Barrett Co. v. Panther Rubber Mfg. Co., 2167.

• Decision Date: 13 February 1928
• Docket Number: No. 2167.,2167.
• Citation: 24 F.2d 329
• Parties: BARRETT CO. et al. v. PANTHER RUBBER MFG. CO.
• Court: U.S. Court of Appeals — First Circuit

24 F.2d 329 (1928)

BARRETT CO. et al. v. PANTHER RUBBER MFG. CO.

No. 2167.

Circuit Court of Appeals, First Circuit.

February 13, 1928.

COPYRIGHT MATERIAL OMITTED

Edward F. McClennen, of Boston, Mass. (Arthur E. Whittemore, of Boston, Mass., on the brief), for appellants.

La Rue Brown, of Boston, Mass. (A. C. Webber and Brown, Field & McCarthy, all of Boston, Mass., on the brief), for appellee.

Before BINGHAM, JOHNSON, and HALE, Circuit Judges.

HALE, Circuit Judge.

This case comes before the court upon appeal from the decree of the District Court of Massachusetts giving judgment for the plaintiff, and ordering the defendants to pay to the plaintiff a total sum of $192,837.18, together with the plaintiff's costs of suit, as the same may be taxed by the clerk.

In its bill of complaint the plaintiff, a Massachusetts corporation, brings suit against the Barrett Company, a New Jersey corporation, and the Barrett Company, a Maine corporation, alleging as ground of jurisdiction that it is a suit in equity between citizens of different states, where the amount in controversy exceeds $3,000; further, that the Barrett Company of Maine had transferred all its assets in business to the Barrett Company of New Jersey; and that the suit seeks to reach and apply to the satisfaction and discharge of the cause of action assets of the Maine corporation in the hands of the New Jersey corporation.

In its bill the plaintiff tells this story, in substance:

That on or about the 27th day of December, 1919, the defendant, the Barrett Company (of Maine), through its agent, sold to the plaintiff a large quantity of a certain commodity called "B. R. V.," a substance manufactured by the defendant according to a process unknown to the plaintiff, and with a composition unknown to the plaintiff; the plaintiff for a long time had been engaged in the manufacture of rubber heels, which, as the defendant well knew, it was selling in large quantities throughout the United States; in such manufacture and sale it had acquired a valuable business good will, had spent large sums of money in advertising, and had established a valuable reputation for rubber heels under the brand and trade-name of "Panther"; the purchase of the said B. R. V. was induced by the solicitation of the defendant that the plaintiff substitute the B. R. V. for certain oil purchased from others than the defendant, which the plaintiff for a long time had been successfully using in the manufacture of rubber heels of good and merchantable quality; the plaintiff was manufacturing heels by a process which was fully disclosed to the defendant; and the defendant warranted that said B. R. V. was proper to be substituted for the oil used by plaintiff in the manufacture of rubber heels, and would, without any other change in the process employed by the plaintiff, result in the production of merchantable rubber heels of the kind and quality theretofore manufactured and sold by the plaintiff.

The defendant represented to the plaintiff that other persons had used B. R. V. in the manufacture of rubber heels by a process like that used by plaintiff, and that the rubber heels so produced were without any defect which would render them unmerchantable, or of less value than if manufactured with oil of the character which the plaintiff had been accustomed to use, and that this representation was known to the defendant, but not to the plaintiff, to be untrue; that the plaintiff relied upon the skill and judgment of the defendant and upon the representations made by it as to the fitness of B. R. V. for the manufacture of rubber heels by the process so designated; that, so relying, the plaintiff purchased of the defendant the B. R. V. and employed it in place of the oil which the plaintiff had theretofore employed in the manufacture of a large number of rubber heels of great value; that the defendant gave the plaintiff no advice or instruction with reference to the use of the B. R. V. which plaintiff did not follow; that the rubber heels, so manufactured by the use of the B. R. V., were in accordance with the purposes disclosed, and that the rubber heels were sold and shipped to plaintiff's customers; but the heels were not good and merchantable heels of the kind theretofore manufactured and sold by plaintiff, but contained latent defects, not discoverable upon inspection in the ordinary course of manufacture and shipment to the trade; that these defects rendered the rubber heels wholly unmerchantable and valueless; and the plaintiff in consequence, and by reason of the defective quality of the heels, so manufactured with B. R. V., was damaged to the amount of $1,000,000.

The bill then makes a statement of the damages by items, and says that this damage directly and naturally resulted from the defendant's acts as stated. The bill alleged the transfer of the property of the Barrett Company of Maine to the Barrett Company of New Jersey, so that the property cannot be reached by execution and action of law, and that the plaintiff was not notified by the Barrett Company of New Jersey, prior to the sale and transfer, or given any information as to the proposed sale; that, therefore, the sale and transfer, the same being a sale in bulk of the stock of merchandise, otherwise than in the ordinary course of trade, was fraudulent and void as against the plaintiff.

Upon the bill the defendants made a motion for further particulars and obtained same. They also propounded interrogatories and received their answers in due course. They answered the bill by raising the issues upon which the case was tried, and admitted the allegations in the portion of the bill entitled "Grounds of Jurisdiction." After all these pleadings, and after the case had been tried upon the issues raised in equity, the defendants, in their assignment of errors, now challenge the equity jurisdiction. They say that there was an adequate remedy at law, and that, as to the Barrett Company of New Jersey, the prerequisite of a bill in the federal courts is the obtaining of a judgment against the principal defendant and the exhaustion by the plaintiff of his legal remedies, citing Pierce v. United States, 255 U. S. 398, 41 S. Ct. 365, 65 L. Ed. 697. This objection does not go to the court's jurisdiction as a federal court. Pusey & Jones Co. v. Hanssen, 261 U. S. 491, 43 S. Ct. 454, 67 L. Ed. 763. The case does not present a cause of action where there is no actual equity jurisdiction. It is a case where equity, except for a technical objection, could apply and grant relief. If any objection had been made by the defendants, it could have been met by a transfer to the law side of the court. In such cases, where the defendant had consented to the action by the court, or has failed to object seasonably, to it, the objection will be treated as waived. Pusey & Jones Co. v. Hanssen, supra; Brown v. Lake Sup. Iron Co., 134 U. S. 530, 10 S. Ct. 604, 33 L. Ed. 1021. In the instant case it is evident from the bill, which we have stated in substance, that the plaintiff sought to recover unliquidated damages, caused by the failure of the material supplied to be fit for the intended use. The defendants were never left in doubt as to the plaintiff's case. They clearly showed their approval of the procedure in equity by their adoption of equitable proceedings in their interrogatories and in their answer. They showed by their conduct that they did not intend to make any objection to the adequacy of equity jurisdiction to deal with the questions involved. They did not specifically call the attention of the trial court to this point. The parties have been subjected to long delay and expense in protracted hearings, without objection by the defendants. We think it is now too late for them to raise such objection. If they wished to seek the transfer of the case from the equity to the law side of the court, they should have made their request at an earlier time; by not doing so they waived their right to raise the question. Their conduct indicates that they neither made, not intended to make, any objection to the jurisdiction of the court to deal with the question of warranty of fitness for a disclosed purpose, upon which the plaintiff relied. The relief sought was a remedy competent for equity to give. The courts have said that where a contention of this character is not raised at the trial and did not enter into the theory of the trial, it is too late to raise it in the court of ultimate resort. Hercules Powder Co. v. Rich (C. C. A.) 3 F.(2d) 12; Duignan v. United States, decided April 25, 1927, 274 U. S. 195, 47 S. Ct. 566, 71 L. Ed. 996; Blanchard Lumber Co. v. Maher, 250 Mass. 159, 163, 145 N. E. 62; Whiting v. Burkhardt, 178 Mass. 535, 60 N. E. 1, 52 L. R. A. 788, 86 Am. St. Rep. 503.

We think there is no merit in the defendant's assignment of an error by the District Court, in entering its decree in a case involving unliquidated damages shown in the record.

The plaintiff was a maker of rubber heels from a stock made of pure rubber, sulphur, and other chemicals, with a large mixture of "shoddy" or reclaimed scrap rubber, prepared for use by grinding and devulcanization; the proofs show that this process requires the use of a stiffening material; that the plaintiff had been in the habit of using a mixture of liquid asphalt called "80-80," and a small amount of other oils, with the satisfactory result of a merchantable product; that the plaintiff sold its heels in large quantities all over the country, and its widely advertised brands and trade-marks became an asset of great value; closely connected with these brands and trade-marks were the molds which imprinted characteristic patterns upon the heels, and the cartons which bore a reproduction of those patterns, together with the trade-names or brands. The record makes it clear that the defendant — the Barrett Company of Maine — was a manufacturer of products obtained from the distillation of coal...