1. A declaration in covenant by a patentee, setting out a sealed
contract by defendant to pay him a certain tariff in consideration
of an exclusive right to use the patent within a certain district
is good.
2. The practice of referring pending actions under a rule of
court to arbitrators appointed by the court with the consent of
both parties is a mode of prosecuting a suit to judgment as well
established and as fully warranted as a trial by jury.
3. A reference to hear and determine all the issues in a case
does not require the referee to
report his finding in all.
It is answered by his hearing and determining all and reporting the
result.
4. A judgment in the circuit court, entered by the clerk without
objection upon the report of the referee and pursuant to order of
court and the agreement of parties, is valid and can be
enforced.
John Fowler brought suit in the Circuit Court for the Southern
District of New York against John and George Heckers to recover
damages for a breach of covenant. The declaration alleged that the
plaintiff, who was the patentee of an improvement in making flour,
had granted to the Heckers the right to supply a particular
district with such flour &c., paying so much per barrel.
Defense, that the patent was worthless, and that the plaintiff had
failed to maintain its validity at his own cost, as he had agreed
to do. Replication, issue, and joinder. While the case was thus
pending, the attorneys of the parties agreed to refer it to a
"referee to hear and determine the same and all issues therein,
with the same powers as the court, and that an order be entered
making such reference, and that the report of said referee have the
same force and effect as a judgment of said court."
One of the judges accordingly
"Ordered that the cause be
referred to H. Cramm, Esq.,
to hear and determine
all the issues herein, with the
fullest powers ordinarily given to referees, and that on filing the
report of the said referee with the clerk of the court, judgment be
entered in conformity therewith the same as if the cause had been
tried before the court."
The referee heard the case, and without stating what his
findings were upon any of the several issues presented in the
pleadings, made
Page 69 U. S. 124
the finding, simply and generally, that there was due to
plaintiff, John Fowler, from the defendants, John and George
Heckers, the sum of $9,500, besides costs, all which he "reported"
to the court. On this, the attorneys of Fowler drew up the form of
a judgment, and without the presence or action of the court except
the order of reference already alluded to, filed it with the clerk,
who thereon entered judgment as a judgment of the court for the
amount reported, with costs. The defendant took this writ of
error.
It is necessary here to state that, by the Code of New York,
[
Footnote 1] a referee is
clothed with the attributes of a judge. A trial by him is to be
conducted in the same manner as a trial by the court; he may grant
adjournments, allow amendments, compel the attendance of witnesses.
His decisions may be excepted to and revised as in cases of appeal
from courts of record. It is also enacted, that
"the report of the referees upon the whole issue shall stand as
the decision of the court, and judgment may be entered thereon in
the same manner as if the action had been tried by the court. "
Page 69 U. S. 126
MR. JUSTICE CLIFFORD delivered the opinion of the Court.
This is a writ of error to the Circuit Court of the United
States for the Southern District of New York.
Suit was brought in this case by the present defendant, and
judgment was rendered in his favor in the court below. Action was
referred, under a rule of court, by consent of the parties, and the
judgment in the case was rendered upon the report of the referee,
made in pursuance of the rule of reference. Original defendants
sued out this writ of error, and now seek to reverse the judgment
upon the several grounds hereinafter mentioned. Errors assigned at
the argument were in substance and effect as follows:
1. That the declaration and the matters therein contained are
not sufficient in law to enable the plaintiff to maintain the
action.
2. That the circuit court erred in passing the order that the
action should be referred, and that the matters in controversy
should be heard and determined by a referee.
3. That the action of the referee was erroneous because he did
not determine all or any of the issues involved in the
pleadings.
4. That the judgment set forth in the transcript is invalid, and
not such a one as can be enforced in the circuit court of the
United States.
1. First objection was not much pressed at the argument and is
entirely without merit, as will be obvious from a brief examination
of the record. Plaintiff was assignor and patentee of a certain
invention, described as a new and useful improvement in the
preparation of flour for the making of bread, and the substance of
the declaration was that the defendants, in consideration that the
plaintiff had granted to them the exclusive right to supply a
certain district with such prepared flour, and to manufacture and
vend therein the patented ingredients used in the preparation of
the same, promised to account with and pay over to the plaintiff a
certain tariff for every barrel of flour so supplied and for the
patented ingredients, when manufactured and sold separately, to be
used in its preparation. Agreement was in
Page 69 U. S. 127
writing and under seal, and the action was covenant broken to
recover damages for the neglect and refusal to account and pay the
tariff according to the terms of the contract. Pending the suit,
the defendants appeared and pleaded to the merits. They made no
objection to the declaration, and if they had it must have been
overruled, as it is in all aspects sufficient and well drawn.
2. Substance of the second objection is that the circuit court
erred in allowing the reference. Defense, among other things, was
that the plaintiff agreed to maintain the validity of the patent at
his own expense during the period the defendants should be engaged
in the business, and that he neglected and refused so to do, and
that the patent was invalid and worthless. Replication of the
plaintiff reaffirmed the facts set forth in the declaration and
tendered an issue to the country, which was duly joined by the
defendants. Pleadings being closed, the parties agreed in writing
to refer the cause to a referee
"to hear and determine the same and all the issues therein, with
the same powers as the court, and that an order be entered making
such reference, and that the report of the referee have the same
force and effect as a judgment of the court."
Following that agreement is the order of the court allowing the
reference, which is the subject of complaint. Recital of the record
is that on reading and filing the agreement, "the court ordered
that the cause be referred" to the referee therein named, to hear
and determine all issues therein with the fullest powers ordinarily
given to referees, and that on filing the report of the said
referee with the clerk of the court, judgment be entered in
conformity therewith the same as if said cause had been heard
before the court, and the attorneys of the parties annexed their
consent in writing to the order.
Intention of the court and of the parties was to refer the
action, and the requirement of the referee was that he should hear
and determine the matters in controversy and make his report to the
court in which the action was pending. Defendants insist that such
a reference of a pending suit in
Page 69 U. S. 128
the circuit court of the United States is invalid because such
courts have no power to authorize such a proceeding. Such is the
substance of the several propositions submitted by the defendants
on this branch of the case. They admit that the state courts have
such powers, but insist that the power is derived from statute, and
that the circuit courts cannot exercise it, because there is no act
of Congress which confers any such authority.
Where the United States are plaintiffs, or an alien is a party,
or the suit is between a citizen of the state where the suit is
brought and a citizen of another state, the circuit courts of the
United States have original cognizance, concurrent with the courts
of the several states, of all suits of a civil nature at common law
or in equity where the matter in dispute exceeds, exclusive of
costs, the sum or value of five hundred dollars. Record shows that
the plaintiff was an alien and that the defendants were citizens of
the state where the suit was brought. Amount in dispute exceeds the
sum or value of five hundred dollars, and inasmuch as the suit was
of a civil nature at common law, the jurisdiction of the court was
clear beyond cavil. [
Footnote
2]
Scope of the objection, however, does not directly involve the
question of jurisdiction, but has respect to the mode of trial as
substituting the report of a referee for the verdict of a jury.
Circuit courts, as well as all other federal courts, have authority
to make and establish all necessary rules for the orderly
conducting business in the said courts, provided such rules are not
repugnant to the laws of the United States. Practice of referring
pending actions is coeval with the organization of our judicial
system, and the defendants do not venture the suggestion that the
practice is repugnant to any act of Congress. On the contrary, this
Court held in the case of the
Alexandria Canal Co. v. Swan
[
Footnote 3] that a trial by
arbitrators, appointed by the court with the consent of both
parties, was one of the modes of prosecuting a suit to judgment as
well established and as fully warranted
Page 69 U. S. 129
by law as a trial by jury, and in the judgment of this Court
there can be no doubt of the correctness of that proposition.
Doubts were nevertheless entertained whether a bill of
exceptions would lie to the ruling of the circuit court in
overruling the objections filed by the losing party to the
acceptance of the report or award of a referee appointed under a
rule of court:
York & Cumberland R. Co. v. Myers.
[
Footnote 4] Opinion of the
Court in that case shows that the action, at the time of the
reference, was pending in the Circuit Court of the United States
for the District of Maine. Myers brought the suit, and the parties,
before trial, agreed to refer the action to three persons to be
appointed by the court. Presiding justice named three persons as
referees, and the rule issued by the clerk provided that their
report, or the report of a majority of them, "was to be made to the
court as soon as may be, and that judgment thereon was to be final,
and execution to issue accordingly." Subsequently one of the
persons so appointed was, with the leave of the court, authorized
by the parties to sit alone, and he made a report awarding damages
to the plaintiff.
Corporation defendants, when the report was made, submitted
written objections to the acceptance of the same and examined the
referee in support of the objections. Question presented was
whether the report should be accepted or rejected, but the circuit
judge overruled the objections, accepted the report, and rendered
judgment for the plaintiff for the amount reported by the referee.
Defendants excepted to the rulings of the court and sued out a writ
of error to reverse the judgment. Preliminary objection in this
Court was that the bill of exceptions would not lie because the
proceedings, as it was insisted, had been irregular, but this Court
held otherwise and decided the cause upon the merits. Conclusion of
the Court was that the equity of the statute, allowing a bill of
exceptions in courts of common law, embraces all such judgments
or
Page 69 U. S. 130
opinions of the court arising in the course of a cause as are
the subjects of revision by an appellate court, and which do not
otherwise appear on the record. [
Footnote 5]
Subordinate tribunal, said the Court, must ascertain the facts
upon which the judgment or opinion excepted to is founded, which
undoubtedly is correct for the reason there given, that this Court
cannot determine, in cases at common law, the weight or effect of
evidence, nor decide mixed questions of law and fact. Allusion is
then made to the fact that appellate courts in other jurisdictions
are accustomed to revise such judgments and opinions, and the Court
said,
"Upon principle, we can see no objection to the introduction of
the same practice into the courts of the United States under the
limitations we have indicated."
Taken as a whole, that case is decisive of the question under
consideration. But it is a mistake to suppose that the practice
referred to was first sanctioned in this Court by the opinion in
that case. Ample authority for it is to be found in a decision of
this Court pronounced more than forty years before the question in
that case was argued. Reference is made to the case of
Thornton
v. Carson, [
Footnote 6] in
which the opinion was given by Chief Justice Marshall. statement of
the case shows that two pending actions were referred by consent
under a rule of court. Arbitrators made an award. Effect of the
award was that the defendant was to pay to the plaintiff (Carson)
the amount of the bonds in suit unless by a certain day he made a
conveyance to the plaintiff of the property described in the award,
in which latter event he was to receive from the plaintiff a
transfer of certain shares in a mining company and to be discharged
from the payment of the money, an entry to that effect to be made
in the suits. Defendant failed to perform the act which would
entitle him to such an entry in the case, and consequently became
liable to pay the sums awarded by the referee. Oral
Page 69 U. S. 131
objections were made to the acceptance of the award, but the
court overruled the objections and rendered judgment for the
plaintiff on the award for the amount of the money awarded. None of
the evidence introduced when the award was accepted appeared in the
record, and no bill of exceptions was tendered to the ruling of the
court, but the defendant removed the cause into this Court by a
writ of error. Under those circumstances, this Court refused to
revise the rulings of the circuit court, but, in disposing of the
case, the Court said if he, the original plaintiff, failed to do
that which warranted the court in entering judgment on the award,
it was the duty of the complaining party to have shown that fact as
a cause against entering judgment, and to have spread all the facts
upon the record, which would enable this Court to decide whether
the court below acted correctly or not. Various other objections
were also taken to the proceedings, but they were all overruled and
the judgment was affirmed. Similar views have been expressed by
this Court on other occasions, but it is not thought necessary to
do more than to refer to the other cases, as those already examined
are believed to be decisive. [
Footnote 7]
Practice of referring pending actions under a rule of court by
consent of parties was well known at common law, and the report of
the referees appointed, when regularly made to the court pursuant
to the rule of reference and duly accepted, is now universally
regarded in the state courts as the proper foundation of judgment.
[
Footnote 8]
3. Third objection is that the action of the referee was
erroneous because he did not determine all of the issues between
the parties. Evidently the objection is founded in
Page 69 U. S. 132
a mistaken view of the duty of the referee as prescribed in the
rule of reference. He was not required either by the agreement of
the parties or by the order of the court to report specially what
his finding was upon the several issues presented in the pleadings.
His duty was to determine all the issues and to report the result
of his finding. Referee reported that, having heard and examined
the matters in controversy in the cause and having examined on oath
the several witnesses produced, there was due to the plaintiff the
sum of nine thousand and five hundred dollars, besides the costs of
suit. Presumption is that he did determine all the issues, and
inasmuch as there was no evidence to the contrary, the conclusion
must be to the same effect.
4. Fourth objection is that the judgment is invalid and cannot
be enforced. Defect suggested is that the judgment was rendered by
the clerk, and not by the court, but the record, when properly
understood, does not sustain the objection. Judgments are always
entered by the clerk under the authority of the court. Prevailing
party is entitled to judgment, and it is not the practice in the
circuit courts to require a rule for judgment to be entered in any
case, as is the practice in some of the courts in the parent
country. [
Footnote 9] Entry of
judgment in term time is never made except by leave of court, but
the motion need not be in writing, and the order of the court is
seldom or never entered in the minutes. When the term closes,
judgments are entered by the clerk under the general order without
motion, and yet no one ever doubted that a judgment entered under
such circumstances was the act of the court, and not of the clerk.
Reference of a pending action is ordinarily perfected in term time
by an entry made under the case by the clerk, at the request of the
parties, that it is "referred," and with the addition of nothing
else except the names of the referees, or it may be done, as it was
in this case, by a written agreement, signed by the parties or
their attorneys, and filed in the case. When that is done, a rule
is then issued, or the
Page 69 U. S. 133
order of the court may be entered in the minutes, as was done in
this record. Duty of the referee is to notify and hear the parties
and then to determine the controversy and make a report or award to
the court in which the action is pending and from which the rule
was issued. Judgment, however, cannot in general be entered in
conformity to the report or award until it is accepted or confirmed
by the court. [
Footnote 10]
Reason for the rule is that whenever it is presented and before it
is accepted, the party against whom it is made may object to its
acceptance; but if required by the court, he must reduce his
objections to writing and file them in the case. Hearing is then
had, and after the hearing the court may accept or reject the
report, or, if either party desires it, the report may, for good
cause shown, be recommitted. Such a report of referees is in many
respects a substitute for the verdict of a jury. Where there is no
agreement to that effect, no judgment can be entered on such a
report until the same has been accepted. Present case, however,
must be determined upon the peculiar circumstances disclosed in the
record. Parties agreed that the report of the referee should have
the same force and effect as a judgment of the court, and the court
ordered, by consent of parties, that on filing the report with the
clerk of the court, judgment should be entered in conformity
therewith the same as if the cause had been tried before the court.
Referee accordingly made the report and filed it as required, and
thereupon the clerk entered the judgment pursuant to the order of
the court and the agreement of the parties. Proceedings of the
referee were correct, and the losing party made no objections to
the report. [
Footnote 11]
Judgment having been entered without objection, and pursuant to the
order of the court and the agreement of the parties, it is not
possible to hold that there is any error in the record. [
Footnote 12]
Page 69 U. S. 134
Theory of the objection is unfounded in fact, and upon that
ground it is overruled. The judgment of the circuit court is
therefore,
Affirmed with costs.
[
Footnote 1]
ยง 272.
[
Footnote 2]
1 Stat. at Large 78.
[
Footnote 3]
46 U. S. 5 How.
89.
[
Footnote 4]
59 U. S. 18 How.
246.
[
Footnote 5]
Strother v. Hutchinson, 4 Bingham's New Cases 83;
Ford v. Potts, 1 Halsted 388;
Nesbitt v. Dallam,
7 Gill & Johnson 494.
[
Footnote 6]
11 U. S. 7 Cranch
596.
[
Footnote 7]
Carnochan v.
Christie, 11 Wheat. 446;
Luts
v. Linthicum, 8 Pet. 176;
Butler v. Mayor of
N.Y., 7 Hill 329;
Ward v. American Bank, 7 Metcalf
486;
Water Power Co. v. Gray, 6
id. 174.
[
Footnote 8]
Yates v. Russell, 17 Johnson 468;
Hall v.
Mister, Salkeld 84;
Bank of Monroe v. Wadner, 11
Paige 533;
Green v. Palshen, 13 Wendell 295; Caldwell on
Arbitration 359;
Feeler v. Heath, 11 Wendell 482;
Graves v. Fisher, 5 Me. 70;
Miller v. Miller, 2
Pickering 570;
Com. v. Pejepsent Proprietors, 7 Mass. 417,
420.
[
Footnote 9]
2 Tidd's Practice, p. 903; Archbold's Practice by Chitty
521.
[
Footnote 10]
Brown v. Cochran, 1 N.H. 200.
[
Footnote 11]
Hughes v. Bywater, 4 Hill 551.
[
Footnote 12]
Bank of Monroe v. Widner, 11 Paige 533.