Court Opinion

ID: 6919634
Source: CourtListenerOpinion
Date Created: 2022-07-23 22:56:06.320538+00
Date Added: 2024-06-11T16:06:45.592251
License: Public Domain

PLATT, District Judge
(dissenting).
In my opinion Allbright-Nell Company has entered its general appearance in these cases and waived venue as required by § 1400, Title 28 U.S.C.A.
The majority opinion is based primarily upon Freeman-Sweet Co. v. Luminous Unit Co., 7 Cir., 1920, 264 F. 107, certiorari denied 253 U.S. 486, 40 S.Ct. 482, 64 L.Ed. 1025, which presents a different situation than presented here. The district court in the instant case made the following finding of fact:
“The defense of this case has been openly assumed by said Allbright-Nell Company, which concedes that it was and is defending this suit for defendant, Peter Eckrich & Sons, Inc., and has assumed full control of the defense thereof. This defense is pursuant to a contract dated March 6, 1959, the pertinent provision of which is as follows:
“3. The Allbright-Nell Co. agrees solely at its expense to defend or settle any suit or proceeding brought against Peter Eckrich and Sons, Inc. based on a claim (of which claim prompt and timely written notice shall have been given to The All-bright-Nell Co.) that the ANCO Emulsitators supplied by The All-bright-Nell Co., or the use thereof in accordance with specifications of The Allbright-Nell Co., constitutes an infringement of any United States patent, and The Allbright-Nell Co. agrees to indemnify Peter Eckrich and Sons, Inc. for any expenses directly arising from any such claim, provided that Peter Eckrich and Sons, Inc. shall not undertake to defend any such suit or proceeding nor to effect any settlement or compromise thereof without the prior express written consent of The Allbright-Nell Co.; and should the ANCO Emulsitator or its use as specified by The Allbright-Nell Co. *597be adjudicated to constitute an infringement of any United States patent, The Allbright-Nell Co. further agrees to pay all court awarded damages and costs, and solely at the expense of The Allbright-Nell Co. * * * »*
Thus, Allbright-Nell, the manufacturer, not alone employed counsel and was obligated to pay attorney’s fee but it assumed full control of the defense, and by the contract was required to pay the judgment and costs against Eckrich, and Eckrich could not compromise the action. In Freeman-Sweet, the Reflectolyte, the manufacturer, was not a defendant in the original suit where the validity and infringement was determined, but only in a subsequent suit for “injunction, damages, and accounting.” Allbright-Nell is named defendant in this suit, the original action, where all issues will be determined, and is the real party in interest with the right to make the defense in any manner it decides, take or defend an appeal, without any interference from Eckrich.
In Ocean Accident & Guarantee Corp. v. Felgemaker, 6 Cir., 1944, 143 F.2d 950, which the majority opinion refuses to follow, Inter Insurance Exchange was not a party to the original action against its insured where judgment was obtained, but it controlled the defense of that suit. After judgment was obtained a supplemental action was brought against Inter Insurance Exchange to collect the judgment against its insured. Inter Insurance Exchange made a motion to quash the service of summons as soon as it was made a party defendant to the supplemental action to collect judgment because it was an inhabitant of Illinois and the suit was brought in Ohio. Felgemaker v. Ocean Accident & Guarantee Corporation, D.C.N.D.Ohio E.D.1942, 47 F. Supp. 660, 661, affirmed as to Inter Insurance Exchange in 143 F.2d 950, 952. The service of process on the defendant, Inter Insurance Exchange, was quashed but the court assumed jurisdiction of Inter Insurance Exchange and entered judgment against it. Inter Insurance Exchange was not a proper party to the original proceeding where judgment was obtained against its insured. Felgemaker v. Ocean Accident & Guarantee Corporation, supra. Allbright-Nell is a proper party to the original action in the instant case. In Ocean Accident & Guarantee Corporation v. Felgemaker, supra, the court held “that Inter Insurance had made a general appearance in the suits by actively defending the cases through its attorneys. * * * ” The court said at page 952:
“Concededly Inter Insurance took every action in the case which it could have taken if it had itself been the defendant, and in fact it exercised absolute and complete control over the proceedings. It had the right to cross-examine, to present testimony, and if it desired, to appeal. It also had a substantial interest in the controversy. * * * Under its agreement, after rendition of the final judgment * * * it was liable to the insured. Therefore when Inter Insurance conducted the defense, it was defending itself.”
Allbright-Nell will also control the defense here and is possessed of these same rights and by its contract will be compelled to pay any judgment and costs, if any, against Eckrich. In addition thereto if Allbright-Nell is permitted to be the real party in interest it may take full advantage of Deposition and Discovery as provided in Ch. V, Fed. Rules Civ. Proc., 28 U.S.C.A., but not being a defendant it is questionable what it will be required to disclose. Frasier v. Twentieth Century Fox Film Corp., D.C.D.Neb.L.D.1954, 119 F.Supp. 495; Newmark v. Abeel, D.C.S.D.N.Y.1952, 106 F.Supp. 758; Quemos Theatre Co. v. Warner Bros. Pictures, D.C.D.N.J.1940, 35 F.Supp. 949; Canuso v. City of Niagara Falls, D.C.W.D.N.Y.1945, 7 F.R.D. 162; Stewart-Warner Corporation v. Staley, D.C.W.D.Pa.1945, 4 F.R.D. 333; Isrel v. Shapiro, D.C.S.D.N.Y.1942, 3 F.R.D. 175.
The only difference between the instant case and the Ocean Accident case is that judgment has not yet been obtained *598and may not be against Eckrich, whereas it had already been entered against the Inter Insurance Exchange’s insured. Since Allbright-Nell controls the defense and is bound by an indemnity contract, the principles of res judicata will be applicable to the judgment whether it is a party defendant or not. Switzer Brothers, Inc. v. Chicago Cardboard Co., 7 Cir., 1958, 252 F.2d 407, 412. In Bros, Incorporated v. W. E. Grace Manufacturing Co., 5 Cir., 1958, 261 F.2d 428, the court said at page 430:
“While the mere payment of counsel fees or participation in a trial by one not a named party to it would not alone be sufficient, cf. I. T. S. Rubber Co. v. Essex Rubber Co., 1926, 272 U.S. 429, 47 S.Ct. 136, 71 L.Ed. 335, Restatement, Judgments § 84, comment e (1942), the extent and nature of that participation may completely alter the consequences. * * * The alternative, of course, is to jump in and give the case full and active defense as though the manufacturer were the real named party. * * *
“Where that course is followed and the non-party actively and avowedly conducts the defense, manages and directs the progress of the trial at its expense and under its supervision, the outcome, which if favorable would have redounded to his benefit, if adverse becomes sauce for goose and gander alike, and binding under principles of res judicata.”
A manufacturer under similar circumstances has been restrained where the decree was entered against the dealer in a patent suit. Redman v. Stedman Manufacturing Company, D.C.M.D.N.C.G.D. 1960, 181 F.Supp. 5; Eagle Mfg. Co. v. Miller, C.C.S.D.Iowa E.D., 1890, 41 F. 351, reversed on other ground 151 U.S. 186, 14 S.Ct. 310, 38 L.Ed. 121. There is no reason why the principle set forth in the Ocean-Accident case should not be applied in the instant patent case. See Metalock Repair Service, Inc. v. Harman, 6 Cir., 1958, 258 F.2d 809.
The venue statute “relates to the convenience of the litigants and as such is subject to their disposition.” Riley v. Union Pac. R. Co., 7 Cir., 1949, 177 F.2d 673, 675. The objections to venue “may be lost by failure to assert it seasonably, by formal submission in a cause, or by submission through conduct.” Neirbo Co. v. Bethlehem Shipbuilding Corp., 1939, 308 U.S. 165, 168, 60 S.Ct. 153, 155, 84 L.Ed. 167. In this case All-bright-Nell has objected seasonably but by its conduct in taking full control of the case, and having executed a contract to pay the judgment and costs, has waived the convenience element of venue. It is present voluntarily in the Northern District of Indiana, the forum of the instant case, and can suffer no inconvenience by being a defendant in the case. Cf. Fairhope Fabrics v. Mohawk Carpet Mills, Inc., D.C.Mass.1956, 140 F.Supp. 313, 316.
The chance that Allbright-Nell might terminate its defense agreement is not material. Allbright-Nell has already entered the case and venue once waived can not be revived. Neirbo Co. v. Bethlehem Shipbuilding Corp., supra.
In Dicks Press Guard Mfg. Co. v. Bowen, D.C.N.D.N.Y.1916, 229 F. 193, the court made a statement at page 196 which I think is appropriate here:
“It would seem plain that the court ought to know what parties, either complainant or defendant, are before it and entitled to be heard, and that the record itself should show this. One of the most vicious things connected with a litigation, either civil or criminal, is the operation of influences from and the recognition of interested persons not appearing as parties on the record. Those who are to be heard at all and recognized in bringing out and considering the merits of a controversy should be parties of record * * *.”
For the reasons stated I would reverse the order of the district court dismissing Allbright-Nell from the cases, and hold that it had entered its general appearance and waived venue by its conduct.