CINERAMA, INC. v. SWEET MUSIC, S.A. No. 980, Docket 72-2411.
482 F.2d 66 (1973)
CINERAMA, INC., a New York Corporation, Plaintiff-Appellant, v. SWEET MUSIC, S.A., a Swiss Corporation, Defendant, and Union Bank of Switzerland, a Swiss Corporation, Defendant-Appellee.
United States Court of Appeals, Second Circuit.
Decided June 14, 1973.
Robert G. Desmond, New York City (Harry B. Swerdlow, and Seward & Kissel, New York City, of counsel), for plaintiff-appellant.
John Dickey, New York City (John W. Timbers, and Sullivan & Cromwell, New York City, of counsel), for defendant-appellee.
Before MOORE, FRIENDLY and FEINBERG, Circuit Judges.
FRIENDLY, Circuit Judge:
These appeals present an example of how a successful litigant's effort at accelerating collection from an adversary, in a manner which on any view pressed the Rules of Civil Procedure to their limit, has produced substantial delay.
This action in the District Court for the Southern District of New York by Cinerama, Inc., a New York corporation, against two Swiss corporations, Sweet Music, S.A., and Union Bank of Switzerland, stemmed from a written guarantee delivered by Cinerama to the Bank of a loan to be made by the Bank to Sweet Music in order to finance the production of a film which Cinerama was to distribute. In a first cause of action, Cinerama sought a declaration
In an opinion rendered on September 18, 1972, 355 F.Supp. 1113, Judge Tenney concluded that Cinerama's claim of non-liability on the guarantee raised no genuine issue of any material fact, that its complaint for a declaratory judgment should be dismissed, and that the Bank was entitled to partial summary judgment for $1,825,000, the principal amount of the guarantee. He added, 355 F.Supp. at 1121:
Four days later, judgment was entered in a form proposed by the Bank. The judgment recited the motion for summary judgment and the decision thereon, and said there was "no just cause for delay for entry of judgment pursuant to Rule 54(b) of the Federal Rules of Civil Procedure." It thereupon ordered that the Bank recover $1,825,000 and costs from Cinerama; that Cinerama's claim for a declaratory judgment against the Bank be dismissed; and that "the remainder of the action [be] severed."
Evidently fearing that the Bank would endeavor to levy execution on the judgment but that an appeal on its part would be dismissed for lack of finality of the judgment, Cinerama promptly made a motion which, among other things, asked that an order be entered pursuant to F.R.Civ.P. 60(b) "vacating the judgment on the ground that it was improperly entered."
Some months were then spent in negotiations, which turned out to be fruitless, that would have avoided a levy of execution by having Cinerama place the Bank on a parity with secured creditors. On May 1, 1973, another panel of this court heard a motion by Cinerama for a stay of execution; Cinerama claimed that it was unable to procure a supersedeas bond but that execution was likely to precipitate insolvency, with great harm to other creditors, employees, and stockholders. Being disturbed by the problem presented by the apparent unappealability of the judgment, the panel granted a stay pending expedited argument
The first sentence of Rule 54(b) provides:
Since multiple parties were here involved, there is no doubt that the district court could properly have made the specified direction if it had fully disposed of the separate claim between Cinerama and the Union Bank although it has not determined the controversy between Cinerama and Sweet Music. The propriety of such a disposition, however, does not invest the district court with greater power to characterize a partial disposition of a claim between Cinerama and the Bank as final than if Sweet Music had not been a party. It is settled that, in making the requisite determination and direction under F.R.Civ.P. 54(b), "[t]he District Court cannot, in the exercise of its discretion, treat as `final' that which is not `final' within the meaning of [28 U.S.C.] § 1291" (emphasis in original), and that "any abuse of that discretion remains reviewable by the Court of Appeals." Sears, Roebuck & Co. v. Mackey, 351 U.S. 427, 437, 76 S.Ct. 895, 900, 100 L.Ed. 1297 (1956).
We see no basis for the apparent belief of the district court that it could sever the Bank's claim for principal from its claim for prejudgment interest and render a "final" judgment only for the former. Since the same operative facts that created the right to recover principal gave rise to the right to recover interest, there was but a single claim, as would be evident if the Bank had counterclaimed only for principal and, after obtaining judgment, had endeavored to sue for prejudgment interest. See ALI, Restatement of Judgments 2d, § 61 (Tent. Draft No. 1, March 1973). We held long ago that a district court could not endow with finality a judgment which determined the merits of all of the contentions asserted by parties but had not yet fixed the damages sought by the prevailing ones, even though "the computation would now seem to be comparatively simple, if not ministerial in nature." Petrol Corp. v. Petroleum Heat & Power Co., 162 F.2d 327, 329 (2 Cir. 1947). We see no significant distinction when the court has determined part of the damages, here the principal, but has reserved, as raising fact issues, the amount of prejudgment interest. The matter might stand differently if computation of such interest were a purely ministerial act, with the clerk directed to compute the amount and include the total, compare N.Y. CPLR § 5001(c); see Mower v. Fletcher, 114 U.S. 127, 5 S.Ct. 799, 29 L.Ed. 117 (1885); Republic National Gas Co. v. Oklahoma, 334 U.S. 62, 68, 68 S.Ct. 972, 92 L.Ed. 1212 (1948).
Aetna Casualty & Surety Co. v. Giesow, 412 F.2d 468 (2 Cir. 1969), is directly in point. We there dealt with an agreement whereby the defendant undertook in a certain event to indemnify the plaintiff for "any and all liability, loss, costs, damages, attorneys' fees and expenses of whatsoever kind or nature" which plaintiff might sustain by reason of having issued performance and payment bonds. The district court had entered
Against all this the Bank opposes Brown Shoe Co. v. United States, 370 U.S. 294, 304-311, 82 S.Ct. 1502, 8 L. Ed.2d 510 (1962), where the Supreme Court upheld its jurisdiction under § 2 of the Expediting Act, as amended, 15 U.S.C. § 29, over an antitrust decree directing complete divestiture although no specific plan had yet been approved. The Court made clear that its ruling rested on considerations peculiar to decrees in government civil antitrust suits and was not intended to alter what it characterized as "a cornerstone of the structure of appeals in the federal
Although the Bank has not cited the case, we have considered whether finality could properly have been ascribed to the judgment under the rule of Forgay v. Conrad, 47 U.S. (6 How.) 212, 12 L. Ed. 404 (1848), where an appeal was permitted from a decision setting aside a conveyance of land and slaves and ordering a special master to take an accounting of rents and profits. Professor Ward's remark that the principle of that inscrutable decision "is not always a rule of easy application," 9 Moore, Federal Practice ¶ 110.11, at 146 (2d ed. 1973), is somewhat of an understatement, as his discussion shows. However, we find no difficulty in holding Forgay inapplicable here. The rule has been confined to judgments "directing immediate delivery of physical property" and ordering an accounting which has not been completed, see Radio Station WOW, Inc. v. Johnson, 326 U.S. 120, 126, 65 S.Ct. 1475, 89 L.Ed. 2092 (1945), and not even to all of these, see Catlin v. United States, 324 U.S. 229, 65 S.Ct. 631, 89 L.Ed. 911 (1945); cf. Republic National Gas Co. v. Oklahoma, supra, 334 U.S. 62, 68 S.Ct. 972.
What has been said leads to the conclusion not only that the direction for the entry of final judgment was an abuse of discretion but that the judgment was not appealable. Confronted with a judgment which in reality was non-final but under which the defendant was facing execution, the Seventh Circuit thought that justice required treating the judgment as appealable, Biggers v. Oltmer Iron Works, 154 F.2d 214 (7 Cir. 1946); a better course would have been to treat the appeal as a petition for mandamus and direct the district court to vacate its declaration of finality. See Rabekoff v. Lazere & Co., 323 F.2d 865, 866 n. 1 (2 Cir. 1963).
We therefore dismiss Cinerama's appeal from the judgment for lack of appellate jurisdiction but reverse so much of the order denying its motion under Rule 60(b) as declined to withdraw the declaration that there was no just reason for delay in the entry of judgment. The judgment will stand as an interlocutory summary judgment on the liability issue, F.R.Civ.P. 56(c), and as an order specifying the extent to which the amount of damages are not in controversy, id. 56(d), but execution cannot be had thereon until the amount of prejudgment interest is determined and a final judgment is entered.
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