Bee Mach. Co. v. Freeman, 3781.

Decision Date06 November 1942
Docket NumberNo. 3781.,3781.
Citation131 F.2d 190
PartiesBEE MACH. CO., Inc., v. FREEMAN.
CourtU.S. Court of Appeals — First Circuit

George P. Dike and Cedric W. Porter, both of Boston, Mass., James W. Sullivan, of Lynn, Mass., and Dike, Calver & Porter, of Boston, Mass., for appellant.

Nathan Heard, of Boston, Mass., and Marston Allen, of Cincinnati, Ohio, for appellee.

Before MAGRUDER, MAHONEY, and WOODBURY, Circuit Judges.

WOODBURY, Circuit Justice.

On February 3, 1941, the plaintiff, a Massachusetts corporation, brought an action at law against the defendant, a citizen of Ohio, in the Superior Court of the Commonwealth of Massachusetts for breach of a contract entered into between them on November 29, 1933. In this action personal service was made on the defendant when he happened to be in Boston. By the terms of the contract in suit, the defendant, as the owner of certain patents, gave to the plaintiff a non-exclusive license to manufacture and sell the patented articles in New England and New York, and the plaintiff agreed to pay royalties on the articles it sold and to render to the defendant periodical accounts of its sales. In the declaration filed in this action the plaintiff alleged that it had fully performed all of the obligations imposed upon it by the contract but that the defendant had not, in that, in violation of clause 12 of the contract,1 he had "failed and refused to furnish and deliver to the plaintiff the indispensable and necessary drawings and model parts required for the manufacture" of certain improvements in the patented articles which he had developed or acquired. In its declaration the plaintiff also alleged that the defendant had injured the plaintiff's business by providing such drawings and parts to his other licensees operating in the territory covered by the plaintiff's license, and by representing to the trade in general and to the plaintiff's customers in particular that the plaintiff was not licensed to manufacture and sell the patented articles as improved and anyone purchasing such improved articles from the plaintiff would be subjected to suits for patent infringement.

The defendant, appearing specially, removed the action to the United States District Court for the District of Massachusetts on the ground of diversity of citizenship and amount in controversy; answered alleging that the issues set forth in the declaration had been previously determined adversely to the plaintiff by a final judgment entered by the United States District Court of the Southern District of Ohio, Western Division, 40 F.Supp. 299; and filed a counterclaim for damages alleged to have been sustained by him by reason of the necessity of defending himself "in this cause, most wrongfully brought". He then moved for a summary judgment under Rule 56(b) of the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c. On the day before this motion was to come up for hearing the plaintiff moved to amend its declaration by adding thereto a complaint for treble damages under the anti-trust laws of the United States.

The district court granted the defendant's motion for summary judgment and denied the plaintiff's motion to amend and thereupon entered judgment for the defendant. The plaintiff then took this appeal.

Federal jurisdiction on the ground of diversity of citizenship and amount in controversy is clear. Our jurisdiction over this appeal under 28 U.S.C.A. § 225 is equally clear.

We shall first consider the question of res adjudicata raised by the granting of the defendant's motion for a summary judgment. We turn, therefore, to the record of the litigation between the parties in Ohio.

It appears that in June, 1937, the plaintiff filed a bill in equity against the defendant in the United States District Court for the Southern District of Ohio, Western Division, in which it set out the contract of November 29, 1933; alleged its full compliance with the terms of that contract, and breaches thereof by the defendant. The breaches alleged were (1) that the defendant had refused to credit the plaintiff with overpayments of royalties; (2) that for the purpose of harassing the plaintiff into concessions with respect to its claim of overpayment of royalties and "to create apprehension on the part of the plaintiff that it might lose its license", the defendant, "without any justification whatever" had begun proceedings to cancel the contract according to the provisions of clause 10 thereof2 which proceedings he proposed to prosecute unless enjoined; and (3) that the defendant, in breach of clause 12 of the contract, refused to provide the plaintiff with the information necessary to enable it to manufacture the patented articles with the improvements therein which the defendant had developed or acquired. The relief asked for in this suit was for an injunction to restrain the defendant from terminating the contract; for an accounting of royalties; for an order requiring the defendant to disclose to the plaintiff the improvements which he had made so that the plaintiff might manufacture the articles as improved, and for such other and further relief as justice and equity require.

The defendant answered denying that he had broken the contract but alleging that the plaintiff had, and that in consequence he had the right to cancel under clause 10 above. He also filed two counterclaims, one for an accounting of royalties which he alleged the plaintiff owed him, and the other for infringement of the patents in question by the plaintiff.

Before trial counsel for the parties stipulated "that the issue of the existence of a License Agreement between the parties shall be tried first and separately". After full hearing on this issue the court, ruling "that the License Agreement between the parties was properly cancelled by the defendant, Freeman, for cause or breach of condition by the plaintiff justifying the cancellation upon his (Freeman's) part", entered a decree dismissing the plaintiff's bill of complaint. The court referred the defendant's first counterclaim, "insofar as it seeks an accounting against the plaintiff of the amounts due from the plaintiff to the defendant", to a master for hearing and report. It did not pass upon the merits of the defendant's second counterclaim but left the matter of patent infringement raised thereby "to further hearing and trial between the parties".

On appeal the United States Circuit Court of Appeals, Sixth Circuit, 121 F.2d 451, affirmed the decree of the district court without opinion.

The plaintiff contends that the doctrine of res adjudicata cannot be invoked to bar it from proceeding to trial in the Massachusetts action because the decree in the suit in Ohio was only an interlocutory one. While it is true that the decree of the district court in Ohio was interlocutory, it was interlocutory only in that the issues raised by the defendant's counterclaims were not fully determined but were left for further litigation between the parties. After full hearing the court decided the only issue submitted to it under the stipulation of counsel quoted above, that is, the issue of the existence of the license contract, and it resolved that issue in favor of the defendant. That is, the court decided that although there had been at one time a contract between the parties, the defendant, Freeman, had acted within the rights conferred upon him by that contract when he cancelled it for violation of its terms by the plaintiff, Bee Machine Company. It seems to us clear that the determination of this issue by the Ohio Court was final. As to the issue before it that Court left nothing open for later decision after further hearing, and counsel for each party appears to have been afforded full opportunity to present his case upon it. We see no reason why, as to the issue considered, the decree of the District Court for the Southern District of Ohio should not be regarded as final, for purposes of res adjudicata, especially in view of its affirmance on appeal by the circuit court of appeals.

We proceed, then, with our consideration of the applicability here of the doctrine of res adjudicata with two matters established (a) the identity of the parties in both the suit in equity in Ohio and in the action at law in Massachusetts, and (b) the finality of the decree entered in the suit in equity in so far as it determined that the contract between the parties had been properly cancelled by the defendant for breaches thereof by the plaintiff.

The contract in suit is not a severable one. Looking at the instrument as a whole it is clear that the promises of the defendant, licensor, were made to depend upon the payment to him by the plaintiff, licensee, of the royalties agreed upon. Penley Bros. Co. v. Hall, 1 Cir., 84 F.2d 371, 374. No part of it could be performed independently of any other part, and it is well settled that an action for damages for breach of such a contract cannot be maintained without proof of performance,...

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17 cases
  • Freeman v. Bee Machine Co
    • United States
    • U.S. Supreme Court
    • 1 Junio 1943
    ...Appeals sustained the ruling of the District Court on the motion for summary judgment but disagreed with its view on the motion to amend. 131 F.2d 190. The case is here on a petition for a writ of certiorari which we granted because of the importance of the problem and the contrariety of vi......
  • Morgan v. Kerrigan
    • United States
    • U.S. Court of Appeals — First Circuit
    • 14 Enero 1976
    ...state action--and affirmed on appeal. See, e.g., White v. Higgins, 116 F.2d 312, 317--18 (1st Cir. 1940); Bee Mach Co. v. Freeman, 131 F.2d 190, 192--93 (1st Cir.), aff'd, 319 U.S. 448, 63 S.Ct. 1146, 87 L.Ed. 1509, (1943); Hodgson v. Brookhaven Gen'l Hospital, 470 F.2d 729 (5th Cir. 4. The......
  • United States v. Silliman
    • United States
    • U.S. Court of Appeals — Third Circuit
    • 25 Marzo 1948
    ...in suit on insurance policy in federal court); see also Austin v. United States, 7 Cir., 1942, 125 F.2d 816 (same); Bee Mach. Co. v. Freeman, 1 Cir., 1942, 131 F.2d 190, affirmed 1943, 319 U.S. 448, 63 S.Ct. 1146, 87 L.Ed. 1509; Bennett v. Forrest, 1944, 24 Cal.2d 485, 150 P.2d 416, 422. 49......
  • Mayer v. Bernalillo Cnty.
    • United States
    • U.S. District Court — District of New Mexico
    • 8 Enero 2019
    ...decisive, 2 Freeman, Judgments § 666 (5th ed. 1925), nor is the label, such as 'interlocutory,' given the decision. Bee Mach. Co. v. Freeman, 131 F.2d 190 (1st Cir. 1942), aff'd, 319 U.S. 448 . . . (1943). The judgment may be final as to some matters, even though the litigation continues as......
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