India to achieve political independence from Great Britain - seriously embarrassed by the internal divisions between them - are a matter of common knowledge. Following the end of World War II, the British Government made various efforts to bring the contending factions together. The report of the Cabinet (Cripps) Mission issued on May 16, 1946, recommended the formation of an interim government to work out a constitution acceptable to both major political parties, looking toward the political separation of India from Great Britain. An Interim Government was formed on September 2, 1946. By February 20, 1947, it was apparent that the Interim Government was failing to achieve the hoped for unity between Hindus and Moslems, but the British Government nevertheless on that date announced its firm intention to transfer power to some Indian authority by June 1948. See Statement on Indian Policy delivered February 20, 1947, to Parliament by the Prime Minister.
The continued refusal of the Moslem political leaders to participate in the effort of the Constituent Assembly to draft a constitution led to the announcement by the British Government on June 3, 1947, that the Moslem areas of India would be given an opportunity to determine, by referendum, whether they would participate in the labors of the Assembly or whether they would work out their own constitution and become an independent nation separate from the rest of India. See Statement of Indian Policy delivered June 3, 1947, to Parliament by the Prime Minister.
Finally, on July 18, 1947, the British Parliament enacted the Indian Independence Act (10 & 11 Geo. VI, c. 30, Public General Acts of 1947, Vol. 1, p. 236) under which power would be transferred to two new Dominions - Pakistan (Moslem) and the Union of India (Hindu), which included Delhi where the plaintiffs were engaged in business - on August 15, 1947. On that date of Union of India became a self-governing member of the British Commonwealth of Nations. On November 26, 1949, the Union of India adopted a Constitution, effective January 26, 1950, under which it became a sovereign republic, but elected to continue as a member of the Commonwealth of Nations.
It appears from a State Department communication which was before the lower Court that although our Government did not formally recognize India as an independent nation until August 15, 1947, it took steps to recognize the Interim Government of India after its formation on September 2, 1946, by receiving in February 1947 India's first ambassador, whose credentials were signed ...