St. Louis Car Co. v. JG Brill Co.

• Decision Date: 11 January 1937
• Docket Number: No. 1741.,1741.
• Citation: 25 F. Supp. 244
• Parties: ST. LOUIS CAR CO. v. J. G. BRILL CO. et al.
• Court: U.S. District Court — Western District of Pennsylvania

25 F. Supp. 244

ST. LOUIS CAR CO. v. J. G. BRILL CO. et al.

No. 1741.

District Court, E. D. Pennsylvania.

January 11, 1937.

Sundheim, Folz & Sundheim and Samuel D. Goodis, all of Philadelphia, Pa., and Cushman, Darby & Cushman, John J. Darby, C. Willard Hayes, and Gorham F. Freer, all of Washington, D. C., for plaintiff.

Hugh M. Morris and S. Samuel Arsht, both of Wilmington, Del., and Donald U. Rich, of New York City, for defendant.

KIRKPATRICK, District Judge.

This is a suit in equity for an accounting. In 1906 the plaintiff's predecessor and the defendant agreed in writing to take licenses under a patent—O'Leary Re-Issue No. 11,992—which had been in litigation, and to pay royalties into a common pool for division between them. The defendant refused to pay royalties upon certain cars manufactured by it, beginning in 1911, and the question involved in this suit is whether or not those cars embody the device of the patent, which had to do with means for pushing side panels and sashes of trolley cars up into the roof of the car so that a closed car can be converted into an open one.

There are three principal defenses— first, that the suit has abated and that there is now no party plaintiff; second, laches; and third, that the defendant's cars are not within the scope of the patent.

1. Abatement and Lack of Party Plaintiff.

In 1925, while this suit was pending, the plaintiff went through a reorganization. It had been incorporated in Missouri and it proceeded according to the general corporation law of that state. In order to be able to use its name for the new, reorganized company, it first changed its name to "Liquidating Car Company". It then assigned all its assets to a new company having the old name—St. Louis Car Company —which latter also assumed the liabilities. The new company was also a Missouri corporation. Having thus reorganized, the charter of the old company, Liquidating Car Company, formerly the original St. Louis Car Company, plaintiff in this case, was surrendered or forfeited (January 1, 1927) and that company ceased to exist.

None of the numerous counsel on either side seems to have known anything about the reorganization, and the cause proceeded for some eleven years without any recognition of the change upon the record. It was apparently discovered after the trial, in June and July, 1936. The plaintiff thereupon promptly filed a suggestion, putting before the Court the foregoing history together with certain statutes of the State of Missouri, and moving that the name of the plaintiff be changed of record and that the suit proceed in the names of its surviving officers and directors, or rather those of the Liquidating Car Company which was the original plaintiff under the name which it adopted for the reorganization.

The situation is rife with technical difficulties for the plaintiff, and the defendant, not unnaturally, seeks to take advantage of them. The plaintiff's difficulties are twofold.

First, the general rule is that when a complainant parts, pendente lite, with his interest in the subject matter of litigation he cannot further prosecute the suit. Pittsburgh S. & N. R. Company v. Fiske, 3 Cir., 178 F. 66, 67. The old company parted with its interest in this litigation when, under its new name of Liquidating Car Company, it assigned all its assets including the choses in action here involved to the new company. Federal Equity Rule 37, 28 U.S.C.A. following section 723, provides, "Every action shall be prosecuted in the name of the real party in interest * * *".

But Rule 37 also provides, "but * * * a party expressly authorized by statute, may sue in his own name without joining with him the party for whose benefit the action is brought". If he may sue originally he may also continue the suit. A statute of the State of Missouri, Mo.St. Ann. § 904, p. 1183, provides, "when an interest is transferred in any action * * * the action shall be continued in the name of the original party etc. * * * or the court may allow the person to whom the transfer is made to be substituted in the action * * *". I agree that this matter is entirely procedural, but Rule 37 adopts, and directs the Federal Courts to follow, procedural statutes. Hence this action could be properly continued after the assignment in the name of the original party, the assignor. This disposes of the first difficulty.

The plaintiff's second difficulty is that the original party, a corporation, has ceased to exist, by reason of the forfeiture of its charter. The defendant argues that, even if the assignment did not abate the action, there is no longer any party plaintiff before the Court. However, the statutes of the State of Missouri, Mo.St.Ann. § 4561, p. 2007, provide that in such case the president and directors of the dissolved corporation shall have liquidating powers, including the power to sue for the recovery of debts. This part of the law is not procedural. "It concerns the fundamental law of the corporation enacted by the state which brought the corporation into being". Oklahoma Gas Company v. Oklahoma, 273 U.S. 257, 47 S.Ct. 391, 392, 71 L.Ed. 634. It will be recognized and administered by the Federal Courts. The result is that the real parties here entitled to carry on this litigation are the president and surviving directors of the original corporation which brought the suit.

I see no reason why they cannot be brought upon the record by suggestion, without resort to a supplemental bill or an original bill in the nature of a supplemental bill. Even if it were otherwise the liquidating managers could be formally brought upon the record by such means at any time. The question of laches does enter into this last consideration but that will be taken up next under the general defense of laches.

I hold that the defense based upon the abatement of the action and the want of a party plaintiff is not well taken.

2. Laches.

This defense is not purely technical, as was the one just discussed, but it does not reach the merits of the case.

The suit was brought in 1917. In 1923 it was automatically dismissed under a rule of this Court, no proceedings having been taken in it for three consecutive years. A month or two later, after full hearing and argument, this Court directed the order of dismissal vacated and the suit reinstated. Another three years elapsed before a decree in accordance with this ruling was entered. It was, however, finally done on February 23, 1926. Then came another period of ten years during which the sum total of proceedings in the case was (1) a half-hearted effort to define issues under Rule 11; (2) an amendment of the answer which was agreed to; (3) a counterclaim filed; and (4) a motion to dismiss, argued and denied.

I have gone through the docket entries and much of the voluminous files of correspondence offered in evidence in an effort to try to ascertain just why it took nearly twenty years to bring this case to trial. There was an immense amount of procrastination and quibbling, but it is only fair to say that a great deal of time was lost through circumstances over which the parties had no control. The deaths of some five lawyers, all closely connected with the case, are the milestones which mark its course. The judges have been more fortunate, but the picture is a depressing one from the point of view of the Court as well as that of surviving counsel, and the details will not be dwelt upon.

I think that there is no doubt that the period prior to February 23, 1926, must be diminated because on that day there was an adjudication by this Court that the suit was entitled to remain in full standing. But the ten years after that are still to be accounted for. There have been periods of time since 1926 when the Court, for various reasons, probably would not have been able to hear the case even if the parties had been ready. The plaintiff was certainly terribly remiss at...