Skelly Oil Co. v. Universal Oil Prods. Co.

• Decision Date: 01 July 1949
• Docket Number: Gen. No. 44627.
• Citation: 338 Ill.App. 79,86 N.E.2d 875
• Parties: SKELLY OIL CO. et al. v. UNIVERSAL OIL PRODUCTS CO.
• Court: United States Appellate Court of Illinois

338 Ill.App. 79

86 N.E.2d 875

SKELLY OIL CO. et al.

v.UNIVERSAL OIL PRODUCTS CO.

Gen. No. 44627.

Appellate Court of Illinois, First District, First Division.

June 20, 1949.

Rehearing Denied July 1, 1949.

Appeal from Circuit Court, Cook County; Harry M. Fisher, Judge.

Action by Skelly Oil Company and others against Universal Oil Products Company for damages for fraud. From judgment dismissing amended complaint, the plaintiffs appeal.

Reversed in part and affirmed in part and remanded with directions.Thiess, Olson & Mecklenburger, Chicago (J. Bernhard Thiess, Thorley von Holst, Albert F. Mecklenburger, Sidney Neuman, Robert W. Poore, Chicago, of counsel), for appellants.

Poppenhusen, Johnston, Thompson & Raymond, Chicago (Floyd E. Thompson, Chicago, of counsel), for appellee.

FEINBERG, Presiding Justice.

This appeal is from an order and judgment dismissing the amended complaint, charging fraud, based on the bribery by defendant of a judge of the United States Circuit Court of Appeals for the Third Circuit in a patent infringement suit. Root Refining Co. v. Universal Oil Products Co., 78 F.2d 991. The theory of the court below was that the amended complaint failed to state a cause of action.

Plaintiffs were sued in separate suits by defendant for the same alleged infringement of the patent involved in the Root case, to which they were not parties. Universal alleged in each of said latter suits that the judgment in the Root case was res adjudicata as to them. All of the plaintiffs were users of the Winkler-Koch process of cracking and refining petroleum, held in the Root case to be an infringement of the patents owned by Universal. Shortly after the institution of the suit against Root, plaintiffs contributed to a fund to be used to defray the expense of defending patent infringement suits brought by Universal against users of the process, claimed by Universal to be a violation of the patents owned by them. There was expended from this fund the expenses attendant upon the defense of the infringement suits against plaintiffs, Root and the National Refining Company, another user of the process. It was alleged in the complaint that Universal knew of this fund and the use intended to be made of it in the defense of said suits. The infringement suits against plaintiffs were instituted between April 11, 1930, and August 23, 1934. The Root case was tried before any of the suits against plaintiffs or the National Refining Company. The Root case was decided in favor of Universal (Universal Oil Products Co. v. Winkler-Koch Engineering Co., D. C., 6 F.Supp. 763), and upon appeal was argued before the Circuit Court of Appeals for the Third Circuit on January 7, 1935. On April 1, 1935, the suit against National Refining Company was commenced. June 26, 1935, the Circuit Court of Appeals affirmed the judgment in the Root case, 78 F.2d 991, and on October 21, 1935, a petition for certiorari was denied by the Supreme Court, 296 U.S. 626, 56 S.Ct. 149, 80 L.Ed. 445. Accounting proceedings followed against the Root and National companies, and on January 24, 1939, Root settled Universal's claim for profits and damages. Shortly before that the National company settled its case. The suit against Globe, one of the plaintiffs, was decided in favor of Universal (Universal Oil Products Co. v. Winkler-Koch Engineering Co., 27 F.Supp. 161) by the District Court for the Northern District of Illinois, which held that the judgment in the Root case was res adjudicata. Subsequently, on July 18, 1939, upon a petition for rehearing before the District Court, the original judgment in the Globe case was vacated (Universal Oil Products Co. v. Globe Oil & Refining Co., 31 F.Supp. 665). The hearing upon the merits in the Globe case was had July 24, 1941, 40 F.Supp. 575, in which the District Court held the patents invalid and decided adversely on the issue of res adjudicata. The judgment in the Globe case was affirmed by the Circuit Court of Appeals for the Seventh Circuit June 30, 1943, 137 F.2d 3, and affirmed by the Supreme Court of the United States May 29, 1944, 322 U.S. 471, 64 S.Ct. 1110, 88 L.Ed. 1399. The dates of these decisions are important, as shall presently be pointed out, in relation to the public exposure of the bribery of Judge Davis in the Root case.

The amended complaint seeks to recover not only the moneys contributed by them in the defense of the Root and National cases, but the necessary outlay and expense of defending each of the cases against them brought by Universal. It alleged that Universal in pleading the judgment in the Root case impliedly represented that the judgment was valid and not a corrupt judgment obtained by fraud and bribery. It alleged in detail the facts of the bribery of Judge Davis, who wrote the opinion in the Root case. The details of the bribery were enumerated in the subsequent opinion of the Circuit Court of Appeals for the Third Circuit, in which it vacated its former judgment and directed the dismissal of Universal's suit against Root, 169 F.2d 514. It alleged that each of the plaintiffs was compelled to expend a large sum of money in defending its suit against the claim of res adjudicata, alleged by Universal, when it knew at the time it made its claim of res adjudicata that the Root judgment was obtained by Universal by fraud and corruption through the bribery of Judge Davis.

In the view we take of this appeal, we shall discuss only that part of the amended complaint which seeks to recover the necessary expense and damages incurred by each of the plaintiffs in the defense of each of their suits brought against them by Universal.

It is the theory of the plaintiffs that they are entitled to recover, as indicated, because of the fraud and corruption of Universal.

Tersely stated, the theory of the defendant is that the present action is for fraud and deceit, and that in such an action it is necessary to allege that the plaintiffs relied upon the implied representation that the judgment obtained by Universal, against Root, was a valid judgment; that these plaintiffs resisted the claim of res adjudicata and, therefore, did not rely upon the implied representation, which defeats their right to recover; that it is against public policy to permit a defendant to recover money necessarily expended in defense of a patent infringement suit, except taxable costs.

The shocking type of fraud involved in the instant case should not be compared with the ordinary case of fraud and deceit, or where perjury is deliberately employed by a successful litigant in the trial of a case. The latter type of fraud is not uncommon, but the bribery of a Federal Court of Appeals judge to secure a corrupt judgment, and the use of the corrupt judgment by the briber as a basis for similar litigation against others, is quite a different type of fraud from that discussed in the cases relied upon by defendant. The claim here presented, arising out of the bribery of the judge, may be sui generis. At least no like reported case has been cited.

The designation of the action is of no moment. If the facts, as set up in the instant complaint, disclose the unprecedented type of fraud we are dealing with, then the situation demands a remedy. The framers of the State Constitution of 1870, Article II, § 19, Smith-Hurd Stats., wisely inserted this provision:

‘Every person ought to find a certain remedy in the laws for all injuries and wrongs which he may receive in his person, property or reputation; he ought to obtain, by law, right and justice freely, and without being obliged to purchase it, completely and without denial, promptly, and without delay.’

This is a clear mandate to the courts, that wherever the legislature has failed to provide a remedy, the courts must. This constitutional protection should be here invoked, especially where the legislature has not provided a remedy. Courts should not be helpless to find a remedy for a fraud of the instant type. If the statute fails to provide a remedy, the court can, as it has in many instances under the common law and equitable principles. In the cases of fraud and deceit the remedy is generally provided for by the courts, not by statute. It is perfectly clear that the Constitution had not in mind only remedies created by legislative enactment. The right of these plaintiffs to use the process alleged to be an infringement was a property right, and was not an infringement upon any right or patent Universal claimed, as was ultimately adjudicated. In the pursuit of their property right to use the process, plaintiffs should not have been burdened with the expense of defending against a claim of infringement based upon the corrupt judgment of the Court of Appeals. This money expended was a property loss. The constitutional provision should be applied to this wrong to property. That this corrupt judgment had its effect at the outset upon the District Court in Illinois is borne out by the first opinion in the Globe case (27 F.Supp. 161).

Judge Davis and his co-conspirator were indicted for conspiracy to obstruct justice, and bribery. They were tried upon this indictment between May 19 and May 29, 1941, resulting in a disagreement of the jury. A second trial upon the same indictment was had between July 28 and August 21, 1941, also resulting in a disagreement. It was upon the trial of this indictment that the evidence revealed the alleged bribery and conspiracy of obstruct justice, 169 F.2d 514. A petition in the Root case was presented June 5, 1941, to the United States Court of Appeals for the Third Circuit to vacate its previous judgment, and was heard by three justices designated by the Chief Justice of the United States Supreme Court, 169 F.2d 514. The petition informed the court of the corrupt and illicit conspiracy of Judge Davis and his accomplice, not only in the Root case but also in another case in that court. American Safety Table Co. v. Singer Sewing Machine Co., 3 Cir....