Reynolds Metals Co. v. Metals Disintegrating Co.

• Decision Date: 27 June 1949
• Docket Number: No. 9840.,9840.
• Citation: 176 F.2d 90
• Parties: REYNOLDS METALS CO. v. METALS DISINTEGRATING CO., Inc.
• Court: U.S. Court of Appeals — Third Circuit

176 F.2d 90 (1949)

REYNOLDS METALS CO. v. METALS DISINTEGRATING CO., Inc.

No. 9840.

United States Court of Appeals Third Circuit.

Argued March 25, 1949.

Decided June 27, 1949.

Raymond F. Adams, New York City (Augustus C. Studer, Jr., McCarter, English & Studer, Newark, N. J., Curt Von Boetticher, Jr., New York City, on the brief), for appellant.

James D. Carpenter, Jersey City, N. J. (Carpenter, Gilmour & Dwyer, Jersey City, N. J., on the brief), for appellee.

Before MARIS, O'CONNELL and KALODNER, Circuit Judges.

O'CONNELL, Circuit Judge.

The instant complaint seeks reformation of a license agreement between plaintiff ("Reynolds") and defendant ("Metals Disintegrating") and the refund to Reynolds of certain royalty payments made in connection therewith to Metals Disintegrating. After extensive and prolonged pre-trial proceedings at which all the available information was stated to have been adduced, the court below granted the motion of Metals Disintegrating to dismiss the complaint as legally insufficient. D.C.N.J.1948, 8 F.R.D. 349. Both litigants have expressed the desire that the record on this appeal be treated as though it had been made at trial rather than in the preparatory stages of the case.

Diversity of citizenship being the basis of federal jurisdiction here, we refer to the law of New Jersey wherever applicable. Erie R. Co. v. Tompkins, 1938, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487.

The pertinent facts may be briefly summarized. In 1934, Reynolds began the installation of a ball mill for the manufacture of flake aluminum powder and paste. This activity led Metals Disintegrating, holder of patents involving like products, to file in 1938 a suit charging patent infringement. Negotiations ensued, during the course of which several drafts of licenses were presented for the consideration of Reynolds. That to which Reynolds eventually agreed, in 1939, included provisions purporting to fix the price and limit the sublicensing of dry aluminum bronze powder, which was unpatented.

In 1946, Reynolds advised Metals Disintegrating that this price-fixing attempt was apparently in violation of the antitrust laws. Metals Disintegrating thereupon offered an amendment calculated to cure that defect. Rejecting the proposed change because there was no allowance made for rebate of what Reynolds deemed to have been improperly paid royalties, Reynolds filed the complaint at bar.

The district judge, after candidly noting his disagreement with the views we expressed in Frederick Hart & Co. v. Recordgraph Corporation, 3 Cir., 1948, 169 F.2d 580, nevertheless decided in conformance with that opinion, and refused to strike the instant complaint as sham. He further found, however, that the contract was not severable and that the illegality of that price-fixing provision permeated the contract as a whole, and also that neither contracting party could obtain equitable relief because both were in pari delicto. He thereupon ordered judgment in favor of Metals Disintegrating.

The comments of the learned district judge directed to the advantages of permitting a "speaking motion," whereby a litigant might obtain the involuntary deletion of an allegation by his opponent through the medium of a motion reinforced by affidavits, merit an answer by us. He has ably presented the view contrary to that which we recognized as correct in the Frederick Hart case, supra, and to which we adhere. It seems to us that the Federal Rules of Civil Procedure, 28 U.S.C.A., were designed to facilitate correlation, and not duplication, between the pre-trial and trial proceedings. If the truth or falsity of allegations in pleadings may be adjudicated in advance of a trial through the technique of filing affidavits, it is to be expected that eventually the courts will have to develop pre-pre-trial procedures; for pre-trial proceedings such as those favored by the court below are likely to inspire all too many carefully-drafted written statements escaping the clarifying processes of cross-examination and delaying prompt disposition of cases. We are satisfied that pre-trial proceedings are intended to determine what the issues are, and not to invade the trial function of resolving those issues. The rule limiting the scope of motions to strike pleadings as sham, as exemplified in Bates v. Clark,...