source: Caselaw Access Project

author: MARTINEAU, District Judge.

license: Public Domain

text:
    WILLIAMSON v. CHICAGO MILL & LUMBER CO. et al.
    No. 2329.
    District Court, E. D. Arkansas.
    July 16, 1931.
    Lamar Williamson, of Montieello, Ark., pro se.
    C. M. Buck, of Blytheville, Ark., Orville Zimmerman, of Kennett, Mo., and Daggett & Daggett, of Marianna, Ark., for defendants.
   MARTINEAU, District Judge.

The plaintiff, Lamar Williamson, seeks in this suit to quiet his title to two islands, known as Georgetown Towhead Island and Little Island, lying in the Mississippi river in Chicot county, Ark., against the claims of defendants. His .title to these lands is based upon a deed issued to him by the state of Arkansas on September 27, 1929, under the Island Act (Acts Ark. 1917, No. 282, p. 1468).

Defendants say that plaintiff has no title to the lands in dispute, because the Island Act, under the terms of whieh the lands were deeded to him by the Commissioner of State Lands, has been repealed.

They next contend that, even if the Island Act has not been repealed, the lands in controversy are not in fact islands, but are accretions to their shore lands, and for that reason belong to them.

They further contend that they are entitled to the lands, because they have paid the taxes on them since 1901, under a survey ordered by the county judge of Chicot county, and made by the county surveyor of that county.

The Supreme Court of Arkansas in Wilson v. Guthrie, 155 Ark. 315, 244 S. W. 338, and Jones v. Euper, 182 Ark. 969, 33 S.W. (2d) 378, has held that the Island Act has not been repealed, and these decisions are binding upon this court. Plaintiff’s title to these lands is good, if they are in fact islands, unless the defendant has acquired title-through the payment of taxes under the Chi-cot county survey.

Are these lands islands in fact, or are they accretions to the defendant’s shore lands ?

The two islands are now completely surrounded by water at ordinary stages of the river, and during a large portion of each year boats navigate the chute separating them from the mainland. This chute has been navigable since the time these two islands, or towheads, as they were first called, were formed in the river, according to the testimony of river pilots and captains who have been working on this part of the river since these islands first appeared. The testimony of these old rivermen shows that these islands first appeared in the Mississippi river some distance from the mainland, and that when they first appeared they were sandbars or towheads, upon which no vegetation .at all grew. Since that time they have gradually enlarged, spreading out in all directions, and timber of considerable size has grown upon them. During all this time, the chute has been filled with living water which flowed during a greater portion of each year, to such an extent that no vegetation ever grows upon the bottom of this chute or body of water which separates the islands from lands of defendant on the mainland, which are known as islands 80 and 81. These two latter islands have, however, long since ■become what would now be called the hanks of the Mississippi river.

• Defendant, to prove that the islands in dispute are accretions to their lands, offered the testimony of engineers to show that islands such as these are never formed in the body of a running stream, but actually form by the water receding from the old shore line. They explain this chute by saying that after this land accreted to theirs, during times of high water it was washed out by water flowing over it.

The Mississippi river, however, does not always work according, to theory, and, if the testimony of men who have been familiar with this part of the river since these islands were first formed is to be believed, we must conclude that they were forméd in the body of the main stream, and not by being separated from the sandbars formed adjacent to the shore line. It is my conclusion then that these lands were islands, and that the state had the right to convey theni to plaintiff under the Island Act.

The question of whether they are accessible to agriculture is one that cannot he raised by the defendants. The state alone could raise this question in a proper proceeding.

Since these were islands and not accretions, Chicot county had no authority through its county judge and surveyor to place them on the tax books. The payment of taxes by the defendant under these conditions could not deprive the state of Arkansas of its title.

The circumstances under which the timber was cut and removed from these lands by defendant does not entitle plaintiff to recover their value.

Findings of fact and conclusions of law in accordance with this opinion may he prepared and submitted for approval, and a proper decree prepared.


author: WOOLSEY, District Judge.

text:
    UNITED STATES v. FIRST NATIONAL PICTURES, Inc., et al.
    District Court, S. D. New York.
    June 29, 1931.

      John Lord O’Brian, Asst, to Atty. Gen., and Charles H. Weston and John Harlan Amen, Sp. Assts. to Atty. Gen.
    Cadwalader, Wickersham & Taft, of New York City (Cornelius W. Wickersham, Paxton Blair, Arthur L. Fisk, Jr., and Gabriel L. Hess, all of New York City, of counsel), for defendants.
   WOOLSEY, District Judge.

A decree on mandate will be signed and filed in the form hereto annexed.

I. This suit was remanded to this court by the Supreme Court after a successful appeal by the government from a decree by Judge Thacher dismissing the complaint for the reasons stated in his opinion, which is reported as United States v. First National Pictures, Inc. (D. C.) 34 F.(2d) 815.

The gist of the decision of the Supreme Court, which is reported as United States v. First National Pictures, Inc., et al., 282 U. S. 44, 51 S. Ct. 45, 75 L. Ed. 151, is contained in a statement made by Mr. Justice MeReynolds after he had summarized the effect on the motion picture industry of the Rules and Regulations for the Establishment and Operations of a Credit Committee, copies of which were annexed to the government’s petition and constituted the gravamen thereof.

Mr. Justice McReynolds said at page 53 of 282 U. S., 51 S. Ct. 45, 48:

“The definite point of attack in this proceeding is the agreement for the creation and operation of the credit committees and their use under prescribed rules to restrict freedom of sales by distributors and of purchases by exhibitors.
“Ten producers and distributors of films, controlling 60 per cent, of the business, agreed to contract with exhibitors only according to a standard form, and then combined through thirty-two local film Boards of Trade with other distributors, who with themselves control 98 per cent, of the entire business. The film boards appoint credit committees, and these operate under the rules above outlined. The obvious purpose of the arrangement is to restrict the liberty of those who have representatives on the film boards and secure their concerted action for the purpose of coercing certain purchasers of theaters by excluding them from the opportunity to deal in a free and untrammeled market.
“Reference to what has just been said in Paramount Famous Lasky Corporation v. United States, 282 U. S. 30, 51 S. Ct. 42, 75 L. Ed. 145, and to the opinions in Eastern States Lumber Ass’n v. United States, 234 U. S. 600, 34 S. Ct. 951, 58 L. Ed. 1490, L. R. A. 1915A, 788; United States v. American Oil Co., 262 U. S. 371, 43 S. Ct. 607, 67 L. Ed. 1035; Binderup v. Pathe Exchange, 263 U. S. 291, 44 S. Ct. 96, 68 L. Ed. 308; and Anderson v. Shipowners’ Ass’n, 272 U. S. 359, 47 S. Ct. 125, 71 L. Ed. 298, will suffice, we think, to show the challenged arrangement conflicts with the Sherman Anti-Trust Act (15 USCA §§ 1-7, 15).’’

It appears, therefore, that on the basis of the credit rules mentioned, the Supreme Court held that the Government has' established in this suit a conspiracy, in conflict with the Sherman Anti-Trust Act (15 USCA §§ 1-7, 15), to restrain interstate trade.

II. It is not fitting for me in the face of that decision to attempt to determine what part, if any, of those credit rules, so condemned in their entirety by the Supreme Court, are not objectionable; but that is, in effeet, what the defendants ask me to do in their proposed -decree.

The case having been remanded for further proceedings in conformity with the opinion of the Supreme Court, the only question now before me is the form of decree which should be entered on the mandate, heretofore filed herein, in order to embody the decision of the Supreme Court.

III. The purpose of a decree such as is to he entered here is twofold: 1. To denounce the conspiracy held illegal by the Supreme Court; and (2) to prevent the continuance of that conspiracy or the creation of another identic conspiracy or other identic conspiracies by the parties, or of the repetition by the defendants in substituted forms of the acts found to be illegal.

{3] IV. The wording of the decree, however, has to be precise enough in its injunctive provisions to enable the parties to know whether they are acting at any time within the terms of its prohibitions.

As an injunction necessarily speaks in futuro, it is a task of some nicety so to word it as to accomplish this result. Cf. Swift & Co. v. United States, 196 U. S. 375, at pages 396 and 401, 25 S. Ct. 276, 49 L. Ed. 518.

V. After giving careful consideration to the contentions of the respective parties, it seems to me that the annexed decree will accomplish these purposes because {1) it is unequivocal with regard to the conspiracy which has been condemned; and (2) in the terms of the injunction it avoids, as far as is possible consonant with the relief to which the United States is entitled, any uncertainty as to the limits of the prohibitions imposed on the defendants.

That injunctive provisions should be definite is, of course, a prime desideratum in ,a decree of which the sanction is the penalty for contempt of court.

But if, when the defendants come to operate under this decree, it should turn out that the border line drawn therein between permissible and nonpermissible acts seems to them to be somewhat blurred, it should be borne in mind by them that it does not lie in the months of those who have brought .about the situation necessitating injunctive relief, to complain if there is a zone near the .border line of the permissible .within which ■they feel uneasy. If such a feeling is in-duced,. it nray, indeed, have a salutary cautionary effect on the defendants and tend to prevent them from getting into forbidden territory.

VI. I believe the form .of decree annexed as schedule A hereof, follows the letter and embodies the implications of the Supreme Court's decision, and I shall therefore sign the decree on mandate herein in that form.

       Final Decree.
      Tliis cause having come on for hearing before this court and having been determined by a decree entered December 23, 1929, from which the petitioner appealed to the Supreme Court of the United States, which has reversed the decree of this court and issued its mandate, filed herein January 20, 1931, remanding the cause:
      Now, therefore, upon motion of the petitioner, by George Z. Medalie, Esq., Unite'd States Attorney for the Southern District of New York, John Lord O'Brian, Esq., the Assistant to the Attorney General, John Harlan Amen, Esq., and Charles H. Weston, Esq., Special Assistants to the Attorney General, of counsel, for relief in accordance with the prayer of the petition, and the defendants having appeared by their attorneys, Messrs. Cadwal-ader, Wickersham & Taft, and Cornelius W. Wick-ersham, Esq., Arthur L. Fisk, Jr., Esq., and Gabriel L. Hess, Esq., of counsel, and submitted a different form of decree, it is ordered, adjudged, and decreed as follows:
      First: That by reason of the mandate of the Supreme Court issued November 24, 1930, and filed in this court on January 20, -1931, the decree of this court, filed and entered herein on December 23, 1929, whereby the petition herein was dismissed on the merits, be and it hereby is vacated and set aside.
      Second: That (1) the agreement of the defendant distributors to cause each defendant Film Board of Trade to adopt Rules and Regulations for the Establishment and Operations of a Credit Committee, a copy of which Rules and Regulations is attached to the petition herein as Exhibit A; (2) the adoption of said rules and regulations by each defendant Film Board of Trade; and (3) the carrying on of interstate commerce in motion picture films by the defendant distributors in conformity with the provisions of said rulés and regulations constitute a conspiracy in restraint of interstate trade and commerce in violation of the Act of Congress of July 2, 1890, entitled “An Act to Protect Trade and Commerce against Unlawful Restraints and Monopolies," commonly known as the Sherman Anti-Trust Act.
      Third: That the defendants, their officers, agents, servants, and employees, and all persons acting under, through, or on behalf of them, or any of them, hereby are perpetually enjoined, restrained, and prohibited, individually and collectively:
      1. From further engaging in or carrying out said conspiracy or“ any other conspiracy similar to, or having a purpose or effect similar to said conspiracy.
      2. From doing any act or thing whatsoever having the same purpose or effect as the acts done in pursuance of said, conspiracy, or promoting, or tending to promote, any of the purposes and effects thereof.
      3. From enforcing or carrying out, directly or indirectly, any of the provisions of the aforesaid rules and regulations or any other rules or regulations identical therewith or similar .thereto, or having the same purpose or effect as the aforesaid rules and regulations.
      4. From retaining any sum or sums heretofore received from any exhibitors of motion pictures in the United States by virtue of the operation or enforcement of the aforesaid rules and regulations.
      5. From entering into any understanding, arrangement, combination, conspiracy, or agreement (1) to réfrain, either for a limited or an unlimited period of time, from entering into any contract for licensing the exhibition of motion pictures, or (2) to require the deposit of security by the licensee as a condition of entering into any such contract with such licensee.
      Fourth: The provisions of this decree shall not be construed, however,
      1. As prohibiting any defendant distributor, or any member of any defendant Film Board of Trade, from exchanging either directly or through a committee or other agency, information concerning the financial or moral responsibility of any exhibitor of motion pictures in the United States; always provided that there shall not be made, in connec- , tion with or in supplement of such exchange of information, any comment in the nature of a recommendation as to any action to be taken thereon; or
      2. As prohibiting, restraining, or interfering with the action of any single company or firm, which is a defendant herein, by its or their officers, agents, or employees, whether such officers, agents, or employees are themselves made parties hereto or not, from acting with respect to its or their own corporate or firm business, property, or affairs, entirely independently and free from any agreement or understanding with any other defendant distributor or defendant Film Board of Trade, or member thereof.
      Fifth. Jurisdiction of this cause is hereby retained
      1. For the purpose of enforcing this decree and of making such other and further orders and decrees as may become necessary herein; and
      2. For the purpose of enabling any party hereto to apply to the court for such further orders and directions as may be necessary or proper in relation to carrying out the enforcement of the provisions of this decree; or
      3. For the purpose of applying to the court for a modification of this decree, if it be hereafter shown to the satisfaction of the court that, by reason of changed conditions or changes in the statute law of the United States, the provisions hereof have become inadequate or inappropriate, or unduly oppressive to the defendants, and are no longer necessary to secure the maintenance of conditions in harmony with the law.


text:
    STATE OF ARKANSAS ex rel. NORWOOD, Atty. Gen., v. RUST LAND & LUMBER CO. et al.
    No. 2350.
    District Court, E. D. Arkansas.
    July 16, 1931.
    Hughes & Davis, of Memphis, Tenn., and Robert W. Wilson, of Pine Bluff, Ark., for plaintiff.
    Sam Costen, pro. se, Wilson, Kyser, Armstrong & Allen, and Robert B. Goodwin, all of Melnphis, Tenn., for defendants.
   MARTINEAU, District Judge.

In this suit the state of Arkansas seeks to quiet its title against the adverse claims of defendants to certain lands lying in Phillips county, Ark., and to cancel a deed to these lands executed to defendants by the state land commissioner under what is known as the Island Act (Crawford & Moses’ Dig. Ark. § 6796 et seq.).

First, the state claims these lands were-the bed of the Mississippi liver at the time of an avulsion in that river some time in the early ’40’s, and that there is not now and neyer has been any provision of law by which their title could pass from the state. It contends that they are not island lands.

• Next, conceding, but not admitting, that they were island lands, the state asserts that the Island Act has been repealed, and was repealed at the time deed to defendants was executed by the state land commissioner, and that therefore there was no authority for the execution of that deed.

The state makes the further contention that even if the Island Act is in effect and the lands conveyed were in fact islands, yet they were not formed in a navigable stream, and that the act applies only to such lands, and not to islands generally, or islands that may be formed in a lake, and the state contends that if these lands were formed as an island that the island was formed in what is known as Horseshoe Lake.

The defendants claim, first, that the Island Act has not been repealed, and assert title to these lands under the deed of the state land commissioner made in pursuance to the terms of that act. They say that since there is doubt as to how these lands were ini fact formed, the determination of the land', commissioner that the lands were island lands is conclusive as against the state, as .neither* fraud nor collusion in the execution or procuring of the deed upon the part of the land commissioner or these defendants is alleged or proved. . Defendants further say that if.' all the lands in controversy are not in faet island lands, that they hold title to them as accretions to adjoining lands to which it is conceded they have title. As a further defense to the state’s claim of title to the lands in controversy, defendants say the state is estopped from asserting its title, if it had one which has not been conveyed, because the state has accepted money from these defendants in payment for these lands, and has permitted defendants for a numb.er of years to pay taxes upon the lands and spend large sums of money to protect and preserve the timber, which is the most valuable part of the lands, and in addition that defendants spent large sums of money in a suit between Arkansas and Mississippi, by which the Supreme Court of the United States held the lands to be in Arkansas.

The lands in controversy prior to 1840 lay in what was then known as Horseshoe Bend, which was a peninsula in the Mississippi river formed by the river running in the shape of an ox-bow or horseshoe, with the neck of the bow being only a few miles apart. These lands are on the toe of that peninsula. Some time between 1840 and 1848 the river cut through this narrow neck and formed what has since been known as the Horseshoe But-off. This cut-off has been held by the United States Supreme' Court to have constituted an avulsion, and left the boundary line between Arkansas and Mississippi where the main navigable channel of the Mississippi river was at the time of this cut-off. The facts, however, show conclusively that the cut-off did not occur suddenly, but extended over several years, that during these several years, probably extending down to 1868, boats passed around the old bed of the Mississippi river, and did not always go through the cut-off. Finally the two channels of the old river were closed at the cut-off and parts of that old channel to-day constitute what is known as Horseshoe Lake, and other smaller bodies of water.

'' The testimony unquestionably shows that from a very early date there were islands on .the toe of this peninsula. To determine definitely whether these islands covered all the lands in controversy is impossible. The age ■of the trees, the nature of the soil, and the ■contour of the surface would indicate that much of the land was above the mean high-water mark at the time of this avulsion. This ■conclusion is reached,- not from direct testimony, because no man living" to-day can remember the conditions as they existed there in 1840, but from the theories advanced by the engineers and scientists who have testified in this case. All the available proof has been offered. Dr. Glenn, who has examined this territory carefully, gives it as his conclusion that many islands were formed on the toe of this peninsula prior to the time that the water ceased to flow through the old river channel. His conclusions appear to me to be sound, and are, perhaps, as accurate as the lapse of time and absence of direct testimony make possible of determination by any court or commission authorized to fix the character and nature of these lands. It will never be possible for any court to determine definitely which of the lands are island lands, which are accretion lands, or which are parts of the old river bed, just as it was not possible for the commissioners, who fixed the boundary line between Arkansas and Mississippi, to say definitely where that line was. The best they could do was to locate it in the deepest part of the old river, known then as Horseshoe Lake.

There must be an end to controversies of this kind. It is my conclusion that the lands in dispute were either island lands or accretion to the lands of defendants.

The question of whether the Island Act of 1917 has been repealed is one solely for the determination of the Supreme Court of Arkansas. That court has definitely held that the Island Act is unrep ealed and in effect. Wilson v. Guthrie, 155 Ark. 315, 244 S. W. 338, and Jones v. Euper, 182 Ark. 969, 33 S.W.(2d) 378.

Since there is doubt and uncertainty as to the character of these lands, the Island Act reposed in the commissioner the discretion of determining whether the lands were island lands or lands of a different class. His determination that they were island lands and his conveyance of them to the defendants for a valuable consideration as that class of lands is conclusive as against the state, since neither fraud nor collusion is alleged or proved. The faet that others might differ with him as to whether these were island lands or not is not enough to justify the cancellation of his deed. The proof in this ease is sufficient to show that in the exercise of a sound discretion reposed in him by law he could reasonably and honestly classify those lands as island lands. Lewis v. Owen, 146 Ark. 469, 225 S. W. 648; Reed v. Wilson, 163 Ark. 520, 260 S. W. 438.

The contention of the state that these islands were not formed in a navigable stream or river, but in a lake, is overcome by the fact that water continued to flow through the old river for twenty years, if not longer, after the cut-off actually occurred. The trees found in this area are shown by many witnesses to be of an age antedating the time of the cut-off.

The -principles of law announced in State of Iowa v. Carr (C. C. A.) 191 F. 257, should be given much weight in determining the present controversy. They are peculiarly applicable under the facts here established, and place upon the state a burden which it has not met.

The plaintiff’s complaint will be dismissed, and defendants’ title quieted to the lands in controversy.


author: JOHNSON, District Judge.

text:
    ALBERTSON & CO., Inc., v. ALVORD REAMER & TOOL CO., et al.
    No. 586.
    District Court, M. D. Pennsylvania.
    July 31, 1931.
    Williams, Bradbury, McCaleb & Hinkle, of Chicago, Ill., and Wm. N. C. Marsh, of Lewisburg, Pa., for plaintiff.
    Howson & Howson, of Philadelphia, Pa., and James Gardner Sanderson, of Scranton, Pa., for defendants.
   JOHNSON, District Judge.

This suit concerns the alleged infringement of letters patent of the United States No-. 1,599,266, issued September 7, 1926, to Albertson & Company as assignee of Erans C. Albertson, the applicant. The subject-matter of the patent is a cutting tool of the reamer class specifically adapted for use as a refacer for valve seats of internal combustion engines.

The defendants are two Pennsylvania corporations located at Millersburg, Dauphin county, Pa., the Alvord Reamer & Tool Company and the A. J. Polk Company, together with L. H. Swind, J. M. Bossard, Edward Newland, A. W. Pickford, A. D: Swift, and M. V. Wilkinson. By stipulation of counsel, the bill of complaint was dismissed as to the individuals L. H. Swind and J. M. Bossard. It was also stipulated that none of the individual defendants have any connection with the alleged infringement except as members of the creditors’ committee “having general, but not detailed charge of the affairs of said corporate defendants.” The creditors’ committee conducted the business of the two corporations under the name “Alvord-Polk Tool Company.”

Defendants are charged with infringement of each of the three claims of the Al-bertson patent- by the making and selling of tools which in appearance and in fact are copies of the tool of the patent in suit. This has not been denied by defendants, who rely upon three main defenses: First, that in view of the knowledge of the art prior to the alleged invention by Albertson, the patent in suit is devoid of patentable novelty; secondly, that the patent in suit is invalid for lack of patentable invention on the patent to Lutz and Reiss, No. 93,212; and, thirdly, that Albertson was not the first inventor because of the prior knowledge and use of the alleged invention by Franklin Machine So Tool Company of Springfield, Mass., and others.

The record shows that it has long been common practice in the metal cutting art to use two types of reamers, a roughing reamer to rough out the work, and a finishing reamer to give the final smoothness. Prior to the Albertson invention, however, the valve seat repair tools were capable of action upon the valve seat only after the hard surface stratum or crystallized film had been removed by make-shift and unsatisfactory methods.

Albertson, the inventor, had been working on this problem for some years, and on December 20, 1919, filed an application for a patent on a valve-seat reamer which he thought would accomplish the desired result. When he discovered that it could not successfully be used to reface the hardened seat, he developed the reamer of the patent in suit.

The step which Albertson took was a very simple one. Plain tooth refacing tools had been long in use for finishing work on valve seats. What Albertson did was to divide the teeth by spaced nicks into short tooth sections, so that three or four of these sections engage simultaneously across the narrow width of the valve seat. This resulted in an improved mode of operation. The new tool successfully, penetrated and removed the hardened surface stratum of the valve seat, thus performing a function which the old tools never could perform. The invention has been commercially successful and has almost universally replaced the earlier reamers for the purpose.

If a particular result was long desired and sometimes sought but never attained, want of invention cannot be predicated of a device or process which first reached that result on the ground that the simplicity of the means is so marked that many believed that they could readily have produced it if required. Walker on Patents (6th Ed.) p. 74.

After a consideration of the prior art, it is evident that the patent in suit, while of very narrow scope, is not devoid of patentable novelty.

Defendants’ second defense claims that the patent in suit is invalid in view of the prior patent to Lutz and Reiss, No. 93,-212. This patent covers an improved milling tool, in the form of a “metallic disk having cutting blades tin its periphery which may be parallel or oblique to the axis of rotation, and with similar radial cutting blades on one or both sides, the edges of which may be perpendicular to the edges of those on the periphery, or inclined thereto, as may be desired and of all which cutting blades the edges are notched * * * in such manner that the notches in one blade are more or less covered by, or in line with cutting portions of the next blade * * * so that the whole width of the blades will cut.”

In the specifications it is made clear that the purpose of the notches was to permit the ready passage of shavings through them without retarding the progress of the blades.

The Lutz patent was cited against the patent in suit by the examiner before the patent was granted and the claims were amended to distinguish them from the invention covered by the Lutz patent. One element of claim 1 of the patent in suit is that “the notches of the several teeth being disposed in spiral formation so that no one of said piercing points is tracked by a corresponding piercing point of a following tooth.” This element is also present in the other two claims of the patent in suit.

The fact that the Lutz patent was cited and the patent allowed over the citation- raises the presumption of validity. This presumption should not be overthrown lightly. Moreover, the Lutz cutter, or milling tool, was intended to operate on soft metal. Cutters to operate on soft metal, nicked to shorten the chips produced thereby, were for many years known to all mechanics. Albert-son was the first to nick the teeth of a cutter which was to be put to the job of coping with the harder-than-steel stratum of a valve seat.

Defendants have presented a reamer which they claim has been manufactured according to the teaching of the Lutz patent. This reamer is practically identical with the device of the patent in suit.

A careful study of the Lutz patent, however, shows that it would be necessary to modify it considerably to arrive at the device of the patent in suit. The Lutz device was a metallic disk with nicked blades so positioned that the nicks were in alignment. A prior use which requires modification to perform the function of the patent attacked is not anticipation. Motor Improvements v. General Motors Corp. (C. C. A.) 49 F.(2d) 543, 551.

The patent in suit is not invalidated by the Lutz and Reiss patent, No. 93,212.

The third defense put forward by defendants is that Albertson was not the first inventor because of the prior knowledge and use of the alleged invention by Franklin Machine & Tool Company of Springfield, Mass., and others. It is alleged that in 1919, a valve seat refacer substantially similar to that covered by the patent in suit was developed by employees of the Franklin Machine & Tool Company and that it was discarded in favor of a different type. In May, 1923, the company was absorbed by the Van Norman Machine Tool Company. Subsequently, upon demand by the trade for a more finished product, the company manufactured and sold a device which is substantially similar to that covered by the patent in suit. An infringement suit against the Van Norman Company has been threatened.

There are seven witnesses to the alleged development by the Franklin Machine & Tool Company of an anticipating device. Four of the witnesses are connected with the Van Norman Machine Tool Company, while a fifth sold machines for the company. Six of the witnesses testified that some time pri- or to May, 1923, there was developed by the Franklin Machine & Tool Company a device with nicked teeth which was tested and discarded. No evidence was produced of any sale of this device, and no nicked tooth cutting reamer developed prior to the application for patent in suit was produced.

Mr. Van Norman, president and manager of the Van Norman Machine Tool Company, produced in the office of counsel for plaintiff in Chicago in 1926 a device purporting to be one of the original nicked tooth reamers made in 1919. This reamer subsequently disappeared. Mr. Van Norman testified that he had gotten it from his works manager, Osear S. Johnson, who was an official of the Franklin Machine & Tool Company. Mr. Johnson’s testimony is contradictory to this. He says that he has not seen one of these devices since it was discarded, about the year 1919.

The testimony of defendants’ witnesses shows that a nick-toothed cutting reamer was experimented with, but the evidence is not sufficiently clear that the device was substantially the device of the patent in suit.

In a decision handed down by the Circuit Court of Appeals for the Sixth Circuit on February 13, 1931, in the case of United Shoe Machinery Corporation v. Day Wood Heel Co., 46 F.(2d) 897, 899, it was said: "Anticipation cannot be proven alone by the number of witnesses introduced to support it. Barbed Wire Case, 143 U. S. 275, 12 S. Ct. 443, 36 L. Ed. 154; American Bell Tel. Co. v. People’s Tel. Co. (C. C.) 22 F. 309. It must be determined by a consideration of the evidence in the aggregate, and, so treating it, the case is not free from reasonable doubt. Giving due weight to the testimony of these witnesses taken 12 to 15 years after their purported knowledge of the anticipating heels, it is entirely too uncertain whether the heels and method for making them were sufficiently similar to plaintiff’s patent to constitute anticipation. Deering v. Winona Harvester Works, 155 U. S. 286, 301, 15 S. Ct. 118, 39 L. Ed. 153.”

“The oral testimony of many witnesses, if unsupported by any evidence consisting of documents or things, must be very reasonable and very strong, in order to negative novelty.” Walker on Patents (6th Ed.) page 142.

The conduct of the Franklin Machine & Tool Company in discarding their experimental nieked-tooth cutting reamer appears to support the opinion that it differed from the device covered by the patent in suit which was immediately successful and. which drove out of- the market the double end reamer with the burrs left on one end which had been developed by the Franklin Machine & Tool Company, and later manufactured by the Van Norman Machine Tool Company.

It appears that Albertson was the first inventor of the patent in suit, and that his patent, while narrow in scope, is valid and entitled to protection. It has not been denied by the defendants that their device was substantially similar to that covered by the patent in suit. Every element of all three, claims of the patent in suit can be read directly upon the defendants’ deviee.

And now, July 31, 1931, it follows that plaintiff’s patent No. 1,599,266, issued September 7, 1926, is valid and infringed by the defendants, and a decree for an injunction, reference, accounting, and costs may be prepared and submitted, in accordance with this opinion.


author: WATSON, District Judge.

text:
    KAWNEER CO. v. McHUGH et al.
    No. 543.
    District Court, M. D. Pennsylvania.
    Aug. 15, 1931.
    Ralph M. Snyder and James R. McKnight (of Parkinson & Lane), both of Chicago, Ill., and S. A. Davis and T. L. Hoban, both of Scranton, Pa., for plaintiff.
    Rudolph J. Magagna and Albert W. Johnson, Jr., both of Wilkes Barre, Pa., and George P. Kimmel, of Washington, D. C., for defendants.
   WATSON, District Judge.

This is a suit in equity. The plaintiff charges against the defendants infringement of patent No. 1,157,900 to Plym of October 26,1915, and unfair competition.

The defendants deny the validity of the patent, deny that they are guilty of infringement, and deny all charges of unfair competition.

The patent in suit is a metallic structure for holding glass in position for show windows, or for any similar purpose. The title to the patent in the plaintiff was admitted. The objects to be attained by this structure are several. Glass expands and contracts when subjected to different temperature, and it is necessary that the holding yield sufficiently so that it will not break the glass when it expands, and not hold the glass too loosely when it contracts. The glass varies in thickness and is subject to pressure by currents of air, and is liable to be subjected to other pressures. These pressures may be exerted from the inside or the outside. It is, therefore, desirable that the glass be held with sufficient rigidity to resist these pressures, and at the same time in a manner, sufficiently yielding on both sides so that it will not break at the holding point. There should be a resilient gripping of the glass on both sides. Inventive genius had sufficiently developed many years ago so that the holding of glass was accomplished by substantially three elements : A rest to support the glass at its bottom; a gutter supporting the glass at the back or inner side; and a brace holding it at its front or outer side. The plaintiff’s patent in suit contemplates the use of these three elements, but, in my opinion, the elements are different in some respects from those of earlier patents.

Figure 1 of the patent drawings of the patent in suit (here produced) shows in vertical section the inventor’s preferred type of construction.

1,157,900.

Referring to the specifications: “1 indicates a window sill, and 2 an angle-bracket secured to the sill by screws 3. 4 is an angle-plate resting on the sill and against the upwardly-projecting arm of the angle-bracket and equipped at its upper end with a V-shaped apertured resilient gutter 5. 6 indicates a molding strip bearing at one edge against the sill and the outer edge of the angle-plate 4. 7 are screw bolts (only one appearing) connected to the molding strip 6 and angle-bracket 2 and engaged at their inner ends by nuts 8. 9 is a continuous or sectional inverted U-shaped channel bar fitting upon the base portions of plates 4 and against the vertical arms of said plates and spaced from the adjacent' edge of the glass plate 10 clamped between the resilient apertured gutter 5 and the adjacent edge of the molding strip 6, the bolts 7 extending through the channel plate, it being noticed that the bridge portion of the channel bar is interposed between the bolts and plate 10 and thus guards against any possibility of the latter coming in contact with the bolts. 11 indicates an angle-plate secured to the vertical arm of base-plate 4 and upon the bridge portion of the channel bar and equipped with leather or equivalent compressible strips 12 forming seats for the window glass and spacing the same from the angle-plate 11 to permit air to circulate around the window glass and through the apertures of the gutter and the apertures 13 (only one appearing) in the molding strip.”

The specifications in describing figure 8 refer to the upper edges of the outer member and inner member terminating in resilient flanges for engagement with opposite faces of the window glass.

The claims in suit are Nos. 4, 5, 8, and 11, and read as follows:

“4. In a setting for plate- glass, the combination with a support of an inner and an outer sheet metal member, the inner member having a gutter to form the glass engaging portion thereof, said inner and outer members being both free to move toward the glass, and means for drawing both of said members toward the glass and together whereby the glass is resiliently gripped between the two members.
“5. In a setting for plate glass, the combination with a support of an inner and an outer sheet metal member, the inner member having a gutter to form the glass engaging portion thereof, said inner and outer members being both free to move toward the glass, a plurality of parts underlying and supporting the glass, and means for drawing both of said members toward the glass and together whereby the glass is resiliently gripped between the two members.”
“8. In a window construction, the combination with an inner and outer sheet metal member adapted to engage the opposite sides of a pane of' glass, of an inverted U-shaped member intermediate of said sheet metal members, fastening means for connecting said members together, and the pane of glass ■adapted to rest upon the said U-shaped member.”
“11. In a setting for plate glass, a support, a pair of yielding clamping members mounted on said support, said clamping members being each free to move toward the glass, and means for drawing them together toward the glass, drainage and ventilating openings in said clamping members for conveying moisture and air through said setting.”

The advantages claimed for the device of the patent are that it is a device for mounting heavy glass plates in store fronts and the like, capable of resiliently gripping and properly holding in place under varying conditions and strains plate glass of various sizes from 8 to 10 feet in length and 10 to 12 feet wide weighing many hundred pounds. By providing for resilient gripping of the glass on both sides, the inventor provides a means by which the glass is securely gripped at all times and throughout its length despite variation in thickness of the glass, settling vibration set up by high wind pressure, and other conditions. The entering of moisture between the upper edge of the outer member and the glass is prevented.

I have stated that in my opinion the elements in the patent in suit are different from those of earlier patents. The gutter' members, or inner members, are not different. They are resilient and function in the same way, but the principal difference, and to my mind one that is controlling, is the difference in the outer member. The outer member in the patent in suit, while it may look somewhat like the outer member in the earlier patents, is quite different in function, because the outer member is not shaped to evade contact with the shelf, as there is no shelf to evade, and the shape is such that it is much more flexible and resilient. The purpose of the form or shape being to produce a resilient gripping means whereby a glass is gripped on both sides resiliently. The most that can be said for any of the prior patents is that the outer member was rigid, or of a soft metal which would adapt itself to the contour of the glass, but not resilient in intent or in claim. In the patent in suit, we find an outside resilient member which shows a double gripping action, which has apparently solved the problem of holding glass against double movement. Glass does not always move in one direction. There is another element which is also different from that found in any prior patent, and that is the structure underlying the glass which is an inverted sectional U-shaped resilient channel bar; whereas, in the prior patents, the support was a rigid shelf.

As I understand the prior art and the earlier patents, Plym was the first to make use of yielding and resilient outer and inner members, so that, by the pressure from the outside or pressure from the inside, the glass is so firmly held as to keep it in place, and, at the same time, yield sufficiently whenever the strain is exerted so that the glass will not break at the edge near the holding points, and will not permit a separation between the upper edge of the outer member and the glass for the entering of moisture. Out of the invention a new combination and useful structure seems to have been created, and one that is of real benefit and assistance to the public generally, and is now in general use.

The change of the outer member from a rigid one to a resilient one was an important step in the development of the art, and, together with the combination of elements of plaintiff’s device, goes beyond what would be mechanical skill. It rises beyond mechanical skill to have made the outer member of such form, material, and structure as would be yielding and resilient and so combined with the other elements as to produce the desired results.

The validity of the patent in suit is challenged as not involving invention, in view of the prior art including earlier issued patents to Plym. A number of patents were introduced, but those finally relied upon as denying invention are: Plym, No. 846,343, 1907; Plym, No. 852,450,1907; Plym, No. 879,898, 1908. Por the purpose of convenience, I shall refer to these patents as first, second, and third, in the order named. Neither of •these patents describes the outside resilient member, which is an important feature of the combination of the claim in suit. In the first patent, the outside member is rigid and forms a shelf for the glass. In the second patent, the outside member is a rigid, nonresilient member, and the shelf is another rigid member fastened to the back member. In the third patent, the shelf is a rigid member fastened to the back member, and the outside member is a plate or molding piece of copper, or equivalent metal, shaped so as to evade the shelf, of a yielding metal not resilient. Neither of these three patents' discloses the resilient outside member, which is present in the patent in suit where the glass is resiliently gripped between the outer member and the inner member. The resilient gutter on the inside, which is free to expand like a bellows, and the cantilever section on the outside, is also free to move toward the glass, so that both move toward the glass, regardless of the fact that each is fixed to a base which does not move. Nor do we find in the first, second, or third patents the U-shaped resilient member under the glass.

The patent in suit received the approval of the Patent Office after it was considered by that office for over six years, and is presumptively valid. The authorities hold that, to overcome this presumption, the burden is upon him who asserts it, and every reasonable doubt should be resolved against him. The evidence must be full, unequivocal, and convincing. Diamond Rubber Company v. Consolidated Tire Co., 220 U. S. 428, 31 S. Ct. 444, 55 L. Ed. 527; Ward Baking Co. v. Hazleton Baking Co. (D. C.) 292 F. 202; Window Glass Machine Co. v. Smethport Window Glass Co. (D. C.) 266 F. 85; United Shirt & Collar Co. et al. v. Beattie et al. (C. C.) 138 F. 136.

It is contended by defendants that the elements in the patent in suit are all old, and that for that reason the patent is not valid. I cannot agree with the contention that all of the elements are old. It is well settled that a patent combination may contain old elements, or that all the elements may be old providing a new result is accomplished. United Verde Copper Co. v. Peirce-Smith Converter Co. (C. C. A.) 7 F.(2d) 13; The Barbed Wire Patent, 143 U. S. 275, 12 S. Ct. 443, 36 L. Ed. 154; Diamond Rubber Co. v. Consolidated Tire Co., 220 U. S. 428, 31 S. Ct. 444, 55 L. Ed. 527.

I find plaintiff’s patent valid, and, in reaching my conclusion, I have considered all the evidence in the case, including the evidence produced July 24, 1930, on motion of the plaintiff.

The question of infringement is to my mind not so difficult as the question of validity. The alleged infringing structure is manufactured by the defendants, and marketed and installed by the defendants in connection with their store front business. The structure in question responds to the claims in suit. It performs the primary function of the patent in suit in practically the same way. The two structures are alike in their functions, combinations, and elements. In Hobbs v. Beach, 180 U. S. 383, 21 S. Ct. 409, 416, 45 L. Ed. 586, the Supreme Court said: “We are not concerned with the subordinate differences in the mechanism. * * * As the two machines are alike in their functions, combination, and elements, it is unnecessary to go further and inquire whether they are alike or unlike in their details.”

I hold that the defendants’ structure infringes the claims in suit of patent No. 1,157,900.

The only remaining branch of the case to be disposed of is that of unfair competition. The record shows that plaintiff’s manufacture of sash rails and other parts of store fronts were received with great favor by the trade, and established a high reputation.

Plaintiff charges principally that defendants have copied plaintiff’s products in essential and nonessential details; that they sold them at a materially reduced price; that they palmed off their products as and for those of plaintiff; that defendants’ copies so closely resembled the plaintiff’s in design and appearance and non-functional details as to cause the public to constantly mistake the defendants’ for plaintiff’s, and purchased defendants’, believing they had obtained plaintiff’s; and that defendants copied plaintiff’s catalogues and other literature, which showed plaintiff’s product and other data.

The sash rail is a minor part of 'the whole structure, which includes many other unpatented features. The plaintiff seeks relief for alleged unfair competition on account of the store front construction taken as a whole. In Detroit Showcase Co. v. Kawneer Mfg. Co., 250 F. 234, the Circuit Court of Appeals, Sixth Circuit, because of lack of jurisdiction in that ease as to the many other unpatented features, considered only the sash rail construction of patent No. 852,450 independently, and not as a part of a complete window front construction, and found an absence of unfair competition.

There was much testimony taken in connection with the charge of unfair competition. I have considered carefully all of the evidence. There is in defendants’ product a similarity in form, dimensions, and general appearance, which I feel was the result of effort to comply with the physical requirements essential to commercial success and not designed to misrepresent the origin of such articles. It is to be observed that it is reasonable to expect closer attention on the part of a purchaser, to store front constructions than to padlocks. Nowhere in the catalogue or other literature of the defendants is there disclosed anything intended or calculated to deceive or create confusion in the minds of the purchasing public as to the origin or ownership of the store front construction. On the contrary, distinguishing words, such as “Kingston Store Front System,” are so used as to prevent the deception or misunderstanding. It does not appear from the evidence that there was any ease where a person desiring to purchase the plaintiff’s store front construction was misled by the appearance of the defendants’ store front construction, so that he believed the defendants’ was that of plaintiff’s. There is no evidence that the defendants sold their product at a material reduction in price, nor at any reduction in price, but there is evidence that defendants sold their product at a price higher than plaintiff sold its product. The evidence shows that the defendants’ name plate was placed upon the Robinson store by the owner of the store and not by the defendants, or with the knowledge or consent of the defendants. I find as a fact that the defendants never deceived any one that purchased their store front construction, and that every one who has purchased defendants’ store front construction has known that he was purchasing defendants’ product. “ ‘Unfair competition is not established by proof of similarity in form, dimension, or general appearance alone. When such similarity consists in constructions common to, or characteristic of, the articles in question, and especially when it appears to result from an effort to comply with the physical requirements essential to commercial success, and not to be designed to misrepresent the origin of such articles, the doctrine of unfair competition cannot be successfully invoked to abridge the freedom of trade competition.’ ” J. A. Scriven Co. v. Morris (C. C.) 154 F. 914, 918 (quoting and adopting the definition in Marvel Co. v. Pearl, 133 F. 160, 162, 66 C. C. A. 226, 227). The test of unfair competition is whether the maker or seller of the goods is, by his conduct, passing off his goods as the complainant’s goods, and not whether the public is likely to be deceived as to who is the maker or seller of the goods. Borden Ice Cream Co. v. Borden’s Condensed Milk Co. (C. C. A.) 201 F. 510. “The essence of the wrong in unfair competition is' that the defendants are palming off their goods as the merchandise of another. If the defendants so conduct their business as not to palm off their goods as those of the plaintiff, the suit falls. Charles Broadway Rouss, Inc., v. Winchester Co. (C. C. A.) 300 F. 706; Auto Light Co. v. Prest-O-Lite Co. (C. C. A.) 264 F. 810.” Turner & Seymour Mfg. Co. v. A. & J. Mfg. Co. (C. C. A.) 20 F.(2d) 298, 301. “The cardinal rule is that nothing else than conduct tending to pass off one man’s merchandise or business as that of another, will constitute unfair competition. Rathbone v. Champion Steel Range Co., 189 F. 26, 110 C. C. A. 596, 37 L. R. A. (N. S.) 258; American Washboard Co. v. Saginaw Mfg. Co., 103 F. 281, 43 C. C. A. 233, 50 L. R. A. 609; Hanover Milling Co. v. Metcalf, 240 U. S. 403, 36 S. Ct. 357, 60 L. Ed. 713; Hendler Creamery Co. v. Chapin-Sacks Mfg. Co., 254 F. 553, 166 C. C. A. 111.” Autoline Oil Co. v. Indian Refining Co. (D. C.) 3 F.(2d) 457, 464.

In a case like this, where a plaintiff stands upon ground outside the scope of his patent, and seeks relief for unfair competition in trade, he prevails, if he prevails at all, under the general doctrine of equity. “And where an injunction is sought which would operate as restraint in the mercantile field, it is a principle of equity, based upon considerations of caution, that to justify an injunction the case must be unmistakably clear and beyond question.” Marshall Field & Co. v. George S. Kelley Co. (C. C. A.) 233 F. 265, 266.

I do not think that plaintiff’s case meets these requirements of equity,-and a ease of unfair competition is not made.

So much of the bill as relates to unfair competition is dismissed, A decree will be entered in favor of the plaintiff for such profits and damages as plaintiff is entitled to for tbe infringement, and reference will be made to a master to take an accounting as to the damages and profits, and a permanent injunction will issue restraining the defendant from infringing the patent.


author: CAVANAH, District Judge.

text:
    KLINE et al. v. WRIGHT et al. (RILEY et al., Interveners).
    No. 680.
    District Court, D. Idaho, E. D.
    Jan. 8, 1931.

      John J. Dwyer, of New York City, John H. Padgham, of Salmon, Idaho, and Richards & Haga, of Boise, Idaho (McKeen F. Morrow, of Boise, Idaho, of counsel), for plaintiffs, cross-defendants, and interveners.
    Enoch W. Whitcomb, of Salmon, Idaho, and L. E. Glennon, of Pocatello, Idaho, for defendants and cross-complainants.
   CAVANAH, District Judge.

On July 31, 1930, an order of reference was made in this ease pursuant to memorandum opinion [(D. C.) 42 F.(2d) 927] for the purpose of determining on the accounting pleaded in defendants’ cross-bill what moneys, if any, were actually spent by any of the parties in the operation, improvement, and annual assessment work on the mining claims involved. The evidence, taken before the referee, discloses that certain amounts were expended by cross-complainants, who claim that they are entitled to contribution for the same from plaintiffs and interveners. The evidence taken before the court on the main question as to the interest of the parties in the claims resulted in the conclusion reached by the court that the claims were held by Wright and the plaintiffs and interveners as tenants in common, and Wright ■and his associates, without any agreement with plaintiffs and interveners, operated the property for their own account to the exclusion of plaintiffs and interveners' during the period when cross-complainants claim the right of contribution. Such being the situation, the principle is urged by plaintiffs and interveners that as cross-complainant Wright and plaintiffs and interveners stood in the position of tenants in common, and neither was the agent of the other, the law does not invest one tenant in common with authority to charge the other with any expense incurred in the operation and improvement of the common property, except by consent or in case of necessity upon prior notice and demand to the other one, but must recoup if at all from the profits derived from the property. This principle, now settled by the courts in the mining area of the West, would seem applicable to the facts here, for Wright and his associates held exclusive possession of the property from plaintiffs and interveners until 1930, and undertook to operate and ship therefrom quantities of ore without consulting or receiving the consent of plaintiffs and interveners, who did not voluntarily participate in the venture, nor grant permission to Wright to expend money in their behalf. Under such circumstances, the money they so expended was at their own risk, and they cannot now, where it resulted in a loss, force contribution for the expense of such operation. McDaniel v. Moore, 19 Idaho, 43, 112 P. 317; Madar v. Norman, 13 Idaho, 585, 92 P. 572; Stickley v. Mulrooney, 36 Colo. 242, 87 P. 547, 118 Am. St. Rep. 107; Rico Reduction & Mining Co. v. Musgrave, 14 Colo. 79, 23 P. 458; Welland v. Williams, 21 Nev. 230, 29 P. 403; Manhattan Co. v. White, 48 Mont. 565, 140 P. 90.

The next claim for contribution is for plaintiff’s and interveners’ pro rata share for annual assessment work claimed to have been done on the claims for the years 1917, 1918, 1921,1925,1926,1929, and 1939.

As to the years 1917 and 1918, the evidence shows that Wright was then working the claims under a bond and lease, which required of him to perform the assessment work. He was then prospecting and endeavoring to develop the mine in order to satisfy himself as to whether or not he would complete his purchase. Certainly after obligating himself to do the assessment work he cannot thereafter insist upon his eotenants. contributing to such expense, nor can he urge such contribution unless the law at the time required such work to be done to preserve the claims from forfeiture. This latter requirement we find was not required for the years 1917, 1918, and 1919, by reason of resolutions of Congress in which the annual assessment work on mining claims was suspended. 40 Stat. 343; 41 Stat. 354. It is therefore sufficient to say that as no claim is made for the year 1919, and no assessment work was necessary to be performed for the three years, and that the administrator Shoup, who was then administering the claims, had filed the necessary notice claiming the benefits of the statute, the claim for contribution for these three years should not be allowed.

Approaching then a consideration of the claim of Wright for contribution for the remaining years, the evidence discloses that until July 16, 1930, the date of the original opinion of this court, Wright held wrongfully adverse possession of the claims to the exclusion of his eotenants, plaintiffs and interveners, as the evidence is clear that during those years litigation was pending between the parties, and Wright held exclusive possession of the claims. Kline v. Shoup, 38 Idaho, 202, 226 B. 729; Riley and Crane v. Kline, 44 Idaho, 299, 256 P. 535. And also Wright and Ford had attempted to wrongfully relocate the claims while a fiduciary relation existed between him and plaintiffs and interveners. His conduct in that respect being contrary to the doctrine of equity, he, as said by the Ninth Circuit Court of Appeals in Becker-Franz Co. v. Shannon Copper Co., 256 F. 522, where the facts are similar, lost his right to contribution. McKay v. McDougall, 25 Mont. 258, 64 P. 669, 87 Am. St. Rep. 395; Mills et al. v. Fletcher et al., 100 Cal. 142, 34 P. 637; Erhardt et al. v. Boaro et al. (C. C.) 8 F. 692.

Furthermore, it would seem that for the years 1925, 1926, and 1929, it is very doubtful, under the evidence, if Wright did any assessment work because others were permitted by him under leases to go upon the property and take out valuable quantities of ore, in sufficient amount for the assessment work.

For the year 1930, the assessment work was done by Wright on three of the claims to the amount of $300, and the remaining work for that year required on the other claims was done by plaintiffs and interveners after the date of the original opinion. Therefore, cross-complainants are entitled to recover from plaintiffs and interveners their proportion of the $300 which they should pay and which was expended by cross-complainants, figured on the basis of their interest in the property, of which plaintiffs are entitled to an undivided Yzl interest, and interveners to an undivided Ys Interest, being the sum of $257.14, and costs.

In accordance with the conclusion reached in the original opinion, the decree shall provide that plaintiffs are entitled to an undivided %i interest in the property, interveners to an undivided Ys interest, and cross-complainants to an undivided Vi interest, which last interest is to be divided between Wright and wife, Ford and wife, and the Thompson heirs, in accordance with the deeds made by Ford and Wright after the relocation.


author: SOPER, Circuit Judge.

text:
    R. E. DUVALL CO., Inc., v. WASHINGTON, B. & A. ELECTRIC R. CO. (CLEVELAND TRUST CO., Intervener).
    No. 1826.
    District Court, D. Maryland.
    July 21, 1931.

      George Weems Williams, of Baltimore, Md., for Washington, B. & A. Electric R. Co.
    Semmes, Bowen & Semmes, of Baltimore, Md., for Cleveland Trust Co., trustee.
    Cook & Markell, of Baltimore, Md., for Consolidated Gas, Electric Light & Power Co.
    Venable, Baetjer & Howard, of Baltimore, Md., for Maryland Trust Co., trustee, et al.
    Clarence A. Tucker, of Baltimore, Md., for Fidelity Trust Co., trustee.
    Bartlett, Poe & Claggett, of Baltimore, Md., for J. Sawyer Wilson, Jr., et al. committee.
   SOPER, Circuit Judge.

On January 27, 1931, a receiver was ap■pointed by this court for Washington, Baltimore & Annapolis Electric Railroad Company, hereinafter called the railroad company, upon a bill of complaint filed by its ■creditors and upon its admission of insolvency and consent. The Cleveland Trust Company, hereinafter called the trustee, was given leave to intervene as party plaintiff in the •case in order to protect the rights of bondholders holding bonds to the amount of $7,-308,000, which are secured by a mortgage on the property of the railroad company dated March 1,1911, and executed and delivered on March 31, 1911, by the railroad company to the trustee. On March 1, 1931, the railroad company defaulted in the payment of an installment of interest due on the bonds. On May 15, 1931, the trustee filed a petition in the case praying for an order directing the receiver and the railroad company to assign and deliver to it certain shares of stock of certain Maryland corporations, to wit, 39,271 shares, without par value, of the capital stock •of the Annapolis & Chesapeake Bay Power Company, hereinafter called the power company, 10 shares of the par value of $100 each of the Terminal Real Estate Company of Baltimore City, Md., hereinafter called the terminal company, and 400 shares of the par value of $50 each of the Maryland Development & Realty Company of Anne Arundel County, Md., hereinafter called the Maryland company. The shares of stock above described constitute all the outstanding stock of the respective corporations. All of the stock of the power company and all of the stock of the terminal company belong to the railroad company, and all of the stock of the Maryland company belongs to the terminal company.

The trustee asserts that the stock is covered by terms of the mortgage whereby property owned by the railroad company at the time of the execution of the mortgage, or acquired thereafter, was made subject to its lien; and that since a receiver has been appointed for the railroad company on the ground of insolvency, and a default has been made in the payment of interest on the bonds, the trustee has become entitled to delivery and possession of the stock and to receive and hold the revenues, income, and profits therefrom under the terms of the mortgage. Answers to the petition have been filed by creditors of the railroad company, not protected by the lien of the mortgage. They point out that shares of stock are not mentioned in the grant, and contend that property of that kind is-not subject to the lien of the mortgage, if that document is properly interpreted, but belongs to the railroad company, free and clear of any lien. The issue thus raised constitutes the main question to be decided in this case.

The trustee, in support of its contention, relies upon the express terms of the granting clause of the mortgage, and particularly upon the sweeping character of the language employed in its final paragraph. The grant itself and a description of the property there-by conveyed may be summarized for our purposes as follows:

“The Railroad Company, party of the first part,, conveys to the trustee upon the trusts created by the mortgage, ‘all the right, title, interest and estate of the first party in md to the entire railroad of the party of the first part, as follows

1. “The terminal station in the City of Baltimore and its line of railroad, rights of way, privileges and rights of tracks in the City of Baltimore, beginning at a certain described point therein and extending through certain streets in the city and thence thirough certain counties in Maryland to the boundary line between the State of Maryland and the District of Columbia.

2. “Also a line of single railway track extending from a point on the railroad in Anne Arundel County in an eastern direction to the City of Annapolis and a line of single track in that city.

3. “Also all the terminals, terminal tracks, railroad facilities, engines, rolling stock, eleetric appliances, bridges, &e., enumerating in all 39 classes of tangible railroad property, ‘and all other estate, property and right of every and any kind and class now or hereafter owned or acquired or to any extent controlled or possessed by the Railroad Company belonging to or used or designed for use for or in connection with said terminal stations and said lines of railroad.'

4. “Also franchises granted to the Railroad Company by the City of Annapolis to use the streets of the city for railroad purposes.

5. “Also franchises granted to the Railroad Company by the City of Baltimore to use the streets of the city for railroad purposes.

6. “Also rights under three separate contracts to use the tracks of certain street railways in Baltimore and Washington, or the power thereover, and to acquire power for the operation of the railroad.

7. “Also, all contracts, rights, revenues, rents, tolls, sums of money or income arising or to arise from the property now owned or controlled or hereafter to be acquired or controlled by the Railroad Company, and each and every part and parcel thereof, and also all corporate or other franchises, rights, easements, privileges and immunities now or at any time hereafter owned, held or enjoyed by or in any manner conferred upon the Railroad Company; it being the intention hereof to include herein all of the property of the Railrpad Company, real, personal or mixed, in possession or expectancy, now owned or hereafter in any wise acquired, together with all and singular the tenements, hereditaments, rights, franchises, easements, privileges, immunities and appurtenances of such property and premises hereinbefore expressed to be conveyed, or which may in any manner hereafter be acquired by the Railroad Company, belonging or in any wise appertaining to, or at any time hereafter held or enjoyed by the Badlroad Company, and the reversion and reversions, remainder and remainders, tolls, incomes, revenues, rents, issues and profits thereof, and also all the estate, right, title and interest, property, possession, claim and demand whatsoever, as well in equity as in law, of the Railroad Company, in and to the same and every and any part thereof; it being intended and it is hereby agreed that all the property of every kind now owned or which may be in any wise acquired by the Railroad Company shall be as fully embraced within'the provisions hereof, and subject to the lien hereby created for securing the payment of all of said bonds so to be issued, together. with the interest thereon, as if thesai} property were now owned by the Railroad 'Company, and were specifically described herein and conveyed hereby." (Italics-inserted.)

It is obvious that the language of this-concluding paragraph, taken by itself, is sufficiently broad to include the shares of stock which the trustee now claims. And it may be conceded for the purposes of this case that a railroad may mortgage after-acquired property. Thompson v. White Water Valley R. Co., 132 U. S. 68, 10 S. Ct. 29, 33 L. Ed. 256, and that there is no reason for applying to securities any other or different rule as to after-acquired property than is applied to other-kinds of property. United States Mtge. & Trust Co. v. Chicago & A. R. Co. (C. C. A.) 40 F.(2d) 386, 392. It may also be conceded that the mere fact that a granting clause includes a specific description of existing property does not necessarily limit or qualify subsequent general provisions of a broader scope. Compare Westinghouse Elec. & Mfg. Co. v. Brooklyn R. T. Co. (D. C.) 276 F. 152; Id. (D. C.) 288 F. 221;. and American Brake Shoe & Foundry Co. v. New York Rys. Co. (D. C.) 277 F. 261, with Smith v. McCullough, 104 U. S. 25, 26 L. Ed. 637, and Alabama v. Montague, 117 U. S. 602, 6 S. Ct. 911, 29 L. Ed. 1000. It may also be noted in passing that the specific limitation upon, after-acquired property to that which belongs to or is used in connection with terminal stations or lines-of railroad, which is quoted in clause 3 above, does not appear in the concluding paragraph. Nevertheless, there are other provisions of the mortgage and other material faets now to be considered which throw a strong light upon the kind of property which the parties intended to cover by the terms of the mortgage.

It is highly significant that the introductory paragraph of the granting clause, which contains the words of conveyance, also gives a general description of the property conveyed as “all the right, title, interest and estate of the first party in and to the entire railroad of the party of the first part, as follows.” These words manifest an intention of the mortgagor to grant and convey complete title to its entire railroad, but they purport to convey no other property. The long description of the items of the property set out in the mortgage immediately after the words “as follows” has been summarized above, and it will be noted that in all of the paragraphs but the last, only property, tangible and intangible, which is useful in the operation of the railroad, is included. The final paragraph comprises all property of the railroad company, real, personal, and mixed, and is not in terms limited to property devoted to railroad purposes; but since all of the paragraphs after the effective words of conveyance are expressly inserted as descriptive of the railroad itself, it is not an unreasonable conclusion that all of the paragraphs were intended to relate to the same kind of property.

Certain recitals of the mortgage bear out this conclusion, particularly those which embody the resolutions of the board of directors and of the stockholders, whereby the execution of the mortgage was authorized. The mortgage recites that at a meeting of the board of directors of the railroad company on March 31, 1911, it was resolved that, in order to provide funds to pay debts and to acquire certain railroad properties, it was necessary to issue and sell bonds and “in order to secure the payment of said bonds, issued and to be issued, and sold, with interest thereon, this company issue a first mortgage deed of trust bearing date the first day of March, 1911, to the Cleveland Trust Company of Cleveland, Ohio, as trustee, covering the terminal stations, terminals, lines of railway, rights of way, real estate, franchises and other property of this company used m connection with the operation of said~ termmals and lines of railroad! now owned or hereafter acquired and wherever situated, together with all of its rights and privileges.” (Italics inserted). The board also approved in the same resolution the form of the bond set out in full in the mortgage, and the form of the mortgage itself.

The form of bond declares that the bonds to be issued under the mortgage are secured by a mortgage deed of trust “conveying the terminal stations, terminals, lines of railway, real estate, franchises and other property of this Company used in connection with the operation of said terminals and lines of railroad now owned or hereafter acquired, and wherever situated together with all of its rights and privileges,” using the same language as appeared in the resolution of the board. On the same day, the resolutions of the board and the form of mortgage were approved at a meeting of the stockholders. Erom' these recitals, it seems to be clear that it was the intention of the corporate authorities, from whom the power to execute the railroad mortgage was derived, to limit the lien of the mortgage to property, whether then owned or thereafter acquired, which was used in connection with the operation of the terminals and lines of railway.

It is suggested by the trustee that the resolutions of the board and of the stockholders, having approved the broad language of the grant in the mortgage actually executed, must be considered as having authorized a lien upon all property of the railroad without any limitation or restriction whatsoever; but it is impossible to suppose that it was the intention of these bodies to direct the execution of a mortgage unlimited as to the property covered, when in the same resolutions there was the express limitation that the lien of the mortgage should cover property used in connection with the operation of the railroad. It must be assumed, of course, that the directors and the stockholders were aware of the sweeping provisions of the last paragraph of the granting clause, and intended to give it full force and effeet. But the plainly expressed purpose of the governing bodies of the corporation to limit the extent of the lien of the mortgage must also be given effeet, if it can be done consistently with the terms of the grant.

It goes without saying that the intent of the parties must be gathered from the provisions of the instrument taken as a whole. The problem is reduced to a determination of whether the final paragraph of the grant shall be read apart from the other clauses of the mortgage, so as to include all property of every description, or shall be considered as limited to the kind of properties described in the preceding paragraphs of the grant. If the former alternative is adopted, it is not possible to give effeet to the limitation which the board of directors and the stockholders obviously desired to place upon the scope of the lien; If the latter alternative is adopted, all portions of the mortgage are consistent, and the broad language of the final paragraph of the grant is given an effeet in harmony with the preceding paragraphs and with the terms of the corporate resolutions. The conclusion seems to be inevitable that, in this mortgage, the lien was restricted to property, whether then owned or thereafter acquired* used in connection with the operation of the terminals and lines of railway. The rules established for the interpretation of written instruments do not justify the detachment of general words from accompanying expressions of an explanatory character, and often times, as in this case, a broad phrase must be construed as ejusdem generis with more limited descriptions in order to give effect to the obvious intention of the parties. Indeed it has been laid down broadly that general words in any contract pertaining to a particular subject shall be construed as meaning things of the same kind as the particular matters referred to. Williston on Contracts (1920) 1201; See Smith v. McCullough, 104 U. S. 26, 28, 26 L. Ed. 637; Alabama v. Montague, 117 U. S. 602, 6 S. Ct. 911, 29 L. Ed. 1000; Guaranty Trust Co. v. Minneapolis & St. L. R. Co, (C. C. A.) 36 F.(2d) 747.

We come then to determine whether the shares of stock which the trustee seeks to recover fall within the lien of the mortgage as property owned at the time of its execution or thereafter acquired and used in connection with the operation of the railroad. The subsidiary corporations, the stock of which is in question, are completely owned by the railroad company, and, with some exceptions, substantially the same persons who have been officers and directors of the railroad company have acted in the same capacity for the power company and the terminal company. The shares of stock have never been assigned to the trustee under the railroad company’s mortgage, and have never been pledged, hypothecated, or assigned to any other person so that the certificates of stock stand in the name of the railroad company, and are now in the possession of the receiver. The stock of the power company has been carried on the books of the railroad company in its investment account, and was so carried on its balance sheet in its annual report until the year 1924. In 1924 and subsequent years, the railroad company has published a consolidated balance sheet of itself and its subsidiaries in which, pursuant to regular accounting practice, the stock has been eliminated both as an asset and as a liability, and the property of the subsidiary corporations has been included among their assets. There are other circumstances surrounding the acquisition of the several blocks of stock, and affecting the character of the business done by the several corporations, which must be separately considered.

The power company was incorporated in Maryland in 1912. In the following year, with the consent of the public service commission of Maryland, it acquired all the property of Annapolis Gas & Electric Light Company, a Maryland corporation, engaged in furnishing the public with gas and electricity for light and power in Annapolis. In 1913, and in subsequent years, the railroad company acquired all of the capital stock of the power company now consisting of 39,721 shares of no par value. The total cost of the stock was $172,700 which the railroad company paid out of its earned surplus. At the present time, and for some years past, the power company has been engaged in furnishing to the public electricity for light and power in certain counties of Maryland, and in furnishing gas in the city of Annapolis. It owns electricity and gas distribution systems in the territory which it serves. It has issued mortgage bonds secured by mortgage on its property, and also certain secured and unsecured demand notes representing loans, the proceeds of which have been used in malting capital expenditures for construction. The value of the property and franchises of the power company is in excess of the amount of its indebtedness.

The railroad company has never produced electricity, but has always purchased all that it needed in its own business. It has also purchased electricity and sold it at a profit to the power company under its control. This practice was pursued from 1913 to July 1, 1923, when it was embodied in a written contract, wherein the power company agreed to purchase such electricity as it might desire from the railroad company. This contract has been the subject of interpretation in this court, and has been held to constitute merely an option on the part of the power company, and not a binding obligation, to purchase . such electricity as it might need from the railroad company. The contract price was fixed at such a figure that there was a substantial profit accruing to the railroad company, which represented the difference between the cost of the electricity furnished to it by the producer, and the selling price thereof paid by the power company.

In 1928, the transmission lines of the Consolidated Gas, Electric Light & Power Company of Baltimore, were extended so as to connect directly with the lines of the power company; and thereafter and until July 1, 1930, the power company purchased its supply of electricity from the gas company at a price substantially less than it had previously paid. On the latter date, the power company resumed the purchase of elec-trinity from the railroad company under the contract above described. Since the railroad company was running at a loss during the year 1930, it is a fair inference that the purchase of the power under the contract was resumed in order to assist the railroad com- ■ pany in its failing condition. This situation continued until the following year when by the decree of this court passed on the 10th day of June, 1931, the contract was construed and the further purchase of-electricity from the railroad company was directed to be abandoned.

The railroad company, was obliged to spend approximately $2,700,000 for transmission lines and equipment for use in the operation of the railroad. This amount included expenditures in the sum of $79,112.27, which were made in 1913 for an additional substation building and equipment and an additional transmission line, which were used by the railroad company not only in connection with the operation of its railroad, but also in connection with the furnishing of electricity to the power company. After 1913, additional expenditures not exceeding $50,000 were made by the railroad company for similar purposes as the aforesaid $79,-112.27. The furnishing of electricity to the power company required a greater substation and transmission capacity than the operation of the railroad alone.

The direct sale of electricity by the railroad company to the public has been quite limited. It has never sold electricity to the public in Annapolis, but has sold it for light and power to a few rural customers along its line of railroad before the power company began business in 1913. After that date, the railroad company sold to fewer rural customers, to the United States government at Camp Meade and at its high power radio station, and to the Maryland State Hospital at Crownsville. Since 1923, the railroad company has made no sales of electricity.

From these undisputed facts, it is certain that neither the shares of stock of the power company nor its tangible property have been used by the railroad company in connection with the operation of its terminals or its railroad line. The business of the power company has been entirely separate and distinct therefrom. It has been connected with that of the parent company only in the purchase of electricity and the use by the railroad company of apart of its equipment primarily employed for the transmission of power to operate its railroad lines for the purpose of delivering electricity from the generating company to the power company’s lines. The railroad company found it to be profitable to employ a part of its property for this purpose, but this activity on its part clearly served no railroad purpose, and could readily have been abandoned by it without in anyway interfering with the conduct of its railroad business. In that operation,’ the tangible property of the power company was neither needed nor employed. The conclusion follows that neither the stock of the power company nor its tangible property is subject to the lien of the mortgage.

The situation with regard to the stock of the terminal company and its tangible property is somewhat different. The terminal company was incorporated in 1906 with a nominal capital of 10 shares of stock of the par value of $100 each. All of -its stock was acquired by the Washington, Baltimore & Annapolis Electric Railway Company, and became subject to the lien of mortgages, executed by it in 1905, which conveyed all of the lines of railroad of the mortgagor, its property rights, privileges, franchises, estate, and appurtenances, and all other property of every kind then owned or thereafter to be acquired. These mortgages were foreclosed by a decree of this court of February 10, 1911, and, in the sale and property conveyances which followed, the present railroad company acquired not merely the railroad properties, but also the stock of the terminal company. These mortgages of the railway company, in contrast with the mortgage under discussion conveyed, not merely railroad property, but all property of every description, and also made provision for the contingency that shares of stock might be covered by its terms, since it provided that the mortgagor should have the right, pending default, to vote upon all shares of stock which might be covered by the instrument. All of the property of the railway company, including the terminal stock, was sold at foreclosure sale, and was described in the conveyances to the purchasers and in the mesne conveyances through which the railroad company acquired title. The railroad company acquired the stock of the terminal company on or about March 31, 1911, by deeds which also conveyed the franchises and contract rights specified in the granting clause of the mortgage, as above set out, all of which related to railroad purposes. These deeds were executed and delivered to the railroad company immediately before it executed the mortgage under discussion. When that document was drawn, the contract rights and franchises were specifically described as covered by the grant, but all mention of the stoek of the terminal company was omitted. Likewise provision for the voting of shares of stoek by the mortgagor, pending default, was left out. Moreover, the terminal stoek was not delivered or assigned to the trustee named in the mortgage, although it had been assigned and delivered to the mortgagoi’. Hence there appears to have been an intentional omission of the stock from the mortgage executed immediately after its acquisition. These circumstances'furnish additional reasons for holding that the railroad company’s mortgage does not cover the stoek of the terminal company. However, when the facts with reference to certain tangible property of the terminal company and the use to which it has been put are taken into consideration, it appears that at least a part of the 'physical assets of the company are fairly within the descriptive terms of the railroad mortgage.

The history of the company shows that it has been used by the railroad company to take title to land, of which some parcels have never been used for railroad purposes, while others have been so used in the past and are so used at this time. The charter of the corporation was amended in 1919 so as to provide for the purchase of lands in the District of Columbia, and the erection of a building thereon to be used as a railroad terminal. As a matter of faet, the terminal company erected a Washington terminal and sold it to the railroad company.

When the railroad company acquired the stoek of the terminal company in 1911, the only property owned by it was improved and unimproved real estate, all of which had been acquired before 1908, and none of which was used for railroad purposes. In 1912, some of this property was sold, and in 1912-13, land in Washington was purchased, the funds for which were borrowed in part from the railroad company. This property was bought for the erection of a freight station to he sold to the railroad company, but the land was found to be unsuitable and was subsequently ■ sold át a profit. Part of the purchase price was secured by mortgage of which an unpaid balance still belongs to the terminal company.

In addition, the company now owns about $6,000 worth of land, none of which is used for railroad purposes. It also owns that portion of the line of railroad formerly belonging to the Baltimore & Annapolis Short Line Company which extends from Shipley northwardly to the city of Baltimore. The Short Line Railroad was operated as an independent railroad until 1921, primarily for passengers, but also for freight from Annapolis to Baltimore. Its track extended • from Annapolis to a point near Baltimore city, and thence over the lines of the Baltimore & Ohio Railroad to that railroad’s terminal in the city. At or near Shipley, a point six miles south of Baltimore, the Short Line Railroad was in close proximity to the line of the Washington, Baltimore & Annapolis Railroad, the defendant company. In 1921, the Short Line Railroad Company abandoned operations and entered into an agreement with the defendant for the operation of the Short Line trains from Shipley to Baltimore over the defendant’s tracks into its terminal. At the same time, all the property and franchises of the Short Line from Annapolis to Shipley were sold to the defendant railroad, subject to the lien of two mortgages previously executed; while the Short Line Railroad, north of Shipley, was sold and conveyed to the terminal company. The liens of the mortgage of the Short Line Railroad Company on the last-mentioned section of its road were released by the trustee named in the mortgages on the ground that the property was considered no longer necessary or desirable for use in connection with the railroad. The public service commission of Maryland also approved the abandonment of the use by the Short Line of that part of its road north of Shipley.

The Short Line Railroad received no cash for its property, but acquired the right to use the track of the defendant railroad from Shipley to Baltimore and the latter’s terminal in that city, and the defendant railroad company guaranteed the payment of the Short Line’s mortgages. In short, the consideration for the Short Line’s property was given by the defendant railroad company, hut that part of the line north of Shipley was nevertheless conveyed by deed to the terminal company, which company gave its note to the defendant railroad company in the sum of $200,000 in payment for the following properties: (1) The Short Line Railroad north of Shipley at $150,000; (2) a substation at Linthicum (since conveyed to the defendant) at $30,000; and (3) the capital stock of the Maryland Development & Realty Company at $20,000. Of this total of $200,000, $140,000 is still due by the terminal to the railroad company.

Since these conveyances were made in 1921, the only trains from Annapolis to Baltimore over the Short Line have run over the defendant's track from Shipley to Baltimore, and no passenger trains have been run over the Short Line between Shipley and Baltimore. However, the north portion of this part of the Short Line, comprising about four miles out of six, has since been continuously used by the defendant railroad company for the storage of cars and also for the interchange of freight traffic with the Baltimore & Ohio Railroad Company and with the Western Maryland Railroad Company. The defendant company maintains the property but does not pay rent or any other charge therefor, nor does it receive or charge any interest on the balance of the demand note due to it by the terminal company.

From this description, it is clear that no part of the property of the terminal company is used for railroad purposes except that part of the Short Line Railroad between Shipley and Baltimore, and that this part has since been continuously used by it for railroad purposes. Consequently, it falls within the express description of other property used in connection with the operation of its terminals and lines of railroad, and is subject to the lien of the mortgage. No further discussion is needed to demonstrate that the property in fact belongs to the defendant railroad, and that the retention of legal title by the terminal company, for purposes of convenience, does not affect the real character of the situation. The shares of stock of the terminal company and its other real estate have no part in railroad operations, and are held by the railroad company free from the lien of the mortgage; but the short line north of Shipley, in contemplation of a court of equity, is held subject to that lien, and such corporate action should be taken as may be necessary to effect a conveyance of the property to the trustee subject to the terms and conditions of the mortgage.

The only other property owned by the terminal company is the capital stock of the Maryland Development & Realty Company consisting of 400 shares of the par value of $50 each, which it acquired in 1921. The Maryland company was incorporated for the purpose of dealing in real estate in 1907 and now owns land of the book value of $15,799.16, adjoining the railroad terminal at Annapolis. The Maryland company owns other real estate of the value of $2,300. The land adjoining the defendant’s terminal at Annapolis is used by the defendant as a sort of public square and approach convenient and conspicuous, but not indispensable to the terminal. The taxes on it are paid by the railroad company. This land is also held in equity subject to the mortgage lien, and formal conveyance to the trustee should be made.

A decree will be signed in accordance with this opinion.