Root Refining Co. v. Universal Oil Products Co.

• Decision Date: 06 July 1948
• Docket Number: No. 5546,No. 6459.,5648,5546,6459.
• Citation: 169 F.2d 514
• Parties: ROOT REFINING CO. v. UNIVERSAL OIL PRODUCTS CO. AMERICAN SAFETY TABLE CO. v. SINGER SEWING MACHINE CO.
• Court: U.S. Court of Appeals — Third Circuit

169 F.2d 514 (1948)

ROOT REFINING CO. v. UNIVERSAL OIL PRODUCTS CO.

AMERICAN SAFETY TABLE CO. v. SINGER SEWING MACHINE CO.

Nos. 5546, 5648, No. 6459.

Circuit Court of Appeals, Third Circuit.

July 6, 1948.

COPYRIGHT MATERIAL OMITTED

Ralph S. Harris and John R. McCullough, both of New York City, and Adam M. Byrd, of Chicago, Ill. (Dwight, Harris, Koegel & Caskey and Frederick W. P. Lorenzen, all of New York City, on the brief), for Universal Oil Products Co.

Leslie Nichols and Allen C. Holmes, both of Cleveland, Ohio, for William Whitman Co., Inc.

George B. Clothier, of Philadelphia, Pa., Edwin M. Otterbourg, of New York City, and Leon J. Obermayer, of Philadelphia, Pa., for American Safety Table Co.

Synnestvedt & Lechner, Newton A. Burgess, John F. Ryan and Reginald Hicks, all of New York City, for Singer Sewing Machine Co.

H. G. Morison, Asst. Atty. Gen., and Roy C. Hackley, Jr., and Alfred C. Aurich, Sy. Assts. to Atty. Gen., for the United States of America.

Before SOPER and MAHONEY, Circuit Judges, and PRETTYMAN, Associate Justice of United States Court of Appeals for the District of Columbia, Sitting by Designation of the Chief Justice of the United States, FRED M. VINSON.

SOPER, Circuit Judge.

This proceeding relates to the integrity of the judgments of this court in certain patent infringement suits, that is, two companion cases, Nos. 5648 and 5546, Root Refining Company v. Universal Oil Products Company, June 26, 1935, 78 F.2d 991, and also No. 6459, American Safety Table Company v. Singer Sewing Machine Company, March 9, 1938, 95 F.2d 543. It is asserted that these judgments are invalid and should be vacated because in each case there was a corrupt and illicit conspiracy to obstruct justice between J. Warren Davis, one of the former judges of this Court, and Morgan S. Kaufman, one of the attorneys for the successful litigant; and that in each case the successful litigant was party to the unlawful combination. The two Universal cases were one for all practical purposes and were so treated at the time they were tried in the District Court and in this court. The trial of the charges respecting the judgments therein was consolidated by us with the trial of like charges respecting the judgment in the American Safety Table Company v. Singer Sewing Machine Company case, since much of the evidence was common to both cases.

Nos. 5546 and 5648. Root Refining Company v. Universal Oil Products Company.

Universal Oil Products Company was owned one-half by the Standard Oil Company of California and one-half by the Shell Oil Company. It was the owner and licensor of certain patents for the production of gasoline from petroleum, on which patents its suits against Root Refining Company were based; and Universal was also the plaintiff in other infringement suits, in respect to the same patents, against other oil companies in various parts of the United States. The instant proceeding had its inception at an informal hearing in this court on June 5, 1941, before certain judges of this court who were not members thereof when the judgments under examination were rendered. On that date the attorneys for the defendants in the other suits brought by Universal appeared in this court and charged that the judgments in Root Refining Company v. Universal Oil Products Company were invalid for the reasons outlined above, and that these judgments were being used in the other cases as a precedent or as res judicata with respect to the validity of the patents. Universal was represented by attorneys at this hearing, but Root was not, since it did not desire to reopen the case and disturb an agreement with Universal entered into in the early part of 1939, whereby Root acquired a license under the patents, before the investigation of the charges against Davis and Kaufman had been begun.

Davis and Kaufman were tried under an indictment to obstruct justice in the District Court of the Eastern District of Pennsylvania between May 19 and May 29, 1941, and the trial resulted in a disagreement of the jury.¹ The attorneys who attacked the judgments in this court at the hearing on June 5, 1941, alleged that the evidence then recently offered at the first criminal trial indicated that Davis had been bribed by Kaufman to secure a decision favorable to Universal in the Root appeals; and they suggested an investigation of the matter but, as their clients were not parties in the cases, they expressed doubt as to their capacity to participate. The presiding judge of the court thereupon suggested that they serve as amici curiae, and accordingly, they accepted this role.

Thereafter, petitions were filed by the attorneys in which as amici they asked the court to appoint a master to investigate the Root appeals, stating at the same time that they were also concerned with the interests of their clients in suits which Universal had brought against them. Universal, on its part, while denying the fraud, offered to consent to a reargument of the Root cases without disturbing its agreement with Root even though Universal should prevail in the reargument; but this offer was not accepted. On November 26, 1941, the court appointed a master and authorized and directed him to examine, investigate and report to the court his conclusions concerning the relationship between Universal, Morgan S. Kaufman and Judge Davis in connection with these cases and particularly whether the judgments of this court therein were tainted and invalidated by fraud. He was directed to receive relevant documents and evidence in the possession of the United States Department of Justice, its Bureau of Investigation, and United States Attorneys, and to inspect the federal grand jury proceedings in New York and Philadelphia. He was given power to summon and swear witnesses, and subject them to the examination and cross examination of the attorneys. It was further ordered that the fees and expenses of the master should be first paid by the amici, and ultimately taxed against them or Universal as the court might direct.

The master took the testimony of numerous witnesses who were sworn and subjected to examination by the amici and by the attorneys of Universal; and the master also examined records in the possession of the United States Attorney in New York, the records of the proceedings of the grand jury in Philadelphia and other records and statements, in the absence and without assistance of the attorneys. On October 19, 1943, he reported his conclusion that the judgments of the Circuit Court of Appeals in the Root appeals were tainted and invalidated by fraud. The nature of his work is described in Universal Oil Co. v. Root Refining Co., 328 U.S. 575, 66 S.Ct. 1176, 90 L.Ed. 1447, wherein the Supreme Court considered the propriety of certain fees which had been allowed by this court to the amici for their services. The Supreme Court said: (328 U.S.at pages 578, 579, 66 S.Ct. at page 1178)

"* * * He examined records in the possession of the United States Attorney for the Southern District of New York, the records of proceedings before a Philadelphia grand jury, bank records, and various statements of interested parties. From this mass of material, he selected those documents which he deemed appropriate for submission to the inspection of the amici and of counsel for Universal. Witnesses were also heard and petitioner was given the right to cross-examine. * * * Petitioner's (Universal's) counsel duly excepted to the manner in which the investigation was being conducted, `if it were to involve any property rights of our clients, including the validity of any judgment. * * *' The master evidently did not view the proceedings in the light of an adversary litigation. He ruled `that the investigation — for that is all it is — should not be conducted strictly according to the rules of evidence in litigation.' At the conclusion of this investition, the master rendered a report in which he concluded `that there was in connection with this case such fraud as tainted and invalidated the judgments' in the Root appeal."

Exceptions to the master's report were filed by the amici and by Universal but on June 15, 1944, after hearing, the court overruled the exceptions, adopted the findings and conclusions of the master, vacated the judgments of June 26, 1935, recalled its mandate and restored the cases to the reargument list. 62 U.S.P.Q. 114. No attempt to review this order was made. Thereafter application was made by the amici for the allowance of costs, disbursements and fees, and after a hearing an order was passed on December 29, 1944, wherein the amici were allowed $100,000 for their services and the additional amount of $54,606.57 as reimbursement for their out-of-pocket expenses. Root Refining Co. v. Universal Oil Products Co., 3 Cir., 147 F.2d 259. These amounts had in fact been already paid to the amici by their oil company clients, and the awards therefore constituted an order for the reimbursement to the clients by Universal. With respect to this order a writ of certiorari was sought and granted, and when it was considered by the Supreme Court, this court's order was reversed.² In passing on the question, the Supreme Court made the following statement which directly bears upon the power and duty of this court as now constituted in conducting the present proceeding. We refer particularly to portions of the statement which we have emphasized. The court said (328 U.S. at page 580, 66 S.Ct. at page 1179, 90 L.Ed. 1447, June 10, 1946):

"The inherent power of a federal court to investigate whether a judgment was obtained by fraud, is beyond question. Hazel-Atlas Co. v. Hartford-Empire Co., 322 U.S. 238, 64 S.Ct. 997, 88 L.Ed. 1250. The power to unearth such a fraud is the power to unearth it effectively. Accordingly, a federal court may bring before it by appropriate means all those who may be affected by the outcome of its investigation. But if the rights of parties are to be...