source: Caselaw Access Project

author: GODDARD, District Judge.

license: Public Domain

text:
    ROYAL SILVER MFG. CO., Inc., v. NATIONAL SILVER CO. et al.
    District Court, S. D. New York.
    May 9, 1945.

      Nims, Verdi & Martin, of New York City (Harry D. Nims, Minturn de S. Verdi, Wallace H. Martin, and Marion L. Severn, all of New York City, of counsel), for plaintiff.
    John P. Chandler, of New York City (Edward S. Rogers and Clifton Cooper, both of New York City, of counsel) for defendants.
   GODDARD, District Judge.

This is an action for the cancellation of a trade-mark registered in the United States Patent Office by defendant Samuel E. Bernstein in 1921 and allegedly used by the defendants successively and continuously since about 1914; for an injunction against the continued use of this registered mark; and for an accounting of profits and damages for past use.

The plaintiff, Royal Silver Manufacturing Company, Inc., is a corporation organized on May 14, 1909, under the laws of the State of Virginia and since its incorporation to date has manufactured table flatware and table cutlery. Upon organization of the plaintiff corporation it claims it started to use in 1909, among others, the two marks “Royal Brand” and “Royal Silver Mfg. Co.” which it never registered, upon its goods. Among other trade-marks it has used the original marks in one form or another ever since, and in 1932 when the plaintiff went into the manufacture of stainless steel tableware, it dropped the word “Brand” from its trade-mark “Royal Brand” and used the word “Royal” combined with “Stainless Steel” so as to result in “Royal Stainless.” Different patterns of this stainless ware were and are also sold under various combinations with the word “Royal,” such as “Royal Streamline”; “Royal Virginia”; “Royal Norva”; “Royal Windsor”.

The plaintiff also used two other trademarks; one was “Rajah” registered in the United States Patent Office in 1910; the other “Crown” used since 1909. These trade-marks will be treated with more particularity later on in this opinion.

The plaintiff has marked its ware with the private brands of the customers upon request. The plaintiff’s goods have been sold in many parts of this country. Plaintiff’s main customers were mail-order houses and the plaintiff’s ware appeared in catalogues of various mail order houses at least as early as 1916. However, the plaintiff also sold to retail concerns.

The plaintiff claims that by its first use of the words “Royal Brand” and “Royal Silver Mfg. Co.” on cutlery it acquired a valid technical trade-mark in the word or words; it also claims that as a result of its sales and advertising it became well known to the trade and its trade-marks became well known to the trade and public as indicating goods made by the plaintiff. The plaintiff also asserts that its customers and the trade in general came to know plaintiffs ware as “Royal” or the “Royal Brand” and associated goods so marked as being goods manufactured by the plaintiff..

In 1890 Samuel E. Bernstein entered into the business of household furnishings and cutlery and continued with various partners until 1909, when he started in business for himself. On August 22, 1910, he filed a certificate in the New York County Clerk’s office of doing business under name “Royal 5, 10, 19 Cent Store.” On June 19, 1912, he filed a certificate of doing business under the name “Royal Brand Cutlery Co.” Continuing in the same business until 1922, he then incorporated under the name of Samuel E. Bernstein, Inc., which on December 11, 1928, was merged with “Nasco Co.” into the National Silver Company. Since 1894 a substantial part of the business carried on by Bernstein or his successor companies has been as a wholesaler and jobber in cutlery.

During the entire period up to 1932 defendants bought finished articles and also parts which they assembled in their own plant. In 1932 they acquired a manufacturing plant and began to forge their own knife blades.

Since 1909 until about 1941 the defendant or its predecessor has purchased from the plaintiff a vast number of pieces, both finished and parts. Many of them were marked with various combinations of the word “Royal”; some of which were marked at the express request of defendants.

In 1921 Samuel E. Bernstein, while doing business as Royal Brand Cutlery Company, registered a trade-mark consisting of a generally double squared edged diamond-shaped figure bearing the words “Royal Brand Cutlery Company” between the diamonds and the words “Sharp-Cutter” at the center of the internal diamond as represented in the following drawing:

In his application for its registration Samuel E. Bernstein stated that “The trade-mark has been continuously used in my business 'since June, 1914.” He further stated — “that no other person, firm, corporation or association, to the best of his knowledge and belief, has the right to use said trade-mark, either in the identical form or in any such near resemblance thereto as might be calculated to deceive.”

The basic question presented is whether the plaintiff has a valid technical trademark right to the word or words “Royal” or “Royal Brand” as a result of its prior adoption and use.

A mark which is descriptive is not a valid technical trade-mark. Armstrong Paint & Varnish Works v. Nu-Enamel Corporation, 305 U.S. 315, at page 335, 59 S.Ct. 191, 201, 83 L.Ed. 195; William R. Warner & Co. v. Eli Lilly & Co., 265 U.S. 526, 44 S.Ct. 615, 68 L.Ed. 1161.

The court is inclined to follow the opinion of the Circuit Court of this circuit holding that the word “Royal” is merely descriptive and not capable of adoption as a technical trade-mark. See Hiram Walker & Sons v. Penn-Maryland Corporation, 2 Cir., 79 F.2d 836, and cases therein cited; Sterling Products Corporation v. Sterling Products, D.C., 43 F.Supp. 548; Royal Baking Powder Co. v. Sherrell, 93 N.Y. 331, 45 Am.Rep. 229; compare Hemmeter Cigar Co. v. Congress Cigar Co., 6 Cir., 118 F.2d 64, 68; Waterman v. Shipman, 130 N.Y. 301, 29 N.E. 111.

The plaintiff cites Royal Baking Powder Co. v. Royal, 6 Cir., 122 F. 377, and Raymond v. Royal Baking Powder Co., 7 Cir., 85 F. 231, for the proposition that the word “Royal” is a valid technical trademark. I do not think that either of these cases support plaintiff’s contention. In Royal Baking Powder Co. v. Royal, supra, the court based its holding on the ground that whether or not “Royal” was capable of adoption as a valid technical trade-mark, the plaintiff proved that it had obtained a secondary significance.

In Raymond v. Royal Baking Powder Company, supra, the court specifically recognized Beadleston & Woerz v. Cooke Brewing Co., 7 Cir., 74 F. 229, which held the word “Imperial” was not adoptable as a valid technical trade-mark. The Bea-dleston case was relied on as authority in Hiram Walker & Sons v. Penn Maryland Corporation, 2 Cir., 79 F.2d 836. The Raymond v. Royal Baking Powder Co. case was distinguished from the Beadleston case on the ground that since the word ‘‘Royal” was applied to the entire manufacture of the plaintiff and not to a particular grade and had come to be known in connection with that article of baking powder as a word indicating the origin, it was a valid technical trade-mark. This case apparently laid down two conditions before the word “Royal” could be said to be a valid technical trade-mark, namely —that the word be applied to the entire production of the plaintiff and that it indicated the origin of the product. The decision was based upon the principles set forth in Columbia Mill Co. v. Alcorn, 150 U.S. 460, 14 S.Ct. 151, 37 L.Ed. 1144, which held, among other things, that the claimant, in order to establish valid trademark rights in a name, must have been the first to use or employ it on like articles of production. The court did not limit this to the first in point of time as between the litigants, but first in the specific trade to use that name on the article in that section where it is sold. See Hiram Walker & Sons v. Penn Maryland Corporation, 2 Cir., 79 F.2d 836, 839 and cases therein cited. In both Royal Baking Powder cases referred to above the court found that the Royal Baking Powder Company was the first to use the name “Royal” on baking powder.

In this present case the evidence clearly shows that this plaintiff was far from the first to use the word “Royal” in the cutlery and silver-ware trade. There were at least four trade-marks with the word “Royal” predominating, registered in the Patent Office before 1909, namely — “Royal Manufacturing Co.,” Reg. No. 33284 of 1899; “Royal E. S. Co.,” Reg. No. 10494 in 1883 covering shears and scissors; “Royal Worcester,” Reg. No. 20976 of 1892 covering all kinds of cutlery; “Royal Silver,” Reg. No. 19406 of 1891 covering solid, plate and other silverware. The word “Royal” was used as a part of corporate titles and as a descriptive word on numerous articles of silver prior to 1909. A few examples are — “Royal Baby Plate” 1906; “Royal” 1908; “Royal Oak,” Gor-ham Co. 1902; “Royal Plate Co.” 1901; “Our Royal” 1909 N. Shure; “Royal Windsor,” Rogers & Hamilton 1891; Royal Silver Co.; The Royal Silver Company; Royal Metal Mfg. Co. There is abundant evidence that this plaintiff was not the first in its field to use the word “Royal” on cutlery or silverware; therefore, it seems evident that under the doctrine of Columbia Mill Co. v. Alcorn, supra, this plaintiff fails to establish a valid technical trade-mark.

The next question is whether the combining of the word “Royal” with the word “Brand” resulting in “Royal Brand” gives the plaintiff a valid technical trademark. In Columbia Mill Co. v. Alcorn, it was held that if the mark was placed upon the article for the purpose of identifying its class, grade, style or quality, it could not be sustained as a valid trade-mark. This principle was adhered to in both the Royal Baking Powder cases and it is the doctrine of New York. The Royal Baking Powder Co. v. Sherrell, 93 N.Y. 331, 45 Am.Rep. 229. The evidence in the case at bar shows that the plaintiff, when not marking its goods with the special marks requested by the respective customers, marked the goods principally with three different marks. On its “12 dwt” goods it used the marks “Royal Silver Mfg. Co.” or “Royal Brand Warranted Hand Forged”; on its second grade goods, the “4 dwt or 6 dwt” — it used the registered trade-mark “Rajah” or “Rajah Mfg. Co.”; on the cheapest grade of goods, its “2 dwt,” the word or words “Crown” or “Crown Mfg. Co.” appeared. The plaintiff has continued to use the above marks to distinguish its own marked goods insofar as quality is concerned. The evidence shows that the plaintiff as late as 1932 was using these three quality marks. The evidence is therefore that unlike the situation in Raymond v. Royal Baking Powder, supra, plaintiff’s entire production was not marked with the word “Royal” or any combination of the word “Royal”. Plaintiff generally used the words “Royal Brand Warranted Hand Forged” or “Royal Silver Mfg. Co.” to indicate its best quality of cutlery as in Royal Baking Powder Co. v. Sherrell, supra.

The plaintiff has not, therefore, a valid technical trade-mark in the words “Royal Brand.”

Since the plaintiff has not a technical trade-mark in the word or words “Royal” or “Royal Brand” it must prove the existence of a secondary meaning. Armstrong Paint & Varnish Works v. Nu-Enamel Corporation, 305 U.S. 315, 59 S.Ct. 191, 83 L.Ed. 195; Standard Paint Co. v. Trinidad Asphalt Co., 220 U.S. 446, 447, 31 S.Ct. 456, 55 L.Ed. 536; Sterling Products Corporation v. Sterling Products, supra; Charles Broadway Rouss, Inc. v. Winchester Co., 2 Cir., 300 F. 706, at page 714, certiorari denied 266 U.S. 607, 145 S.Ct. 92, 69 L.Ed. 465. This secondary meaning must be shown to have existed at least prior to 1921, for the registration of the “Royal Brand Cutlery Company, Sharp-Cutter” diamond design in 1921 by the defendant raises a presumption of its validity. James Heddon’s Sons v. Millsite Steel & Wire Works, 6 Cir., 128 F.2d 6, certiorari denied 317 U.S. 674, 63 S.Ct. 79, 87 L.Ed. 541; Hemmeter Cigar Co. v. Congress Cigar Co., supra.

To establish the existence of a secondary meaning in the particular trade and class, plaintiff must prove that these words were used by it in such a manner and so extensively that they were commonly associated with the plaintiff and its products. Sterling Products Corporation v. Sterling Products, D.C., 45 F.Supp. 960; Armstrong Paint & Varnish Works v. Nu-Enamel Corporation, 305 U.S. 315, 59 S.Ct. 191, 83 L.Ed. 195; DuPont Cellophane Co. v. Waxed Products Co., 2 Cir., 85 F.2d 75, 81, certiorari denied 299 U.S. 601, 57 S.Ct. 194, 81 L.Ed. 443; Du Pont De Nemours & Co. v. Waxed Products Co., 304 U.S. 575, 58 S.Ct. 1047, 82 L.Ed. 1539, rehearing denied 305 U.S. 672, 59 S.Ct. 227, 83 L.Ed. 436.

The plaintiff has offered little, if any, proof that the words “Royal,” “Royal Brand,” and “Royal Silver Mfg. Co.” as used by it had acquired a secondary meaning and the record would not support such a finding.

Next, for consideration, is the plaintiff’s charge that defendant was guilty of unfair competition. To sustain this charge the plaintiff must prove that the mark used by plaintiff had acquired a secondary meaning or significance and that the necessary and probable tendency of the defendant’s conduct is to deceive the public and to pass its goods off as and for those of the plaintiff, although actual fraudulent intent need not be shown. McGraw-Hill Pub. Co. v. American Aviation Associates, 73 App.D.C. 131, 117 F.2d 293; Lewis v. Vendome Bags, 2 Cir., 108 F.2d 16, certiorari denied 309 U.S. 660, 60 S.Ct. 514, 84 L.Ed. 1008; Sterling Products Corporation v. Sterling Products, D.C., 45 F.Supp. 960.

Not only has the plaintiff failed to prove the existence of a secondary meaning, but there is no evidence that the goods of the defendants have been passed off as those of the plaintiff either intentionally or unintentionally. If there is any confusion, apparently it is not serious for there are only two instances in all the years where there has been any suggestion of it. However, the plaintiff and the defendants in adopting “Royal” — a descriptive word, then in fairly common use by others in more or less the same business— could hardly have failed to realize that situations might arise where some of the public might be confused.

The court should be and is reluctant to interfere in a situation which the parties themselves have permitted to develop. Conflicting interest must always be weighed. Emerson Electric Mfg. Co. v. Emerson Radio & Phonograph Corporation et al., 2 Cir., 105 F.2d 908, 910. It seems to me that it would not be equitable at this late date to deprive the defendants of the use of its mark, in view of the following circumstances: That the defendants have been using the diamond trademark for about thirty years and registered it twenty-four years ago; that the mark appeared on its letter head for over twenty-four years; that it had appeared on the signs on the front of its factory and salesroom for many years; that the defendants had it put on goods manufactured for it by various concerns besides the plaintiff; that during these many years the defendants have, with extensive advertising, built up a large business in goods bearing the mark — all of which it is difficult to realize could have escaped the notice of the plaintiff; also the fact that plaintiff’s own testimony is that the diamond design with the words “Royal Brand Cutlery Company” was first used by it in 1929.

In view of the above it is unnecessary to give consideration to Kellogg Co. v. National Biscuit Co., 2 Cir., 71 F.2d 662, which holds that a registered trade-mark cannot be cancelled except in the manner prescribed by statute. 15 U.S.C.A. §§ 121 et seq. and 93.

The defendants may have a decree dismissing the bill of complaint, Defendants to promptly submit findings of fact and conclusions of law in accordance with the above on five days notice.


author: FORD, District Judge.

text:
    UNITED STATES v. SHARPE et al.
    No. 4768.
    District Court, E. D. Kentucky.
    June 20, 1945.
    Claude P. Stephens, U. S. Atty., and Robert M. Stephenson, Asst. U. S. Atty., both of Lexington Ky., for plaintiff.
    E. S. Wiggins, of Richmond, Ky., for defendant Vernon Kimbrough.
   FORD, District Judge.

This case is submitted upon a motion filed by the defendant, Vernon Kimbrough, for correction of the judgment pronounced upon him and to vacate the consecutive sentences imposed upon him by this Court on April 28, 1941, upon the three counts of the indictment herein. The first count charged the defendants with a conspiracy to transport in interstate commerce stolen motor cars and to conceal them while moving in such commerce, with knowledge that they had been stolen, and thereby to commit offenses against the United States in violation of section 37 of the Criminal Code, 18 U.S.C.A. § 88. The second count charged the substantive offense of transporting an automobile from Atlanta, Georgia, to Owen County, Kentucky, “then and there well knowing that said automobile had been stolen”, in violation of 18 U.S.C.A. § 408. The third count charged receiving, concealing and storing the same automobile with knowledge that it had been stolen, a violation of another provision of 18 U.S.C.A. § 408.

The judgment was entered and sentences imposed upon the defendant’s plea of guilty.

The acts set out in count 1 as constituting overt acts to effect the object of the conspiracy are the same acts charged as substantive offenses in counts 2 and 3. Consequently the defendant contends that the same evidence required for conviction under count 1 would also establish the offenses charged in counts 2 and 3, resulting in such identity of offenses that imposition of sentences under counts 2 and 3 constituted double punishment and double jeopardy in violation of the Fifth Amendment of the Constitution of the United States.

The defendant filed a brief pro se which has had the careful consideration of the Court. He has also had the benefit of the services of able counsel appointed by the Court, at his request, who has filed a brief and presented oral arguments in support of defendant’s motion.

To establish the offense charged in count 1 requires proof of a common understanding or agreement to commit the offense and an overt act in furtherance thereof, but it is not essential that the overt act be a consummation of the intended crime or in itself a criminal act. The gravamen of the conspiracy charge under count 1 is an agreement or understanding between two or more of the defendants, and “While certain evidence under the two counts is identical, much of the evidence necessary to establish conspiracy is not required nor proper for proof of the substantive charge. Conspiracy involves the element of agreement, of the existence of a single design for the accomplishment of the common purpose. There must be a combination by concerted action to accomplish an unlawful result, or to accomplish a lawful result in an unlawful manner. Such evidence may not be competent to prove the substantive offense.” Schmel-ler v. United States, 6 Cir., 143 F.2d 544, 549.

That conspiracy to commit a crime is a separate and distinct offense from substantive offenses which are the object of the conspiracy and that the conspiracy and the substantive offenses may be separately punished are principles now so thoroughly established as to admit of no controversy. United States v. Rabinowich, 238 U.S. 78. 35 S.Ct. 682, 59 L.Ed. 1211; Heike v. United States, 227 U.S. 131, 33 S.Ct. 226, 57 L.Ed. 450; Blue v. United States, 6 Cir., 138 F.2d 351, 360; Westfall v. United States, 6 Cir., 20 F.2d 604, 607; and Kelly v. United States, 6 Cir., 258 F. 392.

In dealing with the question here involved, the Circuit Court of Appeals of the Eighth Circuit in Steigleder v. United States, 25 F.2d 959, 960, made the following comprehensive statement of the controlling law upon the subject:

“ * * * Plaintiff in error asserts that the same criminal act, or offense, cannot be pleaded as an overt act in a conspiracy count, and also as a separate substantive offense. Or to put it another way: That the facts pleaded separately in counts 2 to 17, respectively, are the same that are pleaded collectively as overt acts in the conspiracy count, and that the same evidence required to convict under any one of counts 2 to 17 will sustain a conviction under the conspiracy count.
“This proposition, variously stated, has been made many times before in the federal courts, and always rejected, and does not justify extended discussion. There are no common-law crimes cognizable in the federal courts and the conspiracy section referred to is purely a creature of statute. It in no sense is a combination of offenses, but a distinct and separate crime. The gravamen of the offense is the formation of a conspiracy, or agreement, to commit an offense against the United States, coupled with the doing of any act to effect the object thereof. This requires proof of the common understanding, and of an overt act done in furtherance thereof. But the act which must be done by one or more of the conspirators to effect the object of the conspiracy does not have to be a successful, completed, substantive act or offense. It need not be criminal in its nature. Manning v. United States, 8 Cir., 275 F. 29. An unsuccessful, or partial, attempt at a substantive offense is sufficient; so that the liability for conspiracy is not affected by its success or failure; that is, the full accomplishment of the objective. That is a matter of indifference as far as the government is concerned. Ryan v. United States, 7 Cir., 216 F. 13; Heike v. United States, 227 U.S. 131 at [page] 144, 33 S.Ct. 226, 57 L.Ed. 450, Ann.Cas.l914C, 128.
“On the other hand, to secure a conviction of the substantive offenses set out in counts 2 to 17, the government was required to prove a completed crime. So it has been held that an acquittal under a conspiracy count is not inconsistent with a verdict of guilty under the counts charging the substantive offense, where the overt acts charged in the former are relied upon under the latter charge. Therefore the plea, autrefois acquit, to be availed of, must demonstrate that the offenses referred to are precisely the same in law and in fact, or, as said by Mr. Justice Harlan in Burton v. United States, 202 U.S. 344, 26 S.Ct. 688, 50 L.Ed. 1057, 6 Ann.Cas. 362, in adopting the language of Chief Justice Shaw: ‘The plea will be vicious if the offenses charged in the two indictments be perfectly distinct in point of law, however nearly they may be connected in fact.’ Also Kelly v. United States, 6 Cir., 258 F. 392; Singleton v. United States, 5 Cir., 294 F. 890. And in this circuit see Bell v. United States, 8 Cir., 2 F.2d 543.
“The contentions of plaintiff in error are decisively settled adversely to him by Morgan v. Devine, 237 U.S. 632, 35 S.Ct. 712, 59 L.Ed. 1153, which holds that the test of identity of offenses when double jeopardy is pleaded, is whether the same evidence is required to sustain them, and if not, the mere fact that both charges relate to and grow out of one transaction does not make a single offense, where more than one is defined by the statute. As we have shown, the proof required to sustain the conspiracy charge in the instant case differs in amount and kind from that necessary to convict under the other counts.”

Perhaps the most recent case in point is Banghart v. United States, 4 Cir., 148 F.2d 521, in which the Court, speaking in reference to a claim similar to that here presented, said:

“Their contention is that the crimes charged under counts 3, 4 and 12 were parts of the same crime for which they were given the 25 year sentence under count 2, and that, consequently, additional sentences under those counts are void as constituting double jeopardy.
“We think that there is no merit whatever in the contentions of appellants. It is well settled that conspiracy to commit a crime is a separate and distinct offense from the crime which is the object of the conspiracy and may be separately punished.”

The authorities referred to are applicable and controlling and impel rejection of the defendant’s contention that the judgment and sentences under counts 2 and 3 constitute double jeopardy or double punishment.

The defendant further contends that count 1 of the indictment fails to charge an offense in that it omits the essential averment of agreement. “It is the general rule that an indictment charging conspiracy is sufficient, if it follows the language of the statute and contains a sufficient statement of an overt act to effect the object of the conspiracy.” Williams v. United States, 6 Cir., 3 F.2d 933, 934. The averments of count 1 fulfill this requirement.

The sentences imposed are within the limits fixed by law. The defendant’s claim that they are excessive presents a question which is not open for consideration at this late date. United States v. Mayer, 235 U.S. 55, 35 S.Ct. 16, 59 L.Ed. 129; Bozel v. United States, 6 Cir., 139 F.2d 153, certiorari denied 321 U.S. 800, 64 S.Ct. 937, 88 L.Ed. 1087.

For the reasons indicated, the defendant’s motion for correction of the judgment and vacation of the sentences must be denied. An order will be entered accordingly-


author: MANDELBAUM, District Judge.

text:
    GODFREY v. UNITED STATES.
    District Court, S. D. New York.
    Dec. 12, 1940.
    Clark H. Hebner, of New York City, for plaintiff.
    John T. Cahill, U. S. Atty. for Southern District of N.Y., of New York City (William J. Sexton, Asst. U. S. Atty., of New York City, of counsel), for defendant.
   MANDELBAUM, District Judge.

The defendant moves to dismiss the complaint contending that on the face thereof, the suit is barred by a statute of limitations.

The petition seeks to recover certain gift taxes claimed to have been erroneously and illegally collected from the petitioner. A claim for refund was filed with the Commissioner of Internal Revenue and thereafter was rejected by him on the sole ground that the filing of the claim was untimely in that more than three years had elapsed since the payment of the tax. Section 528(a), (b), (1) (2), Revenue Acts of 1932 and 1934, now Section 1027, Internal Revenue Code, 26 U.S.C.A. Int.Rev. Code, § 1027.

The government urges the dismissal of the suit contending that the filing of a claim within the time specified in the above statute was jurisdictional and unless that requirement was met by the taxpayer, the court must dismiss for want of jurisdiction. United States v. Chicago Golf Club, 7 Cir., 84 F.2d 914, 106 A.L.R. 209; Bryan v. United States, D.C., 22 F.Supp. 232, 233; Huntley v. Southern Oregon Sales, Inc., 9 Cir., 102 F.2d 538.

The petitioner argues that the claim for refund which was rejected by the Commissioner of Internal Revenue was timely in that a four year statute of limitations applies in the instant case, rather than the one relied upon by the government. Revised Statutes, Section 3228(a), now Section 3313, Internal Revenue Code, 26 U.S.C.A. Int.Rev.Code, § 3313.

The three year statute of limitations as contended by the government deals with “an overpayment of any tax imposed by this chapter,” whereas the four year statute of limitations, as contended by petitioner, governs claims for the refunding of any internal revenue tax “erroneously or illegally assessed * * * or in any manner wrongfully collected.”

The background of this litigation shows that the deficiency which was assessed against the petitioner by the Commissioner of Internal Revenue was predicated upon a new departmental regulation which was given a retroactive effect so as to affect the petitioner. It is the legality of this retroactive assessment which is in issue. The claim therefore is not for an overpayment but rather for an illegal and erroneous assessment.

After careful consideration, I have come to the conclusion that the four year statute of limitations applies and that the claim, filed by the petitioner was timely. For an exhaustive analysis of the limitation statutes comparable to the ones at bar, see Huntley v. Southern Oregon Sales, Inc., 9 Cir., 102 F.2d 538. The motion is denied.


author: HOLLZER, District Judge.

text:
    OLIVA v. GOLETA LEMON ASS’N.
    No. 3935-H-Civ.
    District Court, S. D. California.
    July 10, 1945.
    David C. Marcus, of Los Angeles, Cal., for plaintiff.
    Stanley N. Barnes, of Los Angeles, Cal., for defendant.
   HOLLZER, District Judge.

This is an action for damages for personal injuries alleged to have been caused by defendant’s negligence. Jurisdiction is conceded by reason of the fact that plaintiff is a citizen and resident of the Republic of Mexico, while defendant is a citizen and resident of the State of California and the amount in controversy exceeds $3,000, exclusive of interest and costs.

Defendant, Goleta Lemon Association, hereinafter referred to as defendant, by its answer has raised several issues. One of these defenses is to the effect that at the time and place of the accident involved herein plaintiff was an employee of said defendant acting within the scope of his contract of employment, and that his exclusive remedy against said defendant, if any, is under the provisions of the Workmen’s Compensation Act of the State of California, St.Cal.1937, p. 265, § 3201 et seq.

A pre-trial was ordered. During the course of and as the result of such hearing the parties entered into a stipulation respecting the facts relevant to the aforementioned defense. Such stipulation as amended establishes the relevant facts to be as hereinafter set forth.

Under date of November 10, 1943, with the approval of the Secretary of Labor of Mexico plaintiff had entered into a contract with the United States through the Farm Security Administration. Under said agreement the United States obligated itself to contract with employers of farm labor in this country so as to provide work for Mexican nationals, including plaintiff, and pursuant to the provisions thereof the worker was provided with transportation, food, lodging, subsistence and employment. One of said provisions read: “The worker shall enjoy, as regards occupational diseases and accidents, the same guarantees enjoyed by other agricultural workers under the laws of the United States of America.”

Under date of October 4, 1943, defendant had entered into a contract with the United States through the Regional Director of the Office of Labor, War and Food Administration to employ 175 agricultural workers between November 1, 1943 and April 30, 1944. Besides prescribing minimum subsistence allowance and minimum wages, said agreement required the employer to provide board and lodging (conditionally up to January 1, 1944 and unconditionally thereafter), also to pay all costs of transporting workers between the destination points in the United States (here Goleta) and the place or places at which the workers were to perform their labor, also the cost of returning the work-= ers to such destination point, and further the employer was obligated to provide workmen’s compensation insurance for all workers employed during the period of employment.

In addition, said contract required the employer to make available to the workers and their families, without charge, such shelter facilities as were owned by the employer and not otherwise occupied during the period of employment. Said agreement also contained a provision reading: “The workers shall be entitled to the benefit and protection of all applicable child labor, and other laws and regulations of the Government and of the State or States in which the work is performed, and the employer shall provide workmen’s compensation insurance for all workers employed hereunder during the period of employment.”

Subsequent to executing said last-mentioned contract, defendant entered into an agreement with Citrus Emergency Harvest, Inc., hereinafter referred to as “Citrus”. Said agreement designated defendant as employer and under its terms Citrus guaranteed the performance of all cooperative employment agreements, and was authorized to allocate workmen among various citrus growers in California. One of the provisions of said contract with Citrus read: “Employer agrees that it will provide and maintain workmen’s compensation insurance for each worker employed under this contract and will upon request furnish Corporation (Citrus) with sufficient information to show that all the workers are covered by the terms of the policy.”

At the time of the accident in question, defendant was maintaining as one of the places of abode for Mexican nationals, as required by its contract with the United States, a certain area known as “Norman-die Auto Court”. Said area was located adjacent to and westerly of U. S. Highway 101, near Goleta, California. Defendant had selected said area as plaintiff’s place of abode, and at the time of and prior to said accident plaintiff resided in one of the cabins located within said area. His lodging and food were paid for out of his wages. Between said cabins and said highway were a restaurant and kitchen, also an ice-house and a store, said restaurant and kitchen having been converted to said purpose by defendant to provide food for «the Mexican nationals, including plaintiff.

For sometime prior to the day of the accident, and up to March 27, 1944, plaintiff had acted under defendant’s control in working upon various ranches and defendant had paid his wages. But for said accident plaintiff also would have worked for defendant on March 28, 1944. In fact sometime subsequent thereto plaintiff resumed working for defendant.

At the time involved herein defendant owned seven vehicles which were used each day to transport Mexican nationals, including plaintiff, from their place of abode to their place of work, such transportation being furnished in accordance with defendant’s contract before mentioned. On the day of the accident plaintiff was scheduled to board one of said vehicles, but not the one which caused his injury. On the morning of March 28, 1944, one of defendant’s employees was driving one of said vehicles, and about fifteen Mexican nationals, employed by defendant and working under said driver, were riding therein. For the purpose of picking up about thirteen more Mexican nationals the driver of the last-mentioned vehicle drove the same to said Normandie Auto Court, more particularly onto, a portion of the premises comprising said Court adjoining said highway and in the vicinity of said restaurant and kitchen, where many of the Mexican nationals were waiting for transportation to their place of work.

While engaged in this operation, the driver backed said' vehicle so as to cause the same to strike and injure plaintiff. At that time the latter was standing or walking in the vicinity of the aforementioned kitchen and store, and was then waiting to be picked up by one of said vehicles and to be transported therein to his place of work. All workers residing at said Nor-mandie Auto Court were picked up daily in front of the same, and this was the general area where it had been customary to pick up plaintiff. Said accident occurred at the approximate time when plaintiff and other Mexican nationals residing at said court customarily were picked up to be taken to work. Defendant reported plaintiff’s injury to the State Compensation Insurance Fund, its compensation insurance carrier.

A pre-trial order was entered in conformity with the aforementioned stipulation. Said order adjudges that one of the issues to be determined herein is whether this court has jurisdiction of the action at bar. The principal question to be decided upon this issue, therefore, is whether plaintiff’s remedy for the injury complained of is restricted to a proceeding before the .Industrial Accident Commission of the State of California.

Plaintiff contends that the facts herein-before set forth do not bring this case within the jurisdiction of said Commission. In support of this contention plaintiff relies upon a recent decision rendered by a District Court of Appeal of said state, in the case of Garcia v. Yedor, 154 P.2d 1.

As disclosed by the opinion filed in the case cited, the only question there determined was whether the amended complaint stated a cause of action. The trial court had ruled that said complaint showed that complainant had been injured upon the premises of his employer, and had rendered judgment on the pleadings that his only remedy was before the Industrial Accident Commission, in accordance with the Workmen’s Compensation Act. In reversing that judgment the Court there said:

“The amended complaint alleges that defendants operated a die casting plant, * * * ; that the plaintiff was an employee of the defendants; that the plaintiff entered the plant before it was time for him to go to work, and went to a part of the plant where there was located a die casting machine operated by another employee * * * to visit with that employee; whereupon the machine was negligently started, thereby spattering molten metal into plaintiff’s eye and upon parts of his body to his consequent injury and damage.
“Judgment for defendants was rendered upon the assumption that the plaintiff employee having been injured upon the premises of the employer, his only remedy was before the Industrial Accident Commission * * *. This would be true if the only inference which may be drawn from the complaint is that the plaintiff was injured in the course of his employment.
“With certain exceptions, it is settled law in this state that one injured coming or going to his work is not injured in the course of his employment. These exceptions are discussed in Freire v. Mattson N. Co., 19 Cal.2d 8, 118 P.2d 809, 811. In that case the employee was injured while on his way to work, and while he was upon a bulkhead leading to a pier * * *. It was held that while the employee was not under the employer’s control or management at the time of his injury, the bulkhead was the ‘means of access’ to the pier from which the employee had to embark to reach his place of employment, and his remedy was under workmen’s compensation. A somewhat similar situation existed in Judson Mfg. Co. v. Industrial Acc. Comm., 181 Cal. 300, 184 P. 1, where the employee was injured while using a path not controlled by the employer along a railroad right-of-way. jjj ij;
“In the present case, taking the complaint by its four corners, as we must, the inference may be drawn that the plaintiff was not injured while following a necessary route on his way to work, but was hurt when he was engaged upon a venture of his own. The fact that the accident was caused by a fellow employee, upon the employers’ premises, is not controlling. The test is whether or not the particular act involving accident and injury was reasonably contemplated by the employment. Whiting-Mead C. Co. v. Industrial Acc. Comm., 178 Cal. 505, 173 P. 1105, 5 A.L.R. 1518. * * *
“Under the facts alleged in the complaint the injury was occasioned while the employee was at a place and doing something not reasonably contemplated by his employment. The conditions of compensation do not concur, and the right in the plaintiff to recover is not exclusively under workmen’s compensation.”

Our analysis of the opinion from which we have just quoted persuades us that the facts upon which the same was based are readily distinguishable from those presented here. Furthermore certain portions of that opinion sustain the position taken by the defendant herein. In the case cited the employee was making a social visit and was at a place where he was not expected to be at the time of the injury complained of. As the court there pointed out, the employee “was not injured while following a necessary route on his way to work, but was hurt when he was engaged upon a venture of his own.” In other words, as the court there expressed it, “the injury was occasioned while the employee was at a place and doing something not reasonably contemplated by his employment.”

On the other hand in the action at bar the facts disclose that plaintiff was injured while following a necessary route on his. way to work, and while waiting to be transported by his employer to his place of work. Here the employee was at a place and doing something reasonably contemplated by his employment.

The same opinion refers with approval to the cases of Judson Mfg. Co. v. Industrial Acc. Comm., 181 Cal. 300, 184 P. 1, and Freire v. Matson N. Co., 19 Cal.2d 8, 118 P.2d 809. In the first of these two decisions the court upheld an award by the Industrial Accident Commission. There it appeared that the employee was killed while walking on a path leading from the end of a public street to the gate of his employer’s factory. The path was on a railroad right-of-way and was neither owned nor controlled by the employer. The court there awarded compensation upon the grounds that it was the necessary means of access to the employer’s premises, required by the employer and contemplated in the employment, and that as between the employer and his employee it was in practice a part of the employer’s plant, and hence that such injury and death arose out of and occurred in the course of the employment.

In the remaining case, the facts showed that the employee of a steamship company was injured while on his way to work and while he was on a bulkhead leading to a pier assigned to the employer for the docking of its ships, and from which pier he was to embark to reach his place of employment. The bulkhead was under the control of the Harbor Commission, but it constituted the only means of reaching said pier. The trial court held that the injured employee’s remedy was under the Workmen’s Compensation Act. In affirming this ruling, the Supreme Court of California said, in part (19 Cal.2d 8, 118 P.2d 809, 811, 812):

“It is well settled that while an employee is ordinarily not entitled to workmen’s compensation for an injury sustained in going to or departing from work, he is entitled to compensation if the employment creates a special risk, for injuries sustained within the field of that risk. Such a risk may attend the employee as soon as he enters the employer’s premises or the necessary means of access thereto, even when the latter is not under the employer’s control or management. (Citing many California cases)
“It is evident from the facts in the instant case that the bulkhead is ‘the means of access’ to the pier ‘required and authorized by the company’, that it is ‘in fact, dominant as to user in the employer, servient to its purposes, and intimately associated with its plant as a part of its necessary establishment.’ Judson Mfg. Co. v. Industrial Acc. Comm., supra, 181 Cal. page 301, 184 P. page 1. * * *
“In the instant case the plaintiff by reason of his employment was subjected to the risks arising on the bulkhead peculiarly and to an abnormal degree. At the time of his injury plaintiff was upon the bulkhead solely in the line of his duty as an employee. See Judson Mfg. Co. v. Industrial Acc. Comm., supra * * *. He was obliged to be there on the morning of the accident before 8 o’clock in readiness to go on the pier and thence to his ship at that time. The injury to plaintiff occurred upon the only practical means of access to the employer’s premises. The hazard to which he was subjected when he arrived upon the bulkhead was created by his employer, its agents and those with whom it did business. See State Comp. Ins. Fund v. Industrial Acc. Comm. [194 Cal. 28, 227 P. 168.] Under these circumstances, the hazard was one directly connected with the employment and, under the authority of the cases cited, the injury was one arising out of and in the course of plaintiff’s employment.
“The fact that the accident happened some minutes before plaintiff was to begin work is immaterial. Judson Mfg. Co. v. Industrial Acc. Comm., supra. See Cromwell v. Los Angeles Ry. Corp. [102 Cal. App. 499, 283 P. 375.] ‘The employment contemplated is entry upon and departure from the premises as much as it contemplated his working there, and must include a reasonable interval of time for that purpose.’ Cudahy Packing Co. v. Parramore, supra, 263 U.S. [418, 423-426], 44 S.Ct. [153], 68 L.Ed. 366, 30 A.L.R. 532.”

In the present suit, applying the principles announced in the Judson Manufacturing Co. and the Freire cases, it may be noted that here the employee was injured while at a place which was owned and controlled by the employer, which was the necessary means of access to the place of work, required by the employer and contemplated in the employment, and that as between the employer and his employee said place was in practice a part of the employer’s plant, and hence plaintiff’s injury arose out of and occurred in the course of the employment.

To the same effect see Larson et al. v. Industrial Acc. Comm., 193 Cal. 406, 224 P. 744; Pacific E. I. Co. v. Industrial Acc. Comm., 77 Cal.App. 424, 246 P. 825; Cudahy Packing Co. v. Parramore, 263 U.S. 418, 423-426, 44 S.Ct. 153, 68 L.Ed. 366, 30 A.L.R. 532; and Bountiful Brick Co. v. Giles, 276 U.S. 154, 48 S.Ct. 221, 72 L.Ed. 507, 66 A.L.R. 1402.

In the Larson case awards had been made by the Commission to certain employees and also to the heirs of certain deceased employees of one Eric Larson. The facts there disclosed that the injured employees were employed on a ranch and were required to accept the employer’s accommodations, including a bunkhouse, for board and lodging, such accommodations being part of their pay. One of the employees had finished his day’s work and was waiting for supper in said bunkhouse, when he was injured through an explosion caused by a chore man throwing coal oil on a bunk house fire which he was hired to build. Another employee, killed by the same explosion, had lived with his family in a cottage on the ranch, sometimes ate at the bunkhouse and had gone there after work to give orders to men constituting a night shift. Affirming said awards, the Supreme Court of California said, in the course of its opinion (224 P. 745):

“Almost the same contentions that are now made by these petitioners were presented for our consideration in a case only recently decided. Associated Oil Co. v. Industrial Acc. Comm. [191 Cal. 557], 217 P. 744. The question there submitted for decision was whether injuries occurring about and in an employer’s bunkhouse, situated on the employer’s premises, sustained by employees during their leisure hours, while reasonably using the bunkhouse in a proper manner during intermissions from work, are within the purview of the Workmen’s Compensation Act. We held that employees are in the course of their employment while properly spending their time, when off duty, in the bunkhouse furnished by the employer for such purpose, and at which the men are compelled to live. We said: ‘The general rule appears to be that when the contract of employment contemplates that the employees shall sleep upon the premises of the employer, the employee, under such circumstances, is considered to be performing services growing out of and incidental to such employment during the time he is on the premises of the employer. (1 Schneider W'orkmen’s Compensation Law, p. 608, par. 279.) The test is whether or not the workman is given a choice in the matter and is as free as possible to come or go as he pleases.’
“ * * * The facts of the case we are now considering present a situation in which ‘the employer places the employee in such circumstances that his time is never his own, where he has no discretion as to where he shall sleep and where he shall eat. Under such circumstances the workman must be considered in the employ of the employer all of the time, or at least performing a service which is incidental to the employment he is engaged in.’ Holt Lumber Co. v. Industrial Comm., 168 Wis. 381, 170 N.W. 366; Honnold on Workmen’s Compensation, § 109, p. 373.”

In the second of the four cases just cited, it appeared that an employee was injured a few minutes before working hours while passing over the working premises of the employer to obtain breakfast at the employer’s cookhouse where the employees were required to take their meals. Holding that such injury was sustained in the course of and grew out of the employment, the court in the course of its opinion said (246 P. at page 826) : “As said in Judson Mfg. Co. v. Industrial Acc. Comm., 181 Cal. 300, 302, 184 P. 1, ‘the right to compensation is by no means restricted to those cases where the injury occurs while the employee is actually * * * manipulating the tools of his calling’ ; and, where it appears, as here, that the injury occurred on the working premises of the employers, that the employee, while not actually performing the work for which he was employed, was thereon for a purpose contemplated, and, by fair inference from the testimony, required by them at a time, which, though not within his specified working hours, closely preceded their commencement, the situation is one in principle within the decision in State Comp. Ins. Fund v. Industrial Acc. Comm., 194 Cal. 28, 227 P. 168, and the injury was reasonably held to have been sustained in the course of and to have grown out of the employment.”

In the Parramore case, supra, the United State Supreme Court held that an employee was entitled to an award under the Utah Workmen’s Compensation Act, where the facts showed that the' employee while on his way to work was killed by a locomotive at a public crossing on a railroad adjacent to his employer’s factory, and where it appeared it was necessary for the employees to cross the tracks in order to get to the place of work and where they, in effect, were invited by the employer to do so. In the course of its opinion, the Supreme Court there said (263 U.S. at page 423, 44 S.Ct. at page 154, 68 L. Ed. 366, 30 A.L.R. 532) : “Workmen’s Compensation legislation rests upon the idea of status, not upon that of implied contracts; that is, upon the conception that the injured workman is entitled to compensation for an injury sustained in the service of an industry to whose operations he contributes his work as the owner contributes his capital — the one for the sake of the wages and the other for the sake of the profits. The liability is based, not upon any act or omission of the employer, but upon the existence of the relationship which the employee bears to the employment because of and in the course of which he has been injured.”

Again in 263 U.S. at page 426, 44 S.Ct. at page 155, 68 L.Ed. 366, 30 A.L.R. 532, the court said:

“Here the location of the plant was at a place so situated as to make the customary and only practicable way of immediate ingress and egress one of hazard. Parramore could not, at the point of the accident, select his way. He had no other choice than to go over the railway tracks in order to get to his work; and he was in effect invited by his employer to do so. And this he was obliged to do regularly and continuously as a necessary concomitant of his employment, resulting in a degree of exposure to the common risk beyond that to which the general public was subjected. The railroad over which the way extended was not only immediately adjacent to the plant, but, by means of switches, was connected with it, and in principle it was as though upon the actual premises of the employer.
“We attach no importance to the fact that the accident happened a few minutes before the time Parramore was to begin work, and was therefore, to that extent, outside the specified hours of employment. The employment contemplated his entry upon and departure from the premises as much as it contemplated his working there, and must include a reasonable interval of time for that purpose.” (Citing cases.)

In the Bountiful Brick Co. case it was held that where an employee is injured while passing with the express or implied consent of the employer to or from his work over the premises of another, in such proximity and relation to the premises of the employer as to be in practical effect a part of them, the injury is one arising out of and in the course of the employment. In affirming a judgment of the Supreme Court of Utah, which had affirmed an award of compensation by the Industrial Commission of that state, the United States Supreme Court said (276 U.S. at pages. 158, 159, 48 S.Ct. at page 222, 72 L.Ed. 507, 66 A.L.R. 1402):

“Liability was constitutionally imposed under the Utah Compensation Law if there was a causal connection between the injury and the employment in which Giles was then engaged substantially contributing to. the injury. Cudahy [Packing] Co. v. Par-ramore, 263 U.S. 418, 423-425, 44 S.Ct. 153, 68 L.Ed. 366, 30 A.L.R. 532. And employment includes not only the actual doing of the work, but a reasonable margin of time and space necessary to be used in. passing to and from the place where the work is to be done. If the employee he injured while passing, with the express or implied consent of the employer, to or from his work by a way over the employer’s premises, or over those of another in such proximity and relation as to be in practical effect a part of the employer’s premises, the injury is one arising out of and in the course of the employment as much as though it had happened while the employee was engaged in his work at the place of its performance. In other words, the employment may begin in point of time before the work is entered upon and in point of space before the place where the work to be done is reached. Probably, as a general rule, employment may be said to begin when the employee reaches the entrance to the employer’s premises where the work is to be done; but it is clear that in some cases the rule extends to include adjacent premises used by the employee as a means of ingress and egress with the express or implied consent of the employer.” (Citing cases) * * *
“The present case, though it comes near the border line, falls within the principle of the Parramore case. * * * No definite line of travel being indicated by the company or followed by the employees, who, with the company’s full knowledge and acquiescence, habitually crossed wherever they saw fit, it results that, however the crossing was made, the risk thereby incurred was reasonably incidental to the employment and became annexed as an implied term thereof.”

Similarly, it may be said upon the record before us that plaintiff, a citizen of Mexico, was in the United States solely by virtue of a contract of employment made with him, that pursuant to the terms of said contract he was provided with lodging, subsistence, employment and also transportation by defendant, his employer, between the place of his lodging and the location at which he was to perform his labor. Likewise, the facts here disclose that plaintiff sustained the injury complained of upon premises where under the terms of his employment he was required to be, not only for his lodging and subsistence, but also for the purpose of being transported to his place of work, that the scene of the accident was intimately associated with the employer’s plant as a part of its necessary establishment; also that at the time of his injury plaintiff was upon said premises solely in the line of his duty as an employee; that he was obliged to be there on the morning of the accident in readiness to go to his place of work; and that the hazard to which he was subjected at the scene of the accident was created by his employer.

In other words, it appears in the instant suit that plaintiff was properly spending his time on premises furnished by his employer for such purpose, and that the injury complained of occurred on said premises; and also that plaintiff, while not actually performing the work for which he was employed, was at the time of said accident on said premises for a purpose contemplated and by fair inference required by his employer at a time which, though not within the specified working hours, closely preceded their commencement.

Accordingly we conclude that plaintiff was injured as the result of a hazard directly connected with his employment, and that his injury was one arising out of and in the course of his employment.

We therefore hold that plaintiff’s remedy is restricted to a proceeding before the Industrial Accident Commission of the State of California, and that this Court lacks jurisdiction of the action at bar.


author: BYERS, District Judge.

text:
    CHAMPION SPARK PLUG CO. v. SANDERS et al.
    Civ. A. No. 3767.
    District Court, E. D. New York.
    July 2, 1945.

      Wilber Owen, Carl F. Schaffer, and Owen & Owen, all of Toledo, Ohio (Joshua Ward and Ward, Crosby & Neal, all of New York City, of counsel), for plaintiff.
    John Wilson Hood, of New York City, for defendants.
   BYERS, District Judge.

This cause has undergone final hearing,, and no substantial change in its essential" features has been brought to light which' would justify a repetition of what was. said in connection with the application for preliminary injunction. 56 F.Supp. 782 and 787. The cause is not essentially different from the cases of Champion Spark Plug Co. v. Emener, D.C., 16 F.Supp. 816, and Champion Spark Plug Co. v. Reich, 8. Cir., 121 F.2d 769.

The matters which have been illuminated' in the testimony may be briefly referred to :

A. As to the structural difference between the spark plugs sold by the defendants, and the new plugs manufactured and: sold by the plaintiff, forty of such plugs, constitute plaintiff’s exhibits 1, 2, 3 and 4, and the respects in which the repaired secondhand plugs no longer possess the physical characteristics imparted to them by the plaintiff are specified in Findings 11 and 12: as submitted by the plaintiff. The evid-ence on this subject is undisputed, and no attempt has been made to trace the source of those changes, either to wear and tear prior to the discarding of the plug by the original user, or to the process of repair as conducted by the defendants. It is the end result which has to do with the plaintiff’s trade-mark rights, not the means whereby that condition was brought about.

It seems too clear for further discussion, that plaintiff’s product, which is a precision device, of accessory character, cannot be sold in the secondhand market in a fundamentally altered form under the plaintiff’s trade-mark, without doing violence to that which the trade-mark proclaims ; it seems equally clear that any reference to the origin of the repaired plugs, in connection with their distribution by the defendants, must be in an explanatory sense merely, and in such a form as to show that the defendants have repaired a used article of designated origin and that the defendants stand sponsor for the quality of the repairs which they have made, and also the anticipated performance of the rehabilitated device.

B. As to the removal of the trade-mark “Champion”, and the type or style marks on the insulator, the evidence leaves no room for doubt that this can be done safely and cheaply, and without impairment of the porcelain itself. The demonstration at the trial was conclusive on that subject.

The necessity for doing this as to the trade-mark follows from what has been written above. The reason is equally applicable to the style marks and numbers. The variations in the physical components of the plaintiff’s products referred to in Findings 11 and 12, as sold by the defendants, compel the removal of the style marks and numbers from them, if misrepresentation is to be avoided.

The defendants argue that the specifications employed by the plaintiff are too minute and precise to have any practical value. If this proves anything in a trademark case, it is that the defendants’ business can be conducted profitably without regard to plaintiff’s system of style marks and numbers, and consequently they can be removed with entire confidence that no damage will be thereby occasioned to the defendants.

C. As to the unfair competition aspect of the case, a doubt still persists on the part of this Court. There is no evidence of a palming off of the defendants’ wares as the new and original product of the plaintiff; there is no evidence that any purchaser was induced to buy the plugs as sold by the defendants, relying upon a representation that they were as serviceable as new ones.

It may be assumed that to some undisclosed extent purchasers who would otherwise buy new plugs of plaintiff’s manufacture are induced to take the defendants’ wares instead, at a lower price, but that is not unfair competition, so long as no deception is practiced by the defendants to accomplish that purpose, and so long as they do not render deception convenient or likely on the part of their customers among service station proprietors.

All cases relied upon by the plaintiff have been examined, and involve substitution or palming off, or the use of a trade-name so as to suggest an untrue origin of the merchandise in question, in order either to capture some of the plaintiff’s business, or to unfairly trade upon his (its) name and commercial stature.

The most that can be urged here is that possibly these defendants have done the latter, and their failure to print their own name and place of business on their cartons and boxes lends a certain force to that argument. No good reason appears why they should not openly stand sponsor for the repairs that they have effected in order to render their wares acceptable to users.

I prefer not to make a finding that unfair competition has been shown in this record, but to leave the issue for future determination, if the occasion should arise, in view of the requirements hereafter to be stated touching the wording deemed to be appropriate for use by the defendants upon their cartons and boxes.

Special defenses have been pleaded which seem not to affect the issues, but which should be referred to by way of assurance that they have not been ignored:

Estoppel. The plaintiff puts out a spark plug cleaner and recommends that it be used by those who purchase its product. How this could have resulted in a change of position on the part of defendants, whereby they have acted or refrained from acting in reliance upon the plaintiff’s said conduct, is not made to appear. What a spark plug user may do to keep his own property in its best condition, and what a dealer in discarded plugs, who buys, repairs and sells them for further use, may do lawfully by way of promoting his business, seem to be so remote, one from the other, as to discourage discussion of the subject.

Implied License. This is related to the foregoing, and means that the sale of the plug-cleaning device in effect licenses the defendants not only to use it, but to sell plugs which they have repaired under the plaintiff’s trade-mark.

If what has been already written by other courts and this fails to indicate that the plaintiff’s trade-mark is not assigned as part of the plugs, or as part of the cleaning device, and consequently no license can be implied in favor of these defendants in connection with their own commercial traffic, further exposition of the subject would be futile.

Laches. As stated in the opinion on temporary injunction, the defense, if seriously advanced, is without substance. In 1936 the plaintiff gave written notice to the defendants of the then recent decision in the Emener case, supra, and has persistently continued ever since to admonish the defendants of its intention to seek legal redress. The proceedings initiated before the Federal Trade Commission in 1938 were not concluded until 1941 when the defendants withdrew their appeal from a “cease and desist” order.

The fact that the order was complied with by the defendants of course does not affect the claim of laches.

This complaint was filed in April of 1944. Meanwhile the Reich case, supra, was decided in the Eighth Circuit in 1941. So far from sleeping on its rights, clearly the plaintiff has been diligent in asserting them.

So far as the motion to dismiss as to Peter Sanders is concerned, there is evidence, but not from him, although he is said to have been in court throughout the hearing, that late in 1943 or early in 1944 he withdrew from the partnership with his sons, the remaining defendants. No formal proof of dissolution of the firm was offered, and he and his wife own the building in which the business is conducted. For all that appears, he may still be a silent partner, and it is not seen that dismissal as to him would be appropriate, but rather that the injunction to be issued should in terms include him.

It results from the foregoing and from the findings which are filed herewith, that the temporary injunction is to be supplanted by a permanent injunction which shall provide:

1. The defendants are to be forbidden to use the plaintiff’s trade-mark “Champion” on the spark plugs repaired and sold by them of the plaintiff’s manufacture, and also the style and type marks of figures or letters or both; such trademark and such style and type marks are to be removed entirely from said plugs.

2. The word “used” or “repaired” is to be stamped and impressed in the metal of the “hex”, and the word is to appear in white paint, and the metal part of the plug is to be painted some distinctive color as may be agreed upon.

3. The plaintiff’s trade-mark “Champion” and the plaintiff’s type or style marks are to be removed from the cartons and containers.

The defendants may affix to the cartons and containers of the plugs which they sell which were originally manufactured by plaintiff, the following: “Used spark plug(s) originally made by Champion Spark Plug Company, repaired and made fit for use up to 10,000 miles, by Perfect Recondition Spark Plug Co., 1133 Bedford Ave., Brooklyn, N. Y.”

The name of the plaintiff may be in slightly larger type than the rest of the body of the legend, and the name and address of the defendants to be larger and more prominent than the legend itself.

The word “repaired” is chosen as being more accurate than the word “reconditioned”, which would be inappropriate in view of the changes in physical characteristics referred to in findings 11 and 12.

Settle decree; no costs.


text:
    UNITED STATES v. 25.4 ACRES OF LAND IN BOROUGH OF BROOKLYN, KINGS COUNTY, et al.
    Miscellaneous No. 586.
    District Court, E. D. New York.
    July 9, 1945.
    Harry T. Dolan, Sp. Asst. to U. S. Atty. Gen. (Sidney L. Segall, Atty., Dept. of Justice, of Washington, D. C., of counsel), for petitioner-plaintiff.
    Ignatius M. Wilkinson, Corp. Counsel, of New York City (Julius Isaacs and Alfred D. Jahr, both of New York City, of counsel), for City of New York.
   BYERS, District Judge.

These are a motion and a cross-motion by the United States as Petitioner and the City of New York, in reference to the report of the Commissioners in Condemnation filed-April 12, 1945, respecting damage parcels 1, 5, 5-A, 9, 10, 22-A, 23, and 25.

As to parcel 1, it is understood that, upon the argument, the City withdrew its opposition to confirmation and joined in the motion made to confirm by the Government. If that understanding is correct, so much of the motion is granted.

As to parcels 5, 10, and 25, which involve claims for relocation as to an electric power line, and rerouting as to street cars, rendered necessary by the Government’s acquisition of a portion of Washington Avenue, the City favors confirmation of the awards, and the Petitioner asserts that it has not had an opportunity to present evidence in opposition to that offered by the City, as the result of a misunderstanding, and now desires that the matter be remitted to the Commission for that purpose. It is not the Court’s understanding that such an application was made to the Commissioners and refused by them, that they assumed, in formulating their report, that they were justified in believing that no such opposing evidence was likely to be submitted by the Government.

That the Petitioner should be accorded the chance to present evidence upon a subject which has eventuated into an award of $690,000.00 in round figures to the City seems too clear for labored discussion.

As to parcels 5, 5-A, 9, 10, 22-A, 23, and 25, which involve public streets, a bridge structure, and land under water owned by the City, but subject to easements of navigation, the question is carefully presented in the report and argued pro and con in these motions, as to whether there can be an award to the City for more than nominal damages. The Commission is persuaded in the negative.

In reference to parcel 10 (as to the bridge) an award has been made for the scrap value of the bridge, which the City moves to set aside, and the Petitioner does not oppose.

The City’s motion to set aside the nominal awards, on the theory that something of actual value to the Municipality has been taken, is actively opposed. In that connection the Court understands the trend of the oral argument to be that in any case the City should be permitted to present to the Commission an alternative theory of damage; namely, that it should now be allowed to show, if it can, that it has incurred demonstrable items of cost, in providing substitute streets rendered necessary by the taking of Washington Avenue, Taylor Street and Hewes Street. Cf. United States v. Des Moines County, 8 Cir., 148 F.2d 448.

There seems to be no good reason why the City should not have two strings to its bow, but how the new theory can avail in connection with parcels 10 and 22-A is not made to appear; as to the streets, it is thought that, in all fairness, the City should be given an opportunity to present its latest theory, even at the eleventh hour.

Since the proceeding must go back to the Commission for the taking of further testimony in the two respects indicated, decision of the motions to confirm, except with respect to parcel 1; will be reserved, pending the coming in of the supplemental report hereby rendered necessary. It is not intended that the proceeding be reopened generally, but that the further hearings as to matters herein discussed be confined to the particular issues as to which the Petitioner and the City desire to offer testimony, and to present their arguments in full to the Commission.

The supplemental report will set forth the conclusion of the Commission as to whether there should be a revision of any or all of the said awards heretofore made.

Settle order.


author: BRIGHT, District Judge.

text:
    DEFENSE SUPPLIES CORPORATION v. NORWALK TIRE & RUBBER CO.
    District Court, S. D. New York.
    June 11, 1945.

      Harold E. Jacobson, of New York City, Agency Counsel, Reconstruction Finance Corporation, (Sol A. Liebman, Asst. Agency Counsel, and Henry Fabricant, both of New York City, of counsel), for plaintiff.
    Ingram & Schenck, of New York City, for defendant.
   BRIGHT, District Judge.

Plaintiff brings this action to recover the balance of the purchase price of automobile tires and tubes sold by it to defendant under a written contract. It is stipulated that tires and tubes of the aggregate value of $609,889.72, as determined by formula D of the contract later referred to, were purchased, that defendant has paid on account thereof $571,979.42, leaving a balance of $37,910.30, against which defendant is entitled to a credit of $7,885.21. For the balance $30,025.09 judgment is sought by plaintiff, with interest at six per cent, from July 9, 1943.

Defendant pleads payment in full as one of its defenses. In that defense it has failed because upon its own figures testified to by its treasurer, and making allowance for a deduction of $4,671.38 for storage, referred to hereafter, there is an unpaid balance of $2,608.49.

Its second defense, which if sustained, it is stipulated shall entitle defendant to a judgment dismissing the complaint, is that prior to the execution of the contract referred to, the Office of Price Administration, as agent of the plaintiff, to induce the contract sued upon, assured defendant that maximum prices for tires and tubes would be adjusted so as to permit it to “cover in full the costs imposed” upon it by the plan mentioned in the contract, such adjustment to be in two steps, a temporary one, and, second, a final adjustment after the final establishment of prices at which plaintiff would resell passenger car tires to members of the plan, of which defendant was one. It is further alleged that these representations were false and fraudulent and were either known by plaintiff so to be, or in making said representations plaintiff intended to convey to defendant the impression that plaintiff had actual knowledge of the matters stated, be influenced thereby, and act in reliance thereon, when plaintiff was at the time conscious that it had no such knowledge, and knew of facts sufficient to cause it to suspect the falsity thereof, and were made without having knowledge whether the same were true or false and without reasonable grounds to believe them to be true, and with reckless disregard of the injury which might thereby be caused to the defendant, of all of which defendant was in ignorance; that defendant relied thereon, that there was a temporary-adjustment as promised, but no final adjustment so as to permit defendant to recover the full costs imposed upon it by the plan.

The counterclaim for damages alleged to have been sustained by defendant because of misrepresentations has been withdrawn.

The impact of the war in Europe caused a shortage of crude rubber in this country, resulting in an allocation plan, among others, for the use of the same in the manufacture of automobile tires and tubes. The restrictions upon use became more stringent as the year 1941 passed. The invasion of Pearl Harbor by the Japanese and the consequent declaration of war, and the elimination entirely from the market of the supply of crude rubber from the East Indies, resulted in a “freezing” by the O.P.A. of all automobile tires and tubes. That created' a critical financial situation among jobbers and dealers. They had stocks of tires and tubes which they could not sell and for which they could not pay. The O.P.A. attempted to solve the problem. A plan was finally devised, to be financed by plaintiff, by which the manufacturers, of which defendant was one, and mass distributors like Sears Roebuck and Montgomery Ward,, were requested and finally agreed to purchase from the dealers and jobbers all of the passenger tires and tubes held by the latter, the price to be that which had been paid by the dealers and jobbers, plus 10% for their profit and expenses in handling,, etc. The tires and tubes so purchased were to be sold by the manufacturers and mass-distributors to plaintiff at the price paid to -the jobbers and dealers, plus certain charges for handling, storage, etc. As the-manufacturer thereafter required tires and tubes for its trade, it could repurchase so much thereof previously sold to the plaintiff at prices to be determined by formula D attached to the contract.

A number of meetings were had between representatives of the O.P.A. and the manufacturers and mass distributors, which defendant attended, and at which the proposed plan was discussed and shaped. The contract in question was prepared by the plaintiff and submitted to those meetings as the-contract which it required to be signed by-defendant and other manufacturers as the-basis for any financing of the project. None of the representatives of plaintiff attended the meetings mentioned, or made any statements or representations now relied upon by defendant. The O.P.A. had nothing to do with the preparation of the contract, or the terms upon which plaintiff would advance not to exceed $75,000,000 to relieve the situation caused by the freezing of the tires and tubes. The fixing of the maximum sales price was, of course, within the sole jurisdiction of the O.P.A., and plaintiff had nothing to do with that and could not in any way regulate the same.

The contract in question is dated January 28, 1942. It was not actually executed by defendant until February 27, 1942, although copies of it were sent to it on February 11, 1942. When executed, it was returned by defendant to the O.P.A. with a “Letter of Escrow” which stated that the contract was to be turned over to the plaintiff “only when you (the O.P.A.) have received, and are prepared to deliver to Defense Supplies Corporation contracts of a like form executed by all members.” The members consisted of 56 manufacturers, defendant being one of them, and mass distributors, whose names were attached to the contract.

Prior to the sending of the contract, the Administrator of the Office of Price Administration, on February 9, 1942, had written to the defendant and other manufacturers and mass distributors, a letter outlining the procedure of sale to plaintiff, to repurchase by them, and the price which defendant must pay (which was the price charged plaintiff at the time of the sale to it, plus a percentage calculated according to formula D representing the “proposed share of the cost to the industry of the plan”), and further read as follows:

“In order to protect a Member from loss under the Plan, it will be necessary to permit him to sell to the trade and to consumers any tire or tube that was in his ■possession at the time of inception of the Plan at a price equal to the present maximum price plus a dollar amount equal to X percent of the car-door cost of such tire or tube. However, any tire or tube that was not in a Member’s possession at the inception of the Plan, but was bought back by the Member from dealers, consignees, and jobbers, must have, at one time, been sold downstream by such Member at a markup over and above car-door cost. Presumably, such markup included a profit related to the cost of manufacturing as well as of distributing such tire or tube. As a result of the Plan, this Member will be in a position to sell such tire or tube downstream a second time. However, as an offset to the possible profit benefit accruing as a result of such second sale, manufacturers who are Members under the Plan have agreed to absorb all handling and reconditioning costs incurred on tires that are returned by dealers, consignees, and jobbers, and to limit their charge for inspection and reconditioning on tubes that are returned to a maximum of 5^ per tube. In general and to the extent that it is possible in an industry-wide ceiling price adjustment, this Office will attempt to guard against permitting any Member from reaping any undue gain, since it is essential that the Plan should not have the effect of placing any Member in an especially advantageous competitive position.
“I assure the participating manufacturers and mass distributors that maximum prices for tires and tubes will be adjusted so as to permit them to cover in full the costs imposed upon them by the Plan. This adjustment will be in two steps. First, a temporary adjustment as of March 16, or on such other date that is set for Members to turn over their own stock, that will be made on the basis of preliminary data submitted on or before March 9 or such other date 9 days following final date set for acceptance of Plan by dealers, consignees and jobbers under the terms of the Plan. Second, a final adjustment that will be made shortly after the final establishment of prices at which Defense Supplies Corporation will resell passenger-car tires to Members.”

A temporary advance of 16% in maximum retail prices of new .passenger car tires and tubes was authorized by the O.P. A. on or about April 23, 1942. On March 2, 1943, the O.P.A. advised defendant that the Defense Supplies Corporation, on and after January 1, 1943, would reduce from 4% to 2% interest charges on the repurchase value of dealer and jobber tires and tubes repurchased by defendant, and would absorb charges accruing subsequent to that date for storage space newly acquired by defendant necessary for the storage of tires and tubes returned by dealers and jobbers. It further read: “We should like to point out that this adjustment does not cover the factory and field stocks of Members, since it was the intent of the Plan that Members bear the storage and financing charges on their own stocks. Other inequities which have arisen in connection with the Plan have already been taken care of through the Tire and Tube Adjustment Contract and this adjustment, covering interest and storage charges on dealer and jobber stocks, must be considered as a final adjustment of all problems relating to the Tire Return Plan.”

The claim of defendant is that this was definite notice that no final adjustment of prices would be made as promised by the O.P.A. on February 9, 1942, and was a distinct repudiation of the representations then made and definite proof of fraud.

It is noted, however, that the O.P.A. stated that, because of the reduction of the interest charge, the assumption of storage expense, and the taking care of other inequities in connection with the plan, the information communicated must be considered “as a final adjustment” of all problems.

The first question is whether or not the Office of Price Administration was the. agent of the plaintiff in the making of any representations relied upon by the defendant.

The Reconstruction Finance Corporation' was created a body corporate on January 22, 1932, 15 U.S.C.A. § 601. Its entire capital stock is owned by the United States. It was authorized by Section 606b(3), in order to enable the government in its national defense program, to create a corporation to acquire, carry, sell or otherwise deal in strategic or otherwise critical materials as defined by the President; and the powers of any such corporation were to be set out in a charter, filed with the Secretary of the Senate and the Clerk of the House of Representatives. Admittedly plaintiff was so created and exists, and all of its capital stock is owned by the Reconstruction Finance Corporation.

The Office of Price Administrator is also a government agency, created originally under the name of Office of Price Administrator and Civilian Supply by executive order of the President, and later under the Emergency Price Control Act of 1942, 50 U.S.C.A. Appendix, § 901 et seq. As such, it was authorized to utilize the services and facilities of other federal departments and agencies to the fullest extent compatible with efficiency. But neither under the executive order nor under the Emergency Price Control Act was it constituted an agent of the plaintiff. It was authorized to advise and make recommendations in respect to the purchase and acquisition of commodities, to formulate programs for the use of consumers’ goods, fix maximum prices, and buy and sell commodities under certain conditions. But the Federal Loan Administrator was the one who should define what was a strategic or critical material, and such commodity could be bought and sold, stored or used, and payments made therefor, only by corporations organized and created under the Reconstruction Finance Corporation Act, subject only to the fixing by the O.P.A. of maximum prices.

It is admitted by defendant that it is not able to show any representation or statement by plaintiff, in so far as we are interested, with reference to the contract in question, or upon which defendant relied in executing it. It needs no citation to show that statements made by an alleged agent would not prove agency. And in that connection, it is admitted that no representative of the O.P.A. claimed that he was acting as agent for the plaintiff. And the recitals in the contract itself, which was executed by plaintiff and defendant, and not in any way prepared by the O.P.A., do not recite anything which in any way establishes such agency. It does show that the O. P.A. had requested plaintiff to make the agreement for the purpose of carrying out the desire of the O.P.A. to conserve tires and tubes and to promote the purposes of the regulations issued by it, and that plaintiff was agreeable to purchase tires and tubes not to exceed in the aggregate $75,-000,000. Further than that, there is no intimation that plaintiff requested the O.P.A. to act for it in the transaction, and the proof fails to show that it did. In fact, all the testimony shows is that plaintiff acted as a banker in financing the transaction to relieve as far as possible the serious difficulties in which dealers and jobbers found themselves as a result of the freeze order.

The contract itself is devoid of any statements which lend any weight to whatever was said or represented on the subject of price by any representative of the O.P.A. Aside from the question of fraud, the contract is presumed to have merged into it all negotiations and transactions prior thereto. It might be said in passing, that promissory statements are never the basis for a finding of fraud unless it clearly appears that when made they never were intended to be met or carried out.

Even assuming such agency, there is no evidence of a fraudulent statement by the O.P.A. in its letter of February 9, 1942, •or otherwise. The assurance was that prices would be adjusted to cover in full the •costs imposed upon them by the plan, first, temporarily, and second, shortly after final establishment of prices at which plaintiff will resell. On April 23, 1942, the temporary adjustment was made. On March 2, 1943, the prices were further adjusted by a reduction in interest charges, and the absorption by plaintiff of charges accruing subsequent to January 1, 1943, for storage space newly acquired and necessary for storage of tires and tubes returned by dealers and jobbers. Other inequities had previously been taken care of. It was definitely ■stated that these adjustments were the final ones. Thus the promise was carried out. That it was not satisfactory to defendant •does not prove fraud or misrepresentation. In addition, it may be pointed out that these promises, if they may be said to include the •construction sought to be placed upon them hy defendant, are not shown to have been made with any intention of not performing them, or recklessly. Aside from that, they were preliminary to the written contract which may properly be said “plainly to be a final memorial of the promises.” Rothkopf v. Lowry & Co., 2 Cir., 148 F.2d 517-520.

The remaining question is whether or not the defendant is entitled to a credit of $4,-•671.38 for expenses incurred by it for storage space for tires and tubes manufactured by it and never sold to dealers or distributors.

The defendant’s contention with reference to this subject is based upon section 5 of the contract, which, so far as material, reads:

“5. Member will store in the usual and proper manner to prevent undue depreciation all tires and tubes purchased ffom it by Defense Corporation under the provisions hereof at no expense to Defense Corporation except actual rental paid by member for any new storage space which it is ■necessary to procure from others for the storage of said tires and tubes. Member will if and so long as it has storage space •available belonging to it or which it now leases, supply space for said tires and tubes •at no expense to Defense Corporation. Tires and tubes stored by member for Defense Corporation will be segregated and kept separate and apart from'merchandise owned by member and signs will be placed on or in said storage space, properly identifying said stocks as being the property of Defense Corporation and bearing the legend ‘Property of Defense Supplies Corporation, Washington, D. C.’ Member will be liable for losses of tires and tubes stored by it for Defense Corporation only when caused by the negligence of member, such liability being limited to Defense Corporation’s investment in the merchandise lost through such negligence.”

The contract also provides in paragraph 6 that the plaintiff will sell to the defendant all or any portion of the tires and tubes purchased from the defendant by the plaintiff at prices to be determined by formula D attached to the contract. That formula specified that the price should equal the sum of the car-door cost (which generally is the cost of the tire or tube to the manufacturer when placed in a car for shipment), plus a number of other items, among which was included financing expense by plaintiff, which was interest at 4% per annum, figured on the price for the period between the date when the Defense Corporation paid for the tires and tubes and the date when the defendant made funds available to the plaintiff for their repurchase, plus “a proper pro rata share of storage paid by Defense Corporation to member and other members.”

It is shown without dispute that before this contract was made, defendant had no storage space under lease or otherwise than on its own premises. It manufactured tires and tubes only when ordered by purchasers thereof; and between the time they were completed and their shipment, they were stored by the defendant on the floor where its shipping room was located, and usually occupied about 40% to 50% of the 10,000 square feet of space of which that floor consisted. The remaining space was occupied by the shipping department, which used about one-fourth of the 10,000 feet, about 1,000 feet by vats, and another one-fourth by the finishing and inspecting department of the defendant. When the contract was entered into defendant had in the storeroom mentioned about 7,000 tires (referred to as “frozen”), which occupied a space that would be necessary for the normal flow of the defendant’s product coming through the plant at that time. Unless these frozen tires were moved, defendant would not be able to function freely because of the continuing process of finishing, inspecting and getting other tires ready for shipment. When defendant was confronted with this situation, this frozen stock of tires was shipped to a Bridgeport warehouse and storage paid on the same. It is for these 7,000 tires, which were clearly factory stock, and which had never been delivered to any distributor or jobber, or repurchased from' such distributor or jobber by the defendant, upon which storage to the extent of $4,671.38 is now sought by the defendant to be offset against plaintiff’s claim.

Plaintiff opposes any such credit, alleging that the true construction of the contract was that it was not to reimburse for any storage except that paid by defendant for extra space required in which to store tires and tubes bought by it from dealers and distributors.

The contract, paragraph 5, requires a member to store all tires and tubes purchased from it by the Defense Corporation at no expense to the latter, except actual rental paid by the member, for any new storage space which it is necessary to procure from others for the storage of said tires and tubes, and the member agrees that, if and so long as it has storage space available which then belonged to it, and which it then leased, it would supply space for said tires and tubes at no expense to the plaintiff.

Concededly, the Defense Corporation has paid to defendant all amounts paid by defendant for the storage of tires and tubes received by it from distributors and dealers. The only tires upon which the plaintiff has not paid storage are the tires which the defendant had in its possession at the time of the signing of the contract, and which, under the definitions contained in the contract, were “factory stocks”, i.e., tires and tubes stored in the factory and elsewhere in the same town or city in which the factory is located, and which have not entered into the stream of distribution.

Factory stock tires were agreed to be sold by defendant under paragraph 4(2) of the contract, at prices determined by formula “C”. That formula does not include any charge for storage on factory stocks. In fact, it excludes any such charge by expressly providing that storage is to be added only to the price of “field stocks”. Such factory stock tires were to be sold by plaintiff to defendant at prices to be determined by formula D (contract paragraph 6). That formula paragraph 5(b) includes as one of the elements of price “a proper pro-rata share of storage paid by Defense Corporation to member and other members”.

This certainly would not seem to contemplate any charge for storage on factory stocks because the Defense Corporation did not contract to pay any such charge to a member.

The contract, as I have written, was signed by defendant on February 27, 1942. On March 2, 1942, defendant was advised that under regulations adopted by plaintiff, covering warehousing and storage of tires and tubes under the plan, “no storage space shall be acquired and charged to ‘pool cost’ (which comprises the total elements of cost incident to the purchase of all tires and tubes by plaintiff from defendant and other members) for storage of field or factory stocks of members.”

Defendant questioned this regulation in a letter of March 10, 1942, and requested to be advised. By telegram, he was advised that the agreement contemplates that plaintiff would pay only for additional storage of tires and tubes reacquired by members from dealers and jobbers, and which storage was to be charged pro-rata to all members under paragraph 5 of the agreement and paragraph 5 of formula D.

Again, on June 10, 1942, special attention was called to paragraph 5 of the agreement relating to storage. That notice required that invoices covering storage should be certified as representing “newly acquired storage for dealers and jobber stocks of tires and tubes repurchased under the plan”. The limitation of storage charges to tires and tubes repurchased from dealers and jobbers was emphasized again on June 30, 1942.

It is clear, I think, that there is, in the contract, a distinct differentiation between factory stocks, field stocks, and stocks purchased by members from dealers and distributors. Storage on the last two classes is specifically mentioned, and was paid for the third. There is no such provision for the first. The probable reason for that was, that when tires and tubes were frozen, manufacturers would have on hand certain factory stocks which they had in storage and which, under the circumstances, they* would be required to hold until purchased by plaintiff, repurchased by defendant, and sold to dealers and distributors under the plan. Storage of such was the manufacturer’s problem and no charge therefor was assumed by plaintiff or included in the pool cost in formula D. The distinction, I think, appears in the contract, and is carried through in all of the correspondence.

Under the stipulation, therefore, judgment will be directed for plaintiff, in the sum of $30,025.09 with interest from July 9, 1943.

Findings may be proposed by plaintiff within ten days from this date and a copy served on defendant’s attorneys, who may have five days in which to file objections. The court will then make the formal findings and file the same as required by Federal Rules of Civil Procedure, Rule 52, 28 U.S.C.A. following section 723c.