Salvage Process Corp. v. ACME TANK C. PROCESS CORP., 267.
| Decision Date | 22 May 1939 |
| Docket Number | No. 267.,267. |
| Citation | 104 F.2d 105 |
| Parties | SALVAGE PROCESS CORPORATION et al. v. ACME TANK CLEANING PROCESS CORPORATION. |
| Court | U.S. Court of Appeals — Second Circuit |
W. Hastings Swenarton, of New York City, for appellant.
Larkin, Rathbone & Perry, of New York City (Albert Stickney and Charles B. McGroddy, Jr., both of New York City, of counsel), for appellees.
Before SWAN, AUGUSTUS N. HAND, and PATTERSON, Circuit Judges.
This appeal brings up for review a decree entered upon a reference to ascertain the damages sustained by the defendant by reason of the improvident issuance of a preliminary injunction in a patent infringement suit. As required by statute, 28 U.S. C.A. § 382, the plaintiffs had posted a surety bond in the sum of $25,000 conditioned on payment to the defendant of "such costs and damages, not exceeding the before mentioned sum, as it may sustain by reason of the injunction, if the Court finally decides that the plaintiffs are not entitled thereto." On a prior appeal this court reversed the decree which granted the preliminary injunction. Salvage Process Corp. v. Acme Tank Cleaning Process Corp., 2 Cir., 86 F.2d 725. Upon final hearing the trial court granted a permanent injunction as to one of the claims in suit, which was likewise reversed on appeal. Salvage Process Corp. v. Acme Tank Cleaning Process Corp., 2 Cir., 94 F.2d 69. The improvidently issued preliminary injunction was in force from August 6, 1936, to February 9, 1937, and the order vacating it referred the cause to a special master to ascertain and report to the court the damages sustained by the defendant by reason thereof. After lengthy hearings the master reported that no damages had been proved. Over the defendant's exceptions, the report was confirmed and costs of the reference amounting to $1,305.59 were awarded the plaintiffs who had been required to pay them in the first instance. This decree is now before us.
The special master has written a comprehensive and able report which discusses seriatim the several items of damages claimed by the defendant. In our opinion he disposed of the defendant's contentions in accordance with well established law.
The first item relates to punitive damages for malicious prosecution and libel. On August 18, 1936, the plaintiffs wrote letters to three shipyards, subsidiaries of Todd Shipyards Corporation, informing them that the preliminary injunction which the plaintiffs had obtained restrained the defendant "from further operations." This was a misstatement of the effect of the injunction, which did not enjoin all operations by the defendant but merely infringement of specified claims of the patents in suit. Whether the false statement as to the extent of the injunction be viewed as evidence tending to support a cause of action for malicious prosecution or a cause of action for libel in respect to the defendant's business, the denial of punitive damages was correct. Damages for libel are plainly not within the coverage of the bond; they do not result from the issuance of the injunction but from an independent tort committed by the plaintiffs. Only such damages as are covered by the bond are recoverable in this proceeding. See United Motors Service v. Tropic-Aire, 8 Cir., 57 F.2d 479, and cases therein cited. On the assumption that recovery of damages for malicious prosecution of the suit was permissible under the reference — though this may well be doubted — the master was quite right in holding that no such claim was proven. Even if the letters be viewed as showing that the plaintiffs bore malice towards the defendant and as such might be considered some evidence that a similar feeling had prompted them to seek the preliminary injunction, proof of another essential element, namely, lack of probable cause, was absent. The granting of a preliminary injunction upon notice to opposing parties, even though reversed on appeal, is at least prima facie evidence of probable cause. Burt v. Smith, 181 N.Y. 1, 73 N.E. 495, 2 Ann.Cas. 576, appeal dismissed in 203 U.S. 129, 27 S.Ct. 37, 51 L.Ed. 121; Donnally v. Fairmont Brewing Co., 87 W. Va. 494, 105 S.E. 778. The granting of a final...
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...held to be conclusive of probable cause.Id. (citing Clements, 67 Md. at 463–64, 10 A. 442);see also Salvage Process Corp. v. Acme Tank Cleaning Process Corp., 104 F.2d 105, 107 (2d Cir.1939) (“The granting of a final injunction, despite reversal on appeal, is conclusive evidence of probable......
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