Court Opinion

ID: 6918995
Source: CourtListenerOpinion
Date Created: 2022-07-23 22:53:42.943031+00
Date Added: 2024-06-11T16:06:44.663385
License: Public Domain

ENOCH, Circuit Judge.
Defendant, William James Bargen, has appealed from a preliminary injunction and supplementary mandatory injunctive order entered by the District Court.
Plaintiff, a Georgia corporation, sought (1) declaratory judgment determining its rights under a license agreement, (2) restraint of alleged violations of that agreement, (3) damages therefor, and (4) other appropriate relief.
The facts as found by the District Court are largely undisputed at this stage in the proceedings. The District Court found that in 1949, defendant Bargen, a resident of Wisconsin, granted exclusive license to U. S. Thermo Control Co. of Minneapolis, Minnesota, to manufacture school furniture from Bar-gen’s unique designs, a number of which were the subject of patents.
In 1950, Bargen had replaced this license by another license to Bargen-Built Industries, Inc., a wholly owned subsidiary of U. S. Thermo Control Co., and, in 1951, had, in turn, replaced that license by another to the same subsidiary which changed its name to General School Equipment Company, and which, in turn, with Bargen’s consent, assigned the license to plaintiff.
Under that license, still in effect, Bar-gen granted General School Equipment *48Company (and subsequently plaintiff) exclusive United States rights to manufacture and sell Bargen’s designs for fifty years. Royalties were to be paid on unit sales with a guaranteed minimum royalty of $500 per month. General School was given an option to acquire exclusive rights to improvements invented by Bar-gen without obligation to pay development expenses.
The District Court found that, contrary to Bargen’s assertions, General School and plaintiff had duly performed all covenants binding on them.
Under these successive agreements, Bargen was given the exclusive distributorship in a designated territory for General School and then for plaintiff. The District Court found further that Bar-gen, beginning in about 1954, had begun to substitute fibreglass for laminated wood in certain items of the Bargen line of furniture, and that General School had exercised its option to use this material. Bargen had fibreglass molds made at Structurlite Plastics Corporation, of Hebron, Ohio, and had arranged for General School to secure its fibreglass from Structurlite.
In 1956, contrary to the provisions of the license agreement, Bargen authorized Structurlite to use the same molds to make similar parts for Configured Tube Products Company, of Bellwood, Illinois, and its subsidiary Sehoolco, Inc., to sell in competition with General School. Bar-gen also became a distributor for Configured Tube in the same territory where he had been General School’s distributor. This fact remained unknown to General School and to plaintiff until after the transfer of the license and General School’s manufacturing assets to plaintiff, when Sehoolco advertised items of the Bargen line nationally.
On notice from plaintiff, Structurlite ceased fabrication of fibreglass parts for sale to anyone but plaintiff. When another company, on similar notice, also refused to make parts from these molds for sale to anyone other than plaintiff, Bargen transferred the molds to Minnesota Mining and Manufacturing Company, which did fabricate parts for Sehoolco and Configured Tube. Bargen subsequently moved the molds to Gisholt Machine Company, in Madison, Wisconsin. The District Court found that, unless enjoined, Bargen would continue to have fibreglass parts made for Sehoolco or Configured Tube, which also manufactured certain tables designed by Bargen, which were expressly included in the 1951 license now owned by plaintiff.
The injunction, directed to Bargen, his agents, servants, and employees, and all persons acting in concert with him, prohibits (inter alia) inducing or permitting others than plaintiff, to manufacture, etc. in the United States, any school furniture designed by Bargen “or any other items covered by the license agreement dated October 19, 1951”, listing (without limitation) certain specified items, including the tables mentioned above, and items “in the current sales literature of Sehoolco, Inc., or any variation thereofand further prohibits “violating the terms or provisions of the license agreement of October 19, 1951,” and any disposition or use of the molds which are not to be moved from their present location at Gisholt Machine Company.
It was Bargen’s position that General School Equipment and plaintiff had breached the license agreement in failing to use their best efforts to manufacture and sell the tables. He asserts that an informal arrangement was made whereby he could have these tables manufactured elsewhere and hence he took no steps respecting this breach until this suit was filed and it appeared that, contrary to the informal agreement, plaintiff was still claiming an exclusive license to the tables. Bargen then served notice of cancellation of the license, under a provision in the license whereby plaintiff may prevent such cancellation from taking effect by curing the specified breach within 60 days.
A supplemental injunctive order required Bargen to withdraw that notice. *49Bargen lists the contested issues as follows:
“1. In entering an injunctive Order prepared by plaintiff’s counsel, may the District Court disregard the plain requirements of Rule 65(d), Federal Rules of Civil Procedure, 28 U.S.C.A., by incorporating other documents by reference and using unspecific general language in defining the proscribed acts?
“2. May the District Court enjoin a defendant from his rights to dispose of his personal property in an area in which plaintiff has not asserted rights, either by contract or otherwise, and when such disposition can be accomplished without violating any rights asserted by plaintiff ?
“3. May the District Court enjoin an aggrieved party to a contract to deny him his right to cancel that contract for a breach which matures after the filing of a suit for interpretation of another part of that contract?”
Rule 65(d) provides:
“Every order granting an injunction and every restraining order shall set forth the reasons for its issuance; shall be specific in terms; shall describe in reasonable detail, and not by reference to the complaint or other document, the act or acts sought to be restrained; and is binding only upon the parties to the action, their officers, agents, servants, employees, and attorneys, and upon those persons in active concert or participation with them who receive actual notice of the order by personal service or otherwise.”
The injunction before us describes the acts sought to be restrained in part through reference to the license agreement of October 19, 1951, and the current sales literature of Schoolco, Inc., neither of which is attached thereto as an exhibit or made a part thereof. Bar-gen complains that paragraph 1(b) of the injunction order, which reads:
“(b) School desks and chairs incorporating a Bargen designed movable offset pedestal, either as offered by plaintiff, or as offered in the current sales literature of Schoolco, Inc., or any variation thereof.” (emphasis added),
is further defective in that it is unduly vague and general.
In our opinion the injunction is not specific in terms and fails to conform to Rule 65(d) in incorporating other documents by reference.
Plaintiff contends that Bargen may not now complain of the wording of the injunction because his counsel approved it as to form prior to its submission to the District Court for signature, and that in thus approving the form of the injunction, Bargen waived the objections he now raises. Had he approved the order for injunction without limitation, then we could well agree with plaintiff’s contention, for then, in fact, it would be a consent order. Unquestionably, the District Court was misled; for had objections to the substance been raised, the District Court, doubtless, would have corrected the deficiencies immediately. We, however, are not passing upon the conduct of counsel. The fact remains that anyone reading the injunction order cannot ascertain from the four corners of the order itself exactly what conduct was enjoined.
We believe that Rule 65(d) is controlling and mandatory under these circumstances, or any other circumstances except by complete agreement of counsel. It is founded on reason and logic. It sets out mandatory provisions which should be respected. In Shannon v. Retail Clerks, International P. Ass’n, 7 Cir., 1942, 128 F.2d 553, 555, Judge Evans, speaking for this Court, said that an order which did not comply with Rule 65(d) was not necessarily void; but that if it were assailed on appeal, it should be set aside for failure to comply with the rule. Schine Chain Theatres v. United States, 1948, 334 U.S. 110, 126, 68 S.Ct. 947, 92 L.Ed. 1245; Mayflower *50Industries v. Thor Corp., 3 Cir., 1950, 182 F.2d 800.
An injunctive order is an extraordinary writ, subject to contempt for failure to comply, and thus must be set out in specific terms.
 In the light of the history of misuse of the molds, it was a reasonable and proper exercise of the District Court’s broad equity powers to restrain disposition of these items. Similarly, in view of the District Court’s finding that plaintiff had performed all of its obligations under the license, it was equally proper to direct withdrawal of the notice of cancellation served after the issuance of the preliminary injunction order. Connolly v. Gishwiller, 7 Cir., 1947, 162 F.2d 428, 435.
The District Court’s preliminary injunction order of March 20, 1959, is reversed solely as to paragraphs 1 and 3 thereof; both the aforesaid preliminary injunction order of March 20, 1959, and the supplementary injunctive order of April 17, 1959, are affirmed in all other respects; and this cause is remanded for further proceedings in conformity with the foregoing opinion.
Reversed and remanded in part.
Affirmed in part.