Eastern States Petroleum Co. v. Asiatic Petroleum Corp.

L. HAND, Circuit Judge

(dissenting).

Upon an application like this all doubts must, of course, be taken against the plaintiff; but — quite aside from the contract with Harris & Dixon, Ld. — it is clear that the defendants are threatening its customers in a way that is damaging, and may be ruinous. They are doing this by challenging its title to the oil, which they declare generally they may attach as their own, if others buy it. This they assert a privilege to do, because they say that they honestly believe the oil to be theirs: that is, that the expropriation of it by the Mexican Government will not be recognized by the courts of other countries. I shall assume arguendo that a person is privileged to assert an honest claim of title to property in the possession of another, even to the extent of diverting his customers. Huxley v. Hayes, C. C., 191 F. 943, affirmed 3 Cir., 201 F. 899; Restatement of Torts, § 647. It seems to me strange that such a privilege should exist, if the claim be unwarranted, and I should try to reach an opposite conclusion, if the point were necessary .to decide. It is not. The putative privilege must in any event be ancillary to the protection of the claimant’s own title; it is accorded him only in order (o prevent dispersion of the property before he can secure an adjudication. Certainly I can see no other legitimate interest he can have, which justifies the damage inflicted. If so, obviously the claimant may not avail himself of it, and yet refuse to resort to courts able and competent to judge the dispute. This is well brought out in those cases which enjoin a patentee who "will not sue on his patent, from badgering the trade by threats he refuses to

push home. Adriance, Platt & Co. v. National Harrow Co., 2 Cir., 121 F. 827; Virtue v. Creamery P. M. Co., 8 Cir., 179 F. 115; Oil Conservation Eng. Co. v. Brooks Eng. Co., 6 Cir., 52 F.2d 783; Art Metal Works v. Abraham & Straus, 2 Cir., 62 F.2d 79; American Ball Co. v. Federal Cartridge Corp., 8 Cir., 70 F.2d 579, 98 A.L.R. 665. It is often said in these cases that the privilege depends upon the honesty of the claim, and that the refusal to sue is merely evidence of bad faith; and that, may not be practically objectionable. But it veils the proper theory, for a man might honestly believe in his title and yet refuse to assert it, in which event his privilege would certainly not survive.

I am not clear that my brothers disagree with the statement of law T have just made: in any case, as I understand it, they rely, at least in part, upon the fact that the defendants have filed a counterclaim in this suit alleging a conversion of the oil. That was after the order had been entered, and we cannot consider it on this appeal; and as the record stands, the defendants have refused to test their title in our courts. That, to my mind (full opportunity to do so having existed for many months), tolled their privilege to divert the plaintiffs customers. I do not of course mean that the courts of other countries are not as competent as our own, but it seems to me axiomatic that we should not excuse what would otherwise be a wrong upon the assumption that the putative wrongdoer cannot obtain justice here. I would therefore affirm the order, with leave, however, to the defendants to move in the district court to vacate the injunction because of the pendency of the counterclaim.

So far I have been speaking only of diverting prospective customers, not of inducing buyers to break their contracts. As my views are not to prevail, it hardly seems worth while to go into that difference here; except to notice it, and to say that in my judgment the privilege to induce a breach is, and should be, much narrower than to divert customers, who are still fair game for both competitors. I doubt that an honest, but unwarranted, belief in the validity of one’s title will excuse such an injury; but I must own that I know of no authority on the question.