Hartford-Empire Co. v. Shawkee Mfg. Co., 2791.

• Decision Date: 12 August 1946
• Docket Number: No. 2791.,2791.
• Citation: 67 F. Supp. 26
• Parties: HARTFORD-EMPIRE CO. v. SHAWKEE MFG. CO. et al.
• Court: U.S. District Court — Western District of Pennsylvania

67 F. Supp. 26

HARTFORD-EMPIRE CO. v. SHAWKEE MFG. CO. et al.

No. 2791.

District Court, W. D. Pennsylvania.

August 12, 1946.

Stebbins, Blenko & Webb, Walter J. Blenko, Weil, Hirsch & Shumaker, and Albert C. Hirsch, all of Pittsburgh, Pa., and Sidney F. Parham, of Hartford, Conn., for plaintiff.

William B. Jaspert, of Pittsburgh, Pa., and Max Swiren and Swiren, Heineman & Antonow, all of Chicago, Ill., for defendants.

GIBSON, District Judge.

The instant action was first heard in this court in 1933. In fact, however, the judgment rendered depended upon the final decree in Hartford-Empire Co. v. Hazel-Atlas Glass Co., originally heard in the early part of 1930.

The history of these cases, so far as we are now concerned with them, is found in Shawkee Manufacturing Co. et al. v. Hartford-Empire Co., 322 U.S. 271, 64 S.Ct. 1014, 88 L.Ed. 1269 and Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 64 S.Ct. 997, 88 L.Ed. 1250. After prior hearings in the Circuit Court of Appeals for the Third Circuit, and denials of the petitions of the defendants below for allowance of a bill of review in the District Court by that court, the Supreme Court reversed the judgment of the Court of Appeals and determined that it (Supreme Court) had jurisdiction to hear and pass upon matters of fact raised by said petitions and was not limited by existing procedure practice to a reversal of the finding of the Circuit Court of Appeals, with direction to that court to permit Shawkee Manufacturing Co. et al. to file a bill of review in the District Court.

Pursuant to its conclusion as to jurisdiction the Supreme Court found as facts: (1) That Hartford (hereinafter so called) had been guilty of fraud, in that it had foisted upon the Patent Office and the Circuit Court of Appeals, to aid its application for a patent, an article purporting to be written and published by one Clarke, National President of the Flint Glass Workers Union, as a disinterested expert, wherein said Clarke had termed gob feeding (the Peiler Patent Claim) one of the revolutionary devices which had confronted organized labor in the glass industry to its detriment, whereas in fact said article had been written and published by an employee of Hartford, and not by Clarke; and as the result of this fraud the judgment in favor of Hartford should be vacated by mandate of the Court of Appeals transmitted to the District Court. (2) That Shawkee Manufacturing Company, Glenshaw Glass Company, Inc., McKee Glass Company (hereinafter called Shawkee, Glenshaw and McKee), despite their suspicions, had no formal proof as to the authorship of the article prior to the decision in an antitrust action against Hartford, Hazel-Atlas, et al. in Ohio in 1941. (3) That due diligence had been observed by Shawkee et al. since proof of the fraud had become available and that the defendants were entitled to relief.

The final paragraph in Shawkee et al. v. Hartford is as follows 322 U.S. 271, 64 S.Ct. 1015:

"The judgment of the Circuit Court of Appeals is reversed. The cause is remanded to it with directions to set aside its 1934 judgment, recall the mandate, and dismiss the appeal; and issue mandate to the District Court with directions to set aside its judgment finding Hartford's patent valid and infringed, deny Hartford all relief against infringement of this patent and permit Shawkee and the others to bring such further proceedings as may be appropriate in accordance with their prayer for relief."

In the prayer for relief by Shawkee and the others, the Circuit Court of Appeals was asked to appoint a master to render an accounting of costs incurred in the present and former proceedings, moneys paid by them to Hartford pursuant to the original judgments, and damages sustained because of Hartford's unlawful use of its patent. The Supreme Court, in respect to this prayer, stated: "Whether this type of relief will be granted must depend upon further proceedings in the District Court which entered the judgment." By this language we infer that the method of relief was in mind rather than any limitation of it.

George R. Haub was one of the defendants enjoined in the original action. No testimony was introduced on his behalf in support of his counterclaim, and his counsel have consented to entry of judgment against him now.

Glenshaw Glass Company, Inc., claims the right in the present action to recover from Hartford the amount paid by it in settlement of the accounting proceedings, the royalties paid by it from January 1, 1934, for litigation and travel expenses incurred by reason of the injunction, for the loss of the Shawkee feeders, loss of the Shawkee stock investment, and damages for loss of the fruit jar business. In addition it claims damages for delay in payment of each of these items, and also claims an amount for exemplary damages.

The McKee Glass Company seeks to recover the amount paid Hartford in settlement of the accounting proceedings, the royalties paid Hartford from January 1, 1934, to October, 1944, the amount of litigation expenses, the amount of payments to the special master and the master's accountants, the amount of payments to accountants engaged by McKee itself, and for loss upon the Shawkee and Kucera feeders and for loss on Shawkee stock investment. Also an amount is claimed for delay in payment, and an amount for exemplary damages.

The Shawkee Manufacturing Company claims for the amount paid Hartford in settlement of the accounting proceeding, for litigation expenses, for salary paid George R. Haub, and for certain miscellaneous expenses. Also an amount is sought for delay in payment of these amounts, and an amount as exemplary damages.

Hartford denies liability upon the counterclaims. First, it asserts that the parties, represented by Mr. Jaspert for all the counterclaimants and Mr. Eldred for Hartford, entered into a settlement agreement of the entire matter in 1939, and by that settlement the counterclaimants are bound. It denies liability for the royalties paid it from January, 1934, because the amounts so paid it were not pursuant to and by virtue of the injunction decree, and therefore the counterclaimants are not entitled to restitution of such amounts. Liability is also denied for the amounts paid for litigation and travel expenses, as Hartford, never having received the sums so paid, is not required to make restitution of them to the claimants. The payments having been made by reason of the erroneous injunction issued by the court, Hartford claims the wrong is damnum absque injuria, no pleading of malicious prosecution appearing. Liability is denied upon the claim of loss by reason of the claimants' inability to engage in the manufacture of fruit jars which resulted, it is asserted, from the wrongful use of Hartford's patent. This claim is alleged to be for purely speculative damages, and in addition is not supported by any proper pleading of malicious prosecution. Denial of liability is made upon the loss of the Shawkee feeders and upon the claim for loss of claimants of their investment in that feeder. The reasons for the denial have been in part already mentioned.

It will be noted that when the injunction issued against the counterclaimants no bond was required from Hartford. In such case defendants, against whom an injunction wrongfully issued, are ordinarily entitled to recover only costs and restitution of the amounts directly paid by them by virtue of the decree. To this ordinary rule one exception exists. If the action is a malicious prosecution, brought without probable cause and for the purpose of injuring the defendants and without hope of success, then defendants may recover, as direct damages, not as restitution, for the injuries inflicted. See Greenwood County v. Duke Power Co., 4 Cir., 107 F.2d 484, 131 A.L.R. 870, certiorari denied, 309 U.S. 667, 60 S.Ct. 608, 84 L.Ed. 1014, and cases cited therein.

The first claims of the counterclaimants, hereinbefore mentioned, are for restitution of the amounts paid, as it is asserted, in settlement of the accounting proceedings. By the original decree the then defendants were ordered to account to Hartford, and subsequent to the order on February 9, 1939, Glenshaw Glass Company, Inc., paid Hartford $11,167.85, Shawkee Manufacturing Company paid $1,205.79, and McKee Glass Company paid it $2,773.31. Counsel for Hartford claims these sums were not paid solely by virtue of the decree, but were paid as a part of a settlement between the parties of the instant case and several others in which Hartford and one or more of the then defendants were interested, and that in the negotiations for the settlement no mention was made of the Clarke article, nor was any other false statement made to induce the settlement. So far as appears in the testimony no fraud subsequent to the Clarke article entered into the matter, and later than the payments in question settlements were made upon the other cases pending. Nevertheless the payments set forth were in settlement of the accounting ordered by the decree, and would not have been made except by virtue of the decree; and they were made at a time when "Shawkee had no direct proof of its charge" of fraud. Shawkee v. Hartford-Empire Co., supra. In the judgment of the court each counterclaimant is entitled to restitution of the amounts so paid Hartford, with an amount to compensate for delay in payment, not to exceed six per cent. per year of the amount paid, from the date of the injunction.

Other than the claim upon the settlement of the accounting proceedings, each claim of Glenshaw, McKee and Shawkee is one, not for restitution, but for damages, and depends upon the finding of the court as to whether or not the original action brought against the defendants is to be characterized as a malicious prosecution.

Both Glenshaw and McKee, after the injunction decree, made a number of payments to Hartford in settlement of royalties for the use of the Howard and...