HEATON PEN1N'SULAR BUTTON-FASTENER CO.
v.
DICK.
667
true in Ohio. But plaintiff has not attempted to controvert these returns of the sheriff, or the answers of the garnishees. The case has been pending in this court quite long enough for the plaintiff to begin his proceedings to show that some property or credits have been attached or garnished. As the case now stands on the evidence and returns, the motion to dismiss should be allowed. but as counsel for the plaintiff claim they have learned of evidence which will enable them to impeach the truthfulness of the answers of the garnishees, and be able to show that when served with process they had in fact property and credits due the de.. fendants, I will continue the motion to dismiss for 20 days, to enable them to offer such evidence.
HEATON PENINSUJ,AR BUTTON-FASTENER CO. 17. DICK
et al.
(Oircuit Oourt, N. D. Illinois, N. D. July, 1892.) No. 870. INlUNOTION-PROCURE:I<lENT OJ' BREACH OJ' CONTRACT-CONTRIBUTORY INl'RINO;EHENT OJ' PATENT.
A bill "Ueged that complainant, owning. patents for button-fastening machines. had sold the patented machines upon condition that tbey should be used only with fasteners made by complainant from the sale of whioh a profit was derived; and that defendants were manUfacturing similar button fasteners, capable of and intended by them for use in complainant's maobines, and were induoing purchasers of tbose machines to use suoh fasteners therein, to the exolusion of complainant's fasteners; and it prayed that defendants be restrained from making for sllle, selling, or offering or advertising for sale, any fasteners, intended for use or oapable of being used in the machines sold by complainant UDder such condition, and from persuading or inducing vendees of such machines to purchase or use in such miloohines any fasteners other than those made and sold by complainants. Held, that the bill should be sustained, on general and a preliminary injunotion should be granted on the bill and affidavits substanuating the charges therein.
In Equity. Suit by the Heaton Peninsular Button-Fastener Company against Joseph C. F. Dick and others to restrain defendants from procuring or inducing purchasers of button-fastening machines from complainant to violate their contracts with complainant entered into on' the purchase of such machines. Heard on general demurrer to the bill and on motion for preliminary injunction. Demurrer overruled, and injunctIon granted. The facts alleged in the biil were in general purport and substance as follows: Complainant is the owner of several letters patent granted for improvements in button-setting machines. the validity of which. has been sustained twice in the United States courts, and under these patents manufactures and sells button-fastening machines called "Peninsular" machines. These machines are sold outright to the users thereof, with the condition that the machines shall be used only with button fasteners made and sold by the complainant, and known as" Peninsu-
668
FEDERAL. REPORTER,
vol. 52.
lar" fasteners. This condition is expressed on the bills of sale on tags attached to each machine, and also by a caution plate attached to each machine,which reads: "This machine is sold and purchaf!ed for use only with fasteners made by the Heaton Peninsular Button-Fastener Company, to whom the title to said machine immediately reverts upon violation of this condition of sale." The price asked and received for each Peninsular machine is an amount barely covering the cost of manufactureand transportation. The complainant seeks its royalty in the profit derived from the sale of Peninsular fasteners, and derives benefit from the patented inventions embodied in the Peninsular machines in thjs and no other way. The Peninsular machine was and is the only efficient machine in use capable of setting the Peninsular fastener. In 1890 the defendants entered into the manufacture of a metallic button fastener, called by them the "Shoe Dealers' Staple," identical in all essential respects with the Peninsular fastener, capable of use in Peninsular machines, and intended by the defendants for such use. TheAefendaqts, from the beginning of the manufacture of Shoe Dealers'Staples, by solicitation and advertisement, procured and persuaded large nU!llbers of users of Peninsular machines to use in those machines the Shoe Dealers' Staple, to the exclusion of the Peninsular Jastener, which by their agreement and acquiescence in the condition the sale of Peninsular machines they were under obligation to use; Thus the complainant, since 1890, was deprived of the benefitsaccr-uing to it from the sale of Peninsular fasteners, and ceased to obtain the, income which it should have received from the use of Irnany Penin.sular machines, while the defendants diverted to themselves ,the profits arising out oftbe,use ·of their Shoe Dea.lers' Staples, which oe,ver!were capable of any e:x:cept in Peninsular machines. 'Fhe bill. prayed, among other things: . "That the defendants may,?eperpetually enjoined and restrained from directly or indirectlyprocurillgor attempting to procure. inducing or attempting to induce, or causing, any breach or violation of the contracts, or of either or any of the contracts, now or hereafter existing or subsisting between your oratol-" and the .vendees, or either or any of the vendees of button-setting machines sold lJy your orator, or to be sold by your orator, under condition that Buch shall use in machines so sold no other button fasteners than those made and fut-nished by your orator: and especially from directly or'indirectly making or causirlg to be mkde for sale, selling or causing to be sold, or offering or causing to be offered for sale. to any person or persons, {i,rillor .firms, corporatiop. or corporations whatsoever, any button fasteners intended or adapted for use, or capable of being used, in button-setting machines manufactured byyour orator and sold by your orator under the conditions aforesaid; from directly or indirectly persuading or inducing the vendees, or either or any of of button-setting machines, sold by your orator and held by such vendee or vendees under the conditions aforesaid, to purchase any button tastellers designed or adapted for nse in such machines, other than the button fasteners made and sold by yOUl' orator for use in such machines by.the p\>ssessors thereof in conformity to the conditions aforesaid nnder whicbs!l.id machines are held; and from advertising or cBnsing to be advertiseLl fot sale any button fasteners intended 01' adapted for use in button-setting 111ltehines manufactured and sold by your orator, and
HEATON PENINSULAR BUTTON-FASTENER CO. V. DICK.
609
held by purchasers under the conditions aforesaid, other than the button fasteners made and sold by your orator to be used in such machines by the possessors thereof in conformity to the conditions aforesaid, under which such machines are held; and from pUblishing or causing to be published any offer, promise, or inducement, designed or intended to procure the vendees, or either or any of them, of button-setting manufactured and sold by your orator, and held and used subject to the conditions of sale aforesaid, to use or to purchase for use in such button-setting machines, in violation of the contracts, or either or any of them, wherein such vendees have been and are bound to your orator as aforesaid, any button fasteners other than those made and furnished by your orator for use in the said button-setting machines."
Upon the bill, and upon affidavits stating facts substantiating its allegations of fact and charges in detail, complainant moved for a preliminary injunction. Defendants demurred to the bill generally, and the cause was contested both on the demurrer and on the motion for injunction. Hamlin, Holland &; Boyden, (James H. Lange and Odin B. Roberts, of counsel,) for complainant. (1) Action lies for maliciously procuring a breach of contract, whereby a contracting party is injured. Anyone who interferes with a contractual relation, to benefit himself at the expense of the contracting party, does 80 maliciously, within the intent andrileaning of the law. Lumley v. 6ye, 2 EI. & BI. 216; Bowen v. Hall, 6 Q. B. Div. 333; Haskins v. Royster, 16 Amer. Rep. 780; Biwby v. Dunlap, 22 Amer. Rep. 475; Walker v. CJ'onin, 107 Mass. 555; 6unter v. Astor, 4 Moore, C. P. 12; Sheperd v. Wakeman, Sid. 79; Keeble v. Hickeringall, Holt, 14, 17, 19; Carrington v. Taylm', 11 East, 571; Tarleton v. Mc6awley, Peake, 270; 6reen v. Button, 2 Cromp.M. & R. 707; Hartv. Aldridge. Cowp. 54; DUdleyv. Briggs, 141 Mass. 582, 6 N. E. Rep. V17; De Fransesco v. Barnum, 39 Wkly. Rep. 5; Benton v. P1'att, 2 Wend. 385. 'fhe only case not in harmony with the doctrine as expressed is Chambers v.Baldwin, (Ky.) 15 S. W. Rep. 57. . (2) 'A patentee may parcel his monopOly in any way he sees fit accordiug to the natural subdivision of bis monopoly into the three exclusive rights t() make, to· sell, and to use. It rests with the patentee to define the limitations under which he allows others to enjoy his invention. D01'sey, etc., Rake Co. v. Bradley Manu,f'g Co., 12 Blatchf. 202; Adams v. Burke, 17 Wall. 453. (3) When a patented article is solll subject to an express restriction as t() its use, disregard of such limitation is an infringement of the patent, and all assignees /?rvendees of the article are charged with constructive notice of the restriction. Hawley v. Mitchell, 4 Fish. Pat. Cas.388, affirmed 16 Wall. 544; Burr v. D'iJ,ryee, 2 Fish. Pat. Cas. 275. (4) The circumstance that the struc,ture embodying the patented invention is sold absolutely by the patentee is not inconsistent with a continuing control over the use of the structure, to be exercised by the patentee. '1'ie Co. v. Simmons, 3 Ban. & A. 320: Tie Supply Co. v. Bullard, 4 Ban. & A. 520; Cotton-Tie Co. v. Simwms, 106 U. S. 89, 1 Sup. Ct. Hep. 52; Morgan ElI'celope Co. v. Albany Pe1'j'omted Wrapping Paper Co .· 40 Fed. Rep. 577. (5) It is generally true that if by contract or covenant a condition or servitude is attached to the ownership of property which is the SUbject-matter of the covenant, and which is of such peculiar value that the covenantee can invoke the aid of a court of eqUity to enforce the contract or covenant specificallyas against the obligor or covenantor, then to that property in the hands of a purchaser from the obligor or covenantor, with notice of the condition or servitude, the equity raised in favor of the covenantee by the cove-
; ftDERAL' 'B1£PORTER;
vol. ,52.
'il.llntnadh,eres, and 2 l'hil:ifCb/774;Weatet'1£!iiV'f'MittiDermott,L. R. 72; Wliitnell'v. iRuiltbatJCo;dl Gray,S59; Ol!l1nimts'v;Wellea.L. R; 290;Lle Mattos .v.'Gib,nmiJ4<De Gex &J'.276;Olii/rk"fij Flint, 22 PlckV28I.' I" ' (6') 'fl1beoomplai nant'slioon$eas, the uSarsof Penlnslllilttnachiries, bydeaL-
log;, with 'bbose patentediffiQllbinel! in a mariner eont1"dtyllo the conditions .and 'limitations of the license, in.1ringe the v,aterits for the in ventions.embodied in the v;,'lttubber 00.,3 Ban. &lA. 568; Starlzn{j v. Plow 290; 'Petter v. NeWhall, 17 Fed. ,Rep. 841; Willis v. 29 Fed. Rep. 64iJ:; , ,,' 0, " , (7)"One who, assists, in an intringementof'patenttights.by designedly furnishing to the actual infriQger the means by whiCh hjs is effected, an!! for purpo/teof promotlngsuch is a contributor1infrJp"ger, and is liiUil& to the extent of his contribution to the infringement·. ·,Jforgan Envelope'!Ov.v. Albany Perforated W1'appin.rJ Paper Co., 40 Fed. Rep. 1,/1.7. ' (8) Any aot, done with intent to contribute directly to an infringement of patent rigMs,is wrongful, f:\.nd will be enjoined by a court of equity, although in itself, anil'considered apart from its intended purpose, such act might be lawful. Wallace v. Holmes, 9 Blatchf. 65; Holly v. Machine (Jo., 18 Blatcht v. DOWB, 15 O. G. 510; TraverB v. Beyer, 26 .Fed. Rep.450j JWillis v. McOrullen, supra,' Oelluloid Manuf'g -00. v. American 30 Fedi, Rep. 437 ; Alabastine 00. v'Payne, 27 Fed; Rep. 559; l'ie8upply 00. v. McOready, 4 Ban. &; A. 58l:l; Boyd v. Oherry, 50 Fed. ,Rep. 279. DJlrenforpt· <fc DyrenjfYl'th, for defendants. (1) of a part,Yto a contract, in case otbreaoh, is against the ['he, law gives this mode of redress, ,and, though the other breach of may be induced by a third party, yet the !ict of breach is not has no cautle of action agahist a third party.',".'"",.: .;. (2) By the restriction placed upon the u.se of ftsPeninsular machines, complainant seeks toesu"blish a monopoly manufacture of unpat. ented articlell' namely, theputton This is, unconscionable, in restraint.of tJ;ad8, ,'and theaUege,d contract Is void. Machine Co. v. Earle, S Wall. Jr. 320; Wilcox &QibbB Sewing-Mach. 00. v.6ibbenq F'rame, 17 Fed. Rep. 623; Man1.li!actu1'iiigCo. v. 60rmully, 12 Sup. Ct. Hap. 632.
as follows:
District J udget directed an interlocutory decree to be entered II An order will be entered overruling'the demurrer, and requiring an answer by the first Monday ofAugust. An order will also be &J.l injunction pendente lite to issue pursuant tp the prayer. ,o,f Sllpsequently the defendants submitted toa,final depree, making, the perpetual. JENKINS. ! ,'.
CAlUllY ,tI. HOUSTON & 'X. O. BY 0' 00.
'671
CAREY
tit
at.
fl. HOUSTON
& T. C. Ry. Co. tit
(Circuit Gourt,:JC. D. Texas. November 12, l89').) L FEDERAL CoUBTS-JURJSDICTION-RAILROAD FQRECLOSUR_RECEIVERS. A federal court baving jurisdiction and. possession, tbrough its receiver, of all the propljrty of a railroad company, thereby acquires jurisdiction of a subsequent suit t,o, fore,close a m.ortga,Lge on t1).e, same pro.perty,' irre,BPectl,'ve ot the citizenship decree of foreclosure and of the parties thereto, and may enter therein a sale. Morgan's L. & T. B. & S. S. CO. v. Texas Cent. By. Co., 11 Ct. Rep. 61, 13711r 1;1; 171, followed. , i, CONSENT DECREE-RAILROAD FORBOLOSURE. A decree of foreclosure and s,ale ofs railroad. entered by consent ot the creditors and the company, without fraud. in pursuance of a plan of reorganization, will not be set sside at the suit of some of the stockholders merely because the principal of one mortgage was not yet due, when it appeara that the sums due for interest thereon, for floating indebtedness, and on other mortgages, then due, were so great as to render foreclosure. inevitable, and in that case to deprive the stockholders of all their eqUity in the property; especially when complainants' not otter to do equity by paying the floating debt, and have not been diligent in opposing tbeplan of reorganization, vrin attacking the decree complained of.
ao
In Equity. Bill by S. W. Carey and others, stockholdersiQ the Houston & Texas Central Railway Company, against the company and various other parties, to set aside a foreclosure decree entered byoonsent in pursuance of a plan to reorganize the company, and to enjoin the carrying out of the scheme of reorganization. A motion for an injunction pendente lite was denied. 45 Fed. Rep. 438. Bill dismissed. R. H. Landale and Jeffetrson Chandler, for complainants. BuUer, Stulman Hubbard, A. H. Joltine, and Farrar, Krnttschnitt, for defendants. PARDEE, Circuit Judge. This cause was before the court in the first instance on a motion for an injunction pendente lite. The motion was denied for reasoDs given at some length. 45 Fed. Rep. 438. Both parties having taken such evidence as suited, the cause now comes on for final hearing on the proofs, which change very little the aspect of the case as presented by the pleadings. It has been most thoroughly and exhaustively argued on both sides, both orally and by brief; the discussion ranging over a wide field, covering many propositions of law and equity and of equity practice. Were it at all likely that the present decision would be taken as a finality in the case, I should be disposed to take up 8eriatim the questions as presented by counsel, and disas counsel cuss them as elaborately and, perhaps, at as great have argued the same in their printed briefs. Under the circumstances, however, I.do not deem it necessary to further incumber the record with my conclusions in the case beyond adding a little to what was said in denying the motion for a preliminary injunction. Whether the bill of COmplaint herein is an original one in the nature of a bill ofreview attacking a former decree of the court, or.is a bill of complaint in continuation of a former suit, or is an original bill to set aside a decree of foreclosure and sale and a sale thereunder, it seems to