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UNITED STATES v. BAYER CO.

May 22, 1952

UNITED STATES
v.
BAYER CO., Inc. (NEW YORK) et al.



The opinion of the court was delivered by: SUGARMAN

On April 9, 1923, the defendant, The Bayer Company, Inc., a New York corporation, (hereinafter called Bayer), wholly owned subsidiary of the defendant, Sterling Products Incorporated, a Delaware corporation, (hereinafter called Sterling), entered into an agreement with Farbenfarbriken Vorm. Friedr. Bayer & Company, a German corporation, (hereinafter called Leverkusen), wherein it was agreed, among other things, that certain trade mark and patent conflicts be settled by the transfer by Leverkusen to Bayer of Leverkusen's Cuban trade marks, rights and patents, and that Bayer have exclusive sales rights in Cuba for certain products therein named, for which Bayer was to pay Leverkusen one half of its annual Cuban profits for a minimum of fifty-five years.

On December 1, 1925, I. G. Farbenindustrie Aktiengesellschaft, a German corporation, (hereinafter called Farben), through a predecessor, acquired ownership of Leverkusen.

 On November 15, 1926, Farben and Bayer contracted, among other things, to affirm, ratify and accept the April 9, 1923 agreement between Bayer and Leverkusen with the same force and effect as though it had been entered into by Bayer and Farben. Shortly thereafter Farben assigned the profits under its contract with Bayer, to General Aniline Works, Inc., a Delaware corporation. On October 31, 193-, General Aniline Works, Inc., was merged with the defendant General Aniline and Film Corporation, (hereinafter called General), the movant herein.

 Bayer and Sterling paid General Aniline Works, Inc., for the years 1930 to 1938 inclusive and General, for the years 1939 and 1940, an aggregate in excess of $ 600,000 under the contracts. No payments were made by Bayer and Sterling to General for profits earned after 1940 because, on September 5, 1941 a suit was commenced by the United States of America, plaintiff herein, against Bayer, Sterling and two officers of Sterling, under Sec. 4 of the Sherman Anti-Trust Act, Act July 2, 1890, c. 647, 26 Stat. 209, to restrain violations of Sec. 1 of said Act.

 On the same day, September 5, 1941, a decree was entered in that suit on consent of the four defendants there named, without trail and without the admission by any party in respect of any issue, decreeing (a) that the court had jurisdiction under the Sherman Anti-Trust Act; (b) that, the 1923 contract between Bayer and Leverkusen and the 1926 contract between Bayer and Farben being unlawful

 'the defendants Bayer and Sterling, and their respective successors and subsidiaries, or any of them, be and they hereby are enjoined and restrained from carrying out or enforcing any of the aforesaid contracts, or any supplements, amendments or modifications thereof, or from paying to I. G. Farben, its subsidiaries, successors or assigns, any royalties or share of profits pursuant to said contracts with respect to sales following the effective date of this decree * * *';

 and (c) that

 'jurisdiction of this cause is retained for the purpose of enabling any of the parties to this decree to apply to the Court at any time for such further orders and directions as may be necessary or appropriate for the construction or carrying out of this decree, for the modification or termination of any of the provisions thereof (having regard for such laws or regulations of any state or country in which the parties bound by this decree may be doing business as may be relevant), for the enforcement of compliance therewith, and for the punishment of violations thereof'.

 On October 24, 1945, General commenced an action in the New York Supreme Court, New York County, against the successors to Bayer and Sterling for $ 1,000,000 for its share of the Cuban profits for the years 1941 to 1944 inclusive. Bayer and Sterling pleaded, as complete defenses to that action, the decree of September 5, 1941, entered in this court as aforesaid. General then moved to strike out said defenses. That motion was granted by an order entered in the New York Supreme Court on July 30, 1946 supported by the court's decision reported at General Aniline & Film Corp. v. Bayer Co., 188 Misc. 929, 64 N.Y.S.2d 492. Bayer and Sterling thereafter appealed to the Appellate Division, First Department and said appeal is still pending.

 On December 18, 1951, the plaintiff, United States of America, moved before this court, on notice only to the original four defendants (Bayer, Sterling and the two individuals) for leave to summon General as an additional party defendant and to file a supplemental complaint against General in the original anti-trust suit, asserting in substance that General's New York suit against Bayer and Sterling conflicts with this court's decree of September 5, 1941 and purposes the enforcement of contracts declared by this court to be unlawful. The motion was granted on the consent of the four defendants notified thereof and an order to that effect duly made.

 General, having been duly served with the supplemental summons and supplemental complaint, now moves to dismiss the latter. The supplemental complaint states that it is brought against General 'in aid of the previously acquired jurisdiction of this Court and to protect and effectuate the Final Judgment entered herein on September 5, 1941 * * *' and that, though not originally named as a defendant, General has acted and is acting 'so as to defeat the jurisdiction of the Court * * * and to obstruct and thwart the effectuation of the provisions of said Final Judgment'. The supplemental complaint then prays that (1) General be required to appear and answer and (2) General be ordered to discontinue its action in the New York Supreme Court and confine its quest of payments under the 1923 and 1926 contracts to proceedings in this court.

 General's attack upon the supplemental complaint consists of the points that (1) it fails to state a claim upon which relief can be granted; (2) the court lacks jurisdiction over the person; (3) the court lacks jurisdiction over the subject matter; (4) a supplemental complaint is not the proper procedure under the circumstances.

 Points (1), (2), and (3) above stem from a common basis- that General, not having been a party to the original anti-trust suit and not having had an opportunity of being heard therein, cannot now be saddled with the restrictions imposed by the resultant decree. Enough is said in the decision by Special Term of General's motion to strike out the Bayer and Sterling defenses in the New York Supreme Court action, supra, (188 Misc. 929, 64 N.Y.S.2d 499), to manifest the validity of that contention. The New York Supreme Court pointed the course when it said

 'If plaintiff (General) attempted to intervene in the anti-trust action where the decree was entered five years ago, it would be met with 'the settled rule of practice that intervention will not be allowed for the purpose of impeaching a decree already made' and an order denying leave to intervene would not be appealable. United States v. California Co-op Canneries, 279 U.S. 553-556, 49 S. Ct. 423, 424, 73 L. Ed. 838. It would seem from the above quoted provision of the decree that any motion to bring plaintiff into that ...


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