Norris Manufacturing Company v. RE Darling Co.

• Decision Date: 25 March 1963
• Docket Number: No. 8720.,8720.
• Citation: 315 F.2d 633
• Parties: NORRIS MANUFACTURING COMPANY, Appellee, v. R. E. DARLING CO., Inc., Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

315 F.2d 633 (1963)

NORRIS MANUFACTURING COMPANY, Appellee, v. R. E. DARLING CO., Inc., Appellant.

No. 8720.

United States Court of Appeals Fourth Circuit.

Argued November 9, 1962.

Decided March 25, 1963.

James P. Donovan, Washington, D. C., for appellant.

Edward F. Shea, Jr., Baltimore, Md. (Paul F. Due and Joseph Sherbow, Baltimore, Md., on brief), for appellee.

Before HAYNSWORTH and BOREMAN, Circuit Judges, and BUTZNER, District Judge.

HAYNSWORTH, Circuit Judge.

In an effort to avoid partial execution upon a judgment against it, the judgment-debtor has appealed, contending that the judgment is not a final, appealable order. We find that it was, and that there was no abuse of discretion when the District Judge required a partial payment upon it.

The defendant, R. E. Darling Co., Inc., is a manufacturer of high altitude, oxygen, breathing hoses and equipment. The plaintiff, one of its suppliers, brought this action for the recovery of $101,658.28 for goods sold and delivered by the plaintiff to the defendant. The defendant admitted that it owed the plaintiff $96,338.28 for goods which it had purchased, but it claimed that some other goods, invoiced at $5,320, which it had received from the plaintiff were defective. The defendant contested the plaintiff's claim to that extent. The defendant also filed a counterclaim against the plaintiff, in which it set forth causes of action unrelated to the plaintiff's complaint. In the counterclaim, it is alleged that the plaintiff owns a beneficial interest in Space Aero Products Co., Inc., a competitor of the defendant's, some of the officers of which are former employees of the defendant. The counterclaim charges that the plaintiff with certain of the defendant's employees conspired and in concert obtained certain of the defendant's trade secrets, designs, drawings and materials, and utilized them to the profit of Space Aero Products Co., Inc., and to the detriment of the defendant. It sought a large amount of money in actual and punitive damages on the counterclaims.

Since the plaintiff's claim of $101,658.28 was contested only to the extent of $5,320, and the remainder of $96,338.28 was uncontested, the plaintiff moved for a summary judgment in its favor as to the uncontested portion of its claim. Its motion was granted by an order of May 2, 1961, but execution upon the judgment was stayed pending the further order of the Court upon condition that the defendant file a sufficient bond in the penal sum of $100,000, conditioned upon the payment to the plaintiff of any amount ultimately found to be due. This order contained no determination that there was no just reason for delay.

Thereafter the parties engaged in a number of pretrial proceedings, during which it is apparent that both parties treated the contested portion of the plaintiff's claim as having been left open for litigation and ultimate determination by the Court, in spite of the fact that the defendant had filed the bond required as a condition of the stay of execution on the order of May 2, 1961, from which fact it would appear that the Court and parties thought that the judgment otherwise would have been final and subject to execution.

During the remainder of 1961, the parties were principally concerned with preparation of the case for trial on the counterclaims. In that connection, the Court in May 1961 appointed a distinguished chemical engineer as a Special Master to investigate the activities of Space Aero Products Co., Inc. and its alleged use of drawings, trade secrets and confidential information obtained from the defendant. Apparently, because each side was interested in the security of still secret information each possessed, the engineer designated as Special Master was to proceed in an ex parte fashion, and it was clearly understood by the Court and the parties that his findings were not to be accepted until he and his informants had been subject to cross examination in open court. The Special Master filed a report in September 1961, which, based upon his ex parte investigation, lent some support to the defendant's counterclaims. For the reasons stated, however, the report carries with it no present presumption of correctness, though its conclusion indicates that the defendant's counterclaims are not frivolous and were not interposed solely for the purpose of delay.

The issues raised by the counterclaims were far from simple, however, and by early 1962 were still unready for trial. The plaintiff had not paid certain income tax obligations it owed to the United States, with the result that a tax lien was filed with the defendant to protect the interest of the United States in the moneys due by the defendant to the plaintiff upon the judgment of May 2, 1961.

Thereafter, the plaintiffs sought a revision of the order of May 2, 1961. After a hearing on March 30, 1962, the District Court ruled that in moving for summary judgment the plaintiff had not reserved the right to claim the contested sum of $5320, and that the order of May 2, 1961 awarding judgment in favor of the plaintiff in the sum of $96,338.28 was intended to have been a final order disposing of the whole of the plaintiff's claim. It ordered the defendant to deliver its check payable jointly to the order of the plaintiff and the District Director of Internal Revenue in the amount of $50,000 on account of the judgment, provided that the plaintiff would file a bond for $25,000, conditioned upon its payment of any judgment which might be rendered in favor of the defendant upon the counterclaims. Upon such payment, the amount of the bond previously filed by the defendant was to be reduced from $100,000 to $50,000.

The District Court declared that if it should be in error in its interpretation of its order of May 2, 1961, it would then be its purpose to direct...