Court Opinion

ID: 8831723
Source: CourtListenerOpinion
Date Created: 2022-11-26 16:05:43.898447+00
Date Added: 2024-06-11T17:04:56.613688
License: Public Domain

LEARNED HAND, D. J.
(after* stating the facts as above).  Under Equity Rule 30 (201 Fed. v, 118 C. C. A. v), there would cqncededly be no objection to the counterclaim if substantive jurisdiction existed. However, there is not the necessary diversity of citizenship between the plaintiff and the defendants, and therefore the counterclaim will lie only if ancillary to the main controversy; the rule being incapable of extending the constitutional jurisdiction of the District Court. The question therefore is this: Is' it necessary to a complete disposition of the subject-matter of the bill and to the protection of the-rights involved, if the defendants are correct that the counterclaim should be entertained? This is the result of the cases. Stillman v. Combe, 197 U. S. 436, 25 Sup. Ct. 480, 49 L. Ed. 822; Raphael v. Trask, 194 U. S. 272, 24 Sup. Ct. 647, 48 L. Ed. 973; Cleveland, etc., Co. v. Galion, etc., Co. (D. C.) 243 Fed. 405, 407; Hogg v. Hoag (C. C.) 107 Fed. 807, affirmed 154 Fed. 1003, 83 C. C. A. 677 (C. C. A. 2). The same reasoning lies at the basis of the common rule that when a court has custody of a res, *683it will entertain all controversies touching claims upon it. The case turns upon an analysis of the pleadings with an eye to this principle.
The bill rests upon a tort, the refusal of the defendants to furnish the quotations to the plaintiff in pursuance of an unlawful agreement to suppress competition. The right of the defendants to withhold its quotations for other reasons is necessarily conceded, but it has no right to make its refusal a step in a scheme to monopolize the business of dealing in cotton. The answer admits the refusal, but denies that it is a step in any such agreement. It asserts the defendants’ right to withhold the quotations from this plaintiff because of other reasons.
Thus if the defendants succeed, the decree will either expressly or by implication declare that the defendants have the right to withhold the quotations and that the plaintiff has no right to receive them. On the assumption that the defendants will succeed, the counterclaim asks that this right be protected from the plaintiff’s tort of “purloining” the quotations from the defendants’ customers. The counterclaim goes upon the legal hypothesis that when the defendants have given the quotations to a customer under agreement that he shall use them only for himself, it is a tort for another to use them in his own business. Whether or not they be right is not for the moment the question, but only whether that relief demanded in the counterclaim will be ancillary to a complete disposition of the controversy in the bill.
It appears to me that it is. The defendants’ whole defensive pleading is that they have the right to refuse the quotations, and that if they can establish it they should be immune in its enjoyment from unlawful attack by the plaintiff. The decree on the bill will establish their right against any attack by suit; that on the counterclaim against attack in pais. There is no reason, if the defendants can establish their right by the decree, why the plaintiff should not be forbidden from impairing the value of the decree by tortious interference. A decree under the counterclaim would do no more than secure to the defendant the complete enjoyment of a decree on the bill. It is in every sense ancillary to a complete disposition of the original controversy. Therefore it is not necessary that there should be any independent federal jurisdiction.
Thus the question arises on the merits. The defendants’ affidavits show reason to assume that the plaintiff has been copying, or causing to be copied, the quotations from blackboards of the defendants’ customers, and these affidavits are unanswered. If so, the cases support the defendants in their position. Board of Trade v. Christie Grain & Stock Co., 198 U. S. 236, 25 Sup. Ct. 637, 49 L. Ed. 1031; McDearmott Com. Co. v. Board of Trade, 146 Fed. 961, 77 C. C. A. 479, 7 L. R. A. (N. S.) 889, 8 Ann. Cas. 759 (C. C. A. 8); Board of Trade v. Price, 213 Fed. 336, 130 C. C. A. 302 (C. C. A. 8).
Therefore the defendants are entitled on this showing to an injunction forbidding the plaintiff from taking their quotations for distribution among its customers. This protects the status quo until after hearing it can be determined whether the defendants are engaged in an unlawful conspiracy.
Motion granted.