United Motors Service v. Tropic-Aire

• Decision Date: 29 February 1932
• Docket Number: No. 9228.,9228.
• Parties: UNITED MOTORS SERVICE, Inc., v. TROPIC-AIRE, Inc.
• Court: U.S. Court of Appeals — Eighth Circuit

57 F.2d 479 (1932)

UNITED MOTORS SERVICE, Inc., v. TROPIC-AIRE, Inc.

No. 9228.

Circuit Court of Appeals, Eighth Circuit.

February 29, 1932.

Frank A. Whiteley, of Minneapolis, Minn., for appellant.

A. C. Paul, of Minneapolis, Minn., for appellee.

Before KENYON, VAN VALKENBURGH, and GARDNER, Circuit Judges.

KENYON, Circuit Judge.

Appellee (hereinafter designated as plaintiff) brought suit on April 28, 1930, in the United States District Court, District of Minnesota, against United Motors Service, Inc., appellant (hereinafter designated as defendant), for infringement of claims 6 and 7 of reissue letters patent No. 17,131, which was a reissue of a patent granted to one Caesar for improvements in heating apparatus for automobiles. With its bill of complaint plaintiff filed a motion for a preliminary injunction. Issue was raised by defendant as to the validity of the letters patent; infringement was denied. No affirmative relief was asked, but it was prayed that the complaint be dismissed at plaintiff's cost.

July 2, 1930, District Judge Molyneaux granted a preliminary injunction upon plaintiff filing a bond in the sum of $25,000 conditioned to save defendant harmless from all loss and damage it might suffer from the issuance of the preliminary injunction if the same should later be held to have been improvidently granted.

July 2, 1930, defendant appealed from the order granting the preliminary injunction to this court.

July 17, 1930, defendant presented a motion to this court to increase the bond to an amount sufficient to adequately protect defendant for any losses it might suffer, which was denied. A motion to increase the bond made to the trial court had been previously denied.

At the time the District Court granted the temporary injunction, it had been held by District Judge Sanborn in the case of Tropic-Aire, Inc., v. Sears, Roebuck & Co., 44 F. (2d) 577, that claims 6 and 7 of the Caesar patent, in so far as they were valid, were so limited by the prior art as not to be infringed under the state of facts presented to the court. The decision of the District Court in that case was appealed to this court, which on September 5, 1930, held that the Caesar patent was invalid for lack of invention. Tropic-Aire, Inc., v. Sears, Roebuck & Co., 44 F.(2d) 580.

October 13, 1930, defendant dismissed its appeal.

On October 15, 1930, on motion of defendant in the District Court, unopposed by plaintiff, the preliminary injunction of July 2, 1930, was dissolved.

November 26, 1930, plaintiff secured an order upon defendant to show cause why the plaintiff's motion to dismiss its bill of complaint upon payment of costs should not be granted. The motion to dismiss set forth the various stages in the progress of the case and stated that defendant had not prayed for any affirmative relief and would not be prejudiced in any substantial right by dismissal of plaintiff's bill, and asked that the same be dismissed without prejudice, the costs to be taxed against the plaintiff.

Defendant responded to the order to show cause on December 22, 1930, and alleged that on December 18, 1930, plaintiff filed a bill in equity in the United States District Court of the Eastern District of New York against E. A. Wildermuth, charging infringement of the said Caesar reissue patent, No. 17,131, and that Wildermuth was an authorized agent of the defendant, and further alleged that by reason of the improvident issue of the preliminary injunction it had been caused great damage and loss in an amount which ought to be ascertained by the court and directed to be paid over by plaintiff, and filed a number of affidavits in support of its position. One of the allegations of the response was: "X. That it is not right and proper in view of the above-recited facts that Plaintiff herein should be permitted to dismiss its bill without prejudice, or that said bill should be dismissed at all, until the loss and damage due the Defendant from the Plaintiff by reason of the improvident grant of said Preliminary Injunction shall be assessed and paid."

Defendant presented a form of order in which it was asked: "That the Defendant recover of the Plaintiff and of the Sureties on the Injunction Bond such damages as Defendant has suffered by reason of the issuance of said Injunction." It was also asked therein that the cause be referred to a special master to consider the evidence of defendant's damage and report to the court what the damage and loss to defendant was by reason of the improvident issuance of the injunction.

February 25, 1931, the trial court made and entered the following decree:

"(Decree, February 25, 1931.)

"United States District Court, District of Minnesota, Fourth Division.

"Tropic-Aire, Incorporated, Plaintiff, "No. 1679 vs. In Equity.

"United Motors Service, Inc., Defendant.

"This cause came on for hearing December 23, 1930, upon order directed to defendant to show cause why plaintiff's motion to dismiss its bill of complaint herein without prejudice and upon payment of costs, should not be granted; and after argument of counsel for both sides, and consideration, it is

"Ordered, Adjudged and Decreed:

"1. That said cause be and hereby is dismissed without prejudice.

"2. That plaintiff pay the taxable costs of this suit.

"Dated this 25th day of February, 1931.

"Joseph W. Molyneaux, U. S. District Judge."

And with this the court filed the following note: "Note. In this case it is discretionary with the Court to either dismiss the case on the motion of the plaintiff and leave the defendant to recover in an action at law on the injunction bond such damage as he may be entitled to, or to dismiss the action and retain jurisdiction to determine the defendant's damages under the bond," citing a number of cases as sustaining his ruling. The appeal is from this decree.

Defendant contends that the trial court abused its discretion in dismissing plaintiff's complaint without prejudice, and in not retaining jurisdiction until the amount of defendant's damages was ascertained and settled, that in permitting dismissal of plaintiff's complaint the District Court departed from well-established principles of equity, that the procuring of the preliminary injunction by the plaintiff and the procuring of a bond limitation, which plaintiff well knew was entirely inadequate, was unconscionable and ought not to preclude the right of defendant to recover from plaintiff in the equity case its actual damages.

The only question here is whether the District Court abused its discretion in dismissing the cause without prejudice.

The general rule of the federal courts undoubtedly is that ordinarily a plaintiff has a right to dismiss a bill in equity without prejudice before final hearing on payment of costs. There are well-established just exceptions to this rule, to wit, where defendant asks on the pleadings affirmative relief or where he has acquired in the proceedings some substantial right or advantage that he would lose by virtue of the dismissal. There may come a point in a suit where a dismissal by plaintiff would work not a mere hardship but such an injustice to a defendant that a court should not permit it. The controlling case on the right to dismiss is In re Matter of Skinner & Eddy Corporation, Petitioner, 265 U. S. 86, 93, 94, 44 S. Ct. 446, 447, 68 L. Ed. 912. We quote from this opinion of the Supreme Court as follows:

"It is ordinarily the undisputed right of a plaintiff to dismiss a bill in equity before final hearing. * * *

"The right to dismiss, if it exists, is absolute. It does not depend on the reasons which the plaintiff offers for his action. The fact that he may not have disclosed all his reasons, or may not have given the real one, cannot affect his right.

"The usual ground for denying a complainant in equity the right to dismiss his bill without prejudice at his own costs is that the cause has proceeded so far that the defendant is in a position to demand on the pleadings an opportunity to seek affirmative relief and he would be prejudiced by being remitted to a separate action. Having been put to the trouble of getting his counter case properly pleaded and ready, he may insist that the cause proceed to a decree."

The exceptions to the rule are clearly stated in Pennsylvania Globe Gaslight Co. v. Globe Gaslight Co. (C. C.) 121 F. 1015, 1016, as follows: "First, where the dismissal would deprive the defendant of some substantial right which has accrued to him since the suit was commenced; second, where the defendant prays for, or is entitled to, some affirmative relief, as, for example, where there is a cross-bill."

In Greenville Banking & Trust Co. et al. v. Selcow et al., 25 F.(2d) 78, 80 (C. C. A. 3d), the court after stating the right refers to the exceptions as follows: "However, where defendants have acquired rights which might be lost, rendered less efficient or prejudiced by dismissal, otherwise than by the annoyance of prospective future litigation, the court in the exercise of a sound discretion may deny the application." These cases are typical of practically all the authorities. See Western Union Tel. Co. et al. v. American Bell Tel. Co. (C. C.) 50 F. 662; City of Detroit v. Detroit City Ry. Co. et al. (C. C.) 55 F. 569; Lindley v. Denver et al. (C. C. A.) 259 F. 83; Pullman's Palace-Car Company v. Central Transportation Company, 171 U. S. 138, 18 S. Ct. 808, 43 L. Ed. 108; McGowan et al. v. Columbia River Packers' Association et al., 245 U. S. 352, 38 S. Ct. 129, 62 L. Ed. 342; Sauter v. First Nat. Bank of Philadelphia et al. (C. C. A.) 8 F.(2d) 121; Scholl Mfg. Co., Inc., v. Rodgers (C. C. A.) 51 F. (2d) 971.

There may be gathered from the plethora of language employed in the cases in drawing fine distinctions a simple rule, viz., if it is inequitable to permit the dismissal of an equity case it should not be done. Whether it is inequitable is to be determined by the trial court in the exercise of a...