Flynn & Emrich Company v. Greenwood

• Decision Date: 11 March 1957
• Docket Number: No. 7346.,7346.
• Parties: FLYNN & EMRICH COMPANY, Appellant, v. Henry B. GREENWOOD and Greenwood Engineering Company, Inc., Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

242 F.2d 737 (1957)

FLYNN & EMRICH COMPANY, Appellant, v. Henry B. GREENWOOD and Greenwood Engineering Company, Inc., Appellees.

No. 7346.

United States Court of Appeals Fourth Circuit.

Argued January 21, 1957.

Decided March 11, 1957.

Charles G. Page, Baltimore, Md. (White, Page & Lentz, Baltimore, Md., on brief), for appellant.

Harold F. Watson, Washington, D. C. (Watson, Cole, Grindle & Watson, Washington, D. C., D. Franklin McGinnis, Baltimore, Md., and Haven E. Simmons, Washington, D. C., on brief), for appellees.

Before PARKER, Chief Judge, SOBELOFF, Circuit Judge, and HARRY E. WATKINS, District Judge.

HARRY E. WATKINS, District Judge.

This is an action for patent infringement in which the answer sets up the usual defenses of invalidity and denial of infringement. In what is called a "counterclaim", the defendant avers that by reason of estoppel, the plaintiff can not maintain this action. The District Court heard and decided the question of estoppel in favor of the plaintiff in advance of any hearing on the defenses of infringement and validity. Pursuant to Rule 54(b) of the Federal Rules of Civil Procedure, 28 U.S.C.A., the District Court certified that no just reason existed for delay in entry of final judgment upon the counterclaim, and directed that a separate final judgment should be entered thereon without awaiting the trial of the original action. From the adverse decision on the issue of estoppel the defendant appealed. The question is whether the District Court's decision on the single issue of estoppel was vested with the finality necessary to be appealable under 28 U.S.C. § 1291, or whether the matter of estoppel constituted only an affirmative defense to a single claim for relief not justifying an appeal until the other defenses are heard and determined.

Appellant's original answer includes under the section labeled "counterclaim," the affirmative defense of release, but such defense was later withdrawn. Appellant also included a demand that the patents in question be assigned to it. However, counsel later withdrew this demand as to the "running register" patent, and as to the "skip-feed" device the District Court specifically found that it was developed in substantially final form by February 3, 1952, and held that this precluded any questions of assignment or shop rights as to it. This finding of fact has not been urged as error in this court. This appeal is limited solely to the question of whether Greenwood's conduct with defendant gave rise to estoppel whereby defendant had the right to use the patents. Defendant alleged that title to the patents was held by Greenwood Engineering Company, Inc., which is a corporation owned by Greenwood's family in which Greenwood was the dominant figure.

Upon oral argument of this case, we raised the question of our jurisdiction to entertain this appeal and asked counsel to brief the question. Irrespective of the certification of the District Court under Rule 54(b) as to the finality of its judgment order, and even though the matter of jurisdiction was not raised by the parties, this Court must consider the matter of its jurisdiction to hear this appeal. See United States Plywood Corp. v. Hudson Lumber Co., 1954, 2 Cir., 210 F.2d 462, 463 where the court said:

"Some months after the judgment and appeal the judge amended his order by making a finding of no just reason for delay and expressly directing judgment, thus bringing it within the formal requirements for finality specified in amended Fed. Rules Civ.Proc. rule 54(b). Though the parties have not now raised the question, nevertheless we must still determine the appealability of the judgment, * * *".

The jurisdiction of this Court is limited, other than for certain statutory exceptions not here material, by 28 U.S.C. § 1291, which states: "The courts of appeals shall have jurisdiction of appeals from all final decisions of the district courts * * *." That rule was restated recently in Stone v. Wyoming Supreme Court, 10 Cir., 236 F.2d 275, 276, in these words:

"Courts of appeals are courts of limited jurisdiction; and save for excepted instances in which it is provided otherwise by statute, they have jurisdiction to review only final decisions of the district courts." (Citations omitted.) It becomes pertinent, therefore, to inquire whether the District Court decision before us is, in fact, a final decision.

It is urged by appellant that the District Court made this a final decision by virtue of Rule 54(b). That rule was amended in 1946 to take effect in 1948, and now reads,

"(b) Judgment Upon Multiple Claims. When more than one claim for relief is presented in an action, whether as a claim, counterclaim, 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 the entry of judgment. In the absence of such determination and direction, any order or other form of decision, however designated, which adjudicates 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 validity of amended Rule 54(b) was recently upheld by the Supreme Court in Sears, Roebuck & Co. v. Mackey, 351 U.S. 427, 76 S.Ct. 895, 100 L.Ed. 1297, and Cold Metal Process Co. v. United Engineering & Foundry Co., 351 U. S. 445, 76 S.Ct. 904, 905, 100 L.Ed. 1311, 1315, both cases decided June 11, 1956. The cases turned upon the sole question of appellate jurisdiction and the Supreme Court affirmed the Courts of Appeals for the Seventh and Third Circuits, denying motions to dismiss. The Supreme Court there held that amended Rule 54(b) is not an unauthorized extension of 28 U.S.C. § 1291, and does not impair the statutory concept of finality therein embraced.

These two decisions did lay at rest a conflict among the circuits which had been pointed out by Judge Duffy in the lower court decision, Mackey v. Sears, Roebuck & Co., 7 Cir., 218 F.2d 295, 297, 298, as to whether the District Court's entry of judgment upon a determination that there exists "no just reason for delay" confers jurisdiction automatically and conclusively upon courts of appeals to hear the appeal. The Supreme Court answered that question in the negative, stating, 351 U.S. at page 437, 76 S.Ct. at page 900:

"The District Court cannot, in the exercise of its discretion, treat as `final\' that which is not `final\' within the meaning of § 1291. But the District Court may, by the exercise of its discretion in the interest of sound judicial administration, release for appeal final decisions upon one or more, but less than all, claims in multiple claims actions. The timing of such a release is, with good reason, vested by the rule primarily in the discretion of the District Court as the one most likely to be familiar with the case and with any justifiable reasons for delay. With equally good reason, any abuse of that discretion remains reviewable by the Court of Appeals."

The Court further stated, 351 U.S. at page 435, 76 S.Ct. at page 899, "the amended rule does not apply to a single claim action" and this is abundantly clear from the language of the rule itself, which has a condition precedent written into it, — "When more than one claim for relief is presented in an action * * *." See also Capital Transit Company v. District of Columbia, 96 U.S.App.D.C. 199, 225 F.2d 38, 40, which states:

"The quoted Rule, we have said, `is applicable only in instances in which more than one claim for relief is presented in an action, and in which the claim upon which a final judgment is to be entered under the Rule is itself a claim distinct from the other claim or claims.\' Gold Seal Co. v. Weeks, 1954, 93 U.S.App. D.C. 249, 254, 209 F.2d 802, 807. In other words, notwithstanding Rule 54(b), there cannot be an appeal from an order entered upon a part of an indivisible claim. Leonidakis v. International Telecoin Corp., 2 Cir., 1953, 208 F.2d 934. There must be `multiple claims of which at least one has been adjudicated.\' Pabellon v. Grace Line, 2 Cir., 1951, 191 F.2d 169, 174, certiorari denied Coston Supply Co. v. Pabellon, 1951, 342 U.S. 893, 72 S.Ct. 201, 96 L.Ed. 669. The question is thus `whether the underlying factual bases for recovery state a number of different claims which could have been separately enforced.\' Rieser v. Baltimore & Ohio R. R. Co., 2 Cir., 224 F.2d 198. * * *"

The case of United States Plywood Corp. v. Hudson Lumber Co., supra, a decision from the Second Circuit, is very close in point. There plaintiff sought to recover a sum due under a contract. The answer set up an affirmative defense and a counterclaim for rescission based upon the ground of mistake. The District Court granted summary judgment as to the counterclaim and made the certificate provided by Rule 54(b). The defendant appealed and neither party raised the question of appealability. The appellate court dismissed the appeal, holding that no multiple claims were involved; that Rule 54(b) was inapplicable; and that the...