The opinion of the court was delivered by: Kirkpatrick, Chief Judge.
The plaintiff obtained an injunction ordering the defendant to
turn over to it certain patents and documents and forbidding the
defendant to carry on certain business practices, D.C.,
93 F. Supp. 153. The defendant appealed and obtained a stay of the
mandatory portions of the injunction by filing a supersedeas
bond. The condition of the bond was that the defendant "shall
satisfy the said judgment in full together with costs, interest
and damages for delay if said appeal is dismissed or if the
judgment is affirmed." The decree of this Court was affirmed. The
defendant now seeks an order satisfying the judgment and
discharging the supersedeas bond upon turning over to the
plaintiff the patents and documents specified in the decree. The
plaintiff resists, claiming damages for the delay in turning over
the patents and documents to it.
It seems to be settled that where a case involves the
possession of real estate and the decree of the trial court
directs immediate execution of a deed and delivery of possession,
the word "damages" in the condition of the supersedeas bond
includes rents and profits accruing from the time when the
appellee became entitled to the property by the decree of the
lower court. See Woodworth v. Northwestern Mutual Life Ins. Co.,
185 U.S. 354, 22 S.Ct. 676, 680, 46 L.Ed. 945, in which the
Supreme Court ruled that appropriation of "rents, issues, and
profits of the land during the pendency of the appeal, which
equitably belonged to the purchaser * * * constituted `damage' to
the obligee in the bond, within the meaning of the condition for
payment of `all damages and costs which it may incur by reason or
on account of said appeal.'" Also, In re Estate of Gleeson,
192 Pa. 279, 43 A. 1032 (decree in ejectment).
Here, instead of real property, this Court's decree required
the delivery of certain patents and documents which, it found,
the defendant was unlawfully retaining. Like real estate, a
patent is income-producing property, and royalties which may be
obtained from others using it are the equivalent of the rents and
profits of land. Although no case has been cited to me in which
the subject matter of the decree was a patent, I can think of no
logical reason for holding that the word "damages" in a bond
which, admittedly, is broad enough to cover the deprivation of
the owner of real estate of rents, would not cover the
deprivation of a patentee of royalties under his patent.
The defendant relies chiefly on the decision of the Circuit
Court of Appeals for the Third Circuit in Spruks v. United States
Fidelity & Guaranty Co., 138 F.2d 812, and it points out that, as
in the Spruks case, the mandate of the Court of Appeals in the
present case did not specifically award damages for delay.
It is true that the Court, in the Spruks case, said, citing In
re Washington and Georgetown Railroad Co., 140 U.S. 91, 11 S.Ct.
673, 35 L.Ed. 339, that the fact that the judgment of the
appellate court merely affirmed the judgment of the lower court
(which made no mention of interest) with costs and said nothing
about interest, is to
be taken as a declaration of the appellate court that, upon the
record as presented to it, no interest was to be allowed.
But the fact that the appellate court had not, in its decree of
affirmance, added interest was only part of the basis on which
the decision in the Spruks case was placed. The important thing
was the nature of the proceeding in the court below. The Circuit
Court of Appeals pointed out that the appeal was not from an
ordinary judgment against the debtor but from a decree awarding a
fund in the registry of the court to the person entitled to it.
Originally, the dispute was about the title to a pile of coal.
The fund was created by permitting one of the claimants to sell
the coal from time to time and pay the money into court, until
the amount of a landlord's levy upon the coal had been equalled.
That was all done by agreement of all the parties, who also
consented to the order of the District Court placing the money in
the registry. Everyone understood that the fund was where it
would not be producing income, and it was as clear as anything
could be that the District Court's award was of a sum certain,
with the plain intent that interest should not be added. In other
words, both the Circuit Court of Appeals and the District Court
evidently recognized that the procedure, agreed to by all
parties, fully discharged all obligations in connection with
interest or damages arising from the detention of the fund or by
reason of delay in ultimately paying it to the party entitled to
Of course, no comparable procedure or situation exists in the
present case. The decree of this Court awarded the patents to the
plaintiff and directed their transfer to it within 30 days from
the date of the judgment. When this judgment was stayed by the
supersedeas bond, the patents remained in the defendant's
possession and were, or could have been, used by it to its own
profit during the period of the appeal. The Spruks case is, in my
opinion, fundamentally different from the present one and it does
not require a ruling in favor of the defendant here.
The bond in the present case specifies damages "for delay"
whereas the bond in the Spruks case was merely for "all" damages,
but I do not think that the wording in the bonds is a matter of
great importance and do not place my decision upon that ground.
The defendant's argument that the damages "for delay" mentioned
in the bond in this case refers only to the kind of damages which
the appellate court may award, in the nature of a penalty, in
cases of vexatious and frivolous appeals is, I think, not well
taken. True, the appellate court has discretion to award such
damages and if it does not the lower court may not do so.
However, the appellate court has this power by statute,
28 U.S.C.A. § 1912, and could exercise it without regard to the
terms of the supersedeas bond, and in John Hancock Mutual Life
Ins. Co. v. Hurley, 1 Cir., 151 F.2d 751, 756, the Court said,
"But it does not follow from this that, where a supersedeas bond
has been given, the district court may not proceed either in a
summary proceeding or in an independent suit on the supersedeas
bond, to give judgment against the principal and surety for the
amount of the provable damages resulting from the taking of an
unfounded appeal, in accordance with the undertaking of the
bond." The defendant's argument amounts to saying that the
addition of the words "for delay" restricts the damages provided
for in the bond to such as may be awarded by the appellate court
as a penalty. I can find nothing to indicate such an intention.
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