Source: https://supreme.justia.com/cases/federal/us/261/399/
Timestamp: 2019-04-21 08:23:21+00:00

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Justia › US Law › US Case Law › US Supreme Court › Volume 261 › Toledo Scale Co. v. Computing Scale Co.
1. Under the Act of September 6, 1916, this Court has no jurisdiction to review on certiorari the merits of a final decree entered by the circuit court of appeals more than three months before the certiorari was applied for. P. 261 U. S. 417.
2. Applications made to the circuit court of appeals after it had affirmed a decree upholding a patent and ordering an accounting, and renewed upon the appeal from the accounting, whereby the defendant sought to reopen the case upon the ground of newly discovered evidence of prior discovery, manufacture, sale, and use of the invention, were addressed to the sound discretion of the court, and properly overruled where the failure to discover the evidence in time for the original hearing in the district court was due to the applicant's lack of diligence. P. 261 U. S. 419.
3. To justify setting aside a decree for fraud, extrinsic or intrinsic, it must appear that the fraud charged prevented the party complaining from making a full and fair defense. P. 261 U. S. 421.
opponent from finding and availing himself of it, constitute such a fraud as will sustain a suit to enjoin execution of a decree enforcing the patent. P. 261 U. S. 423.
5. A decree of a district court enjoining obedience to a decree of a circuit court of appeals of another circuit, upon an issue and evidence of fraud, which, except for immaterial adjuncts of malice and conspiracy, had been presented to and rejected by the latter court as a basis for reopening the decree, held an unwarranted review of that court's discretion, and not a decree founded on extrinsic fraud. P. 261 U. S. 423.
6. The principle requiring due diligence in discovering and presenting evidence, to avoid protraction of litigation, cannot be set aside to avoid hardship in a particular case. P. 261 U. S. 424.
7. The fact that the sureties on a supersedeas bond in a circuit court of appeals, and the banks with which their principal made deposits for their indemnification, have been erroneously enjoined from complying with that court's decree by a district court of another circuit does not relieve them from obedience to a proper and final order of the former court directing summary judgment against them. Their remedy is by appeal from the decree of the district court. P. 261 U. S. 425.
8. Under Jud.Code § 262, the circuit court of appeals has power to issue all writs not specifically provided for by statute which may be necessary to the exercise of its appellate jurisdiction. P. 261 U. S. 426.
9. To protect the execution of its decree, the circuit court of appeals may direct the district court to enjoin a party from prosecuting a suit in another jurisdiction. Id.
10. A defeated party who seeks by a suit in another jurisdiction to enjoin the sureties on his supersedeas bond and his opponent from executing a decree of the circuit court of appeals is guilty of contempt of that court which it may punish by directing the district court to enter a summary decree for expenses occasioned by such injunction suit and a reasonable attorney's fee. P. 261 U. S. 426.
"We now receive from the Computing Company the certified copy of the Supreme Court's order denying Toledo Company's petition for writ of certiorari, and we direct the clerk to file it in this cause."
"Unless the mandate which we now formulate be stayed on Toledo Company's motion filed within five days, the clerk is directed to issue and transmit to the court below the following mandate:"
"(1) Enter of record our affirmance of the final decree on accounting."
"(2) Enjoin Toledo Company from further maintaining its Ohio bill and from filing elsewhere any similar bill."
"(3) Enter summary decree against the sureties on the supersedeas bonds for the amount due upon the accounting decree, including all costs in both courts, but not exceeding the penalties of the bonds."
"(4) Ascertain Computing Company's expenses in this matter, including reasonable attorney's fees, paid or incurred since the Supreme Court's denial of the petition for writ of certiorari on January 9, 1922, and enter summary decree therefor against Toledo Company, but not against the sureties on the supersedeas bonds."
revolved in response to the effect of the weight would so coordinate with figures on the casing as to show the weight and correct price on the same line. The patentee in his specifications admitted that the general combination was an old one, but said that the object of his improvement was to provide scales, extraordinarily sensitive to weights of small amount, and accurately registering them. He explained that an essential feature of the indicator drum in his improvement was that it should be made of very light material, because scales of this kind theretofore would not weigh alike successively, due to the inertia of the revolving drum, the force required to operate it, and the difficulty of stopping, and so he had constructed his drum of a skeleton frame of aluminum with a periphery of a thin sheet of paper.
"5. An indicator drum for weighing mechanism consisting of a spindle provided with a plurality of skeleton frames of light material and secured to said spindle, and having secured to their periphones a sheet of paper forming a cylinder."
"6. An indicator drum for weighing mechanism consisting of a spindle provided with a plurality of skeleton disks or frames of thin aluminum, having a sheet of paper extending around and secured to their periphones to form a cylinder."
"by reason of prior public use and sale by various persons at various places, and, among others, at Pawtucket by William H. Phinney, then and now, as defendant is informed and believed, residing at said Pawtucket."
that, long before the "paper" art, including a patent to Phinney in 1870, had proposed to teach practical scale makers how to build automatic computing scales, but all attempts to make them were failures, that, in the 25 years between Phinney and Smith, the brightest and most skillful men had sought the necessarily tremendous commercial success of a reliable computing scale, but had not found it until Smith had the happy conception that the lightest possible drum would secure the required accuracy of revolution and stopping.
affidavit that the Boston Computing Company, which owned the Smith patent and which subsequently was bought out by the complainant Computing Scale Company, was trying to buy the scales which Phinney had. The evidence tended to show that only 20 scales had been made by Phinney, and that no scales were made after 1895. The president of the Toledo Company, in his affidavit, excused failure earlier to discover this evidence by saying that the company made every effort to learn of prior use. His counsel explained that he had been led away from investigation into manufacture of Phinney scales at Pawtucket, which was not visited by agents of the Toledo Company till after June, 1912, by the fact that the model of the Phinney patent at the Patent Office was only a small one of solid wood, and not of light material, and that he only acquired knowledge of Phinney's manufacture and use of scales with indicator drums by accident after June, 1912, from counsel for defendant in a suit brought by the Computing Company against the Standard Company in 1911. There was no direct charge in these 1913 affidavits that the Computing Scale Company was purchasing and gathering in these Phinney scales to conceal them, but there were averments in the affidavits which were only relevant to sustain such a charge, and were evidently inserted for that purpose. The 1913 motion for a rehearing was overruled by the circuit court of appeals.
when they were in the custody of the Toledo Company, because he did not think they would weigh properly. The district court confirmed the master's report of the accounting, and made a decree accordingly for $420,000. This was carried on appeal to the circuit court of appeals, which affirmed it in October, 1921. 279 F. 648.
"To refuse to consider the evidence in the present record respecting the Phinney scale, as affecting the validity of the patent in suit, would be to permit the plaintiff to take advantage of essential facts known to it and unknown to the defendant or the court and its consequent imposition on both."
"The affidavits further showed that plaintiff had full knowledge of the Phinney scales for more than ten years, that evidence and numerous samples of them had been introduced in a suit which plaintiff had brought at Philadelphia ten years earlier upon the reissued patent here in suit, that the prosecution of said suit had been abandoned because of such evidence, and that plaintiff had suppressed and concealed such fact from the court and defendant throughout the litigation in the present cause."
The motion to reopen the case was denied by the circuit court of appeals. 279 F. 674. An application to review this October, 1921, decree by certiorari was made and was denied by this Court January 9, 1922. 257 U.S. 657.
suits; that these purchases were made in pursuance of the conspiracy, secretly and fraudulently, for the purpose of preventing the Toledo Company and the District Court of Northern Illinois and the Circuit Court of Appeals of the Seventh Circuit from learning of the Phinney commercial practice; that the Toledo Company made diligent effort and investigation to find the Phinney commercial practice, and also evidence of the Computing Company's fraudulent suppression of evidence thereof; that, while Toledo Company had had knowledge of the Phinney commercial practice since 1913, it had no knowledge of Computing Company's fraudulent suppression thereof until December 20, 1921, which was after the affirmance of the accounting decree. The bill further averred that counsel for the Computing Company in 1913, in their brief on appeal from the district court in this case, said that Phinney had never made a successful scales or put it on the market, which the Computing Company knew to be false, and that this deceived the Toledo Company and its counsel into damaging admissions in the circuit court of appeals as to the material of which Phinney's scales were actually made.
This bill was supported by the same evidence used in the Seventh Circuit applications of 1913 and 1921, and also by the affidavit of one Koehne, who said that he was a patent lawyer and solicitor, and had been in the employ of the Computing Company for a number of years; that he was privy to the conspiracy charged in the bill and a participant in it, but that the counsel employed to defend the various patent suits referred to in the bill were not, and that the agents and managers of the Computing Company with whom he worked and talked were dead.
"That no writ of error, appeal, or writ of certiorari intended to bring up any cause for review by the Supreme Court shall be allowed or entertained unless duly applied for within three months after entry of the judgment or decree complained of."
This deprives us of jurisdiction to consider the merits of the decree of October, 1921.
The case of Hamilton Shoe Co. v. Wolf Brothers, 240 U. S. 251, is cited to sustain a contrary view, but it fails to do so. In that case, a writ of certiorari had been applied for to this Court to review an interlocutory decree of the circuit court of appeals, and denied. The case went back to the district court for a final accounting for infringement of a trademark, and, after a final decree for profits, came again to the circuit court of appeals and was affirmed. Then a second application was made for a certiorari, and it was allowed. The respondent contended that this Court could not review the whole case, including the merits of the interlocutory decree, because of the denial of the first application for certiorari. We held that the denial constituted no bar, because the decree sought then to be reviewed was not final. Our power to grant writs of certiorari extends to interlocutory, as well as final, decrees, and a mere denial of the writ to an interlocutory ruling of the circuit court of appeals does not limit our power to review the whole case when it is brought here by our certiorari on final decree. In the case before us, the decree of October, 1921, which we declined to review in January, 1922, was a final decree, and we are expressly denied power to review it after three months.
the Toledo Company, had anything presented to it in the record in the Ohio court which required it to stay its hand in using available process to enforce its final decree. We are very clear that it had not. It has been necessary to make an elaborate statement to show the complicated facts, but, when they are arrayed in order so as to be understood, there is no escape from the conclusion that the action of the Ohio court could not, and should not, interfere with or stay the due course of proceedings of enforce the Seventh Circuit decree.
The application to the circuit court of appeals in 1913 to frame its mandate so as to permit that court to rehear the issue on the merits of the validity of the patent already found and affirmed by both courts was addressed to the discretion of that court, and it was exercised to deny the application, presumably because the application showed on its face a lack of the due diligence in not producing the alleged newly discovered evidence in time to have presented it to the trial court at the hearing on the merits in June, 1912. The Toledo Company had been advised of the claim of its infringement of the Smith patent within a year after it began to make and sell the aluminum cylinder scale in 1906 by two suits of the Computing Scale Company, and its attention had been directed to the necessity of preparing for a defense. This was further stimulated by the Chicago suit, the one at bar, in 1910, in which the Toledo Company filed an answer averring, among other defenses, that the Smith patent had been anticipated not only by the Phinney patent itself, but by prior manufacture, sale, and commercial use by Phinney of scales which embraced the device whose invention was claimed by Smith, and that this prior use was at Pawtucket, Rhode Island.
reason for this failure is the suggestion that the model of the cylinder deposited by Phinney in the Patent Office with his application was a small solid wooden cylinder, not full-size, which led counsel to think that no practice under the patent would show lightness of material and weight. It was a matter of equitable discretion for the circuit court of appeals to determine whether this was sufficient excuse. Hopkins v. Hebard, 235 U. S. 287. Certainly it was not an abuse of its discretion to hold that it was not a good one. The natural and obvious course of one tracing out evidence of prior commercial use of Phinney, which was formally averred in the Toledo Company's bill to have taken place at Pawtucket, would have been to go to Pawtucket and look up Phinney, or, if dead, his family and successors. Had this course been pursued, Phinney's widow and son would have been found there, and several of those whose affidavits and depositions are now produced who say that they bought and used the Phinney scales made with light wood and paper cylinders. From those witnesses, too, the investigator would have been led directly to the proceedings in Federal Company suit in Philadelphia, the record of which contained all this evidence, and he would have found without difficulty the three original Phinney scales that were exhibits in that case. Nor can we say that it was an abuse of discretion for the circuit court of appeals to refuse a similar application, made in October, 1921, to open up the case to permit a rehearing of an issue, settled nine years before, when the evidence as to the lack of diligence of the Toledo Company was just the same.
sound discretion of the court, and, based as they were upon the ground of newly discovered evidence, the indispensable condition of their being granted was that the failure to discover the evidence in time for the trial was not due to a lack of diligence on the part of the applicant. That condition precedent was not fulfilled.
Do the additional facts averred in the bill filed in the Ohio court change the situation? It is said they show extrinsic fraud committed by the Computing Scale Company upon proof of which a court of equity, although in another jurisdiction, having jurisdiction of the parties, may enjoin the one guilty of the fraud from profiting by a decree so obtained. There has been much discussion as to whether extrinsic fraud is here alleged, and the case of United States v. Throckmorton, 98 U. S. 61, is cited, and numerous other authorities since that case. We do not find ourselves obliged to enter upon a consideration of the sometimes nice distinctions made between intrinsic and extrinsic frauds in the application of the rule, because, in any case, to justify setting aside a decree for fraud, whether extrinsic or intrinsic, it must appear that the fraud charged really prevented the party complaining from making a full and fair defense. If it does not so appear, then proof of the ultimate fact -- to-wit, that the decree was obtained by fraud -- fails. That is the case here.
to take the ordinary and obvious course to make adequate inquiry at Pawtucket as to the prior use which it had averred in the bill. Certainly the Computing Scale Company was not responsible for the inadequacy of Phinney's model, or for the failure of the Toledo Company to make the inquiry before June, 1912. The averments as to conspiracy to monopolize and to drive the Toledo Company out of business, and the details of the purchase of Phinney scales, are all irrelevant, because they are not shown to have had any causal connection with the failure of the Toledo Company to find out earlier what it did stumble on in 1913.
We do not understand it to be contended that there was any relation between the Computing Scale Company and the Toledo Company which made it the duty of the former to furnish evidence to the latter to weaken its own case, or that silence in respect to the Phinney scales constituted that kind of fraud which would invalidate the decree unless it was accompanied by acts which actually prevented the Toledo Company's finding and availing itself of such evidence. Clearly there is no such rule of law in a case like this.
to open the decree on its merits in 1921 to let in the evidence. It did not add to the weight of that evidence, for the purpose for which it could be used in either court, that this was the result of a conspiracy to monopolize trade, or that it grew out of malicious feeling toward the Toledo Company. What the District Court for Northern Ohio was doing in hearing the injunction suit and issuing a temporary injunction was merely reviewing the discretion of the Circuit Court of Appeals of the Seventh Circuit in dealing with the same ultimate facts and reaching a different conclusion. This was beyond its province. Embry v. Palmer, 107 U. S. 3, 107 U. S. 11; Telford v. Brinkerhoff, 163 Ill. 439, 443; Marine Ins. Co. v. Hodgson, 7 Cranch 332.
"It is for the public interest and policy to make an end to litigation, or, as was pointedly said by a great jurist, that suits may not be immortal, while men are mortal."
The surety companies object to the order of the circuit court of appeals, directing the district court to enter summary judgment against them for the amount due on the decree, because it causes them to pay a decree which the Toledo Company, their principal, deposited in Toledo banks enough money to their order to pay, but which a court of competent jurisdiction enjoins them from paying, or from using this money to pay. They say they are to be ground between the upper and the nether millstones. They say they are indifferent between the parties, and only wish to be protected. The order which the circuit court of appeals directed against them was within its jurisdiction. Pease v. Rathbun-Jones Engineering Co., 243 U. S. 273, 243 U. S. 278. It was right, was final, and they must obey it. They can appeal from the order of the Ohio court. Indeed, we are advised that the cause is now pending on appeal in the Circuit Court of Appeals of the Sixth Circuit. If they satisfy the decree of the Seventh Circuit, they can be reasonably confident that they will not be required to suffer a double burden. The Circuit Court of Appeals of the Sixth Circuit is not likely to ignore the ruling of this Court in the premises, and the cause pending in the Sixth Circuit can be brought within the jurisdiction of this Court at any time by certiorari.
It is objected that the circuit court of appeals had no power to direct the district court to enjoin the Toledo Company from further maintaining its Ohio bill or from filing elsewhere any similar bill. It is also objected that it cannot direct the district court to assess the Computing Company's expenses, including a reasonable attorney's fee, in the matter of the Ohio bill, and to enter a summary decree therefor. We think these orders were within the power of the circuit court of appeals. This Ohio proceeding was instituted to halt and defeat the decree of the circuit court of appeals while that decree was still in that court to be enforced by mandate to the lower court. Under § 262 of the Judicial Code, that court had the right to issue all writs not specifically provided for by statute which might be necessary for the exercise of its appellate jurisdiction. It could therefore itself have enjoined the Toledo Company from interfering with the execution of its own decree, Merrimack River Savings Bank v. Clay Center, 219 U. S. 527, 219 U. S. 535; or it could direct the district court to do so, as it did, Supreme Tribe of Ben Hur v. Cauble, 255 U. S. 356; Steel Co. v. R. Co. Supply Co., 244 U. S. 294, 244 U. S. 299; Kessler v. Eldred, 206 U. S. 285. Moreover, when the character of the proceeding initiated by the Toledo Company, a party before it, to stop the execution of its decree was disclosed on a full hearing on the petition for a rule against the Toledo Company, it had jurisdiction to determine whether the filing and maintenance of the bill was in contempt of its jurisdiction, New Orleans v. New York S.S. Co., 20 Wall. 387, 87 U. S. 392; Swift v. Black Panther Oil & Gas Co., 244 F. 20, 29, and, finding it to be so, to punish it by a compensatory imposition, Merrimack River Savings Bank v. Clay Center, 219 U. S. 527, 219 U. S. 535, or to remand it to the district court to do so.
execution. In the latter case, he is obstructing the process of the court in a proceeding in which its action has been properly and lawfully invoked. The degree of punishment for contempt in such case is in the discretion of the court whose dignity has been offended, and whose process has been obstructed. New Orleans v. New York Steamship Co., 20 Wall. 387. Certainly it was not an abuse of discretion in this case to impose as a penalty compensation for the expenses incurred by the successful party to the decree in defending its rights in the Ohio court.

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