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Crosley Corp. v. Corporation.

September 11, 1941

CROSLEY CORPORATION
v.
HAZELTINE CORPORATION.



Appeal from the District Court of the United States for the District of Delaware; John P. Nields, Judge.

Author: Maris

Before BIGGS, MARIS, and CLARK, Circuit Judges.

MARIS, Circuit Judge.

Hazeltine Corporation is a Delaware corporation which holds title to some 400 patents in the radio and television field and, through a subsidiary, maintains laboratories in which it conducts research in these fields. The Crosley Corporation is an Ohio corporation with its principal place of manufacture in Cincinnati. In June, 1939, Crosley terminated a twelve years' license agreement with Hazeltine and refused to renew it. In December, 1939, Hazeltine formally notified Crosley that the latter was infringing 22 patents owned by Hazeltine. In May, 1940, Hazeltine sued Crosely in the District Court for the Southern District of Ohio, alleging infringement of two of the 22 patents specified in the formal notice. Crosley contested validity of the patents and denied infringement. That suit was heard in November, 1940, and is now awaiting decision. On January 13, 1941, Crosley commenced an action in the District Court for the District of Delaware seeking a declaratory judgment as tot he validity and infringement of the remaining 20 patents specified in the notice. Seventeen days later Hazeltine filed nine suits in the District Court for the Southern District of Ohio in which it sought decrees that Crosley had infringed 15 of the patents specified in the notice and involved in the declaratory judgment suit. On February 3, 1941, Hazeltine filed an answer in the declaratory judgment suit and on the same day Crosley moved for a preliminary injunction to restrain Hazeltine from proceeding with the nine suits in Ohio until the District Court in Delaware had adjudicated the declaratory judgment suit. This injunction was refused and the present appeal followed.

We are thus called upon to determine whether a United States district court which first obtains jurisdiction of the parties and issues may, and under the circumstances of this case should, enjoin proceedings involving the same issues and parties begun thereafter in another United States district court. To put in other words, does a district court have the power to issue such an injunction and if it does, was it an abuse of discretion to deny such an injunction under the circumstances of this case?

The determination of the question of the power of the court to issue such an injunction involves primarily a consideration of the powers of the Court of Chancery of England, for, as stated by Bates on Federal Equity Procedure, § 526, "The remedies in equity in the courts of the United States are the same, and are to be granted and administered according to the principles, usages and remedies in equity in England at the time our government was established; and where, under the English chancery system, relief by injunction can be given, the same or similar relief may be given by the courts of the United States." As Mr. Justice Stone said in Matthews v. Rodgers, 284 U.S. 521, 529, 52 S. Ct. 217, 221, 76 L. Ed. 447, "The equity jurisdiction conferred on inferior courts of the United States by section 11 of the Judiciary Act of 1789, 1 Stat. 78, and continued by section 24 of the Judicial Code (28 U.S.C.A. § 41), is that of the English court of chancery at the time of the separation of the two countries."

Our examination of the English cases indicates that the English Court of Chancery at the beginning of the Nineteenth Century exercised unquestioned power to enjoin parties from proceeding elsewhere, either at law or in equity, once it had obtained jurisdiction of a cause. Some consideration of a few of the cases will be helpful.

In Reynolds v. Nelson (1821), 6 Madd. 290, 56 Eng.Repr. 1101, it appeared that the defendant, after a decree for specific performance of a contract for the purchase of an estate, to which he submitted, brought an action at law against the plaintiff for damages due to the failure of the plaintiff to complete his contract within the time specified. The plaintiff applied for an injunction to restrain the proceedings at law. The Vice-Chancellor, Sir John Leach, said: " * * * If the Plaintiff in equity had before the decree applied for an injunction to restrain the Defendant from proceeding in an action at law to recover damages, I should upon the same principle have then granted the injunction; and a fortiori, I must grant it now. The proceeding at law is inconsistent with the decree in equity."

In Beckford v. Kemble (1822), 1 Sim. & St. 7, 57 Eng.Repr. 3, the facts were that the plaintiff had obtained a decree in the English Court of Chancery directing the taking of accounts in order to determine the amount necessary to redeem mortgages on plantations in Jamaica. The defendants filed suit in the Chancery Court of Jamaica to foreclose the mortgages. The plaintiff prayed in the English Court of Chancery that the defendants be enjoined from proceeding with the foreclosure suit in Jamaica. The injunction was allowed, the Vice-Chancellor, Sir John Leach, saying: "All the parties are in England; and it is plain therefore that the accounts can much more conveniently, as well as more satisfactorily, be taken here than in Jamaica. It appears to me that the Plaintiff in this Court has a clear equity to be protected against a double account of the amount due on the mortgages. I shall therefore make an order to restrain the Defendants from proceeding in Jamaica until the further order of the Court, with liberty to the Defendants to make such application as they shall be advised, with respect to the Jamaica cause, after the Master shall have made his report here; the Plaintiff in this cause undertaking to consent to such order or orders in the Court in Jamaica as this Court shall think reasonable."

In Frank v. Basnett (1835), 2 My. & K. 618, 39 Eng.Repr. 1080, the facts were that the plaintiff had obtained a decree in the Court of Chancery for specific performance of an agreement whereby the defendant agreed to convey land to the plaintiff and the plaintiff agreed to erect a bridge. The cause was referred to a master to settle a conveyance. After the decree and pending the master's proceedings, the defendant brought an action at law for damages alleged to have been occasioned by the plaintiff not having erected the bridge. The plaintiff filed a supplemental bill, praying an injunction to restrain this latter action. The injunction was allowed. The Lord Chancellor, Lord Lyndhurst, stated: "No action could be brought upon the contract up to the time of the decree, and after the decree some time must necessarily elapse before the directions of the Court could be carried into effect. Supposing that there was improper delay in the Master's office, the whole proceedings were before the Court, and it was competent to the party complaining of such delay to apply to the Court, and, if he were so advised, to move for liberty to bring an action. Had such a course been adopted, the Court might, if it had seen occasion, have directed an action to be brought; but the Defendant had no right to resort himself to a Court of Law pending the proceedings in the Master's office.

"I consider the form in which the proceedings at law are sought to be restrained, whether by supplemental bill or otherwise, wholly immaterial; and that the Plaintiff is entitled to have the action restrained by special injunction, upon the ground that it is an infringement of the rules of the Court to bring an action, while the Court is working out a decree, and that where a proceeding is before this Court, and the Court has full power to do justice, a party ought not to resort to any other tribunal."

To similar effect are the cases of Beauchamp v. Huntley (1822), Jacob 546, 37 Eng.Repr. 956; Booth v. Leycester (1838), 3 My. & Cr. 459, 40 Eng.Repr. 1004; Prudential Assurance Co. v. Thomas [1867], L.R. 3 Ch. 74.

Bispham in his Principles of Equity, Sixth Ed., says: "413. A court of equity frequently interferes by injunction to restrain proceedings at law for the purpose of preventing unnecessary or vexatious litigation. This it does * * * by restraining a party from bringing an action in another court after a court of equity has once obtained possession of a cause * * * ."

"414. After a court of equity has once got possession of a cause, it will not suffer any of the litigating parties to resort to another tribunal. Either a plaintiff or defendant who attempts to do so ...


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