Opinion
Docket 53, No. 21420.
Argued November 4, 1949.
Decided November 17, 1949.
On February 10, 1948, plaintiffs filed their complaint, naming Mansew Corporation as defendant, and alleging infringement by defendant of letters patent Nos. 2,192,446 and 2,422,914. The complaint alleged that the patents were owned by the individual plaintiffs and that they had granted an exclusive license to the plaintiff, the L.R.S. Machine Company, which had granted an exclusive license to the plaintiff, Michael J. Hughes Company.
On May 19, before Mansew filed its answer, the district court, on Mansew's motion supported by an affidavit of Mansew's lawyer, made an ex parte order reading as follows: "It is ordered that Cutting Room Appliances Corp. be made a third party defendant in this action, and that leave be granted to serve a summons and a copy of the answer and third party complaint herein upon Cutting Room Appliances Corp., and it is further ordered that the title of the action herein be amended to read as above set forth." The supporting affidavit read in part as follows: "I make this affidavit in support of the defendant, Mansew Corporation's application for an order bringing in Cutting Room Appliances Corp. as a third party defendant in this action. * * * The defendant's answer, which is now being prepared, will set forth a number of defenses and will include counterclaims. One of such counterclaims will be for a declaratory judgment of invalidity and non-infringement of the patents involved, and another for damages and an injunction, pursuant to the provisions of the Clayton and Sherman Anti-Trust Acts, 15 U.S.C.A. § 1 et seq., because of the conduct of these plaintiffs and the third party defendant, Cutting Room Appliances Corp., in conspiring to restrain trade and to secure an illegal monopoly in the manufacture and sale of garment trimming machines. The proposed third-party defendant, Cutting Room Appliances Corp., as will be demonstrated herein, has taken a leading part in such activities in restraint of trade, and it is obvious that, in order for the defendant (and proposed third party plaintiff) to obtain full relief on its counterclaim, the proposed third party defendant, Cutting Room Appliances Corp., is a necessary party." The affidavit went on to state the following: (1) Cutting Room Appliances (CRA) had published advertisements creating the impression that it was selling the "only fully automatic dress bottom trimmer authorized" by letters patent Nos. 2,192,446 and 2,422,914. (2) One of its advertisements contained this statement: "We think you should be advised that action has commenced to restrain, as infringement of these Letters Patent, manufacture and sale of dress bottom trimmers by others, and that instructions have been issued vigorously to prosecute such action to a final decision. We think you should know that not merely the manufacturer, but also the user and seller of an infringing machine, may be enjoined, and may be held responsible for damage arising out of the use or sale of such infringing machine." (3) This statement had led Mansew's customers and prospective customers to believe that CRA was the plaintiff in the patent suit and would be the plaintiff in other similar contemplated suits. (4) CRA and plaintiffs had apparently resorted to a campaign of falsehoods, vilification and abuse designed to injure the defendant's standing in the trade. Thus they had made statements that "Mansew was forced to withdraw their skirt trimmer from the market due to the fact that they were infringing on certain patents." (5) "Accordingly, it is obvious that, as far as the public is concerned, Cutting Room Appliances Corp., the proposed third-party defendant, has taken the lead in a conspiracy to restrain trade, and to secure an illegal monopoly, and to injure the defendant's business, and should be made a party to this action so that the merits of the defendant's counterclaim against it and the plaintiffs may be determined, with binding effect on all parties concerned."
Emphasis added.
On May 24, 1948, Mansew filed its unsworn answer. The answer contained, inter alia, a counterclaim against plaintiffs and a "third-party complaint" against CRA, which alleged the following: Plaintiffs and CRA, by bringing their suit were attempting to "misuse the patent system to obtain an illegal monopoly"; they had so acted as to create a monopoly in connection with their patents in violation of the Sherman and Clayton Acts, by "limiting and decreasing competition in, the trade in garment trimming machines, not covered by any valid claim of the patents in suit, in interstate commerce"; That they had "misrepresented the scope of said patents and the scope of the claimed rights of plaintiffs, to the trade and to the public in general, by circulating and publishing in trade papers, and by advertisements, circulars, letters, announcements, notices and oral communications, false, deceptive and misleading information, and threats of suits, seeking thereby to intimidate prospective purchasers of defendant's machines, and to restrain the free trade among the several states, and between this country and foreign countries, in garment trimming machines"; their conduct had resulted and would result in "material, irreparable and substantial loss and damage to defendant and in the loss of sales by defendant of its garment trimming machine which defendant would have otherwise made, except for the unlawful and unfair acts of plaintiffs and the third party defendant"; "the exact amount of said damage and injury cannot be ascertained except by an accounting proceeding; * * * unless plaintiffs and the third party defendant are restrained and enjoined from continuance of such illegal and monopolistic activities, defendant will be subject to further serious and irreparable loss. * * *" This counterclaim asked an injunction, and other relief against plaintiffs and CRA.
On May 26, 1948, CRA was served. The summons signed by the Clerk was on a printed form which contained the following: "Note: This summons is issued persuant to Rule 14 of the Federal Rules of Civil Procedure." On June 10, 1948, CRA moved to dismiss the "third party complaint." Attached to the motion papers was an affidavit of the lawyer for CRA which stated that the "complaint" had been filed under an order made "without the presence or consent of CRA"; that there was "no sound foundation for the bringing in of" CRA; and that Mansew had shown no basis for joining CRA under Rule 14, 28 U.S.C.A. The district court entered a judgment dismissing this complaint without leave to amend. From this judgment, Mansew appeals.
Austin, Wilhelm, Carlson Cooke, New York City, Harris B. Steinberg, New York City, Jacob J. Bobrow, New York City, of counsel, for third party plaintiff and defendant appellant.
Henry L. Burkitt, New York City, for defendant appellee.
Before L. HAND, SWAN and FRANK, Circuit Judges.
The impleading order of February 10, 1948, bringing in CRA as a party, was ex parte. Whether a motion to dismiss a counterclaim would ordinarily be the proper method to raise the question of the validity of such an order, we need not decide, for here the affidavit attached to the motion sufficiently raised that question. True, in that affidavit CRA urged that the order was erroneous under Rule 14, 28 U.S.C.A., whereas obviously the pertinent rule is Rule 13(h); however, the note printed on the summons might well have misled CRA. Consequently, we think the motion to dismiss the counterclaim should be considered as a motion to vacate the impleading order as improper under Rule 13(h).
We have jurisdiction of this appeal because the dismissed counterclaim prayed an injunction.
That rule allows impleader only where "* * * the presence of parties other than those to the original action is required for the granting of complete relief in the determination of a counterclaim or crossclaim. * * *" Here, when defendant sought impleader, its only basis was the supporting affidavit of defendant's lawyer. We may assume, arguendo, that that affidavit would have sustained the order if it had stated merely (a) that the counterclaim would allege that plaintiffs had violated the Sherman and Clayton Acts, 15 U.S.C.A. § 1 et seq., and (b) that CRA had joined in the violations to such an extent that it was a necessary party if defendants were to obtain "complete relief" under the proposed counterclaim. But the affidavit went further. It thus said too much and, in so doing, said too little. For it alleged detailed facts which, so the affidavit asserted, "demonstrated" that the anti-trust laws had been violated. Those alleged facts fell far short of anything like such a showing. The district court should therefore not have made the order joining CRA as a party.
Rule 13(h) reads as follows: "When the presence of parties other than those to the original action is required for the granting of complete relief in the determination of a counterclaim or crossclaim, the court shall order them to be brought in as defendants as provided in these rules, if jurisdiction of them can be obtained and their joinder will not deprive the court of jurisdiction of the action."
We need not consider whether, had the impleading order been valid, the counterclaim would have been sufficient or at least good enough to require that defendant be allowed to amend.
Affirmed.