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Dyotherm Corp. v. Turbo Machine Co.

decided: March 14, 1968.


Staley, Chief Judge, Kalodner, Circuit Judge, and Sheridan, District Judge.

Author: Sheridan


SHERIDAN, District Judge.

This is an appeal from an order of the district court, entered November 22, 1966, dismissing the complaint of appellant, Dyotherm Corporation, for want of prosecution.*fn1

On August 29, 1962, Dyotherm filed a complaint against appellee, Turbo Machine Company, alleging breach of an agreement entered into in 1957 in settlement of an action in which Dyotherm had accused Turbo of appropriating its inventive ideas and processes. As a part of the agreement, Dyotherm licensed Grant and Harry Brewin, former officers of Dyotherm, to manufacture and sell in North America, South America and Japan, "and nowhere else," certain machines covered by four Dyotherm patent applications, two of which resulted in patents and two of which were subsequently abandoned. The Brewins relicensed their rights to Turbo. Dyotherm alleged that Turbo breached the agreement by manufacturing the machines for sale outside of the agreed upon areas, and sought money damages and injunctive relief. During discovery proceedings, Turbo and Dyotherm stipulated the facts and filed cross motions for summary judgment. Dyotherm contended that "and nowhere else" was a negative covenant which precluded both the Brewins and Turbo from manufacturing textile machines for sale outside North America, South America or Japan, irrespective of whether they were covered by Dyotherm's patents. Turbo contended that this language merely limited the Dyotherm-Brewins' license geographically, and even if it were a negative covenant, it was binding only on the Brewins.

On April 20, 1964, the motions for summary judgment were denied and on July 8, 1964, Turbo's motion for reconsideration was denied. Turbo then moved to amend its answer to raise the defense that its machines were not covered by Dyotherm's patents and to assert a counterclaim for a declaration that its machines were not covered by any patent owned by Dyotherm. Dyotherm resisted enlargement of the issues beyond those covered by the stipulation. On February 8, 1965, the court allowed the motions.

On March 16, 1965, Turbo requested the court to set a trial date at its earliest convenience, stating the "long pendency has proven to be quite troublesome to the defendant in the conduct of its foreign operations." The court called a conference for May 14, 1965. It was not denominated a pre-trial conference, no order was issued and a transcript was not made. Apparently, Dyotherm sought time to explore the possibility of engaging patent counsel in view of the patent issues raised by the amended answer and counterclaim. A trial date was fixed for September 20, 1965, with the understanding that Dyotherm would notify the court and Turbo if it did not intend to secure patent counsel, in which event the trial was to be rescheduled for the last week in June. Dyotherm did not secure patent counsel, and did not advise the court or Turbo. The trial date was continued from September 20 to October 4 because of illness of the trial judge. On that date Dyotherm's counsel appeared both late and unprepared. He requested a continuance for the reason that Mr. Lihn, Dyotherm's president and principal witness, was ill and could not appear in court for a week. When the court told counsel to proceed with other witnesses, he offered the implausible explanation that the other witness, an expert, was known only to Lihn and had been expected to accompany him to the trial. The court demanded proof of Lihn's illness before ruling on the request for a continuance. Court adjourned until 9:30 A.M. of the next day, Tuesday, October 5, 1965, to permit counsel to obtain this proof. Before adjournment, the following occurred:

[THE COURT]: "I might say I will not accept a letter from a doctor as evidence of the illness of the party in question.

" MR. RADIN: May I ask Your Honor what you would accept because my information is that he will be out for a week.

" THE COURT: That is up to you, Mr. Counsel, to present your case. You are asking for a continuance, and you are a lawyer. You ought to know how to establish the facts that you want to establish. I will not accept a letter of the doctor."

Later, counsel asked the court's law clerk whether the court would accept an affidavit from the doctor. The law clerk replied that he could not speak for the court, but that it was his impression that an affidavit would not be sufficient.

On October 5, counsel again appeared late. He advised the court the doctor could not be present because of some emergencies, and offered the doctor's affidavit. Turbo refused to accept the affidavit, and moved that the case be dismissed.*fn2 The court indicated orally that it would dismiss, noting the matter of patent counsel and counsel's late appearance that morning.*fn3 The dismissal was entered on October 21, 1965.

Dyotherm filed a request for reconsideration, accompanied by affidavits of Lihn's illness, including the affidavit which had been excluded on October 5. In an opinion filed on January 3, 1966, the court indicated that it would vacate the judgment of dismissal if Dyotherm paid Turbo its costs and expenses for October 5 and 6, including a reasonable counsel fee. After a conference with both counsel, the court on March 16, 1966, ordered Dyotherm to pay $1,185 for expenses and counsel fees, but did not fix a time for payment. It also required Dyotherm to reply to Turbo's counterclaim within ten days.*fn4

On June 7, 1966, Turbo, not having received payment, requested the court to confirm and render absolute the judgment of dismissal. On June 21, 1966, Dyotherm made the payment but Turbo returned it on June 22, 1966, because "it would be most unreasonable to suppose that the Court intended that the filing of a reply to the counterclaim, which was limited to a ten-day period, was to precede reinstatement of the case." Counsel stated payment had not been made earlier because of Dyotherm's poor financial condition. On August 25, 1966, the court wrote to counsel stating that Dyotherm's financial condition during the pendency of the case was relevant to the alleged reasons for the delays, and requested that proof be submitted within fifteen days. At the request of Turbo, the court on August ...

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