ANSBUTZ V. HOERR.
608-
insolvency, within the meaning of the bankrupt act, means inability to pay debts in the ordinary course of business; a.nd, unless the debtor is able to pay such debts as they mature, with money, he is insolvent in the contemplation of said act, notwithstanding he may have lands and goods sufficient, in time, to meet all his liabilities." Nicholas Wurzel, Sr., was a merchant, and, therefore, as applicable to him, the foregoing point contains an accurate statement of the law. Hardy v. Glcw'k, 3 B. R. 387; Webb v. Sachs, 15 B. R. 168; Foot v. Martin, 13 Wall. 47. In the last the jury that, "if the cited case the judge below bankrupts could not pay their debts in the oridinary course of business, that is, in money, as they fell due, they were insolvent." This instruction was approved by the supreme court as applied to traders and merchants. It seems to me the reasons assignei fora new trial are insufficient, and the motion is overruled. In order properly to understand the questions of law reserved, it is necessary to state the following facts: Philip Hoerr's judgment against Wurzell was for the sum of $790.96. It was. entered' and execution issued thereon December 22, 1875. On the same day, but at a later hour, August Klein entered judgment and issued execution against Wurzell for $1,500. The day following, Lindsay, Sterrett & Co. entered judgment and issued execution against Wurzell for $2,200. Under and by virtue of these three executions the sheriff seized and sold the personal property, consisting mainly of his stock of merchandise of the defendant Wurzell. The amount realized by the sheriffs sale was $1,301.98, which the sheriff appropriated and paid as follows, to wit: $223 90 To costs, .. Philip Hoerr, 803 46 274 62 · August Klein, $1,301 98 The assignee of the bankrupt claims that the Klein judgment and execution were in fraud of the bankrupt act, and v.l,no.8-38
094
FEDERAL REPORTER.
he brought a suit, now pending in this court against Klein, to set aside the alleged unlawful preference acquired by him. But it is conceded on all hands that the judgment and execution of Lindsay, Sterrett & Co. were valid and unimpeachable. At the trial of this case the defendant, Hoerr, prayed for the following instructions, viz.: "4. That the levy and sale by the sheriff having been made before commencement of proceedings in bankruptcy upon other executions, issued upon judgments which were unquestionably good and valid under the bankrupt law, the said sale cannot be impeached; and the only claim the assignee could make would be to the fund realized from the sale, and the defendant would only be liable for the amount of the fund received by him. "5. That the evidence showing that the execution of Lindsay, Sterrett & Co. would have been entitled to the fund produced by the sheriff's sale, if execution of defendant was set aside, the assignee could have no interest in said fund, and cannot recover. "6. That the sale of the sheriff having been regular, and having taken place before proceedings in bankruptcy were commenced, the assignee should have made his claim to the state court, which had jurisdiction of the fund, and the money having been distributed according to law in said court, its judgment cannot now be impeached. "7. That the declaration in this case claims the nlue of the goods as damages, and the said goods having been sold by due process of law, under a judgment good under the provisions of the bankrupt law, there can be no recovery." The questions raised by these four points are the questions of law reserved. The verdict of the jury establishes that Philip Hoerr's judgment and execution were fraudulent, as an unlawful preference under the bankrupt law. Now, it is well settled that a security or priority in fraud of the bankrupt act, gained by. a suit in a state court, has no better claim to protection than a payment by the debtor himself, and if the property of a bankrupt has been seized and sold under process from a. state court, issued on a ,iudgment which is void
ANSHUTZ V. HOERR.
595
as a preference, the assignee may maintain an action against. the creditor to recover the proceeds of sale in his hands, or the value of the property. Showan v. Whe1Titt, 7 How. 627; Clarion Bank v. Jones, 21 Wall. 325. The.se cases, it seems to me, authoratively determine that the assignee of Nicholas Wurzell, Sr., was not concluded by the distribution made in the state court. But it is strenuously argued that as the execution of Lindsay, Sterrett & Co. was confessedly good, and would have taken the fund produced by the sheriff's sale had Hoerr's execution been set aside or excluded, the assignee had no interest in the fund. To sustain this position the defendant relies upon the cases of Wilcocks v. Waln, 10 Ser. & Raw. 380; Manufacturers' « Mechanics' Bank v. Bank of Pa. 7 Watts & Ser. 335; Schultz's Appeal, 1 Barr. 251; and Tomb's Appeal, 9 Barr. 61. The principle of these cases is that the last of three or more liens, in the order of their succession, being superior to the first but inferior to the second, gains no· practical advantage from its priority, because it could not be· preferred to the first without also being preferred to the second, to which it is subsequent. And the argument here is that the assignee could not have taken the fund from Lindsay, Sterrett & Co., because their execution was valid; and as. he WIl;S not entitled to it as against them, he could not prevent the application of the fund to Hoerr's execution, whioh was prior to that of Lindsay, Sterrett & Co. In other words,. it is claimed that the fund raised by the sheriff's sale belonged to one or the other of these execution creditors, to the e1:clusionof the assignee. But, as applicable to the case before us, we cannot accept as sound the defendant's reasoning, or adopt the conclusion to which it leads. It is not now necessary. to consider what would have been the proper disposition of the fund realized by the sheriff's sale had the assignee been a claimant in the court of common pleas. He was not bound to go into that. court, and, as we have seeu, is not concluded by the distribution there made. The case in hand is not a contest for priority between lien creditors. The assignee recovers the money
596
FEDERAL
in the defendant's hands by the assertion of a superior title eonferred upon him by the bankrupt law. The defendant is in no better position than if the money had been paid to him directly by the bankrupt in fraud of the law. Therefore, as against the assignee, he cannot retain the money. Moreover, Lindsay, Sterrett & Co., it will be perceived, having taken nothing by their execution, are thrown upon the general assets of the bankrupt, and justice to the general creditors requires that the fund in the defendant's hands-the fruit of an unlawful execution-shall come to the assignee for distribution pro rata among the creditors. Upon the questions of law raised by the defendant's fifth, sixth and seventh points the opinion of the court is with the plaintiff. The verdict of the jury was for the value of the goods sold by the sheriff. But clearly the defendant's liability does not extend so far. His writ did not authorize the sheriff to sell more of the bankrupt's goods than was necessary to satisfy that execution. In fact the sheriff sold by virtue of three writs of fl. fa., and one of these was unimpeachable. Part of the proceeds of sale went to the second execution creditor, against whom the assignee is prosecuting a suit to recover the money so paid to him. The extent of the defendant's liability is indicated in his fourth point. The sheriff ap'plied to the costs of his writ $128.45, and to his judgment $803.46, or in all $931.91. The plaintiff, therefore, is only entitled to recover in this action the last mentioned sum, with interest from the time of payment to the defendant, March 6, 1876. Upon that basis the true verdict, on May 30, 1879, would have been for the sum of $1,112.62. And now, to-wit, February 17, 1880, it is ordered that judgment be entered upon the questions of law, reserved in favor of the plaintiff, ;or the sum of $1,112.62, with interest from May 80, 1879,1.00 obdante verdicto. .
1l0lil V. OOtTBJilLLo
591
HOE
and others v. CO't'l'RELI. and another.
'(Jireuit Court, D. Oonnecticut. March 30, 1880.) PATENT-PATENTEE SOLE INVENTOR-BuRDEN OF PROOF.-In a suit for an alleged infrirlgement of letters patent, the burden of proof is on the defendant to show that the patcntcc was not the sole inventor, although prior thereto forcign letters had becn issued to such patentee and another for the same invention. COMMISSIONER'S DECISION-FoRMAL DEFECTS NOT REVIEWABLE COLLATERALLY.-In such suit the commissioner's decision is final that the drawings and the model required by the statute had been presented, that the attorney of the applicant was duly constituted by the applicant, and had authority to amend or alter the specification, and that the specification had becn sufficiently sworn to by the inventor. COMBINATION-VALID CLAIM.-A claim is not invalid upon the ground that the several elementary parts of a combin.llion have no conjoint action, and no active connection to produce a joint result, where there was invention in the combination, and the patentee was the nrst inventor. SAME-INVENTTON.-In determining whether there was invention in any particular combination, the important point is to ascertain whether novelty and utility existed OMISSION 01' G'LAlM IN STATEMENT Oll' ..NVENTION.-A patent is not void by reason of the omission of a claim in the statement of the invention in the body of the specification, which had been introduced by way of amendment into the claim, whcre the combination recited in the is shown in the drawings and described in the specification.
M. B. Phillips and Benjamin F. Thurston, for plaintiffs. H. D. Donnelly and William A. Shipman, for defendants. SHIPMAN, J. This is a. bill in equity, based upon the alleged infringement of letters patent, which were granted on 16, 1869, to Richard M. Hoe, as the assignee of A.uguste Hippolyte Marinoni, for an improvement in lithographic printing presses. The patent has been assigned to the plain. tiffs. The first question is whether Marinoni was the sole in· ventor of the alleged improvement, or was It joint inventor with Francis Noel Chandre. In 1866 Mr. Hoe was in France, and purchased from Marinoni all his right to the invention in consequence of the future grant of letters patent therefor in the United States. Marinoni made oath, in his application
598
this government for the letters patent, that he believed himself to be the original and first inventor of the improvements, and that they had been patented in France on June 5, 1865, in the name of Marinoni and Chandre. Chandre, who was a. partner of Marinoni at the date of the invention, testified that he was a joint' and equal inventor of the improvement which he describes at length. On June 12. 1865, a Belgian patent was issued to Marinoni and Chandre, and an English patent was issued to one Clark, upon their communication. By the French statute every new discovery or invention, in all departments of industry, confers upon its author, under the conditions and for the time mentioned in the statute, the exclusive right of working for his own profit the said invention: "Every person who shall wish to obtain a patent of invention must deposit, under a sealed cover, · · · · · · (1) his petition to the minister of agriculture and commerce; (2) a specification of the discovery, invention or application forming the subject of the petition; (3) the drawings," etc. The patents demanded in due form are delivered without previous examination. Applications are not required to be verified by oath, and are not preservea by the government. The plaintiffs introduced Marinoni's deposition, in which he asserted that he was the sole inventor. It is necessary for the defendants to overcome the prima facie case, and to establish affirmatively that the applicant was not the sole inventor. The testimony of Chandre is not sufficient. I cannot perceive from the depositions that one story is apparently more entitled to confidence than the other. Marinoni's statement is exceedingly brief, and is a bare assertion that he was the inventor. Chandre is equally positive of his joint participation in the invention, and he describes its character; but is equally silent as to the manner in which they w'orked, and as to the method by which they jointly accomplished the result. If the defendants could have shown an admission by Marinoni, in either foreign application, that he was not the sole inventor, it would have turned the scale, but it is not cer-
