Opinion ID: 1476888
Heading Depth: 1
Heading Rank: 5

Heading: American Safety Table Company v. Singer Sewing Machine Company.

Text: The appeal in this case was decided by a court consisting of Buffington and Davis, Circuit Judges, and Johnson, District Judge, on March 9, 1938, in an opinion by Judge Buffington, 95 F.2d 543. Thereby the decision of the District Court of the Eastern District of Pennsylvania was reversed, and a patent of the American Safety Table Company for a mechanical clutch connecting a sewing machine to a power shaft was held valid and infringed by the Singer Sewing Machine Company. Thereafter, in due time, a motion for reargument and an application to the Supreme Court for writ of certiorari were denied, and on October 17, 1938, the mandate of this court was issued under which an interlocutory decree in favor of the patentee was entered by the District Court and a master was appointed to take account of damages and profits. The proceeding before the master is still pending. The attorneys who tried the case for American in the District Court were Augustus B. Stoughton and E. S. W. Farnum, Jr., well known lawyers of the Philadelphia bar experienced in patent law; but after the adverse decision American employed Levinsohn, Neiner and Levinsohn, patent lawyers of the New York bar, and later, under circumstances presently to be described, American put the appeal in charge of Morgan S. Kaufman, and he retained Thomas G. Haight and Samuel E. Darby, experienced and successful practitioners of patent law, who prepared the briefs with the assistance of Levinsohn and argued the appeal in this court. During the period in which the inquiry as to damages and profits was dragging its slow way before the special master, the investigation by the United States into the relationship between Davis and Kaufman, the indictment and trial of Davis, Kaufman and Fox for the obstruction of justice, and the inquiry by this court and its master into the integrity of the judgments in the Root appeals took place. These proceedings have been described in the foregoing opinion, Root Refining Company v. Universal Oil Products Company, and need not be discussed here other than to say that in this case as in the Root cases they constitute part of the background which justifies the present proceeding. On June 15, 1944, as appears in the foregoing opinion, this court adopted the master's findings of fact and conclusions of law and vacated its judgments in the Root cases; and thereafter, on September 26, 1944, Singer Sewing Machine Company filed a petition for recall of the mandate and reargument of the merits of the case now under consideration, on the ground that at the time of the argument of the case in this court, there existed a corrupt and illicit combination between Davis and Kaufman to obstruct justice. The petition also charged that Judge Buffington was disqualified to sit in the hearing of the appeal in this case because of the infirmities of old age and his consequent reliance upon Judge Davis. By supplement to the petition, it was charged that Judge Johnson was also disqualified and unfit to participate in the decision of this case on appeal by reason of improper official conduct on his part as District Judge in the Middle District of Pennsylvania, as set out in Report No. 1639 of the Judiciary Committee of the House of Representatives, 79 Cong., 2d Sess. In reply the American Table Company set out the circumstances under which Kaufman and its other attorneys were employed, denied any improper conduct on its part, denied the existence of any unlawful combination between Davis and Kaufman in this case, and also denied that Judges Buffington and Johnson were disqualified to participate in the appeal. The questions raised by these pleadings were argued on March 6, 1945, before Judges of this court who did not hear the argument on the appeal in 1938, and decision thereon was withheld during the proceedings then pending in this court in Root Refining Company v. Universal Oil Products Company, as outlined in our opinion in that case; and thereafter, on June 20, 1947, an order was passed by this court requiring American to show cause why the relief prayed by Singer should not be granted and further authorizing the Attorney General of the United States to appear as amicus curiae. In reply, American reaffirmed its denial of any improper conduct in this case on its part or on the part of Kaufman, and denied that any of the judges therein were disqualified. Thereafter, the designation of the judges now sitting herein was made by the Chief Justice of the United States and proceedings were taken in this case which paralleled those taken in the Root cases described in the foregoing opinion. On April 6, 1948, this court passed an order in this case which recited in substance the foregoing facts and authorized the United States, through the Assistant Attorneys General designated by the Attorney General, to participate in this proceeding as amicus curiae. It further ordered, in view of the foregoing facts, that the court deemed it necessary to determine whether Judges Buffington, Davis and Johnson were disqualified from participating in the appeal in this case, and whether the judgment of the court in this case was secured by fraud or wrongdoing on the part of American Safety Table Company or any one acting on its behalf, and to that end, set forth the charges that had been made and were to be tried as follows: (a) Whether Judge Davis' action in this case was influenced by any expectation of gain or favors pursuant to an agreement or understanding to that effect with Morgan S. Kaufman. (b) Whether certain transactions effected in the latter part of 1935, whereby Morgan S. Kaufman advanced the sum of $10,000 to one Charles Stokley, a cousin of Judge Davis, and also whether certain other transactions between Judge Davis and Morgan S. Kaufman in the period 1935 to 1938, allegedly related to the litigation evolving from the bankruptcy of one William Fox, were part of a corrupt and illicit combination between Judge Davis and Kaufman to obstruct justice, and, if so, whether Judge Davis was disqualified from participation in the appeal in this case by virtue of that combination. (c) Whether Morgan S. Kaufman was employed or retained by American Safety Table Company in connection with this case and, if so, whether the purpose of such employment or retainer was the expectation of American Safety Table Company that Kaufman would exercise or endeavor to exercise an improper influence upon Judge Davis in order to secure favorable judicial action by him in connection with this case. (d) Whether Judge Buffington, by virtue of his physical condition in 1938 and his reliance upon Judge Davis, was disqualified from participation in the appeal in this case. (e) Whether, in the light of the findings of the Committee on the Judiciary of the House of Representatives in respect of Judge Johnson's conduct in office, Judge Johnson was disqualified from participation in the appeal in this case. We further ordered that the trial be set for hearing before the court as now constituted without the intervention of a special master, and that in the trial of the charges, the amicus curiae should have the duty to present to the court the available evidence bearing upon the charges whether or not in support thereof, to the end that the truth might be ascertained, and that the parties to the case should have full opportunity to present evidence bearing on the charges and to participate in the examination and cross examination of witnesses so that the customary procedure of an adversary proceeding might be observed. The court further ordered that the trial of the charges set forth be consolidated with the trial of the charges set forth in the order of the court of the same day in Nos. 5648 and 5546, Root Refining Company v. Universal Oil Products Company. Subsequently a pretrial conference was held in this case at which the question was discussed whether the inquiry should be limited to the propriety of vacating the judgment in this court on the appeal and submitting the case to the court for reargument; and this court concluded and announced with the assent of the parties that the case would be heard upon the issues formulated in the order of April 6, 1948, and that the court would not restrict itself, in case the charges were sustained, to ordering a reargument of the appeal. It was subsequently stipulated by the parties and by the amicus before the hearing that the testimony of the witnesses and the exhibits in the Root cases should be offered as part of the record in this case, subject to objections on the ground of admissibility, and without limitation upon the right of either party to offer additional testimony. Certain objections of American to the admissibility against it of certain testimony offered in the Root cases must be considered before we state the conclusions of fact upon which we base our disposition of this case. It is contended that none of the testimony taken before the master in the Root cases is admissible against American because American was not party to that inquiry, and in fact did not know anything about it until long after the testimony was given. However, American raises no objection before us to any of that testimony except that of Judge Davis and Fox, but contends that the objection to their testimony is not overcome by the fact that Davis is dead and Fox is physically unable to appear. American relies on the general rule that testimony in a prior proceeding is not admissible in a subsequent proceeding on the ground of the death or disability of the witness, unless the same issue was involved in both proceedings and the subsequent proceeding is between the same parties or their privies as the first. Wigmore on Evidence, Section 1388. The strict rule that the parties must be the same in both proceedings has been somewhat liberalized where the same issue is involved in both proceedings, and there is some degree of relationship between the party against whom it was offered at the first proceeding and the party against whom it was offered at the subsequent trial. [7] Wigmore takes the position that the earlier testimony should be admitted in a subsequent proceeding without regard to technical niceties where the former testimony was subjected to the test of cross-examination by a party who had the same interest and motive to combat it as the party against whom it is offered in the subsequent trial. Wigmore on Evidence, Section 1388. The reason of course, is that the testimony of the witness is subject to all the tests to which the objecting party would have resorted if the opportunity had been afforded. This broad view has not generally been adopted by the courts, but it may well be that in a proceeding in which the integrity of the court itself is under investigation, technical niceties should be disregarded and that testimony which has been subjected to the usual tests and safeguards should be admitted in order that the truth may be ascertained. However, we do not need to decide that question in this case in view of the conclusion which we have reached as to one of the issues upon testimony which was offered at the hearing to which no objection was taken. The issue is squarely presented whether American Safety Table Company employed or retained Kaufman on this appeal for the purpose and with the expectation that he would exercise or endeavor to exercise an improper influence upon Judge Davis to secure judicial action from him favorable to American's interest in this suit. We have prepared and filed a summary of the evidence bearing on the issues in the case and as to this issue our ultimate conclusions of fact are as follows: The setting under which Kaufman was employed is significant. The case was thought to be of great importance by American, especially as its adversary was a powerful corporation and its chief competitor. Its leading attorney in the District Court had been Mr. Stoughton, the dean of the patent bar in Philadelphia who had practiced law since 1888, and was thoroughly familiar with conditions in the Third Circuit; and when the case was lost, the firm of Levinsohn, Neiner and Levinsohn was also retained. Nevertheless the five Frankel Brothers, who established American and owned its stock, were not satisfied, and Louis Frankel, the president of the corporation, determined to go to New York to confer with the well-known law firm of Otterbourg, Steindler, Houston and Rosen, which had guided the Frankel family in legal matters since 1920. Charles A. Houston of that firm was familiar with patent matters and actually conducted the final proceedings for an accounting before the master in this case. Obviously American did not lack access to experienced men who could aid them in the selection of an additional counsel for the appeal if any was thought necessary. For this purpose Louis Frankel went to New York shortly after October 18, 1937, when the main brief for the appellant prepared by the Levinsohn firm was filed. But he did not visit either the Otterbourg or the Levinsohn firm. His brother, David Frankel, who lived in New York, took him instead to see Murray Becker the attorney for William Fox of motion picture fame. The visit had to do with business transactions between Fox and the Frankels. In the course of the visit the Frankels and Becker talked about the American suit against Singer, and Becker advised the Frankels to employ Morgan S. Kaufman to handle the appeal for them. Becker was well acquainted with the Third Circuit Court of Appeals, especially the court composed of Judges Buffington, Davis and Thompson. He had been the counsel for the Fox interests in Altoona Publix Theatres, Inc. v. American Tri-Ergon Corporation, wherein an important patent covering motion pictures was sustained by this court on August 6, 1934, 72 F.2d 53, and later lost in the Supreme Court, 293 U.S. 587, 55 S.Ct. 101, 79 L.Ed. 682; 294 U.S. 477, 55 S.Ct. 455, 79 L.Ed. 1005. In that case distinguished patent counsel had striven to uphold the patent, and Kaufman had been employed as local counsel. For this service he had been paid a fee of $10,000 and expected to receive an additional fee in case of ultimate success as the patent was thought to be very valuable. Subsequently Fox filed a petition in bankruptcy in Atlantic City and in a series of appeals in the bankruptcy cases from the District Court of New Jersey to this court, Becker achieved remarkable success for the Fox interests and members of the Fox family before the same judges. In these cases, according to the uncontradicted testimony of William Elmer Brown, Jr., attorney for the trustee in bankruptcy, the administration of the bankrupt estate was greatly hampered and delayed by the decisions of this court. See Steelman v. All Continent Corp., 301 U.S. 278, 57 S.Ct. 705, 81 L.Ed. 1085, and the description of this litigation in the opinion of this proceeding in Root Refining Co. v. Universal Oil Products Company. This litigation was before the Circuit Court of Appeals in 1936, 1937 and 1938, and was in active progress at the time Becker recommended Kaufman to the Frankels in October, 1937. It was also during this period that Judge Davis' personal financial affairs reached a crisis. He had been insolvent since the market crash of 1929 as the result of speculation in stocks. In 1937 he owed divers New Jersey banks the aggregate sum of $85,000 and was preparing to go to a hospital for an operation as he believed that he had a malignant disease. In this emergency, one Samuel Ungerleider, a New York stock broker, advanced the sum of $37,674.50 for Davis and arranged a composition with his creditors, receiving certain promissory notes inadequately secured from Davis which were never fully paid. Both Davis and Kaufman were customers and friends of Ungerleider. Davis and Kaufman were on intimate terms of personal friendship, and their relationship was well-known in legal circles in the Third Circuit. Their association included Judge Buffington and Kaufman's brother David; and the four men visted each others' offices and houses and spent all or part of February together in the same hotel in Florida in 1935, 1936 and 1937. Becker had ample opportunity to learn this situation while the Tri-Ergon and Fox cases were going through the courts of the circuit in the years 1934 to 1938. Subsequently in 1940, when the relationship between Fox and Davis and Kaufman was under investigation, it was Becker who called Kaufman, according to the latter's testimony, to arrange a conference between Davis and Fox. [8] American added Kaufman to its legal staff in this case under these conditions, and the pertinent inquiries are what legitimate services Kaufman was expected to perform, what compensation he expected to receive and what competence he possessed to act as an attorney in important patent litigation. Kaufman was experienced in bankruptcy matters since he had acted as referee in the Middle District of Pennsylvania, under appointment from Judge Johnson and other judges, from 1913 to 1934. He had long maintained a home and a law office in Scranton, Pennsylvania, but in 1933 the District Court of Delaware appointed him a receiver in bankruptcy of S. W. Strauss Company, a mortgage investment company whose principal office was in New York City. Shortly after this appointment, he set up his home and his office as receiver in New York City and his main occupation, aside from the business of receiver, was the buying and selling of securities on the stock market; and he practically gave up the practice of the law. At no time during his career was he competent to brief or to argue a patent case. This was the situation when American employed him in its suit against Singer. There is seldom need for local counsel to file papers, secure orders of court and make engagements with respect to a case in a court of appeals; and if such a need had arisen in this case, Kaufman, whose headquarters were in New York, was not conveniently available, while Stoughton and Farnum maintained their offices in Philadelphia where this court holds its regular sessions and the clerk's offices are located. What was Kaufman's function to be? Frankel testified that they employed him as general counsel in the Singer case so that he might in turn employ competent patent lawyers to prepare the reply brief and to argue the case in the appellate court. For this purpose American agreed to advance him $5,000 to pay the lawyers' fees and costs of the appeal, and in addition promised him 25 per cent. of any monies which American might recover from Singer, against which percentage the $5,000 was to be credited. American did in fact pay him $5,000 and he employed Thomas G. Haight of Jersey City, New Jersey, and Samuel Darby of New York City, well known and well qualified patent lawyers who prepared the reply brief with the aid of the Levinsohn firm and argued the case in the Court of Appeals. They were successful in that court, and the patent was held valid and infringed. Upon the return of the case to the District Court, an interlocutory decree in favor of American was issued and the case was referred to a master to fix the damages. For the services in the Court of Appeals Kaufman paid Darby $1750 and Haight $1250 and kept $2000 for himself. Subsequently when certiorari was sought from the Supreme Court and denied, 305 U.S. 622, 59 S.Ct. 82, 83 L.Ed. 397, Kaufman got an additional $1500 from American and paid $500 of this sum to Darby for the preparation of a brief in opposition to the application for certiorari, and kept the remaining $1,000 for himself. In short, the lawyers who did all the actual work received $3500 in the aggregate and Kaufman retained $3000 for himself. This, however, is not the whole story. American's claim against Singer for damages and profits was substantial and Kaufman had been promised 25 per cent of any recovery as an additional fee. American presented a claim against Singer before the master in the sum of $737,450.62 and the master actually awarded the sum of $40,362.97. American excepted to this allowance as insufficient on the ground that the master had failed to take into account and make any allowance for certain devices of Singer which American claimed to be infringements of the patent. The decision of that question has been held in abeyance pending this proceeding. Notwithstanding the sums paid Kaufman in this case and the prospect of large additional payments in case of success, Kaufman rendered no substantial legal services in the litigation. His file was produced in evidence and it was found to contain copies of the opinion, briefs and other papers prepared by the patent lawyers. In addition, it contained 61 letters written by him or to him about the case; but they were routine in nature and showed merely that he was kept in touch with the progress of the case, arranged conferences and conveyed information from the Frankels to Darby. Nothing in the file indicates that he made any intellectual contribution to the case or performed any routine service that would not have been performed as a matter of course by the active lawyers in the case if Kaufman had not been employed. There was in fact no room for him in the case, and no legitimate service that he was competent to perform. There was no need for his services as local counsel, no need for advice from him as to the selection of the lawyers to conduct the appeal, and no ability on his part to present to the court the position of American on the questions of fact or of law involved. He had only one asset to offer his employer, and that was, his personal intimacy and influence with Judge Davis. We cannot escape the conclusion that it was for this purpose, and this purpose only, that he was employed by American in this case. In the foregoing opinion in the Root cases, we cited the authorities for the principle that one who comes into a court of equity must come with clean hands, and the suitor who fails in this respect will be denied all relief, whatever may be the merits of his claim. That principle is equally applicable here. Fortunately, venality or even susceptibility to personal influence is rarely found in a judicial officer; and the reports do not disclose instances of the employment of a lawyer by a litigant where it is clearly shown, as in this case, that neither professional competence nor the expectation of professional services inspired the employment, but only the expectation that the attorney's personal influence with the judge would be exerted to win a favorable decision. There are, however, cases where the courts have emphasized the correlative duty of the lawyer to depend solely upon the merits of his client's case and to abstain from all efforts to throw into the scales of justice the weight of his personal influence with the man upon the bench. The legal profession has formulated this primary obligation of the lawyer in the Canons of Professional Ethics of the American Bar Association which provide that a lawyer shall not communicate or argue privately with the judge as to the merits of a pending case, and which denounce any device or attempt to gain from a judge special personal consideration or favor. The courts enforce these rules by disciplinary action. [9] The attorney who attempts by personal influence to control a judge or jury in their decision in a pending case, or who merely holds himself out as able to do so, whether or not he actually makes the attempt, and whether or not he succeeds or fails in the attempt, in short, an apostate lawyer, who is false to the lawyers' creed that justice shall be undefiled, is ejected from the courts, and as a lawyer ceases to exist. See Ex Parte Cole, C.C.Iowa, Fed.Cas.No.2973, p. 35; cf. In re Doe, 2 Cir., 95 F.2d 386; In re Claiborne, 1 Cir., 119 F.2d 647; In re Shon, 262 App.Div. 225, 28 N.Y.S.2d 872; Werner v. State Bar, 24 Cal.2d 611, 150 P.2d 892; In re Farris, 340 Mo. 1206, 105 S.W.2d 921, 923. The client who with evil intent employs such an agent fares no better in the instant case. To him also the doors of the courts are closed. From the moment that he ceases to depend upon the justice of his case and seeks discriminatory and favored treatment, he becomes a corrupter of the Government itself and is fortunate if he loses no more than the rights he seeks to obtain. So it must be in this case with the American Safety Table Company. The decree of the court will provide that its former mandate on this appeal be recalled, that the judgment of the court herein be vacated, and that the case be remanded to the District Court with directions to vacate its judgment and dismiss the suit. By this action, the records of this court and of the District Court will be purged, and there will be no need to consider whether or not in this case Kaufman actually succeeded in exerting an improper influence upon Judge Davis, or whether upon the evidence before us, excluding the testimony of Davis and Fox, the Stokley and Fox transactions were part of a corrupt and illicit combination between Davis and Kaufman, or whether Judges Buffington and Johnson were disqualified in this appeal. The court extends its thanks to Mr. Alfred C. Aurich, the attorney for the amicus curiae, for his able and painstaking presentation of the complicated facts in these cases under great pressure. Through his efforts and through the willing co-operation of all the attorneys in these cases the work of this special court was greatly expedited and the period during which it was performed was greatly shortened.