Warford Corporation v. Bryan Screw Mach. Products Co., 5331.

• Decision Date: 05 November 1930
• Docket Number: No. 5331.,5331.
• Citation: 44 F.2d 713
• Parties: WARFORD CORPORATION et al. v. BRYAN SCREW MACH. PRODUCTS CO. et al.
• Court: U.S. Court of Appeals — Sixth Circuit

44 F.2d 713 (1930)

WARFORD CORPORATION et al. v. BRYAN SCREW MACH. PRODUCTS CO. et al.

No. 5331.

Circuit Court of Appeals, Sixth Circuit.

November 5, 1930.

Daniel L. Morris, of New York City (M. S. Rupert, of New York City, and Albert Lynn Lawrence, of Cleveland, Ohio, on the brief), for appellants.

Ray Martin, of Toledo, Ohio (F. F. Crampton, of Toledo, Ohio, Ira J. Wilson, of Chicago, Ill., and Marshall, Melhorn, Marlar & Martin, of Toledo, Ohio, on the brief), for appellees.

Before DENISON, MOORMAN, and HICKS, Circuit Judges.

MOORMAN, Circuit Judge.

The Chrysler Corporation is the owner of the law patent 1,010,273 for a speed changing mechanism for automobiles. Its predecessor in ownership, The Maxwell Motor Car Company, granted the Warford Corporation a license under the patent upon a royalty basis to manufacture and sell the invention, with the exclusive right to sell it as an auxiliary for Ford automobiles. It also granted the licensee the right to sue for infringement of the patent in its exclusive field. The Bryan Screw Machine Products Company manufactures automobile transmissions, and the Chicago Transmission Company is a selling agency for the Bryan Company. This suit was brought by the Warford Company and the Chrysler Company against both the Bryan Company and the Chicago Company for infringement of the patent. The bill alleged inter alia that in an action in the District Court for the Northern District of Ohio by the former owner and the Warford Corporation against Riordan, the patent was sustained and adjudged infringed by the same device alleged to infringe in this proceeding. It also alleged that the defendants herein were parties privy to that proceeding and were bound by the decree therein. The defendants denied that they were bound by the decree in that case. They also denied validity and infringement, and by way of confession and avoidance asserted the defense of equitable estoppel arising from laches in commencing the earlier case. By counterclaim they alleged unfair competition by misuse of the decree in the former case, and they sought an injunction, enjoining and restraining plaintiffs from such further practices. Upon the hearing plaintiffs' motion for an injunction was denied, their bill dismissed, and the injunction prayed for in the counterclaim granted.

There can be no doubt that the decree in the Riordan case is conclusive and binding upon the parties of record in that proceeding, not only as to all matters therein adjudicated, but also as to every matter which might have been offered to sustain or defeat the claims and defenses therein asserted. The primary question here is whether the defendants in this proceeding were in privity with Riordan in the former case as alleged in the bill. The evidence on that point is not in dispute. In May of 1925 suit was brought against Riordan, who was superintendent and factory manager of the Bryan Company, and who had a contract for selling that company's transmissions in a defined district, including Cleveland. Upon the filing of the suit, counsel for the Bryan Company began negotiations with Mr. Crampton, attorney for the plaintiffs, looking to a settlement of the suit and the taking out of a license for the patent by the Bryan Company. Answer in the form of a general denial was filed under an agreement with plaintiffs' counsel that at any time within thirty days it could be amended without objection. Later interrogatories were filed which were answered by plaintiffs, and stipulations were entered into from time to time extending the time of trial. While these court proceedings were taken in the name of Riordan, defendant of record, he was the nominal defendant only, the Bryan Company being the real defendant in interest. The proofs show that that company, upon the filing of the suit, immediately took charge and control of the case through its attorney whom it employed and paid and who, in addition to filing an answer and interrogatories, made an investigation of the prior art in Washington and New York in preparation for trial. We think it was in privity with Riordan in that action. Penfield v. C. & A. Potts Co., 126 F. 475 (6 C. C. A.); Van Kannel Revolving Door Co. v. Winton Hotel (D. C.) 263 F. 988; Beyer Co. v. Fleischmann Co., 15 F.(2d) 465 (6 C. C. A.); Carson Inv. Co. v. Anaconda Copper Mining Co. (C. C. A.) 26 F.(2d) 651; Zip Mfg. Co. v. Pep Mfg. Co., 27 F.(2d) 219 (6 C. C. A.); Hart Steel Co. v. Railroad Supply Co., 244 U. S. 294, 37 S. Ct. 506, 61 L. Ed. 1148.

But it is said that the decree was not binding upon the Bryan Company because it was in the nature of a consent decree. We do not agree that it was a consent decree. The court required proofs of every matter put in issue by the answer, and while the decree was in the nature of a default decree, it was not the less binding upon the privies as well as the parties. It has been held...