20 Del. Ch. 10 | New York Court of Chancery | 1933
A preliminary matter needs first to be noticed. The petitioner makes mention in its petition of the point that the final decree was not served upon it as required by Rule 107 of this court. That rule is as follows:
“Rule 107. A copy of any order, rule or decree made by the Chancellor upon a party not appearing in the cause by a solicitor, shall be served on such party by the Sheriff, unless otherwise ordered by the Chancellor, and the order, rule or decree shall take effect only from the time of such service.”
What is meant to be made of that point is not disclosed on the petitioner’s brief. Certainly failure to serve the petitioner with a copy of the decree cannot have the effect of rendering the validity of the decree open to attack. At most such failure can have the effect of questioning only the manner of the decree’s execution through the instrumentality of the master whom the court appointed to make the assignment which the decree called for. But it cannot, in my judgment, have even that effect, for it is to be observed that service of the copy under Rule 107 is required
Having disposed of this preliminary matter, I now turn to the merits of the petition.
The petition asks leave to file a bill of review and a copy of the proposed bill is exhibited to the court.
The proposed bill of review seeks a vacation of the decree obtained by Grites on two grounds. These are (a) on the ground of newly discovered evidence, and (b) on the ground of fraud. A bill which seeks the review of a decree on the ground of newly discovered evidence is strictly a bill of review and can be filed only by leave of the court. Story, Equity Pleading (6th Ed.) §§ 412, 417. So far therefore as the proposed bill seeks the review on the ground designated as (a), the petitioner very properly requests the court for leave to permit its filing. But in so far as the proposed bill seeks to attack the former decree on the ground of fraud in its procurement, it is an original bill in the nature of a bill of review and as such may be filed as a matter of right without leave of the court first had and obtained. Story, Equity Pleading (6th Ed.), § 426. The petition therefore, so far as the proposed bill seeks the review ón the ground designated as (b), should be dismissed as asking a leave which the court should not be requested to extend.
Should the bill of review be allowed to be filed on the ground of newly discovered evidence? Before giving' an answer to this question, the statement of facts preceding this opinion'should be supplemented.
It appears from the evidence before me that Grites did not assign his patents, etc., promptly upon entering into the agreement of March 12, 1919; neither did the petitioner promptly issue to Grites all of the two hundred and-fifty thousand dollars of stock (twenty-five thousand shares) which it agreed to issue as part of the consideration for the patents. It did issue to Grites fourteen thou
It is at this point that the so-called new evidence upon which the ^petitioner relies as ground for a review has its setting. The petitioner says that it can show that the purchase of the stock by Krieger was in its behalf, that it was paid for by its money, and that Grites in addition to selling his stock (which was all that he then owned) agreed as part consideration for the purchase of his stock to surrender to the petitioner all his rights under the original contract of 1919. If such an agreement was made, Grites of course no longer possessed the right to recapture the patents, etc., for breach of covenants on the part of the petitioner. His original bill and the decree entered upon
Therefore it prays that it may have leave to file a bill of review in order that the evidence it now possesses may be brought forward in impeachment of the decree.
Such is the nature of the case which the proposed bill of review seeks to present. Grites challenges by affidavit the truth of the allegation that he agreed to a surrender of all his rights of recapture in December, 1920. It is of course apparent that Grites’ interests in the development of the patents by the petitioner were not terminated by his disposal of all of his stock, for, even considering that he had waived his royalty rights of five per cent, of the gross income as is contended, he yet possessed a right under the 1919 contract to twenty-five per cent, of the net income received from the sale of factory and territorial rights. I point this out because the solicitor for the petitioner appears to take the view that the severance of Grites’ relation as a stockholder necessarily terminated all his interest in the development of the patents, and therefore any right, such as the one of recapture, which he possessed as a protection to that interest expired with its termination.
The new evidence is proposed to be directed to the question of whether in December, 1920, Grites surrendered all of his rights of every description.
There are certain principles thoroughly settled to which so-called newly discovered evidence must conform before it will be accepted as sufficient to warrant the review of a decree. Those principles are the same in a general way as are applied by the law courts in disposing of motions for a new trial.
Chief among these principles is the one that the evidence must be newly discovered since the trial. If it was known to the defeated party at the time of the trial or
Now, in the instant case, what is the showing made by the petitioner as to the “newly discovered” quality of the evidence? It is that after the settlement was made in 1920 which, it is said, removed all of Grites’ rights, the old officers of the corporation who had knowledge of the terms of settlement severed their connection with the corporation and a completely new lot who were ignorant of the whole affair came in. The old officers were C. B. O’Connor, president, and N. F. Krieger, secretary. These gentlemen were joined as defendants in the Cook County suit out of which the settlement grew. They negotiated it.. They are the witnesses whom it is now sought to produce to prove it. Certainly the corporation, the present petitioner, through them knew of the facts which it now seeks to prove. Why then has not the petitioner known all along, ever since the settlement was made, what it now says has just recently come to its knowledge ? It will not do to say that a corporation’s knowledge fluctuates with the shifting of its personnel. A corporation’s mind, if we may use such a term, has a constant identity. What it knows to-day through its present officers cannot be regarded as never having been known by it simply because new officers have replaced old ones. What we may call its knowledge is not so mercurial. It continues the same, let the personnel of its officers, directors and stockholders change as often as we may imagine. If the present personnel is ignorant of what the former personnel knew, the situation is simply one where, if we may speak in analogy to individuals, the corporation may be said to have forgotten what it once knew. Looking at the present aspect of the case in that light, it is appropriate to remark that evidence for the purposes of a review of a decree or for new trial is not to be regarded as newly discov
I am of the opinion that sufficient circumstances are not shown to permit the attribution to the evidence relied upon as a basis for a review the quality of being newly discovered.
The decree was a default decree, obtained after service of the subpoena on the petitioner’s registered agent. It is claimed that the registered agent never forwarded notice to the petitioner, and that the petitioner was therefore in ignorance of Grites’ suit against it. If that be so the petitioner was exceedingly unfortunate in the selection of its registered agent. The law, however, provides that service upon a corporation’s designated agent is sufficient service upon the corporation. It would contribute to the insecurity of judgments and decrees and encourage all sorts of conceivable difficulties in the conduct and conclusion of litigation against corporate defendants if the courts were to relax from the firmness of view, that service of process upon the agent selected by the corporation to act for it for that purpose must be taken as conveying notice to it of the institution of the suit. Of course a case of fraud might be shown which would warrant the questioning of such service. But no fraud in the service is intimated in the present case. The emphasis which the petitioner lays upon the fact that the decree against it was a default decree, cannot therefore appeal to me as an argument for indulgence in its behalf.
A bill of review will not in any case be allowed to review a consent decree on the ground of new evidence in the absence of fraud or mistake. Thompson v. Maxwell Land Grant & R. Co., 95 U. S. 391, 24 L. Ed. 481; Cox v.
But I am far from satisfied that, if the petitioner had contested the bill against it, it could not have obtained the evidence which it now says has just recently come into its possession. A simple inquiry addressed to either O’Con-nor or Krieger, the former officers, would have uncovered it, as it eventually did. If such inquiry had not been made,
I do not see how the petitioner could escape being taxed with negligence, in which event of course leave to file a bill of review would be denied it. Not having appeared and contested the bill, I am of the opinion that the so-called new evidence cannot be of greater avail to it than it would have been had the contest been made.
The new evidence which is relied upon rests in paroi. All the documents which have been exhibited before me are consistent with Grites’ contention made both in his original bill and now in his response to the pending petition. In none of these papers does it appear that Grites
The requested leave will be denied. The request as based on new evidence does not come within the rule Governing such matters as appears from the foregoing; as based on fraud, if there be merit in that aspect of it, leave of the court is improperly asked.
Order accordingly.