Graffis v. Woodward

• Citation: 96 F.2d 329
• Decision Date: 24 May 1938
• Docket Number: No. 6468.,6468.
• Parties: GRAFFIS et al. v. WOODWARD et al.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

96 F.2d 329 (1938)

GRAFFIS et al. v. WOODWARD et al.

No. 6468.

Circuit Court of Appeals, Seventh Circuit.

April 18, 1938.

As Amended May 2, 1938.

Rehearing Denied May 24, 1938.

Williams, Bradbury, McCaleb & Hinkle, Clifford C. Bradbury, and Warren C. Horton, all of Chicago, Ill., for petitioners.

Frank Parker Davis and John R. Nicholson, both of Chicago, Ill., for respondent Charles E. Woodward.

I. Joseph Farley, of Detroit, Mich., for Ford Motor Co.

Before EVANS, SPARKS, and TREANOR, Circuit Judges.

SPARKS, Circuit Judge.

Petitioners have filed a petition praying that this court issue its writ of prohibition and, or alternatively, its writ of mandamus, directed to the Honorable Charles E. Woodward, United States District Judge, and the United States District Court for the Northern District of Illinois, Eastern Division, ordering and directing that a certain order of reference to an auditor heretofore entered by Judge Woodward on November 5, 1937, be vacated, and that no proceedings or hearings be taken or had under or in accordance therewith, and ordering and directing that the cause in which the order complained of was entered, be restored to the trial calendar and proceeded with in the regular way.

The facts which gave rise to the order from which the relief is sought are as follows. Petitioners filed their suit at law December 2, 1936, against the Ford Motor Company, for damages for infringement of a patent owned by them. They demanded jury trial of the issues. The defendant filed its answer denying the validity of the patent sued on or that it had infringed that patent, and also denying that petitioners had suffered any damage. The case was at issue and appeared on the trial calendar on March 25, 1937, to be set for trial. It was reset from time to time, and on October 11, 1937, the court suggested that the cause might be referred to an auditor. Thereupon both parties filed briefs as to the legality and advisability of such reference, and over petitioners' vigorous protest, the order of reference was entered.

The order recited that it was entered upon the motion of the court, upon his examination of the pleadings in the case, and finding that the issues and facts involved were complex, intricate and of a type not easily understandable by jurors, and that there were so many separate issues of fact that a jury would have constant difficulty remembering and passing upon them, and that a substantial amount of time would be consumed in court involving a detailed examination of various witnesses and voluminous records which could be largely obviated by the appointment of an auditor. It also appeared to the court that such appointment would reduce the general expenses of the case. The order of appointment provided that the auditor make preliminary investigation as to the facts, conduct hearings and hear whatever evidence, and consider all documents, records and testimony either party might see fit to produce, and file a report with a view to simplifying the issues for the jury. It also provided that the auditor should have power to compel attendance of and administer oaths to witnesses, and compel the production of papers and documents. Fees, compensation and expenses of the auditor, including traveling and stenographic expenses, were to be fixed by the court and to abide the result of the action. The court specifically provided that the auditor should not finally determine any of the issues of the action, but that such final determination of all issues of fact should be made by the jury on the trial.

The auditor was ordered to report separately as to the issues of fact upon a variety of items lettered (a) to (g) and numbered (1) to (19), separating disputed from undisputed items, and indicating his opinion as to the disputed ones. The items included citizenship and residence of the parties plaintiff; their interest in the subject matter of the suit; whether or not they had legal title to the patent involved; its utility; notice of infringement to defendant, with dates of such notice, if any; validity; infringement; the number of motor vehicles of each type made and sold by defendant charged to infringe within the period covered by the suit; date of invention; damages claimed; alleged reasonable royalty including facts as to licenses; prior discovery and prior publication; invalidity due to patentee's wrongful obtaining of invention of others; nonpatentability of device on account of aggregation; estoppel on the part of plaintiff to maintain the patent in such scope as to cover defendant's alleged use.

Petitioners earnestly urge the invalidity and inequity of the order of reference, basing their objections thereto on eight grounds:

"1. It seriously abridges and denies plaintiffs' right to a trial by jury, as insured by the Seventh Amendment to the Constitution, and article 2 of the Ordinance of 1787.

"2. It is in direct conflict with the decisions of the courts of the United States and Section 635 of Title 28, U.S.Code, 28 U.S.C.A. § 635 prescribing the mode of proof in the trial of actions at common law.

"3. It is an unlawful attempt at judicial legislation and provides for an improper delegation of judicial power.

"4. It refers to an auditor, questions and issues upon which an opinion is sought, which questions and issues are solely for the jury in said cause.

"5. No basis, reason, or necessity therefor appears in the record.

"6. It unlawfully and unreasonably multiplies and increases the cost of litigation, and because of plaintiffs' limited financial means may in effect deny them their day in court.

"7. It illegally and unfairly delays the trial of said cause.

"8. The order, even if it were constitutionally proper, is defective in the scope of lack of proper limitations upon, or clearness of directions to, the auditor named therein."

The jurisdictional question of the right of this court to pass upon the order of reference entered by the District Court by means of the petition here presented, for writ of mandamus or prohibition, is not here raised, having been determined by the Supreme Court in the case, Ex parte Peterson, 253 U.S. 300, 40 S.Ct. 543, 545, 64 L. Ed. 919. There the same procedure was used to bring before that Court the question of the validity of a similar order, of reference to an auditor, and the Court held that it had jurisdiction to consider the matter.

Both parties refer to a number of cases in which auditors were used in the trial of cases at law, respondent to show that such practice is firmly established by such cases, and petitioners to show that the practice has been used only when the cases involved complicated arithmetical computations, or where the reference was by consent of the parties.¹ Because we are convinced that the case, Ex parte Peterson, supra, has established the rule to be followed in the case at bar we refrain from discussion of the other cases. Petitioners contend that this case does not control the decision of the case at bar for the reason that it did not involve a patent infringement, or even a tort, but was simply another case where there was a very complex series of accounts which could best be simplified by reference to an auditor. No case has been found by the parties or by us where the trial court ordered reference to an auditor of a case at law arising out of an action for patent infringement. But see Los Angeles Brush Corp. v. James, 272 U.S. 701, 47 S.Ct. 286, 71 L.Ed. 481, for a somewhat similar question arising in a case in...