Davis v. Mabee

• Decision Date: 09 May 1929
• Docket Number: No. 5109.,5109.
• Parties: DAVIS, Trustee, v. MABEE et al.
• Court: U.S. Court of Appeals — Sixth Circuit

32 F.2d 502 (1929)

DAVIS, Trustee, v. MABEE et al.

No. 5109.

Circuit Court of Appeals, Sixth Circuit.

February 14, 1929.

On Rehearing, May 9, 1929.

George W. Ritter, of Toledo, Ohio (Ritter & Brumback and Marshall, Melhorn, Marlar & Martin, all of Toledo, Ohio, on the brief), for appellant.

James Harrington Boyd, of Toledo, Ohio (Stahl & Price, of Toledo, Ohio, on the brief), for appellee Boyd.

Charles A. Thatcher, of Toledo, Ohio, pro se.

Before MOORMAN, HICKS, and HICKENLOOPER, Circuit Judges.

HICKENLOOPER, Circuit Judge.

This cause comes here upon appeal from an order of the District Court dismissing the bill in equity of Clyde A. Davis, trustee in bankruptcy of the By-Products Recovery Company, filed September 18, 1923. The bill is in the nature of one for specific performance of contract to convey certain patents and patent applications, with ancillary relief to quiet title by injunction and to cancel and avoid other assignments and licenses theretofore granted. The action marks the culmination of years of controversy and litigation between the parties hereto. In passing upon the questions raised, the chronological sequence of events is of importance.

The defendant Mabee having applied for a number of patents prior to the year 1913, the By-Products Recovery Company was organized to develop and exploit the inventions in question, and to secure letters patent thereon, and various contracts and agreements relating thereto were made between Mabee and that company or those acting in its interest. Differences arose between Mabee and the By-Products Recovery Company, which resulted in an action being brought by the latter in the court of common pleas of Lucas county, Ohio, on August 27, 1919, in which the By-Products Recovery Company sought substantially the same relief as is sought in the present action, with the exception that a number of the patents had not yet been issued upon applications pending. Later in the day on August 27, 1919, the By-Products Recovery Company also brought an action in the District Court for the Northern District of Ohio, differing from the action in the court of common pleas only in that the right to certain foreign patents was involved in the federal court action. Service was first acquired in the common pleas court suit, and that action was prosecuted to a judgment for the plaintiff. The defendant Mabee, however, appealed to the state Court of Appeals, where the case was argued and submitted. In June, 1923, an opinion was filed in such appeal, reversing the finding of the court of common pleas, and holding that certain conditions precedent to transfer of title had not been performed by the By-Products Recovery Company, and such company was given further time in which to perform these conditions precedent, in the absence of which performance, title was to be reconveyed to Mabee. No decree was then entered upon the opinion, because of the allowance of additional time for performance by the company.

Prior to the decision of the state Court of Appeals, attempt was made to revive the prosecution of the federal court action filed August 27, 1919, and thereupon the District Court dismissed the action there pending as to all matters involving United States patents, on the ground that, the controversy having passed to judgment in the court of common pleas, and appeal being pending, the parties were precluded and estopped by such judgment from relitigating the same cause of action in all courts. By-Products Recovery Co. v. Mabee (D. C.) 288 F. 401.

After the decision was handed down in the state Court of Appeals, the By-Products Recovery Company filed its voluntary petition in bankruptcy on July 27, 1923. The bill, upon which the present appeal is prosecuted, was filed September 18, 1923, and was referred to a master, which accounts for the judgment dismissing it not having been entered until September 24, 1927. For a portion of the time between the filing of the petition in bankruptcy and the ultimate entry of decree in the state Court of Appeals, the defendant Mabee and those in interest with him were enjoined by the bankruptcy court from taking further steps or proceedings in the state court action. This injunction was subsequently dissolved, and the order so dissolving it was affirmed by this court. In re By-Products Recovery Co. (Davis v. Mabee et al.) 2 F.(2d) 664. Thereafter the state Court of Appeals entered judgment upon the opinion theretofore rendered, without the intervention of the trustee in bankruptcy, or the making of such trustee a party therein.

The contention is now made by the trustee in bankruptcy that the present action differs from that prosecuted by the bankrupt in the state courts, in that sources of ownership and chains of title are now presented other than and/or in addition to that claimed in the original litigation, and that the litigation being solely in personam, though affecting property rights of the bankrupt, the doctrine that, where one court has already assumed jurisdiction of the subject-matter of litigation, such jurisdiction will not be disturbed by the bankruptcy court, does not apply, and the state court lost whatever jurisdiction it had upon bankruptcy.

Upon the first of these contentions, it is established beyond controversy that "a judgment on the merits, rendered in a former suit between the same parties or their privies, on the same cause of action, by a court of competent jurisdiction, operates as an estoppel, not only as to every matter which was offered or received to sustain or defeat the claim, but as to every other matter which might with propriety have been litigated and determined in that action." 34 C. J. 818; United Shoe Machinery Corp. v. U. S., 258 U. S. 451, 458, 42 S. Ct. 363, 66 L. Ed. 708; Sapulpa Petroleum Co. v. McCray, 4 F.(2d) 645, 650 (C. C. A. 8). There is no contention that any right to title to the patents involved was secured after the commencement of the 1919 litigation, and litigants are not...