Court Opinion

ID: 9443450
Source: CourtListenerOpinion
Date Created: 2023-08-03 19:20:32.185914+00
Date Added: 2024-06-11T17:29:29.379321
License: Public Domain

-dtT . BIGGS, Circuit Judge
, (concurring m t and dissenting in part).
Parlssi- for a number of 7ears tbe Presi" dent> £eneral manaSer> policy-maker, and «tolling stockholder of Padua, during the Course of hls emP,oyment b7 Padua made certam mventl0ns and by a contract, entered mt0 before he had severed his con' n,ectlons with tbe comPany> &ave Padua the status of a co-licensor with him under patents covering these inventions. After Parissi severed his connection with Padua he entered into a series of contracts with General Time for the manufacture of an “Electric Clock with Visible and Audible Alarm Means.” General Time proceeded to manufacture and sell the kind of clocks referred to arid, a dispute having arisen between Parissi and Padua as to who is en-titled to, royalties, from General Time, General Time brought a declaratory judgment action in the court below pursuant to the Declaratory Judgments Act, 28 U.S.C. § 2201, paying the amount of royalties due from it into court.
Parissi answered General Time’s complaint as did Padua, Parissi asserting (1) *362that he is the true owner of the patents and of the device covered thereby and therefore is entitled to all the royalties, and (2) that under the instant circumstances Padua is not entitled to any benefit from the licenses granted to him by General Time. Padua then filed an answer and a cross-claim in which it asserted that all , , ., , ~ royalties must be paid by General Time to , ,, , , , ...... it under the contracts referred to, it m turn -d • • ianf r , . , paying Parissi 10% thereof, and, m the al- , , • . -r, • • • , , , . ternative, that Parissi is but a mere trustee r r> . , ,, . . , . for Padua for the patents and the device r _ . . . ,... , and that therefore Parissi is entitled to ... ™ .. r t . ■ ■ nothing. The matters referred to m this , .. . and the preceding paragraph are discussed . , .1 , • at some length hereinafter. °
The court below held that Padua was entitled to the royalties less 10% to be paid by it to Parissi. Parissi has appealed. This count is divided m opinion as appears.
It is more convenient I believe to deal first with Padua and Parissi’s status under the contracts since this is the subject matter dealt with in the respective opinions of my brothers CHASE and CLARK.
-p, ,, , , .«or, By the contract of September 6, 1939 /t- I r> • - n j (Exhibit D ) Parissi gave Padua, as we , . . , ^ . . , .. ■- have stated, the status of a co-licensor for , r , , . r , , i the four patents named m the footnote.1 _ . . , , Parissi agreed that all license fees accru- ■ . ., . ing under these patents should be paid to Padua, Padua in turn to pay 10% thereof to Parissi. By the contract of May 14, 1945 (Exhibit “A”) Parissi gave General Time a non-exclusive irrevocable license in the non-telephone field under the four patents designated in note 1 in return for specified royalties. The contract, however, contained clauses whereby Parissi represented that he had made additional developments relating to the subject matter of the patents, including a “Silent Alarm Clock.” Then comes the phrase which supplies the sole bone of contention in the view of the court below and of my Brethren of this court. Exhibit “A” provided that General 'Time should pay “* * * to Parissi during the terms of * * * [the] agree-ment a royalty of Five Cents * * * for each * * * ” clock or other device incorporating the constructions licensed in paragraph 1. Paragraph “1” designates the four patents named in note 1, supra.
. T , The contract of July 12, 1945 (Exhibit B ) is not pertinent to the instant con-' ... , „ .... troversy. The contract of March 28, 1949 J . ’ (Exhibit C ) specifically incorporated .1 ~ 1 , Patent No. 2,444,748 for a “Clock with ... . , Visible and Audible Alarm Means, Patent .... , , T No. 258,724, for an Incandescent Lamp „ , V , . . ,T bocket, and an Application No. 705,068, .. ’ . for a Signalling Device, within the pur. , 1 -A „ 7, . . , view of Exhibit A, the contract of May u> l945¡ and made the latter patents subject t0 its royalty provisions. A Reissue Patent No> 23,261, granted August 22, 1950) to which reference was made during the course of the trial, was a divisional re-issue of No. 2,444,748, issued July 6, 1948, on Application S. N. 613,070, filed August 28, 1945. The reissue patent also was for a “Clock with Visible and Audible Alarm Means.” There seems to be no doubt that _ • , . , , , General Time is manufacturing an alarm , , . . . r clock with a visible and audible means of , , . , . . , . , . . _ alarm which is withm the purview of Re-. _ . ^ ... . , nr o issue Patent No. 23,261 of Patent No. 2,-... , ... . ’ . , 444,748 and within the purview and cov„ ... . „ era£e o x i i .
But at the trial Padua moved to strike out of paragraphs one and two of the prayers of its cross-complaint all refer-ence to Patent No. 2,444,748. The reason stated for the amendment was that Re-issue Patent No. 23,261 had been granted and Patent No. 2,444,748 had been surrendered to the Patent Office. Padua did not move to amend the complaint to assert any rights under Reissue Patent No. 23,261, taking the position that the claims of the reissue patent represented discoveries made by Parissi after he left Padua’s employ-ment. The amendment striking the refer-*363enees to Patent No. 2,444,748 was- granted by the court below.
At the trial in the court below Padua advanced two theories based on two separate and distinct claims. Under the first of these Padua asserted that by virtue of its standing under the contracts, it was entitled to recover the royalties paid into court by General Time and in turn was required to pay 10% thereof to Parissi. By the second or alternate claim, Padua asserted it was entitled to have conferred upon it the status of beneficial owner of the four patents designated in note 1, supra, and therefore entitled to all royalties without deduction, As to the first' claim, it is clear that' it was and is hotly pressed by Padua. Padua did not abandon the second claim, but nonetheless pursued it vaguely and indecisively in the court below and does not assert it in this court. This matter is discussed at greater length hereinafter.
Padua first contended that it was entitled to royalties paid by General Time because General Time is required to pay royalties “for each clock or other device incorporating * * * ” the visual and audible signal device as required by Exhibit “A” whether the original four patents covered by Exhibit “D” are or are not employed by General Time. In other words, Padua contends that Parissi by his own voluntary act included within the coverage of Exhibit “A” the four patents named in note 1 to this opinion and the developments thereof in the non-telephone field and the patents designated in Exhibits “A” and “C,” save, of course, Patent No. 2,444,748; that therefore, since Parissi saw fit to include the patents in a kind of patent pool which originally embraced only the other four patents, Padua is entitled to the royalties paid by General Time. The court below concluded2 (as does Judge Chase of this court) that this view was correct and that for this reason Padua is entitled to share in the royalties in accordance with Exhibit “D.” The court concluded that Padua was entitled to 100% of the royalties, of which 10% was to be paid to Parissi, as specified by Exhibit "D.”
As to the respective statuses of Padua and Parissi under the contracts hereinbefore referred to, I am of the opinion, ex-pressed by my brother CLARK, that to give Padua the benefits of the royalties from General Time because General Time is manufacturing and selling alarm clocks under’ Patents Nos. 2,444,748, and 23,261, is to confer a windfall upon Padua. Despite the fact that in Exhibit “A” Parissi recites that disclosures in the non-telephone field covered by the four patents designated in note 1 were to be licensed to General Time and paragraphs 1 and 2 of Exhibit “A” provide that royalties are to be paid by General Time at a single stated figure if any of the patents or developments designated thereunder be employed by General Time and Exhibit “C” specifies particular patents on which the developments were based, Padua can profit from the license agreements embodied in Exhibits “A” and “c” only on some third-party beneficiary theory not recognized by the law of New Yol'k or, insofar as I am aware, by that of any other State.3
Exhibit “D” simply makes Padua a co-licensor of the four patents named therein, That contract contains no reference what-soever to any future developments made by Parissi in the fields covered by the four patents and Padua is given no rights there-under. True, Parissi by Exhibits “A” and “C” included the two additional patents, Nos. 2,444,748 and 23,261, covering later developments, in the pool, and thereby compelled General Time to pay the royalties prescribed if any of the patents in the pool were used by General Time. But in this case we are not concerned with the issue as to whether or not General Time must pay royalties but with the question as to whom, Parissi or Padua, must General Time pay the royalties. General Time must pay royalties if any of the six patents under which it is licensed are used by it. So much is conceded by all the parties. *364But the . fact that Parissi, licensed General Time and recited in Exhibit “A” that any developments made under the first four patents were also to be and were licensed to General Time cannot make Padua a beneficiary of the license agreement.
There was. no valid consideration moving from Parissi to Padua under the contracts embodied in. Exhibits “A” or “C.” Padua was not a party to or beneficiary under these contracts, had no legally cognizable interest therein, and was not in-, tended to have such. The fact that Padua ratified these agreements by statements made in its pleading is unavailing and indeed irrelevant. One does not-acquire con-tracf rights by ratifying an agreement to which one is not a party apd under which one is not to receive a benefit. It is not even suggested by Padua, nor sensibly. could it be, that Padua can presently profit by -some new and hitherto unheard of theory of third-party beneficiaries. As Judge CLARK has pointed out there is a complete hiatus in both logical and legal connection between Padua and the contracts between General Time and Parissi as embodied in Exhibits “A” and “C.” I agree 'with the conclusions he has expressed with regard to the statuses of the parties under the contracts. .
,, i-rn ,, ■ • ■ j- • r ,, • , , My difficulty in disposing of the instant . . , , -o . . ,, .. case m favor of Parissi on the merits on . , , . - £ the present record stems from the assertion , L , ,, - by Padua of the trust theory, the second . . . . , ,- , , . - , , claim hereinbefore referred to, whereby _ . , , ,. , ... Padüa seeks to have conferred upon it the . , r .-i x ^ status of beneficial owner of the four pate'nts designated 'in nóte 1, supra,' claiming in effect that Parissi is a mere trustee de son tort for it, Padua. This claim may or may not possess merit but in my view it is beyond our jurisdiction, our power, to adjudicate the instant appeal because of it.
Rule 54(b), Fed.Rules Civ.Proc., provides that a United States District Court can ad-judicate one of multiple claims only upon an express determination that such an ad-judication will serve the ends of justice and upon an express direction to enter judgment on that claim. Such an order is an appealable one within the purview of 28 U.S.C. § 1291.4
. Padua in the instant suit has asserted two claims and two causes of action which, have been hereinbefore referred to. First, Padua claims that it is entitled to the status of a co-licensor with Parissi under. the patents .hereinbefore designated and as such co-licensor is. entitled to receive, all the royalties paid by General Time, Padua in turn paying Parissi 10% thereof. _ The second claim and cause asserted , in effect that Padua is entitled to a decree declaring it to be the true owner of the patents. If Padua were to prevail under this theory it. would get all the royalties from General Time and Parissi would get nothing. The contract action and contract claim were disposed of by the court below and an or-der entered. The cause of action and the claim based on the trust thesis have never been adjudicated by the court below. The court below expressly did not pass upon the trust claim asserted by Padua. See in particular the first and fourth paragraphs v „ . . . , r of its opinion under the heading Discus-. „ L, . , , , ,, sion. The court below did not make the , ... , .- , , determination or the direction required by ™ , , Rule 54(b). The order made was not, . , v ' - , ■. . . . . , therefore, a final- decision within the pur. , ’ view of 28 U.S.C. § 1291., °
The majority opinion of the court in this regard takes the position that even if Padua has pressed two-alternative'claims,-accept-anee of one claim by the court below is necessarily a rejection of the other since, in the majority view, the claims are alter-*365nate or mutually exclusive. But the court below, if it had adjudicated the claim based upon the trust theory, could have held that Padua was entitled to all the royalties, not 90% of them. The fact that a trial court decides that a party is entitled to 90% of royalties, when a claim for 100% of royalties is made in an alternate cause of action, does not exclude the possibility of recovery on a 100% claim if the latter was not adjudicated. It is only where two mutually exclusive claims are both adjudicated that the principle of exclusiveness operates. In the instant case the trial court made- express reference to the trust claim in opinion and stated in effect that it would not determine it. The trial court seems to have been of the view that both claims and causes of action were within the purview of the contracts. This was erroneous.
. . ... , ,, , The majority opinion does not say that ,, ... , j-j-.j.v • the trial court adjudicated the issue or claim presented by the trust theory. -The majority view is that Padua abandoned the trust theory and claim and that the trial court was therefore at liberty not to adjudicate it. The majority pitches its decision squarely on the issue of complete relinquishment of the trust claim, spelling out this inference from a cloudy record, The trial court seemingly reached a contrary conclusion and the trial judge was in a better position than is the appellate tribunal to determine what was the effect of the conduct of the parties at the trial. If there is to be speculation upon the issue of abandonment — an undesirable result since it imposes an unjuristic function on a judicial tribunal — that speculation would be more aptly hazarded by the trial court rather than by this appellate tribunal. That this court, to reach its present conclusion, has to speculate as to the meaning of Padua’s conduct at the trial is apparent for the con-elusion that there was abandonment can be sustained in no other fashion on this rec-ord.5 There is nothing in the argument, the colloquy between court and counsel, or in the briefs of the parties in the court be-low6 which is decisive of the issue. What was said and done by counsel and the par-ties was ambiguous.7 This is one of the situations which Rule 54(b) was precisely framed to meet,
. The case at bar presents no finely drawn *ssues sucb as were before this court in Flegenheimer v. General Mills, 2 Cir., 191 F.2d 237, 241; Lopinsky v. Hertz Drive-Ur-Self Systems, 2 Cir., 194 F.2d 422, and Telechron, Inc., v. Parissi, 2 Cir., 197 F.2d 757, 759, or before the Court of Appeals for the Third Circuit in Bendix Aviation Corp. v. Glass, 195 F.2d 267. The question 1 , Presented IS a slmPle one- 1 reSret that 1 must dlffer from Brethren who have distinguished themselves m the application and creation of the Federal Rules of Civil Procedure. It is my view that we are without the P°wer to dispose of the instant case on the merits. Though this point has not hitherto been raised the issue pf jurisdiction is always open. Mitchell v. Maurer, 293 U.S. 237, 55 S.Ct. 162, 79 L.Ed. 338. It may be that on remand the court below would decide the trust theory asserted by Padua against it. Cf. Standard Parts Co. v. Peck, 264 U.S. 52, 44 S.Ct. 239, 68 L.Ed. 560. But the claim and cause of action as-serted by Padua under the trust thesis has not been disposed of by the court be-low; no findings of fact or conclusions of law have been made, nor any order dis-positive of the trust issue entered.
*366I therefore must respectfully dissent from the conclusions reached by both Judge CHASE and Judge CLARK. The appeal should ibe dismissed and the case remanded to the end that the court below may adjudicate the undetermined claim asserted by Padua.

. As follows: No. 2,073,585, March 9, 1937, for a “Telephone System,” No. 2,-073,586, of the same date, for the same subject matter, No. 2,073,587, of the same date, also for a “Telephone System,” and No. 2,098,631, November 9, 1937, for “Electric Lighting Fixtures.”
The 1939 agreement was entered into because Western Electric Company, a licensee, desired to settle all questions relating to title to the patents.

. No opinion reported for publication.

. No problem in conflicts of laws is presented despite the fact that the record before this court gives no information as to where the contracts were entered into and bat bttle t0 they were o e per orme

. Rule 54(b), Fed.Rules Civ.Proc., provides as follows:
“When more than one claim for relief is presented in an action, whether as a daim, counter-claim, cross-claim, or third-party claim, the court may direct the entry of a final judgment upon one or more but less than all of the claims only upon an express determination that there is no just reason for delay and upon an express direction for tbe entry of judgment, In tbe absence of sucb determination and direction, any order or other form of decision, however designated, which adjudieates less than all the claims shall not terminate the action as to any of the claims, and the order or other form of decision is subject to revision at any time before the entry of judgment adjudicating all the claims.”

. The issue of the trust claim has never been abandoned in the pleading.

. For the purpose of determining the issue of abandonment we must treat the briefs of the parties m the court below as if they were part of the record.

. See, for example, the following:
(1) Padua’s counsel’s statement, transcript pp. 130-136;
(2) Padua’s reply brief, pp. 7, 17, 22 and 26;
(3) Parissi’s reply brief, pp. 23-26, wherein Padua’s asserted trust claim is attempted to be answered by quotations from American circular Loom Co. v. wilson, 198 Mass. 182, 190-205, 84 N.E. 1S3 originally cited by Padua in support of ^ trust theory. and
(4) Parissi’s request for conclusions of law, Nos. “6” and “7,” Parissi’s reply brief, pp. 27-28.