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    Mitford C. Massie, individually and as trustee, &c., et al., complainants, v. The Asbestos Brake Company et al., defendants.
    [Decided September 28th, 1923.]
    On appeal of Mitford C. Massie et al.
    On appeal from a decree of the court of chancery advised by Vice-Chancellor Buchanan, who filed the following-opinion :
    “By separate respective -written agreements, each dated May 2d, 1911, the Asbestos Brake Company, assignee and owner of certain patents and patent applications, granted licenses to the defendants H. W. Johns-Manville Company and Thermoid Enbber Company to manufacture and sell and rise articles (asbestos brake linings) covered by the patents and patent applications, and the said defendants as such licensees, contracted, inter alia, to pay to the Asbestos Brake Company, monthly, certain royalties on all such articles so sold by it, and to send certain daily and monthly reports of all such sales.
    “Complainant Massie, as a stockholder of Asbestos Brake Company, being unable to procure the latter company to bring this suit, filed this bill on behalf of himself and all other stockholders against the licensees (joining Asbestos Brake Company as a defendant), alleging the manufacture and sale of large qirantities of the licensed articles by the licensee-defendants, and that no reports or accounts have been rendered, nor any payment of royalties made, and ask such accounting and payment and for a decree of specific performance of the license contracts for the future.
    “Conrad Hubert, the only other person in addition to complainant and the two licensee-defendants holding stock in Asbestos Brake Company, subsequent^ applied and was admitted as a party co-complainant, and a decree pro confesso was duly taken against Asbestos Brake Company.
    “The defendants H. W. Johns-Manville Company (hereinafter referred to as the ‘Manville Co.’), and Thermoid Rubber Company (hereinafter referred to as the “Thermoid Co.’) filed separate, but practically identical, answers.
    “The defenses thereby interposed are—
    “1. That the license agreements in question were executed and delivered only upon, and subject to, and as a part of, an express agreement by -all parties that they were to become and be binding and effective only upon certain contingencies, and that those contingencies never eventuated.
    “2. That subsequent to the making of said license agreements, an agreement was made by all parties rescinding the said license agreements and suspending the force and operation of the requirement of the payment of royalties.

      “3. That complainants have acquiesced, for eight years in the non-performance or breach by the defendants, and are equitably estopped from suing thereon at the present time.
    “4. Laches.
    “o. That the license agreements in question are a part of a combination in restraint of trade in contravention of the federal statute commonly known as the Sherman Anti-Trust act, and are therefore illegal and void, and no suit can be Maintained upon them.
    “In dealing with the issues thus raised, and particularly in relation to the last-mentioned defence, it is necessary to consider the acts and dealings of the parties from the commencement of their relationships with each other, as well as the circumstances and conditions with respect to the manufacture, use and sale of brake linings. As to most of the following facts there is no real controversy.
    “With the advent of motor vehicles and the development of the gasoline engine at the commencement of the present ■century, a new field was opened in the use of brake linings, and one in which the conditions and requisite factors differed from those theretofore controlling. A number of inventors began experimenting with asbestos and applied for patents on the results of their endeavors. One of these was Clyde J. 'Coleman, who assigned to Hubert (one of the present complainants) his application for patent; another was William T. Bonner, who assigned his application to the Thermoid Co., and there were also Louis D. Hoff and Cutting & Jewett, whose applications were assigned to the Manville Co. Interferences were declared in the patent office among these several applications.
    “Thereafter negotiations were begun among the three owners of the several applications looking toward an arrangement whereby each and all should be able to manufacture and sell brake linings embodying all of the several and various inventions and improvements comprised in each of the several ■applications for patent, and these negotiations resulted about September 22d, 1910, in a tri-partite agreement among them ¡bearing that date.

      “This agreement recited the several applications for patent and their several ownerships among the three parties; the fact of the interferences; the desire of the parties to settle the interferences to their ‘mutual’ advantage, and provided and agreed that the three (Hubert, Manville Co. and Thermoid Co.) should join in the incorporation of a company to be named Asbestos Brake Company, with specified charter and by-laws; that the pending interferences should be prosecuted to decision; that all of the inventions in the said applications for patent, and the patents to be issued thereon, should bé assigned to the Asbestos Brake Company, subject to the condition, however, that the Asbestos Brake Company should give to Auto'Improvement Company (a corporation controlled by Hubert), the Manville Co. and the Thermoid Co., licenses to manufacture and sell under said inventions and patents and under all other inventions and patents which might thereafter be owned or controlled by Asbestos Brake Company (which licenses were to be under a specified form of license agreement); that the three proposed licensees would accept and execute such license agreements; that the licensees should sell the manufactured articles at scheduled prices and make monthly report to the Asbestos Brake Company and pay a royalty of 10 per cent.
    “By the time this agreement was made Bonner and Hoff had each filed application for patent for improvements in asbestos brake linings, which conflicted and were placed in interference by the patent office. This application of Hoff had been assigned by him to the Manville Co. while Bonner’s had been assigned to Brake Liners Company, a company in which he (Bonner) -was a large stockholder.
    “As the result of further negotiations another agreement— a quadri-partite agreement—was made, dated March 6th, 1911, among the three parties to the agreement of September 22d, 1910, and the Brake Liners Company, whereby the latter company became a party to the agreement of September 22d, 1910, and certain modifications were made therein to conform to the circumstance of there being four parties, instead of three, thereto. The Brake Liners Company was to assign its inventions and patents to Asbestos Brake Company, and to receive for itself or its nominee a license similar to the licenses to be issued to the other three.
    “The provisions of these agreements were for the most part duly carried out. The Asbestos Brake Company was incorporated in March, 1911, with the four parties as stockholders, and organized formally May 2d, 1911; all of the applications for patent were assigned to the new company; the new company issued license agreements to the Manville Co. and the Thermoid Co., but none to Hubert or his Auto Improvement Company, nor to Brake Liners Company or any nominee thereof. The interferences were proceeded with, and patents were issued and of course became the property of the new company. Subsequently, other patents bn asbestos brake linings were issued to the new company on later applications of Hoff, Bonner and Headson (another employe of the Man-ville Co.).
    “During all this time—that is, prior to the negotiations leading up to the agreement of September 22d, 1910, and continuing uninterruptedly, the Manville Co. and the Thermoid Co. had been manufacturing and selling asbestos brake linings in open competition with each other and a number of other manufacturers. It was, of course, the hope and desire of each of these two companies, prior to the interferences, that upon the patent applications owned by it, a patent would issue to it, which would give to it the patent monopoly in these articles—the sole right to manufacture and sell asbestos brake bands, thus eliminating the competition of the other manufacturers thereof, who would either have to quit the held or pay royalties to the owner of the patent. Competition, doubtless is the li fe trade from a broad, general standpoint, but it is the hete n-ovre of the individual manufacturer or merchant. If he can eliminate competition, bis prices and therefore his profits will increase, the consuming public suffers accordingly; hence, the statutory provisions against combinations for that purpose.- Monopolies based on the ownership of secret processes or inventions and upon the ownership of patents are, however, legal, and, of course, highly desirable to the manufacturer or merchant.
    1 think it is also unquestionable that at the time of the negotiations for the agreement—whatever may have been the fact later on—the Thermoid and Manville companies, and, of course, the other parties to the agreement, were still actuated bjr this desire, in a modified form. The claims of the several patents were different—a patent might issue to one on asbestos brake linings in general, and a patent to another on an improved asbestos brake lining, and to still another on a further improvement—in which case the latter two could make no asbestos brake linings at all without the consent of the former, and the former could not make the improved lining (which might be the only practical, salable form of the articles) without the consent of the latter two. But if all the patents were combined in one ownership (which could legally, at least under certain circumstances, be done), all would reap and share in the benefits and profits of the marketable improved articles covered by the several patents, and exclude the competition of all other manufacturers.
    “It must also be borne in mind, however, that patents in this country are not conclusively valid against all the world. It is an unfortunate but well-known fact that when a man has received liis patent Iris troubles, have just begun/ and the more valuable his patent is, if valid, the more trouble and expense he will have. Comparatively seldom does the original inventor of an article covered by a valuable patent reap his just reward. Competitors already in the field do not give up without a struggle, and other competitors arise. Some may be hold infringers, pure and simple, taking a chance on making as much as possible before they are stopped; some claiming, honestly or dishonestly, that the patent is invalid, that the invention is not patentable, or that the patentee’s invention was anticipated by others.
    “Of course, the parties to this agreement did not believe that upon the issuing of the patents the competing manufacturers would forthwith and without difficulty acknowledge the validity of the patents and the right of the Asbestos Brake Company to monopoly in the asbestos brake lining field, and enter into license agreements whereby they would pay royalties to the Asbestos Brake Company. And it is, of course, evident that if competitors .should be allowed to infringe these patents unchecked, a licensee under the patents would be worse off than before, since he would be handicapped in his competition with the outsiders by the additional costs arising from his payment of royalties.
    “Hence, the provisions in the license agreements that the licensor should prosecute infringers, provisions frequent and usual, though not invariable, in such license agreements, and the desire and the efforts to get other manufacturers to take licenses without the compulsion of infringement suits.
    “The Thermoid Co. and the Manville Co. did, in fact, pursuant to the pre-corporate agreements, execute license agreements with the Asbestos Brake Companjq receiving the right to manufacture and sell the patented articles, and binding themselves to pay royalties to the Asbestos Brake Company on all the patented articles made and sold by them. These two companies, therefore, occupied a dual position toward the Asbestos Brake Company, for they were also stockholders therein—each holding one-quarter of the preferred stock (of which Hubert and the Brake Liners Company also held each one-quarter), and together holding seventy per cent, of the common stock (of which Hubert and the Brake Liners Company held each fifteen per cent.). By the certificate of incorporation and the by-laws, the election of directors and the power to change the certificate of incorporation or the by-laws was vested in the preferred stockholders, and there were four directors and four officers (the same persons as the directors), divided among the four respective interests, so that each interest was represented by its own director (and officer), and no two interests could exercise control. The Thermoid Co. and the Manville Co. were manufacturers; Hribert and the Brake Liners Company were not.
    “After the formal organization of the company and issuing of the licenses in question, in May, 1911, the next directors’ meeting was held in July, 1911. All four directors (one representing each of the four stockholding interests) were present and a beginning was made upon the matter of endeavoring to get the outside competitors to acknowledge the Asbestos Brake Company’s patents and resultant control of the field and to get them to. enter into license-royalty agreements with the Asbestos Brake Company. These endeavors were carried on by correspondence and by some personal interviews for some months, with practically no success. One or two directors’ meetings were had during this time, and all four directors knew of the situation. One thing that became apparent was that the schedule of prices which the Asbestos Brake Company proposed to have adopted by its licensees was very generally considered too high, and a resolution was adopted August 29th that a lower schedule should be adopted after further interviews with prospective or possible licensees.
    "No other licensees were obtained either then or at any subsequent time. The last meeting of the company was a directors’ meeting, January 17th, 1912. Since then, although the corporate existence has been kept alive, it has not functioned in any way. No stockholders’ or directors’ meetings have been held or called, nor has there been any effort by anyone to call such meetings. No additional licensees have been procured, no prosecution of infringers has been had or begun. No moneys have been paid, and no reports rendered by the Thermoid Co. or the Manville Co., although those two companies have at all times continued to manufacture and sell brake lining just as before, and such manufacture and sale is admittedly, except for the license, in infringement of the patents of the Asbestos Brake Company. No effort has been made by the Asbestos Brake Company to compel the Thermoid Co and the Manville Co. to make the reports and the payments as provided by their license agreements until the commencement of this suit in 1919, nor has any such effort, at least of any formal kind, been made by or on behalf of either of the other two stockholding interests in the Asbestos Brake' Company.

      “The first defense interposed by the defendant in the present suit is that there was an agreement that the license agreement should be operative and valid only under certain conditions—‘an agreement contemporaneous with the organization of the company and the execution and delivery of the license agreements, from the Asbestos Brake Company to the Johns-Manville Company that the license agreement was to become effective only when and if the Asbestos Brake Company should be successful in establishing its monopoly under the patents by forcing competing manufacturers to take out licenses under its patents/
    “I do not believe there ever was any such agreement, and I so find. There is no proof of any written agreement, n-or indeed of any agreement by the Asbestos Brake Company as such. And even if we go behind the corporate entity to the actual parties in interest, the proof offered of any agreement between them is of a rather indefinite and decidedly unconvincing character. This proof consists of testimony of Mr. J. 0. Stokes and Mr. W. J. B. Stokes (both officers of the Thermoid Co.), and of Mr. T. F. Manville (of the Manville Co.), to the effect that it was repeatedly discussed and agreed amongst all that the license agreements which were to be and were executed between the Asbestos Brake Company on the one hand, and the Manville Co. and Thermoid Co. on the other hand, were not to be effective unless other manufacturers were forced to come in and take license agreements and pay royalties to the Asbestos Brake Company. Messrs. Hubert, Bonner and Massie (the other individuals in interests), testify that no such conversations were ever had with them and that they never heard of any such agreement or proposed agreement. Mr. Williams, the attorney of Hubert, and Mr. Lowthorp, then the attorney for the Thermoid Co., likewise so testify. Mr. Parker-Smith, the attorney for the Manville Co., fails to testify as to such conversation or agreement.
    “Looking to the circumstances and the inherent probabilities of the situation, the argument is not without weight, that the Thermoid Co. and Manville Co. would have been unlikely to handicap themselves as manufacturers by these agreements to pay royalty, unless their competitors should be likewise burdened. The answer may be made, however, that it is evident that they expected and intended that their competitors should be compelled to pay royalties, or else should be restrained from manufacturing or selling, and that these very agreements so provided. When it is remembered that all these four interests, although combining as against the outside field, were separate and individual as among themselves, and particularly so in the negotiations and detailed steps of putting the project through, that each was represented by skilled counsel, whose care and attention are evident all through the proceeding, it is impossible to believe that if there had been any such agreement it would not have been known by them, or indeed that it would not have been reduced to writing and formal execution. There is another circumstance, adding further weight to the conclusion that' there was never any such agreement. On October 5th, 1911, Mr. Massie wrote to Joseph 0. Stokes and sent a copy of the letter to Mr. Manville. In this latter he called attention to the fact that the Thermoid Co. and Manville Co. were not paying royalties or making returns to the Asbestos Brake Company as provided by the license agreements. These two men—Stokes and Manville—are two of the three persons who testify in this suit that the alleged contemporaneous agreement was made, and these two testified as to conversations had by themselves with Massie, recognizing and constituting such contemporaneous agreement, conversations said to have been had only six months before they received this letter. Can it be imagined that, under those circumstances, they or either of them could have received this letter from Mr. Massie without immediately replying to him and calling his attention to such agreement. But there is no such proof, and the reason there is no such proof is obviously because there never had been any such agreement. What Stokes and Man-ville did do was to father the so-called 'rescission resolution’ of the Asbestos Brake Company, on November 14th, 1911 (later to be mentioned), colorably indicating a rescission by that company of the requirement that the Manville Co. and Thermoid Co. should pay royalties. Nothing is mentioned in that ‘resolution’ ’ about any such alleged contemporaneous agreement, and such omission is not without weight, for while it is not inconceivable that such a resolution might have been so framed, even if there had been the alleged contemporaneous agreement, it would be far more probable that mention of it would have been made in the resolution or in a preamble, as explaining and giving thé reason for such action by the company; an action which needed such explanation, if it existed, for otherwise it was without consideration.
    “Finally, there is what seems to me the very significant language of two of the defendants’ own witnesses in testifying as to how and why the ‘rescinding resolution’ was passed. Greenwood, Manville’s, secretary, on his direct examination, and also in his cross-examination, testified that Manville, in proposing the resolution, gave as the reason for so doing that the Asbestos Brake Company had not been successful in getting anjr other manufacturers to take licenses, and that the Manville Co. could not afford to pay the royalties under the license' agreement, and therefore he moved that they be ‘waived’ or rescinded. He says nothing about any statement by anybody that there had been any prior agreement or understanding to that effect. W. J. B. Stokes, also-, in his direct testimonjr, says that Manville, in proposing the resolution, said that the Asbestos Brake Company had made unsuccessful efforts to get other manufacturers to take out licenses, and hence,- the Manville Co. and the Thermoid Co. were out in competition with the world, and therefore he wanted the resolution rescinding the royalties—that the two companies couldn’t afford to pay the ten per cent, royalty. It is clear to my mind, therefore, that the ‘rescinding resolution’ was passed not in furtherance of any prior agreement, but solely at the instigation and desire of the Manville and Thermoid companies, as an attempt to relieve themselves from the situation which then-existed.
    “The second defence is that of rescission. It is quite evident that no rescission ever took place. It appears that notices were sent out for a directors’ meeting of the Asbestos Brake Company, to be held at its New York office on November 14th, 1911, and that at that time and place there were present Mr. Manville, Mr. W. J. B. Stokes and Mr. Bonner. Of these three, Manville was the only one who was a director—the other three directors being (as it will be remembered) Mr. J. 0. Stokes, Mr. Massie and Mr. Hubert. Hubert had not received the notice mailed to him; Massie was unable to come. Of course there was no quorum. Yet a pretended directors’ meeting was held—Manville calling in his private secretary, Greenwood, to act as secretary of the meeting, since Bonner, who had come there on other business entirely, and was not a director, declined to act, although he did stay at the ‘meeting.’ Manville and Stokes presented and voted for the following ‘resolution’:

      “ ‘Resolved, In view of the conditions in connection with prices on brake .band lining and the fact that it has been impossible to maintain prices as proposed at the time of the organization, that the provision for the members of this company paying in ten per cent, on the sale of brake band lining be rescinded, and until conditions warrant, no royalties are to be paid.’
    “Manville immediately wrote to Massie as follows:
    “ T have your telegram advising us that you could not attend the meeting. There was a quorum present and we passed a few resolutions which we will hold and have you enter in the minute book at the first opportunity.’
    “After the adjournment of the next—and last—directors’ meeting, on January 17th, 1912, Manville handed the transcript of minutes to Massie. All four directors were present, but neither Hubert nor Massie knew anything about the so-called resolution.
    “It is quite clear that, in the first place, there was no action by the Asbestos Brake Company at all. The resolution was not passed by the directors of the Asbestos Brake Company nor presented at a meeting of that company, and there was no ratification, either active or passive, at any meeting of the company. In the second place, the resolution is not one of rescission. Rescission would mean the entire undoing of what had been done. It would mean, amongst other things, the assignment of the several patents back to their several prior owners. (Of course, in the nature of things, complete rescission could never be had—the parties could not be placed back in the sialu quo ante.) But nothing of this kind was included or suggested. The ‘resolution’ simply purports to nullify, temporarily, at least, the pro"visions of the license agreements requiring the Thermoid Co.-and Manville Co. to pay royalty. It was a release entirely without consideration.
    “The incident and the conduct of the several parties in regard to it are most peculiar, but as I have said, it is evident that there was no rescission. The defendants also set up acquiescence, laches and equitable estoppel.
    “As to acquiescence, I have pointed out that there was no corporate act done or taken in which the complaining stockholders can be said to have acquiesced. Inapplicable, therefore, are the numerous cases cited by defendants involving the well-recognized principle that where a corporation does an act which is ultra, vires, and which would be set aside at the instance of dissenting stockholders if timely steps in behalf be taken by them, the act is deemed to be ratified and acquiesced in by them where they with knowledge remain silent and inactive for an unreasonably long period. There was not even any action by the Manville and Thermoid companies amounting to a notice of repudiation of the contract or of an intention not to abide by its terms. The thing that was done was an attempt to make a colorable record of action by the Asbestos Brake Company, and an attempt so smirched with mala fides as to render it impossible for a court of equity to regard it as a foundation upon which any edifice of rights in favor of defendants ’ could be rested. I have in mind Manville’s letter to Massie wherein he falsely stated that there had been a quorum present at the directors’ meeting, and that several resolutions had been passed—statements which he knew to be false, and the fact that the subject-matter of the ‘resolution’ was not brought before the next meeting of directors when there was not only a quorum, but a full attendance of all the directors, representing all the stockholding interests.
    “Neither do I find laches. True it is that the action which has now been taken by this suit could have been taken equally well at any time during a period of about eight years prior to the filing of the bill. But laches involves something more than mere delay, mere lapse of time. There must be delay for a length of time which, unexplained and unexcused, is unreasonable under the circumstances, and which has been prejudicial to the defendant. Of. Johnston v. McKenna, 76 N. J. Eq. 217 (at p. 229) ; affirmed, 77 N. J. Eq. 555; where there was delay of some seven or eight years. Of. also Soper v. Cisco, 85 N. J. Eq. 165 (at p. 174).

    “In the present case no prejudice is shown, or can be inferred, to have resulted to complainants. There has been no loss of memory, no loss of witnesses, no loss of evidence, Defendants’ course of conduct was not induced by complainants’ delay or inaction. Defendants have simply continued to act as they acted in the beginning. It will be borne in mind that complainants are in this court, suing on a legal right, their right to an accounting on an express covenant in a sealed contract. Equity has concurrent jurisdiction in the enforcement of such right, and in the present case was the necessary or appropriate forum since complainants must needs sue in the corporate right. In such a case, where com! plainants’ bill is for the enforcement of a legal right, the equitable remedy is not ordinarily barred by mere acquiescence for a period less than the statute of limitations at law in a similar case, as is pointed out by Vice-Chancellor Emery in Paterson v. East Jersey Water Company, 74 N. J. Eq. 49 (at p. 97); affirmed,. 77 N. J. Eq. 588. The right of action being based on the covenant in the sealed contract would not be barred at law by the six-year limitation respecting the ordinary action of account, and hence will not be barred in equity as laches by analogy. Lilliendahl v. Stegmaier, 45 N. J. Eq. 648 (at p. 650).

      “I have already indicated that there are no special circumstances to raise equities in favor of defendants and turn delay into laches, and, of course, the defence of equitable estoppel, in so far as it is raised separately from laches, falls in the same way. Defendants’ conduct was not induced, nor were they misled, by any acts or conduct of complainants. Defendants continued to manufacture and sell these brake linings at all times just as they had always done—both before and after the execution of the license agreements. They never at any time paid any royalties or made any returns. Their course was taken with their eyes open and at their own risk, and, as a matter of fact, in the face of the notice or warning given by Massie in his letters of October 5th, 1911 (Exhibits (7-7 and 8). Complainants’ delay has been unusual, it is true, for parties in such circumstances, but its only resulting prejudice is to complainants -rather than de■fendants. Not even is there evidence to prove nor to indicate that defendants would not have continued to manufacture and sell if this litigation had been commenced eight years ago. Wherein does their position differ from an obligor on a bond matured due who has failed to pay principal or interest for eight years without complaint or protest from the mortgagee ? Would he be heard to come in to equity and say that the mortgagee’s silence and inaction had caused him to spend the money on the education of his children, for instance, and that the mortgagee must be held barred by an equitable estoppel ?
    “Defendants, in the course of their argument, refer to the concurrent obligation on the Asbestos Brake Company, under the terms of the license agreement, to prosecute outside infringers, and to the fact that this obligation was not performed by the Asbestos Brake Company. ,1 do not see that this can be of any avail to defendants. No effort whatever was made by defendants to have the Asbestos Brake Company undertake or prosecute such suits, at least after January, 1912, at which time defendants were and had been for six months guilty of - default and breach of their own obligation. They were the first offenders; their default and breach deprivecl the Asbestos Brake Company of funds to carry on such litigation, and they could at any and all times have taken the requisite steps to have such suits brought. That the suits were not brought was, to say the least, as much the fault of defendants as of complainants, and cannot raise either a legal bar nor an equitable estoppel against complainants, who were, as appears from the evidence (and this defendants in nowise seek to controvert), at all' times ready and willing to have infringement suits brought against the other manufacturers,
    “There remains to be considered the last defence interposed, namely, that the whole arrangement among the parties embodied in the pre-corporate agreement was unlawful as an agreement in restraint of trade; that the license agreements here sued upon are a part, and in furtherance of that unlawfull agreement, and hence, are invalid and unforceable.
    “It is not claimed that the two license agreements sued on are in and of themselves alone unlawful. They are license agreements perfectly natural and proper to be made by an owner of patents, containing no unusual provisions. Each agreement cites the patents and patent applications owned by the Asbestos Brake Company, and grants a non-exclusive license to manufacture, sell and use asbestos brake linings embodying the inventions in the said patents and patent applications, as well as in such patents as might later be acquired by the’ licensor. There are provisions limiting assignment of the license to those only who should succeed substantially to the licensee’s business and good-will; providing that sales of the articles embodying the inventions shall be at prices fixed by the licensor; requiring the licensee to render statements and pay royalties to the licensor; providing for damages or cancellation in case of breach, and for affixing the proper patent marks upon the articles sold. The licensor agrees to protect against infringers. All of these things are lawful and proper as between the owner of patents (at least where that owner is a natural person) and licensees. The contention of defendants is that the whole scheme and agreement among the four parties who incorporated the Asbestos Brake Company was unlawful under section 1 of the act of congress of July 2d, 1890, known as the Sherman law (U. 8. Comp. StaL. §' 8820), which provides: ‘Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations, is hereby declared to be illegal/
    “The object of patents and the patent laws is of course to secure to the patentee a monopoly for the term of the patent. In the exercise of that monopoly, competition as to the patented article vanishes except to the extent that the patentee permits, and the result, in a sense at least, is a, restraint of trade. It is not against this, however, either in terms or intent, that the Sherman law is directed—it is combination. and combination in restraint of trade, which is forbidden.
    “As is pointed out by the United States supreme court in Standard Sanitary Manufacturing Co. v. U. S., 226 U. S. 20 the statute is a limitation upon the rights of all persons, patentees as well as others, i And so a contract whereby the manufacturers of two independent patented inventions agree not to compete in the same commercial field creates a .restraint of trad© which results not from the patents but from agreement. Blount Co. V. Yale & Towne Co., 166 Fed. Rep. 565 (at p. 557). It naturally results that where such agreement of such manufacturers of independent patented inventions take the form of incorporating their several interests into a company, and assigning their patents to that company so that there shall be a single owner of all the patents, the resulting situation is not thereby saved from being unlawful. It is the substance, not the form, which is to be looked into, and the agreement being unlawful, the form, which is the creature of the unlawful agreement, affords no shield.
    “It is precisely that situation which defendants contend is disclosed in the case at bar. They contend that the object of the pre-corporate agreement and the purpose of the parties thereto, was to eliminate or restrain competition in articles covered by independent inventions, by fixing prices at which the same should be sold, and that the creation of the Asbestos Brake Company and the assignment of the several patents to it, and the execution of license agreements between it and manufacturers of brake lining, all constituted, simply, means to that end. .
    “It is true that the license agreements provide for the fixing of prices at which the manufactured articles are to be sold by the licensees. This a bona fide patent owner may lawfully do. Bement v. National Harrow Co., 186 U. S. 70. It would seem clear that he may also lawfully make as many of such agreements with separate licensees as he may desire or find profitable. Rubber Tire Wheel Co. v. Milwaukee Rubber Co., 15k Red. Rep. 858; Indiana Manufacturing Co. v. J. L. Case, &c., Co., 15k Red. Rep. 865; Goshen Rubber Co. v. Single Tube Co., 166 Red. Rep. kSl. This is indeed conceded by defendants, but they say that that is not the case shown by the facts now before this court. They say that here there is price-fixing, not by the owner and licensor of the patents, but by agreement amongst the licensees.
    “Of course it is perfectly clear and undisputed that tho Asbestos Brake Company is simply the Manville Co., the Thermoid Co., the Brake Liners Companjq and Hubert in another—a corporate'—form, so that in essence the price-fixing by the Asbestos Brake Company is price-fixing by the four companies. It is also true that these four companies, by their pre-corporate contract, agreed together in advance as to the fixing and maintaining of the prices at which the manufactured articles should be sold. In a sense, therefore, it may be said to be true that there is here a price-fixing agreement between licensees, because the Manville Co. and the Thermoid Co. are licensees from the Asbestos Brake Company. But it is perfectly obvious that the price-fixing agreement was made by them, primarily, at least, not as licensees but as owners. Suppose there were four persons who had collaborated in an invention and had had a patent therefor issued to themselves; two desired to manufacture and the other two did not. If they saw fit so to do, is there any reason why they should not form a quadri-partite corporation, and assign their patent to it, under an agreement that the two who desired to manufacture should receive licenses so to do and should pay royalties to the corporation, that licenses might be issued by the corporation to other manufacturers, and that the prices at which the .manufactured articles should be sold by the licensees should be fixed by the corporation, namely, the four joint owners themselves. I cannot conceive that such an agreement would be unlawful: certainly I know of no adjudication so holding or indicating.
    "However, defendants deny that the parties to the precorporate agreement occupy any such position as the joint owners in the suppositious case. They contend that the four parties were owners of patents or patent applications which were independent and not conflicting; that the agreement was not for the proper purposes of bona, fide owners of a patent but had as its object the elimination of competition. I am unable to find from the evidence that such is the fact. It is true perhaps that some of the inventions were independent, that as to some of them the respective owners might have each manufactured something under his patent which would not have infringed the others. But it is clear that if this could have been done there would have been little, if any, competition as among these articles. It is clear that the thing which would benefit the public was an article manufactured under a combination of these patents and which could not be manufactured under any one of them alone— the brake lining made of the woven wire and asbestos tape, which is so universally used to-day. It is also clear that there had been interferences declared in the patent office among the five patent applications of the parties to the original tripartite pre-corporate agreement; that the ultimate ownership of the basic patent was a matter of uncertainty to be decided only after litigation; that the value of the basic patent alone, without the improvements of the other inventions, and vice versa was much less than in combination, and this latter is also true as to the improvement inventions in the patents of the fourth party, the Brake Liners Company, who later joined the first three. I am satisfied that the purpose and object of the agreement and combination of the four parties was a bona fide desire to settle the disputes, get half or quarter of a loaf rather than no bread, and associate themselves as joint owners of a combination of patents not independent but interdependent as a practical matter; that the provisions as to price-fixing were simply incidental provisions proper and lawful for them to make as the joint owners of such combination of patents and the agreement in that behalf not unlawful under the statute mentioned.
    “I conclude, therefore, that complainants are entitled to relief-—-to a decree for accounting. The form of the decree may be settled on notice. During the course of these proceedings a receiver was appointed to take over the patents of the Asbestos Brake Company and bring suits against infringers. The payment of the amounts found due upon the accounting should be made to the receiver. I do not now recall whether or not the powers conferred upon him by the order appointing him are sufficiently broad to comprehend this, but if not they can be made so.
    “It may be noted here that subsequent to the appointment of the receiver, notice’s were served by the Manville and Thermoid companies purporting to rescind the license agreements. To this action or attempt I accord no efficacy. There existed no more ground for rescission at that time than there did in November, 1911. I have not the notice now before me, but my recollection is that there was no accompanying tender or offer to restore the several patents to their original assignors. Certainly no- such offer was at any time made prior to the appointment of the receiver.
    “Subsequent to the formulation of the foregoing conclusions the parties have come before the court for settlement of the form of decree, and in the 'course of that application questions substantive as well as formal have arisen. Complainants, in the draft of decree presented by them, included certain provisions for the specific performance of the license agreements by the defendants in future. The bill prays for such specific performance as well as for the accounting, but the granting of this additional relief clearly is not a necessary consequence of the result reached in the prayer for accounting. The right to the accounting is, as I have heretofore indicated, a legal right enforceable, and here being enforced, in a court of equity. A decree -for an accounting, although in some sense it amounts to a partial enforcement of the contract, is not from a legal standpoint a decree for specific performance. Sussex Railroad Go. v. Morris and Essex Railroad Go., 19 N. J. Eq. IS (at p. 28). And the right to the latter is not a legal but an equitable right.
    “Specific performance is extraordinary relief, and the award thereof rests in principle upon the inadequacy of other remedies to afford complainant that measure of relief to which he is equitably entitled under the circumstances. There may well be do-ubt whether in the case of a contract of this kind the future performance of the contract should be decreed or its violation enjoined, since the essence of the contract is for the payment of moneys, notwithstanding the undoubted fact that the trend of courts of equity in modem times is toward extending such relief. It seems to me that in the present case the practical result of a decree for future specific performance would at most be the elimination of the possible necessity for complainants to bring subsequent accounting suits if there should be future violation, substituting contempt proceedings in place of such suits. Such contempt proceedings might well partake largely of the nature of new suits, however, since a decree for specific performance must needs comprehend performance by complainants, or the Asbestos Brake Company, of the things provided by the agreements concurrently to be performed by the latter. Furthermore, the equitable principles governing this extraordinary relief of specific performance limit its award to those who seek it promptly. Gf. Fry Spec. Perf. (6th ed.) §• 1102; Van Doren v. Robinson, 16 N. J. Eq. 256 (at p. 26S). I take this still to be a requirement or limitation in specific performance cases, notwithstanding it is frequently lost sight of because the great majority of such cases are between vendor and vendee on contracts of sale, and in those cases the doctrine of trust or equitable title rather strongly motivates the court in somewhat the opposite direction. The complainants have certainly, in the present case, been quite the reverse of prompt in bringing suit, and if they thereby lose the right to this adclitional relief, which they might perhaps otherwise‘have had, it is their own fault.
    “It seems to me that the exercise of that sound discretion to which the prayer for decree for specific performance is always addressed leads in the present case to the denial thereof, but such denial may be without prejudice to a like prayer in a future bill, should any such occasion of future Violation arise.
    “The question of interest upon the defaulted royalty payments was also raised. I think defendants are properly chargeable with such interest.
    “I earlier said that I thought payment of the amounts found due upon the accounting should be made to the receiver. On further consideration of the internal situation of the Asbestos Brake Compan}r, and the fact that defendants as stockholders will be entitled to receive back as dividends a large part of the royalties, less taxes and corporation expenses, it seems to me, and to counsel on both sides, that the decree as to payment may well await the result of the accounting.”

      Messrs. McCarter & English and Mr. Francis C. Lowthorp, for the complainants.

      Messrs Pitney, Hardin & Skinner and Mr. Edward L. Katzenbach, for the defendants.
   Per Curiam.

The decree appealed from will be affirmed, for the reasons stated in the opinion filed in the court below by Vice-Chancellor Buchanan.

For affirmance — The Chief-Justice, Trenchard, Bergen, Kalisch, Black, White, Heppenheimer, Van Buskirk—8.

For reversal—Parker, Minturn—2.


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    Mitford C. Massie, individually and as trustee, &c., et al., complainants, v. The Asbestos Brake Company et al., defendants.
    [Decided September 28th, 1923.]
    Appeal of Thermoid Rubber Company.
    On appeal from a decree of the court of chancery.

      Mr. Edward L. Katzenbach, for the appellants.

      Mr. Francis G. Lowthorp and Messrs. Pitney, Hardin Skinner, fox the defendants.
   Per Curiam.

The decree appealed from will be affirmed, for the reasons stated in the opinion filed in the court below by Vice-Chancellor Buchanan.

For affirmance — The Chiee-Justice, Trenchard, Parker, Bergen, Minturn, Kalisch, Black, Heppenheimer, Van Buskirk—9.

For reversal—White—1.


author: Per Curtam.

text:
    In the matter of a petition for a commission for Sarah A. Rhodes, an alleged lunatic.
    [Decided October 19th, 1923.]
    On appeal from a decree of the court of chancery advisee! by Vice-Chancellor Foster, who filed the following opinion:
    “Application is made for leave to traverse the inquisition in the above matter in which the jury found Mrs. Sarah A. Rhodes to be of unsound miiul, so as to be unable to take care of herself and her property, and in connection with this motion it is urged that an issue may be awarded to try the fact of lunacy and have the inquisition set aside on the ground that the proceedings were irregular and unsatisfactory for the reason that the finding is against the weight of evidence, and on the ground that a mistake was made by the jury as to their duty and for such other relief as the court may deem proper, including a request for the refusal on the part of the court to appoint another commission at any time in the future.
    “From the record it appears that the inquisition of lunacy was duly issued on the petition of Anna McCoy and Lucetta Iliff, cousins of the alleged incompetent, and also verified by their affidavits as well as the affidavit of William F. Utter, who had been acting as the agent for Mrs. Rhodes in the rental of her property and the management of some of her affairs.
    “At the time the application for the inquisition was made, in April, 1922, Mrs. Rhodes was a widow over seventy-two years of age, and she was suffering from palsy and from an injury to her spine and was quite lame, and these conditions affected her health generally. Iier husband had died in 1886. and their only child, a son, had died in 1919. Mrs. Rhodes was at this time possessed of certain real estate and personal property, the net value of which is about $19,000, and the average net income therefrom is estimated to be less than $1,000, and she is living at an expense of about $200 monthly.
    “The inquisition was issued on April 27th, 1922, and.the hearing thereof was continued by orders of the court, made on the consent of counsel, until November 1st, 1922, when the commission was duly executed at Newark, before a jury, by -whose verdict Mrs. Ehodes was adjudged to be ‘a lunatic and of unsound mind, and does, at times, enjoy lucid intervals so that she is not capable of the management of herself, her lands, tenements, goods and chattels, and that she has been in the same state of lunacy since March 1st, 1922.’ It appears that before the hearing on the inquisition was held, viz., on June 7th, 1922, Mrs. Ehodes conveyed her real estate to the Fidelity Union Trust Company of Newark, in trust, and that on July 1st, 1922, a declaration of trust which was irrevocable was made by Mrs. Ehodes, declaring' the conditions of trust upbn which the property was to be held -and managed by the trust company.
    “The first objection made against the validity of the proceedings is the claim that no opportunity was given to counsel to challenge the jurymen. T find nothing in the record to support this claim. As a matter of fact the record shows that a challenge to the jury was made by Mr. Laddey and was overruled. He now claims, although there is no proof to support it, that two members of the jury were employed in the sheriff’s office, and by reason thereof were disqualified to sit as jurors, and he cites chapter 128 (P. Jj. 1921 p. 50) to support his contention. A reading of the provisions of that chapter clearly indicates that it applies by its terms only to grant and petit jurors and does not apply to a jury sum-moped in a proceeding such as this.
    “The second objection urged in support of the motion is that the orders of continuance of the hearing on the inquisition were improperly entered after the two months’ limitation prescribed bv rule No. 236 for the execution of the inquisition had expired, and were therefore invalid, and terminated the proceedings. The record does not disclose any objection made by Mr. Laddey to the proceedings on this ground nor does he deny'the statement contained in the brief of counsel for the petitioners that he consented to the making of such orders of continuance, and, furthermore, assuming that his contention that the time had expired for the execution of the commission when one or more of the orders of continuance were entered, his contention is still without support because under rule No. 2 of this court it is provided—
    “'That the time limited in these rules for doing any,act may, for good cause, be extended by order either before or after the expiration of the time/ The provisions of this rule No. 2 apply to rule No. 236, relied upon by Mr. Laddey, an they do to all other rules of this court. And rule No. 236 itself provides that after the expiration of the two months' period no proceedings shall take place under the commission without the further order of the court, and the record shows that such further orders were from time to time made by the chancellor.
    “It is further claimed that the master committed grave errors in his charge to the jury. Eeading the charge in full as it appears in the record, I am unable to perceive the errors which it is claimed were committed. The facts were properly presented and the law applicable thereto was clearly stated for the guidance of the jury, and if any such errors were committed it appears that no exception was taken to any of these that are now alleged to be prejudicial to the rights of Mrs, Ehodes.
    “The further claim is made that there were certain mistakes made by the jury and that the verdict returned is the result thereof. In support of this claim the court is asked to consider certain affidavits made by three of the jurors after the rendition of the verdict and which in effect charged that two of the jurors, viz., those alleged to be employes in the sheriff’s office dominated their fellow-jurors and coerced them into reaching the conclusion announced in the verdict. Aside from the fact that these affidavits are not admissible for the purposes for which they are now offered, see Queen v. Jennings, 93 N. J. Lato 353; Hutchinson v. Consumers Coal Co.. 3fí N. J. Lena 24; Linauer v. Teeter, 41 N. J. Imw 255. I do not find from Mr. Laddey’s recital of their contents that they would show that it was the intention of the jurors to announce any different verdict from that which they returned.
    “The supporting affidavits attached to the petition on which the commission issued are also attacked on the ground that they are inadequate and insufficient to warrant the issuance of the commission. That matter was passed upon at the time the chancellor granted the commission, and it is now too late to make this objection, assuming it to have any merit, as the court undoubtedly was satisfied in granting the commission, that a prima facie case had been made out by the petitioners or the commission would not have been granted.
    “On the remaining and important feature of the case, viz., the sufficiency of the evidence to .support the verdict, I find the proof to conclusively support the jury’s verdict. Not only does the testimony of the medical and lay witnesses show Mrs. Rhodes to be of unsound mind, but her own examination before the commissioners and the jurors clearly indicates her loss of memory, her unsoundness of mind and her inability to care for herself or her property. The testimony of Doctor Beling and Doctor Washington is given in a very careful, guarded manner, and they were apparently reluctant to pronounce Mrs. Rhodes a lunatic and to place that stigma upon her ; they preferred to use a milder expression wherever possible, but when pressed by counsel for Mrs. Rhodes on cross-examination they were finally obliged to pronounce her a lunatic, although not a dangerous one, and to unqualifiedly state that she, by reason of her mental condition, was incapable of caring for herself and her property. In this they were corroborated not only by the petitioners but by other witnesses acquainted with Mrs. Rhodes, and who had ample opportunity to observe her condition, her loss of memory and her inability to care for her person, either in cleanliness or with proper and adequate food, or to care for her property or financial interests. The proof further indicates that this mental condition of Mrs. Rhodes has been progressive for some time, and that it is probably the result of the death of her son in 1919, who had cared for her and shown her the greatest affection and looked after all her personal and material interests. The proof showing the condition of dirt and vermin and rats in the home, and vermin and dirt upon the person of Mrs. Rhodes, which was in sharp contrast to the former clean, neat and orderly condition in which she kept her person and her home, coupled with her inability to recall the extent or nature of her properties or their value or the nature of trust which she created therein'when she conveyed the same to the trust company, her inability to tell Doctor Washington whether she had conveyed the property in trust to the Clinton Avenue Trust Company or the Fidelity Trust Company, when, in fact, at the time he saw her in either March or May she had not made any conveyance to any trust •company, her inability to recall what she was now paying to Mr. and Mrs. Warren for her board or what arrangements had been made respecting the same, her inability to tell what had become of her personal property and her failure to give .any intelligent information about herself or her affairs, furnished conclusive proof that while she is not wholly incompetent, and can recall events of the remote past and can express herself in an intelligent and orderly manner on certain subjects, that she has such a total loss of memory at times that she is unable to recall the most vital features of her affairs in so far as they affect herself, her comfort or her future.
    “There is some evidence from Mr. and Mrs. Warren, with whom Mrs. Rhodes is now living, to negative the idea of incompetency, as well as from some other witnesses, but this mere negative proof is so unsatisfactory that it does not, in any way, overcome the positive testimony of the witnesses produced in support of the petition for the inquisition, and which, as stated, conclusively supports the verdict of the jury that Mrs. Rhodes is of unsound mind and is incapable of caring for herself or her property, and as I find nothing in the record to support any of the contentions advanced in support of the motion to traverse, &c., I will advise that the application be denied.”

      Mr. John V. Laddey, fur the appellant.

      Mr. George E. Carpenter, for the respondent.
   Per Curtam.

The decree appealed from will be affirmed, for the reasons stated in the opinion filed in the court below by Vice-Chancellor Foster.

For affirmance—-The Ci-iiee-Justice, Tren chard, Parker, Minturn, Kalisoi-i, Black, Katzenbach, I-Ieppeni-ieimer, Ackerson, Van Buskirk—10.

For reversal—None.


author: .Per Curiam.

text:
    John Williams, appellant, v. M. E. Blatt Company, respondent.
    [Decided October 19th, 1923.]
    On appeal from a decree of the court of chancery advised by Vice-Chancellor Learning, who filed the following opinion :
    “Complainant’s bill is for an injunction by means of which it is sought to enforce the observance by defendant of a certain written contract between complainant and Braunstein-Blatt Company, a corporation whose name has since been changed to M. E. Blatt Company, defendant above named.
    “'Bv the agreement referred to, defendant, as the owner of a large department store, has leased to complainant what is referred to in the contract as a hair dressing department to occupy certain specified space in defendant’s department store.

      “The specific controversy relates to the extent to which the rights conferred upon complainant are exclusive. It is conceded that under the contract defendant has no right to operate or permit anyone other than complainant to operate what the contract defines as a hair dressing department, but defendant contends that the right conferred upon complainant to sell certain merchandise in that department was not intended to be an exclusive right and thereby deny to, defendant the privilege of continuing the operation in that store of two certain departments known respectively as the toilet goods department and the notion goods department, in which departments goods are sold which include the same kind as those which complainant is authorized by his contract to sell, whereas complainant claims that the privilege conferred upon him by the contract includes not only the exclusive right to sell the merchandise referred to in the contract.
    “A writing stj-led an 'addenda1 was by defendant annexed to the contract and signed by defendant at the same time the contract was signed by defendant, but-that addenda was not signed by complainant. That addenda specifically stated that the sales privileges of complainant referred to in the contract should not be considered as exclusive. That paper and other circumstances of the case render necessary a consideration of the negotiations and various acts of the parties to adequately ascertain their respective rights at this time.
    “The testimony discloses the following facts:
    “Louis E. Stern, secretary of defendant company, prepared the first draft of a proposed contract between the parties and gave it to complainant for his approval.
    “Touching the privileges conferred on complainant, so far as of interest here, that proposed contract provided:
    “ * * the B. B. Co. [defendant herein! hereby grants unto Williams the exclusive privilege of conducting a hair dressing department in the department store of the B. B. Co., located at the corner of South Carolina and Atlantic avenues, Atlantic City, New Jersey, said hair dressing department to be operated and conducted under the terms and conditions hereinafter mentioned:

      “ "3. The term hair dressing department is hereby construed to include manicuring, shampooing, massage, hair dressing, and a children’s barber shop, as well as the right to sell hair goods, hair decorations, hair nets and such toilet articles as shall be approved by the B. B. Co., and such other articles as are usually sold in high-class hair goods stores.’
    “That draft of contract was taken by complainant to EL Walter Gill, his attomejq and Mr. Gill made several modifications and retyped the contract in quadruplicate, as altered by him.
    “The redraft of the part above quoted was as follows:
    " * * the B. B. Co. hereby leases and grants unto Williams the exclusive privilege of conducting a hair dressing department in the department store of the B. B. Co., located at the corner of South Carolina and Atlantic avenues, Atlantic City. New Jersey, said hair dressing department to be' operated and conducted under the terms and conditions hereinafter mentioned:
    “ T. The term hair dressing department, to which Williams is given the exclusive right, is hereby construed to include manicuring, shampooing, massage, hair dressing and a children’s barber shop, as well as the right to sell hair goods, hair decorations, hair nets and such articles, lotions. &e., as are usually sold in high-class hair goods stores, provided, however, that any article sold in this hair dressing department shall have a first-class reputation in the trade, or shall be approved by the B. B. Co.’
    “The only other modification made by Mr. Gill, which here need be considered, required defendant to supply gas and electricity not only for general heating and lighting purposes, but apparently for power purposes.
    “The copies prepared by Mr. Gill were then signed by complainant, and two of them sent to Mr. Stern for execution by Mr. Blatt for the company.
    “Mr. Stem then prepared the faddenda already referred to as follows:
    “ 'This addenda is made prior to the execution of the agreement, to construe the following:
    “ ‘3. As to paragraph 1, page 1. it is expressly understood that “hair nets and such articles as lotions, &c.,” shall not be exclusive to Williams, Williams fully understanding that these articles are now sold in other departments of the Braunstein-Rlatt Co. store, and that all-toilet articles ai’e part of the Braunstein-Blatt Co. business.

      “ '2. That as to paragraph 3, where the words “gas” and “electricity” are mentioned, the Braunstein-Blatt Co. agrees to furnish either gas or electricity for lighting purposes only, and if either gas or electricity are used for other purposes, it shall be under arrangement whereby the said Williams shall pay the exact cost of the powers so used.’
    “Mr. Stern then had Mr. Blatt, as president of the company, sign the duplicate contracts which had been signed by complainant, and at the same time sign the addendas which had been annexed, and Mr. Stem in like manner signed and .sealed the contract and addenda.

    “One of the contracts with the addenda annexed was then forwarded by Mr. Stem to complainant.
    “Complainant then took the contract to Mr. Gill and told ■ him the addenda was not satisfactory to him. Soon there.after- complainant and Mr. Gill met Mr. Blatt on the street .and complainant and Mr. Blatt entered into a discussion of fhe addenda. Up to this point there is no dispute touching the fact.
    “The only conflict in the testimony touching the addenda is as follows: Mr. Blatt testified that complainant objected fo the addenda, because of the clause relating to gas and •electricity, and made no other objection; that after some discussion he (Blatt) yielded and said ‘cross that out.’ Complainant testifies that he complained of both clauses and that Mr. Blatt finally said ‘tear the addenda out.’ Mr. Gill is unable to recall whether the discussion related to both clauses of the addenda, but is positive that Mr. Blatt said ‘tear it 'Out.’
    “Mr. Gill subsequently telephoned to Mr. Stern that he had ■seen Mr. Blatt, and that he (Blatt) had said that the addenda -could be tom out. Subsequently, Mr. Stern telephoned Mr. Gill that Mr. Blatt had confirmed his (Gill’s) telephone message.
    “For reasons hereinafter more fully set forth I do not believe there can be any reasonable doubt as to what actually occurred in that interview on the street touching which the ■testimony is in .partial conflict. I am fully convinced that -.the only objection that complainant made to Mr. Blatt about the addenda was touching the gas -and electric clause, and that Mr. Blatt was thereby led to understand that that was the only feature of the contract, as it had stood when he had affixed his signatures, to which complainant objected, and that it was the only unsettled matter between the parties, and so believing and understanding he ordered the addenda to be ‘torn out’ without knowing at the time that it contained any oilier matter and without any intent to thereby confer an exclusive sales privilege on complainant.
    “Returning now to the original contract without an addenda-, I entertain the view that while the strictly grammatical construction to be given to the language above quoted from the original draft of contract prepared by Mr. Stern, and also that as framed by Mr. Gill in the contract which was signed, is to understand the word ‘exclusive’ as persisting throughout the paragraph, and therefore applying to the sales privileges, I can see how the language ‘as well as the right to sell’ could have been understood by one having no thought of conveying an exclusive right to sell as meaning merely the right to sell the enumerated articles, and especially so as to one who knew that in department stores throughout the country leased hair-dressing departments uniformly enjoyed in connection with the exclusive right to operate as such a right to sell articles incident to their work only in common with the notions and toilet goods departments of the stores.
    “I believe Mr. Stern speaks the truth in his statement that he understood the language first adopted by him to mean as last above suggested, and that he first thought some doubt might exist as to that meaning when he read Mr. Gill’s draft, and'that he then drew the addenda to make it certain, but still believing it reasonably.adequate without that part of the addenda.

    “I believe Mr. Blatt’s testimony to the effect that he never negotiated with Williams for the sale of the exclusive right to sell merchandise, and never intended to confer such a right, and that he did not understand the contract to profess to confer such a right.

      “I fully believe that by reason of the objection made by complainant to the addenda on the specific and sole ground that it denied to complainant the free use of power, Mr. Blatt was led to believe that that was the only unsettled matter between he parties, and waived the addenda in that belief and with that intent and understanding.
    “I do not believe that complainant ever negotiated for, paid for, or understood that he purchased an exclusivo sales right, and I do not believe that he ever fully realized that the papers afforded him a substantial claim of that nature until after the papers had been delivered.
    “I believe the testimony of Mr. Stern to the effect that he considered that the contract without an addenda conveyed no exclusive sales right, and carelessly acceded to the elimination of the addenda when told by Mr. Blatt that he had adjusted the matter with complainant, and that the addenda could be torn out.
    “My belief touching these several matters above referred to is fixed and irresistable.' That belief is not alone based upon the testimony of the witnesses upon the witness-stand. The evidence discloses that at the time the contract was made de-1 fendant’s department store contained the two departments already referred to as the notions and toilet goods departments. Each of these departments were large and important and well-equipped departments, which necessarily would be largely put out of business by the exclusive sales right which complainant claims. It is impossible to believe that defendant could have intended to confer such an exclusive right on complainant, and especially so in a lease of a department apparently inadequate in space to supply the necessity of such departments in a department store. Nor did the equipment which complainant installed indicate a purpose on his part to exercise an exclusive sales right of the articles which he now claims the exclusive privilege of selling.
    “Furthermore, it will be observed that the tenth paragraph of the contract provides: "The B. B. Co. [defendant] agrees that all merchandise sold to the said hair dressing department by it shall be sold to Williams at cost.’ By this clause it is clearly contemplated that the articles which complainant is to sell may be carried by defendant in his store, with the privilege of complainant to buy such articles at cost. It cannot be possible that the articles were to be carried by defendant solely for complainant's privilege of buying them at cost.
    “In my judgment the truth is that neither of the parties at any times contemplated or undertook to agree that complainant should enjoy an exclusive sales right; that complainant in fact neither bargained for nor paid for any such right, and any language in the ’contract which may be said to indicate to the contrary is the result of inadvertence and mistake, and not the product of mutual engagement or mind-meeting of the parties.
    “The point is urged on behalf of complainant that defendant has not by counter-claim or otherwise sought a reformation of the contract. That is true. But by this suit complainant appeals to the equitable jurisdiction of this court for affirmative relief through tire medium of its extraordinary process of injunction, and by the use of that negative process complainant seeks to effect the specific performance of the contract. A court of conscience cannot properly award relief of even that nature in pursuance of the letter of a contract when to do so is subversive of justice between the parties. It is one ■of the necessary inherent qualities of a decree for specific-performance that it does complete justice. King v. Morford, 1 N. J. Eq. (BaxL.) 27If, 282. In suits of this nature this court will grant its aid or not, according to the justice of the case. Miller v. Ghetwood, 2 N. J. Eq. (1 Or. Oh.) 199, 208. A decree for specific performance will never be made unless substantial justice will be advanced thereby. Ely v. Perrine, 2 N. J. Eq. (1 Or. Oh.) 896, lf02. ‘This court will not become an instrument of injustice, and if the case presented is such that it would be unconscientious to grant the complainant the relief he seeks, and repugnant to a just sense of right between man and man, the court will refuse its aid. * * * The defendant may be unable to prove any mistake, fraud -or accident, in reference to its execution, and yet the conduct •of the complainant may have induced such a state of things in relation to the subject-matter of the agreement as would make it not only proper, but the plain duty of the court to refuse its aid in enforcing its specific performance.’ Stoulenburgh v. Tompkins, 9 N. J. Eq. (1 Slock.) 882, 885, 886. ‘The remedy by specific performance is discretionary. The question in such cases is not what must the court do, but what, in view of all the circumstances of the case in its judgment, should it do to further justice.’ Johnson v. Somerville. 33 N. J. Eq. (6 Stew.) 152, 158. An unintentional misrepresentation of a material matter will be operative as a bar to a decree for specific performance^ Wuesthoff v. Seymour, 22 N. J. Eq. (7 G. E. Gr.) 66, 69. The material inquiry is not whether a complainant intended to mislead defendant, but is, Did he mislead him? Prof. Pomeroy says:
    “ ‘In maintaining the defence to a suit for specific performance the knowledge, belief, or intent of the party making the representations is wholly immaterial, and the question is not raised. The point upon which the defence turns is the fact of the other party having been misled by a representation calculated to mislead him, and not the existence of a design to this mislead.’ Pom. Spec.. Perf. § 217.

    “In Baskcomb v. Beckwith,'L. R. <9 Eq. Gas. 100, a map was exhibited to the-purchaser which was not misleading if examined carefully, and which was not intended to mislead, but which was liable to mislead if not carefully examined, and which map did in fact mislead the purchaser; specific performance was accordingly denied. The decree denying relief does not operate upon the contract or determine it fraudulent or void, it is merely a determination that under the circumstances of the case it is not in furtherance of substantial justice to extend the extraordinary powers of the court to complainant’s aid. Nor can a defendant be denied the defence of mistake in a contract because he has not sought its reformation. As to that Prof. Pomeroy, in 2 Eq. Jw. § 860, says:
    “ ‘The equitable remedy of the specific enforcement of contracts, even when they are valid and binding at law. is not a matter of course; it is so completely governed by equitable considerations that it is sometimes, though improperly, called discretionary; it is never granted unless it is entirely in accordance with equity and good conscience. It is therefore a well-settled rule that in suits for the specific enforcement of agreements, even when written, the defendant may by means of parol evidence show that, through the mistake of both or either of the parties, the writing does not express’the real agreement, or that the agreement itself was entered into through a mistake as to its subject-matter or as to its terms. In short, a court of equity will not grant its affirmative remedy to compel the defendant to perform a contract which he did not intend to make, or which he would not have entered into had its true effect been understood. What is thus true of mistake is equally true of a defence based upon fraud or surprise. Wherever the defendant’s mistake was, either intentionally or not, induced,' or made probable or even possible, by the acts .or omissions of the plaintiff, then, on the plainest principles of justice, such error prevents a specific enforcement of the agreement. Such co-operation by the plaintiff, however, is not at all essential. A mistake which is entirely the defendant’s own, or that of his agent, and for which the plaintiff is not directly or indirectly responsible, may be proved in defence, and may defeat a specific performance.’
    “I will advise a decree denying the relief sought b}' complainant.”

      Mr. Marry Heher, for the appellant.

      Mr Theodore W. Bchimpf, for the respondent.
   .Per Curiam.

The decree appealed from will be affirmed, for the reasons stated in the opinion filed in the court below by Vice-Chancellor Learning.

For affirmance—The Chief-Justice, Trenchard', Parker, V INTERN, IvALISCH, BLACK, KaTZENBACII, Wl-IITE, ACKerson, Van Buskirk—10.

For reversal—None.


text:
    Mary E. McVoy, respondent, v. Karl Baumann and Ruth C. Naugle et al., appellants.
    [Decided December 4th, 1923.]
    On appeal from an order of the court of chancery advised by Vice-Chancellor Buchanan, who filed the following reason :
    “This is an application by the complainant for a writ of assistance in aid of a -decree made in this court in this cause, filed February 25th, 1922, by the terms of which decree the defendant Cooley was directed to make a conveyance to the complainant of the property in conformity with the contract made by Cooley’s grantor. The decree awarded specific performance of the contract against Cooley as a subsequent grantee with notice, and it was affirmed by the court of errors and appeals. RemUlitur was filed July 24th, 1922.
    “Complainant now asks the aid of this court in enforcing that decree by an order of possession, followed by writ of assistance, if necessar}*, against the present respondents, the Naugles. She shows by her affidavits that she has performed the provisions of the decree which were by her to be performed; that the defendant Cooley never executed or delivered a deed in performance oE the provisions of the decree ; that she, complainant, has recorded a copy of the decree, under the statute; that the Naugles are in possession of the premises and refuse to surrender them to her.
    “The Naugles come in to resist the application, and they contend that they have title to the premises, and that since there is a claim of title, this court cannot determine it but must leave it to a court of law and that the order of possession and writ of assistance must therefore be denied.

      "I am unable to agree. It is of course not enough for respondents merely to say they claim title—they must show that there is a real claim or dispute of title—that there is some reason why this court should not complete the relief awarded by its decree. This they fail to do. They attempt so to do by showing in their answering affidavits that they are in possession under a deed to themselves executed by the defendant Cooley, on or about September 30th, 1922, and they attempt to argue some sort of a waiver or estoppel against complainant because complainant did not record the copy of the chancery decree until May or June of this year, 1923—or because the present application was not made earlier.
    "The present respondents were not defendants in the main suit; they were not in possession or claiming any interest when the bill was filed. They claim, as I have said, under deed from defendant Cooley subsequent to final decree. They are bound by knowledge of that decree—both under the Us pendens, which was filed, and by the actual knowledge which they admittedly had of the litigation while it was pending. This, they of course do not attempt to deny. When they took their deed from Ooole3r therefore they took subject to complainant’s right—they took from Cooley a deed for premises which because of the final decree was to all intents and purposes the property of complainant, not Coole3r, as respondents well knew. Indeed, it seems to me that their act-in taking this deed from Coole}7 amounts to participation in a contempt of this court—for Cooley’s act in conveving to the Naugles in the face of a decree that he convey to complainant would seem to constitute a contempt. There can be no dispute—and, indeed, respondents have not attempted to argue otherwise—that even if respondents acquired the teclini-' cal legal title by their deed, they did not on the facts so far stated acquire anything else. They did not acquire the equitable title, which still remains in complainant, unless she has lost it by reason of some other acts or circumstances.

      “Respondents say that she has—by waiver or estoppel from the delay in attempting to enforce the decree and delay in her own compliance with the decree. This delay is the only thing which the answering affidavits set up to prove waiver or estoppel—nothing but lapse of time alone.
    “As to waiver, intent (while it may be presumed in a proper case) is a necessary element. Decree of affirmance in the court of errors and appeals was entered June 19th, 1922, and complainant caused remiiiilv/r to be filed on July 24th, 1922, as the record shows. This disproves any intent of waiver up to that time. Respondents took their deed about two months later—September 30th, 1922. This mere lapse of two months time is utterly insufficient, without more, to prove a waiver by complainant of her rights under the decree, for which she lmd fought so persistently both in this court and in the court of errors and appeals. But that is all the respondents show, that this two months time had elapsed and that complainant had not recorded the decree nor paid the balance of purchase price into court as required of her by the decree.
    “As a matter of fact under the strict wording of the decree, .complainant was not required to pay the balance of purchase price, until defendant Cooley made the conveyance, delivered possession and accounted for the interim rents and profits.
    “On the question of estoppel the case is even more barren. Respondents in their affidavit do not even say.that they believed complainant had waived her rights under the decree— much less that they took the deed and possession because of and in reliance on such a belief. They show no- inquiry made by them of complainant or any one e-lse'—nor any attempt at any such inquiry.
    “It is perfectly obvious, from the disingenuous character of respondents answering affidavit, and some of the things said by their solicitor, that the original defednants are the real parties in interest, and are seeking by indirection to avoid the decree against them. It is perhaps worthy of note that the record shows proceedings by complainant ’ nearly six months ago attempting to reach these original defendants on contempt proceedings, to enforce the decree. These attempts were unavailing because of the non-residence of the defendants.
    “Now, assuming that by reason of their deed, respondents have the bare legal title, it seems clear that on the facts before me, in a proper proceeding in this court, respondents would lie decreed to convey that title to complainants. Respondents have no title in equity.
    “This application involves no question of title which respondents are entitled to have tried out at law. The rights of the parties would have to be determined in this corxrt, either by a bill by complainant against the respondents to compel a conveyance of the legal title—or if respondents should commence some action at law such as trespass, it would have to be removed into this court either by bill to restrain the action at law or by a transfer under the transfer of causes statute and practice.
    “But this application is not to determine title. It is to determine possession only; to put complainant into possession by way of effectuating the decree heretofore made. Respondents claim under the original defendant; they stand in his shoes; ho would have had no defense to this motion, and they show nothing by way of defense peculiar to themselves as distinguished from him.
    “I can see no reason why the application should be denied. If complainant is to be required to file a bill against respondents in order to get what has already been decreed to them— then the same thing might happen after decree in that suit, and so on without end—and this court would have to confess itself unable' to accord adequate relief to complainants in these circumstances as long as successive defendants could be-found to flout and contemn its decrees.
    “Complainant may have an order for possession, with costs, and upon default of surrender of possession, a writ of assistance will be awarded.”

      Mr. Bari A. Merrill, for the complainant.

      Mr. Augustus 0. Nash, for the defendants.
   Per Curiam.

The order appeal from will be affirmed, for the reasons stated in the opinion filed in the court below by Vice-Chancellor Buchanan.

For affirmance — The Chief - Justice, Trenchard, Parker, Mintuen, Kalis ch, Black, Katzenbach, HepPBNHEIMEE, GARDNER, ACKERS ON, VAN BuSKIEK, CLARK— 12.

For reversal—None.


text:
    Edwin Robert Walker, Chancellor. Edmund B. Leaming. Vivian M. Lewis, John H. Backes, John Griffin, John E. Foster, Malcolm G. Buchanan, James F. Fielder, Alonzo Church, Robert H. Ingersoll and John Bentley, Vice-Chancellors. In the matter of Charles A. Rigg, a solicitor in chancery.
    [Decided January 4th, 1924.]
    It is a contempt of court in a solicitor who obtains the issuance of a writ of habeas corpus to fail to deliver it to the sheriff to whom it is directed, and to advise, counsel and procure such officer to enlarge the prisoner out of jail and produce him in court, as such writ alone would be the sheriff’s authority and protection, and production of the Lody of the prisoner without the writ constitutes a permissive escape.

      On hearing of order to show cause In re contempt.
    Before Walker, Chancellor, and Buchanan, Vice-Chancellor.

      Mr. Ernest Waits, for the respondent.
   Opinion by the Court.

Recently the respondent, Charles A. Eigg, Esquire, a solicitor of this court, presented to the chancellor a petition for a writ- of habeas corpus on behalf of Reginald Branch, a prisoner in the jail of the county of Burlington, in the custody of the sheriff, and so by him imprisoned and restrained of his liberty in the jail, as it was said, he having been committed by a magistrate upon conviction of violating chapter 308—P. L. 1921 p. 643 § 14 tabd. 3—(the act defining motor vehicles, &c., and regulating proceedings • for the violation of the same), in that Mr. Branch permitted one McCarty to operate a motor vehicle owned, by him, Branch, which he, McCarty, was under the influence of intoxicating liquor; Avhereupon the chancellor awarded a Avrit of habeas corpus returnable forthwith, and signed the allocatur on the back thereof and delivered the writ to Mr. Rigg for signing and sealing by the clerk in chancery, aaTlo issued it accordingly. The writ was in tlie usual form, directed to the sheriff of the county of Burlington, and commanded him to have the body of Mr. Branch, together with the day and cause of his taking and detention, before the court at Trenton aforesaid, forthwith. The chancellor, hcAvever, directed Mr. Bigg to instruct the sheriff to have Mr. Branch before the court at tAvo o’clock in the afternoon. At the time and place last mentioned the chancellor and Vice-Chancellor Buchanan appeared upon the bench, and Mr. Branch Avas there present in the custody of the under-sheriff, but neither Mr. Rigg nor any other solicitor appeared for Mr. Branch, and upon request from the chancellor to knoAv if the sheriff had made return to the aatR, the under-sheriff replied that neither the sheriff nor he had any Avrit, but Avere notified over the teleplume by Mr. Bigg to produce Mr. Branch at the time and place mentioned. The court waited until two-thirty o’clock in the afternoon, and no one appearing for Mr. Branch, the vice-chancellor drew an alias writ of habeas corpus directed to the sheriff, commanding him as in the original writ he was commanded, upon which the under-sheriff endorsed and signed a return upon the writ; .whereupon the hearing was proceeded with, Mr. Branch representing himself. About two forty-live o’clock Mr. Bigg appeared and stated that he had telephoned the sheriff that the writ had been allowed, and that he should produce Mr. Branch before the court at Trenton at two o’clock, but that he had not delivered or sent the writ to the sheriff. The cause then proceeded further with Mr. Bigg representing Mr. Branch, who, at the conclusion of the hearing, was remanded to the custody of the sheriff and the writ of habeas corpus was dismissed.

The court being of opinion that the failure of Mr. Bigg to deliver the writ to the sheriff to whom it was directed, and that in advising the latter to enlarge Mr. Branch out of jail and produce him before the court, without any warrant therefor being delivered to the sheriff, and his (Mr. Bigg’s) failure to appear in court representing Mr. Branch at two o’clock, constituted a contempt of the power, authority and dignity of the court of chancery, and that ho, Mr. Bigg, should bo charged with such contempt and required to answer therefor, and an order was thereupon made requiring Mr. Bigg to appear before this court and show cause why he should not be adjudged guilty of contempt in respect to the matters aforesaid and punished therefor. On the return of this order Mr. Bigg appeared with Mr. Watts as his counsel, and admitted the statements above made, and said, also, that at and just before two o’clock on the day of the return of the habeas corpus, he stood on the portico of the state house waiting for Mr. Branch to appear with the sheriff, and, not seeing them, supposed they had not arrived; that he waited a considerable time before going into court to inform the judges of such non-appearance, and, when he did appear there, he found the court in session, with Mr. Brandi at the bar and the cause proceeding. The explana1 tion is that Mr. Branch arrived with the under-sheriff long in advance of the time of the hearing.

Now, it was the duty of Mr. Bigg at the hour of two o’clock, thinking that Mr. Branch and the sheriff had not yet arrived, to appear in court and state the fact of the non-arrival of the parties. Tt is quite unnecessary, however, to decide whether or not this constitutes a contempt of court, as the other matter charged agaiust Mr. Eigg, namely, not delivering the habeas corpus to the sheriff, and advising him to take the prisoner out of jail and bring him to' court, without the sheriff having any warrant or authority therefor in the possession, was clearly a contempt.

There being now no statute in this state which regulates the writ of habeas corpus when it issues out of the court of chancery by the common, law (In re Thompson, 85 N. J. Eq. 221, 234, 235, 236, 237), we must, therefore, look to the common law for procedure.

In 29 C. J. 155 § 172, it is laid down that tire officer or other person to whom the writ of habeas corpus is directed must, make a return thereto in accordance with the command of the writ. See, also, Bac. Abr. TIab. Corp. B. 6, 7. It is to be observed that there was a plain mandate in this writ, namely, that the sheriff have the body of Mr. Branch, together with the day and cause of his caption and detention, before the court. When we found that Mr. Branch was in court without the under-sheriff having in his possession, as his authority and for his protection, a writ commanding Mr. Branch’s production, wo forthwith drew an alias writ of habeas corpus as above mentioned, so that the prisoner might be properly before us, and, when this was done, proceeded with the hearing.

The deliverance of a person who is lawfully imprisoned, ■out of prison, before such person is entitled to such deliverance, is an escape. Bourn. Law Did. {Ramies’ rev.) 687. And if Mr. Branch had been in prison on a capias in a civil case the sheriff would have been liable., to the plaintiff for the whole debt. Browning’s Executor v. Riltenhouse, 40 N. J. Law 230 (at p. 236).

What the respondent, Mr. Eigg, did was to counsel and procure the sheriff to be at least technically guilty of a permissive escape. It was not a voluntary .escape, for that is where the officer charged with the custody of a prisoner knowingly gives him his liberty with intent; and it is not a negligent escape, for that is where the imprisoned party escapes against the will of the person who imprisons him. 21 O. J. S27 §§ 2, 8. A constructive escape takes place when the prisoner obtains more liberty than the law allows, although he still remains in custody. 21 G. J. 827 § .5 note 17. At common law it is held that every liberty given to a prisoner, not authorized by law, is an escape. 2 Whari. Gr. L. § 2612. A sentence to a prison means the four walls of it, so that the keeper by permitting a prisoner to go at large commits escape. 2 Bish. Gr. L. (9ih ed.) § 1104.

We acquit Mr. Eigg, who is a man of high standing and known integrity, of any intention to advise the sheriff to violate the law in thus taking Mr. Branch out of jail without his (the sheriff) having in his possession an appropriate writ out of a court of competent jurisdiction, commanding such action; but, the fact that a counselor-at-law does such a thing, calls for pointed reproof. And the members of the bar and the sheriffs and jail wardens throughout the state should know that such proceedings as the one disclosed in this case are a violation of law and liable to be followed by serious consequences.

Mr. Eigg is guilty of contempt, as lack of intent is not an excuse. He will be notified when to appear to receive the judgment of the court.