195 F.2d 267 (3rd Cir. 1952), 10470, Bendix Aviation Corp. v. Glass

Docket Nº:10470.
Citation:195 F.2d 267, 92 U.S.P.Q. 235
Case Date:February 19, 1952
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit

Page 267

195 F.2d 267 (3rd Cir. 1952)

92 U.S.P.Q. 235




No. 10470.

United States Court of Appeals, Third Circuit.

February 19, 1952

Argued June 21, 1951.

Reargued Dec. 7, 1951.

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Charles C. Tillinghast, Jr., New York City, Dexter N. Shaw, Philadelphia, Pa. (Howson & Howson, Wilson Oberdorfer, Philadelphia, Pa., Richard W. Hogue, Jur., New York City, on the brief), for appellant.

Leonard L. Kalish, Philadelphia, Pa., for appellee.

Before BIGGS, Chief Judge, and MARIS, GOODRICH, McLAUGHLIN, KALODNER, STALEY and HASTIE, Circuit Judges.

MARIS, Circuit Judge.

This is an appeal by the plaintiff from an order of the District Court for the Eastern District of Pennsylvania dismissing without prejudice the plaintiff's complaint which sought specific performance of certain acts which it alleged the defendant had agreed to perform. The order did not dispose of, but left pending for future determination, the defendant's counterclaim for damages arising from the same transactions. The order was entered upon the express determination by the district court that there was no just reason for delay and upon the express direction of the court for the entry of judgment thereon.

We are faced at the outset with the jurisdictional question whether the order here sought to be reviewed is a 'final decision' which is appealable to this court under

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Sec. 1291 of Title 28, United States Code. 1 The plaintiff points out that the order was entered as a final judgment in strict accordance with the provisions of Civil Procedure Rule 54(b), 28 U.S.C., 2 and it argues that by virtue of the operation of that rule it must be regarded as a 'final decision' within the scope of Sec. 1291.

As we have said the action in the district court involves a multiple claims for relief, namely, a claim for equitable relief by the plaintiff in the complaint and a claim for damages by the defendant in the counterclaim. It is thus the type of action to which Rule 54(b) is directed. The order here appealed from was entered as a final judgment in strict accordance with that rule. If, therefore, the rule validly authorizes the entry of a 'final decision' as that phrase is understood in Sec. 1291 the order here in question is appealable and this court has jurisdiction to hear and determine it. Our jurisdiction accordingly turns on the scope and validity of Rule 54(b).

Rule 54(b) in its present form was adopted December 27, 1946, effective March 19, 1948. It superseded Rule 54(b) as originally adopted which had authorized the entry of judgment on one of the claims in an action involving multiple claims when and only when the issues material to that claim and all counterclaims arising out of the same transaction or occurrence had been determined. The application in practice of the single transaction standard resulted in a good deal of confusion and the consequent uncertainty as to the appealable finality of judgments entered in multiple claims actions made necessary the taking om many precautionary appeals in doubtful cases. It was largely to eliminate this uncertainty and confusion that the amended rule was proposed and adopted. 3

As the Supreme Court's Advisory Committee pointed out in its note to the Court on the amended rule, the latter was the result of the Committee's conclusion that the retention of the older federal rule which prohibited piecemeal disposal of litigation and permitted appeals only from final judgments was desirable and needed only the vesting in the district courts of a discretionary power to afford a remedy in the infrequent harsh case to provide a simple, definite, workable rule. 4 We read that rule, as embodied in amended Rule 54(b), to be that in a multiple claims case the judgment which finally adjudicates all the claims is the only judgment having finality unless the district court in the exercise of its discretion expressly determines that there is no just reason for delay with respect to the entry of a final judgment upon a particular claim in the action and accordingly expressly directs the entry of a final judgment adjudicating that claim. In such case the rule says that 'the court may direct the entry of a final judgment.' This is language of grant not of restriction and it requires that the judgment thus entered on a single claim is to be regarded as just as final, so far as further revision by the district court is concerned, as though the claim thus adjudicated were the sole claim for relief embodied in a wholly independent action. For when such a judgment has been entered it may at once be enforced and executed,

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unless enforcement is stayed by the court under Rule 62(h).

If Rule 54(b) may validly be given this effect, which we read its language to require, it is conclusive in support of the jurisdiction of this court to entertain the present appeal. For such a final judgment would be a 'final decision' of the district court within the meaning of Sec. 1291 and thus appealable. It is contended by the defendant, however, that Rule 54(b) cannot be given this effect but must be construed as merely having the purely negative effect of making non final and, therefore, non-appealable certain types of judgments in multiple claims cases which would have been regarded as final and, therefore, appealable under the old practice. The case of Flegenheimer v. General Mills, 2 Cir., 1951, 191 F.2d 237, is cited in support of this contention. 5 With all due respect to our brethren of the Second Circuit who joined in that opinion we cannot agree that the effect of Rule 54(b) must be thus narrowed.

The theses of those who support the decision in the Flegenheimer case are two. First they say that the language of Rule 54(b) itself requires that it be limited to the negative effect of making interlocutory and nonappealable judgments on single claims in multiple claims suits which do not embody the formula of the rule. We have already stated that we cannot so read the rule. Then they say that if read more broadly the rule would be invalid. Pointing out that a judgment which determined less than all of the claims arising out of the same transaction in a multiple claims suit would not have been appealable as a 'final decision' prior to the Federal Rules of Civil Procedure, they say that to give Rule 54(b) the effect of making such a final judgment final would be to extend the jurisdiction of the courts of appeals to judgments not previously appealable and this would render the rule invalid as beyond the rule making power of the Supreme Court under the Enabling Act of June 19, 1934, c. 651, 48 Stat. 1064. 6

It is unquestionably true that neither the Act of 1934 nor its successor, Sec. 2072 of Title 28, authorized the Supreme Court by the Federal Rules of Civil Procedure adopted under those statutes to alter the jurisdiction of the district courts or of the courts of appeals. 7 We also assume that a judgment which, as here, adjudicated the plaintiff's claim while leaving unadjudicated the defendant's counterclaim arising out of the same transactions would not have been regarded as a final appealable judgment prior to the amendment of Rule 54(b). 8 But it does not follow that the jurisdiction given to this court by Sec. 1291 has been altered because Rule 54(b) has made it possible for the district court to make final, and, therefore, appealable, a type of judgment which under the procedural rules previously in force was always subject to later revision in the district court and was, therefore, regarded as not appealable because it was interlocutory.

We have seen that Sec. 1291 makes all 'final decisions' appealable. While the phrase 'final decisions' is not defined in the statute it obviously refers to steps in the course of litigation in the district courts, steps which rise to the dignity of 'decisions' and which are 'final'. What is an appealable decision within the meaning of Sec. 1291 has been the subject of much judicial discussion which we need not here review. Suffice it to say that there is involved the idea of a definitive judgment, order or decree determining something more than a mere procedural incident in a law suit and that a judgment definitively adjudicating a claim for relief in a civil

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action clearly comes within it. Whether a decision is final within the meaning of Sec. 1291 has also been the subject of a host of cases. It is settled that finality involves the termination of the litigation so that nothing remains but to execute the judgment or decree in question. 9 But this does not necessarily mean the termination of the entire law suit. For in the course of a judicial proceeding there may be one or more final decisions on particular phases of the litigation, reserving other matters for future determination. 10 A court of appeals in passing upon the finality of a district court judgment for purposes of appeal must necessarily look to the proceedings in the district court. And it must appraise the nature of those proceedings in the light of the procedural rules of the district court which give them meaning and effect. The jurisdiction conferred upon the courts of appeals by Sec. 1291 depends for its exercise upon the production of final judgments by the district courts in accordance with their procedural rules. When these rules have changed, the impact of Sec. 1921 has changed with them. 11 In this sense many of the procedural rules of the district courts unquestionably affect the jurisdiction of the courts of appeals under Sec. 1291.

Rule 54(b) is such a procedural rule. 12 As we have seen, its purpose is to provide an objective and mechanical way for determining when a judgment adjudicating a single claim for relief in a multiple claims suit is, and when it is not, to be...

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