Emlenton Refining Co. v. Chambers

• Decision Date: 08 July 1926
• Docket Number: No. 3435.,3435.
• Citation: 14 F.2d 104
• Parties: EMLENTON REFINING CO. v. CHAMBERS.
• Court: U.S. Court of Appeals — Third Circuit

14 F.2d 104 (1926)

EMLENTON REFINING CO. v. CHAMBERS.^*

No. 3435.

Circuit Court of Appeals, Third Circuit.

July 8, 1926.

John E. Mullin, of Kane, Pa., W. Pitt Gifford, of Erie, Pa., Mullin & Woods, of Kane, Pa., Frampton & Courtney, of Oil City, Pa., and Gunnison, Fish, Gifford & Chapin, of Erie, Pa., for appellant.

J. Thurston Manning, Jr., of Philadelphia, Pa., Bigham, Englar & Jones, of New York City, Edmund C. Breene, of Oil City, Pa., and Conlen, Acker, Manning & Brown, of Philadelphia, Pa., for appellee.

Before BUFFINGTON and WOOLLEY, Circuit Judges, and DICKINSON, District Judge.

WOOLLEY, Circuit Judge.

Three suits involving the same contracts were instituted against the defendant by the same plaintiffs in different characters. They were brought in the order and, abbreviated for convenience, were entitled as follows:

(1) Chambers, for the use of Adams, v. Emlenton Refining Company.

(2) Adams (averring that Chambers was his agent) v. Emlenton Refining Company.

(3) Chambers, for the use of Adams, v. Emlenton Refining Company.

In the first action a voluntary nonsuit was entered; in the second, a judgment for the defendant on a verdict; the third, the instant case, is still pending on the merits.

Much confusion arose in the trial of the second case because of the insistence of counsel in trying two issues to the jury. One raised the formal question whether Adams or Chambers was the proper legal plaintiff; the other the substantial question whether the defendant had breached its contract and, if it had, to what damages was the plaintiff entitled. Both questions were submitted with the result that no one knows, nor can anyone ascertain, on which question the jury found for the defendant. When this suit — the third — was brought, the defendant interposed three equitable defenses under Section 274b of the Judicial Code (Comp. St. § 1251b):

(1) Res judicata, that is, all the rights of the parties in the contracts sued upon were litigated and determined in the second action; (2) equitable estoppel and (3) judicial estoppel both of the legal and use-plaintiffs by reason of their conduct and testimony in the prior suits involving the same contracts.

Following the practice of some courts in cases where equitable and legal issues are mingled, the learned trial court heard, preliminary to trial, these equitable defenses, and finding they could not be sustained because of lack of identity of parties, doubtful identity of causes of action, and lack of prejudice to the defendant arising from the alleged inconsistent positions taken by the plaintiffs in the several actions, entered a decree holding them invalid and at the same time entered a judgment on them against the defendant and, finally, ordered the case for trial before a judge and jury on the other issues raised by the pleadings. From this decree embracing an adverse judgment on the equitable issues, the defendant took this appeal.

At the argument here counsel addressed themselves exclusively to the merits of the issues decided by the trial court. Questioning the defendant's right to appeal from a decree or judgment which decided only a part of the issues of the case — seemingly interlocutory — and, doubting its jurisdiction to entertain such an appeal, this court asked for argument on these two questions, whose determination in the appellant's favor must, of course, precede a determination of the matters brought up for review.

These questions are so related that, in truth, only one is presented, namely: the jurisdiction of a Circuit Court of Appeals to entertain an appeal taken from a decree or judgment of a District Court disposing of equitable defenses interposed in a law action under authority of Section 274b of the Judicial Code. If the Circuit Courts of Appeals have this jurisdiction it is only because it is conferred by some statute, as the appellate jurisdiction of these courts is wholly statutory. Realizing this, the appellant says jurisdiction is conferred by three statutes of which the first is Section 274b of the Judicial Code. (38 Stat. L. 956). Therefore, in our search for a statutory grant of jurisdiction, we first turn to this provision, which is in the following words:

"Sec. 274b. Forms of pleadings abolished. That in all actions at law equitable defenses may be interposed by answer, plea, or replication without the necessity of filing a bill on the equity side of the court. The defendant shall have the same rights in such case as if he had filed a bill embodying the defense of or seeking the relief prayed for in such answer or plea. Equitable relief respecting the subject-matter of the suit may thus be obtained by answer or plea. In case affirmative relief is prayed in such answer or plea, the plaintiff shall file a replication. Review of the judgment or decree entered in such case shall be regulated by rule of court. Whether such review be sought by writ of error or by appeal the appellate court shall have full power to render such judgment upon the records as law and justice shall require. 38 Stat. L. 956."

Concededly the provision does not give a right of appeal nor does it grant jurisdiction by express terms. Congress rarely confers jurisdiction on a court by implication. When it does, the implication, to be effective, must be not only clear but necessary. The only words of the section touching review by appellate courts are contained in the last two sentences. Of these the first is: "Review of the judgment or decree entered in such case shall be regulated by rule of court." Manifestly, this is a grant of power to regulate action under a jurisdiction already conferred; it is not a grant of jurisdiction. Moreover, under the power of regulation thus given, no rule has been promulgated by this court. But the next sentence in the context clearly explains the meaning of the first. Realizing that on mixed issues — equitable and legal — technical uncertainties might arise in disposing of a case according as it is in equity or at law, or when there is doubt as to which one it is, the Congress, in concluding the section, said: "Whether such review be sought by writ of error or by appeal the appellate court shall have full power to render such judgment upon the records as law and justice shall require."

But the appellant further urges that the Congress conferred the necessary jurisdiction when, in the quoted section, it said: "The defendant shall have the same rights in such case as if he had filed a bill embodying the defense of (or) seeking the relief prayed for in such answer or plea;" maintaining that among those "rights" is the right of appeal. We regard these words merely as defining the defendant's position when issues normally belonging to opposite systems are brought together for trial by a new method. That this is a grant of a right of appeal to a litigant and a grant of jurisdiction to this court is not only not a...