KEINZ CO v. SUPERIOR COURT IN AND FOR ALAMEDA COUNTY

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District Court of Appeal, First District, Division 2, California.

H. J. KEINZ CO. v. SUPERIOR COURT IN AND FOR ALAMEDA COUNTY et al.*

Civ. 15380.

Decided: January 14, 1953

Brobeck, Phleger & Harrison, San Francisco, Christy, Parmelee & Strickland, Pittsburgh, Pa., Paul M. Duff, Pittsburgh, Pa., for petitioner. Morris Lowenthal and Juliet Lowenthal, San Francisco, for respondent.

This proceeding in certiorari is to review an order of the Superior Court of Alameda County adjudging petitioner guilty of contempt of court and awarding compensatory damages to respondent on account of an alleged violation of an injunction against the use of a patent.

In 1937, Owens, the respondent, was granted a patent by the United States covering the construction and operation of a giant vinegar generator. The Heinz Company, the petitioner, is engaged in the business of processing foods, and in this business uses large quantities of vinegar. On November 25, 1941, it obtained from Owens a license to build and operate vinegar generators of the type and kind covered by his patent. A dispute later arose as to the rights of the company under the license contract and Owens filed suit for declaratory relief, to cancel the contract, and for an injunction against the use of his invention by the company. The grounds urged for cancellation were fraud and lack of consideration. Owens was granted a decree cancelling the license and enjoining the Heinz Company against further use of the patent. No appeal was taken from the judgment and, if valid, it is now final.

The record discloses that after the entry of the decree, and in alleged violation thereof, the Heinz Company built and was operating sixteen giant generators in this and other states. The combined average output of these generators exceeded twenty-six thousand gallons of vinegar per day. On September 8, 1949, Owens filed an affidavit in the case charging the Heinz Company with violation of the injunction. An order was issued directing the petitioner and its employee, O. R. Hayes, to show cause why they should not be held in contempt of court. Both the company and Hayes demurred to the affidavit, and to the order to show cause. At the same time they filed an answer to the order to show cause. A motion was then made to dismiss the order, which motion was denied. This left the pleadings in the contempt proceeding in that state where there was a demurrer to the affidavit and an answer to the order to show cause. Before the matter was brought on for hearing an amended answer to the order to show cause was filed, which amended answer denied the allegations of the Owens' affidavit, set up numerous affirmative allegations of fact and carried with it a prayer for affirmative relief.

Petitioner has consistently contended by its demurrers as well as by its answers that the charging parts of respondent's affidavit which read, ‘* * * affiant is informed that the H. J. Heinz Company has built, constructed and installed vinegar generators of the type, kind or character covered by the Letters Patent of the United States owned by affiant, Charles H. Owens, other than the one generator installed by affiant at the H. J. Heinz Company factory in Berkeley, California in 1941; affiant is informed that said H. J. Heinz Company has installed said generators in its Berkeley factory, as well as in other factories of the company in other parts of the United States', and ‘That your affiant believes that the H. J. Heinz Company has appropriated the invention covered by affiant's Letters Patent on the vinegar generator, etc.’ are insufficient to charge a contempt. (Emphasis added.) Respondent on the other hand advances the argument that notwithstanding any defect in the affidavit petitioner appeared and submitted itself to the jurisdiction of the court and became an affirmative actor in the proceedings. This contention is, of course, of no force unless the court were empowered to act in the matter. It stands to reason that before one can submit himself to the jurisdiction of a court, the court must have jurisdiction over the action. Without jurisdiction over the subject matter in the court, there is nothing in the way of jurisdiction to which an appearing party can submit himself. The question of jurisdiction over the person, therefore, need not be considered unless it appears that the court had power to render the judgment which is here under review.

A mass of evidence was admitted into the record and the court also viewed the generator allegedly built in violation of the decree located at the Berkeley plant of the petitioner. Counsel stipulated that the fifteen generators in the other plants of petitioner were of the same type and kind as the one in the plant at Berkeley. The evidence was, by this stipulation, made applicable to all of the generators.

From its inspection, and other substantial facts before it, the court found that the Heinz Company was using the Owens' patent in the sixteen generators, and that the use so being made was in violation of the injunction. The company was accordingly adjudged in contempt of court and fined $375,934.66, which said sum the court directed the company to pay to Owens as a compensation for the unwarranted use of his patent.

As a further award, the company was directed to pay Owens $526 per day for each day that the generators were in use after the contempt order, and, to prevent their further use in violation of the injunction, the company was ordered to destroy the generators.

The compensatory award made by the court was based on what it determined was the saving which the Heinz Company made by the use of the Owens' patent over other generators available to it. Production figures were submitted in evidence and from the facts produced it was demonstrated to the satisfaction of the court that the company was making at least two cents per gallon on each gallon of vinegar manufactured by using Owens' patent. The court concluded that this profit was the product of Owens' property and in equity belonged to him, and made its remedial award accordingly.

The judgment of contempt is first challenged by the petitioner on the ground that the injunction is void. It is argued that the action out of which it issued involves patent rights, and that the jurisdiction to decide the questions raised in the case vested in the Federal Courts under the rule that the Federal Courts take jurisdiction of all cases arising under the patent laws. This, however, is not the situation confronting us here. The action was brought by Owens to cancel a contract on the ground of fraud, and to enjoin the further use of his patent. The charge against the defendant was not that it had violated the patent laws, but to set aside the license on the ground that it had been fraudulently and inequitably obtained. A situation similar in many respects was presented in the case of Pendleton v. Ferguson, 15 Cal.2d 319, 326, 101 P.2d 81, 85, 688, where the Court said: ‘It appears to be the settled rule that while the federal courts have exclusive jurisdiction of all cases arising under the patent laws, such jurisdiction does not extend to all questions in which a patent may be the subject-matter of the controversy, for courts of a state may try questions of title, and may construe and enforce contracts relating to patents.’

And in Luckett v. Delpark, 270 U.S. 496, 46 S.Ct. 397, 402, 70 L.Ed. 703, 708, cited in Pendleton v. Ferguson, supra, it is said, ‘that where a patentee complaint makes his suit one for recovery of royalties under a contract of license or assignment, or for damages for a breach of its covenants, or for a specific performance thereof, or asks the aid of the court in declaring a forfeiture of the license, or in restoring an unclouded title to the patent, he does not give the federal District Court jurisdiction of the cause as one arising under the patent laws. Nor may he confer it in such a case by adding to his bill an averment that after the forfeiture shall be declared, or the title to the patent shall be restored, he fears the defendant will infringe, and therefore asks an injunction to prevent it.’

It is also pointed out in Wilson v. Sandford, 10 How. 99, 13 L.Ed. 344, that an injunction cannot issue unless the contract is set aside, the court saying, ‘The object of the bill is to have this contract set aside and declared to be forfeited; and the prayer is, ‘that the appellant's reinvestiture of title to the license granted to the appellees, by reason of the forfeiture of the contract, may be sanctioned by the court’, and for an injunction. But the injunction he asks for is to be the consequence of the decree of the court sanctioning the forfeiture. He alleges no ground for an injunction unless the contract is set aside.' Since Owens' case was of general equitable jurisdiction it did not arise under the patent laws but under the equity branch of the state law and jurisdiction over it vested in the state court. Luckett v. Delpark, 270 U.S. 496, 46 S.Ct. 397, 70 L.Ed. 703, 705; New Marshall Engine Co. v. Marshall Engine Co., 223 U.S. 473, 480, 32 S.Ct. 238, 56 L.Ed. 513, 516. Nor can it be said that the language of the decree is not sufficient to enjoin the use of the patent, H. J. Heinz Co. v. Owens, 9 Cir., 191 F.2d 257, and no appeal having been taken, and the decree having become final, we must accept it as conclusive.

We now pass to a consideration of the question as to whether a court in this state has the power to make a compensatory award in a contempt proceeding. The court below proceeded upon the theory that in the exercise of the inherent powers vested in the courts at common law it could award compensatory damages in a proceeding in civil contempt. Petitioner, on the other hand, takes the position that there is but one form of action in this state for the redress of a private wrong even though the act by which the wrong is occasioned is in direct violation of a decree of the court, and that the Legislature has provided the machinery for such redress in the statutes authorizing the prosecution of ordinary civil actions.

In those jurisdictions in which the common law prevails three principal procedures are followed by the courts in giving efficacy to their drcrees. The distinction between these procedures is pointed out in Gompers v. Bucks Stove & Range Co., 221 U.S. 418, 441, 31 S.Ct. 492, 498, 55 L.Ed. 797, 806, where it is said: ‘Contempts are neither wholly civil nor altogether criminal. And ‘it may not always be easy to classify a particular act as belonging to either one of these two classes. It may partake of the characteristics of both.’ Bessette v. W. B. Conkey Co., 194 U.S. [324] 329, 24 S.Ct. 665, 48 L.Ed. [997] 1002. But in either event, and whether the proceedings be civil or criminal, there must be an allegation that in contempt of court the defendant has disobeyed the order, and a prayer that he be attached and punished therefor. It is not the fact of punishment, but rather its character and purpose, that often serve to distinguish between the two classes of cases. If it is for civil contempt the punishment is remedial, and for the benefit of the complainant. But if it is for criminal contempt the sentence is punitive, to vindicate the authority of the court. It is true that punishment by imprisonment may be remedial as well as punitive, and many civil contempt proceedings have resulted not only in the imposition of a fine, payable to the complaint, but also in committing the defendant to prison. But imprisonment for civil contempt is ordered where the defendant has refused to do an affirmative act required by the provisions of an order which, either in form or substance, was mandatory in its character. Imprisonment in such cases is not inflicted as a punishment, but is intended to be remedial by coercing the defendant to do what he had refused to do. The decree in such cases is that the defendant stand committed unless and until he performs the affirmative act required by the court's order.'

In distinguishing between a refusal to do that which is required by the decree, and doing something which is in violation of it the court said: ‘On the other hand, if the defendant does that which he has been commanded not to do, the disobedience is a thing accomplished. Imprisonment cannot undo or remedy what has been done, nor afford any compensation for the pecuniary injury caused by the disobedience. * * * Such imprisonment operates not as a remedy coercive in its nature, but solely as punishment for the completed act of disobedience.’ And with respect to the remedial aspect attendant upon a completed act of contempt it is said, 221 U.S. 418, 31 S.Ct. 492, 499, 55 L.Ed. 807, ‘The only possible remedial relief for such disobedience would have been to impose a fine for the use of complainant, measured in some degree by the pecuniary injury caused by the act of disobedience.’ As the case holds, the defendant may be proceeded against in the event of a completed act of contempt and punished to vindicate the authority of the law, or a civil contempt proceeding may be had against him for damages resulting from the contumacious act. ‘Proceedings for civil contempt’ as the court said, 221 U.S. 418, 31 S.Ct. 492, 499, 55 L.Ed. 807, ‘are between the original parties, and are instituted and tried as a part of the main cause. But, on the other hand, proceedings at law for criminal contempt are between the public and the defendant, and are not a part of the original cause.’ The right of appeal is another characteristic of the common-law proceeding in civil contempt, Penfield Co. v. Securities Exchange Comm., 330 U.S. 585, 67 S.Ct. 918, 91 L.Ed. 1117; Gompers v. Bucks Stove & Range Co., supra, which distinguishes it from the punitive and coercive proceedings which are subject only to review, and which right adds weight to its role as a civil action for the redress of a private wrong.

In Field's draft of the proposed Code of Civil Procedure for the State of New York provision was made for each of the three remedies afforded at common law for proceedings in contempt, but the legislature of this state selected and incorporated into the Practice Act of 1851 and the Codes of 1872, only two of the Field provisions, namely, the remedial proceeding for coercing obedience, now appearing as section 1219 of the Code of Civil Procedure, and that punishing criminally for defiance of the law as set out in section 1218 of the same code.

The section of the Field Code of Civil Procedure—section 1479—dealing with civil contempts which the legislature did not incorporate either in the Practice Act or the Codes reads: ‘If an actual loss or injury, to a party in an action or special proceeding prejudicial to his rights therein, have been caused by the contempt, the court or officer, in addition to the fine or imprisonment imposed for the contempt, may order the person proceeded against to pay to the party aggrieved a sum of money sufficient to indemnify him, and to satisfy his costs and expenses which order, and the acceptance of money under it, is a bar to an action by the aggrieved party for such loss or injury.’

The omission of the Legislature to incorporate the foregoing section of the Field Code into Title V of Part III of the Code of Civil Procedure, which is the Title dealing with contempts, can not be charged to anything but evident intent. When the codes were adopted the Legislature had in mind a simple and direct procedure for all civil actions. It proceeded to enact section 307 of the Code of Civil Procedure, providing that, ‘There is in this state but one form of civil actions for the enforcement or protection of private rights and the redress or prevention of private wrongs.’ The alternative choice of proceeding in civil contempt in the action producing the violated decree as was the right at common law, and outlined in the Field draft, was eliminated and the single substitute given of an ordinary civil proceeding. If section 1479 of the Field Code had been adopted, a conflict with other sections of the code would have been produced. Two forms of action would have been permitted to one injured by a contumacious act, while only one form of action would have been available to one injured by an act not a contempt. But by providing a single form of action for the redress of all private wrongs the Legislature created a vehicle by means of which all persons alike might pursue this remedy for a private wrong whether it be occasioned by an act of contempt or any other injurious act.

By limiting a person injured by a contumacious act to recourse through an ordinary civil action the Legislature in nowise deprived him of his remedy. It is only the procedure by which he may secure his right that is changed and limited to the one form of action.

That the Legislature is empowered to so regulate such procedure is not open to question for as is stated in People v. Hickman, 204 Cal. 470, 478, 268 P. 909, 913, 270 P. 1117, ‘A state has full control over the procedure in its courts, both in civil and criminal cases, subject only to the qualification that such procedure must not work a denial of fundamental rights or conflict with specific and applicable provisions of the federal Constitution. It is not tied down by any provision of the federal Constitution to the practice and procedure which existed at common law. Subject to the limitations noted, it may avail itself of the wisdom gathered by experience to make such changes as may be necessary’, citing Brown v. State of New Jersey, 175 U.S. 172, 175, 20 S.Ct. 77, 44 L.Ed. 119. This rule that the Legislature is invested with the power to regulate the procedure by which the jurisdiction of a court may be exercised also finds expression in the cases of Sacramento & San Joaquin Drainage Dist. v. Superior Court, 196 Cal. 414, 238 P. 687, and In re Garner, 179 Cal. 409, 177 P. 162.

Although, as is said in Re Estate of Wickes, 128 Cal. 270, 274, 60 P. 867, 868, 49 L.R.A. 138, ‘The common law is the rule of decision in this state, where no positive law, state or national, obtains', yet as the court states in Burlingame v. Traeger, 101 Cal.App. 365, 371, 281 P. 1051, 1053, ‘It must also be borne in mind that ‘our codes, of course, were intended as complete revisions of the existing laws upon the subjects embraced therein’ ([In re] Estate of Carragher [Carraghar], 181 Cal. 15, 183 P. 161, 163 [164]), and that their provisions establish the law of this state respecting the subjects to which they relate. (In re Apple, 66 Cal. 432, 6 P. 7; McLean v. Blue Point Gravel Min. Co., 51 Cal. 255). It is only when the Code and other statutes are silent that the common law governs.' Statutes intended to supplant the common law are to be construed liberally and applied where it can be done without violating reason and justice for as is said in Re Estate of Paterson, 34 Cal.App.2d 305, 315, 93 P.2d 825, 831, ‘Section 4 of the Code of Civil Procedure now reads, and has so read since 1872, that: ‘The rule of the common law, that statutes in derogation thereof are to be strictly construed, has no application to this code. The code establishes the law of this state respecting the subjects to which it relates, and its provisions and all proceedings under it are to be liberally construed, with a view to effect its objects and to promote justice.’'

With respect to the contempt sections of the Code the Supreme Court in the case of In re Morris, 194 Cal. 63, 69, 227 P. 914, 916, said that ‘It was the plain intent of the Legislature expressed in the cited code sections to give a double aspect to the wrongful acts there enumerated. In one aspect they are to be regarded as offenses against the dignity and authority of the court, remediable in accordance with the rules prescribed in the Code of Civil Procedure. In the other aspect they are to be regarded as offenses against the peace and dignity of the people of the state of California, and remediable as such in accordance with the rules prescribed in the Penal Code.’ And in that case the court further stated that, ‘It is apparent upon reflection that the same act may at the same time take on a third aspect in which it is to be regarded as an offense against private rights, and remediable as such by an ordinary action at law.’

This procedure was followed in Kirby v. San Francisco Sav. & Loan Soc., 95 Cal.App. 757, 273 P. 609, where plaintiff sought to recover damages in an ordinary civil action for a loss resulting from the violation of an injunction. The trial court sustained a demurrer to the complaint on the theory that such an action was not the proper course to pursue. On appeal the order sustaining the demurrer was reversed.

The statutes and the decisions firmly establish the rule in this state that when a person has sustained a private injury by an act which may also be in contempt of an injunction he is nevertheless confined in the pursuit of his remedy to an ordinary civil action, and is not authorized to proceed in civil contempt at common law.

When the Legislature has established a procedure in accordance with which a court is required to act, the court has no power to follow a different course for to do so would be to trespass upon the legislative function. This is true even though the court may have jurisdiction over the parties and the subject matter of the action. As is said in Fortenbury v. Superior Court, 16 Cal.2d 405, 407, 106 P.2d 411, 412, ‘A court may have jurisdiction of the cause of action and of the parties, but it may lack the authority or power to act in the case except in a particular way. Under such circumstances, it is now generally held that the court had no jurisdiction. As pointed out in the case of Spreckels S[ugar] Co. v. Industrial Acc. Comm., 186 Cal. 256, 260, 199 P. 8, 9, ‘the word is frequently used as meaning authority to do the particular thing done, or, putting it conversely, a want of jurisdiction frequently means a want of authority to exercise in a particular manner a power which the board or tribunal has * * *.’' And again in the Fortenbury case 16 Cal.2d at page 408, 106 P.2d at page 413, the court said, ‘More recently, this court again recognized the confusion which exists in determining whether, in a given situation, there was a lack of jurisdiction or mere error in the exercise of jurisdiction. Upon the authority of the Spreckels case and other decisions, it held ‘that when a statute authorizes prescribed procedure, and the court acts contrary to the authority thus conferred, it has exceeded its jurisdiction, and certiorari will lie to correct such excess'. Rodman v. Superior Court, 13 Cal.2d 262, 89 P.2d 109, 112. In other words, under the modern practice, the writ of certiorari may properly be used to question the exercise of unauthorized power in a case where the court had jurisdiction of the parties and the subject matter.’

In the case before us the court proceeded, not in accordance with the procedure prescribed by the codes for the prosecution of an ordinary civil action for the recovery of damages but contrary thereto. It followed the course of a proceeding in civil contempt at common law, and awarded compensatory damages for the alleged wrong. Since there is no authority for such a proceeding in contempt in this state, the court acted without jurisdiction in making the remedial award and directing the destruction of the generators.

The judgment is annulled.

JONES, Justice pro tem.

NOURSE, P. J., and DOOLING, J., concur.