Electrical Research Products v. Gross

• Decision Date: 14 December 1936
• Docket Number: No. 8044.,8044.
• Citation: 86 F.2d 925
• Parties: ELECTRICAL RESEARCH PRODUCTS. Inc., v. GROSS.
• Court: U.S. Court of Appeals — Ninth Circuit

86 F.2d 925 (1936)

ELECTRICAL RESEARCH PRODUCTS. Inc., v. GROSS.

No. 8044.

Circuit Court of Appeals, Ninth Circuit.

December 14, 1936.

R. E. Robertson, of Juneau, Alaska, and John H. Ray and H. H. Breland, both of New York City, for appellant.

J. A. Hellenthal and H. L. Faulkner, both of Juneau, Alaska, for appellee.

Before WILBUR, DENMAN, and MATHEWS, Circuit Judges.

MATHEWS, Circuit Judge.

This action was brought by appellant against appellee in the District Court for Alaska to recover possession of certain theater equipment owned by appellant and detained by appellee in his theaters at Juneau and Ketchikan,¹ and to recover $2,100 as damages for its detention and $1,200 as attorneys' fees. The value of the equipment, as alleged in the complaint, is $13,200.

The action does not arise under any law of the United States, nor is there any showing of diverse citizenship or other ground of Federal jurisdiction. The District Court for Alaska, however, is not only a federal District Court, but is also a court of general jurisdiction in civil cases. Compiled Laws of Alaska 1933, § 1091 (48 U.S.C.A. § 101). It therefore had jurisdiction of this case.

The action was brought under sections 3493-3504 of the Compiled Laws of Alaska 1933 (Act of June 6, 1900, c. 786, title 2, §§ 123-134, 31 Stat. 351-353). Having made the affidavit and given the undertaking which the statute prescribes, appellant required the marshal to take the above-mentioned equipment from appellee and deliver it to appellant. The marshal did take the equipment from appellee, and thereafter, no exception having been taken to appellant's sureties, and no request having been made for redelivery of the equipment to appellee, the marshal delivered it to appellant, as the statute directs. Comp.Laws Alaska 1933, §§ 3494-3498.

Appellee answered, pleading various defenses and four counterclaims. There was a jury trial. On all the issues, including those raised by the counterclaims, the jury returned a verdict for appellee, awarding him $31,068.92 on the first counterclaim, $1,725.77 on the second, $23,948.92 on the third, and $1,692.72 on the fourth, making a total of $58,436.33. The trial court entered a judgment in appellee's favor for this amount, plus $7,500 as attorneys' fees, with interest and costs. This appeal is from that judgment.

The judgment appealed from is a "final decision" of the District Court for Alaska in a case "wherein the value in controversy, exclusive of interest and costs, exceeds $1,000." Therefore, this court has jurisdiction. Judicial Code, § 128, as amended (28 U.S.C.A. § 225).

The complaint alleges that appellant is the owner of the above-mentioned equipment and is entitled to possession thereof, and that appellee wrongfully detains it and refuses to surrender it to appellant. The answer admits that appellant is the owner of the equipment, but denies that appellant is entitled to possession thereof; admits that appellee detained the equipment and refused to surrender it to appellant, but denies that the detention and refusal were wrongful or unlawful; and alleges that the equipment in question was installed in appellee's theaters under and pursuant to a written contract² between appellant and appellee dated March 28, 1929, whereby appellee was licensed to use the equipment in his theaters for a term of ten years from the date of installation, subject to the terms, conditions, and limitations of the contract, a copy of which is attached to and made a part of the answer; that the contract is still in full force and effect; that it has never been modified, rescinded, or revoked; that appellee has complied with all its terms and provisions; that he has not been and is not now in default, and that he was and is, therefore, entitled to possession of the equipment.

The answer contains four counterclaims.³ The first and third are for damages for taking and withholding the aforesaid equipment from appellee.⁴ The second and fourth are for the recovery of sums alleged to have been wrongfully obtained by appellant from appellee by means of threats.

In the second and fourth counterclaims it is alleged that on December 30, 1929, appellant threatened to remove and take from appellee's possession all equipment theretofore installed in his theaters and to deprive him of the use thereof, unless he paid appellant $1,975.60, which he had not contracted to pay and did not owe appellant; that appellee believed that appellant could and would carry out said threat; that, so believing, appellee did, because of said threat, and under duress, pay appellant $1,975.60; that thereafter appellant continued to threaten that, unless appellee paid appellant further amounts, appellant would disconnect said equipment; and that appellee, believing that appellant could and would carry out said threats, did pay appellant further amounts aggregating $1,130.50, making a total⁵ of $3,106.10, for which, with interest, attorneys' fees and costs, appellee prays judgment.

Why, or on what ground or basis, if any, these threats were made is not indicated. It is not alleged that they were based on any contract, or any right or claim of right to possession of the equipment above referred to, or any claim or contention that appellee was wrongfully detaining the equipment or wrongfully withholding possession thereof from appellant; nor is there any allegation that appellant has agreed or promised to repay the money thus obtained from appellee.

Appellant demurred to the second and fourth counterclaims, on the ground that neither of them states facts sufficient to constitute a counterclaim. The demurrer was overruled. This ruling was excepted to and is assigned as error. There is no merit in appellee's suggestion that, because not incorporated in the bill of exceptions, this ruling is not properly before us for review. A ruling on a demurrer to a pleading is not required to be incorporated in the bill of exceptions. Board of County Commissioners v. Home Savings Bank, 236 U.S. 101, 104, 35 S.Ct. 265, 59 L.Ed. 485; Nalle v. Oyster, 230 U.S. 165, 177, 33 S.Ct. 1043, 57 L.Ed. 1439; Mitsui v. St. Paul Fire & Marine Ins. Co. (C.C.A.9) 202 F. 26, 28.

Counterclaims are provided for in chapter 75, §§ 3421-3424, of the Compiled Laws of Alaska 1933 (Act of June 6, 1900, c. 786, Title 2, §§ 63-66, 31 Stat. 342, 343). Section 3421 provides that the answer of the defendant shall contain, inter alia, a statement of any new matter constituting a defense or counterclaim. Section 3422 provides:

"The counterclaim mentioned in this chapter must be one existing in favor of the defendant and against a plaintiff, between whom a several judgment might be had in the action, and arising out of the following causes of action:

"First. A cause of action arising out of the contract or transaction set forth in the complaint as the foundation of the plaintiff's claim.

"Second. In an action arising on contract, any other cause of action arising also in contract, and existing at the commencement of the action."

The causes of action stated in the second and fourth counterclaims do not arise in, on, or out of any contract, nor do they arise out of any transaction set forth in the complaint. Therefore, under section 3422, these are not valid counterclaims.

Cases cited by appellee as sustaining their validity are not in point. In Clement v. Field, 147 U.S. 467, 13 S.Ct. 358, 37 L. Ed. 244, both the action and the counterclaim arose on contract, the action being founded on a chattel mortgage, the counterclaim on a contract of sale. In Story & Isham Co. v. Story, 100 Cal. 30, 34 P. 671, and in Bannerot v. McClure, 39 Colo. 472, 90 P. 70, 12 L.R.A.(N.S.) 126, the action and the counterclaim arose out of the same transaction. The decision in Advance Thresher Co. v. Klein, 28 S.D. 177, 133 N. W. 51, L.R.A.1916C, 514, was under a statute permitting counterclaims which are merely "connected with the subject of the action." Under the Alaska statute, such counterclaims are not permitted.

Appellant's demurrer should have been sustained.

Appellant's reply admits that appellant and appellee made and executed the contract of March 28, 1929, above referred to, and that the equipment in question was installed in appellee's theaters under and pursuant thereto, but denies that appellee has complied with the contract, and alleges that, by written agreement dated September 4, 1929, appellant and appellee mutually agreed to and did modify the contract, and particularly section 6 thereof, in the respects hereafter indicated.

Appellant also alleges⁶ that it has fully complied with the contract, as originally executed and as modified by the agreement of September 4, 1929; that appellee has failed and refused to make certain payments required by sections 6 and 8 of the contract and therefore, under section 14 thereof, is in default; and that, because of appellee's default, appellant is entitled, under section 15 of the contract, to possession of the equipment above referred to.

Section 6 of the contract, as executed, reads as follows: "In addition to any other payments required to be made by the Exhibitor appellee hereunder, the Exhibitor agrees to pay Products appellant throughout the term⁷ of the license hereby granted a service and inspection payment, payable weekly, which, for the first two weeks of said term, shall be payable on the Saturday next succeeding the `Service Day' and thereafter throughout the balance of said term on each and every Saturday in advance. The amount of such payment shall be in accordance with Products' regular schedule of such charges as from time to time established. Under Products' present schedule, the service and inspection payment shall be $____ per week, which charge shall not be exceeded during the first two years of the period of said license and thereafter for the balance of the term of said license shall not exceed the sum of $____ per week."

Appellant introduced in evidence...