Buffalo Specialty Co. v. Vancleef

• Decision Date: 16 September 1914
• Docket Number: 219.
• Citation: 217 F. 91
• Parties: BUFFALO SPECIALTY CO. v. VANCLEEF et al.
• Court: U.S. District Court — Northern District of Illinois

217 F. 91

BUFFALO SPECIALTY CO. v. VANCLEEF et al.

No. 219.

United States District Court, N.D. Illinois, Eastern Division.

September 16, 1914

Offield Towle, Graves & Offield, of Chicago, Ill., for plaintiff.

Banning & Banning, of Chicago, Ill., for defendants.

SANBORN District Judge.

This is an application by defendants for an injunction, based on defendants' counterclaim and affidavits, restraining plaintiff from making false representations concerning the order or decree of August 7, 1914, dismissing the bill for want of equity, with costs, and from interfering with defendants' business of making and selling 'Neverleak Tire Fluid.' They also ask a reference to a master to ascertain the profits and damages they claim to be entitled to, as prayed in their counterclaim.

The bill, which was dismissed, alleged infringement of a trade-mark and unfair competition. Defendants denied plaintiff's allegations, and pleaded a counterclaim under equity rule 30, alleging wrongful acts of plaintiff in reference to the use by defendants of the trade-mark or name claimed by plaintiff, and praying for an injunction against such acts, and an accounting of damages. Defendants alleged that plaintiff was threatening their customers with suits and various forms of prosecution in case they should continue to market their own goods.

Defendants moved to dismiss the bill because it appeared on the record that complainant had by its conduct made its right to use the word 'neverleak' coextensive in time with its patent on the fluid called neverleak, and by the expiration of the patent had lost its protection. The motion was granted, and a decree of dismissal followed, without making any disposition of the counterclaim. An appeal from this decree to the Circuit Court of Appeals was at once taken, and is now pending undetermined; the clerk's return to the appellate court having been duly made. Defendants then, before any hearing on the counterclaim moved for a permanent injunction and reference, just as though they had obtained an interlocutory decree on hearing showing by affidavit that plaintiff had begun several suits against customers of defendants, had written threatening letters to defendants' dealers, and had misrepresented the nature of the decree of dismissal. These acts were injurious to defendants, causing loss of custom and other damage. While the motion was for a permanent injunction and reference, on the hearing they asked for a temporary injunction only, and did not press the motion for reference.

Answering the motion, plaintiff denied any unfair competition (submitting many affidavits), and contended that the district court has no jurisdiction of the motion because the case and the whole case has been removed to the Court of Appeals. Counsel for defendants contend that the case involves two separate suits, one on bill and answer for trade-mark infringement and unfair competition, and the other on counterclaim and reply for unfair competition, and that only the first suit has been finally disposed of, leaving the second one still pending just as though the first had never been commenced. It is contended in reply to this position that the counterclaim authorized by rule 30 (198 F. xxvi, 115 C.C.A. xxvi) is like a cross-bill in equity under the former practice, which was so connected with the bill that a dismissal would necessarily carry the cross-suit with it. It was also suggested on the argument that a counterclaim under the rule is so connected with the main suit that the decree already entered was not a final one, for the purpose of an appeal, because it made no disposition of the counterclaim.

Many questions are being raised in the district courts as to the proper construction of rule 30, and there has been conflict of opinion which will probably continue. As I look at the matter, the rule is quite clear and easy to interpret. It is quite similar to section 3 of order 19 of the English orders (Statutory Rules and Orders of 1912, p. 1781; Annual Practice of 1908, p. 234). The two rules follow:

English rule:

A defendant in an action may set off, or set up by way of counterclaim against the claims of the plaintiff, any right or claim, whether such set-off or counterclaim sound in damages or not, and such set-off or counterclaim shall have the same effect as a cross-action, so as to enable the court to pronounce a final judgment in the same action, both on the original and on the cross claim. But the registrar or the judge may, on the application of the plaintiff before trial if in opinion of the registrar or judge such set-off or counterclaim cannot be conveniently disposed of in the pending action, or ought not to be allowed, refuse permission to the defendant to avail himself thereof.

Equity rule 30 (198 F. xxvi, 115 C.C.A. xxvi):

The defendant in his answer shall in short and simple terms set out his defense to each claim asserted by the bill, omitting any mere statement of evidence, and avoiding any general denial of the averments of the bill, but specifically admitting or denying or explaining the facts upon which the plaintiff relies, unless the defendant is without knowledge, in which case he shall so state; such statement operating as a denial. Averments other than of value or amount of damages, if not denied, shall be deemed confessed, except as against an infant, lunatic, or other person non compos and not under guardianship, but the answer may be amended, by leave of the court of judge, upon reasonable notice, so as to put any averment in issue, when justice requires it. The answer may state as many defenses, in the alternative, regardless of consistency, as the defendant deems essential to his defense. The answer must state in short and simple form any counterclaim arising out of the transaction which is the subject-matter of the suit, and may, without cross-bill, set out any set-off or counterclaim against the plaintiff which might be the subject of an independent suit in equity against him, and such set-off or counterclaim, so set up, shall have the same effect as a cross-suit, so as to enable the court to pronounce a final judgment in the same suit, both on the original and cross-claims.

It will be seen that rule 30 requires defendant to set up any counterclaim which arises out of the transaction forming the subject-matter of the bill, but allows without requiring him to set up any equitable counterclaim or set-off which might be the subject of an independent suit by defendant against plaintiff. The language is perfectly clear: If defendant has an independent cause of action in equity against plaintiff he may counterclaim it. If any corroboration of this view were needed, it is found in the fact that the Supreme Court, in adopting the rule, omitted the last clause of the English rule which restricts counterclaims to those which can be conveniently disposed of and those which ought to be allowed. Not only was any set-off or counterclaim which may be the subject of an independent suit included, but an exception was rejected. Moreover, it has always been held by the English courts that independent causes of action, wholly...