Opinion
No. 4288.
June 30, 1930.
Appeal from the District Court of the United States for the Eastern Division of the Northern District of Illinois.
Suit by Leo J. Wahl against Nils E. Norstrom, doing business as the Norstrom Electric Company. From an order adjudging defendant guilty of contempt, he appeals.
Reversed and remanded, with directions.
The appeal is from an order of the District Court finding Norstrom guilty of contempt in disobeying the court's injunction against infringement of appellee's patent. The cause involving the patent and its infringement has been before this court in 27 F.2d 635, 27 F.2d 637, and 39 F.2d 791. The decree for permanent injunction was rendered on or about the 21st day of May, 1929, and it was while the appeal from the decree was pending in this court that appellant committed the alleged contempt in making and selling the device claimed and found to have likewise infringed the patent.
On September 12, 1929, counsel for appellee served on counsel for appellant a notice entitled in the equity case, that on October 1, 1929, they would appear before the District Judge and "present to the court the accompanying motion for the commitment of the defendant for contempt of his violation of the preliminary injunction." It does not appear from the record what "the accompanying motion" was; but it appears that under date of September 26, 1929, there was filed in the cause what is entitled an "Answer to Motion for Rule to Show Cause for Contempt of Permanent Injunction," which was signed by appellant, by Frank E. Liverance Jr., counsel for him.
On October, 1, 1929, counsel for appellee and the previous counsel for appellant, Wisner and Walsh, appeared before the District Court, and the former then filed a motion which was entitled in the equity suit and headed, "Motion for Rule to Show Cause for Contempt of Permanent Injunction." The motion is: "Now comes the Plaintiff and moves the Court that the Defendant herein, Nils E. Norstrom, be adjudged in contempt and suitably penalized for violation of the Permanent Injunction heretofore granted in this cause, and as the reason thereof says": (1) That the permanent injunction was granted as above stated; (2) that immediately following the grant of the injunction and continuing to date defendant manufactured and sold "the clipper presented herewith"; (3) that said clipper was bought from Norstrom on or about July 1, 1929; (4) that the claims of the patent have been held valid by the Circuit Court of Appeals — and, "as a basis for this motion," plaintiff relies on the accompanying affidavit. This is signed by the plaintiff, by his attorney. Thereupon said attorney Walsh made an oral motion for continuance, representing to the court that his firm, which had been acting for Norstrom, had been notified by him to take no further action, and that Liverance had been retained to act as solicitor; that, on conference with Liverance on the morning of October 1, they first learned that Liverance had filed an answer to the plaintiff's original motion; that, after the original motion had been filed, they tried to communicate with Norstrom and procure his presence, but had not succeeded in getting word to him or finding him; and that they were not prepared to hear the motion.
The application for continuance was denied, and thereupon affidavits were submitted to the effect that the alleged infringing device had been purchased as above stated from Norstrom since the injunction, and that it was manufactured by Norstrom. Plaintiff also called the court's attention to Norstrom's affidavit attached to his answer, in which it was stated that he did not willfully violate the court's injunction, but that for a short time after it was rendered he made this model in the belief that it did not transgress the claims of the patent which had been found valid, and that he had altogether ceased manufacturing it and had withdrawn from the manufacture of hair clippers; also it was said therein that in his (Norstrom's) judgment the matter of the infringement of such a clipper was then pending and undecided in the Court of Appeals.
There was attached to this affidavit a lengthy affidavit of Frank E. Liverance Jr., a patent lawyer long in practice, the purport and effect of which was that the structure of the alleged infringing clipper which was offered in evidence did not fall within the decree holding certain claims of the patent valid and infringed by other structures. The patent and the infringing clipper were before the court, but no witnesses were sworn and no oral evidence was heard. Neither Liverance nor Norstrom was present at the hearing, at the conclusion of which the court orally announced:
"That, in the opinion of the Court, the defendant Nils E. Norstrom was in contempt of the Court for having manufactured Plaintiff's Exhibit M, in violation of the permanent injunction issued herein, that the contempt was both civil and criminal in its nature, and that defendant Nils E. Norstrom should be sentenced to pay a fine of One Thousand Dollars, one-half thereof payable to the United States, and one-half thereof payable to the plaintiff, and instructed counsel for the plaintiff to prepare a draft order to that effect."
This was followed by a formal order entitled in the equity cause, which order practically reviews what occurred, and is as follows:
"This cause coming on to be heard on the 1st day of October, A.D. 1929 upon motion of Leo J. Wahl to have the defendant penalized for contempt of Court for violation of a permanent injunction heretofore entered in this cause on or about the 21st day of May A.D. 1929, pursuant to notice served September 17th, 1929, upon Wisner and Walsh, counsel of record for the defendant Nils E. Norstrom; upon the oral countermotion of Wisner and Walsh for a continuance of the hearing on said plaintiff's motion; upon the affidavit of Max W. Zabel in support of the motion of Leo J. Wahl aforesaid, and the drawings attached thereto; upon the affidavit of Max W. Zabel identifying certain photographic exhibits; upon the presentation of clipper identified as plaintiff's exhibit `M'; upon the argument of Max W. Zabel in support of the motion of Leo J. Wahl, aforesaid; and
"It appearing to the Court that on or about the 25th day of September, 1929, one Frank E. Liverance, Jr., of the law firm of Liverance and Van Antwerp, of Grand Rapids, Michigan, entered his appearance in this cause as `Of Counsel' for the defendant herein, and filed with the clerk of this Court an answer to the motion of Leo J. Wahl, aforesaid, subscribed as follows:
"`Nils E. Norstrom "`By Frank E. Liverance, Jr. "`Counsel for Norstrom,'
— which said answer was supported by an affidavit subscribed and sworn to by the said Frank E. Liverance, Jr., and was further supported by an affidavit subscribed and sworn to by the said Nils E. Norstrom, defendant herein; and
"It further appearing to the Court that the said Frank E. Liverance, Jr. had on the 25th day of September, 1929, notified Max W. Zabel that the said Frank E. Liverance, Jr., had been retained by Nils E. Norstrom, defendant herein, as counsel in the said Nils E. Norstrom's litigation with Leo J. Wahl, plaintiff herein; and
"It further appearing to the Court that Lawrence J. Walsh and Carl V. Wisner, Jr. of the firm of Wisner and Walsh, who have previously been conducting this litigation for the said Nils E. Norstrom appeared pursuant to notice, moved to continue the cause, and as grounds therefor stated that they were uncertain as to who was representing the said Nils E. Norstrom; that they had been notified in writing on or about September 25th, 1929, by said Nils E. Norstrom that they should do no more work on the within cause by reason whereof they were not prepared to argue the motion of Leo J. Wahl, aforesaid, and that they had had a conference with the said Frank E. Liverance, Jr. in the forenoon of the 1st of October, 1929, at which time said Wisner and Walsh were first informed by said Frank E. Liverance, Jr. that he had filed said answer of Nils E. Norstrom and the affidavits thereto attached; and
"It appearing to the Court by the decree of the 21st day of May, 1929, the said Nils E. Norstrom had been adjudged in contempt of this Court in this cause; and the Court being fully advised, doth find:
"First: That the said Nils E. Norstrom manufactured and sold the hair clipper identified herein as Plaintiff's Exhibit `M' subsequently to the date of the service of the said permanent injunction upon the defendant herein;
"Second: That by such manufacture and sale, said Nils E. Norstrom violated the permanent injunction entered herein on the 27th day of May, 1929.
"Wherefore, it is ordered, adjudged and decreed That the said Nils E. Norstrom is in contempt of this Court, and that a fine of One Thousand Dollars ($1,000.00) be imposed upon said defendant, Nils E. Norstrom, one-half thereof to be paid to the United States of America, and one-half thereof to be paid to the said plaintiff Leo J. Wahl, and that the said defendant Nils E. Norstrom be confined in the jail of the County of Cook, State of Illinois, until such fine is paid."
Carl V. Wisner, of Chicago, Ill., for appellant.
Max W. Zabel, of Chicago, Ill., for appellee.
Before ALSCHULER, EVANS, and PAGE, Circuit Judges.
It is important to classify the proceeding here — whether for civil or criminal contempt, or both — since the order for payment to the United States of part of the fine imposed can be supported only in a proceeding for criminal contempt, and for payment of part to the plaintiff only in one for a civil contempt. In considering the question, one turns to the exhaustive discussion of civil and criminal contempts as found in Gompers v. Bucks Stove Range Co., 221 U.S. 418, 31 S. Ct. 492, 55 L. Ed. 797, 34 L.R.A. (N.S.) 874. The opinion, from page 440 of 221 U.S. 31 S. Ct. 492, 499, on, is devoted to elucidating the distinction between civil and criminal contempts.
Here, as there, the entire proceeding and each and every step therein, including the final order of the court, is entitled in the equity cause out of which the alleged contempt arose, and was instituted and conducted by the counsel for appellee, and in no instance, here or in the District Court, on behalf of the United States. As to this it was said in the Gompers Case:
"We find nothing in the record indicating that this was a proceeding with the court, or more properly the government, on one side and the defendants on the other. On the contrary, the contempt proceedings were instituted, entitled, tried, and, up to the moment of sentence, treated as a part of the original cause in equity. The Bucks Stove Range Company was not only the nominal, but the actual party on the one side, with the defendants on the other. The Bucks Stove Company acted throughout as complainant in charge of the litigation. As such and through its counsel, acting in its name, it made consents, waivers, and stipulations only proper on the theory that it was proceeding in its own right in an equity cause, and not as a representative of the United States, prosecuting a case of criminal contempt. It appears here also as the sole party in opposition to the defendants; and its counsel, in its name, have filed briefs and made arguments in this court in favoring affirmance of the judgment of the court below."
The Gompers Opinion refers to the usual practice of entering a rule to show cause. Here this proceeding was not followed. Although papers and orders appear to have been entitled "Rule to Show Cause," this proceeding was commenced by a notice from attorneys for plaintiff to attorneys for defendant that on a certain day "we will present to the court the accompanying motion for the commitment of the defendant for contempt of his violation of the preliminary injunction in this cause." This is surely not a motion for a rule to show cause, and no such rule was ever applied for or granted. But on October 1 there was presented to the court a motion which did not follow the notice to the effect that there would be presented a motion for defendant's commitment for contempt, etc., but the motion then presented was that he be "adjudged in contempt and be suitably penalized for violation of the Permanent Injunction heretofore granted in this cause." Had the motion followed the notice it might have been some indication that the proceedings were to be criminal. As stated in the Gompers Opinion, commitment by way of penalty for contempt of court may be imposed only where the proceeding is for criminal contempt. In the absence of a petition for a rule to show cause, or of the entry of such rule, it is at least extremely doubtful if a criminal contempt could be proceeded with or a penalty for criminal contempt imposed.
There are here the further facts, that no contempt rule was ever served on Norstrom; that after the filing of the motion on October 1 Norstrom had no opportunity to be present upon its hearing, and was not in fact present; that upon the hearing no witnesses were sworn and no evidence given other than by ex parte affidavits. If, as was stated in effect in the Gompers Case, the nature of the proceedings may be considered in classifying the contempt charged, we are of opinion that the entire proceedings here, apart from the penalty imposed, strongly indicate that they were not in or for a criminal contempt, but wholly civil, and that the imposition of so much of the penalty as was made payable to the United States is wholly ineffectual and void.
But this does not dispose of so much of the judgment rendered as is attributable to the proceeding as one for civil contempt. In discussing the proposition of penalizing civil contempt it was said in the Gompers Case:
"In this case the alleged contempt did not consist in the defendant's refusing to do any affirmative act required, but rather in doing that which had been prohibited. The only possible remedial relief for such disobedience would have been to impose a fine for the use of complainant, measured in some degree by the pecuniary injury caused by the act of disobedience. Rapalje, Contempts, §§ 131-134; Wells v. Oregon Co. [C.C.] 19 F. 20; In re North Bloomfield Co. [C.C.] 27 F. 795; Sabin v. Fogarty [C.C.] 70 F. 483."
Along this same line the Court of Appeals of the Second Circuit said, in Christensen Engineering Co. v. Westinghouse Air Brake Co., 135 F. 774, 782, respecting the penalty imposed for civil contempt:
"It will thus be seen that the practice has not been uniform, and that in some of the adjudged cases the award, like that in the present case, was for a round sum, not based upon any proved items of loss or expense, but apparently intended to cover probable loss and expenses. It is obvious that a fine exceeding the indemnity to which the complainant is entitled is purely punitive, and, notwithstanding the foregoing precedents to the contrary, we think that when it is imposed by way of indemnity to the aggrieved party it should not exceed his actual loss incurred by the violation of the injunction, including the expenses of the proceedings necessitated in presenting the offense for the judgment of the court. We are also of the opinion that when the fine is not limited to the taxable costs it should not exceed in amount the loss and expenses established by the evidence before the court. Unless it is based upon evidence showing the amount of the loss and expenses, the amount must necessarily be arrived at by conjecture, and in this sense it would be merely an arbitrary decision. Another reason why it should be based upon evidence is that otherwise the question of its reasonableness cannot be re-examined upon an appeal from a final decree in the cause, and the appellate court would have to treat the fine as a purely arbitrary one, or deny to the appellant his right of review."
The record here affords no evidence of the loss or damage incurred by appellee through Norstrom's disobedience of the injunction. It does not appear that more than a single hair clipper was actually made or sold after the permanent injunction, and we fail to see how such a record can support a fine of $500 payable to appellee. In the Gompers Case it was said:
"If, then, this sentence for criminal contempt was erroneously entered in a proceeding which was a part of the equity cause, it would be necessary to set aside the order of imprisonment, examine the testimony, and thereupon make such decree as was proper, according to the practice in equity causes on appeal."
Regarding as we do the proceeding here as one wholly in the equity cause, we believe we may direct the entry of such a decree as we find to be in consonance with the equities. Under the state of the record we believe the court was entitled to impose a penalty for the civil contempt only, measured by the reasonable loss and damage which accrued to appellee by reason of the contemptuous acts of appellant. One element of such damages would be appellee's costs and attorneys' fees, matters such as courts are often called to pass upon, even in the absence of opinion evidence as to amount. In the very nature of things courts should be able to reach a fair conclusion as to the amount of ordinarily necessary costs and attorneys' fees to be awarded in such a case. We believe that in this simple and, to say the least, quite informal proceeding an award to appellee of $250 for its necessary costs and attorneys' fees incurred in the District Court would be fair compensation. For obvious reasons such expenses and fees incurred in this court are not allowable.
The order of the District Court appealed from is reversed, and the cause is remanded to the District Court, with direction to enter there an order finding appellant guilty of civil contempt, and imposing on him a fine of $250, to be paid to appellee, appellant to stand committed until the fine is paid, or he is otherwise discharged.