Electric Boat Co. v. Lake Torpedo Boat Co.

215 F. 377, 1914 U.S. Dist. LEXIS 1726
CourtDistrict Court, D. New Jersey
DecidedJuly 7, 1914
DocketNos. 412, 426, 433, 450, 451
StatusPublished
Cited by27 cases

This text of 215 F. 377 (Electric Boat Co. v. Lake Torpedo Boat Co.) is published on Counsel Stack Legal Research, covering District Court, D. New Jersey primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Electric Boat Co. v. Lake Torpedo Boat Co., 215 F. 377, 1914 U.S. Dist. LEXIS 1726 (D.N.J. 1914).

Opinion

RELLSTAR, District Judge.

The parties are citizens of the same state, engaged in a competitive business of manufacturing and selling submarine boats. The bill in each of the five cases alleges infringement of certain letters patent, relating to submarine boats. The answers to said bills, in addition to the usual defenses, set up as counterclaims alleged infringements of other letters patent, relating to submarine boats, malicious prosecution, and unfair competition, and are substantially alike. In connection with such counterclaims the defendant prays, inter alia, that the plaintiff be enjoined from infringing said letters patent; from unfairly competing with it in its business; for an accounting of the profits acquired by plaintiff; and the damages sufféred by defendant from the acts set out therein.

[379]*379The plaintiff moves to strike out the counterclaims and the prayers based thereon on the following grounds: First, that the subject-matters of such counterclaims are not within equity rule 30 (198 Fed. xxvi, 115 C. C. A. xxvi); second, that, as to some of such patents, defendant is not the sole owner; third, that the subject-matter of the alleged malicious prosecution and unfair business dealings, if a cause of action, is one between citizens of the same state, and not one arising under the Constitution or laws of the United States; and, fourth, that such counterclaims are calculated to embarrass the trial of the action.

[ 1 ] As to the first ground: In Motion Picture Patents Co v. Eclair Film Co. (D. C.) 208 Fed. 416, 418, this court noted the difference in the judicial interpretation given to equity rule 30, but, as the conclusion there reached was based on other considerations, no opinion was expressed as to what counterclaims could be set up under such rule. The pertinent part of the rule is as follows:

“The answer must state in short and simple form any counterclaim arising out of the transaction which is the subject-matter of the suit, and may, without cross-bill, set out any set-off or counterclaim against the plaintiff which might; be the subject of an independent suit in equity against him, and such set-off or counterclaim, so set up, shall have the same effect as a cross-suit, so as to enable the court to pronounce a final judgment in the same suit both on the original and cross-claims.”

The diverse interpretations referred to appear in the following cases: Terry Steam Turbine Co. v. B. F. Sturtevant Co. (D. C.) 204 Fed. 103 ; Adamson v. Shaler (D. C.) 208 Fed. 566; Klauder-Weldon Dyeing Machine Co. v. Giles (D. C.) 212 Fed. 452; Williams Patent Crusher Co. v. Kinsey Mfg. Co. (D. C.) 205 Fed. 375; Marconi Wireless Telegraph Co. v. National Electric Signaling Co. (D. C.) 206 Fed. 295; Salt’s Textile Mfg. Co. v. Tingue Mfg. Co. (D. C.) 208 Fed. 156; and Vacuum Cleaner Co. v. American Rotary Valve Co. (D. C.) 208 Fed 419. These were all suits in which the plaintiff sought to enjoin alleged infringements of patents and to obtain an accounting, etc. In the first three cases the courts struck out counterclaims seeking to enjoin alleged infringements of other patents, etc. In the fourth case the court struck out a counterclaim alleging unfair competition in trade, consisting of misrepresentation by complainant of its patent rights and the scope -thereof. In the other three cases the courts refused to strike out counterclaims setting up alleged infringement of patents, etc., and unfair business methods. The cases which denied the setting up of the counterclaims proceeded on the idea that only such matters as before the adoption of such rule could be set up by a cross-bill could be made the -subject of a counterclaim.

In the Turbine Case, the first of the reported cases dealing with this subject, the learned judge said that the main purpose of the permissive part of the rule was, “to dispense with cross-bills by requiring everything previously done by cross-bill to be thereafter done by answer only.” This, in my judgment, is so only as to the mandatory part of the rule, and, as to the permissive or optional part, the main purpose is to enable the defendant by answer to do precisely that which the plaintiff, by rule 26 (198 Fed. xxv, 115 C. C. A. xxv), may do in one bill, viz., “join * * * as many causes of action cognizable in equity as he may [380]*380have against the (plaintiff) defendant.” This difference as to the main purpose of this part of the rule leads to radically different results. In the former view the term “cross-bill” (drawing to it its previously accepted meaning) is given a controlling effect upon what follows, whereas under the latter view the phrase “without cross-bill” is but a parenthetical one, subordinate in its effect. Dominated by this former view, the learned judge, in the Turbine Case, was led to conclude that no other counterclaims than those covered by the mandatory provision could be set up under the permissive provision of the rule. To so confine the right to counterclaim, in my judgment, is to unduly limit the meaning of the term “cross-bill” as used in such rule, disregard the manifest intent to distinguish between the lands of counterclaims that must or may be set up in the answer, and to overlook entirely the plain purpose of the new rules to permit the parties to settle their differences in one suit, provided they can be conveniently disposed of together.

Under the old system of pleading, a cross-bill was necessary to obtain for the defendant affirmative relief touching the matter of the original bill. A cross-bill, however, was not permitted unless it was based on or grew out of the subject-matter of the original bill.' It was treated as a mere auxiliary suit or as a dependency upon the original suit. Story’s Eq. PI. §§ 389, 399; Shipman’s Eq. PL §§ 210, 211; Morgan Co. v. Texas Central Ry. Co., 137 U. S. 171, 200, 11 Sup. Ct. 61, 34 L. Ed. 625; Harrison v. Perea, 168 U. S. 311, 320, 18 Sup. Ct. 129, 42 L. Ed. 478.; Stonemetz, etc., Co. v. Brown, etc., Co. (C. C.) 46 Fed. 851; New Departure Bell Co. v. Hardware Specialty Co. (C. C.) 62 Fed. 462; Weathersbee v. American, etc., Co. (C. C.) 77 Fed. 523; Springfield Milling Co. v. Barnard & Leas Mfg. Co., 81 Fed. 261, 26 C. C. A. 389; Hogg v. Hoag (C. C.) 107 Fed. 807; 16 Cyc. 331.

The “counterclaim arising out of the transaction which is the subject-matter of the suit,” and which, under the rule, must be set up in the answer, covers broadly stated, all matters which heretofore could have been pleaded by cross-bill. Therefore to limit the option given to the defendant to “set out any set-off or counterclaim against the plaintiff which might be the subject of an independent suit in equity against him’-’ to such claims as must be set up is to make the option fruitless. Marconi Wireless Telegraph Co. v. National E. S. Co. (D. C.) supra, 206 Fed. at page 302.

The distinction made in the rule between a “counterclaim arising out of the transaction” forming the basis of the original suit and one “which might be the subject of an independent suit,” brought by the defendant against the plaintiff, is the primary and influential distinction between what could be set up by a cross-bill and what could not. The provision that the claims arising out of such transaction must be set up in the answer is intended to put an end in .one suit to all the controversies that arise out of such subject-matter, legal (see rule 23-[198 Fed. xxiv, 115 C. C. A.

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Bluebook (online)
215 F. 377, 1914 U.S. Dist. LEXIS 1726, Counsel Stack Legal Research, https://law.counselstack.com/opinion/electric-boat-co-v-lake-torpedo-boat-co-njd-1914.