Appeal from the District Court of the United States for the Northern District of Illinois, Eastern Division; William J. Campbell, Judge.
Before SPARKS, MAJOR and KERNER, Circuit Judges.
This is an action to recover damages alleged to have resulted from the defendant's breach of an implied warranty. The answer alleged, among other matters, that plaintiff's cause of action, if any, did not accrue within five years prior to the beginning of the action, hence was barred by the applicable statute of limitations, Chapter 83, Section 16 of the Revised Statutes of Illinois.
At a pre-trial conference it was agreed that the court should determine, from the parties' stipulation of facts, the issue with respect to the statute of limitations thus pleaded in paragraph 13A of the answer, before setting the cause for trial. This was done and the court decided that issue adversely to defendant, and dismissed that paragraph of the answer. From that ruling this appeal is prosecuted.
It is conceded that the five-year statute of Illinois is the applicable one, but the parties disagree as to when it began to run. That question must be determined from the stipulated facts, which substantially are as follows:
On October 1, 1931, plaintiff, by oral order, purchased from the defendant 6 machines, with incidental appliances, for the purpose of giving hair waves in accordance with the croquignole method.
Plaintiff contends, and defendant denies, that in connection with such purchase there was an implied warranty by defendant that plaintiff would have the uninterrupted right to the use of such machines and appliances in her business in giving hair waves in accordance with the croquignole method without eviction and without any liability to third persons on account of the infringement of any patent, and her suit is founded upon such implied warranty.
Plaintiff had the uninterrupted use of such machines and appliances in her business, above referred to, from the time she purchased them in the latter part of 1931, to December 11, 1933.
On November 25, 1932, a bill of complaint was filed in the United States District Court for the District of Ohio, Western Division, entitled The Philad Company et al. v. Florence Frey (the plaintiff in this action), charging her with infringement of their patent. The charges were based on claims covering a process of waving hair on the human head.
In that case, on motion of the plaintiffs, an order was issued by that court on December 11, 1933, in effect restraining the defendant, the plaintiff herein, from practicing the croquignole method of waving hair, whereupon she discontinued the use of the machines and appliances purchased by her from the defendant herein. Thereafter the infringement action was heard, and on December 23, 1935, that court decreed that the defendant, the plaintiff here, was guilty of infringement as there charged, and that a writ issue perpetually enjoining her from practicing such process with appliances, accessories or supplies not manufactured by or licensed under the patent in issue. On the same day an appeal was filed in the Court of Appeals for the Sixth Circuit, and on November 15, 1938, that appeal was dismissed. Frey v. Philad Co., 99 F.2d 1003. Thereafter, in the District Court above referred to, another final decree was entered to the effect that the defendant, the plaintiff here, had infringed the patent as charged, and that the injunctive decree of December 23, 1935, continue in full force and effect.
It is elemental that a statute of limitations does not begin to run against a cause of action until that action accrues. The sole question here presented and argued is the determination of the time when the five year period of limitation began to run against plaintiff's cause of action on the alleged warranty. Both parties agree that it began to run when plaintiff was evicted from the user covered by the alleged warranty, but they differ as to when that eviction occurred. In support of the District Court's ruling, plaintiff urges that the eviction did not occur until the infringement action in the Sixth Circuit was finally adjudicated by the agreed dismissal of her appeal on November 15, 1938, and the subsequent decree of the District Court in that case, on November 17, 1938, continuing in full force and effect the injunctive provisions of the decree there entered December 23, 1935.
On the other hand, the defendant contends that the eviction occurred when the preliminary injunction was issued in the infringement suit on December 11, 1933, and in any event when it was made perpetual on December 23, 1935, both of which dates were more than five years prior to the commencement of this action.
As to his controversy we think the defendant must prevail. Unquestionably plaintiff's right to use the machines and appliances was interrupted when the temporary restraining order was issued. That order was afterwards made permanent and she never again used them. The first order was issued on account of the court's reasonable effort to protect the patent against infringement which the court at that time was bound to presume a valid one. The second order was issued to protect the same patent against this plaintiff's infringement, of which at that time they found her previously guilty. She admits that her user was thus interrupted at all times after December 11, 1933, and that she was damaged thereby, yet she contends that her cause of action did not accrue until she had dismissed her appeal in the Sixth Circuit Court of Appeals, for until then, so she contends, it could not be definitely said that she had infringed the patents, and without such adjudicated infringement she argues there could be no liability on this defendant's implied warranty. That is to say, if she had prevailed in the infringement suit there would have been no liability against this defendant because there would have been no infringement, although she would have suffered the same ...