author: WOOLSEY, District Judge.

text:
    HARRY PROCHASKA, Inc., v. CONSOLIDATED LITHOGRAPHING CORPORATION et al. GEORGE SCHLEGEL, Inc., v. SAME.
    District Court, S. D. New York.
    July 16, 1931.

      Stern & Reubens, of New York City (Benjamin H. Stern and Raymond Reubens, both of New York City, of counsel), for defendant Consolidated Lithographing Corporation, Inc., and other defendants.
    Moss, Marcus & Weis, of New York City (Isidor Wels, of New York City, of counsel), for defendant Steiner, and other defendants.
    Henry Ward Beer, of New York City, opposed.
   WOOLSEY, District Judge.

I deny requests for particulars mentioned in paragraphs Nos. 1a, 1b, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11a, 11b, 12, and 18 of the motion papers.

I grant the request for particulars with regard to the damages suffered by the plaintiffs mentioned in paragraphs Nos. 11c, 13, 14, 15, 16, and 17 a and b, and 19 of the motion papers.

I. This is an action at law brought under the Sherman Anti-Trust Act (15 USCA §§ 1-7,15) alleging a conspiracy in restraint of trade by the several defendants, and involves a claim for a recovery of triple the amount of damages suffered by the plaintiffs owing to said conspiracy.

In approaching the question of a bill of particulars demanded in such an action, there are many aspects of the situation to be considered.

The complaints in these cases are, I think, very full in their allegations, and this motion is, apparently, made primarily for the purpose of precluding the plaintiffs in their proofs, and not in order to prevent surprise to the defendants.

We must remember that in Swift & Co. v. United States, 196 U. S. 375, at page 395, 25 S. Ct. 276, 279, 49 L. Ed. 518, Mr. Justice Holmes, in dealing with a criticism of the complaint in equity brought under the Sherman Anti-Trust Act as not being sufficiently definite, said: “The general objection is urged that the bill "does not set forth sufficient definite or specific facts. This objection is serious, but it seems to us inherent in the nature of the ease. The scheme alleged is so vast that it presents a new problem in pleading. If, as we must assume, the scheme is entertained, it is, of course, contrary to the very words of the statute. Its size makes the violation of the law more conspicuous, and yet the same thing makes it impossible to fasten the principal fact to a certain time and place. The elements, too, are so numerous and shifting, even the constituent parts alleged are, and from their nature must be, so extensive in time and space, that something of the same impossibility applies to them.”

These two causes, however, are actions for large sums of money brought at law and triable by a jury and, consequently, the question of surprise has to be taken into consideration, and the defen/dants should be adequately advised of such of the plaintiffs’ claims as are wholly within plaintiffs’ knowledge, for, in a jury trial, the somewhat sedate procedure of an equity case under the Sherman Anti-Trust Act is not possible.

The question, therefore, is where the line should be drawn.

II. It has seemed to me, after reflection on the instant cases, that whilst it is perfectly appropriate for the plaintiffs to be required to show how the alleged conspiracy affected them in its exterior relation, it is precluding them too much in cases like these to ask them to give particulars as to what may be appropriately called the domestic affairs of the conspiracy, or particulars as tc- the relation between the conspirators and other persons than the plaintiffs. Cf. Locker v. American Tobacco Co. et al. (D. C.) 194 F. 232, 234, and same case on reargument (D. C.) 200 F. 973, 975, 976.

I have, therefore, approached the items of particulars requested by the defendants with this general principle in mind, and, in allowing or denying the particulars asked, have endeavored, as nearly as may be, to proceed in accordance with it.

Accordingly, I deny all the particulars, except those dealing with the damages claimed by the plaintiffs.

I do not think that the views expressed on damages in Story Parchment Co. v. Patterson Parchment Paper Co., 282 U. S. 555, 51 S. Ct. 248, 75 L. Ed. 544, although it was an action at law under the Sherman AntiTrust Act in which triple damages were claimed, changes the rule for bills of par-’ ticulars so wisely laid down by Judge Ward in Locker v. American Tobacco Co. et al., (D. C.) 194 F. 232; Id. (D. C.) 200 F. 973.

Damages are a most important element in actions in tort suck as these, and the same burden of proof in respect of them is laid on the plaintiff as in respect of the merits of the cause. Furthermore, proof of damages has to be made before the jury and dan-not be postponed and heard by a master, as in an equity or admiralty case.

It is reasonable, therefore, that the defendants should be apprised, as requested, in the particulars allowed, of the plaintiffs’ claim for damages.

The information bearing on damages which is requested in paragraph 18 is, however, denied because it deals solely with the intrastate business of the plaintiffs which is not relevant here. Cf. American Can Co. v. Ladoga Canning Co. (C. C. A.) 44 F.(2d) 763, 770.

Settle order on two days’ notice.


source: Caselaw Access Project

author: WILLIAM C. COLEMAN, District Judge.

license: Public Domain

text:
    DOUGHNUT MACH. CORPORATION v. DEMCO, Inc., et al. SAME v. JOE-LOWE CORPORATION et al.
    Nos. 1616, 1697.
    District Court, D. Maryland.
    July 1, 1931.

      See, also, 39 F.(2d) 132; 42 F.(2d) 291.
    Eraley & Paul and Prank B. Fox, all of Philadelphia, Pa., and Adams & Hargest, of Baltimore, Md., for plaintiff.
    Edwin F. Samuels, of Baltimore, Md., for defendants.
   WILLIAM C. COLEMAN, District Judge.

These two suits involve alleged infringements of five patents covering machines for the automatic frying of doughnuts. Pour patents are involved in suit No. 1616, namely, Tomlinson patent, No. 1,320,662, filed March 15, 1918, issued November 4, 1919; Sherman and Morris, No. 1,414,713, filed June 7, 1919, issued May 2, 1922; Bergner patents, No. 1,492,541, filed October 29,1919, issued April 24, 1924, and No. 1,665,017, filed July 10, 1919, issued April 3, 1928. The remaining patent is involved in suit No. 1697, which was brought by supplemental bill, and, although heard separately, by stipulation the material part of the evidence in suit No. 1616 was brought into the second suit. This patent is to Nye, No. 1,599,916, filed March 7, 1924, issued September 14, 1926.

Plaintiff company is a large manufacturer of automatic doughnut making machines and special flours. It appears from the evidence that three of the defendants, namely, the Joe-Lowe Corporation, Demeo, Inc., and Nye-Mosher Manufacturing Company, are closely interrelated in the manufacture also of automatic doughnut making machines and in the sale of flour; and also that the Joe-Lowe Corporation is in fact the selling agent for Demeo, Inc., Nye-Mosher Manufacturing Company, and for Nymeo Doughnut Machine Corporation, which latter company succeeded to the business of the Nye-Mosher Manufacturing Company in 1929. All three of these defendant companies have interlocking directors and officers, with the same office facilities in New York City, their principal place of business, and all have co-operated in selling the machines manufactured by the Nye-Mosher Manufacturing Company, Dem-eo, Inc., and Nymeo Doughnut Machine Corporation, in connection with flour manufactured by the parent company, namely, the Joe-Lowe Corporation. It is in evidence that various machines alleged to infringe were sold and at other times given away in connection with contracts for flour. The remaining defendant, namely, the E. H. Koes-ter Bakery Company, a Baltimore concern, is joined as defendant on the ground that it has participated in the alleged infringement by owning and operating in its bakery two of the machines in suit.

Doughnuts, crullers, or sticks, as they are variously called, depending largely upon their shape, consist of specially prepared dough, fried in grease. The automatic frying of doughnuts, which, as appears from the evidence in these eases, has become a very extensive, profitable business, as well as the advantages to be derived from this form of cooking as opposed to the more primitive methods, may best be understood by a consideration of the effect of the hot grease upon the raw dough. When the raw dough is placed in the hot grease, it immediately sinks, creating gases within the dough which cause it to expand, so that it becomes buoyant and tends to rise vertically to its point-of deposit in the hot grease. The automatic machines may all be said to have three main objects, to be accomplished mechanically: First, to form and deposit the piece of raw dough in the grease; second, to pro°gress it from the point of deposit to the point where its cooking is completed; and, third, to take it out of the grease when the cooking is completed.

These automatic machines may be divided into three classes: First, the flotation type, which frys the doughnut while it'floats.on the surface of the grease, thus requiring that the doughnut be progressed, turned over about the middle of the course of its cooking, progressed again until the cooking is completed, and then taken out of the machine. Second, the submerged type, which progresses the doughnut while submerged throughout the entire period of cooking. Third, the combination flotation and submerged type, which may or may not embrace a device for turning over the doughnut in the course of the cooking process, and which provides for a period of floating and progressing of the doughnut on the surface of the grease so that, in its semfeooked state, it can expand during the flotation interval or intervals, which are sometimes described in the art as “breathing spaces,” since, if continuously submerged, the doughnut loses its ability fully to expand, without which the dough becomes more tough and consequently less-edible. Also, by this combined method, the proper amount of grease absorption is better controlled.

Because of the number of plaintiff’s patents that are here involved and the variations in the types of machines embraced thereunder, it is not possible to summarize them by a composite description. Suffice it to say that, with some exceptions, hereinafter noted, the basis of plaintiff’s entire claim rests upon the turnover device covered by its several patents, which device, it contends, defendants are infringing by their machines which, it claims, perform, for all practical purposes, although in a somewhat different manner, the same function covered by the broad claims in plaintiff’s patents

Defendants’ machines here in issue are of two main types, designated throughout the litigation, and hereinafter described, as types A and B. Both types have long rectangular troughs with automatic conveyors, also an automatically operated dough-former at one end, and dough-depositor at the other end of the trough. Tested by the heretofore given classification; defendants’ type A machine is a combination flotation and submerged cooker. It consists of a cooking vat, or trough, some seven feet long and two feet wide. At one end of the vat are two dough cutters or formers. From these, to the point where the finished doughnut is taken out of the liquid by an ejector-conveyor, is a distance of six feet. Beneath the cutters is a small conveyor belt completely submerged, which carries the raw dough, while submerged, to a second conveyor, which engages the dough as it rises from the first conveyor and carries it forward. This second convey- or, which is some twelve inches long, with its lower side slightly submerged, keeps the dough submerged and propels it forward into an area where it comes to the surface- and floats along for some six inches, and is then engaged by a continuously operating rotary pusher, having a feathering paddle which enters the liquid in a radial position and leaves it in a rectangular position, turning the doughnut over while partly floating and partly submerged. Thereafter the doughnut passes in a floating position over another area of some twelve inches, until it is engaged by a third conveyor some eighteen inches long, inclined downward, the funetioii of which is to hold the doughnut completely submerged until cooked uniformly all over, when it is again allowed to rise to the surface and float freely for the space of some ten inches, until it is engaged by an ejector-conveyor, which removes it from the trough, the cooking process being complete. The doughnut is propelled from one end of the tank to the other by the conveyor belts, by the movement of the cooking liquid, and by the paddle mechanism.

Defendants’ type B. machine also falls within the third class, namely, it is a combined flotation and submerged cooker. It is made in several forms, but basiely it consists of a hopper or cutter at one end of the cooking vat or trough, from which the dough drops and sinks to a conveyor completely submerged, by which it is moved for a distance of from three to live inches. The dough then rises and encounters the under side of a second conveyor, which is slightly submerged in order that the dough may be kept beneath the surface. After release from this conveyor, the doughnut is allowed to float freely for about two feet, until it encounters the under side of a third conveyor, one end of which is inclined several inches below the surface of the liquid and thereby submerges the doughnut for a distance of some fifteen inches. When released from this third conveyor, the doughnut rises to the surface and encounters a revolving two-vane paddle wheel or pusher, each vane four inches in width and so adjusted as to be submerged about one inch. When these vanes encounter the doughnut, they shove it along-on the surface of the grease and it floats for a distance not exceeding approximately ten inches, until it encounters a fourth conveyor of approximately the same length as the third conveyor, which carries the doughnut submerged for some twelve inches or more, when it again rises to the surface and floats freely until lifted out of the cooking liquid by an ejector-conveyor. The doughnut is propelled through this process of cooking- from one end of the tank to the other by the conveyor belts, by the movement of the cooking liquid, and also in part by the paddle mechanism.

The principal form of defendants’ type B machine, of which plaintiff complains, is constructed with a wire mesh around the third conveyor, the effect of which is to turn over the major portion of the doughnuts. The evidence of the various witnesses is extremely conflicting as to the extent of the turnover; it varying from 20 to 97 per cent. The inspection of a machine of this type afforded to the court indicated that at least a large proportion of the doughnuts were turned over.

Defendants resist the claim of infringement on two grounds: (1) Invalidity of plaintiff’s patents because anticipated by the prior art; and (2) denial. Summarized, tiie first ground is that none of the claims of plaintiff’s patents in suit presents any new device because readily capable, even if not intended, by general application of the art as already disclosed, of cooking, not merely .doughnuts, but various kinds of food in a liquid medium. The second ground is that defendants’ type A machine does not infringe the Tomlinson or any of the other patents, because they must be construed as not only limited to a turnover device, but also to a surface or flotation cooking type of machine, in which the doughnuts are first completely browned on one side, turned over, and completely browned on the other side; and that, as to type B, its turning over of the doughnuts is of no advantage and merely accidental. In other words, that the performance, incidentally and without advantage, in defendants’ machine, of the primary function of plaintiff’s machine, is not infringement.

In the early stages of these suits, this court (Judge Soper) twice had before it, on application for a preliminary injunction, both the A and B type of defendants’ machines in the forms heretofore described. 39 F.(2d) 132; 42 F.(2d) 291. In the first instance, an injunction was denied because of the laches of plaintiff respecting defendants’ type A machine. However, Judge Soper found that it did infringe, saying, page 134 of 39 F.(2d): «* * * The machines of Type A infringe the first claim of the patent in suit. This conclusion is reached notwithstanding the contention of defendants that in type A machine the cooking is in part by the submerged rather than the flotation method described in the patent; that the doughnuts are turned over inside the grease instead of in the air as in the machine illustrated by the patent, and that the length of time for the frying operation is predetermined with more exactness in the method described in the patent than is possible with the machine under discussion. Nor is there any substance, in the opinion of the'eourt, in the fact that the paddle wheel by which the doughnuts are turned over in the defendants’ machine moves in the same direction as the current of flowing grease, while in the infringing machine in the ease in the Ninth Circuit [Bake-Rite Mfg. Co. v. Tomlinson, 16 F.(2d) 556] the paddle wheel moved in the direction opposite to that of the flowing grease. It is doubtless true that in the defendants’ machine in the pending case the jpaddle wheel assists the acceleration of moving current, but, since the paddle wheel also turns over the doughnuts, infringement is made out.”

At this first hearing, defendants’ type B machine was not in evidence equipped with wire mesh on any of theveonveyor belts, but with a paddle wheel, and the court said, page 134 of 39 F.(2d): “The adjustment is such that the blades of the paddle are not submerged to a sufficient depth below the surface of the liquid to turn the doughnuts over, and hence there is .no application of the gist of the Tomlinson method.” But the Court added, page 134 of 39 F.(2d), “it is, however, clear that the machine as described by the witnesses would infringe if a slight change were made whereby the axis upon which the wheel turns should he lowered so that the blades of the paddle would penetrate sufficiently below the surface of the liquid to turn the doughnuts over as they pass.”

At the second hearing, this court adhered to its original finding with respect to defendants’ type A machine, but, being presented with evidence that type B machine was used with the wire mesh, granted a preliminary injunction against same, saying, page 292 of 42 F.(2d): “Expert observers on behalf of the plaintiff have filed affidavits that the machine in question in operation turns over as much as 60 per cent, of the doughnuts in the course of manufacture, and defendants’ expert swears that in the operation of the machine, the percentage turned over at times will be over 50 per cent., and at other times, less than this amount. It seems to be agreed that the number of doughnuts turned over depends upon certain variable conditions, more or less subject to the control of the manufacturer, such as the temperature of the grease, the level of the cooking liquor, the size and quality of the dough and doughnuts, etc. It was the opinion of the plaintiff’s experts that the turnover of the doughnuts was due to the use of the wire mesh covering the moving belts, but defendants’ expert takes the position that the turnover takes place in the machine described irrespective of the use of the wire mesh. In either ease, there is a substantial infringement of claim 1 of the Tomlinson patent, No. 1,-320,662, interpreted by the Circuit Court of Appeals of the Ninth Circuit in Bake-Rite Mfg. Co. v. Tomlinson, 16 F.(2d) 556. Therefore the court is of the opinion that the plaintiff is entitled to an injunction pendente lite, so far as machines of the form B construction are concerned.”

It appears that defendants, as a result of the above findings by this Court with respect to the infringing character of the type A machine, removed the paddle wheel turnover and added another conveyor. But plaintiff claims that defendants have merely repeated the same infringement by equipping its type B machine with wire mesh on the third eon-' veyor, and that the complete evidence presented to the court since the preliminary hearing fully corroborates plaintiff’s contention that both types of defendants’ machines infringe.

We will now address ourselves to a consideration of each of the five patents in suit in the light of both grounds of defense, namely (1) invalidity because of anticipation by the prior art; and (2) noninfringement.

Tomlinson Patent.

First as to the Tomlinson patent, claims 1 and 2 only are in suit. Claim 1 is as follows :• “In an apparatus of the character described, a receptacle for hot grease, mechanism for turning doughnuts or the like over after they have been in said receptacle for a predetermined length of time, and mechanism for thereafter removing them after a further predetermined length of time'.” In Bake-Rite Mfg. Co. v. Tomlinson et al., 16 F.(2d) 556, 557, the Circuit Court of Appeals for the Ninth Circuit affirmed the District Court in holding that this claim was valid and infringed by a device which embodied “the substance of the invention of the Tomlinson patent,” and which is described by the court, pages 557, 558 of 16 F.(2d), as follows: “A trough or channel of uniform width throughout its length; mechanism for turning doughnuts after they have been in the receptacle for a predetermined length of time; co-acting parts combined which propel the doughnuts through the trough at a rate of speed that they will arrive at the turnover device at a time subsequent to deposit in the trough, and will thereafter be conveyed from the turn-over device to the conveyor, where they are to be removed after a further period of time. Defendant has constructed his trough in spiral form, but his purposes and objects are the same as plaintiff’s.”

Claim 2 of Tomlinson is as follows: “In an apparatus of the character described, a receptacle for hot grease, means in one end cff the receptacle for carrying doughnuts or the like through that end of the receptacle and then removing them therefrom, and means in the other end of the receptacle for carrying the doughnuts or the like through that end and delivering them to the aforesaid means in an over-turned condition.” The Tomlinson structure is quite simple. There are two conveyors completely immersed in the hot grease, except for parts of their vanes. Each conveyor has an upwardly inclined portion; that of the first conveyor being located substantially in the middle of the „ tank, and that of the second conveyor being at the right-hand end of the tank. The conveyors are driven in the same direction. The doughnut is laid upon the left-hand end of the first conveyor, is carried through the grease at such speed as to insure its proper browning on the under side, whereupon it rides up the inclined portion of this first conveyor, from which it is dropped onto the left-hand end of the second conveyor, being turned over as it falls. Thereupon, this second conveyor carries the doughnut, now inverted, through the grease as did the first conveyor, until the other side is properly browned, when it rides up the inclined portion of the second conveyor and is discharged from the opposite end of the tank or vat from which it entered.

Respecting the defense of prior art, defendants rely upon patent to Varian, No. 1,086,248, issued February 3, 1914, and patent to Snyder, No. 1,031,481, issued July 2, 1912. Varian was also relied upon in the Bake-Rite Case, supra. Its function may be adequately described by quoting from that court’s opinion, page 557 of 16 F.(2d): “Varian showed means for predetermining the time during whieh an article being cooked is progressed through the circular channel by the flow of the cooking liquid. His device was for vegetable slicing and cooking, especially Saratoga chips, but Varian failed to show any means to turn over the article being'cooked from one side to the other at a given time during the cooking operation. * * * The matter is clarified by the testimony that in Varian’s patent the paddle shown, when brought into contact with a doughnut, would mutilate it. Sometimes it would turn the doughnut over, but at other times the doughnut would stick to the blades and be carried around and around for many times.” The testimony in the present proceeding, and the reproduction of the Varian device which the court viewed in operation, confirm this finding, to the extent that at times doughnuts were mutilated by the blades, were turned over, or that both of these things occurred.

As for the Snyder patent, it is obviously not relevant because it has nothing to do with cooking, but embraces a machine for assorting corks; its object being to provide an improved means for assorting and floating corks by feeding them from one endless belt to another at a lower level.

As to the defense of noninfringement, we conclude that this is equally untenable, because it is uneontradicted that both the feather paddle blade on defendants’ type A machine and the wire mesh on their type B machine turn the doughnuts over, and therefore, even assuming that such turnover in its actual operation is irregular, accidental, and nonbenefieial in the cooking process, it is, in fact, a function of the Tomlinson device which is entitled to complete protection under the broad claims when read, as they must be, in the light of the specifications. It is futile to attempt to rest a valid distinction upon the variations in the flotation, submerged, or partly submerged cooking periods that exist in defendants’ machines and in Tomlinson’s. The use of the phrase “predetermined time” in claim 1 of Tomlinson should not be given any such artificial meaning. As was said in the Bake-Rite Case, supra, page 558 of 16 F.(2d): “Inasmuch as defendant’s machine is intended to produce a doughnut satisfactory for commercial market, the current of liquid flowing through channels must operate to predetermine the time during which the object floating will travel therein, or, in other words, the time consumed in traveling the course must equal the time necessary to cook the doughnut properly.” In short we are fully prepared to conclude on the evidence in the present case, that both of defendants’ devices embody the substance of the invention of the Tomlin-son patent, and therefore infringe. It is not sufficient that a baffle plate, fixed on the shaft, has been substituted for the paddle-pusher on defendants’ type B machine for the purpose of preventing the turning over of the doughnut by the wire mesh, because the baffle, if properly adjusted and revolved, becomes, in effect, a turnover device. Plaintiff has no protection against purchasers of defendants’ machines being thus equipped and operated, and plaintiff is entitled to such protection. Newhall v. B. & O. R. R. (D. C.) 258 F. 650; Engineer Co. v. Blaisdell Canady Co. (C. C. A.) 220 F. 673.

Sherman and Morris.

Coming next to the Sherman and Morris patent, this covers a submerged cooker. Claims 3, 4, and 12 are the ones upon which plaintiff relies. Claim 12 is the broadest, and is as follows: “In apparatus for cooking articles by contact with hot cooking liquor while submerged therein substantially throughout the cooking period, the eombination of conveyor belt means for progressing the articles through the liquor submerged therein, and engaged with such conveyor means by virtue of their buoyancy, and for thereafter elevating the articles out of and above the liquor to a point of delivery; and downward sloping discharge means receiving the articles from the conveyor means.”

It is to be noted that all three of the claims in suit call for submerging the product in the liquid substantially throughout the cooking period. In support of their plea of anticipation by the prior art, defendants rely principally upon the patent to Eagle, No. 529,483, issued November 20, 1894, and patent to Cleveland, No. 1,234,131, issued July 24, 1917. A mere statement of the purpose of the former patent is sufficient to disclose its complete irrelevancy. It has no relation whatever to cooking food, but relates to apparatus for conveying hogs through and removing them from scalding vats. The Cleveland patent, while embracing an apparatus for cooking various food articles, especially for frying fish in oil, has nothing to do with holding articles down against their buoyancy.

As for infringement, we conclude that, a proper construction of all three claims, while perhaps not limiting them to submergence of the article of food for the entire cooking period, nevertheless does presuppose that there shall be no opportunity for “breathing,” as that term is understood where a plurality of conveyors are used. In other words, Sherman and Morris embraces only one conveyor, and, since all of the various machines of defendants claimed to infringe have more than one conveyor, it would be extending too far the Sherman and Morris claims to say they cover defendants’ devices. To do this would virtually be tantamount to saying that these claims were anticipated by Varian and therefore invalid, which Ve do not consider to be the ease.

Bergner Patent, No. 1,492,541.

Five claims of this Bergner patent are in suit, namely, 1, 6, 7, 51, and 58. Summarized, the device as disclosed in varying form in each of these claims is a combined doughnut cutting or forming device, and a cooking deviee, whereby the doughnut is formed and then released intermittently, in definite correspondence and correlation with conveyors which progress the doughnut through the cooking stage. Claims 1, 6, and 51 provide means, or its equivalent, for turning over the doughnut in the course of the cooking. Suffice it, therefore, to quote claim 1, which is as follows: “In apparatus for forming articles such as doughnuts and cooking them with hot liquor, the combination of means for forming raw articles in hollow configuration and releasing them over the liquor to drop in a horizontal position; means for progressing the articles in the liquor; and means for turning over the articles at a point in their progress where they have acquired sufficient stability therefor by cooking.” Of the remaining two claims, namely, 7 and 58, suffice it to quote the latter, which is the broadest, and is as follows: “In apparatus for cooking articles such as doughnuts with hot liquor, the combination of means including a succession of moving engagement members immersed in the liquor for progressing the free doughnuts supported by the liquor; means for introducing the free doughnuts at automatically predetermined definite intervals operating in definitely and automatically maintained correspondence and correlation with the succession of the aforesaid members, to be engaged and progressed by them; and means for ejecting the doughnuts also at automatically predetermined definite intervals operating in definitely and automatically maintained correspondence and correlation with the succession of said members, and with their introduction.”

First, on the plea of anticipation, defendants rely upon Varian, supra, and Wixey, No. 1,265,854, as to claims 1, 7, and 51, and Varian alone as to claims 6 and 58. Enough has already been said respecting Varian to show that it is not applicable. Regarding Wixey, suffice it to say that it covers merely a dough-forming device. If it be argued that what Bergner has done is merely to place in workable combination the old device of the Wixey dough-former with the old device of the Varian cooker, it is, of course, obvious that they are capable of no such correlated workable combination as to produce the result obtained by the Bergner device. The law regards a change as a novelty, and the acceptance and utility of the change as further evidence or demonstration of novelty. It has long been settled that all the elements of a mechanical combination may be old, and yet it may be patentable. Hubbell v. United States, 179 U. S. 77, 21 S. Ct. 24, 45 L. Ed. 95; Leeds & Catlin Co. v. Victor Talking Machine Co., 213 U. S. 301, 29 S. Ct. 495, 53 L. Ed. 805; Diamond Rubber Co. v. Consolidated Rubber Tire Co., 220 U. S. 428, 31 S. Ct. 444, 55 L. Ed. 527; Imperial Bottle Cap & Machine Co. v. Crown Cork & Seal Co. (C. C. A.) 139 F. 312; Ingersoll v. Delaware & Hudson Co. (C. C. A.) 37 F.(2d) 465; Black & Decker Mfg. Co. v. Baltimore Truck Tire Service Corp. (C. C. A.) 40 F.(2d) 910.

As was said in the Hubbell Case, supra, which was concerned with an improvement in metallic cartridges, page 86 of 179 U. S., 21 S. Ct. 24, 28: “Nor can we aeecpt the contention that these two combinations are identical because they are intended to obtain the same result. What we have to consider is not-whether the end sought to be effected is the same, but whether the devices or mechanical means by which the desired result is secured are the same.” Again, in Diamond Rubber Company Case, supra, the Supreme Court, in dealing with a patent for an improvement in rubber tires, said, page 435 of 220 U. S., 31 S. Ct. 444, 447: “Knowledge after the event is always easy, and problems once solved present no difficulties, indeed, may be represented as never having had any, and expert witnesses may be brought forward to show that the new thing which seemed to have eluded the search of the world was always ready at hand and easy to be seen by a merely skilful attention. But the law has other tests of the invention than subtle conjectures of what might have been seen and yet was not. It regards a change as evidence of novelty, the acceptance and utility of change as a further evidence, even as demonstration.”

The guiding principle is again exceedingly well stated in the Imperial Bottle Cap & Machine Company Case, supra, which had to do with a bottle stopper patent. There the Circuit Court of Appeals for this circuit said, page 320 of 139 F.: “The finding in the old devices, one portion here, one in another, and so on, should not defeat a patent for the combination, which is only truly anticipated by a prior device having identically the same elements, or their mechanical equivalents, cooperating to produce the same results. Even if any of them nearly approached the complete invention, if they were not operative or available there would be the presumption that they were not identical with one of admitted superiority, the merits and utility of which are proved by general use. Granting that the elements were known, something before unknown had to become known. A new operative means had to be devised, by which what was known could be made available, and a creative or inventive faculty had to be invoked and exercised to discover the availability of a mode of application by which forces already known could be so united as to effect results desired, and theretofore sought in vain. The unknown and untried factors had to be united with the known factors, and the combination of these elements into a practical operative means, and its embodiment into a concrete thing, constitute invention.”

Turning now to a consideration of whether or not defendants’ machines infringe any of these five claims of the Bergner patent, both types of defendants’ machines have (1) “a succession of moving engagement members for progressing the articles in the liquor”; (2) a cutter above the liquor to form and release the articles “intermittently to drop directly ip a horizontal position”; (3) they both cause the doughnuts to be supported by the liquor during certain stages in their progress through the cooking; and (4)‘ both provide means for ejecting the doughnuts by synchronized arrangement with the other moving parts of the device. Thus it is clear that both types, regardless of the inclusion of the turnover devices, infringe claims 7 and 58.

Claims 1 and 6, which provide for a turnover or its equivalent, are also clearly in-' fringed by defendants’ type A machine, and also by defendants’ type B machine with a wire mesh on the third conveyor, or by lowering the shaft of the paddle pusher.

Lastly, respecting claim 51, we find a new element in this claim in that the power is provided “from beneath the receptacle.” The application of the main driving shaft on defendants’ machine being on a lower level than the tank or vat, the device is to be taken as substantially similar to that called for in claim 51.

A good deal was said by various witnesses for the defendants about the difference in .correlation of the various progressive movements in the defendants’ machines and in the Bergner machine. In short, it seems to be contended that the same form 'of correlation must be adopted in order to infringe the Bergner patent. However, we consider this to be too great a refinement of the language contained in the Bergner claim. While the word “synchronized” is not used in any of them, assuming that it is a proper substitute for the words or phrases that are used, we consider that all that is meant is that each movement forming a part of the progressive cooking of the doughnut must be harmonized with every other movement in the process, to the end that the doughnut will reach the grease at exactly the right moment, neither stay too short nor too long a time in any one spot, whether immersed or afloat, whether on one side or the other, and will thus reach the end of its journey through the vat and be taken out a finished product at exactly the right time to insure its being the most toothsome morsel of its kind that can be commercially produced.

Bergner Patent, No. 1,665,017.

[S] Three claims under this patent are in suit, namely, 12,18, and 19, which are as follows: “In apparatus for cooking articles such as doughnuts, afloat in hot cooking liquor, means for introducing the articles, a rotary paddle for turning over the articles, and means for imparting intermittent flipping movement to the paddle to insure inversion of the articles.” No. 12. “In a doughnut cooking machine the combination of a vessel to hold the heated liquid, means to circulate the liquid in said vessel, and a revoluble grid or grids to turn over the doughnuts.” No. 18. “In a doughnut cooking machine the combination of a vessel to hold the heated liquid, means to circulate the liquid in said vessel, and an intermediate revoluble grid or grids to turn over the doughnuts.” No. 19.

First, with.respeet to the plea of anticipation by the prior art, Varían, supra, is relied upon. Also patent to Comb and Peavey, No. 133,389, issued March 19,1920. For reasons heretofore given, the Varían disclosure cannot be taken as an anticipation. Quoting from the specifications of the Comb and Peavey patent: “T-he invention relates to machines for cooking doughnuts and the object is to provide a machine for cooking or frying doughnuts in grease or deep fat without manual handling of the doughnuts. Another object is to provide a machine of this class, in which the doughnuts will be conveyed through hot grease contained in a receptacle and will be turned over during their progress through the receptacle so as to be uniformly cooked on both sides.” Comb and Peavey functions as follows: The doughnut is carried first by a conveyor belt to, and dropped into the receiving end of the hot grease receptacle, where it is picked up by another conveyor with fingers and carried, submerged, by these fingers, to a paddle wheel located in the middle of the receptacle. The blades of this paddle wheel push the doughnut down and turn it over by carrying it. around through 180 degrees, whereupon, still submerged, it is engaged by the fingers of another conveyor similar to the second one above described, which carries it to the delivery end of the receptacle, where it is lifted and deposited upon a fourth conveyor belt which completes the process by carrying the doughnut away from the receptacle. While quite similar to the Bergner device, it cannot be said to anticipate, because (1) it provides no means for circulating the liquid as required by claims 18 and 19 of Bergner, the Comb and Peavey conveyors all being entirely above the surface of the liquid except for the small fingers, which cannot appreciably circulate the liquid within the contemplation of Bergner; and (2) the Comb and Peavey paddle wheel revolves at even speed, and therefore provides no intermittent flipping movement in the turnover, as required by claim 12 of Bergner.

It appears that the Bergner application was in interference with the Lindsey application. The latter succeeded before the Patent Office, and this resulted in the issuanoe of the Lindsey patent, No. 1,659,383. Nevertheless the Patent Office allowed the present claims to Bergner, and we think rightly, because the respective turnover devices are essentially different; Lindsey’s consisting of two small superimposed belts moving in opposite directions, from one of which the doughnut falls to the other and turns over by gravity in so doing, whereas Bergner employs the rotary paddle or grid. If, as stated by plaintiff’s witness Wadsworth, the Lindsey device is not in fact inoperative, it would appear to be commercially impractical, as evidenced by the fact that the Lindsey-Bake-Bite machine, involved in the litigation in the Ninth circuit was fitted with the revolving paddle blade turnover of Bergner. [10] Turning to the question of infringement, we agree with plaintiff’s contention that one of the three claims of Bergner in suit is infringed by defendants’ type B machine, namely, claim 12, but claims 18 and 19 are not infringed for the following reasons: Defendants’ type A machine has all of the elements of claim 12, the feathering blade corresponding substantially by construction and functioning to the paddle wheel, and the requisite “intermittent flipping movement” being imparted by means of an eccentric cam connected with the feathering blade. However, since “a revoluble grid or grids to turn over the doughnuts” are a basic element of claims 18 and 19, we must hold that they are not infringed by defendants’ machines because neither type embraces a grid as that term is, we think, to be understood in the art, namely, a griddle, that is to say, a receptacle or tray of grating construction, which is not sufficiently simulated by a mere perforated blade, as in defendants’ type A machine, or by the wire mesh covering on the conveyor in defendants’ type B machine.

Nye Patent.

There is only one claim (No. 4) of this patent in suit, and it reads as follows: “In an apparatus of the class described the combination of a tank for holding a cooking fluid, means adjacent one point for feeding uncooked doughnuts into said fluid, means for holding said doughnuts temporarily in spaced relation and for removing them away from 'the feed point, other means for moving said doughnuts, said first mentioned moving means terminating short of the second mentioned means, thereby providing a gap which enables the doughnuts by flotation to distribute themselves laterally before being brought under the influence of the second moving means.”

It will be seen that the distinction over claims in other patents hereinbefore discussed is the provision for a space between the first two and the third conveyor in which the doughnuts are allowed to rise to the surface, for the purpose of distributing themselves laterally before being again submerged by additional conveyors.

Turning to the plea of anticipation by prior art patents, defendants rely primarily upon Sherman and Morris, and Varían, both heretofore considered, and also upon Dunn, No. 1,440,663. Enough has already been said respecting the first of these patents. As for the third, it is sufficient to point out that it is designed without permitting any “break” or flotation period in the course of the doughnut’s progress through the grease. In short, in none of these three patents, nor in any that have been disclosed, is there a means provided whereby the doughnut is first held submerged, then released to float in a gap between the conveyors, and then again submerged by another conveyor. It appears that it was this particular combination of the elements disclosed in the Nye, and undisclosed in the prior art, which led the Patent Office to grant Nye’s claim, and we think rightly. Defendants infringe, because this gap is provided in both their A and B machines; in both instances a flotation period being provided after the doughnuts’ original submergence upon leaving the second conveyor. Nor can defendants’ claim of prior invention by Nye, by virtue of the machino which he admitted having manufactured in 1921 or 1922, as evidenced by a rough drawing produced in evidence, be of any avail to them, first, because in this sketch the gap or flotation period is lacking; and second, because Sherman and Morris, issued in 1922, antedates the Nye manufacture.

In view of what has just been said, it becomes unnecessary to decide whether plaintiff must also succeed upon another and quite independent ground, namely, whether defendants can now be permitted to attack the Nye patent by virtue of their prior conduct. It appears that on December 6, 1927, that is, about a year after the Circuit Court of Appeals for the Ninth Circuit held the Tomlinson patent valid and infringed by the Bake-Rite device, defendants procured a license from Nye to operate under the patent now in issue. On November 20, 1928, they were given notice of infringement of plaintiff’s patent, including the patents here in •suit, and thereupon, on February 19, 1929, they gave notice to Nye of cancellation of the license effective sixty days thereafter, upon being advised by counsel that they were infringing plaintiff’s patents. It appears, however, that defendants, after cancellation of their license, continued to make and to sell their type A and type B machines. While, generally speaking, a license lawfully •canceled relegates the parties to their status before the granting of the license, there are ■exceptional cases, but, as has just been said, it has become unnecessary to decide whether the rule or an exception is applicable in the present situation. See Hutto Engineering Co. v. Grinder Sales Co. (D. C.) 18 F.(2d) 985.

Summarized finally, defendants’ contention is that, of the five patents in suit, three, namely, Tomlinson and the two Bergner patents, cover strictly the flotation type of mar chine, in which the product, either for the entire cooking period or after it has acquired buoyancy, is floated and propelled along the .surface of the liquid, being turned over positively and definitely at a predetermined point in its progress to brown what has previously been the top side of the doughnut, and that these patents neither describe nor suggest any other method of cooking. As for the two other patents of plaintiffs in suit, Sherman and Morris and Nye, defendants claim that they are limited strictly to a submerged •operation in which the product is held beneath the liquid throughout its progress of •cooking and both sides are browned simultaneously. Defendants urge that none of the claims of these patents can be read on defendants’ structures, because the latter do not suggest imitation and are very much more similar to the prior art. Defendants ►contend that their machines are essentially Submerged cookers which cause the product to be cooked or browned on both sides in one operation so that they need not be turned, and that this, therefore, is not the equivalent of a surface conveyor which causes cooking or browning on one side only so that the product must be turned; further, that a submerging conveyor, the function of which is to submerge the doughnuts so that they can be cooked simultaneously on both sides, but which releases them beneath the fat so that some of them turn in coming to the surface, accidentally and without beneficial effect, is not the equivalent of a mechanical turner, the 100 per cent, operation of which is necessary to a 100 per cent, commercial product. In short, defendants contend that plaintiff’s device and their own perform entirely different functions in a different way; that each is an element of a different combination of which the other elements are .also different, and that the only similarity is in the product or result, which cannot be the subject of a patent. However, with this we cannot agree, because, from what has already been said, even assuming, without deciding, that the turnover function in defendants’ machines is accidental, spasmodic, or irregular, and non-benefieial, as part of the cooking process, the fact remains that it is a function basicly similar to that performed by plaintiff’s machines, and entitled to the protection under the broad claims of their patents. In short, defendants cannot be relieved of their wrongdoing on the ground that, although they have infringed, it has been badly done. Defendants’ counsel has epitomized and made composite their contention by the phrase, used in argument, that defendants’ machines are “lineal descendants of the Varían patent.” Enough has been said to show that this argument is untenable.

In conclusion, it may be added that, • were there any doubt about plaintiff having sustained the burden of proving infringement, such doubt should be resolved in its favor by reason of the commercial utility of its product. It is in evidence that its business on its patented machines has increased in some six years from less than one-half million dollars to approximately three millions. But we are satisfied that plaintiff has sustained the burden of proving infringement except as to claims 3, 4 and 12 of the Sherman and Morris patent and claims 18 and 19 of the Bergner patent, No. 1,665,017, and that defendants have totally failed to sustain the burden which rests upon them of establishing invalidity and anticipation. A de-eree will be entered in accordance with these findings, granting plaintiff the’injunctive relief prayed for. The entire matter of profits and damages to be allowed, including the question of whether plaintiff is entitled, as it claims, to triple damages on account of alleged aggravated and continued infringements, will be deferred, pending reference to a special master to determine and report the profits and damages.


author: CAMPBELL, District Judge.

text:
    Petition of WHEELER et al.
    No. 12419.
    District Court, E. D. New York.
    June 10, 1931.
    Crowell & Rouse (by J. D. Crowell), of New York City, for petitioners.
    Bond, Sehoeneck & King, of Syracuse, N. Y., and Bigham, Englar, Jones & Houston, of New York City, for Nicholas Valentine, appearing specially, etc.
    Higbee & Malpass, of Syracuse, N. Y., for Clarence E. and-Josephine Brown.
    Hayden, Setright & Southwick, of Syracuse, N. Y., for Gertrude K. and Anthony H. Weller, appearing specially, etc.
   CAMPBELL, District Judge.

These are three separate motions made on behalf of different claimants, but all asking for the same relief, to wit, for an order dismissing the petition and vacating the order restraining the further prosecution of the actions against petitioners, and now pending, or intended to be commenced, in tbe Supreme Court of the State of New York, Onondaga County.

The petitioners who reside in the Eastern District of New York were the owners of the motorboat Wheeler Shipyard Hull No. 304, a twin screw motor gasoline launch, approximately 40 feet long, with bridge deck amidships and cabins forward and aft.

On the 24th day of May, 1930, while the boat was being operated by Clarence E. Brown, an employee of the petitioner, and the boat was in the inlet, a small stream flowing into Cayuga Lake, it exploded and it is alleged seriously injured several of those on board. The moving parties herein claim to have been injured by this explosion, and have commenced, or intend to commence, actions against the petitioners in thé Supreme Court of the State of New York, Onondaga County.

After the explosion the boat sank in the inlet, but what was left of it was soon raised and placed on shore.

A few days after the explosion, the wreck of the motorboat in question having been raised, an employee proceeded to dismantle and strip said wreck, destroying the woodwork which had been cracked and shattered, and saving only valuable parts of the wreck.

The boat’s gasoline tanks were broken up and sold to a junk dealer for $10.

That sum, together with wreckage and strippings of the said Hull, were transferred by the petitioners to their shipyard on Coney Island creek and Harway avenue, borough of Brooklyn, in this district, before any action had been commenced against them in the Supreme Court of the State of New York, Onondaga County, in the Northern District of the State of New York, or in any other court, for damages because of such explosion.

The wreck was in the Northern District until it was destroyed, and a small portion of the wreckage and strippings of the said hull, comprising a steering wheel and a set of dishes, still remain in the Northern District of the State of New York.

The accident happened in the Northern .District of the State of New York, and most of the witnesses reside in that district.

The petitioners reside and have their shipyard in the Eastern District of New York, and also have a place of business in the Northern District of New York.

The right to limitation of liability is statutory and is found in sections 4283, 4284 and 4285 of the Revised Statutes, title 46, §§ 183, 184, 185 U. S. C. (46 USCA §§ 183-185), which read as follows:

“§ 183. Liability of owner not to exceed interest. The liability of the owner of any vessel, for any embezzlement, loss, or destruction, by any person, of any property, goods, or merchandise, shipped or put on board of such vessel, or for any loss, damage, or injury by collision, or for any act, matter, or thing, loss, damage, or forfeiture, done, occasioned, or incurred without the privity, or knowledge of such owner or owners, shall in no ease exceed the amount or value of the interest of such owner in such vessel, and her freight then pending.
“§ 184. Apportionment of compensation. Whenever any such embezzlement, loss, or destruction is suffered by several freighters or owners of goods, wares, merchandise, or any property whatever, on the same voyage, and the whole value of the vessel, and her freight for the voyage, is not sufficient to make compensation to each of them, they shall receive compensation from the owner of the vessel in proportion to their respective losses; and for' that purpose the freighters and owners of the property, and the owner of the vessel, or any of them, may take the appropriate proceedings in any court, for the purpose of apportioning the sum for which the owner of the vessel may be liable among the parties entitled thereto.
“§ 185. Transfer of interest of owner to trustee. It shall be deemed a sufficient compliance on the part of such owner with the requirements of this chapter relating to his liability for any embezzlement, loss, or destruction of any property, goods, or merchandise, if he shall transfer his interest in such vessel and freight, for the benefit of such claimants, to a trustee, to be appointed by any court of competent jurisdiction, to act as such trustee for the person who may prove to be legally entitled thereto; from and after which transfer all claims and proceedings against the owner shall cease.”

The Supreme Court has prescribed the procedure to be followed to obtain limitation of liability in admiralty, Rules 51 to 55, both inclusive (28 USCA § 723), and Rules 51 and 54 read as follows:

“51. Limitation of Liability — How Claimed. When any ship or vessel shall be libeled, or the owner or owners thereof shall be sued, for any embezzlement, loss, or destruction by the master, officers, mariners, passengers, or any other person or persons, of any property, goods, or merchandise, shipped or put on board of such ship or vessel, or for any loss, damage or injury by collision, or for any aet, matter or thing, loss, damage or forfeiture, done, occasioned or incurred, without the privity or knowledge of such owner or owners, and he or they shall desire to claim the benefit of limitation of liability provided for in. the third and fourth sections of the aet of March 3,1851, entitled 'An act to limit the liability of shipowners and for other purposes’ now embodied in sections 4283 to 4285 of the Revised Statutes (sections 183 to 185 of Title 46, Shipping) as now or hereafter amended or supplemented, the said owner or owners shall and may file a libel or petition in the proper District Court of the United States, as hereinafter specified, setting forth the facts and circumstances on which said limitation of liability is claimed, and praying proper relief in that behalf; and thereupon said court, having caused due appraisement to be had of the amount or value of the interest of said owner or owners, respectively, in such ship or vessel, and her freight, for the voyage, shall make an order for the payment of the same into court, or for the giving of a stipulation with sufficient sureties or ah approved corporate surety for the payment thereof into court with interest at the rate of six per cent, per annum from the date of said stipulation and costs, whenever the same shall be ordered; or, if the said owner or owners shall so elect, the said court shall, without such appraisement make an order for the transfer by him or them of his or their interest in such vessel and freight to a trustee to be appointed by the court under the fourth section of said act; and, upon compliance with such order, the said court shall issue a monition against all persons claiming damages for any such embezzlement, loss, destruction, damage or injury, citing them to appear before the said court and file their respective claims at or before a certain time to be named in said writ, not less than 30 days from the issuing of the same; and public notice of such monition shall be given as in other cases, and such further notice served through the post office, or otherwise, as the court, in its discretion, may direct; and the said court shall also, on the application of the said owner or owners, make an order to restrain the further prosecution of all and any suit or suits against said owner or owners in respect to any such claim or claims.”
“54. Courts Having Cognizance of Lim>-ited Liability Procedure. The said libel or petition shall be filed and the said proceedings had in any District Court of the United States in which said ship or vessel may be libeled to answer for any such embezzlement, loss, destruction, damage or injury; or, if the said ship or vessel be not libeled, then in the-District Court for any district in which the said owner or owners may be sued in that-behalf; when the said ship or vessel has not been libeled to answer the matters aforesaid, and suit has not been commenced against the' said owner or owners, or has been commenced in a district other than that in which the said ship or vessel may be, the said proceedings may be had in the District Court' of the district in which the said ship or-vessel may be, and where it may be subject to the control of such court for the purposes-of the ease as hereinbefore provided. If the- ship shall have already been libeled or sold, the proceeds shall represent the same-for the purposes of these rules.”

The admiralty rules of this court relating to limitation of liability are Rules 31 to-35, both inclusive, and'Rule 31 reads as follows:

“Petitions or libels to limit liability must, state:
“(1) The facts showing that the application is properly made in this district.
“(2) The voyage on which the demands sought to be limited arose, with the date- and place of its termination; the amount, of all demands including all unsatisfied liens or claims of liens, in contract or in tort, arising on that voyage, so far as known to the-pétitioner, and what suits, if any, are pending thereon; whether the vessel was damaged, lost or abandoned, and, if so, when and where; the value of the vessel at the close of' the voyage, or in case of wreck, the value of her wreckage, strippings or proceeds, if any, as nearly as the petitioner can ascertain, and where and in whose possession they are; also-the amount of any pending freight, recovered or recoverable. If any of the above-particulars are not fully known to the petitioner, a statement of such particulars according to the best knowledge, information; and belief of the petitioner, shall be sufficient.”

This is a case where the vessel has not. been libeled, but her owners have been sued,, and the petition for limitation may be filed, either in the district in which the owners have been sued, or in the district in which the vessel may be. Gleason v. Duffy (C. C. A.) 116 F. 298.

If the vessel had been raised and brought into this district, there would be no question about the right of the petitioners to proceed; in either the Northern or Eastern District, but if the wreck had remained in the Northern District, that would have been the district in which the petitioners would have been bound to proceed.

The wreck has been broken up, dismantled, and stripped.

A steering wheel and a set of dishes remain in the Northern District, but the engines and other valuable portions of the wreck are in this district, where they were brought before any action against the petitioners, for damages because of such explosion,’ was commenced in the New York Supreme Court, Onondaga County, or any other court.

The petitioners are residents of this district, and their principal place of business is in this district.

Substantially all the wreckage and strip-pings of the vessel and the proceeds of the sale of her gasoline tanks are in this district, in the possession of the petitioners.

The petitioners were not bound to surrender the res or their interest therein to a trustee, but might, if they so desired, retain possession or ownership of the res, for an appraisal of the value of their interest therein, and file security with the court in lieu of a surrender.

The latter is the procedure usually followed and the one that has been adopted by the petitioners here.

I appreciate the inconvenience that will be occasioned to the claimants by being compelled to proceed in this district, but limitation is a statutory right, and the statute is to be construed liberally in favor of the ship owners. Providence & N. Y. S. S. Co. v. Hill Mfg. Co., 109 U. S. 578, 3 S. Ct. 379, 617, 27 L. Ed. 1038; The Marie Palmer (D. C.) 191 F. 79, affirmed (C. C. A.) 202 F. 1023; The Annie (D. C.) 261 E. 797, affirmed (C. C. A.) 269 F. 793; Kitsap County Transp. Co. v. Harvey (C. C. A.) 15 F.(2d) 166, 48 A. L. R. 1420.

The Supreme Court has power to make rules regulating the proceedings. Providence & N. Y. S. S. Co. v. Hill, supra.

This court is bound to obey such rules.

I have carefully considered the brief on behalf of the moving parties, but I cannot agree with their construction of Rule 54. Of course, a small portion of the strippings and wreckage could not be taken into any district and thus give the court in that district jurisdiction, and that is exactly what is contended for when the moving parties base any argument on the fact that the steering wheel and set of dishes are in the Northern District of New York. What constitutes the vessel for the purpose of giving this court jurisdiction in this case is substantially all of the strippings, wreckage, and proceeds of the wreck of the Wheeler Shipyard Hull No. 304 which are in this district.

The hull of the said wrecked vessel is not in the Northern District of New York; on the contrary, it has been destroyed and substantially all the strippings and wreckage of the said vessel, together with the proceeds of the sale of her gasoline tanks, are in this district, and were here before any action for damages because of the explosion was commenced in any court, and this court has jurisdiction. The Snug Harbor (D. C.) 46 F.(2d) 143; In re Slayton, 105 U. S. 451, 26 L. Ed. 1066.

While it seems to me that the orderly procedure would have been to bring this matter before the court by filing exceptions, still I have considered these motions as in effect the same as exceptions.

The exceptions, if such these motions be considered, are overruled and these motions are denied, and the time of the claimants to appear, answer, and file claims in this proceeding is hereby extended to June 24, 1931, at 10:30 a. m., on which day and at 'which hour the process will be called at the motion part of this court, room 224 Post Office Building, Brooklyn, N. Y.


author: ADLER, District Judge.

text:
    KINSMAN TRANSIT CO. v. 50,000 BUSHELS OF WHEAT ex Cargo THE HENRY STEINBRENNER.
    District Court, W. D. New York.
    July 21, 1931.

      Brown, Ely & Richards, of Buffalo, N. Y. (David S. Jackson, of Buffalo, N. Y., of counsel), for libelant.
    Stanley & Gidley, of Buffalo, N. Y. (Ray M. Stanley, of Buffalo, N. Y., of counsel), for respondent.
   ADLER, District Judge.

This is an action for damages in the nature of demurrage brought by the owner of the steamer Henry Steinbrenner against a portion of her cargo for unreasonable detention of the vessel at the Port o£ Buffalo in May, 1929. 50,000 bushels of wheat were shipped on the vessel by James Richardson and Sons, Limited, of Winnipeg, Manitoba, to Buffalo in care of Charles Kennedy & Company of Buffalo, who thereupon became the care party according to the usage of that port. James Richardson & Sons, Limited, sold the grain to the Seaboard Grain Company, and the Seaboard Grain Company sold the grain to the Oceanic Grain Company, which became its owner before the arrival of the vessel at the Pori of Buffalo and continued to be the owner thereafter. The vessel arrived at the Port of Buffalo on the morning of May 10,1929. There had been an unusual congestion of grain at the port for some little time prior to that date. Charles Kennedy & Company, the care party, controlled the Dellwood elevator, and it was generally understood used the Dellwood for elevating all shipments of grain consigned in its care. The libelant in this case contends that the congestion in the port at this time, which was of course known to Kennedy, must have been communicated to and known by Richardson & Sons, the shippers, who had been continuously making consignments to Kennedy.

The Steinbrenner arrived in Buffalo on a Friday. No part of its cargo was discharged on that day, or on Saturday, May 11th, or on Sunday May 12th. On Monday, May 13th, the fourth day after its arrival, all of its cargo was discharg-ed except the 50,000 bushels here in question. Of this cargo was a lot of 25,000 bushels which was unloaded on May 13th, at the Connecting Terminal Elevator which was controlled by) the Altas Grain Elevating Corporation. On the morning of the 13th, the Atlas Corporation, which was doing business with the Oceanic Grain Company, wired the Oceanic that it had just elevated the 25,000 bushels from the Stein-brenner and that it had room for and could elevate on the same day the 50,000 bushels, and requested the Oceanic to instruct Kennedy to turn over to them the 50,000 bushels which had not yet been taken out of the ship. In response to this telegram the Oceanic Company wired to Kennedy that it would appreciate its turning over the 50,-000 bushels of the Steinbrenner shipment to the Atlas Company. Kehnedy did not reply to this telegram from the Oceanic Company, the owners of the wheat, and declined to turn it over to the Atlas Company when requested by its agent, Sprissler. The testimony is that the employees of the Connecting Terminal Elevator were kept on hand until late in the afternoon of the 13th in order that they might complete the elevating of the 50,000 bushels if Kennedy would agree to turn it over. If Kennedy had given his consent, the unloading of all the grain from the Steinbrenner, including the 50,000 bushels, would have been completed by 7 p. m. of May 13th. Kennedy did not give his consent, and the Steinbrenner was moved to the Dellwood Elevator on the following day, May 14th, and at 3:50 p. m., on that day the unloading of the 50,000 bushels into the Dellwood Elevator began, and was finished at 8:30 p. m., on that evening. The Steinbrenner was then completely unloaded.

The period of detention for which damages are sought to be recovered by this action is from 7 p. m., of May 13, 1929, the time when the vessel could have been completely unloaded at the Connecting Terminal Elevator, and 8:30 p. m. of May 14, 1929, the time when the vessel was finally unloaded at the Dellwood Elevator.

The consignee of a grain cargo, required to unload the vessel, is hound to exercise due diligence under the circumstances and the custom of the port to discharge the vessel as speedily as possible. Ottawa Transit Co. v. 261,000 Bushels of Wheat (D. C.) 260 F. 493. Damages can only he recovered upon proof that the delay complained of was due to some fault or negligence on the part of the respondent. The burden of proving this is upon the libelant. The J. E. Owen (D. C.) 54 F. 185.

In this case the question is whether Kennedy was at fault for not permitting the discharge of the grain cargo from this vessel on May 13th, and holding it in the vessel until May 14th, when it was discharged in his own elevator. What is a reasonable delay in unloading a ship depends upon the surrounding circumstances. In The J. E. Owen, supra, a delay of ten days was held not unreasonable. In that ease the libelant sought to prove that if the consignees had been informed of the exact capacity of the other elevators during the time in question, they might possibly have secured the necessary room. This proof was held not sufficient to establish negligence. Judge Coxe in the opinion pointed out that no demand had been made on the consignees or their agents to furnish another elevator, and Judge Hazel in his opinion in Acme Transit Co. v. 133,000 Bushels of Wheat (D. C.) 243 F. 970, 974, commenting upon this statement of Judge Coxe’s, says: “The implication might be drawn that, if such a demand had been made of the consignees in this ease, they would be liable for any delay occurring" thereafter.”

The evidence here is that Kennedy, the care party, while the vessel was in the Port of Buffalo waiting to be unloaded, was told by the agent of the vessel that there was space in another elevator, the Heeker Elevator, sufficient to take the cargo. Later on May 13th, the owners of the grain requested Kennedy to turn it over to the Atlas Company, whose elevator had space for it and at whose dock the vessel was moored. In this ease, despite the congestion of grain in the Port of Buffalo, and the delays in unloading vessels due, to that congestion, space and facilities were offered to the care party by the owner of the grain the day before he finally unloaded it in his own elevator. In the discussion of the law by both Judge Coxe and Judge Hazel in the eases last cited, they clearly intimate that if the consignee or care party failed to discharge the cargo when he had facilities for doing so, it would b.e proof of negligence on his part.

I have examined the cases cited by respondent and do not find authority for the proposition that a care party, as he is known in the Port of Buffalo, has the kind of control over the shipment consigned to him that would give him the right to hold up the discharge of cargo when facilities for its discharge are offered to him and he is requested by the owner to accept them.

I find that the care party in this case did have facilities offered to him for the discharge of the cargo for the day before he discharged it; that the owner of the cargo requested him to turn it over and make use of the facilities offered; and that his failure to do so was negligence.

A decree may be entered in favor of libelant for $375, the stipulated damages with interest and costs.


author: DIETRICH, Circuit Judge.

text:
    JUNGST et al. v. BALDRIDGE, Governor of Idaho, et al.
    No. 1403.
    District Court, D. Idaho, S. D.
    Aug. 28, 1929.

      Turner K. Hackman, of Twin Palls, Idaho, for plaintiff.
    W. D. Gillis, Atty. Gen. of Idaho, and: Fred J. Bacock, Asst. Atty. Gen., for defendant.
    Before DIETRICH, Circuit Judge, and NETERER and CAVANAH, District Judges.
   DIETRICH, Circuit Judge.

The plaintiffs are engaged in the business of butchering and dealing in meats at. Twin Falls and other points in Idaho. The-business, they allege, is purely intrastate,, and does not come within the provisions of the act of Congress known as The Packers, and Stockyards Aet of 1921 (7 USCA §§ 181. -229). By their complaint they challenge-the validity of an act passed by the Idaho-Legislature, approved March 11, 1929 (Laws-1929, c: 148), regulatory of the business of butchers and dealers in meats, particularly the meats of' cattle, sheep, and horses.

Clearly it is 4o be regarded as a police and not a revenue measure, and is doubtless intended to aid in the prevention and detection of the theft of such live stock. It declares (section 1) that every person who at a fixed place of business slaughters meat animals, or deals in or sells the meat or byproducts of such animals, shall be deemed a “butcher” for the purpose of the aet, and for like purposes any one who at a fixed place of business sells or exchanges or otherwise deals in such meat products shall -be deemed a “meat dealer.” There is also a definition of the meaning of the term “meat peddler,” and horses, cattle, and sheep are designated as “meat animals.”

The act (section 2) provides that, before any person shall engage in the business of butchering or of dealing in fresh meats, he shall register his name with the county recorder of the county where such business is to be conducted and declare his intention to engage therein, and pay the recorder a filing fee of fifty cents. And such filing with payment of fee must -be renewed annually. Every meat dealer must also file with the probate judge of the county where the business is to be conducted a bond of not less than $100 or more than $1,000, within the discretion of such judge, conditioned that the principal will comply with the requirements of the act.

It is also provided (section 3) that, within forty-eight hours after slaughtering any animal, and before offering the meat for sale, “every butcher or meat dealer or meat peddler who slaughters any meat animal or animals, or who sells or otherwise exchanges or distributes the meat thereof to any butcher, meat dealer, or meat peddler shall have the carcass or carcasses of such animal or animals and the hide or hides thereof” inspected “by a sheriff, deputy sheriff, constable, brand inspector, or deputy brand inspector, in the county in which such animal * * * was slaughtered,” and pay a fee of fifty cents for the inspection of the “hide and carcass of each bovine animal” and ten cents for each sheep. He must present to the officer for inspection both the carcass, and the hide in its entirety with the ears attached. The officer is to mark the hide “by making a hole at least one inch square in either front leg,” and also with a stamp to be provided by the county he must indelibly stamp the flesh side of the hide. And he must place an identical stamp upon each quarter of the carcass. The inspecting officer thereupon issues to the dealer or butcher a certificate of inspection, containing certain data, a copy of which is to be forwarded to the sheriff, who must keep it on file ifi his office for a period of three years. ..Every meat dealer is further required to keep a book in which he shall truly enter a record of all animals slaughtered by him, or carcasses or quarters purchased, which record shall disclose the marks and brands on the animals slaughtered by him and the stamps upon the quarters purchased, the weight thereof, when and from whom purchased, and the date of slaughter. The record is to be kept for three years, and shall be open to the public for inspection. Section 5. It is also made unlawful for any dealer to purchase or take possession of a carcass or any quarter thereof, unless' it bears the inspector’s stamp. Section 6.

That reasonable means for the prevention and detection of the theft of live stock, particularly in a country where they commonly run on the open range, are within the police powers of the state, is too clear to admit of discussion. Nor do we think there is anything unreasonable in the act under consideration. The registration is a simple matter, the requisite b,ond is not excessive, and the record to be kept by the dealer entails but little labor. The registration and inspection fees would seem to be moderate in amount; certainly we cannot hold that they bear no reasonable relation to the services for which they are paid. That proximately the burden falls upon ‘the butchering an(d meat industry constitutes no valid objection. True, the measure is-primarily intended for the protection of stock growers, but it may be said of most measures for regulation, inspection, or supervision in respect of any branch of business-that it is for the benefit of the public, and yet the burden of administering such laws-is quite universally imposed in the first instance upon the business affected thereby. It becomes one of the expenses of carrying on the business, and is passed to the public. So here, while the butchers and the dealers in the first instance pay the charges, presumably in the long run they will pay so-much less for the live stock they purchase, thus shifting the burden to the growers, or will sell their products at a higher price, thus recouping the expense from the public. Besides, it is to be borne in mind that in the industry itself there may be dishonest persons who willfully or carelessly buy stolen stock, and the burden imposed could be justified upon that ground alone.

It is further urged that purchasers and dealers may suffer loss through delay in procuring inspection. But all inspection laws would seem to be equally subject to such an objection. It assumes that the inspecting officers will be derelict in the discharge of their duty to act promptly, but this we cannot presume. And we think the kindred suggestion that an inspection officer may not always be available is fanciful. As we have seen, the inspection may be made by a sheriff, one of his deputies, a constable, a brand inspector, or a deputy brand inspector. Generally, the county commissioners of the county have authority to authorize the appointment of as many deputy sheriffs as may be needed, and by section 1939 of the Compiled Statutes (1919) in each county they are directed to appoint a brand inspector, who in turn is authorized to appoint such deputies “as may be necessary or convenient.” That no one of such officers would be available at any time is an extremely remote possibility.

In the brief for plaintiffs are to be found copious extracts from decisions upon fundamental constitutional principles, such as that private property cannot be taken without due compensation, that all citizens are entitled to the equal protection of the law, and other general limitations upon legislative power; but, if we have correctly analyzed the aet, it contravenes none of these great principles, and is well within the range of commonly exercised police' power. The aet is not novel or exceptional. See Territory ex rel. Live Stock Sanitary Board v. Kenney, 11 Ariz. 353, 95 P. 93; Limburger v. Barker, 17 Tex. Civ. App. 602, 43 S. W. 616; chapter 92, Comp. Laws Colo. 1921 (sections 4756-4764); 3 Corp. Jur. p. 188. And in principle its validity is thought to be supported by the Slaughter House Cases, 83 U. S. (16 Wall.) 36, 21 L. Ed. 394; Munn v. Illinois, 94 U. S. 113, 24 L. Ed. 77; Armour & Co. v. N. Dakota, 240 U. S. 510, 36 S. Ct. 440, 60 L. Ed. 771, Ann. Cas. 1916D, 548; Brazee v. Michigan, 241 U. S. 340, 36 S. Ct. 561, 60 L. Ed. 1034, Ann. Cas. 1917C, 522.

'Just how the principle of “equal protection” is supposed to be infringed plaintiffs do not clearly explain. That the business of butchering and dealing in meats constitutes a distinct industry reasonably susceptible to separate classification from other industries would seem to be too clear for discussion. Por like reasons we do not need to discuss the exemption from the operation of the aet of cases where the owner slaughters an animal, not for sale, but for his own use, or those who deal only in “such by-products of meat animals as pickled, cured, dried, or smoked meats.” Manifestly the mischief against which the regulations are directed is in such cases negligible. The aet further exempts from its operation such business of butchering and slaughtering as “comes with-' in the provisions of that certain Act of Congress known and cited as the ‘Packers and Stockyards Act of 1921.’ ” Section 9. 7 US CA §§ 181-229; Stafford v. Wallace, 258 U. S. 497, 42 S. Ct. 397, 66 L. Ed. 735, 23 A. L. R. 229. In general, it may be said this act has to do with the regulation of stockyards and the slaughtering of live stock and dealing in meat products when such activities have direct relation to interstate commerce. Upon an inspection it will appear that its provisions are, to say the least, quite as onerous upon the class affected thereby as are the requirements of the aet here in question upon the class to which it relates; and the classification, we have no doubt, is reasonable. •

Accordingly, the application for an interlocutory injunction will be denied, and the complaint will be dismissed with prejudice; costs to defendants.


author: KENNERLY, District Judge.

text:
    HARRIS v. UNITED STATES.
    No. 1047.
    District Court, S. D. Texas, Galveston Division.
    April 30, 1931.

      John D. Watkins, of Galveston, Tex., for plaintiff.
    Henry M. Holden, U. S. Atty., of Houston, Tex.
   KENNERLY, District Judge.

Articles 5013 to 5023, inclusive, of the Texas Revised Statutes of 1925, authorize individuals, partnerships, or associations of individuals, to make any insurance (except life insurance) on the “Lloyd’s plan,” by executing articles of agreement, expressing their purpose so to do, and complying with the provisions of said articles. On April 15, 1927, Maco Stewart, of Galveston, Tex., and eleven other individuals executed a power of attorney, claimed to be such as is provided for in such articles, to Fletcher W. Harris, of Galveston, Tex. In such power of attorney, it is set forth that the business is to be carried on under the name of - “Lloyd’s Agency at Galveston.” Fletcher W. Harris then filed with the insurance commissioner of the state of Texas an application for a -permit for Lloyd’s Agency at Galveston to write insurance in accordance with the provisions of said statute, for the year ending February 28, 1928. Sueh permit for sueh period was issued by sueh commissioner. A similar application was filed and a similar permit was issued for the year ending February 28, 1929. Under instructions from the internal revenue authorities, and under protest, said Harris, acting under the name of “Lloyd’s Agency at Galveston,” filed for such agency an income tax return for the calendar year 1928, and likewise, under protest, on or prior to March 15, 1929, paid to the proper tax authorities $38, being the assessment of tax owing under sueh return. This is a suit by said Fletcher W. Harris, as attorney in fact for Lloyd’s Agency at Galveston, by original petition filed November 19, 1930, and amended petition filed December 9, 1930, against the United States of America, under the provisions of subdivision 20 of section 41 of Title 28’of the United States Code (28 USCA § 41 (20), to recover such tax so paid. Defendant’s answer, filed February 16,1931, interposes general demurrer, special demurrer,' and general denial. Such demurrers were heard along with the ease on the merits, without same being waived by defendant. On account of the disposition that is made-of the case on the merits, it is only necessary to notice the special demurrer, which, for convenience, is quoted: “Defendant specially demurs and excepts to plaintiff’s first amended original petition and says the same is insufficient in law and does not set forth a cause of action, in that said action is instituted by Fletcher W. Harris, Attomey-in-Faet, Lloyd’s Agency at Galveston, when in truth and in fact said petition, on its face, shows that the party at interest is the Lloyd’s Agency at Galveston.”

It is clear that this is not a suit by Fletcher W. Harris individually, and that he does not purport to act herein individually. An examination of the amended petition, together with its exhibits, makes it clear that this is a suit by Lloyd’s Agency at Galveston, which it is claimed was created by the execution of the power of attorney hereinbefore referred to, and by the happening of the matters, and the doing of the things, set forth in said amended petition; all purporting to be done under and by virtue of said articles 5013 to 5023, inclusive, of the Texas Revised-Civil Statutes. The special demurrer of defendant, therefore, should be, and will be, overruled.

This brings ns to the question of the liability of said Lloyd’s Agency at Galveston to file the income tax return which was filed, and to pay the tax which was paid, and its right to recover same herein. The determination of these questions largely depends upon the character of organization created by plaintiff under said articles of the Texas statutes, and in determining that question what is said by the Circuit Court of Appeals for the Fifth Circuit in the recent case of Lucas, Commissioner, v. Extension Oil Co. 47 F.(2d) 65, page 66, is quite pertinent. In that ease, there was presented for determination by the court the question of whether the Extension Oil Company was a trust, or an. association, etc. The court uses this language:

“It is at once evident that this is one of those eases' where ‘As long as the matter to be considered is debated in artificial terms there is a danger of being led by a technical definition to apply a certain name, and then to deduce consequences which have ho relation to the grounds on whieh the name was applied.’ Guy v. Donald, 203 U. S. 406, 27 S. Ct. 63, 64, 51 L. Ed. 245, and that its correct decision will depend upon a complete apprehension and recognition of the realities of the ease, through an appreciation and understanding of the facts whieh make it up; and that this is so both as to the question of whether the particular taxpayer is an association, or a trust, and whether it is doing business, a review of the many decisions in the Supreme and inferior courts will show.”

After referring to numerous cases, and commenting upon one or more thereof, the court continues and uses this language: “Each of these cases grounds its result upon the controlling facts, and makes it clear that reality, and not fiction, must in each case determine whether the tax is or is not properly laid.”

The facts in this case are, in the main, undisputed, and substantially all of them, that need be considered here, are set forth in the stipulations of fact filed herein, and need not be here, again, set forth or repeated. A consideration of these facts leads inevitably to the conclusion that plaintiff, Lloyd’s Agency at Galveston, was, during 1928, an association within the meaning of, and was required under, the Revenue Act of 1928 (26 USCA § 2001 et seq.) to make the return it made, and pay the tax it paid.

Such agency was, during the year 1928, authorized, under the statutes of Texas above referred to, and by the commissioner of insurance of Texas, to do a general fire, tor.nado, hail, and floater insurance business in Texas. That it voluntarily restricted its business to buildings covered by some nine hundred and eleven loans made by the Guaranty Building & Loan Company is immaterial.

Plaintiff contends that under such power of attorney, etc., it does not come within the definition of an association. While the power of attorney referred to does provide that each subscriber is acting individually, and that the subscribers are not acting jointly or collectively, etc., it is doubtful if this is in compliance with the Texas statutes mentioned, and particularly article 5013. Be that as it may, it is certain that those who executed the power of attorney had a common attorney in fact (Harris), a common name (Lloyd’s Agency at Galveston), a common office, a common set of books, and as to a portion of their funds, a common bank account. When a policy or insurance obligation was issued, while it is true it was signed by the attorney in fact for each underwriter, and the obligation of each is limited, it is a common policy. The premiums of insurance were paid into a common fund, and expenses and losses paid out of such fund. Each underwriter is legally entitled to his pro rata share of such fund.

My time does not permit a review and a discussion of the authorities whieh I believe support this view, but the conclusion reached is that the Lloyd’s Agency at Galveston in 1928 was an association within the meaning of the Revenue Act of 1928, and actively engaged in the fire, tornado, hail, and floater insurance business. Hecht v. Malley, 265 U. S. 144, 44 S. Ct. 462, 68 L. Ed. 949; Pickering v. Alyea-Nichols Co. (C. C. A.) 21 F.(2d) 501; Burk-Waggoner v. Hopkins, 269 U. S. 110, 46 S. Ct. 48, 70 L. Ed. 183; Hoadley v. Purifoy, 107 Ala. 276, 18 So. 220, 30 L. R. A. 351; Thompson v. Schmitt, 115 Tex. 53, 274 S. W. 554; Lucas v. Extension Oil Co. (C. C. A.) 47 F.(2d) 65, page 66, and eases there cited.

Judgment will be entered that plaintiff take nothing as against defendant, and that plaintiff pay the costs of court.