Terry Steam Turbine Co. v. B.F. Sturtevant Co.

• Decision Date: 15 March 1913
• Docket Number: 319.
• Parties: TERRY STEAM TURBINE CO. v. B. F. STURTEVANT CO.
• Court: U.S. District Court — District of Massachusetts

204 F. 103

TERRY STEAM TURBINE CO. v. B. F. STURTEVANT CO.

No. 319.

United States District Court, D. Massachusetts.

March 15, 1913

John P Bartlett and Bartlett, Brownell & Mitchell, all of New York City, for complainant.

Benjamin Phillips and Horace Van Everen, both of Boston, Mass., for defendant.

DODGE Circuit Judge.

The plaintiff's bill charges the defendant with infringement of United States patents 741,385 and 793,857, to Edward C Terry, both for improvements in steam turbines. It asks for an injunction and an account. It was filed March 4, 1912. The case was at issue in June, 1912. The plaintiff's testimony has been taken, the defendant's is not yet completed. There have been no orders of court limiting the time for taking testimony on either side.

The new equity rules of the Supreme Court having gone into effect the defendant now asks leave to file a supplemental answer which is to charge the plaintiff with infringing United States patent 748,678, to Herman Wolke, for an improvement in turbines, and which is to ask for an injunction against the plaintiff and an account. The defendant contends that this is 'a counterclaim against the plaintiff which might be the subject of an independent suit in equity' against it, and which may therefore be set out in its answer, to be heard and determined as a cross-suit under rule 30 of the new rules. 198 F. xxvi, 115 C.C.A. xxvi.

In its original answer, filed June 3, 1912, the defendant set up the Wolke patent as an anticipation of the Terry patents whereon the plaintiff sued, and alleged also, under Rev. Stats. 4920 (U.S. Comp. St. 1901, p. 3394), that Terry had surreptitiously or unjustly obtained his patents for that which was in fact invented by Wolke, who was using reasonable diligence in adapting and perfecting the same. No other connection appears between the subject-matter of the plaintiff's suit and that which the defendant seeks to institute against the plaintiff.

If the defendant has, under these circumstances, what may be properly described as a counterclaim against the plaintiff, which he might have set up in his original answer under rule 30, the court has discretionary power, under rule 34 of the new rules (198 F. xxviii, 115 C.C.A. xxviii), to let him set it up in a supplemental answer. Either party may be allowed under rule 34 thus to allege material facts occurring after his former pleadings, and the defendant's proposed supplemental answer alleges that it has acquired the Wolke patent since its original answer was filed. The first question is, however, whether or not the proposed supplemental answer states a 'counterclaim' within the meaning of rule 30.

The material part of this rule is as follows:

'The answer must state in short and simple form any counterclaim arising out of the transaction which is the subject-matter of the suit, and may, without cross-bill, set out any set-off or counterclaim against the plaintiff which might be the subject of an independent suit in equity against him, and such set-off or counterclaim, so set up, shall have the same effect as a cross-suit, so as to enable the court to pronounce a final judgment in the same suit both on the original and cross claims.'

The defendant does not and could not say that its claim for infringement of the Wolke patent is a 'set-off' in equity against the plaintiff's claim for infringement of the Terry patents. While set-offs in equity need not necessarily arise out of the same transaction, they are allowed only upon mutual contract debts between the parties, in the same right, and, generally speaking, the demands must be liquidated. When unliquidated demands are allowed to be set off, it is for special equitable reasons, as the insolvency or nonresidence of the opposing claimant. See North Chicago, etc., Co. v. St. Louis, etc., Co., 152 U.S. 596, 615-617, 14 Sup.Ct. 710, 38 L.Ed. 565. No authority is found for the proposition that a claim arising from a tort may be an equitable set-off. Both claims here in question arise from torts; neither is primarily a claim for damages, still less for liquidated damages, but each is primarily for an injunction; an accounting for profits and damages being sought as incidental relief.

The defendant's allegation is that it has a counterclaim against the plaintiff's demand. But since it cannot contend that its so-called counterclaim arises out of the transaction which is the subject-matter of the suit, so as to come within the first clause of the above-quoted paragraph of rule 30, it is obliged to rely entirely on the following words:

'And may, without cross-claim, set out any set-off or counterclaim which might be the subject of an independent suit,' etc., and to contend that by these words any cross-claim, even though it has no connection whatever with the plaintiff's cause of action, is permitted to be set up in the original suit.

The following considerations prevent me from believing that the rule is to be thus understood:

In the first place, the main purpose which the quoted part of rule 30 was intended to accomplish is evident. It is to dispense with cross-bills by requiring everything previously done by cross-bill to be thereafter done by answer only. The provision is, not that a defendant may set up any cross-claim whatever against the plaintiff, provided only that it might be the subject of an independent bill, but that any set-off or counterclaim answering that description may be so set up. The cross-claim, in other words, if not maintainable as a set-off in equity, must be of such a nature as to constitute a proper counterclaim in equity. The...