author: WELSH, District Judge.

text:
    FLETCHER v. MAPES et al.
    Civil Action No. 4466.
    District Court, N. D. California, N. D.
    Sept. 17, 1945.

      W. Coburn Cook, of Turlock, Cal., for plaintiff.
    J. A. Pardee, of Susanville, Cal., for defendants.
   WELSH, District Judge.

Plaintiff sued to quiet title to certain lands in Lassen County, California. All defendants, except those sued under fictitious names, filed an answer and cross-complaint. It was subsequently stipulated that the complaint be dismissed as to the defendants Ruth H. Spalding, Blanche S. Pardee, Zella M. Arnold and James A. Pardee, and that their cross-complaint be dismissed as to plaintiff.

An agreed statement of facts was filed by counsel for plaintiff and the answering defendants James Mapes and John Tanner. It appears therefrom that Tule Irrigation District is an Irrigation District organized under and by virtue of the California Irrigation District Act; that it issued certain interest-bearing coupon bonds which went into default. One J. R. Mason became the owner of one such bond and recovered judgment thereon in the Superior Court of the State of California in and for the County of Lassen for $2,661.79.

Said Mason caused an execution to be issued and levied upon the lands belonging to defendants Mapes and Tanner. The Sheriff proceeded to sell and issue a certificate of sale to Mason in the year 1937. Plaintiff, a citizen of the State of Washington, acquired the deed from J. R. Mason and wife prior to the commencement of this action.

Said agreed statement of facts recites: “That the defendant James Mapes is, subject to such rights as the plaintiff may have acquired by reason of the facts hereinafter stipulated, the owner of the lands described in paragraph 1 of his further answer and cross complaint on file herein, and the defendant, John Tanner, and his wife, Lola Tanner are, subject to such rights as the plaintiff may have acquired by reason of the facts hereinafter stipulated the owners of the lands described in paragraph 1 of the further answer and cross complaint of the defendant John Tanner.”

Did plaintiff acquire any rights in said lands? This depends upon whether or not his grantor, J. R. Mason, has derived any title by virtue of the Sheriff’s deed.

That he did not is shown by the statutes and decisions of the State of California. Mason’s remedy, after he recovered judgment against the Tule Irrigation District, was to proceed under the provisions of law whereby assessments could be levied against the lands in said District to raise the money to satisfy said judgment.

Instead of so proceeding, he chose to proceed by the method of execution and sale. This was irregular and unauthorized.

In El Camino Irrigation District v. El Camino Land Corporation, 12 Cal.2d 378, 85 P.2d 123, the Supreme Court of California held that a judgment creditor of an Irrigation District cannot execute on the lands of said District to satisfy a judgment.

In Provident Land Corporation v. Zum-walt, 12 Cal.2d 365, 372, 85 P.2d 116, 119, the same court mentioned that “the sole remedy of the bondholders under the terms of the act is to compel the levy of assessments, and the enforcement of the same by sale of the land for delinquency,” citing Mulcahy v. Baldwin, 216 Cal. 517, 525, 526, 15 P.2d 738.

At page 377 of the opinion in 12 Cal.2d, at page 121 of 85 P.2d, the Mulcahy case is quoted: “The declared plan of the Irrigation District Act is that the holders of outstanding bonds of the district have the right to enforce their demands solely by an annual assessment on the lands in the district. Such is their contract. * * * in law purchasers of those bonds could look only to the statutory right of assessment and enforced payment under that method of raising revenue.”

These remarks are characterized as “obviously correct as a definition of the rights of bondholders in situations within the contemplation of the framers of the act.”

In Qough v. Compton-Delevan Irr Dist., 12 Cal.2d 385, 85 P.2d 126, 128, it was held that property in an Irrigation District was not subject to partition, in view of “the same considerations of policy which make this property exempt from execution.” It was said that, with reference to the Irrigation District Act: “Nowhere does it declare that the bondholder has a lien on the land itself, and it certainly does not recognize any trust for his sole benefit.”

In Moody v. Provident Irr. Dist., 12 Cal. 2d 389, 85 P.2d 128, 131, the Court said: “The property of the district, so far as it owns any property, constitutes a public trust and is held by the district for a public use, and, therefore, is not subject to levy and sale upon execution.” Tulare Irr. Dist. v. Collins, 154 Cal. 440, 97 P. 1124; Sec. 29, California Irrigation District Act, a amended by St.1909, p. 1075.

Said Section 29 declares that property acquired by an Irrigation District “shall be held by such district, in trust for, and is hereby dedicated and set apart to the uses and purposes set forth in this act.” The Court pointed out in El Camino Irr. Dist. v. El Camino Land Corporation, 12 Cal.2d 378, at page 384, 85 P.2d 123, at page 125: “It is impossible, in the face of such language, to say that any such property could be subject to levy on the ground that it was not held for a public use; the statute forecloses any argument on this point. * * * Lands held subject to a public trust cannot be subjected to execution.”

In Re Lindsay-Strathmore Irr. Dist., D.C., 21 F.Supp. 129, Judge Yankwich discussed the nature of an Irrigation District in California, and said that while not a political subdivision for municipal purposes, it is an agency of the State, and the use to which water owned and controlled by it is put is a public use; it is a public instrumentality and agency of the State, subservient to it.

In Meyer v. State Land Settlement Board, 104 Cal.App. 577, 585, 286 P. 743, 746, the Court cited People v. Honey Lake Valley Irr. Dist., 77 Cal.App. 367, 246 P. 819“* * * judgment could not be enforced by an execution against the district, but only by a suit in mandamus against the board of supervisors to compel the levying of an assessment to raise money with which to pay their claims,” and Westinghouse Elect. Co. v. Chambers, 169 Cal. 131, 145 P. 1025 : “in the absence of an ex press statute so providing, such judgment cannot be collected by execution against the state or its property,” and added (104 Cal.App. at page 586, 286 P. at page 746) : “the purpose or capacity in which state property is held does not, so far as we have been able to ascertain, alter the rule that state property cannot be levied upon and sold, save and except as permitted by the Legislature, and not being permitted, it cannot be done.”

Plaintiff endeavors to distinguish the present case from El Camino Irr. Dist. v. El Camino Corp., 12 Cal.2d 378, 85 P.2d 123, by contending that the Tule Irrigation District was not actively functioning as such. The reasoning of the Supreme Court in Tulare Irr. Dist. v. Collins, 154 Cal. 440, 442, 97 P. 1124, 1125, answers that contention. The District there had acquired lands for reservoir purposes, but the project was abandoned. A judgment-creditor levied on that land which was found by the lower court to be unnecessary for the irrigation plans of the District. The Supreme Court held that said land was not subject to execution, saying: “Equally with such other lands they are impressed with the trust and equally they are exempt from execution, levy, and sale. * * * However remiss the directors may have been in failing to pay the judgment, it cannot be held to estop a public corporation from insisting that its property held under a public trust shall be protected from illegal seizure and sale, to the end that this public trust may not be violated.”

Section 39 of the California Irrigation District Act provides in part: “The board of directors shall * * * levy an assessment upon the lands within the district in an amount sufficient * * * to pay the principal of all bonds of the district that have matured * * * also sufficient to pay * * * obligations of the district which shall have been reduced to judgment.” Deering, Act 3854.

If Directors of an Irrigation District fail to act in accordance with said section, the remedy of a bondholder or judgment creditor is to apply for a writ of mandamus to compel the proper authorities to raise what is required to satisfy the debt by the assessment and levy so provided. Nevada National Bank v. Board of Supervisors, 5 Cal.App. 638, 647, 91 P. 122.

This was recognized by the Circuit Court in Herring v. Modesto Irr. Dist., 95 F. 705, 710: “If the corporation had authority to levy and collect taxes for the payment of that debt, a mandamus would issue to compel them to raise by taxation the amount necessary to satisfy the debt.”

More recently, it was said in Re Imperial Irrigation District, D.C., 38 F.Supp. 770, 779: “The sole remedy of the bondholders against the land is to compel, by writ of mandate, the levy of an assessment upon all the lands in the district.”

As title to the property claimed by plaintiff was in the Tule Irrigation District at the time of the levy of execution and the purported sale thereunder, the same was not subject to levy or sale.

It is accordingly held that plaintiff’s predecessor in interest pursued the wrong remedy; that the execution and sale were void; that no title passed to plaintiff’s grantor; and that plaintiff has failed to prove ownership of the property described in his complaint.

The Court interprets the agreed statement of facts to imply that, if plaintiff is unable to establish legal ownership of the property on which execution was levied pursuant to the judgment obtained by J. R. Mason, the defendants James Mapes and John Tanner shall be entitled to judgment quieting their titles as against plaintiff. It will, therefore, be so ordered as to the lands described in the cross-complaints of each of said defendants. Defendants and cross-complainants to have judgment with costs, upon findings.


source: Caselaw Access Project

author: FAKE, District Judge.

license: Public Domain

text:
    MORNINGSTAR, NICOL, Inc., v. NORTON.
    Civil Action No. 2926.
    District Court, D. New Jersey.
    Sept. 9, 1945.
    Sidney S. Jaffe, of Newark, N. J., for plaintiff.
    Lum, Fairlie & Wachenfeld, of Newark, N. J. (Charles B. Barrett, Jr., of Newark, N. J., of counsel), for defendant.
   FAKE, District Judge.

This case is before the court on an agreed state of facts and raises issues as to the application of certain freight rates between Waybill Station, Long Dock, Jersey City, New Jersey, and North Hawthorne, New Jersey, over the lines of the New York, Susquehanna & Western Railroad Company. Plaintiff contends that a proper construction of the tariff, Trunk Line 72-A, I. C. C. A-445, between these points, indicates a rate of 130 per hundred pounds. Defendant contends that the proper rate is 140 per hundred as specifically stated in the aforesaid tariff.

Cases of this type seldom come before the courts in the first instance, since resort is usuálly had to the Interstate Commerce Commission. However, this court has jurisdiction on the election of the plaintiff under the provisions of Section 9, 49 U.S.C.A.

It appears that the tariff above mentioned was effective in the period covered by the main issue now to be considered, and that it specifically provided, as the stipulation says: “In the same tariff and from the same point of origin but for movement over the Erie Railroad there is a rate of 130 per 100 pounds published to Hawthorne, New Jersey.” It also provides “for a rate of 140 per 100 pounds” on shipments moving between the aforesaid Waybill station and North Hawthorne “on shipping instructions calling for transportation over the lines of the New York, Susquehanna & Western Railroad.”

Plaintiff urges that the so-called “alternative application” clause of the tariff renders the higher rate of 140 inapplicable to Susquehanna for the reason that a lower rate is spelled out from a combination of the rates involved over the Erie, and this results in a 130 rate. The clause reads as follows: “If the aggregate of separately established (joint, local and/or proportional) rates contained in tariffs lawfully on file with the Interstate Commerce Commission * * * via any route via which the rates named in this tariff apply, provides a lower charge on any shipment than the charge under the rates contained in this tariff * * * such lower charge will be the legal charge to apply via all routes authorized in this tariff, and the through rate published in this tariff has no application as to that shipment.”

It appears in this connection that when shipping between these points on the Erie, that road is obliged to absorb a switching charge of $6.93 per car, while no such burden falls on Susquehanna when shipment is made over the Susquehanna. It is urged that this is a rate and when dealt with as such furnished two rates, the switching charge being deducted and then added because it must be absorbed with this contention I cannot agree. After a rate is once established, the trials and tribulations of the carrier as to what it must absorb are of no concern to the court in the absence of an attack on the validity of the rate. No such attack is made here. The only question here is as to which of two rates shall be applied.

The switching charge above-mentioned is not a rate as between a shipper and the railroad. It may be a factor involved in the fixing of the rate, but it is a mere item which the railroad must absorb when the rate is established.

“Aggregate of separately established rates” connotes rates to be added. Here the switching charge not being a rate no aggregate can be spelled out and the provision above quoted has no application.

On notice an order will be entered in conformity herewith.


author: FORMAN, District Judge.

text:
    S. &. S. CORRUGATED PAPER MACHINERY CO., Inc., v. GEORGE W. SWIFT, JR., Inc.
    No. C-5659.
    District Court, D. New Jersey.
    July 23, 1945.

      Osborne, Cornish & Scheck, of Newark, N. J., for plaintiff.
    Thorn Lord, U. S. Atty., by I. Edward Amada, Asst. U. S. Atty., both of Newark, N. J., for defendant.
   FORMAN, District Judge.

The clerk of this court called upon the plaintiff herein to pay the sum of 50 cents, pursuant to the provisions of the following statute passed by Congress on February 18, 1922:

“ * * * And it shall be the duty of the clerks of such courts within one month after the filing of any action, suit, or proceeding arising under the patent laws to give notice thereof in writing to the Commissioner of Patents, setting forth in order so far as known the names and addresses of the litigants, names of the inventors, and the designating number or numbers of the patent or patents upon which the action, suit, or proceeding has been brought, and in the event any other patent or patents be subsequently included in the action, suit, or proceeding by amendment, answer, cross bill, or other pleading, the clerk shall give like notice thereof to the Commissioner of Patents, and within one month after the decision is rendered or a decree issued the clerk of the court shall give notice thereof to the Commissioner of Patents, and it shall be the duty of the Commissioner of Patents on receipt of such notice forthwith to indorse the same upon the file wrapper of the said patent or patents and to incorporate the same-as a part of the contents of said file or file wrapper; and for each notice required to be furnished to the Commissioner of Patents in compliance herewith a fee of 50 cents shall be taxed by the clerk as costs of suit.” 35 U.S.C.A. § 70.

The plaintiff declined to pay the fee requested and the issue of the legality of the request of the clerk is before the court.

In § 1285 of its volume of Instructions to United States Attorneys, Marshals, Clerks, and Commissioners, under date of October 1, 1929, the Department of Justice refers specifically to the above enactment. In § 1286 of said volume it comments as follows:

“The interests of the Government have been seriously impaired by the nonobservance, on the part of certain clerks, of the provisions of the above quoted law. It is therefore requested that clerks take such action as will insure the making of prompt reports to the Commissioner of Patents in accordance with the terms of the statute. The fee of 50 cents for each notice to the Commissioner of Patents should be collected and accounted for as an earning of the clerk’s office.”

Thereupon the clerk of the court filed a petition herein setting forth the refusal of the plaintiff to comply with his demand for the payment of the fee and the interest of the Department of Justice in its collection. He applied for an order directing the plaintiff to show cause why it should not be required to pay the fee. Such an order was made and served upon it and in order that the Department of Justice could, if it desired, protect its expressed position as to the collection thereof, a copy of said order was served upon the United States Attorney for this District.

Upon the return of the said order to show cause the plaintiff insisted that the clerk was confined to the collection of a fee of $15 “for all services to be performed by him in such case or proceeding * * * ” as provided by the Flat Fee Act of 1944. 28 U.S.C.A. § 549 et seq.

The United States Attorney appeared for the Department of Justice and stated that it had no position to take in the matter at this time.

Subsequent to the enactment authorizing the fee of 50 cents in 1922, Congress passed a fee bill in 1925, the first section of which was as follows:

“The fees provided for in sections 549 to 555 of this chapter, and no other, shall be charged and collected by clerks of the district courts of - the United States for services performed by them or their assistants. The United States shall not be required to pay any sum or fee herein provided for.” 28 U.S.C.A. § 548.

In 1944 Congress consolidated certain fees and changed others, in what is known as the Flat Fee Act, supra, referred to by-plaintiff as subjecting it to a cost of $15 only.

In the Act of February 18, 1922, supra, it is apparent that Congress intended that the clerk of the court should be entitled to the sum of 50 cents as a fee for furnishing to the Commissioner of Patents information concerning litigation in that field instituted in the court, but the clerk is authorized only to include such a fee in the costs of the suit as and when they are taxed. Under the Act of 1925, supra, the clerk of the court was limited to the collection of certain fees as designated in that Act in cases filed in the court. No provision is made for the charge of 50 cents for furnishing information to the Commissioner of Patents and it appears that Congress intended that no other fees should be charged by the clerk in cases except those enumerated in the Act of 1925. The intent of Congress to limit the fees to be collected by the clerk is made clear in the first sentence of section 1 of the Act of February 11, 1925, c. 204, as previously set forth herein, wherein it is provided. that the clerks of the United States District Courts or their assistants shall not charge or collect costs in cases in the court other than those enumerated in the succeeding paragraphs of that legislation. The fee in question is not provided for thereafter nor is it excepted in any proviso in the Act.

Under the Act of 1922 the clerk was authorized to collect the fee of 50 cents by including it in the taxed bill of costs. This he could only do at such a point in each case where one of the parties to the litigation had prevailed so as to entitle him to have the costs taxed against the losing party. The ultimate collection of the 50 cents fee in question by the clerk is of great uncertainty because of the fact that in practice costs are not finally taxed in many patent cases and the collection of the fee therefore becomes suspended leaving the clerk liable therefor with no recourse for its collection. The effort at collection and bookkeeping relative thereto is altogether out of proportion to the 50 cents fee which the clerk was authorized to charge.

In the case at bar the demand of the clerk upon the plaintiff is premature because only the complaint has been filed herein and the case is not yet at issue. Hence no costs may be taxed as yet. However, since the practice involved has been questioned and the clerk is left unguided as to his position it is deemed well to consider the matter upon its merits as if the demand had been made after the taxation of costs.

We hold that the Act of 1925, supra, repealed the right of the clerk of the court to make any charge for furnishing the Commissioner of Patents with the required information. This view is supported when the original language of the Act of 1925, 28 U.S.C.A. § 548, is noted. It is set forth heretofore in a note as it appears in the Statutes at Large, 43 Stat. 857, and contains the distinct proviso “that all laws or parts of laws inconsistent or repugnant to the provisions of this Act are hereby repealed.” A charge of 50 cents, as authorized under the 1922 law would be inconsistent with and repugnant to the provisions of the 1925 legislation.

The Flat Fee Bill of 1944, supra, by consolidating fees and costs in cases before the District Court, took a forward step in relieving litigants of multiple payments of costs and reduced accounting processes of the clerk of the court. The policy it represents is an affirmation that the legislation of 1925 was designed to limit all costs of litigation by the clerk to those specified therein or specifically excepted by it.

This, however, must not reflect in any way upon the importance of the Information required by the statute to be given by the clerk of the court to the Commissioner of Patents so that office may be furnished promptly with information concerning the state of litigation in the courts involving patents. This service must continue to be rendered by the clerk, but without authority to charge a fee therefor.

The order to show cause herein will be discharged.

       The original enactment was in the following language:
      “That the fees hereinafter provided for, and no other, shall be charged and collected by clerks of the district courts of the United States for services performed by them or their assistants: Provided, That all laws or parts of laws inconsistent or repugnant to the provisions of this Act are hereby repealed; but nothing in this Act shall repeal or in any way enlarge or modify the provisions of the Act of July 20, 1892 (Twenty-seventh United States Statutes at Large, page 252), as amended by the Act of June 25, 1910, (Thirty-sixth United States Statutes at Large, page 866), and the Act of June 27,1922 (Forty-second United States Statutes at Large, page 666): Provided further, That the United States shall not be required to pay any sum or fee herein provided for.” 48 Stat. 857.


author: CONGER, District Judge.

text:
    PENMAC CORPORATION et al. v. FALCON PENCIL CORPORATION.
    District Court, S. D. New York.
    May 14, 1945.
    Frederic P. Warfield, of New York City, for plaintiff.
    Percy Freeman, of New York City, for defendant.
   CONGER, District Judge.

On June 21, 1939, plaintiffs brought action against this defendant. The complaint alleged infringement by the defendant corporation of certain patents of the plaintiff Penmac Corporation. Plaintiff The Wahl Company was an exclusive licensee. The controversy was over certain automatic pencils. Plaintiffs also asked for a preliminary injunction to restrain the alleged infringement. The injunction was granted by Judge Leibell on July 25, 1939. The injunction order, however, was not signed until October 9, 1939. The application for the preliminary injunction was based upon the decision of Judge Woolsey of this Court in Penmac v. Esterbrook, 27 F.Supp. 86, in which the claims of two of the patents in issue in this case were held valid and infringed. The Penmac v. Es-terbrook case was appealed to the Circuit Court for the Second Circuit and was reversed, 108 F.2d 695. The Court held that the two patents involved here should be narrowly construed and when thus construed there was no infringement.

Subsequently and on or about October, 1942, plaintiffs moved to dismiss the action without prejudice, as a result of which an Interlocutory Judgment was made and entered dismissing the complaint without prejudice and vacating and rendering void the said preliminary injunction heretofore issued. The said Interlocutory Judgment also contained this provision (Paragraph 3):

“That this action be referred to Philip C. Peck as Special Master of this Court to hear and report to this Court the amount of damages, if any, caused to the defendant by the issuance of the preliminary injunction herein.”

The Special Master entered upon his duties, has heard the evidence and has now rendered his report and Findings of Fact and Conclusions of Law. The Special Master has rendered a rather lengthy and detailed report. He finds against the defendant herein that the several" claims of damage presented by the defendant should be rejected and that no award of damages caused by the issuance of the preliminary injunction should be made in favor of defendant against plaintiffs.

Defendant has interposed herein some 93 objections to the report of the Special Master and 104 objections to the Findings of Fact and Conclusions of Law of the Special Master.

This matter has been argued before me at length on at least three occasions. I first heard argument on the objections to the Special Master’s report. I thereupon sent the matter back to the Special Master for him to prepare Findings of Fact and Conclusions of Law which he has now filed with me. I then had argument upon objections by the defendant to these Findings and Conclusions. Argument was had at length. I went over each Finding of Fact and Conclusion of Law and ruled upon practically all of the objections at the time of the argument.

This is one of those puzzling cases. I have spent a great deal of time on it and have gone over the objections, numerous as they were, with a great deal of care. I have come to the conclusion that I should confirm and adopt the report of the Special Master; that I should confirm and adopt the Findings of Fact and Conclusions of Law of the Special Master with several exceptions to which I shall refer later. I do not deem it necessary to go into the report of the Special Master with any great detail. His report takes up each of the items of damage specifically and disposes of them. I can’t say that he is clearly wrong. At first blush, one would naturally suppose that if a business is stopped by an injunction and that thereupon and several years later the injunction were vacated that some damage would have occurred to the enjoined party. That is the matter which has given me considerable trouble and concern.

However, I have come to the conclusion that on the testimony, the Special Master could not arrive at any figure which he could justify legally by way of damages to this defendant. The matter is a bit confused because of several factors. There was a delay from the time that the Judge rendered his decision allowing a temporary injunction until the time when the injunction order was finally signed. The defendant charges the plaintiff with bad faith in this respect. While this was unfortunate I can’t find any bad faith.

From a reading of the testimony it would appear that the defendant’s damage or loss of business, if any, might very well have occurred prior to the date of. the granting of the temporary injunction.

It clearly appears from the evidence that this was due to letters sent out by plaintiffs’ attorney to customers of the defendant ; warning letters giving notice of claim of infringement. This, no doubt, did seriously affect defendant’s sales but it’s something with which we are not concerned here. The starting of the action in June, 1939 undoubtedly affected defendant’s business. This is particularly true of the claim of loss in connection with the future sales to the Utility Manufacturing Company of 250,000 pencils. This order was received on June 30, 1938. Only comparatively a small number of these pencils were actually delivered to Utility. The last sale was paid for by Utility on June 16, 1939, yet Harry A. Rankow, President of the defendant, claimed that the loss of the Utility business was due to the injunction. An examination of his testimony, however, indicates that the real loss of business was occasioned by letters written to customers of Utility by the plaintiff.

The testimony further showed that for the fiscal year ending April 30, 1939 the defendant had operated at a loss.

I have no doubt that defendant lost sales as a result of this injunction which was in effect for several years at least, but I confess that from a reading of the testimony produced by the plaintiffs, I am unable to fix any sum by way of damages which might be justified by the evidence. The burden of proof, of course, is on the defendant to show damage. His theories of damage must be those which are in accord with the law and are reasonable. Damages may not be presumed, inferred or conjectured.

I agree with the Special Master that “the entire record fails to sustain claims of damage asserted by defendant. The evidence does not establish with reasonable assurance the fact that any ascertainable damages are the natural and probable result of the operation of the injunction itself, and the assessment of general damages in whole or .in part as urged by defendant is not sanctioned by the express limitation of Paragraph 3 of the Interlocutory Judgment herein.”

There are so many elements entering into the causes of defendant’s loss of business that one cannot say with any degree of certainty just what damage was occasioned by any one of them. The three elements are as follows:

(a) Letters sent by plaintiffs or plaintiffs’ attorney to customers of the warning of defendant of claimed infringement.

(b) The commencement of this action.

(c) Damage caused by the injunction itself.

I can’t see how any one can allocate any particular damage to the latter item when one considers the alleged damage occasioned by the other two. It should be noted in this respect that defendant’s business as reflected in its cash book and accounts receivable just before the injunction was issued (Ex.E) was as follows:

April $273.22

May 246.45

June 12.44

Findings of Fact and Conclusions of Law Supplemental to the Special Master’s Report .

I agree in the main with the Special Master’s Findings of Fact and Conclusions of Law.

There are several corrections and amendments, however, which I wish to make.

At the end of Finding 2, I would add thereto and make a part thereof the following :

“That defendant had a contract with In-gersoll Waterbury Co. of Waterbury, Connecticut, for the manufacture of the enjoined pencils, at a fixed price of 17 cents each shipped in bulk or 18% cents each, if carded, % dozen to a card, and one card to a box; and that defendant had a contract for the sale of the pencils, and sold the pencils, at various prices, but the lowest price for which the pencils were sold was 30 cents per pencil, when sold in bulk and 31% cents per pencil, when carded.”

Finding of fact 14 on page 7, line 4, strike out the 'words “No sales occurred after August 1939” and insert in place thereof, “Defendant produced no record of any sales after August 1939.”

Findings 16 and 17. I do not agree with the Special Master that the Waterbury Company made a gift to defendant of the parts referred to in Finding 15. The witness Rankow did state with reference to them: “They gave me those parts.” An examination of the testimony, however, indicates that Waterbury and defendant closed out their business and severed relations and that part of the settlement was the return of these unused pencil parts. I do not think, however, that it makes any difference in the result here. I would, therefore, strike out from Finding 16 the words : “Rankow states (Rec p 104) that these parts were a gift from Waterbury to defendant in the settlement for defendant’s claim for the delivery by Waterbury of 200.000 pencils (Exhibits I and J) (Rec pp 80, 105),” and insert the following: “Although Rankow states (Rec p 104) that these parts wer,e given to defendant by Waterbury, it appears that these parts were a portion of the settlement of the claim for the delivery by Waterbury of 200.000 pencils.”

Strike out the words on page 8 of Finding 16: “If Waterbury chose to' present these pencil parts to defendant, it might well be they would place a high value on same in the final settlement (Rec p 103),” and on line 7 of page 8, insert the word “Delivery” for “gift.”

In Finding 17, line 9, strike out the words “Waterbury’s gift” and insert “of these parts.”

I, therefore, adopt and confirm the Special Master’s Report and also his Findings of Fact and Conclusions of Law.

The Special Master has asked for compensation herein in the sum of $1200, together with his disbursements of $18.28. My examination of the record herein indicates to me that the Master has given a great deal of time and much study of this matter. I am satisfied that the compensation asked for by him is fair and reasonable. I, therefore, allow the same.

I hold that the costs of the reference should be assessed against both plaintiffs and defendant; that each side should pay one-half of the cost of the reference. I make this ruling because of the fact that after all the moving element which resulted in this reference was started by plaintiffs who obtained a temporary injunction to which it later turned out they were not entitled. By this I do not mean to intimate that plaintiffs were not justified in applying for the temporary injunction. I think they were in view of the decision of Judge Woolsey.

There is another element which causes me to hold this way and that is that the reference, as I gather from the papers submitted to me, was brought about and caused by the application of the plaintiffs to withdraw the suit and to have the complaint dismissed without prejudice.

The Court in granting this application apparently placed a condition thereon that this reference be had. Under the circumstances I feel it is only fair and equitable that the expenses of the reference should be borne equally by the parties even though defendant has been unsuccessful in showing any damage.

The Special Master’s compensation as fixed by this Court and entered in the final judgment shall be paid within ten days after the entry of said final judgment; that portion so ordered to be paid by the defendant herein if not so paid in ten days shall be paid by the plaintiffs or by the Maryland Casualty Company, surety on the bond filed with the injunction.

In the event that the defendant shall not pay the portion so ordered to be paid it as aforesaid and in the event that the same shall be paid by the plaintiffs or the Maryland Casualty Company herein, such payment either by plaintiffs or the Maryland Casualty Company shall be included in plaintiffs’ taxable cost against the defendant.

Settle order on notice.


author: GANEY, District Judge.

text:
    FOWKES et al. v. DRAVO CORPORATION.
    No. 4415.
    District Court, E. D. Pennsylvania.
    Aug. 13, 1945.
    Francis W. Sullivan, of Philadelphia, Pa., for plaintiffs.
    Gerald A. Gleeson, Dist. Atty., of Philadelphia, Pa., and Charles R. Sheidy, Jr., Asst. U.S.Atty., of Reading, Pa., for defendant.
   GANEY, District Judge.

This is an action by nine plaintiffs formerly or now employed by Dravo Corporation to recover overtime compensation allegedly due them under the provisions of the Fair Labor Standards Act of 1938, 29 U.S.C.A. § 201 et seq. The plaintiffs sue individually and as representatives and on behalf of other persons now or formerly employed by the defendant, claiming, that themselves and persons they represent are all members of a particular class of defendant’s employees. It is averred that there are one hundred fifty members of the class, who are described in the complaint as “all salaried employees of the defendant corporation working at its said plant at Wilmington, Delaware, during the period beginning December 1, 1942 and ending at the date of this action, who come under the provisions of the aforesaid Fair Labor Standards Act, and who have not been paid overtime at the rate of time and one-half, the regular rate of pay in accordance with the aforesaid Fair Labor Standards Act”.

Section 16(b) of the Fair Labor Standards Act, 29 U.S.C.A. § 216(b), provides in part as follows: “Any employer who violates the provisions * * * section 207 * * * shall be liable to the employee or employees affected in the amount of * * * their unpaid overtime compensation * * * and in an additional equal amount as liquidated damages. Action to recover such liability may be maintained * * * by any one or more employees for and in behalf of himself or themselves and other employees similarly situated, or such employee or employees may designate an agent or representative to maintain such action for and in behalf of all employees similarly situated. * * * ”

Defendant filed a motion to compel the designation of parties plaintiff, to produce evidence of representation, and to dismiss the complaint as to all unnamed parties plaintiff. It is the contention of the plaintiffs that the action contemplated under Section 16(b) of the Fair Labor Standards Act is a class action without regard to Rule 23 of the Rules of Civil Procedure, 28 U.S.C.A., following section 723c, in that it was the intention of Congress that an action commenced against an employer on behalf of other employees “similarly situate” should constitute the action which should determine the common question of law and fact. However, it is apparent here that the causes of action represented by each of the plaintiffs here named do not present a common question of law and fact, which would be controlling with respect to other members of the class. As has been pointed out, there are vital questions pertinent to each claimant such as whether or not he or she was employed on a “fluctuating work week”, in which event he or she could only recover one-half time, and it thus can be seen that the working schedule of each plaintiff would be an essential factor. In addition the question of whether the plaintiffs were exempt or nonexempt from the provisions of the Act, depending on the character of each of their particular occupations, would likewise be a very vital issue. Different types of proof of necessity must be made. For example, a plaintiff might be exempt as an “executive employee”, for which proof might be offered to show that his primary duty consisted of the management of a department, or that he directed the work of other employees, or that he had certain other responsibilities with respect to the hiring and discharge of employees, as well as various other defenses which might be interposed. It can thus be seen that the question here posed does not concern a true class action, but that it involves individual employees, whose rights, duties and responsibilities must be separately adjudicated. It would seem to be therefore apparent that Congress in the adoption of Section 16(b) here was not broadening any of the procedure and substantive rules of class action, but merely giving an opportunity to other individuals similarly situate to join in an action already brought in order to avoid multiplicity of suits. Saxton v. W. S. Askew Co., D.C., 35 F.Supp. 519; Lof-ther et al. v. First National Bank of Chicago, D.C., 45 F.Supp. 986; Shain v. Armour & Co., D.C., 40 F.Supp. 488; Gordon v. Paducah Ice Mfg. Co., D.C., 41 F.Supp. 980; Archer v. Cornillaud, D.C., 41 F.Supp. 435; Calabrese et al. v. Chiumento et al., D.C., 3 F.R.D. 435; Smith et al. v. Stark Trucking, Inc., D.C., 53 F.Supp. 826; Abram et al. v. San Joaquin Cotton Oil Co., D.C., 46 F.Supp. 969.

Accordingly, ten days is granted from the date of this opinion within which any additional parties plaintiff may enter their appearance, and at the expiration of such time, the complaint is dismissed as to all unnamed parties plaintiff.


author: CAMPBELL, District Judge.

text:
    ELASTIC STOP NUT CORPORATION OF AMERICA v. GREER.
    No. 43-C-435.
    District Court, N. D. Illinois, E. D.
    May 1, 1945.

      Harold W. Norman (of Zimmerman and Norman), William T. Woodson (of Rogers, Woodson & Rogers), and Curtis F. Prangley (of Moore, Olson & Trexler), all of Ghicago, Ill., and Hamilton Hicks, of New York City, for plaintiff.
    Henry Blech (of Blech and Herson) and Enright & Enright, all of Chicago, Ill., for defendant.
   CAMPBELL, District Judge.

This is an action brought by the Elastic Stop Nut Corporation of America, a New Jersey corporation, against Fredric Greer, a citizen of Illinois, doing business as Fredric Greer Company.

Both parties are engaged in the manufacture of self-locking nuts. The plaintiff has been so engaged since 1934 and the defendant since 1942. The plaintiff designates its self-locking nuts as “Elastic Stop Nuts” and as “Stop Nuts.” The products of both parties are practically identical in shape, form and appearance and contain a fibre insert which is the means by which the nut is locked onto the bolt. The natural color of the fibre is gray.

To provide a visual identification for the nuts of its manufacture, plaintiff uses a red fibre for the insert and has extensively advertised its self-locking nuts with illustrations prominently displaying the red ring or collar of the nut, and in such advertisements refers to such identification as “nuts with the red collar.” The color is nonfunctional:

The defendant uses in the manufacture of its self-locking nuts a red-colored fibre insert identical in color to the red insert used by plaintiff in its self-locking nuts. Defendant uses illustrations of a self-locking nut prominently displaying the red collar of the nut in his advertising and on his letterhead and asserts to the trade that his product can be “identified by the red center.” Defendant in advertising his product also uses the terms “Elastic Stop Nuts” and “Stop Nuts.”

The plaintiff charges defendant with unfair competition and seeks to enjoin the defendant from using the terms “Elastic Stop Nuts” and “Stop Nuts” and from displaying a self-locking nut with a red collar in connection with the advertising and sale of his products and from using a red fibre insert in his self-locking nuts. Plaintiff alleges that the defendant deliberately copied its product in an attempt to confuse the trade and to put out a product so similar, so identical to its product that a purchaser would be confused as to which product he was buying, and that the product of the defendant would be mistaken for the product of the plaintiff.

Defendant answers that he manufactures in accordance with the teachings of an expired patent of the plaintiff and that he went into the production of this particular item largely at the request of the United States Army Air Force due to the fact that plaintiff’s stock being more than twenty-five per cent foreign owned made it impossible for the plaintiff to conduct business with the United States Government.

The defendant also filed a counter-claim based upon a patent for an attachable nut issued to Andrew Sande on May 28, 1929, No. 1,714,520, which was assigned to the defendant on February 1, 1945, .and which defendant claims is being infringed by plaintiff in some of the nuts of its manufacture.

The plaintiff has proved, in my opinion, an attempt on the part of defendant to procure a license from the plaintiff prior to the expiration of the Rennerfelt patent which the defendant contends is the controlling patent in plaintiff’s manufacture. The evidence shows that the defendant’s efforts in this regard included threatening public disclosure of the fact that plaintiff’s patent would soon expire and that if this became known to the trade that great competition would result.

There is also some evidence of the desire on the part of the defendant to enter into a price-control arrangement with the plaintiff if the plaintiff would license the defendant.

The proof further shows that plaintiff refused to license the defendant and that thereupon defendant commenced to manufacture a product which in style, appearance, dress and function was an exact copy of the product of the plaintiff.

The evidence is further clear that the defendant used the identical color for the fibre insert that the plaintiff was using and referred to its product as “Stop Nuts” and “Elastic Stop Nuts”.

The evidence further clearly shows that the trade generally was confused thereby, thinking that the product of the defendant was the product of the plaintiff.

Defendant failed to prove his contention on the foreign ownership of the plaintiff and subsequently abandoned it during the trial.

There is some evidence, although I think it is far from conclusive, that the United States Army Air Force at least participated in the defendant’s deliberations prior to his entry into the business of the manufacture of what we know in this lawsuit as “Stop Nuts”.

The evidence establishes that practically all of this product produced by the defendant was used by the United States Army Air Force.

I will first consider the unfair competition part of this case. Counsel for defendant contends that in this matter the law of Illinois governs. With that I agree.

Counsel further contends, however, that in order to prove a case of unfair competition, under the law of Illinois there must be evidence of actual palming off of the goods of the accused as the goods of the accuser. That, I think, may formerly have been the law. I do not think it is the law in Illinois today in view of the decision of Mr. Justice O’Connor in the case of Lady Esther, Ltd., v. Lady Esther Corset Shoppe, Inc., 317 Ill.App. 451, 46 N.E.2d 165, 167, 148 A.L.R. 6, and in view of the general broadening of the theory of unfair competition in this State following the weight of authority throughout the United States.

The proof in this case does not establish a palming off of the goods of the defendant as the goods of the plaintiff. However, I find that such actual palming off, even in the case of competitors, is no longer required by the Illinois law to establish a case of unfair competition. It is sufficient to warrant injunctive relief if there is likelihood of confusion in the trade.

As stated by Justice O’Connor in the Lady Esther case, supra:

“Counsel for defendant contends that ‘Illinois adheres to the “palming off” rule in case of unfair competition. Where there is no competition, there can be no “palming off.” Since defendant was not in competition with the plaintiff, in any manner whatsoever, plaintiff was not entitled to the injunction prayed for in its complaint.’ ”

Referring to four Illinois cases, Stevens-Davis Company v. Mather & Co., 230 Ill. App. 45; DeLong Hook & Eye Co. v. Hump Hairpin Mfg. Co., 297 Ill. 359, 130 N.E. 765; Johnson Manufacturing Company v. Alfred Johnson Skate Company, 313 Ill. 106, 144 N.E. 787; and Ambassador Elotel Corporation v. Hotel Sherman Company, 226 Ill.App. 247, cited by the defendant in that case, the court continues:

“Without stopping to analyze the four cases, we think it sufficient to say that an examination of them discloses the fact that in each there was direct competition between the parties in the business each was conducting — plaintiff and defendant being engaged in the same line of business — and therefore the ‘palming off’ rule was applicable. The holding in those cases, that where there was direct competition between plaintiff and defendant there must be a ‘palming off’ to warrant relief, is far from saying that courts will not grant injunctive relief where the defendant’s conduct is likely to cause confusion of the traders so that the public believes or is likely to believe that the goods of the defendant are the goods of the plaintiff, or that the plaintiff is in some way connected with or is a sponsor of the defendant.”

In my opinion the foregoing constitutes a departure from what was previously regarded as the law in Illinois. I doubt that what was previously regarded as the law in Illinois, the requiring of proof of “palming off” as between competitors for granting of injunctive relief was ever actually the law. It was instead an erroneous interpretation of the four cases above referred to which unfortunately was generally accepted by the Courts and Bar of Illinois. In the Lady Esther case these four previous cases are for the first time clearly analyzed and explained by Justice O’Connor who correctly reasons from the opinions of these four cases, that where in a given case it can be shown that such confusion exists among the public or the traders in a product that they are likely to believe that the goods of the defendant are the goods of the plaintiff, or that the plaintiff is in some way connected with or is a sponsor of the defendant a sufficient basis has been established for The issuance of injunctive relief by a court of equity in a suit for unfair competition.

Counsel for defendant in the case at bar has also argued the absence of proof of fraud as formerly associated with cases of unfair competition. In disposing of this contention adversely to defendant I adopt and quote a further paragraph from the opinion of Justice O’Connor in the Lady Esther case, wherein he cites the case of Vogue Company v. Thompson-Hudson Company, 6 Cir., 300 F. 509, as follows:

“Another change that has come with the realization of this broad basis for ‘unfair competition’ is the elimination of the requirement of ‘fraud’. Although the law of unfair competition has evolved through the application of principles of fraud, with the result that, in this country at least, there will be no relief where the defendant has acted in good faith toward both the plaintiff and the public, yet a realization that the true basis of equity’s interference in such cases is not fraud but the protection of good-will has caused many courts to question the propriety of inquiry into the defendant’s mental state.”

In the instant case we clearly have a question of good-will. Is the plaintiff’s good-will in trade injured by the activities of the defendant? In my opinion, it is.

As ably stated by Justice O’Connor in the Lady Esther case:

“Our Supreme Court cites the Vogue, Aunt Jemima and Ward Baking Co. cases with approval in Investors’ Syndicate v. Hughes, 378 Ill. 413, 38 N.E.2d 754, where Mr. Justice Stone in speaking for the court said, ([378 Ill.] p. 422, 38 N.E.2d 758): ‘Plaintiff cites numerous cases where the courts have refused to consider the question of fraud or imposition on the public, in controversies between hostile corporations over the use of a name. In such cases it has been held that the injunctive relief sought was based upon the protection of property rights of the plaintiff, and that an injunction will not issue unless it is made to appear that the proposed use of the name will result in injury to the complainant. (Citing 3 Illinois cases.) Even in injunction cases between competing corporations the trend of decision is to place less emphasis on competition and more on confusion, as is evidenced by the following cases: Vogue Company v. Thompson Company, 6 Cir., 300 F. 509, Aunt Jemima Mills Co. v. Rig-ney & Co., 2 Cir., 247 F. 407 [L.R.A.1918C, 1039], As was said in Ward Baking Co. v. Potter-Wrightington, 1 Cir., 298 F. 398, “The test should be whether the public is likely to be deceived.” ’
* * * * * *
“And the good-will of plaintiff, which it had built up at great expense over a period of years, would be whittled away. Courts of equity ought not to be so .feeble as to be unable to prevent this.”

In the case now before this Court, we have proof of the good-will built up by the plaintiff over a period of many years and of the general acceptance by the trade of the style, dress, name and appearance of plaintiff’s product as indicating it to be the plaintiff’s product. These valuable assets of the plaintiff are without right suddenly pre-empted by defendant in his copying of the style, dress and nomenclature of plaintiff in the marketing of a new product.

Counsel for defendant has cited DeLong Hook & Eye Co. v. Hump Hairpin Mfg. Co., 297 Ill. 359, 130 N.E. 765, among other cases in support of his position that plaintiff should have no exclusive right to the name describing its product.

[,4] However, in referring particularly to the descriptive nomenclature by which the product is indicated, the Supreme Court of Illinois, in the DeLong Hook & Eye Co. v. Hump Hairpin Mfg. Co. case, 297 Ill. at page 365, 130 N.E. at page 768, said:

“A merely descriptive term or the name of a person or place may have become associated with a particular kind of goods or the product of a particular manufacturer in such a way that merely attaching the word to an article of the same kind would amount to a misrepresentation as to the origin of the article. In such case, while the use of the word cannot be prohibited, it may be enjoined unless accompanied by such information and precautions as will unmistakably distinguish the article from the goods of the original manufacturer or vendor and will prevent deception of purchasers.”

Here is a principle which I think may well be applied to the evidence in this case. Counsel for defendant maintains that the term “Stop Nut” (any claim to the right to use “Elastic” was abandoned by the defendant during the course of the trial) in. its entire generic form is something contained in the dictionaries as early as 1909 and its use therefore cannot be enjoined. In the main I am inclined to agree with him. On the other hand, however, where the term is used to describe a certain product for so many years as to become synonymous with the product, then under the principle enunciated by the Supreme Court of Illinois above, the appropriation of that term by a competitor may amount to misrepresentation as to the origin of the article, and if so is something that may be restrained. As the Supreme Court of Illinois says in the case just cited, the defendant: “can be restrained from doing so only in case it appears that the word has come to have a secondary or trade meaning; that is, that all notions bearing the name ‘Hump’ are of the appellee’s manufacture. Even in such case the use of a descriptive or geographical word, in its primary sense, cannot be wholly enjoined. Whether the appellee has a trade-mark in the name or not, whether the word is capable of adoption as a trade-mark or not, if, in fact, that name means in the trade the appellee or the ap-pellee’s goods, the appellee has a right to have the appellant enjoined from using that name in selling its goods so as to mislead buyers into believing that the appellant’s goods are of the appellee’s manufacture. The only question of proof is the trade meaning of the name.”

I accept the foregoing as the law of Illinois with reference to the use in this case of the term “Stop Nut.” That is, it cannot be wholly enjoined. But since the defendant’s product herein is identical in every respect with that which the plaintiff has been manufacturing for so many years and which has come to be accepted by the trade as plaintiff’s product under the name “Stop Nut,” I think the defendant should be enjoined from the use of that term in order to avoid deceiving the trade and confusing the goods of defendant with the goods of the plaintiff.

In the Hump Hairpin case, the court found as a matter of fact that the evidence failed to show that the word “hump” had acquired a secondary meaning in the trade indicating the appellee or the appellee’s manufactures, and that the evidence did show that the appellant, in the use of a different form of wrapper in the sale of its hairpins and in the plain indication by the use of its name on the wrapper, that the hairpins were manufactured by the appellant and not by the appellee.

In the case at bar however, there is no difference in the product at all and the same name is applied thereto.

One other case cited by counsel for defendant should be distinguished. It is the opinion of Judge Evans of this Circuit in Keller, Inc., v. Chicago Pneumatic Tool Company, 298 F. 52, 57. One paragraph of that opinion not only distinguishes the facts of that case from these but also enunciates a principle which I think is applicable to the facts in this case. I quote it:

“In other words, if the article covered by a patent and manufactured by the owner of the patent is provided with a special dress or artistic adornments that are in no way involved in any of the patent claims, the competitor entering the field at the expiration of the patent may subject himself to the charge of unfair competition, if, in addition to adopting the combination covered by the patent, he adopts the dress, the artistic designs, or those individual marks with which the users have become familiar, and which they recognize as attributes of the product of the old company.”

Applying that principle to the facts in this case, the defendant clearly has the right to use the teachings of plaintiff’s expired patent in the manufacture of his product. Clearly he has the right to market his product but he does not have the right, as Judge Evans says in his opinion, without subjecting himself to the charge of unfair competition, to adopt the dress, artistic design and individual marks with which users have become familiar throughout the years in identifying a product as one manufactured by the plaintiff.

I find that the plaintiff has established proof of the unfair competition charged.

The use by the defendant of the term “Stop Nut,” and also the term “Elastic Stop Nut,” had “Elastic” not been dropped by the defendant and removed from the issue here, when used with the particular style of dress of its product that has characterized the manufacture of the plaintiff throughout these years, will be enjoined in order to avoid confusion on the part of the purchasing public and in the trade which the particular product serves.

I desire to make clear that I do not find that the plaintiff has any monopoly in the term “Stop Nut” or “Stop Nuts.” I find only that when that term is used together with a nut embodying plaintiff’s peculiar style of dress, a red-colored fibre insert, and characteristic clinching at the top, such use should be enjoined in order to avoid confusion because it amounts to unfair competition.

If the defendant or anyone else desires to use the term “Stop Nut,” in such a way as would not cause confusion and on a product not following the peculiar design, style of dress and red coloring which the plaintiff has used, I find no particular proprietary right in the plaintiff to this generic term which, as the defendant points out, has been in the dictionary since 1909. The plaintiff has not acquired a monopoly on the color or on the words. The plaintiff has established however its use ever since it started in business of the words “Elastic Stop Nut” and “Stop Nut,” together with an identifying red circular fibre insert in its product, and this combination cannot be copied and used by anyone else putting the same product on the market without being guilty of unfair competition.

The plaintiff having established its case of unfair competition, an injunction will issue enjoining and restraining the defendant from applying the terms “Stop Nuts” or “Elastic Stop Nuts” to self-locking nuts not of plaintiff’s manufacture that have the style and dress of the plaintiff’s self-locking nuts.

Defendant will further be enjoined from using a red fibre insert or any colorable imitation thereof in connection with any product not the plaintiff’s, except when other colors are not available by reason of the present war shortages, or such other conditions of the market as may make red, at a particular time, the only available color.

Defendant will further be restrained from publishing illustrations using a red insert to identify stop nuts of his manufacture similar to those manufactured by the plaintiff; and from representing, directly or indirectly, that the defendant is licensed by the plaintiff to manufacture lock nuts containing red colored inserts, and from doing any other act calculated to induce the public to believe that defendant’s products are the plaintiff’s.

Counsel for defendant in his argument, and I believe the exhibits bear him out, says that the defendant has stopped the use of “licensed” on his letterhead, but since there is proof that he had used it in the past, I think the injunction may contain that additional enjoining sentence.

As to the accounting and damages which have been prayed for by the plaintiff, I think the evidence is sufficiently clear that what the defendant has manufactured thus far has gone into use by manufacturers of equipment being made for the armed services. Therefore, although I find for the plaintiff on its complaint, and find that the plaintiff is entitled to an injunction, there will be no decree for damages, and no accounting.

There will be a judgment for costs against the defendant.

As to the patent set out in the defendant’s counterclaim, Sande Patent No. 1,714,520, and the one claim thereof, I find the said patent invalid for lack of invention as having been fully anticipated in the prior art.

Taking the most favorable view of the Sande patent, I think it falls within the characterization of the Court of Appeals of this Circuit the case of Dixie-Vortex Company v. Paper Container Manufacturing Company, 130 F.2d 569, 572, wherein the Court said:

“We need not decide whether the patent in suit is anticipated by any one of such prior art patents. It is sufficient, we think, that the prior art disclosures are such that a person skilled in the art might readily design the improvement which Barbieri claims to have made. The improvement thus made would not, in our judgment, amount to invention, and the claims in suit are therefore invalid.”

I think the same language could be properly applied to the claim of the patent of Sande in this suit. In particular, however, I find the elements of the one claim of the Sande patent fully disclosed in the following prior art patents: Feebusch and Roberts patent 1,271,559; Woods and Yost patent 892,202; and McKinnon patent 375,177. And for such lack of invention and for such anticipation in the prior art, I find the Sande patent in suit invalid.

The defendant’s counterclaim will be dismissed at defendant’s costs.


text:
    WAYNE et al. v. ATLANTIC CITY.
    No. C-4633.
    District Court, D. New Jersey.
    July 27, 1945.
    John B. Baratta, of Atlantic City, N. J., for plaintiffs.
    Bolte, Miller & Repetto, by Augustine A. Repetto, all of Atlantic City, N. J., for defendant.
   FORMAN, District Judge.

Plaintiffs, husband and wife, bring this action for damages by reason of the latter’s injuries alleged to have been caused by the negligence of defendant, a municipal corporation.

In the first count of the complaint it is alleged that plaintiff Margaret E. Wayne came to Atlantic City to enjoy the health and recreational facilities offered by it, which included, among others, the Boardwalk; that said plaintiff was induced to visit Atlantic City for these purposes as a consequence of the advertisement and promotional efforts of the defendant which were intended to so induce visitors; that it therefore became the duty of the defendant to operate its Boardwalk so as not to render it dangerous to such invitees or persons similarly induced to partake of its virtues; that defendant failed to carry out said duty in that it knowingly permitted the Boardwalk to fall into disrepair; that by reason thereof, said plaintiff fell and was injured in the amount of the damages sought; that said defendant was insured at that time against the risk of such accident, for which insurance defendant paid a premium.

In the second count the plaintiff’s husband George E. Wayne alleged that the loss of services of his wife and his expenses, past and anticipated, to cure his wife of her injuries for which he likewise sought recovery in damages.

Defendant moved to strike paragraphs 2 and 7 of the first count of the complaint insofar as the allegations thereof are incorporated in the second count, on the ground that the allegations are impertinent. It also moved to strike the complaint in its entirety because it fails to state a claim upon which relief can be granted.

Counsel for the plaintiffs recognizes the law in New Jersey which immunizes a municipal corporation from liability for negligence under facts similar to those in the case at bar but argues that the reasons which served as a basis for the establishment of the rule are no longer present. He sees such reasons set forth in the case of Board of Chosen Freeholders of Sussex County v. Strader, 18 N.J.L. 108, 35 Am. Dec. 530, decided by the New Jersey Supreme Court in 1840, to be that recognition of municipal liability would be productive of an infinity of actions; that there was no precedent for such an action and there was no corporate fund out of which satisfaction could be had. These are similar to the reasons which impelled the early decision in the case of Russel v. Men of Devon, 1798, 2 T.R. 667, 100 Eng.Reprint 359. He argued that the principal reason: —the lack of funds to support a judgment, does not apply because the alleged insurance policy of the defendant supplies that deficiency. He cited in support of this contention the case of O’Connor v. Boulder Colorado Sanitarium Association, 105 Colo. 259, 96 P.2d 835, wherein the Court found a charitable institution liable for negligence causing injury to a paying patient where the loss would be borne by an insurance company.

It is something of an understatement to say that conditions have changed since the case of Men of Devon, or even in the century that has elapsed since the decision in the Strader case. Misfortune to the individual has become the concern of the public and much more progress in this direction may be expected if this government is to achieve its objectives. Indeed in New Jersey some tendency toward bringing municipal corporations into the area of liability for damages caused individuals has manifested itself. At least active wrongdoing upon the part of a municipal corporation has been made the criterion of recovery by a decision of the Court of Errors and Appeals of New Jersey, although the New Jersey Supreme Court has rather frankly and pragmatically conceded that the resultant consequences to the injured party are the same quite regardless of whether the wrongdoing upon the part of the municipal corporation was active or passive. Much has been written upon the subject of the necessity to bridge the lag between the law of damages in this” field and the times in which we live. Plaintiffs’ counsel has directed our attention to a particularly informative article by Professor Albert J. Harno as early as 1921 wherein he advocated that the municipal corporation should be required to assume its responsibilities commensurate with its place in a modern society. However, the Strader case still influences the New Jersey law with little abated rigidity, for as recently as this very year it was cited with hearty approval by the Supreme Court of New Jersey.

We endeavored to expand the rule in a kindred case where negligence of a municipal corporation was alleged, but the higher court pointed out that the scope of the fixed law of New Jersey would not brook the broadening of such liability in the federal court. So in this case we are limited by the doctrine laid down in the case of Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487, and we cannot transgress the line drawn by the New Jersey Courts where relief as sought by the plaintiffs herein is claimed even in the face of the allegation by plaintiffs that the defendant is protected by insurance, the injection of which issue, itself, is a vulnerable maneuver in New Jersey.

The objection by the defendant that the complaint fails to state a claim upon which relief may be granted must be sustained and the complaint will be stricken.

Such an order should be presented.

       (1) Paragraphs 2 and 7 of the first count of the complaint are as follows:
      “2. At all the times hereinafter mentioned and for a long period of time prior thereto the said defendant held itself out to the world as a seashore resort and for its special benefit and advantage there maintained within its exclusive control certain health and recreational facilities whose peculiar virtues through the media of advertisement and other promotional enterprises, it extolled and exploited to induce the general public of the several States to come and enjoy; among which health and recreational facilities was a certain elevated wood-surfaced bridge known as the Boardwalk extending uninterruptedly over and along the shore of the Atlantic Ocean for approximately 5 miles dedicated by the said defendant as a promenade solely for pedestrian use and by it kept free of horse-drawn and motor-propelled traffic and the dangers, annoyances and noxious odors incident thereto, and affording therefrom, save for several abutting amusement piers jutting out into the sea, an unobstructed view of the Atlantic Ocean, along the entire length thereof.”
      “7. At all the times hereinabove mentioned the said defendant carried a policy or contract of insurance insuring it against the risk out of which the said accident grew and providing for the service of counsel in the event of suit in connection therewith; for which policy or contract the said defendant had paid a premium; and the said policy or contract of insurance provided that the insurer was to pay any final judgment recovered against the said defendant for any accidental injury growing out of the maintenance, control or care of the said wood-surfaced bridge known as the Boardwalk.”

       Allas v. Borough of Rumson, 115 N.J.L, 593, 181 A. 175, 102 A.L.R. 648.

       Hammond v. Monmouth County, 117 N.J.L. 11, 186 A. 452.

       Tort Immunity of Municipal Corporations, Vol. 4, No. 1 (Dec. 1921) Illinois Law Quarterly, p. 28.

       Miller v. Layton, 132 N.J.L. 426, 41 A.2d 23.

       Murphy v. City of Asbury Park, D. C., 49 F.Supp. 39.

       Murphy v. City of Asbury Park, 3 Cir., 139 F.2d 888, certiorari denied 322 U.S. 735, 64 S.Ct. 1048, 88 L.Ed. 1569.

       Patterson v. Surpless, 107 N.J.L. 305, 151 A. 754.


author: SWEENEY, District Judge.

text:
    SALZMAN v. LONDON COAT OF BOSTON, Inc.
    No. 3372.
    District Court, D. Massachusetts.
    Sept. 25, 1945.
    Meyer H. Goldman, of Boston, Mass., for plaintiff.
    Edward O. Proctor, Ropes, Gray, Best, Coolidge & Rugg, Charles M. Goldman, and Slater & Goldman, all of Boston, Mass., for defendant.
   SWEENEY, District Judge.

This action was originally brought by the plaintiff to compel the defendant to reemploy him as its New York sales representative, and to recover damages for the defendant’s failure to employ him. Jurisdiction of this Court was invoked under the Selective Training and Service Act of 1940, 50 U.S.C.A. Appendix § 308. The defendant denies its liability either to re-employ the plaintiffs for the damages sought.

Findings of Fact

The defendant is a manufacturer of raincoats and other garments with its place of business in Boston, Massachusetts. Much of its product is manufactured here by other subcontractors. Since February 2, 1942, it has maintained a New York sales representative, and it is this position which was originally sought in this action by the plaintiff.

When the defendant opened its New York sales office on February 2, 1942, it employed as its representative one Milton Winick. Winick’s contract is almost identical with the one later given to this plaintiff and, in substance, is a contract terminable at the will of either party. Winick continued as the New York sales representative of this defendant until May 22, 1942, when he was inducted into the United States Army. On August 23, 1943, Winick was honorably discharged from 'the army and he immediately made application for re-employment with the defendant as its New York sales representative. His application was acted upon favorably and, sometime in September, he returned to his old position and is presently employed there.

In June, 1942, after Winick had been inducted into the service, this plaintiff applied to the defendant for employment. On July 28, 1942, a contract was entered into between the parties similar to the one that had been entered into between Winick and the defendant. It is uncertain whether or not this plaintiff knew, when he first negotiated with the defendant for the position, that the vacancy into which he was to step had been occasioned by Winick’s going into the army, but, in any event, on July 28, 1942, when he signed his formal contract with the defendant, he did know that Winick was on temporary leave from the company and in the military service, and that he was filling Winick’s job in his absence. Previous to that time he had talked with Winick in the firm’s New York office.

On or about July 14, 1943, this plaintiff was inducted into the United States Army, and on November 16, 1944, was honorably discharged therefrom. At that time he sought re-employment with the defendant company and was offered a position at the factory in Boston for a period of a couple of months, the purpose of such employment being to reorganize the sales and accounting system of the defendant in its home office. Shortly thereafter, on November 22, 1944, the plaintiff wrote the defendant a letter in which he set forth an alleged résumé of their oral negotiations. It was to the effect that his employment in Boston was to be merely a stopgap and that “Although we left this in abeyance, I expect that by the turn of the new year you will have made final arrangements for me to again take over the New York office as before”. On receipt of that letter the defendant immediately dispatched a telegram to the plaintiff as follows:

“Relet We have absolutely no arrangements with you other than the work in Boston as discussed between us on weekly salary basis only for the next couple of months. New York office job is not open now and we do not expect to make any changes in the near future. As you know our New York representative who was formerly in the army and for whom you substituted has returned to his old position.”

There is no merit to this plaintiff’s claim. The defendant had but one sales representative in New York. At the time that this plaintiff took the position he knew, or should have known, that it was a temporary one pending the return of Winick. Indeed, the defendant was under obligation to employ Winick and has discharged this obligation. No contract that it could have made with the plaintiff could have relieved it of the obligation imposed by the statute in question. Since the defendant had but one position to be occupied and both men have claimed it, it naturally follows that the position rightfully belongs to Winick, and that the defendant is under no compulsion to offer re-employment to this plaintiff.

Conclusions of Law

I find and rule that the plaintiff was a temporary employee of the defendant during the period that he was in charge of the New York office and as such, under Section 308(b), is not entitled to the claimed relief.

The plaintiff has not availed himself of the provisions of Section 308(e) by which he could have filed his suit through the office of the United States Attorney and, hence, is not entitled to the benefits of the provisions, which state that court costs shall not be taxed against a person so applying for the benefits. Judgment is to be entered for the defendant with costs.

In open court the plaintiff waived his claim for re-employment. In view of the above decision in the case, it is unnecessary to adjudicate the question as to whether this Court has jurisdiction to maintain a mere claim for money damages, due to an alleged failure to re-employ.