Barber-Coleman Co. v. Magnano Corp., 1679

• Decision Date: 10 June 1924
• Docket Number: 1679,1680.
• Citation: 299 F. 401
• Parties: BARBER-COLMAN CO. v. MAGNANO CORPORATION (two cases).
• Court: U.S. Court of Appeals — First Circuit

299 F. 401

BARBER-COLMAN CO. v. MAGNANO CORPORATION (two cases).

Nos. 1679, 1680.

United States Court of Appeals, First Circuit.

June 10, 1924

Appeal from the District Court of the United States for the District of Massachusetts; George W. Anderson, Judge.

Suits in equity by the Barber-Colman Company against the Magnano Corporation. Decrees of dismissal, and complainant appeals. Modified and affirmed.

1. Contracts 32-- Held not intended to be binding until reduced to writing and signed.

Negotiations between counsel for a contract settling infringement suits and also licensing defendant under the patents in suit and other patents held to contemplate that the contract was not to be completed until its terms were formally reduced to writing, signed by the parties, and delivered.

2. Attorney and client 101(1)-- Attorney has no general authority to compromise suit.

An attorney has no power, by virtue of his retainer and without express authority, to bind his client by compromise of a pending suit, and more especially where the compromise agreement includes matters beyond the scope of the suit.

Horace Van Everen, of Boston, Mass. (Lincoln B. Smith, of Chicago, Ill., on the brief), for appellant.

Odin Roberts, of Boston, Mass. (Roberts, Roberts & Cushman, of Boston, Mass., on the brief), for appellee.

Before BINGHAM and JOHNSON, Circuit Judges, and HALE, District Judge.

BINGHAM Circuit Judge.

No. 1679 is a suit in equity charging the defendant with infringement of letters patent No. 1,171,388, involving some thirty claims, and suit No. 1680 is of like character charging infringement of letters patent No. 1,315,789, setting out 16 claims. In each case the defendant's answer contained the usual defenses and denied invention and infringement. The first suit was brought April 9, 1920, and the second April 16, 1920. The answers were filed June 26, 1920. Neither case has been tried in the District Court, but a time was set for their trial on June 5, 1923.

At some time prior to June 5 counsel for the respective parties entered upon negotiations for settlement; counsel for the plaintiff, however, being informed by counsel for the defendant that the assignment for trial would not be surrendered unless and until an agreement of settlement had previously been closed. After various interviews the defendant's counsel prepared and submitted, on or about the 29th of May, 1923, a draft of agreement. On or about June 1, 1923, plaintiff's counsel suggested certain changes in the draft. Upon receipt of these suggested changes counsel for defendant, on June 1, 1923, sent a telegram to Mr. Smith, one of plaintiff's counsel, at Chicago, stating:

'Cannot accept your proposed changes in license contract clauses first and fourth but proposed change clause fifth and also proposed addition to clause fourth accepted. Please telegraph reply two hundred nine Washington street. If we are then agreed I will prepare final form with attached photographs and send to you signed in duplicate.'

On the same day Mr. Smith telegraphed defendant's counsel at Boston:

'In first clause second paragraph word 'use' should be changed to 'lease' since permitted sale by licensor would necessarily carry license to use. With this change and those conceded we accept contract.'

On June 2 defendant's counsel telegraphed Smith at Chicago:

'Will change 'use' to 'lease' in first clause and expect to mail signed duplicates to-day. When licensee's copy is returned will use it to get decrees entered.'

On June 2 defendant's counsel made a redraft in duplicate embodying the draft of May 28, modified to meet the suggestions contained in the telegrams above set forth, caused the redrafts to be executed by the defendant, and mailed them to Mr. Smith at Chicago, accompanied by a letter, in which it was stated:

'Probably I shall be away from Boston next week, and I have left instructions to exhibit the licensee's executed copy of the agreement to Judge Anderson, and to ask him to enter a decree according to the form herewith inclosed, in both cases. This I trust will be agreeable to you.

'I have notified the clerk of court that the cases have been settled and that we shall apply to Judge Anderson for the decree to close them as soon as the agreement is in hand.'

On June 4, 1923, Mr. Smith, on receipt of the letter of June 2 and inclosures, wrote defendant's counsel at Boston:

'This is to acknowledge receipt of your letter of the 2d inst., together with copies of the license contract between Barber-Colman Company and the Magnano Corporation. We have forwarded the contract to Rockford for signature and will return one copy, through Mr. Van Everen, as soon as it is received by us.'

Mr. Van Everen was plaintiff's counsel of record at Boston.

June 6 Mr. Smith telegraphed from Chicago to defendant's counsel at Boston:

'Barber-Colman will not sign contract as written because of misunderstanding but think I can propose modification wholly satisfactory to Magnano. Request conference in Boston at your convenience.'

On the same day (June 6) defendant's counsel at Boston telegraphed Smith at Chicago: 'Magnano Corporation considers contract closed by your acceptance of June first. We are willing to consider your proposed modification as matter for supplemental contract without prejudice to the existing contract if you will submit modification by telegram or letter. If conference is necessary could see you June thirteenth.'

On the same day defendant's counsel sent a letter confirming the telegram.

June 9 Smith wrote defendant's counsel:

'We have your letter of the 6th inst. relating to the Magnano negotiations.

'We cannot admit that the contract is completed, as contended in your telegram and letter; but we would prefer, with your assent, to postpone discussion of that and the related matters until the writer can see you on Wednesday afternoon, June 13.'

Soon after the duplicate contract signed by the defendant was sent to Mr. Smith at Chicago on June 2, and before June 5, defendant's counsel notified the clerk of court that the case was settled. On June 13, 1923, the defendant filed a motion in each suit asking for a decree dismissing the respective bills on the ground that:

'By agreement * * * entered into on * * * the 2d day of June, 1923, the plaintiff granted and the defendant accepted a license to manufacture and sell or lease to others to be used, machines of the character complained of and alleged to be infringements of the plaintiff's patent in suit, under the said patent and others owned or controlled by the plaintiff, and that by the said agreement it was provided that the bill of complaint herein should be dismissed without costs to either party.'

The defendant further stated in its motion that it had surrendered the assignment of trial in reliance on said agreement; also that the plaintiff, by its counsel, Smith, had refused to acknowledge the agreement, and in support of its motions filed an affidavit setting out the facts above enumerated and annexing a copy of the agreement first drafted, marked A, and a copy of the amended draft, marked C, dated the 4th day of June, 1923.

On the 16th day of June the respective motions to dismiss were presented to the District Court, and a hearing was had at which Mr. Roberts, counsel for defendant, and Mr. Van Everen and Mr. Smith, counsel for plaintiff, were present. It was found that the facts stated in the affidavit were true, and on the statement of Mr. Van Everen, counsel of record for the plaintiff, it was found that Mr. Smith had the same authority as Mr. Van Everen, although he was not counsel of record; also that counsel on both sides acted throughout in good faith. At the hearing plaintiff's counsel proposed a dismissal of the suits with the same legal effect as would result from a trial on the merits, but objected to a decree in addition to dismissal adjudicating the validity of the license contract. But the court, on June 20, 1923, entered a final decree in each suit in which it adjudged:

'(1) That the parties to this cause, on or about the 1st day of June, 1923, entered into and concluded an agreement settling the cause in litigation and licensing the defendant under the patent in suit.

'(2) That the document marked C, attached to the defendant's moving papers, expresses and defines the said agreement.

'(3) That the bill of complaint herein be, and the same hereby is, dismissed, without costs to either party.' It is from these decrees that the present appeals are taken. Various errors are assigned, but the principal questions are raised by the fourth, sixth, and seventh assignments of error, to the effect that the court erred in holding that the parties had made and concluded a contract settling the causes in litigation and in entering a decree reciting that the document marked C defined an agreement between the parties.

Under these assignments of error the plaintiff contends that no contract was ever made; that what took place between counsel were mere negotiations for a contract, and that, while they had reduced their negotiations to writing, they had not become and were not intended to be a complete binding agreement until executed by the officers of the respective corporations; that the contract was of such a nature and the conduct of the attorneys for the respective parties was such as to show that it was not intended to close the contract prior to a formal signing of the written drafts. In support of this contention it relies upon the case of Mississippi Steamship Co. v. Swift, 86 Me. 248, 29 A. 1063, 41 Am.St.Rep. 545 (cited with approval by this court in General Motors Corp. v. Abell (C.C.A.) 292 F. 922) in which it was held that the law governing such a...