Attorneys representing clients interested in patents involved in
an allegedly fraudulent judgment theretofore rendered by a federal
court in favor of the petitioner offered and undertook to serve as
amici curiae in an investigation of the judgment. A master
was appointed and an investigation was conducted, but without the
usual safeguards of adversary proceedings. Petitioner, though it
had consented to a reargument of the case in which the judgment was
rendered, objected throughout to the character of the proceedings
before the master if rights were to be adjudicated therein. The
master found that the judgment was fraudulent, and the court set
the judgment aside and ordered the case reargued. The master's fees
and expenses, and fees and expenses of the attorneys as
amici
curiae, were taxed against petitioner.
Held:
1. It was not improper to tax against petitioner the master's
fees and expenses, in view of the fact that the petitioner appeared
and participated in the investigation before the master, with
knowledge that the master's fees and expenses would be assessed by
the court. P.
328 U. S.
579.
2. It was inequitable and improper to tax against petitioner
fees and expenses of the
amici curiae. P.
328 U. S.
580.
(a) Petitioner having objected throughout to the character of
the proceedings before the master if rights were to be adjudicated
therein, it was unjust to tax against petitioner attorney's fees
and expenses. P.
328 U. S.
580.
(b) The
amici curiae having already been compensated by
their clients for their services in the investigation, it was
inequitable and inappropriate that their fees and expenses he taxed
against petitioner for reimbursement of the clients. P.
328 U. S.
581.
147 F.2d 259 reversed.
The Circuit Court of Appeals taxed against the petitioner
certain fees and costs in connection with an investigation of an
allegedly fraudulent judgment theretofore
Page 328 U. S. 576
rendered by that court in favor of the petitioner. This Court
granted certiorari. 324 U.S. 839. In No. 48, the judgment is
reversed and remanded, and in No. 64 the writ of certiorari,
invoked under § 262 of the Judicial Code, is dismissed. P.
328 U. S.
581.
MR. JUSTICE FRANKFURTER delivered the opinion of the Court.
Petitioner, Universal Oil Products Company, is a patent-holding
and licensing company. In 1929 and 1931, it brought suits for
infringement against the Winkler-Koch Engineering Co. and the Root
Refining Company, respectively. The suits were consolidated, the
validity of the patents sustained, and decrees for their
infringement entered.
Universal Oil Products Co. v.
Winkler-Koch Engineering Co., 6 F.
Supp. 763. The Circuit Court of Appeals for the Third Circuit,
in an opinion by Judge J. Warren Davis, affirmed the decrees, 78
F.2d 991, and this Court, in October, 1935, denied certiorari.
Root Refining Co v. Universal Oil Products Co.,
296 U. S. 626.
Both before and after the decision in the
Root case,
Universal started similar infringement suits against other oil
companies. Universal invoked the
Root decisions as
res
judicata against some of these companies. It maintained that,
although these companies had not been parties of record in the
Root suit, they were members of a "patent club," to which
Root belonged and which had been formed
Page 328 U. S. 577
to pool money for the defense of any member of the "club" in an
infringement suit against it, and that the
Root case had
been defended by the attorneys for the "patent club." Universal
contended that these circumstances made the other oil companies
substantial parties to the
Root litigation and, as such,
bound by its outcome.
On June 2, 1941, during the pendency of these latter cases,
attorneys who had represented Root and were representing the other
oil companies advised the attorneys of the petitioner that, on June
5, 1941, they would bring to the attention of the judges of the
Third Circuit Court of Appeals the circumstances surrounding the
appeal in the
Root case, and, more particularly, the
relations of one Morgan S. Kaufman to the outcome of that appeal,
and invited petitioner's attorneys to attend. At the hearing on
June 5, the moving attorneys suggested, in substance, that
testimony taken at the trial of Judge Davis pointed to bribery of
Judge Davis by Kaufman to secure a decision favorable to Universal
in the
Root appeal. They urged an investigation of the
questionable features surrounding affirmance of the
Root
decree, but expressed doubt as to the capacity in which they could
formally make such a request of the Court. Their difficulty was due
to the fact that, after this Court had denied certiorari in the
Root case, Root had settled its controversy with Universal
and was unwilling to disturb the agreement by an attempt to reopen
the law suit. The other oil companies who were in litigation with
Root insisted that they were neither formal nor substantial parties
to the
Root case. And so their attorneys, who were the
attorneys in the Root litigation and the moving attorneys in the
present proceedings, could not move on their behalf to have the
Root decree vacated. But these other oil companies had an
interest in the
Root decree, since it might be used in
pending cases to their disadvantage. Universal offered
Page 328 U. S. 578
to consent to a reargument of the
Root case and to
preserve to the Root Company the benefits of the existing
agreement, even if Universal should prevail upon reargument.
Throughout these proceedings Universal stood ready to carry out
this offer, but nothing ever came of it, presumably because Root
was not represented at these hearings and the other oil companies
were not parties of record in the original litigation.
The dilemma of the attorneys who initiated these proceedings to
set aside a fraudulent judgment but could not speak for any client
prepared to come before the court as a party in interest was
resolved by a suggestion from the presiding judge of the Circuit
Court of Appeals. The suggestion was that the court would accept
the services of these attorneys as
amici curiae.
Accordingly, they offered themselves in that role. Upon their
acceptance as such by the court, they asked for the appointment of
a master to investigate the
Root appeal. while they thus
proceeded as
amici, they stated quite candidly that they
were also concerned with the interests of their clients, the oil
companies in pending litigation. As a matter of law, however, their
status was only that of
amici, for their clients did not
subject themselves to the court's jurisdiction. The relation of
these lawyers to the court, after it recognized them as
amici, remained throughout only that of
amici.
A master was appointed, and he conducted an extensive
investigation. He examined records in the possession of the United
States Attorney for the Southern District of New York, the records
of proceedings before a Philadelphia grand jury, bank records, and
various statements of interested parties. From this mass of
material, he selected those documents which he deemed appropriate
for submission to the inspection of the
amici and of
counsel for Universal. Witnesses were also heard, and
petitioner
Page 328 U. S. 579
was given the right to cross-examine. But the investigation was
not governed by the customary rules of trial procedure.
Petitioner's counsel duly excepted to the manner in which the
investigation was being conducted, "if it were to involve any
property rights of our clients, including the validity of any
judgment. . . ." The master evidently did not view the proceedings
in the light of an adversary litigation. He ruled "that the
investigation -- for that is all it is -- should [not] be conducted
strictly according to the rules of evidence in litigation." At the
conclusion of this investigation, the master rendered a report in
which he concluded "that there was in connection with this case
such fraud as tainted and invalidated the judgments" in the
Root appeal.
On the basis of this conclusion, the Court of Appeals, on June
15, 1944, entered an order directing that the judgments be vacated
and the cause be reargued. The relief thus granted was that to
which petitioner had consented before the investigation got under
way. On July 24, 1944, the
amici applied to the court
below for an order directing that the expenses and compensation of
the master be taxed against Universal. In view of the fact that
Universal appeared and participated in the investigation before the
master, with acquiescing knowledge that the master's fees and
expenses would be assessed by the court, we do not disturb the
taxation of the master's fees and expenses. The
amici also
asked the Court to assess against Universal their expenses and
reasonable attorneys' fees. The court awarded $54,606.57 in
expenses, part of which was for the amount they had advanced in
payment to the master, and $100,000 as compensation for their
services. These amounts had in fact already been paid to the
attorneys by their oil company clients. The awards thus constituted
an order for reimbursement of the clients by Universal. The case
was heard by the court en banc,
Page 328 U. S. 580
and two of the judges thought that the
amici were only
entitled to a compensation of $25,000. 147 F.2d 259. Questions of
importance in judicial administration were obviously involved by
the disposition below, and so we brought the case here. 324 U.S.
839.
The inherent power of a federal court to investigate whether a
judgment was obtained by fraud is beyond question.
Hazel-Atlas
Co. v. Hartford Empire Co., 322 U. S. 238. The
power to unearth such a fraud is the power to unearth it
effectively. Accordingly, a federal court may bring before it by
appropriate means all those who may be affected by the outcome of
its investigation. But if the rights of parties are to be
adjudicated in such an investigation, the usual safeguards of
adversary proceedings must be observed. No doubt, if the court
finds after a proper hearing that fraud has been practiced upon it,
or that the very temple of justice has been defiled, the entire
cost of the proceedings could justly be assessed against the guilty
parties. Such is precisely a situation where, "for dominating
reasons of justice," a court may assess counsel fees as part of the
taxable costs.
Sprague v. Ticonic National Bank,
307 U. S. 161,
307 U. S. 167.
But, obviously, a court cannot deprive a successful party of his
judgment without a proper hearing. This question is not before us,
except as it bears on the order allowing attorneys' fees and costs.
But if the judgment could not be nullified without adequate
opportunity to be heard in a proper contest, neither is it just to
assess the fees of attorneys and their expenses in conducting an
investigation where petitioner throughout objected to the character
of the investigation if it was to be used as a basis for
adjudicating rights.
The case may readily be disposed of on a narrower ground. No
doubt, a court that undertakes an investigation
Page 328 U. S. 581
of fraud upon it may avail itself, as did the court below, of
amici to represent the public interest in the
administration of justice. But compensation is not the normal
reward of those who offer such services. After all, a federal court
can always call on law officers of the United States to serve as
amici. Here, the
amici also represented
substantial private interests. Their clients were interested in
vacating the
Root judgment though they would not subject
themselves to the court's jurisdiction and the hazards of an
adverse determination. While the
amici formally served the
court, they were in fact in the pay of private clients.
Amici selected by the court to vindicate its honor
ordinarily ought not be in the service of those having private
interests in the outcome. Certainly it is not consonant with that
regard for fastidiousness which should govern a court of equity to
award fees and costs of
amici curiae who have already been
compensated by private clients so that these be reimbursed for what
they voluntarily paid.
In No. 48, the judgment is reversed and remanded to the Circuit
Court of Appeals for the entry of a judgment in conformity with
this opinion.
In No. 64, the writ of certiorari invoked under § 262 of the
Judicial Code, 28 U.S.C. § 377, is dismissed.
MR. JUSTICE BLACK concurs in the narrower ground of the
opinion.
MR. JUSTICE MURPHY and MR. JUSTICE JACKSON took no part in the
consideration or decision of this case.