Appeal from the District Court of the United States for the Western District of Pennsylvania; Robert M. Gibson, Judge.
Before BIGGS, MARIS, and GOODRICH, Circuit Judges.
The question presented by this appeal is whether a United States patent may be assigned to a purchaser who purports to buy it at a sheriff's sale, the patent having been seized on an alias writ of fieri facias issued under Pennsylvania statutes on a judgment entered in the Court of Common Pleas of Allegheny County, Pennsylvania.
The pertinent facts may be stated briefly. The patent, No. 1,525,328, was issued on February 3, 1925, to Sheaffer and shortly after its issuance was assigned*fn1 by the patentee to Superior Basic Brick Company. In 1933, Duquesne Light Company obtained a money judgment against Superior in the Court of Common Pleas of Allegheny County which it assigned to the plaintiff, McClaskey. Certain physical assets of Superior were seized under a writ of execution, issued by Duquesne to the use of McClaskey to recover the sum due on the judgment. The proceeds of this sale were credited against the amount due from Superior to McClaskey on the judgment. A writ of fi. fa. was then issued to seize certain other property. Thereafter an alias fi. fa. was issued against Superior, and the directions of counsel to the sheriff accompanying the praecipe for the writ directed that officer " * * * to levy, advertise and sell in satisfaction of the * * * balance of [the] judgment * * * letters patent * * * No. 1,525,328 * * * ". The sheriff sold the patent to McClaskey and gave him a bill of sale.
McClaskey brought suit in the court below alleging that the defendant, Harbison-Walker Refractories Company, has infringed the patent. The plaintiff does not seek an injunction but claims treble damages as provided by R.S. § 4919, 35 U.S.C.A. § 67. The defendant asserted as one defense that the plaintiff got no title to the patent under the sheriff's sale and moved for a summary judgment dismissing the complaint pursuant to Rule 56 of the Rules of Civil Procedure, 28 U.S.C.A. following section 723c. The court below granted the motion and dismissed the complaint. See 46 F.Supp. 937, 938.
Under R.S. § 4898, 35 U.S.C.A. § 47, a patent may be transferred by the "patentee or his assigns or legal representatives" "by an instrument in writing". In the leading case of Ager v. Murray, 105 U.S. 126, 26 L. Ed. 942, the facts were as follows: The Supreme Court of the District of Columbia, acting pursuant to chancery powers conferred upon it by a statute of the State of Maryland, in force in the District of Columbia (Maryland Stat., 1785, ch. 72, Secs. 7, 13, 25; 2 Kilty's Laws; Laws of District of Columbia Ed. 1868, pp. 326, 328, 333, 336) directed that patents belonging to Ager should be sold and the proceeds of the sale applied to pay a judgment against Ager. The degree of the Supreme Court of the District of Columbia provided specifically that if Ager defaulted in paying the judgment, his rights in the patent should be sold and an assignment should be executed by him, but that if he failed to execute such an assignment, a suitable person should be appointed as trustee to execute it.
On appeal Mr. Justice Gray stated, 105 U.S. at page 129, 26 L. Ed. 942, "It has been said by an English text-writer that "a patent-right may be seized and sold in execution by the sheriff under a fieri facias, being in the nature of a personal chattel.' * * * We are not aware of any instance in which such a course has been judicially approved. But it is within the general jurisdiction of a court of chancery to assist a judgment creditor to reach and apply to the payment of his debt any property of the judgment debtor, which by reason of its nature only, and not by reason of any positive rule exempting it from liability for debt, cannot be taken on execution at law; as in the case of trust property in which the judgment debtor has the entire beneficial interest, of shares in a corporation, or of choses in action." In view of this decision of the Supreme Court of the United States we can entertain no doubt that a patent may be reached and sold by a creditor's bill. Though there is no express statement in the Ager case that the trustee who was to be employed to assign the patent if Ager failed to do so, would have been a "legal representative" within the meaning of R.S. § 4898, this is clearly what the Supreme Court of the District of Columbia and the Supreme Court of the United States had in mind, for the patent otherwise could not have been legally assigned under R.S. § 4898.*fn2
In the case of Cookson v. Louis Marx & Co., D.C., 23 F.Supp. 615, the question was presented as to whether an assignment of a patent by a conservator for one who has been legally declared a spendthrift would stand against an assignment made by the spendthrift himself. Judge Patterson stated, 23 F.Supp. at page 617, "The patent act provides that patents are assignable in law by instrument in writing * * * . Thid does not mean that the patentee must in every case execute the assignment by his own hand. On creditor's bill a court of equity may appoint a trustee to make an assignment of a debtor's patent right in case the debtor himself does not make the required assignment, and an assignment executed by the trustee will pass title to a purchaser * * * . There can be no doubt that legal capacity to make an assignment of patent and the aids to incapacity are matters which Congress might have regulated but which it chose to leave to the law of the state of the assignor's domicile * * * . By law of Illinois a person who is legally declared to be a spendthrift has no capacity to transfer his property. The conservator of such a person has authority to transfer personal property without specific order of the court."
The term "legal representatives" used in R.S. § 4898 is broad enough not only to include a master or a trustee appointed by a court possessing adequate equity power but also a trustee under a trust indenture, a guardian of property, or an executor or administrator, an assignee of an insolvent debtor, or some other officer designated to assign a patent. The tests are the powers of the court and the extent of the authority conferred by it on its officer. In the present state of the law, the authority to assign a patent must come from some proceeding akin to a creditor's bill or a petition seeking the aid of the equity side of the court to enforce a judgment at law, through the appointment of a legal representative. Our inquiry, therefore, must be directed to the question as to whether the Court of Common Pleas of Allegheny County possessed the equitable power to assign the patent to McClaskey by the sheriff at the sale we have described.
It is well settled that the courts of Pennsylvania possess no general equitable jurisdiction. This was stated by President Judge Stowe of the Court of Common Pleas of Allegheny County in Bakewell & Kerr v. Keller, 1881, 11 Wkly. Notes Cas. 300. Judge Stowe said, "I have no doubt that in England, and in the courts of the United States, where there is general equity jurisdiction such a bill [a bill to subject a patent right to sale for the satisfaction of a judgment] would be sustained; but in Pennsylvania, we do not have any equitable jurisdiction except where it is specifically granted (Dohnert's Appeal, 64 Pa. 311), and we must therefore look to the Constitution and the various Acts of Assembly to determine our authority, and not to the general powers of a Court of Chancery."*fn3
Jurisdiction in the case at bar lies in Section 24(7) of the Judicial Code, 28 U.S.C.A. §§ 41(7), and not in diversity of citizenship. The court below had to determine whether what was done was sufficient to constitute an assignment of the patent under R.S.§ 4898. What was done was effected under Pennsylvania statutes and a judgment of a Pennsylvania court. The principle of Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188, 114 A.L.R. 1487, is not applicable but we have held that the decision of the Supreme Court of Pennsylvania upon questions of construction of the Constitution of Pennsylvania and of Pennsylvania statutes was binding upon us in determining rights accruing under Pennsylvania law. Mitchell v. Ottinger, 3 Cir., 105 F.2d 334, 338. See, also, the decision of the Circuit Court of Appeals for the Fourth Circuit in Dayton & Michigan R. Co. v. Commissioner of Int. Rev., 112 F.2d 627, 630. In so holding the courts of the United States have followed the rule imposed by the Supreme Court of the United States in cases coming before it on appeals from state courts. See Midland Realty Co. v. Kansas City Power & Light Co., 300 U.S. 109, 113, 57 S. Ct. 345, 81 L. Ed. 540. The principle involved does not depend on the Rules of Decision Act, Section 34 of the Judiciary Act of 1789, 28 U.S.C.A. § 725, which is inapplicable to suits in equity. Russell v. Todd, 309 U.S. 280, 287, 60 S. Ct. 527, 84 L. Ed. 754. In Lindsey v. Washington, 301 U.S. 397, 400, 57 S. Ct. 797, 81 L. Ed. 1182, the Supreme Court stated that it would accept the meaning ascribed to state laws by the highest court of the state and this has been reiterated in later decisions of that Tribunal. See, also, Madden v. Kentucky, 309 U.S. 83, 60 S. Ct. 406, 84 L. Ed. 590, 125 A.L.R. 1383. In the case at bar, therefore, if the Supreme Court of Pennsylvania had ruled upon the questions before us we would be compelled to accept its decision. As will appear from this opinion, however, there has been no authoritative determination of these questions by the Supreme Court of Pennsylvania or by any other appellate tribunal and the trial courts are in disagreement. On analogy to the principle of Erie R. Co. v. Tompkins should we try to determine by all the available date the construction which the Supreme Court of Pennsylvania would put upon the Acts of 1836 and 1870 in relation to the facts of the case at bar? We think that we must do so.
The earliest decision relating to the Acts of June 16, 1836 and of April 7, 1870,*fn4 in respect to the assignment of a patent which has been cited to us or which we have been able to find is Bakewell & Kerr v. Keller, supra. The court held the Acts did not confer such equitable jurisdiction upon the Court of Common Pleas of Pennsylvania as to enable them to decree a sale of a patent to satisfy a judgment. The bill before Judge Stowe was in substance an ordinary creditor's bill except that it included allegations that the defendant was guilty of constructive fraud in not making his property available for the payment of his debts in an effort to meet the terms of another act. Keller, however, was an individual and the Acts of June 16, 1836, and of April 7, 1870, were intended to apply to executions against corporations. The decision might have gone off upon this ground and no other.
In Flagg v. Farnsworth, 1882, 12 Wkly. Notes Cas. 500, on facts almost upon all fours with those of the case at bar, the Court of Common Pleas of Philadelphia County stated that in view of the fact that the Act of April 7, 1870, authorized the sale upon alias fi. fa. of "Any personal, mixed or real property, franchises and rights" a patent could be sold. It decided, however, that because the sheriff had ...