General Aniline & Film Corp. v. Bayer Co.

113 N.E.2d 844, 305 N.Y. 479
CourtNew York Court of Appeals
DecidedJuly 14, 1953
StatusPublished
Cited by42 cases

This text of 113 N.E.2d 844 (General Aniline & Film Corp. v. Bayer Co.) is published on Counsel Stack Legal Research, covering New York Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
General Aniline & Film Corp. v. Bayer Co., 113 N.E.2d 844, 305 N.Y. 479 (N.Y. 1953).

Opinion

Fuld, J.

In this action, for breach of contract and for money had and received, a certified question calls upon us to consider the legal sufficiency of two separate and affirmative defenses.

According to the complaint, defendant Bayer 1 in 1923 entered into a written agreement — termed an ‘ ‘ international cartel arrangement ” (per Hecht, J., 188 Misc. 929, 930) — with a German corporation, Farbenfabriken Vorm. Friedr. Bayer & Company of Leverkusen. 2 The parties agreed to divide the markets throughout the world, specifying the countries in which each was to have the exclusive right to sell its respective products and to use the “ Bayer ” trade-marks. Defendant Bayer, in addition, covenanted to pay the German company, for upwards of fifty years, a sum equal to one half of the net profits derived from all its business in Cuba. Some time later, the complaint continues, the profits due the German corporation under the agreement were assigned to General Aniline Works, Inc.— which in 1939 was merged into plaintiff. The complaint then goes on to recite that each German company duly performed all the conditions imposed upon it; that for the ten-year period from 1930 to 1940, defendant Bayer paid profits of over $600,000 as provided for in the agreement; that defendants Bayer and *483 Sterling earned ‘ ‘ large ’ ’ profits during the years 1941 to 1944, which have not been paid; and that plaintiff has suffered damages of $1,000,000, the amount for which judgment is sought.

In their answer, defendants set forth two separate defenses; they have been stricken by the courts below, and, as indicated, it is with them that the appeal is concerned.

One of the defenses challenges the assignment of the contract to plaintiff, and, as to that defense, we need but say that it was properly stricken upon the ground that it speaks in legal conclusions and is framed in contingent and hypothetical terms. (See Stroock Plush Co. v. Talcott, 129 App. Div. 14, 17-18; Family Finance Corp. v. National Sur. Corp., 180 Misc. 496.)

The other defense, founded on impossibility of performance, sets forth that in 1941 the government instituted a proceeding against Bayer and Sterling in the United States District Court for the Southern District of New York, charging them with a violation of the federal antitrust laws. Defendants, the answer further alleges, consented to the entry of a decree, which declared and adjudged the agreement, upon which Aniline now sues, “ unlawful ” under the antitrust laws and enjoined Bayer and Sterling from “ carrying out or enforcing ” said agreement or from paying ” Farben or its assigns any i-oyalties or share of profits ” pursuant to its terms. Neither Aniline nor its assignor was a party to that antitrust action or in any way privy to the decree.

Were the defense of impossibility held sufficient, Aniline would, in effect, be bound, in contravention of established principles of Anglo-American jurisprudence, by a judgment in personam in an action to which it was not a party and in which it had no opportunity to be heard. (See Matter of New York State Labor Relations Bd. v. Holland Laundry, 294 N. Y. 480, 493-494; Wilkinson v. First Nat. Fire Ins. Co., 72 N. Y. 499; Hansberry v. Lee, 311 U. S. 32, 40-41; see, also, Restatement, Judgments [1942], pp. 5-9; §§ 2, 5, 6.) Whatever the rule might be if the plea were based upon a decree rendered in a contested action, the defense lacks validity where, as here, the judgment was entered upon defendants’ consent. (See, e.g., Oseas, Antitrust Prosecutions of International Business, 30 Corn. L. Q, 42,58-59.)

*484 Moreover, although a consent decree is decisive as between the parties to the antitrust proceeding itself (see Swift & Co. v. United States, 276 U. S. 311; Nashville, C. & St. L. Ry. Co. v. United States, 113 U. S. 261), in a suit brought by some third party, it is not only not conclusive, but not even usable or admissible against the consenting defendants. (38 U. S. Stat. 731, U. S. Code, tit. 15, § 16; see Bausch Mach. Tool Co. v. Aluminum Co. of America, 79 F. 2d 217, 226; Twin Ports Oil Co. v. Pure Oil Co., 26 F. Supp. 366, 371-372; Diamond v. Davis, 263 App. Div. 68, 69.) Since, then, in such a situation, the decree could not be relied upon against the very parties who agreed to its entry, it would be almost unthinkable to allow them to invoke its provisions against a stranger.

Nor is the circumstance that it is the government that brought the antitrust suit sufficient to change settled principles. The government does, it is true, possess the power to strike down “ systems deemed violative of the anti-trust laws even though such systems included leases, licenses, and other forms of agreements, and the lessees, licensees, and other parties to the agreements [are] not before the court.” (United States v. National Lead Co., 63 F. Supp. 513, 525, n. 8, affd. 332 U. S. 319; see, also, Hartford-Empire Co. v. United States, 324 U. S. 570, 572-574.) However, as the Supreme Court has noted in a somewhat analogous situation, such an order is ineffective to determine [the] private rights ” of those not joined as parties, and strangers to the proceeding are free to assert such legal rights as they may have acquired under their contracts, in any appropriate tribunal ”. (National Licorice Co. v. Labor Bd., 309 U. S. 350,366.) And so in the case before us. Aniline has a right to be heard on its claim that the agreement between its assignor and defendants is lawful, and it may not be foreclosed from litigating that claim because defendants saw fit to consent to a judgment declaring the agreement unlawful. However willing defendants may have been to relinquish their own rights under that contract, however ready to absolve themselves from liability, they certainly had no authority or power to extinguish Aniline’s claim.

Defendants may, of course, still defend upon the ground that the contract sued upon runs afoul of the antitrust laws and is, *485 therefore, illegal. (See Metropolitan Opera Co. v. Hammerstein, 221 N. Y. 507, affg. 162 App. Div. 691; Ainsworth v. Cooper Underwear Co.,

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113 N.E.2d 844, 305 N.Y. 479, Counsel Stack Legal Research, https://law.counselstack.com/opinion/general-aniline-film-corp-v-bayer-co-ny-1953.