author: DONAHUE, Circuit Judge.

text:
    LAMBERT TIRE & RUBBER CO. v. BRUBAKER TIRE CO. et al.
    (Circuit Court of Appeals, Sixth Circuit.
    April 6, 1925.)
    No. 4293.
    1. Patents <§=>328 — Brubaker, 1,414,252, for cushion tire, held independent invention of patentee.
    Evidence held insufficient to show invention covered by Brubaker patent, No. 1,414,252, for cushion tire, was made by the patentee as an employee of complainant, or under such circumstances as to give complainant the equitable title thereto.
    2. Patents <§=>328 — Lambert, 1,386,513, for ■ cushion tire, and design 57,363, for design for tire, held not infringed.
    The Lambert patents, No. 1,386,513, for a cushion tire, and design patent No. 57,363, for design for tire, held not infringed.
    Appeal from the District Court of the United States for the Eastern Division of the Northern District of Ohio; D. C. West-enhaver, Judge.
    In Equity. Suit by the Lambert Tire & Rubber Company against the Brubaker Tire Company and William A. Brubaker. Decree for defendants, and complainant appeals.
    Affirmed and_ remanded.
    Albert E. Dieterieh, of Washington, D. C. (Geo. B. Pitts, of Cleveland, Ohio, on the brief), for appellant.
    Hadley F. Freeman, of Cleveland, Ohio (Smith & Freeman, of Cleveland, Ohio, on the brief), for appellees.
    Before DONAHUE, MOORMAN, and KNAPPEN, Circuit Judges.
   DONAHUE, Circuit Judge.

This is an appeal from a decree dismissing plaintiff’s bill of complaint in an action brought to compel defendants to assign to plaintiff United States letters patent No. 1,44.4,252, issued April 25, 1922, to William A. Bru-baker, and if this relief be denied, then to enjoin defendants from infringing, by the manufacture of the tire of the Brubakdr patent, letters patent No. 1,386,513, and design patent No. 57,363, issued to Henry M. Lambert and by him assigned to plaintiff.

It is alleged in the bill of complaint that plaintiff employed the defendant William A. Brubaker to devise a cushion tire and mold to manufacture the same; that in pursuance of this employment Brubaker did design the tire of letters patent No. 1,414,-252 from preliminary plans furnished him and along lines suggested by plaintiff’s officers. This is denied by defendants, who allege in their answer that Brubaker devised this tire upon his own initiative and developed it at his own expense, and not as an employee of the plaintiff or at its expense. It is further alleged on the part of the plaintiff that this tire devised by Brubaker is an infringement of plaintiff’s design patent No. 57,363, and that the molds which were used by defendant to make the tires of the Brubaker patent infringe plaintiff’s patent No. 1,386,513. The defendant pleaded invalidity and noninfringement as to both patents, but relied particularly upon nonin-fringement.

The plaintiff company is the manufacturer of an improved tire of the cushion ventilated type wherein the tire body is provided with holes or air spaces so arranged as to afford sufficient resiliency and ventilation of a tire body manufactured from solid rubber or rubber compound.

While the evidence offered on the part of the plaintiff fails to establish a definite and specific contract, either .verbally or in writing, by the terms of which Brubaker agreed to develop the tire of patent 1,414,252, for the use and benefit of plaintiff and to assign the same to it, yet the evidence tends to prove that this was the understanding of the officers of the plaintiff company who dealt directly with Brubaker in reference to his employment.

The evidence further tends to prove that in this connection the plaintiff submitted to Brubaker the drawings (Figs. 4 and 5) of the Lambert patent 1,386,513, and a design prepared for it by C. W. Draper, the object and purpose of which were to so place the holes or air spaces that the load would be carried, at all times, partly by air and partly by rubber, and not by rubber and air alternately and employed and directed Brubaker to develop and perfect these plans and ideas so as. to produce a tire that would accomplish the desired result. It is the claim of the plaintiff that the tire of the Brubaker patent is the natural outcome or development of the Lambert patent 1,386,513 and the Draper design and idea. It also appears from the evidence that while Brubaker was in the employ of the plaintiff, he devised two designs for treads upon which design patents were issued and assigned by Bru-baker to the plaintiff. It is further claimed by plaintiff that from the nature of Brubaker’s employment, his conduct and dealings with the company, that regardless of an express contract there was an implied contract that Brubaker would assign this patent to' the plaintiff. Dowse v. Federal (D. C.) 254 F. 308; Standard Parts v. Peck, 264 U. S. 52, 44 S. Ct. 239, 68 L. Ed. 570, 32 A. L. R. 1033.

Evidence was offered upon the part of the defendants tending1 to prove that Brubaker was not in the regular employ of plaintiff, but was employed by the Akron Gear & Engineering Company as superintendent of its factory; that while acting in this capacity he had acquired large experience in the developing of molds to make solid rubber and other forms of tires; that because of his experience and skill in these matters he was employed by the plaintiff when it moved its factory to Akron, Ohio, in the fall of 1918 to assist it, during his free time, in developing its product, at a stipulated sum per month; that in pursuance of a later arrangement, Brubaker was paid for services actually performed for the plaintiff upon bills presented by him; that at the same time the Akron Gear & Engineering Company, by whom Brubaker was employed, was manufacturing molds’ for all types of tires, and particularly for Charles Niemeyer, who was also the inventor of a solid cushion tire with staggered holes through each side to the center, which holes tapered down in the center to about a half inch at the smaller part, and except for the size, shape, and tapering of these holes, it is very similar in design to the Brubaker patent in suit; that plaintiff did submit to Brubaker the drawings of the Lambert patent and the Draper design in which the holes passed diagonally, instead of directly through the body of the tire, and employed and directed Brubaker to develop a tire from these basic plans and ideas that would produce the results suggested by Draper and desired by the plaintiff; that after Brubaker had worked with this design for some time, he notified plaintiff that it was impossible of development, and that he was then told by plaintiff “to forget about it”; that he thereupon abandoned all further efforts to develop these plans and designs; that later he designed and developed the tire of patent No. 1,414,252 upon wholly different lines at his own expense; that he paid the Akron Gear Grinding Company for the molds; that he paid the plaintiff for manufacturing some of these tires for experimental purposes; that he also made application for this patent and paid all of the expenses of procuring the same. The evidence further tends to prove that after one or more of these tires were manufactured by plaintiff for Brubaker, and for which service Brubaker paid the plaintiff, some claim was made by the officers of the plaintiff that Brubaker had developed this tire for it in accordance with the plans and designs furnished him and that plaintiff was the equitable owner of the same. This was denied by Brubaker, and thereupon a verbal agreement was made between the plaintiff and Brubaker that the plaintiff might, at its option, on or before the next director’s’ meeting, purchase this tire upon terms then stated; that plaintiff did not exercise its option to purchase, but thereafter made a small number of tires for Brubaker for which bills were sent him by the plaintiff and the same were paid by him.

The plaintiff denies that it countermanded the order to Brubaker to develop the Draper idea or directed Brubaker “to forget it,” but, on the contrary, insists that it furnished the design, the idea, and instructions to Brubaker that enabled him to develop this tire, and that it did not, with knowledge of the facts, enter into any option agreement ‘with him for the purchase of this tire or in any other way admit or recognize Brubaker’s ownership thereof.

While the fact that Brubaker transferred to plaintiff, without objection and upon his own suggestion," the patents covering the treads invented and devised by him, is strongly corroborative of plaintiff’s evidence that it was the intention, understanding, and agreement of the parties that Brubaker was working for and in the interest of the plaintiff and developing these ideas for their use and benefit, yet the evidence in relation to these patents differs materially from the evidence in relation to patent No. 1,414,252. The designs of the tread patents were developed by Brubaker during the time or times for which the plaintiff paid him for his services. The cost of obtaining these patents was also paid by plaintiff, and all materials, molds, and experimental work were furnished and paid for by plaintiff. In relation to patent 1,414,252, no evidence was offered tending to prove that plaintiff paid Brubaker for the time employed by him in developing and perfecting the tire of this patent, or that it paid any part whatever of the expenses incident to its development. On the contrary, it appears from the uncontradieted evidence that Brubaker paid for the molds and rings and took them to plaintiff’s factory and paid plaintiff for the manufacture of the experimental tires. These facts are wholly inconsistent with the claim of plaintiff that Brubaker was developing this tire for its use and benefit and at its expense. It is also clear that the Draper design and Lambert 1,386,513 are wholly unlike the tire of the Brubaker patent. In view of the then state of the art, it is not probable that either of these furnished a basis or suggestion for this invention. The Brubaker tire is very similar to the Niemeyer tire. It differs from Niemeyer in the size and shape of the staggered holes in the opposite sides of the tire body. Brubaker was very familiar with the Niemeyer tire. As superintendent of the factory he made the molds for their manufacture and from time to time discussed this type of tire with Niemeyer. It would therefore appear that the facts in this case are materially and vitally different from the facts presented in either Dowse v. Federal or Standard Parts v. Peek, supra.

In the opinion of this court the evidence in this ease wholly fails to establish that drawings of the Lambert patent, No. 1,386,-513, or the Draper design, furnished to Bru-baker the basic idea upon which and by which he was enabled to develop the tire of patent 1,414,252, or that there was any contract, either express or implied, between the plaintiff and Brubaker that would entitle plaintiff to the property in the Brubaker invention.

Upon the question of infringement of Lambert patent No. 1,386,513, the plaintiff must also' fail. Upon this question it is unnecessary to discuss the evidence in detail. Claims 1, 4, and 6 of that patent include elements wholly absent from the Brubaker mold, and it further appears from the evidence that the Lambert mold is specially constructed for the purpose of manufacturing the Lambert tire, and that the Lambert tire could not be manufactured from the molds used by the defendant. The Brubaker mold is a four-piece mold, but that fact has no functional importance. Just as soon as it is put into use the parts become so cemented together that it becomes to all intents and purposes a two-piece mold, and as such fully answers the purposes for which it was designed, but would be useless in the manufacture of the Lambert tire. Two-piece molds are admittedly old in the art. It also appears from the evidence that Brubaker took these molds to the plaintiff to be used by plaintiff in the manufacture of these tires for him; that plaintiff without ohjeetion did use these molds in the manufacture of the Brubaker tire and later returned the molds to Brubaker. The claim of infringement is evidently an afterthought.

Design patent 57,363 included not only the side wall of the tire body, but also the L-shape tread. There is nothing new in the side wall design to distinguish it from Nie-meyer, Bridge, Wilson, or many other tires then being manufactured. The distinctive feature of this design patent is the L-shape tread. The defendant does not manufacture an L-shape tread, but a ribbed tread, which in no way resembles thq tread of the Lambert design. The conclusion neeessárily follows that the design patent is not infringed hy defendant’s structure.

Affirmed, with costs, and cause remanded'


source: Caselaw Access Project

author: KENYON, .Circuit Judge.

license: Public Domain

text:
    ROAD IMPROVEMENT DIST. NO. 4 OF CONWAY COUNTY, ARK., v. WILKERSON.
    (Circuit Court of Appeals, Eighth Circuit.
    April 16, 1925.)
    No. 6647.
    1. Appeal and error <3=1022(1) — Finding of master, confirmed by trial court, held pre- . sumptively correct.
    Where case was referred to master at request of both parties, master’s findings, confirmed by trial court, must be accepted as presumptively correct, and, in absence of obvious error in application of law, or serious mistake in consideration of evidence, should be permitted to stand.
    2. Accord and satisfaction <3=’ll(l) — Compromise and settlement <3=5(2) — Acceptance and collection of check, reciting that it is in full payment of disputed claim, constitutes “accord and satisfaction.”
    Where there is dispute concerning claim, for which cheek or other remittance is made to creditor, reciting that it is in full payment thereof, and creditor accepts- check or collects it without objection, transaction constitutes accord and satisfaction.
    [Ed. Note. — For other definitions, see Words and Phrases, First and Second Series, Accord and Satisfaction.]
    3. Accord and satisfaction,<3=523 — Compromise and settlement <3=15(1)— Agreement to accept final estimate as final settlement impliedly included agreement that final estimate should be at least approximately correct.
    Where parties to road contract agreed to settle dispute by accepting final estimate as final settlement of contract, their minds met on proposition that contractor should receive what final estimate should show he was entitled to, with implied understanding that final estimate should be at least approximately correct.
    4. Accord and satisfaction <3=20 — Compromise ' and settlement <3=8(4) — Settlement based on mutual mistake of material facts may be corrected or set aside.
    A settlement based on the mutual mistake of material facts may be corrected or set aside,.

      5. Accord and satisfaction <@=»20 — Compromise and settlement <@=8(4)— Mistake in final estimate held sufficient to destroy integrity thereof, and of accord and satisfaction based thereon.
    Mistake in final estimate on road contract, amounting to over $50,000 out. of a total of about $400,000, held to destroy integrity of final estimate, entitling contractor to avoid effect of accord and satisfaction based thereon.
    6. Accord and satisfaction <§=>il(l) — Compromise and settlement @=>5(2) — Contractor’s failure to return proceeds of checks held not to preclude recovery of correct amount on discovering errors in final estimate:
    Where road district’s checks, reciting that they were in payment of final estimate due road coutraetor, were received and deposited by person without authority to make accord and satisfaction in hank holding assignment of estimates and retained percentages, and contractor’s president disclaimed knowledge of recitals, and indebtedness to contractor exceeded amount of checks, contractor was not precluded from recovering amount actually due, on discovering large errors in final estimate, merely because of failure to return proceeds of checks.
    7. Highways <@=>113(4) — Provision of road contract held not to preclude contractor from recovering correct amount on discovering gross errors in monthly estimates.
    Provision of county road contract that engineer’s decision as to value and quantity of work, as shown by monthly estimates, should he conclusive, in absence of fraud or error, held not to preclude contractor from recovering correct amount due on estimates, on discovering gross and palpable errors therein, carried into final estimate.
    8. Accord and satisfaction <@=>23 — Court of equity should not permit plea of accord and satisfaction to work injustice, if there is escape therefrom.
    A court of equity should not permit a plea of accord and satisfaction to work injustice, if there is escape therefrom.
    Appeal from the District Court of the United States for the Eastern District of Arkansas; Jacob Trieber, Judge.
    Suit' by E. M. Wilkerson, trustee for the P. J. Lewelling Construction Company, against Road Improvement District No. 4 of Conway County, Ark. Decree for plaintiff, and defendant appeals.
    Affirmed.
    Edward Gordon and H. G. Combs, both of Morrillton, Ark., for appellant.
    Charles T. Coleman, Joe T. Robinson, Joseph W. House, and Walter G. Riddick, all of Little Rock, Ark., for appellee.
    Before KENYON. Circuit Judge, and PHILLIPS, District Judge.
   KENYON, .Circuit Judge.

This is an appeal from a judgment of the District Court of the United States for the Eastern District of Arkansas in. an action brought by ap-pellee, trustee for the P. J. Lewelling Construction Company, to recover a balance alleged to be due said company for work and material furnished in the construction of a certain road or roads for appellant. Appel-lee claims that the P. J. Lewelling Construction Company entered into a contract with appellant to construct the roadbed of the proposed highway in accordance with the plans and specifications, and under the direction of the district engineer, and that the amount actually due for said work was $443,-102.20; that monthly estimates had been furnished by the engineers of materials and work done, amounting to $392,590, and that there is a balance due and unpaid of $50,-743.20. The original complaint asked for profits, which claim, however, has been abandoned. The claim at the time of suit was the property of E. M. Wilkerson, trustee for the P. J. Lewelling Construction Company.

Appellant contended in the trial court, and contends here, that, some controversy having arisen between the parties, a demand was made upon it by the Construction Company for a final estimate and release of its contract, and .that such final estimate was made, which was accepted as a final settlement; said final estimate being known as “No. 27.” This showed an amount due to the construction company of $13,634.54. Three cheeks were given therefor, in the respective sums of $5,210, $2,114.54, and $6,310. In two of these cheeks were these words: “In payment of final estimate due the Lewelling' Const. Co.” In the other cheek was this phrase: “Final estimate consummates contract.” The final estimate was dated June 13,1921. The cheeks above referred to were dated June 21, 1921. Mr. Dudley, who was treasurer and bookkeeper of the construction company, indorsed them in blank in the name of the construction company, by himself as treasurer, as appears on the cheeks, and delivered them to the Bank of Morrillton, which held an assignment of the estimates and retained percentages. Afterwards two competent engineers went over the work which had been done by the Lewelling Construction Company, and testified to shortages in the final estimates, making a difference in favor of the construction company in the amount of $50,624.84.

By consent of the parties the ease was referred by the court to a master, with instructions to make findings and submit the same to the court. The master, after hearing the testimony of witnesses, reported to the court that the account, as stated by the engineer of the district, was short, as shown by a table inserted in'the master’s report, in the sum of $50,624.84, less 32 cents admitted over allowance, and found that the claim of the trustee of the construction company for judgment in the sum of $50,624.52 was 'supported by a preponderance of the evidence. The court approved the findings of the master, and entered judgment for said amount and costs on the 25th day of May, 1923.

The ease being referred by the court to the master at the request of both parties, and the findings being concurred in and confirmed by the trial court, they must be accepted as presumptively correct, “and unless some obvious error has intervened in the application of the law, or some serious or important mistake has been made in the consideration of the evidence, the decree should be permitted to stand.” Crawford v. Neal, 144 U. S. 585, 596, 12 S. Ct. 759, 36 L. Ed. 552; Tilghman v. Proctor, 125 U. S. 136, 8 S. Ct. 894, 31 L. Ed. 664; Kimberly v. Arms, 129 U. S. 512, 9 S. Ct. 355, 32 L. Ed. 764; Davis v. Schwartz, 155 U. S. 631, 15 S. Ct. 237, 39 L. Ed. 289; Furrer v. Ferris, 145 U. S. 132, 12 S. Ct. 821, 36 L. Ed. 649.

What were the findings of the master? They were: That there was gross error in the final estimate; that there was no testimony to show that Mr. Dudley had authority to bind the construction company to an accord and satisfaction by accepting the cheeks containing the statement that they were given “in payment of final estimate due the Lew-elling Const. Co., which consummates contract” ; that Mr. Lewelling had no reason to suspect that .the accounts kept by appellant’s agent were inaccurate; that he had the right to assume that the engineer was keeping accurate accounts; that the commissioners of the district proceeded on the same assumption, and-neither party had knowledge that the engineer’s accounts were materially inaccurate; that Mr. Lewelling agreed to settle on the basis of the final estimate; that the settlement was made under a mutual mistake as to material facts, and was not binding. The trial court entered decree in accordance with the master’s report.

The principal defense insisted on is that these cheeks, given for the amount of the final estimate, reciting "that they were in payment thereof and consummated the contract, amount to an accord and satisfaction. It is a general principle of law that, where there is a dispute concerning a claim and a check is given, or other remittance to the creditor, which recites that it is in full payment of the claim, and the same is accepted by the creditor, or if the creditor collects the check without objection, the transaction constitutes an accord and satisfaction. 1 R. C. L. § 32; Barham v. Bank of Delight, 94 Ark. 159, 126 S. W. 394, 27 L. R. A. (N. S.) 439; Bassick Gold Mine Co. v. Beardsley, 49 Colo. 275, 112 P. 770, 33 L. R. A. (N. S.) 852; Canton Union Coal Co. v. Parlin & Orendorff Co., 215 Ill. 244, 74 N. E. 143, 106 Am. St. Rep. 162.

Is this broad proposition applicable here? There is testimony, which is referred to by the master to the effect that Mr. Dudley, treasurer and bookkeeper of the Lewelling Construction Company, had no authority to bind the construction company by accepting checks containing the statements as to payment and consummation of the contract. There is also testimony that the company had no notice of the particular wording of the cheeks regarding payment until this suit was brought. The master makes no specific finding as to the authority of Dudley, but the evidence shows he had no authority to bind the construction company 'by an accord and satisfaction. We do not consider this question, however, of controlling importance, for, as we view if, the decisive point in the ease is the alleged' mutual mistake as to the final estimate. These cheeks were in payment of and based upon the final estimate. There is a dispute as to whether or not Lewelling, who was president and evidently the controlling spirit of .the construction company, knew of the estimate, and saw the same before the checks were given. The date of the estimate is June 13, 1921, and the date of the cheeks is June 21, 1921. He testifies he did not see the final estimate before the checks were given; that he did see a memorandum of the same made by one Nicholson. Other witnesses for appellant testified that they discussed the final estimate with him. He testified that he supposed the construction company had something in the neighborhood of $53,000 as retained percentages, and $6,000 or $7,000 due on classification; that he never understood that any settlement was being made for $13,000. These matters are much in dispute, but the fact is, whether Lewelling saw the final estimate before the cheeks were received by his company or not, that the settlement was based thereon, and this fact was established by the finding of the master. The minds of the parties met on the proposition that the construction company should receive what the final estimate should show it was entitled to. We think there inhered in this the implied understanding that the final estimate should be at least approximately correct. Certainly the parties were not agreeing to settle on the basis of a final estimate that was clearly, manifestly, and grossly erroneous. Both parties, of course, intended that the final estimate should be reasonably accurate.

A settlement, by whatever term it may be designated, based upon a mutual mistake of material facts, may be corrected or set aside. 1 Corpus Juris, p. 570, § 105, states the rule as follows: “An accord and satisfaction entered into and executed through mutual mistake of fact is not binding and may be rescinded. The general rule that a contract made upon an assumed state of facts as to which there was a mutual mistake may be rescinded applies to every form of contract including accord and satisfaction.” 5 R. C. L. p. 899; Sheibley v. Dixon County, 61 Neb. 409, 85 N. W. 399; Byrnes v. Byrnes, 92 Minn. 73, 99 N. W. 426; State Sav. Bank v. Buhl, 129 Mich. 193, 88 N. W. 471, 56 L. R. A. 944; Kowalke v. Milwaukee Electric Railway & Light Co., 103 Wis. 472, 79 N. W. 762, 74 Am. St. Rep. 877; Alexander v. Owen County, 136 Ky. 420, 124 S. W. 386; Beck v. School District No. 2 in Bent County, 54 Colo. 546, 131 P. 398, 46 L. R. A. 279; 12 Corpus Juris, p. 351.

The finding of the master of mistakes in the final estimate amounting to more than $50,000 on work aggregating in the neighborhood of $400,000 certainly shows such mistake and error as to destroy the integrity of the final estimate. It is not a mere mistake incidental to the transaction; it is a part of the very subject-matter. The master pointed out the mistakes established by the evidence. We think it is not necessary to set them forth. They covered shortages on grading, loose rock, solid rock, and earth excavation. Indeed, there seems to be very little dispute in the evidence that shortages in the engineer’s monthly estimates did exist, and that they were carried into the final estimate.

It is a fair presumption, from the language of the master’s report, that he found the settlement and the alleged accord and satisfaction were made upon the belief of both parties thereto that the final estimate prepared by appellant’s district engineer was correct, that the checks were given upon that assumption, and that the settlement was made under the mutual mistake of fact. This finding and conclusion of the master was supported by evidence, was concurred m and confirmed by the court, and we consider our-selve bound thereby.

The question is raised that the construction company never offered to return the money received from the checks. Under the circumstances disclosed by the record as to the receipt of the cheeks by one with no authority to make an accord and satisfaction, the immediate deposit of them in a bank holding an assignment of the estimates and retained percentages, the testimony of Lewelling that he had no knowledge of the words of the cheeks claimed to be evidence of accord, and the fact that the indebtedness as found by the master exceeded the amount of the checks, we do not think appellant should be precluded from recovery on the ground that ‘ the checks were not returned when it was discovered that the words referred to appeared thereon. In equity the amount of the checks should be credited on the account, and this was done. Nye v. Swan et al., 49 Minn. 431, 52 N. W. 39; Ludington v. Patton et al., 111 Wis. 208, 86 N. W. 571; Fosha v. O’Donnell, 120 Wis. 336, 97 N. W. 924.

It is suggested that section D-5 of the contract was not observed. This section pro-' vides:

“The engineer shall furnish monthly estimates of the work done, upon which partial payments to the contractor shall be based, and, in the absence of fraud or error, his, decision as to the value and quantity of work or material shall be final and conclusive. Any claim on the part of the contractor for damages, or furnishing extra labor or material, must be made in writing to the engineer at the time the alleged damage occurs, or the cause of the claim arises, and, unless such claim is so presented before the next estimate, it shall be held that the contractor has waived such claim, and he shall not be entitled to receive payment therefor.”

This provision makes conclusive the decision as to the value and quantity of work as shown by the monthly estimates of the engineer in the absence of fraud or error. As the master has found palpable and gross errors, the section, of course, does not apply.

This is an action in equity. The master has found that the appellant is indebted to appellee-in the sum of $50,624.52. There is evidence to sustain this finding A court of equity should not permit a plea of accord and satisfaction to work an injustice, if there is escape therefr'om. Substantial equities of the parties require payment of what is due. If the construction company has performed this work, and furnished material to the extent which the master finds under the evidence, .but has not been paid because of a mutual mistake as to the final estimate, there is no reason why, because of technical defenses, it or its trustee should be deprived of payment for work performed and material furnished. As the final estimate is based on mutual mistake, and as such errors are found in it as to destroy its integrity, the case stands in equity as if no final estimate had been made. If there is no final estimate there is no basis of settlement. The alleged accord and satisfaction is based on the final estimate and falls with it.

The findings of the'master were supported by evidence. They were approved and confirmed by the decree of the trial court. We see nothing to call for our interference therewith. The decree is affirmed.


author: PER CURIAM.

text:
    DAVIS, Director General of Railroads, v. CONTINENTAL SUGAR CO.
    (Circuit Court of Appeals, Sixth Circuit.
    April 6, 1925.)
    No. 4311.
    Carriers <@=>191— Right to storage on outbound shipments.
    Under the uniform interstate tariff schedule, entitling a railroad company to storage on outbound freight actually delivered for transportation, and held by it to complete a shipment, or for forwarding directions, storage held not collectible on beets piled on right of way before shipment.
    In Error to the District Court of the United States for the Western Division of the Northern District of Ohio; Paul Jones, Judge.
    Action at law by James C. Davis, Director General of Railroads and Agent operating the Toledo & Ohio Central Railroad Company, against the Continental Sugar Company. Judgment for defendant, and plaintiff brings error.
    Affirmed.
    This proceeding in error is brought to reverse the judgment of the District Court in an action brought by the Director General of Railroads against the Continental Sugar Company, for storage charges and war tax for beets piled on the right of way of the Toledo & Ohio Central Railroad Company at Woodside and Hatton, Ohio. The plaintiff’s claim is based on a uniform interstate tariff schedule filed with the Interstate Commerce Commission and promulgated by the carrier. The defendant denied that any of the storage charges, computed in conformity with this tariff schedule or otherwise, accrued in respect of any property at that' time owned, possessed, or controlled by the defendant, and particularly that it is, or at any time was, liable to plaintiff in respect to any of the so-called storage charges or war taxes set forth in plaintiff’s petition.
    It appears from the undisputed evidence that Woodside at that time was what was called by the witnesses a blind siding; that no agent was located there, but all business was transacted by and with the station agent at Pemberville, four miles to the north. The defendant, during the fall of 1918 and between October 18th and December 9th, purchased a large quantity of beets from the farmers in that locality. These beets were unloaded frorp the wagons or trucks in which they were delivered to the defendant, on rough, open ground on the west side of the track on plaintiff’s right of way. Later the defendant loaded these beets into wagons or' carts, and hauled them across the track, and loaded them into, ears oh this blind siding. The loaded cars were attached to local freight trains; a bill of lading prepared by defendant was taken by the conductor to Pember-ville and there executed by plaintiff’s agent. Plaintiff claims that the storage on these beets, during the time they were piled on the railway’s right of way at’Woodside, amounts to $4,761.43, with war tax and interest.
    At Hatton, the station is in charge of an agent and the plaintiff claims $91.97, together with war tax and interest, for the storage of beets which were piled partly on plaintiff’s right of way to the south of the station and partly on the adjoining land of William A. Purdy. All of these beets were shipped from Woodside and Hatton, Ohio, to Eindlay, Ohio.
    Shortly after defendant had started to pile beets at Woodside, Mr. Mowry, representing the defendant, had a talk with the plaintiff’s agent at Pemberville in reference thereto. In this conversation the plaintiff’s agent suggested that the defendant secure a lease. The defendant’s representative then requested the plaintiff to secure him a lease, dating it back to the time when the first beets were piled on the right of way. Some time later this lease was executed and delivered to the defendant, but it was not dated back to cover the period for which storage was charged. The lease itself was not introduced in evidence.

      The uniform interstate tariff schedule, upon which the plaintiff relies for recovery, provides, among other things, that freight received for delivery, or held to complete a shipment, or for forwarding directions, if stored in or on railway premises, is subject to the storage rules-and regulations named therein. Under these rules, 48 hours’ free time is allowed to complete a shipment and furnish forwarding directions for outbound freight. Outbound freight held to complete a-shipment, or for forwarding directions, is subject to storage charges at the rate of one-half cent per 100 pounds per day in excess of free time, or, at the discretion of the railway company, may be sent to public warehouses.
    The cause was tried to a jury, resulting in a verdict for the defendant. Judgment was entered upon this verdict.
    Frederick W. Gaines, of Toledo, Ohio (Doyle & Lewis, of Toledo, Ohio, on the brief), for plaintiff in error.
    Gustavus Ohlinger, of Toledo, Ohio (Donald F. Melhorn, of Toledo, Ohio, on the brief), for defendant in error.
    Before DONAHUE and MOORMAN, Circuit Judges, and WESTENHAVER, District Judge.
   PER CURIAM.

Under the uniform interstate tariff schedule, introduced in evidence in this case, the plaintiff was not entitled to charge and collect storage on outbound freight until it had actually been delivered to him for transportation, and held by him to complete a shipment, or for 'forwarding directions, as provided by paragraph “b” of rule 4 of the tariff schedule. From the facts proven or admitted in this case, it clearly appears that these beets, which were later shipped in intrastate traffic, were not delivered or intended to be delivered to the carrier as freight for transportation when they were piled upon the railroad’s right of way..

The carrier did not then accept these beets as freight, or issue any bill of lading or other receipt therefor. He did not exercise any care, control, or authority thereover, and could not have been held liable for their loss or damage. They were not piled upon the right of way at the point where they were later actually received by the carrier, but, on the contrary, were piled at such places that it was necessary to load them on a wagon and haul them to the place where they were received as freight by the carrier and loaded upon the carrier’s cars, at which time a bill of lading was issued. After they were received as freight by the plaintiff, they were not held by him to complete a shipment or for forwarding directions, but the ears in which they were loaded were, at the convenience of the carrier, attached to the local freight and moved in intrastate traffic to Findlay, Ohio. Moore Stave Co. v. Central Georgia Railroad Co., 51 Interst. Com. Com’n R., 170, 171.

Judgment affirmed.


author: FOSTER, Circuit Judge.

text:
    YOUNG & VANN SUPPLY CO. v. GULF, F. & A. RY. CO. et al.
    (Circuit Court of Appeals, Fifth Circuit.
    March 3, 1925.)
    No. 4459.
    1. Equity <§=>427(3) — Any equitable relief may be granted under prayer for general relief.
    If a bill states a cause of action entitling complainant to equitable relief on any theory of the case, a court may grant it under a prayer for general relief, though other specific relief may be mistakenly prayed for.
    2. Appeal and error <§=>768 — Statements in brief may be considered as admissions of facts.
    Statements in the brief of a party may be considered by the appellate court as admissions of facts.
    3. Railroads <§=>194(6) — Creditor of receiver held entitled to enforce payment against purchaser of property.
    Where an order confirming a sale of railroad property under a plan of reorganization required the purchaser as a part of the purchase price to pay claims of creditors of the receiver, any such creditor is entitled to the benefit of such provision and may enforce the payment by a suit in equity against the purchaser or his assignee.
    Appeal from the District Court of the United States for the Northern District of Florida; William B. Sheppard, Judge.
    ' Suit in equity by the Young & Vann Supply Company against the Gulf, Florida & Alabama Railway Company and others. Decree for defendants, and complainant appeals.
    Reversed and remanded.
    R. H. Scrivner, of Birmingham, Ala. (Stokely, Scrivner, Dominick & Smith, of Birmingham, Ala., on the brief), for appellant.
    William Fisher, of Pensacola, Fla., for ap-pellees.
    Before WALKER, BRYAN, and FOSTER, Circuit Judges.
   FOSTER, Circuit Judge.

In this ease the Young & Vann Supply Company, an Alabama corporation, brought its bill against the Gulf, Florida & Alabama Railway Company and the Muscle Shoals, Birmingham & Pensacola Railway Company, both Florida corporations, and against John T. Steele, individually and as receiver of the first-named railroad, seeking to recover for materials and supplies sold to Steele as receiver. On motion the bill was dismissed, and'^from that judgment this appeal is prosecuted.

The bill, with amendments and exhibits, is voluminous and somewhat diffuse. However, proceedings in equity are to be reasonably construed. Lockhart v. Leeds, 195 U. S. 427, 25 S. Ct. 76, 49 L. Ed. 263. Applying that rule, on analysis, the bill, stripped of surplusage, thus states the case.

The Gulf, Florida & Alabama Railway Company, with an authorized capital stock of $7,500,000, of which $4,660,000 was outstanding, was the owner of a railroad having some 154 miles of main line and 29 miles of sidings running from Pensacola, Fla., to Kimbrough, Ala., with docks, a coal tipple, and warehouses at Pensacola; the whole representing an investment value in round figures of $9,171,000.

The property was burdened with a mortgage to secure an issue of 5 per cent, gold bonds in the sum of $10,000,000, of which $4,410,000 were actually issued.

In May, 1917, receivers were appointed for the property by the District Court for the Northern District of Florida on a bill filed by Hubert C. Mandeville. This matured the mortgage, and the trustee, the Columbia Trust Company, brought suit to foreclose. The receivers first appointed resigned, and in January, 1918, John T. Steele was appointed receiver on the bill of the trust company.

Steel operated the railroad for about four years and purchased necessary materials and supplies from many persons including plaintiff. The receipts during the receivership exceeded operating expenses, and a considerable amount of money from that source was expended in the purchase of new equipment and in other permanent improvements. There is still due and owing to plaintiff a balance of $4,890.09, which the receiver repeatedly promised to pay in full. This claim was referred to a master, was reported on favorably, and passed to judgment.

Looking to the reorganization of the road, a bondholders’ committee was organized, and over 80 per cent, of the outstanding bonds were deposited with it. In connection with this committee, a syndicate was also organized with Steele as its manager. This syndicate financed about $1,000,000 of receiver’s certificates, the proceeds of which went into permanent improvements. In addition, a receiver’s creditors’ committee was organized by local creditors, -and all creditors in the same class with plaintiff were required to unconditionally and irrevocably assign their claims to this committee in order to derive any benefit from the reorganization. Plaintiff did not assign its claim. The plan of reorganization worked out by these three committees acting together contemplated the organization of a new company to be known as the Muscle Shoals, Birmingham & Pensacola Railway Company, and also a Securities Company to hold all the securities of the new company; the obligations' of the Securities Company to be issued to creditors of all classes in adjustment of their claims. It is unnecessary to state all of the details of this plan of reorganization, which was several times changed, although they are fully set out in the bill.

•'With this somewhat complicated plan of reorganization in view, the property was sold under a foreclosure decree. This decree provided that the money realized from the sale should be first applied to the payment of costs of the receivership, including the fees of the special master, fees of the receiver and Ms counsel, and ordinary costs of court, and second to the payment of claims such as plaintiff’s and taxes, etc., and the receiver’s certificates and the bonds were subordinated.

The three committees above named agreed among themselves to bid $90,000 in cash for the road, and the sale was made on November 26, 1921, for that price. William Fisher, ostensibly representing the receiver’s creditors’ committee, was the purchaser. He promptly assigned his bid to Steele, who in turn assigned to the new company which had been organized, and the deed was made directly to this company. Steele was president of tMs company. Steele, in addition to paying the $90,000 cash bid, which was all absorbed in the payment of costs, leaving nothing for creditors in the class with plaintiff, agreed also to pay 75 per cent, cash of all claims due for materials and supplies and 25 per cent, of such claims in preferred stock in the Securities Company above referred to. On these terms the sale was confirmed. Steele thereafter paid over $195,000 in cash and agreed to turn over some $60,000 par value -of securities to creditors.

The Interstate Commerce Commission by its order entered May 29, 1923, authorized the new company to issue not exceeding $2,-500,000 of common stock, which was turned over to Steele in payment for the road, $1,-500,000 of first mortgage 6 per cent, gold bonds, $600,000 to be sold at not less than 85 per cent, par and accrued interest to secure new money, $400,000 to be delivered to Steele in payment of certain expenditures made by him in operating tbe railroad during tbe interval between the sale and the taking of it over by the new company, expenses of the syndicate, and certain legal fees and other expenses, and $500,000 to be held unin-cumbered in the treasury for future capital purposes.

The bill alleges that plaintiff had no notice that the property was to be sold for only $90,000 in cash, but does not allege that plaintiff had no notice of the sale at all, nor that it had no notice of the order of confirmation.

The bill prays for service, and that the property in the hands of the Muscle Shoals, Birmingham & Pensacola Railway Company be impressed with a trust in plaintiff’s favor for the amount of its claim, and that it be eventually sold to satisfy plaintiff’s debt and costs, and for such other or different relief as plaintiff might be entitled to under the pleadings and proof.

The motion to dismiss was on the following grounds: That there is no allegation in the bill that plaintiff was not offered participation in the reorganization upon the same basis as the creditors represented by the receiver’s creditors’ committee; that the allegations of the bill are not sufficient to show that the defendant the Muscle Shoals, Birmingham & Pensacola Railway Company is a continuation of the previous corporation owner of the railway properties; that the bill of appellant is in fact a collateral attack upon the decree of confirmation; that the bill of complaint fails to allege any matter of equity entitling plaintiff to the relief prayed for.

We are not favored by an opinion of the District Court, at least none appears in the record, so do not know on what theory the bill was dismissed.

Pretermitting any question as to the sufficiency of the price, the fairness of the plan of reorganization, and whether the property is now in the hands of its former owners, about all of which we express no opinion, another aspect of the bill impresses us most strongly.

If a bill states a cause of action entitling the plaintiff to equitable relief on any theory of the case, a court may grant it under a prayer for general relief, notwithstanding other specific relief may be mistakenly prayed for. Lockhart v. Leeds, supra.

Plaintiff was bound by the decree of confirmation if it had notice, which the bill does not negative, but nevertheless plaintiff is also entitled to the benefit of that decree.

The order of confirmation is not in the record. It is not necessary, however, to look to the order, as the facts above stated regarding Steele’s promise to pay creditors in the same class as plaintiff as part of the purchase price clearly appear in the application of the new company to the Interstate Commerce Commission, which is annexed and made a part of the bill. Moreover, in the brief for appellees appears the statement that the sale was confirmed upon the express condition that the creditors’ committee would give the same protection to all the creditors of the receiver having claims in the same respective categories as to those represented by the committee, and that appellant’s claim would have been entitled to be paid 75 per cent, in cash and 25 per cent, in stock. The brief further shows that the decree of confirmation required that all new creditors should come in within 15 days thereafter, in order that the price Steele had to pay the creditors’ committee should be definitely determined. We may consider the statements in the brief as admissions of facts. Oscanyan v. Arms Co., 103 U. S. 261, 26 L. Ed. 539. And, of course, the District Court could take notice of its own records in considering the bill. Dimmick v. Tompkins, 194 U. S. 540, 24 S. Ct. 780, 48 L. Ed. 1110.

Steele, who represented all parties in interest, promised to pay the claim of plaintiff, as well as all others of the same class, 75 per cent, in cash and 25 per cent, in securities, as part of the purchase price of the property and confirmation of the sale was only on those terms. The deed was made direct to the Muscle Shoals, Birmingham & Pensacola Railway Company, and it is bound by Steele’s promise and the conditions of the sale. It was not necessary that plaintiff should have assigned its claim to the receiver’s committee, nor that it should have done anything further in the way of filing or proving the claim to receive the benefit of this promise. The provision that new creditors should prove their claims within 15 days had no application to if. The claim had been filed long before, was admitted by Steele, and passed to judgment. Steele necessarily knew the amount of plaintiff’s claim and was bound to take notice that it was one of those he had to consider in fixing the purchase price. Plaintiff is entitled to the benefit of the order of confirmation at this time. Under the prayer for general relief, the District Court was authorized to so decree, and that court, of course, has ample jurisdiction to enforce the terms of the sale by such action as may be appropriate and necessary in the premises. Camden v. Mayhew, 129 U. S. 73, 9 S. Ct. 246, 32 L. Ed. 608.

The judgment dismissing the bill will be reversed, and the ease remanded for further proceedings not inconsistent with this opinion.

Reversed.


author: HUTCHESON, District Judge.

text:
    MONAGHAN v. UNITED STATES.
    (Circuit Court of Appeals, Fifth Circuit.
    March 6, 1925.)
    No. 4326.
    Intoxicating liquors <&=»246 — Shed or outhouse held not protected from search as private dwelling.
    A shed or outhouse on premises occupied by a dwelling house is not within the protection of National Prohibition Act, tit. 2, § 25 (Comp. St. Ann. Supp. 1923, § 101381401), as a private dwelling, and is subject to search under a search warrant charging the unlawful manufacture of liquor therein,
    In Error to the District Court of the United States for the Eastern District of Louisiana; Rufus E. Foster, Judge.
    Criminal prosecution by the United States against Henry Monaghan. Judgment of conviction, and defendant brings error.
    Affirmed.
    Jones T. Prowell and William Boizelle, both of New Orleans, La., for plaintiff in error.
    Louis H. Bums, U. S. Atty., and Edwin H. Grace, Asst. U. S. Atty., both of New Orleans, La.
    Before WALKER and BRYAN, Circuit Judges, and HUTCHESON, District Judge.
   HUTCHESON, District Judge.

This is a writ of error prosecuted by defendant from his conviction for the unlawful manufacture of intoxicating liquor contrary to the National Prohibition Act.

Defendant seeks a reversal of the case on the ground that the evidence upon which he was convicted was obtained by an unlawful search of his premises, and that the court erred in not quashing the search warrant upon his motion, and in admitting the evidence obtained thereby over his objection.

The search warrant was issued upon the following affidavit':

“United States v. Monaghan, Case No. 3206, Eastern District of Louisiana, New Orleans Division.
“On this 20th day of November, 1923, at New Orleans, in said division and district, personally appeared Geo. A. Droz, who, being first duly sworn, deposes and says that on or about the 27th day of October, 1923, he visited the premises No. 1922 St. Thomas street, New Orleans, Louisiana, operated, and used by Henry Monaghan, as a place to manufacture intoxicating liquor fit for use for beverage purposes, and then and there he found intoxicating liquor fit for use for beverage purposes containing one-half of one per'centum, and more of alcohol by volume, to wit, 1 16-gallon keg, % full of whisky; 2 1-gallon jugs of gin; 2 quart bottles of gin; 1 gallon jug % full of gin; 1 1-gallon jug half full of whisky; three (3) quart bottles of whisky; one (1) quart bottle % full cocktail; one quart bottle % full creme de menthe; 301 bottles of home brew beer, together with the following property: 1 3-gallon copper still; 2 copper coils; 2 52-gallon barrels of com, rye and molasses mash; 120 empty bottles, contrary to the form of the statute made and provided, and against the peace and dignity of the United States.
“[Signed] Geo. A. Droz,
“Federal Prohibition Agent.”

And it was executed by finding in the shed described in the affidavit for the search the following assortment of intoxicating liquors and paraphernalia:

“One 3-gallon copper still, unmounted and decapped.
“2 copper coils, with galvanized iron eon-densef.
“301 bottles of home brew beer.
“Two 52-gallon barrels full of com, rye and sugar mash.
“One 16-gallon keg % full of whisky.
“Two 1-gallon jugs full of gin.
“Two quart bottles full of gin.
“One one-gallon jug half full of gin.
“One l-gallon‘ jug half full of whisky.
“Three quart bottles full of whisky.
“One quart bottle half full of cocktail.
“One-quart bottle half full of creme de menthe.
“120 empty bottles.”

Prior to the trial defendant duly and properly filed a motion to quash the search warrant on the ground that, the search being of a private dwelling, the affidavit for search was insufficient. The motion to quash was .overruled, and thereafter, the cause coming, on for trial on the merits, the defendant objected to the reception of any evidence obtained by and under tbe search, which objection was overruled, and in addition to the return on the seax-eh warrant the following evidence was admitted:

The agent Droz testified:
“That pursuant to the seareh warrant he went to seareh the premises 1922 St. Thomas street, New Orleans. On arriving there was told that the occupants were at a funeral, and was admitted to side entrance by young negress. That the house was closed, and only the outhouse was searched. That he found various liquors and apparatus in the outhouse as inventoried on the reverse of the seareh warrant.”

The Prohibition Agents also testified:

“That to the best of their knowledge, on the date of the seareh the premises were not being, and had not been used for any business purpose, such as store, shop, saloon, ■restaurant, hotel or boarding house except for the manufacture of liquoi*, which fact was discovered on the execution of the seareh warrant, and that they at that time had no knowledge of any sale of liquor having been made.”

The government concedes, as indeed it must, that a private dwelling occupied as such, and not used in part for some business purpose as stated in section 25, tit. 2, of the National Prohibition Act (Comp. St. Ann. Supp. 1923, § 10138%m), could not be searched unless it was being used for the unlawful sale of intoxicating liquor. Vooi’hies v. United States, 299 P. 275, Pifth Circuit. But it contends that defendant’s premises, under the undisputed facts as to what was found there, could not be claimed to be a private dwelling occupied as such and not used in part for some business purpose, and it says, and cites authorities to the effect, that when a private dwelling is used for the unlawful manufacture of liquor, it ceases to be a private dwelling within the protection of section 25 of the National Prohibition Act, and may be searched like any other place upon an affidavit of violation of law. State v. Sabo, 108 Ohio St. 200, 140 N. E. 499; United States v. Goodwin et al. (D. C.) 1 F.(2d) 36. While the defendant asserts that the weight of authority is against that view, citing Blackmore on National Prohibition (2d Ed.) p. 465 et seq.; Jozwich v. United States (C. C. A.) 288 F. 832; Voorheis v. United States (C. C. A.) 299 F. 275.

The correctness of these respective contentions it is not necessary for us to decide here, for this case must be affirmed on the ground that neither the affidavit for search warrant, nor the warrant itself, nor the seareh made under it, constituted any invasion of a private dwelling occupied as such, but the affidavit aimed at, the warrant authorized, the search of and the search warrant explored, not a private dwelling, but a shed or outhouse, which was searchable under the general provisions of section 25. State v. Lowry, 153 La. 177, 95 So. 596.

This court is in full sympathy with all of the affirmations of all the decisions as to the binding force of the constitutional provisions against unreasonable searches and seizures, and with the limitation upon the search of a private dwelling fixed by Congress in the act, nor would this court abate one jot of the historical and constitutional sanctity which attaches to the maxim that, “An Englishman’s home is his castle”; but both a sense of proportion and of legal and historical fitness prevent our acceptance of the corollary sought to be imposed upon the maxim by the defendant in this case that, “An Englishman’s shed is his home.”

Finding no error in the record, the judgment is affirmed.