William Whitman Co. v. Universal Oil Products Co., Civ. A. No. 987.

CourtUnited States District Courts. 3th Circuit. United States District Court (Delaware)
Citation125 F. Supp. 137
Docket NumberCiv. A. No. 987.
PartiesWILLIAM WHITMAN COMPANY, Inc. (formerly The National Refining Company), Plaintiff, v. UNIVERSAL OIL PRODUCTS COMPANY, Defendant.
Decision Date16 July 1954

125 F. Supp. 137

WILLIAM WHITMAN COMPANY, Inc. (formerly The National Refining Company), Plaintiff,

Civ. A. No. 987.

United States District Court D. Delaware.

July 16, 1954.

125 F. Supp. 138
125 F. Supp. 139
125 F. Supp. 140
125 F. Supp. 141
125 F. Supp. 142
125 F. Supp. 143
Caleb S. Layton, Richards, Layton & Finger, Wilmington, Del., Walter J. Milde, Robert W. Poore, Allen C. Holmes, James T. Lynn, Jones, Day, Cockley & Reavis, Cleveland, Ohio, Thorley von Holst, Thiess, Olson & Mecklenburger, Chicago, Ill., for plaintiff

E. Ennalls Berl and William S. Potter, Berl, Potter & Anderson, Wilmington, Del., Ralph S. Harris, Frederick W. P. Lorenzen, Joanna H. Maxwell, Adrien L. Ringuette, Dwight, Royall, Harris, Keogel & Caskey, New York City, Charles M. Thomas, Washington, D. C., John G. Woods, Des Plaines, Ill., for defendant.

RODNEY, District Judge.

This action, based on fraud, traces its devious course back to 1929 and 1931. This preliminary and abbreviated statement of facts is largely taken from a former opinion of this Court of July 12, 1950, 92 F.Supp. 885.

In 1929 and 1931 defendant's predecessor, a South Dakota corporation of the same name as defendant, commenced two suits in this court against the Winkler-Koch Engineering Co. and the Root Refining Company, respectively, charging them with the infringement of two of its patents, the Egloff and Dubbs patents. These suits were consolidated for trial, and an opinion was filed on April 27, 1934, sustaining the validity of the patents and holding that they were infringed by the process practiced by Root.1 Root appealed to the Circuit Court of Appeals for this Circuit, and that court unanimously affirmed the decree of the District Court, the opinion being written by Judge J. Warren Davis. Rehearing of the case was subsequently denied by the Circuit Court of Appeals2 and the Supreme Court denied Root's petition for certiorari.3 The present defendant was substituted for the South Dakota corporation in the Root case by an order of this Court entered pursuant to an opinion dated October 9, 1936, 16 F.Supp. 846.

In the meantime Universal Oil Products had brought patent infringement suits against other oil companies, including plaintiff in the present action, and especially against the present plaintiff in a suit in Kansas. This last mentioned suit was settled by an agreement of April 1, 1937. Around this agreement and settlement cluster all of the difficulties of the present case. That agreement must herein receive such detailed consideration that it must be sufficient at this point to merely state that it is alleged by the plaintiff that it was induced to become a party to such settlement by fraud and by reason of its reliance upon defendant's representation that it (Universal) had obtained a valid judgment in its favor in the Root case.

In 1941 proceedings were instituted in the United States Circuit Court of Appeals for the Third Circuit, as it was then designated, upon the initiative of certain lawyers, who had originally represented Root Refining Company in the Root case but who were now acting in a somewhat personal capacity, to have that court inquire into the integrity of its own judgment in the Root case. The suggestion was made that Judge Davis had been bribed by Universal to render a decision in Universal's favor when the Root case went up to the Circuit Court on appeal. A master was appointed and seems to have made extensive investigation of the facts. Universal took part in these proceedings, but Root Refining Company did not do so, its former attorneys acting in the proceedings simply as amici curiae. The master rendered a report in 1943, in which he concluded that there was such fraud in connection with the appellate proceedings in the Root case as tainted and invalidated the judgments rendered by the Circuit Court of Appeals on June 26, 1935.

125 F. Supp. 144

On June 15, 1944, the Circuit Court of Appeals entered an order that the judgments be vacated and the cases reargued. Thereafter the amici curiae applied to the Circuit Court for an order directing that their expenses and compensation and those of the master be taxed against Universal. The Circuit Court granted this application on December 29, 1944, 3 Cir., 147 F.2d 259. Universal petitioned the Supreme Court for a writ of certiorari with respect to the order of December 29, 1944. The Supreme Court reversed the judgment of the Circuit Court, as far as the compensation and expenses of the amici curiae were concerned.4

Thereafter the Circuit Court of Appeals decided to vacate its order of June 15, 1944, and on June 20, 1947, it entered an order to that effect. The order also directed Universal to show cause why the judgment of affirmance in the Root case should not be set aside and vacated by reason of the alleged fraud and corruption practiced upon the Circuit Court by Universal or those acting for it; it permitted the intervention of Skelly Oil Company and authorized the Attorney General or some member of his staff to appear as amicus curiae.

The Chief Justice of the United States designated three judges from other circuits to sit as the Circuit Court of Appeals for the Third Circuit in further proceedings in this matter. In the meantime Whitman filed a motion in the Circuit Court for leave to intervene. The intervention was permitted by an order of that court on April 6, 1948, over the opposition of Universal. In the same order the court formulated the charges to be tried, which were, in essence, whether the action of Judge Davis in the case had been influenced by an expectation of gain under an agreement with one Kaufman, and whether Kaufman had been employed by Universal to exercise improper influence upon Judge Davis. Hearings were held and extensive testimony was taken by the Court of Appeals. It found that the judgments in the Root case were tainted with fraud and ordered the judgments to be vacated.5 Finally, after Universal had unsuccessfully petitioned the Supreme Court for writs of certiorari and for rehearings upon the Supreme Court's denial of certiorari, the Court of Appeals issued its mandate directing the District Court to vacate its decrees in the Root case and to dismiss the bills of complaint therein, by reason of the fraud practiced upon the Court of Appeals by Universal.

In the meantime the Kansas suit of Universal against National which had been instituted in 1935 was being maintained. Intermittent attempts to arrange a license from Universal to National and a settlement of pending matters had continued, but on December 13, 1936, National had refused the license on the terms then offered. The Kansas case was being prepared and trial had been set for April 26, 1937. On March 13, 1937, Universal filed an amendment setting up the original affirmance of the Root case in the Circuit Court of the Third Circuit as a bar to National's defense on the merits on the ground of res judicata.

The agreement of April 1, 1937 quickly followed and the then pending suit was discontinued. The plaintiff contends that the defendant had corruptly and fraudulently obtained the affirmance in the Root case and that it fraudulently used such corruptly-obtained judgment as res judicata in the Kansas case. The plaintiff therefore seeks rescission of the contract of April 1, 1937, together with other relief.

It will be borne in mind that the name of the plaintiff, "William Whitman, Inc.," is a new name for the same corporation formerly known as "National Refining Co." and as mentioned in this opinion.

This case contains many complex questions of law and of fact. Elaborate

125 F. Supp. 145
findings of fact and conclusions of law are separately filed. The case has consumed 97 days of actual trial, almost 13,000 pages of testimony in 32 volumes and contains many thousand exhibits. Voluminous briefs have been filed and numerous arguments had. It has been impossible to compress within more reasonable limits the consideration of the many questions presented. The skill, uniform courtesy and helpfulness of counsel have contributed to a very large extent in lessening the burdens of the court

Two questions should be disposed of in limine. In the agreement between the parties, hereinafter discussed in detail, some patents of the plaintiff were assigned to the defendant. Originally some claim as to these patents was made, but the question has been considered as moot and will receive no further consideration herein.

Secondly, a great quantity of exhibits, over four hundred in number, were offered in evidence, en masse, by the plaintiff. The defendant has entered both a general objection and a series of individual and special objections and moves that the exhibits be stricken. In a large measure the exhibits represent the culling of old files of the parties, long discarded, and represent old correspondence and inter-office memoranda. No witness testified to the authenticity of the exhibits and they do not seem to satisfy the requirements of the Federal Business Records Act, 28 U.S.C. ? 1732. None of the exhibits has been considered as material in the ensuing opinion and I think the motion of the defendant should be granted and the exhibits excluded.

I have been requested, initially, to determine as to which jurisdiction we must look for the applicable law. There are so many facets involved in the case at bar it is difficult to determine as to which phase I am requested to examine the law of a particular jurisdiction. It is, of course, useless to expend a long time upon the question of the applicability of a particular jurisdiction where it is not shown to have a distinct application differing from that of other jurisdictions. There are, however, some aspects of the case in which the law is not entirely uniform.


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