David Bradley Manuf'g Co. v. Eagle Manuf'g Co.

57 F. 980, 6 C.C.A. 661, 1893 U.S. App. LEXIS 2220

• Court: Court of Appeals for the Seventh Circuit
• Decided: October 6, 1893
• Docket: No. 22
• Status: Published

Opinion

JENKINS, District Judge,

(after stating the fácts.) The general rule that a judgment or decree of a court of competent jurisdiction between two parties is conclusive in any other suit between them or their privies of every matter that was decided therein, and that was essential to the decision made, is not here called in question. It is objected, however, that the rule ought not to govern here, because — First, the decree in the suit in the southern district of Iowa was, at the bringing, of this suit, interlocutory, and not final, and is not, therefore, res adjudicata; second, the appolice has failed by supplemental bill or otherwise to plead the final decree in the former suit, and the record thereof was therefore improperly allowed in evidence; third, that the appellee has by stipulation expressly waived its right to assert the former recovery; and, fourth, that a new defense, not involved in the former case, is here asserted.

1. The suit in the circuit court of the United States for the southern district of Iowa was brought to restrain the infringement of the same claims of the same patent here in question. The defendant there was the agent of the present appellant in the sale of the infringing machines. The defense of the suit there was assumed and prosecuted by the appellant here. The appellant was in fact the real party to that litigation, and, so far as the decree there is res adjudicata, is as effectively concluded thereby as if it were the actual defendant to the record. Lovejoy v. Murray, 3 Wall. 1, 18, 19; Robbins v. Chicago, 4 Wall. 657, 672.

That the decree was interlocutory at the bringing of this suit, and subsequently ripened into a final decree, does not impair its efficacy or conclusiveness when properly presented in this suit. The relative time of institution of suit, or the relative date of final decree, is not of consequence if the merits of the controversy be thereby fully and finally determined, and the record thereof is properly brought to the attention of the court. Duffy v. Lytle, 5 Watts, 120; Casebeer v. Mowry, 55 Pa. St. 422; Child v. Powder Works, 45 N. H. 547.

2. It is doubtless necessary, where special pleading is required, that a former recovery should be pleaded in bar. There are cases where the record of a former recovery can be given in evidence without being specially pleaded; but this case is not one of them. We are therefore to inquire whether the allegations contained in the bill are sufficient to admit the record, and whether any objection to its admission was laid upon failure to properly plead the former recovery; for, if the record be properly before us in evidence, although not well pleaded, we are not only at liberty to consider it, but are bound to give full effect to it.

The bill in apt terms pleads the former suit, and the interlocutory decree rendered therein. Whether the pleader so charged it in the bill with the view to invoke the doctrine of comity, or as a supposed bar to an apprehended attack upon the validity of the patent, we cannot say. If the latter, it may be doubted wheiher it would not better accord with correct principles of equity pleading to assert a former recovery in bar by replication or special plea. However that may be, the decree pleaded was not technically well pleaded as a bar, because, being interlocutory, while it affirmed the validity of the patent and the fact of infringement, it still remained in the breast of the chancellor, and was subject to change. But the appellant was advised by the bill that the interlocutory decree was relied upon by the appellee as a protection against further attack upon the patent in question, and no exception to the matter in the bill was taken. The object of all pleading is to fitly advise an opponent of the particular charges or defenses relied upon, that he may be prepared to meet the particular matter, and be not taken by surprise. Here the appellant — so far as respects the interlocutory decree — was not only fully apprised of the position of its opponent, but by its answer and stipulation conceded the facts charged, and objected only to the decree that in rendering such judgment the court erred through failure to understand the operations of the Dalton machine, asserted to anticipate the invention of the appellee. While, therefore, the bill did not, in the view of strict pleading, present the issue of a former recovery, because it did not allege what did not at the time exist, — the formal final decree, — still when that final decree was offered in evidence it was properly allowed, and should be considered, unless proper objection was made to its reception upon the particular ground that it had not been pleaded. Walsh v. Colclough, (7th Circuit,) 9 U. S. App.—, — C. C. A. —, 56 Fed. Rep. 778. It was incumbent upon the appellant by fit objection at the time, or by subsequent motion to expunge, to have informed its opponent of the precise ground of objection. The objection could then have been obviated by amendment to the bill, or by proper supplemental pleading. It is too late to urge such objection for the first time upon an appeal.

It is to be further observed that the record of the final decree was introduced in evidence upon the consent of the appellant. The language of the stipulation is: “The defendant, though not appearing, consented in writing to the introduction of said proofs in so far as the same are material.” The stipulation covers four distinct matters allowed in evidence without other objection than that stated. The evident meaning of the stipulation is that the matters offered should all be received in evidence, subject only to the question of theif bearing upon the merits of the controversy. It was a waiver, in our opinion, of all formal objection. “Materiality” means “the property of substantial importance or influence, especially, as distinguished from formal requirement,” (Douvier;) “substantial, as opposed to formal,” (Johnson.) It is clear to our minds that the only reservation made in the stipulation was the question of the influence of the evidence upon the controversy between the parties, — whether the evidence tendered was of substance as affecting the matter in dispute. The stipulation ignores all formal requirements, all technical objections with respect to pleading. We conclude, therefore, that the final decree is properly in evidence, and should be considered, and given its, proper effect.

3. We are of opinion that the third objection, that the bar of a former recovery has been waived, is not tenable. All that remained to give full and final effect to the interlocutory decree of May 23, 1888, was the ascertainment of the damages, and the formal entry of final decree. This bill wras filed June 11, 1888. On the ¿5th September, 1889, the parties stipulated that in the suit in the southern district of Iowa the master should report that the complainant (the appellee here) had brought suit against the manufacturer (the appellant here) of the infringing machines in controversy' in that suit, “electing to recover in full of said manufacturer all profits and damages arising from the sales by the defendant herein, as well as other profits and damages, and for that reason will offer no proof of profits and damages in the cause;” and that the master should report nominal damages against the defendant there, which was doue. The stipulation further provided that the action of the court upon such report “shall not be claimed by said David Bradley Manufacturing Oo. to be a bar to the recovery by the Eagle Manufacturing Oo. of the said David Bradley Manufacturing Oo. of all damages and profits, if any, arising from the sale of the cultivator by the said David Bradley & Oo. in violation of the letters patent 242,497, to E. A. Wright, and by him assigned to the Eagle Manufacturing Co.” We cannot perceive that this stipulation has legal effect to waive the conclusiveness of the Iowa decree upon the validity of the patent and its infringement. The interlocutory decree had determined those questions; conclusively so when by final decree the matter was no longer at large. That would result, whatever the quantum of damages awarded. In the light of the situation of the parties at the time, the object and force of tbe stipulation is obvious. The validity of the patent, and its infringement, had been contested and determined against the agents of the appellant for the sale of its machines. The appellant had assumed the defense of that suit, and was defeated. It was, equally with its agents, (he defendant in that suit, liable for all damages sustained. If ike nominal defendant had ignorantly infringed, being employed io do it, there was a certain .equity that only nominal damages should he exacted, reserving to the appellee recourse to the more guilty infringer, the manufacturer. The appellant had, immediately upon the rendering of the interlocutory decree, instituted Shis suit to recover damages of the manufacturer for all damages sustained, whether by reason of the manufacture and sale of the machines in that suit adjudged to infringe or of others. It was but just, under such circumstances, that substantial damages should be sought of the guilty manufacturer, rather than of a possibly innocent agent. Such proceeding was also in the way of economy in litigation. It was assumed that that course could he safely pursued, if by stipulation the manufacturer would waive the bar of a decree entered for nominal damages, and permit a recovery to be sought in this suit for the actual damages sustained by reason of the manufacture and sale of the infringing machines involved in that suit. The stipulation speaks that object and no other. It contains no intimation that the decree should be at large with respect to the more important matter thereby put at; rest,' — the validity of the patent. There is nol any waiver of the bar of the decree in that respect. Eor does the record disclose to ns any such purpose or intent. We cannot do violence ¿o the plain language of the stipulation by importing into the agreement a stipulation not contained in it, nor authorized by the condition of the parties. It seems to us incredible that the appellee should release all the fruits of its victory without motive or apparent reason therefor. The stipulation in express terms limits tlie release of tlie bar of the decree to tbe subject ‘of damages, and is a release by tbe appellant.. In no.way did tbe appellee waive any claim with respect to tbe effect of tbe decree.

Nor do we see in tbe fact that testimony was taken in tbis suit touching tbe validity of tbe patent any reason to declare a waiver. Until final decree there was no res adjudicata. All such evidence was taken before tbe final decree of October 15, 1889, in tbe Iowa suit. Immediately thereafter, on tbe 23d day of October, 1889, tbe final decree was admitted in evidence here by consent of tbe appellant, together with tbe stipulation containing tbe admission of tbe appellant that it bad assumed and conducted tbe defense of that suit; and tbe evidence was thereupon closed. We are not prepared to say that tbe taking of evidence upon tbe issue presented by a defendant is a waiver by tbe complainant of tbe bar of a former recovery, even when well pleaded;' but it it be so, tbe rule cannot have application before sncb former recovery is rendered effectual by final decree. Nor do we perceive in tbe circumstances of tbe case any action of tbe appefiee that tended to mislead tbe appellant to its prejudice. The latter consented to tbe admission in evidence of tbis final decree, coupled with its admission that it bad assumed tbe defense of tbe Iowa suit. That record could have no other effect in evidence than as res adjudicata. It bad no possible function to perform save as a bar to attack upon tbe validity of tbe patent. Tbe appellant knew, or should have known, ■ tbis. It knew, or should have known, that such was tbe purpose in its introduction. Tbe right • of appeal was perfect in tbe appellant, beyond tbe control of its opponent. It failed to assert its right. The appellee should not, therefore, lose tbe benefit of tbe decree. Tbe consequences must fall where they justly belong, — upon tbe one failing to take advantage of an absolute right.

4. It is insisted that tbe matter is still at large with respect t.o certain defenses stated to have been not involved in the former case. This contention leads to tbe consideration of tbe question of tbe extent of tbe bar of tbe former recovery.

In Cromwell v. County of Sac, 94 U. S. 351, it was ruled that there existed a difference between tbe effect of a judgment as a bar or estoppel against tbe prosecution of a second action upon tbe same claim or demand, and its effect as an estoppel in another action between tbe same parties upon a different claim or cause of action. Tbe distinction is thus stated by Mr. Justice Field:

“In tlie former case, the judgment, if rendered upon the merits, constitutes an absolute bar to a subsequent action. It is a finality as to the claim or demand in controversy, concluding parties and those in privity with them, not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose: Thus, for example, a judgment rendered upon a promissory note is conclusive as to the validity of the instrument and the amount due upon it, although it be subsequently alleged that perfect defenses actually existed, of which no proof was offered, such as forgery, want of consideration, or payment If such defenses were not presented In the action, and established by competent evidence, the subsequent allegation of their existence is of no legal consequence. The judgment is as conclusive, so far as future proceedings at law are concerned, as though the defenses never existed. The language, therefore, which is so often used, that a judgment es-tops not only as to every ground of recovery or defense actually presented in the action, but also as to every ground which might have been presented, is strictly accurate, when applied to the demand or claim in controversy. Such demand or claim, having passed into judgment, cannot again be brought into litigation between the parties in proceedings at law upon any ground whatever. But where the second action between the same parties is upon a different claim or demand, the judgment in the prior action operates as an estoppel only as to those matters in issue or points controverted upon Hie determination of which the finding or verdict was rendered. In all cases, therefore, where it is sought to apply the estoppel of a judgment rendered upon one cause of action to matters arising in a suit upon a different cause of action, the, inquiry must, always be as to the point or question actually litigated and determined in the original action, not what might have been thus litigated and determined. Only upon such matters is the judgment conclusive in another action.”

In that case Cromwell brought action against the county of Sac upon four bonds of the county, and four coupons for interest, attached to them. The county asserted a judgment in a prior action by one Smith upon certain earlier maturing coupons on the same bonds, and charged that Cromwell was at the time the owner of the coupons so sued upon, and prosecuted the action for Ms sole use and beneiit. If was ruled in that action that the bonds were void, except in the hands of a bona tide bolder for value, and, failing proof of that fact, judgment was rendered for the county. It was held that the judgment was conclusive only of the fact that the plaintiff could not recover the amount of the coupons sued for, and for the reason that he had not shown himself a bona Me holder for value, and that finding did not preclude Cromwell from showing in another suit, and as to bonds and coupons not therein involved, that he was a. bona Me holder thereof for value.

In Davis v. Brown, 94 U. S. 423, two of a series of notes had passed into judgment upon the sole defense by the indorsers that they had not been legally charged as such. In a second suit upon certain oilier notes of the series the defense was asserted of an agreement by the plaintiff not to hold them liable for or to sue them upon their indorsements. The court held the former judgment not to be res adjudicate upon the new defense asserted to a different demand, saying by Mr. Justice Field, (page 428:)

“When a judgment is offered in evidence in a subsequent action between the same parlies upon a different demand, it operates as an estoppel only upon the matter actually at issue and determined in the original action; and such matter, when not disclosed by the pleadings, must be shown by extrinsic evidence.”

In Campbell v. Rankin, 99 U. S. 261, 263, the doctrine is thus stated by Mr. Justice Miller;

“Whatever may lia.ve been the opinion of other courts, it has been the doctrine of this court, in regard to suits on contracts, ever since the case of Steam Packet Co. v. Sickles, 24 How. 333, and in regard to actions affecting real estate, since Miles v. Caldwell, 2 Wall. 35, that whenever the same question has been in issue and tried, and judgment rendered, it is conclusive of the issue so decided in any subsequent suit between the same partios; and also, that whore, from the nature of the pleadings, it would be left in doubt on what precise issue the verdict or judgment was rendered, it is competent to ascertain this by parol evidence on the second trial. The latest expression of the doctrine is found in Cromwell v. County of Sac, 94 U. S. 351; Davis v. Brown, Id. 423.”

In Block v. Commissioners, 99 U. S. 686, 693, Mr. Justice Strong asserts the doctrine as follows:

“Now, that a judgment in a suit between two parties is conclusive in any other , suit between them, or their privies, of every matter that was decided therein, and that was essential to the decision made, is a doctrine too familiar to need citation of authorities in its support. A few cases go further, and rule that it is conclusive of matters incidentally cognizable, if they were in fact decided. To this wc do not assent. But it is certain that a judgment of a court of competent jurisdiction is everywhere conclusive evidence of every fact upon which it must necessarily have been founded.”

In Wilson v. Deen, 121 U. S. 525, 532, 7 Sup. Ct. Rep. 1004, Mr. Justice Field restates the principle thus:

“In Cromwell v. County of Sac, 94 U. S. 351, we considered at much length the operation of a judgment as a bar against the prosecution of a second action upon the same demand, and as an estopxjel upon the question litigated and determined in another action between the same parties upon a different demand; and we held, following in this respect a long series of decisions, that in the former case the judgment, if rendered upon the merits, is an absolute bar to a subsequent action, a finality to the demand in controversy, concluding parties and those in privity with them; and that in the latter case — that is, where the second action between the same parties is upon a different demand — the judgment in the first action operates as an estoppel as to thoso matters in issue, or x>oints controverted, upon the determination of which the finding or verdict was rendered.”

In Bissell v. Spring Valley Tp., 124 U. S. 225, 231, 8 Sup. Ct. Rep. 495, Mr. Justice Field again restates the doctrine as held by the court in clear and unequivocal language, as follows:

“In Cromwell v. County of Sac, 94 U. S. 351, we drew a distinction between the effect of a judgment as a bar or estoppel against the prosecution • of a second action upon the same claim or demand and its effect as an estoppel In another action between the same parties upon a different claim or demand. In the latter case — which is the one now before us — we held, following numerous decisions to that effect, that the judgment in the prior action operates as an estoppel only as to those matters in issue, or x^oints controverted, upon the determination of which the finding or verdict was rendered. The inquiry in such case, therefore, we said, must always be as to the point or question actually litigated and determined in the original action, for only upon such matters is the judgment conclusive in another action between the parties upon a different demand. Lumber Co. v. Buehtel, 101 U. S. 038; Wilson v. Deen, 121 U. S. 525, 7 Sup. Ct. Rep. 1004.”

The rule thus settled has been reiterated by the court in Nesbit v. Independent Dist., 144 U. S. 610, 618, 12 Sup. Ct. Rep. 746; Railroad Co. v. Alsbrook, 146 U. S. 279, 302,13 Sup. Ct. Rep. 72; McComb v. Frink, 149 U. S. 629, 641, 13 Sup. Ct. Rep. 993.

In the sense that the present suit is prosecuted for an infringement not involved in the prior adjudication, the demand is not the same. But that, we think, is not the proper criterion. The inquiry should he directed to the question whether the right asserted by the party, as the foundation of this suit is the same right determined by tbe previous action; for, if the former test should prevail as the standard, a patentee could never he precluded from asserting the validity of his patent against subsequent infringements by the one who had by previous judgment obtained adjudication against its validity. The former recovery in such cast; would he conclusive only that the particular devices there involved did not infringe. The question of the validity of the patent would tlius forever remain ai large, without conclusive determination. We are of opinion, therefore, that this suit is upon the same claim and demand, to wit, the patent that was involved and determined in the former suit. That this must be so appears clearly from an examination of the cases cited. Thus in Wilson v. Been, supra, the lessor brought action for rental under a lease. The defense was that of fraud in procuring the lease;, and judgment pa,ssed for the defendant. In another action between the same parties for rental subsequently accruing under the same lease, the former recovery was pleaded in bar, against which it was urged that (.lie demand was not identical, and Cromwell v. County of -Sac was invoked to sustain that position. The court, however, sustained the plea-, saying of the former judgment that “it determined not merely for that case, hut for all cases between the same parties, not only that there was nothing due for the rent claimed for the month of December, 1873, hut that the lease itself was procured by fraud, and therefore void.” The court, cites with approval the case of Gardner v. Buckbee, 3 Cow. 120, where two notes were given upon the sale of a vessel. In an action upon one of the notes the maker pleaded fraud in the sale, and a total failure of consideration, and judgment was rendered, in his favor. In an action upon the other of the notes the record of the judgment in the former suit was offered in evidence in bar of the action. The supreme; court, held the judgment conclusive*. Instances might he multiplied of like adjudications. We deem it only necessary to refer to, without, enlarging upon, the following cases: Lumber Co. v. Buchtel, 101 U. S. 638; Insurance Co. v. Bangs, 103 U. S. 780; Elgin v. Marshall. 106 U. S. 578, 579, 1 Sup. Ct. Rep. 484.

We are compelled, therefore, t.o the e:onviction that this suit fails within the first, resolution in Cremiwell v. County of Sac, namely, that it is a seconei action upon the same claim or demand, to wit, upon the claim for a monopoly granted by patent; and that the former decree, the question being necessarily involved and at, issue in that cause, determines conclusively and for all time, as between the parties thereto and their privies, the validity of the patent. It can no more he made the subject of contention between them.

jSTor do we apprehend the result could he different if the case could he held to fall within the second resolution of Cromwell v. County of Sac. Tf this suit can be construed to he upon a different claim or demand because the alleged infringement was in the use of machines not. involved in the former suit, still the prior decree would he conclusive upon the matters at issue essential to a recovery, and actually determined in such action. The validity of the patent was there at issue. Its invalidity was claimed because, as there asserted, certain specified prior patents described the same invention, and because of prior use. The determinañon of the issue of invalidity was essential to any decree for the complainant in that cause, and was determined by the judgment. It is said here that the prior patent to Dalton, and prior use by Hague here asserted, ivas not then in issue. The Dalton patent was distinctly passed upon by the court, and was held unavailing to defeat the invention claimed. As to the alleged prior use by Hague, it may be said that it was in the prior suit alleged by the defendant with the sanction of the present appellant that the cultivators complained of as infringing were manufactured under the letters patent to Hague of June 21, 1881. . This patent was some two weeks subsequent in date to the complainant’s patent, and was held to infringe. Prior use by Hague may not have been specifically alleged, but the defendant there attacked the validity of the patent because of prior use and of anticipation by other patents.. It was a duty to have asserted all anticipating patents, and all prior use. The issue of the pleadings was novelty of invention. The testimony of prior use and of anticipatory patents bore-upon the issue of novelty of invention. In a suit at law such issue is tendered by a plea of the general issue, and such evidence may be given thereunder upon giving a certain notice. So in a suit in equity, like defense of invalidity may be pleaded, “and proofs of the same may be given upon like notice in the answer of the defendant and with the like effect.” Bev. St. § 4920. The statement so required of particular anticipating patents, and of prior use, is clearly a mere bill of particulars of evidence to establish the issue of want of novelty; not independent issues. So no new defense is here asserted. The matter charged is merely additional evidence in support of the issue presented and determined in the former suit. It was competent evidence in that suit without any statement of it in the pleading, if the objection of the statute was not timely urged. Loom Co. v. Higgins, 105 U. S. 580; Zane.v. Soffe, 110 U. S. 200, 203, 3 Sup. Ct. Rep. 562. The.proposed evidence comes too late to be availing. The decree of a court is not the less conclusive because a" party has. failed to produce all the evidence at command, or because of newly-discovered evidence. “Expedit reipublicae ut sit finis litium.”

The decree will be affirmed.