United States v. Jacobs, 8311.

• Decision Date: 29 December 1961
• Docket Number: No. 8311.,8311.
• Citation: 298 F.2d 469
• Parties: UNITED STATES of America, Appellee and Cross-Appellant, v. Donald H. JACOBS, doing business as The Jacobs Instrument Company, Appellant and Cross-Appellee. Covington & Burling, Intervenor.
• Court: U.S. Court of Appeals — Fourth Circuit

298 F.2d 469 (1961)

UNITED STATES of America, Appellee and Cross-Appellant, v. Donald H. JACOBS, doing business as The Jacobs Instrument Company, Appellant and Cross-Appellee Covington & Burling, Intervenor.

No. 8311.

United States Court of Appeals Fourth Circuit.

Argued April 13, 1961.

Decided December 29, 1961.

Donald H. Jacobs on brief pro se.

Marvin S. Shapiro, Atty., Dept. of Justice, Washington, D. C. (William H. Orrick, Jr., Asst. Atty. Gen., Leon H. A. Pierson, U. S. Atty., Baltimore, Md., and Alan S. Rosenthal, Atty., Dept. of Justice, Washington, D. C., on brief), for appellee and cross-appellant.

George Blow, Washington, D. C. (James C. McKay, Washington, D. C., on brief), for intervenor.

Before SOBELOFF, Chief Judge, and SOPER and HAYNSWORTH, Circuit Judges.

HAYNSWORTH, Circuit Judge.

This is another chapter of a long book, the end of which is not yet at hand. For some of the earlier chapters, see Jacobs v. United States, 4 Cir., 239 F.2d 459; Jacobs v. Tawes, D.C.Md., 151 F.Supp. 770, aff'd. 4 Cir., 250 F.2d 611; Jacobs v. United States, 4 Cir., 252 F.2d 296; Jacobs Instrument Co. v. Comptroller, 216 Md. 290, 140 A.2d 285; United States v. Jacobs, D.C.Md., 187 F.Supp. 630.

The judgment in the original case, brought by the United States to obtain from Jacobs property belonging to the United States and copies of documents, was reopened by the District Court and certain supplemental orders were entered from which both the United States and Jacobs have appealed to this court.

In 1949 Jacobs obtained a government contract, NOrd 10531, for the development of an electronic bombing system to be used in air craft. In 1953, the United States exercised its reserved right to terminate the contractor's work. Thereafter, the United States instituted this action against Jacobs to require him to turn over to the Navy Department personal property drawings and other documents acquired, made or developed by Jacobs during the course of the work under the contract. Jacobs filed a number of counterclaims, which the court disallowed in part, and, to the extent it found the counterclaims meritorious, it concluded that in this action in equity the United States could be required to pay over some $20,072.91, which the court found to be due to Jacobs under the contract. An order was entered requiring Jacobs to permit the copying of all relevant drawings and documents, but conditioning the right of the United States to obtain the copies upon a delivery to the clerk of the court of a check payable to Jacobs in the amount found to be due him. The order provided that Jacobs could obtain the check, after the United States had obtained copies of his drawings and other documents, upon signing a release of all other claims against the United States under the contract and filing a certificate of compliance with the patent provisions of the contract.

Both parties appealed to this court. We affirmed the order of the District Court, holding specifically that the Navy had the right to terminate work by Jacobs under the contract and approving the District Court's conditioning enforcement of the rights of the United States upon its paying into the court the amount of money found to be due to Jacobs.¹

Thereafter the Comptroller of the Treasury of the State of Maryland sought to assess certain sales and use taxes to Jacobs. Jacobs brought an action in the District Court, seeking to enjoin the collection of those taxes amounting to some $1900, including penalties and interest. That action was dismissed for want of jurisdiction.² We affirmed.³ Thereafter Jacobs filed a motion to reopen the judgment in the original action brought against him by the United States and to require the United States to pay the Maryland sales and use taxes. That motion was denied without prejudice to a subsequent motion by Jacobs in that action after his liabilities for sales and use taxes had been adjudicated by the state court and after resort to his administrative remedy. We affirmed, granting to the District Court leave to reopen its judgment and to act upon any renewal of the motion which might be filed after termination of the proceedings in the state courts.⁴ Thereafter, Jacobs appealed from a decision of a lower state court, sustaining the assessment of sales and use taxes, to the Maryland Court of Appeals. The Maryland Court of Appeals dismissed the appeal because it found that Jacobs had not undertaken to file with it a record complying with its rules, the extracts filed being insufficient for its determination of the questions presented.⁵

Thereafter, and after certain other motions presently to be mentioned had been filed in the original action brought against him by the United States, Jacobs filed a motion in which he again sought to obtain an order requiring the United States to pay the Maryland sales and use taxes. Additionally, he sought reimbursement for certain expenses he alleged he had incurred and compensation for harassment, to which he claimed he had been subjected.

Meanwhile, much time had elapsed since the United States had deposited with the clerk of the court its check payable to Jacobs as required by the original order. Jacobs had not taken down this check nor had he filed a release or a certificate of compliance with the patent provisions of the Navy contract, as required by the original order of the District Court. Whatever other reason he may have had for not having done so, the pendency of the question of his right of reimbursement for any Maryland sales and use taxes, which he might be required to pay furnished some reason for his not executing the release in the form prescribed in the original order of the District Court. Apparently, Jacobs did not undertake to obtain a modification of the prescribed terms of the release to except from its provision his contingent claim for reimbursement for sales and use taxes paid by him.

The United States filed a motion in the original proceeding, in which it sought the return of its check because of Jacobs' noncompliance with the conditions for its delivery to him.

Messrs. Covington & Burling, of Washington, D. C., came upon the scene in one of the earliest chapters of this book. They represented Jacobs in the original action brought in the District Court, but had withdrawn from the case under circumstances later to be mentioned. They re-entered the scene, seeking the allowance of an attorney's fee and the assistance of the court in securing its payment out of the funds represented by the check of the United States, then in the hands of the court.

Still later, Maryland undertook to assert a lien for the sales and use taxes it claimed to be due by Jacobs, and the United States claimed a lien for certain income taxes it had assessed against Jacobs.

After further hearings, the District Court decided that the fund represented by the Government's check for $20,072.91, was created through the efforts of the attorneys, Covington & Burling, by reason of which fact it was authorized to determine and allow a reasonable attorney's fee. The court further decided that the motion in which Jacobs sought to require the United States to pay the Maryland sales and use taxes and reimburse him for certain expenses and to compensate him for other claimed losses did not state a claim upon which relief could be granted. Mr. Jacobs did not appear at these hearings. He was then temporarily residing in Victoria, British Columbia, from whence he communicated with the court by mail, but he was not present in Baltimore to execute releases, and his communications with the court indicated that he had no intention of signing releases or certificates of compliance with the patent provisions of the Navy contract. The District Judge concluded, under those circumstances, that the interests of the United States were adequately protected by its adjudication of all of the claims that Jacobs had asserted under the contract, by the Statute of Limitations, and, as to the patent provisions of the contract, by its possession of copies of all of Jacobs' drawings and other relevant documents. The Court appointed its Clerk receiver for Jacobs, with instructions to endorse the check of the United States in the name of Jacobs and to deposit the funds in the registry of the court, subject to the further order of the Court. It stayed the effectiveness of the order pending an appeal to this Court.

The Appeal of the United States

The United States first questions the power of the Court to enter an order authorizing its check to be cashed and the funds disbursed without having in hand a release and a certificate of compliance with the patent provisions of the contract, each signed by Jacobs. The argument is that Fed.Rules Civ.Proc. Rule 60(b) (5) and (6), 28 U.S.C.A. is the only source of the Court's power to reopen its judgment, and that neither party moved that the judgment be modified in that respect.

It is true the rule provides "on motion and upon such terms as are just, the court may relieve a party * * * from a final judgment * * *." Ordinarily, the matter can be brought to the attention of the court only by some pleading. The obvious purpose of the provision for a motion is to permit an informal pleading in the action in which the final judgment had been entered, rather than by a more formal pleading in a new and independent action to which reference is made in a later portion of the rule. The rule need not necessarily be read as depriving the court of the power to act in the interest of justice in an unusual case in which its attention has been directed to the necessity for relief by means other than a motion.⁶ In somewhat comparable situations, it has been held that the rules permit the entry of summary judgment in favor of a party who has not sought it by motion,⁷ and the court, upon its own initiative, may set aside a judgment that is void.⁸

Here, however, each of the original parties to the action, the...