Cramer v. Singer Mfg. Co.

GILBERT, Circuit Judge, after stating the facts as above, delivered tbe opinion of tbe court. Tbe principal question presented on tbe writ of error is whether the circuit court erred in ruling that, upon the evidence adduced by tbe defendant, the judgment in favor of tbe defendant in tbe case of Cramer v. Manufacturing Co. is res judicata as to the present suit. That judgment was held to be binding upon the plaintiff in tins action, not for the reason that the Singer Manufacturing Company was in privity with Pry, or sustained such relation to him that it was bound by a judgment against Mm, but for tbe reason that it took an active part in the defense of that action and paid tbe expenses thereof. In so bolding, tbe circuit court applied the well-settled rule that one who, for bis own interests, assumes the defense of au action, is bound by tbe judgment as if be had been a party thereto or in privity wifi the defendant. But it must not be overlooked that the rule is subject to the limitation lhat, in order that one not a parry who has assumed the burden of the defense of an action shall be bound by the judgment therein rendei'ed, Ms connection with the defense must be open and known to tbe opposite party. In Herm. Estop. 157, it is said: “If one not a party of record, nor in privity with a party of record, to a judgment, desires to avail himself of the judgment as an estoppel, on the ground that he in fact defended the action resulting in the judgment, he must not only have defended that action, hut must have done so openly, to the knowledge of (he opposite party, and for the defense of his own interests. That he employed an attorney who appeared for the defendant of record, and appeared as a witness for the defendant, is not sufficient.” The same doctrine is found in 2 Black, Judgm. § 540; Freem. Judgm. § 189; Andrews v. Pipe Works, 22 C. C. A. 110, 76 Fed. 166; Lacroix v. Lyons, 33 Fed. 437; Schroeder v. Lahrman 26 Minn. 87, 1 N. W. 801; Association v. Rogers, 42 Minn. 123, 43 N. W. 792; Allin’s Heirs v. Hall's Heirs, 1 A. K. Marsh. 425. On referring to the evidence in the present case, it will be seen that it fails short of showing that the Singer Manufacturing Company had such relation to the defense in tbe case of Cramer v. Manufacturing Co. that it can plead the judgment in that case in bar oí this action. So far as the evidence discloses the facts, the company’s connection with the former litigation was secret. The company was not present in court, nor was its participation in the defense open and apparent. The defense was conducted by Fry and his attorneys. That the company'defrayed the expenses of the defense, and paid the defendant’s attorneys, is not shown to have been known to tbe plaintiff. It is not even shown that the company at any time bound itself to Fry or to bis attorneys to pay any portion of the cost of the litigation, or to assist therein. The plaintiff was not chargeable with notice of the company’s connection with the case from the mere circumstance that the attorneys who, at the beginning of the suit, appeared for both defendants, subsequently conducted tbe defense on behalf of Fry. Even if that circumstance, by itself, were .sufficient to convey some kind of notice to tbe plaintiff of the company’s interest in tbe suit, its effect was more than overcome by [638] the fact that the company, although it was originally made a party defendant, declined to be a defendant, and availed itself of its right to cause the action to be dismissed as to itself, and withdrew from the open connection with the case. There was in this fact a distinct intimation to the plaintiff that the company desired to place itself in an attitude where it should not be bound by any judgment that might be rendered in that case, but would be left free to litigate its rights thereafter. This was further evidenced by the fact that, by the terms of the judgment entry then made, the action was dismissed as to the Singer Manufacturing Company, “without prejudice to the right of plaintiff to commence another suit for the same cause of action.” The rule announced by the authorities above cited is supported by sound reason, and its justice is illustrated by its application to the facts of the present case. The plaintiff sued for a large sum of money as damages for infringement of his patent. He attempted to recover the same from the Singer Manufacturing Company and its agent. The company asserted its right to withdraw as a party defendant, for want of legal service upon it. Numerous reasons suggest themselves why its subsequent relation to the defense — a relation which was secret and undisclosed to the plaintiff — should not now operate to prevent his recourse against it. Estoppels must be mutual. If Cramer had obtained a judgment against Fry in the former action, by what means could he have enforced it against the Singer Manufacturing Company? How could he have known, or, if he suspected such to be the case, how could he have proven, that that corporation secretly aided the defense and paid the expenses thereof? Again, circumstances may readily be conceived under which the plaintiff, in an action such as this, might be unwilling or unable to incur the expense of a thorough vindication of his rights, as against an infringer’s agent who might be without the means to meet a judgment for the damages, and whose principal was not known to be so identified with the defense as to be bound by the conclusion of the suit. This view of the principal point in the case renders it unnecessary to consider the other assignments of error. We think the circuit court erred in instructing the jury to return a verdict for the defendant. The judgment will be reversed, and the cause remanded for a new trial.