HAHTZ V. CLEVELAND BLOCK CO.
681
whether the second claim of the second patent, which fully characterizes that invention, is infringed. But this has not relieved the court from the duty of considering the former patent, since both are involved in the questions in regard to the interpretation and effect of the contract and action of the parties when the apparatus which is charged as offending was originally installed in its present situation. The result is that the bill must also be dismissed as against the Peninsular Light, Power & Heat Company. A decree will be entered in conformity with these conclusions.
HARTZ v. CLEVELAND BLOCK CO. (Circuit Court of Appeals, Sixth Circuit. Nos. 688, 689. 1. EQUITY PLEADl:<fe-PLEA AND REPLICATION-REVIEW.
June 6, 1899.)
When, after a plea is set down for argument as insufficient in law, the court permits it to be amended, and a replication is then filed, and a hearing had upon evidence _bearing on the issue thus made, and the court thereupon finds that the plea is supported, and dismisses the bill, the only que s· tion open for review is the question as to whether the plea is sustained by the evidence. PATENTS-CONTRACTS FOR THE ASSIgNMENT OF INVE:<fTIONS AND PATENTS.
2.
The owner of a machine shop, who had invented .a metallic snatch block, .entered into an agreement with a company whereby it was to pay him "all the costs and expenses of making and perfecting such invention and 01). taining patents," in consideration whereof he was to have the right to .manufacture at a reasonable profit all the snatch blocks, tackle, etc" which the company should put upon the market. Thereafter he perfected one snatch block, and obtained a patent therefor, and while so doing he presented weekly bills to the company for labor, material, and expenses incurred in working out his ideas, together with the cost of tools, dies, patterns, etc., and such bills were paid by it. Held, that this was a practical construction of the contract by the parties, and the company could not thereafter, in respect to subsequent inventions, claim that it was only obligated to pay merely the cash outlay in obtaining the patent.
Appeals from the Circuit Court of the United States for the Eastern Division of the Northern District of Ohio. The appellant, who was complainant below, filed thIs bill to restrain the infringement of patent No. 442,679, granted to Henry V. Hartz, December lU, 1890, for a snatch and tackle block. To this bill the defendant filed a plea, which, in substance, averred that the defendant was a corporation engaged in the business of manufacturing and selling snatch and tackle blocks and analogous deVices, but had no factory of its own; that the complainant, Hartz, was the proprietor of a machine shop, and had between 1886 and 1892 made for appellant, at agreed prices, all the snatch and tackle blocks needed in its business; that "in or about the year 1888" the defendant entered into an oral agreement with complainant by which he obligated himself to assign to defendant all United States patents which might be granted to him for inventions relating to metal snatch and tackle blocks while the agreement was in force, the defendant agreeing to pay him "all the costs and expenses of making and perfecting such inventions and obtaining patents"; and also that in consideration of such promise the complainant "should have the right to manufacture at a reasonable profit all the metal snatch and tackle blocks which defendant should put upon the market and sell." The plea further averred that said contract continued in existence from "in or about 1888" until November.. 1892, when, without cause, the complainant refused to make for defendant.
682
95
l"EPERALRE;I>OR:r'E!'L
$Ucil, plockll'IlS It :\'ICllnted,flnd en!ered with another dealer: that c6ntirlUnnceof, tUis agreeIl1ent, complainant, at the !!uggestioI) and for', the' I?enelit"of defendant's trade;' pl?tfected these several inventions for which 'he procured Vttllnts.......the nl'$tof tilese being for '8 snatch block protected bypateJit No. 387;0:;:1", dated Jnly 1888. The second .was that secured Patent No. 4;';l2;679.for a snatcb and block, issued December 16" 1890;aI)qthe,third and last beingior the invention of a tackle block, covered by 'patent :No. 470,240, issued March 8, 1892·. It isavctred that patent No. 387.071 was assigned,shortly after it was taken out, to the defendant, but that ,the complainant has refUsed to as.sign the ot)ler two patents which were taken out during said agreement for imwntions made and perfected during said agreement, although defendant "has made demand' upon the complainant to transfer and assign saIlle, and has offered to pay and to reimburse the complainant for the cost and expenses incident to obtaining the patents and reducing the Inventions to practice," The I?lea concludes with the averment tllat complainant is <lbtalning pateuts for said inventions; "was, by reason of a for defendant; and in equity and good conseience the balds no title to or interest in said patent. save as trustee for the defeu(lant." Replication was filed, and proo! tilken. {Jpon final hearing the plea was sustained, and the bill dismiSSed. A similar bllI was filed for. infringement of patent No, ·170,240, and a like plpa filed by defendant. upon1vI1ich issue was taken. Upon final hearing this bill was also dismissed. Complainant bas appealed from botb'decrees, arid by stipulation the cauSes havebeeu heard together upon oue' record and assignment of e r r o r . ' " II· I
Harvey D. Goulder, for appellee. Hefore TA1!"'1' and LtJB1'9,N, Oircuit Judges, und CLARK, District J u d g e . ' ',' " ' , " ' , ' ., . ", , ,. " 'I' , . ,
.J. E.lngersoU and Samuel T.Douglass, for appellant.
LURTON, Circuit Judge, after making the foregoing statement of facts, delive:red the opinion 'ot . "',:0 'l'he heating'ifllsupon the plea, a general replication, 'and' the evi4en,ce' tak()u ill.,stiPPprt ,Such a plea is a special answer tothe bill, and.nothing is put in issue, so far as the: plea extends, but the truth oftheIhatter p1ende?' . Farley y.Kittson,120:U. S. 303-315, 7 Sup. Ct. 534; Dalzell Co.; 149 U.S. 31,5, 13 Sup. et: 886. . T,'li,eor[iginal' plea was set. down for argument as .insufficient ill ,IW. The court permitted the plea to be amended. To the. plea,as l'liluended, thetomplainllnt' took issue by '1\ r general replicatiOD. Upon the evidence bearing 'upolitheissue thus niade the court found that the plea was supported,ami.dismissed tM complainant's upon, the 'of Jhe court in bilL No. errol' . sum,.,c,\ent in law. The only, question thus open erred inholdingAhatthe, plea was flustained by the evidence. ·If it was not supported,it should have ordered to RI;JSWer.' Dalzell v. been overrllMd; 13 Sup. Ct., v. Klttson, 120.p,,$. 30B, a15, 318, 'LSup. Ct., ,534·. 'l'he evidence:does not, in our jpdgment, support :the plea. The plea avers·that the contraCt' Was made '''irr or aMut'1888,"-a most vague The etiP.epe¢; it still a,pq "leaves ,it probable. tIj,a.t the couvepsation relied upou. ris conabtutlOg the agreement sought to ,bE':: set :up, occurred some time in 1887. ,Tn.etplea makes nOiltvermenttouching-the duration of the l:I.lleged agreement. "The evidence is thatnotliing said l . .', , 'i ) ! ' . ,:: ; ': : ' .. . ,, .,. ' 1 .,, ·
HARTZ 'V. CLEYELAl'n BLOCK
co.
683
about the duration; and' counsel for appellee, in order to take the case without the statute of frauds, have that under the evidence it was an agreement "which could have been terminated by either party at any time upon reasonable notiCe." The' prices to be paid Hartz for making such blocks as the block company had occasion for are shown to have been agreed upqn for one year. This makes it altogether probable that the underst,anding of the parties was that the agreement under which Hartz was to get all the work needed by the block company was td continue but for one year. :From this it would follow that only during that year was he under any obligation to assign to them patents taken out for improvements in blocks. The greatest uncertainty in the evidence supporting the plea is that which relates to the consideration to be paid Hartz for his inventions. 'rhe expense to experimenting and developing new ideas was great. The cost of patterns, dies, and machinery for the practical manufacture of improved snatch and tackle blocks was out of all proportion to the' other costs incident to the obtention of a mere paper pMent. Who was to bear the cost of tools, materials, labor, pte., 'used in devising and perfecting such new inventions as might be suggested to the mind of Hartz? Who was to pay for the plant lwcessary to the practical manufacture 9f new inventions? The plea avers that "defendant was to pay the costs and expenses of making and perfecting said inventions and obtaining said patents." But Who represented his company in the making of the alleged agreement, in stating the bargain says Hartz to do any such work as was necessary to improve or change any block that we might desire changed, or to make such new inventions as had been the work of Mr. Ford in the past, fl'ee of cost to the block comJlany, except the actual money outlay or cost of patents when procured, We agreeing to give him the exclusive manufacture of the blocks in eonsideration of such work." He was asked if this expense to be reimbursed was to be confined "to the expense that attorneys might charge," and answered: "It was confined to the actual cash outlay for the obtainment of the patent. Q. Did that include nothing more than the expense that attorneys might charge? A,. Whatever expense was nt'cessary to obtain the patent. I don't know what they are. Q. 'Wasn't it talked over that there would have to be
various expenses in making patterns and making' experiments, to see whether the invention was really a practical one, before the patent was applied for? \Vasn't that talked over between you and Hartz? A. Yes, sir; and Hartz didn't desire any pay for that. Q. Did he say' he did not to you 'I A. He did. Q. Is it not a fact that he presented accounts to you to cover the expense of 387,071, covering just such items of expense. and that the block company reimbursed him for the same? A. Not to my knowledge."
The fact was that complainant did undertake to get out a metal snatch block some time in 1888, being the deviee covered by patent 387,071, and that every expense incurred by him for material and labor in the eourse of his experiments, as well as the entire cost of tools, dies, patterns, etc., used in working out his ideas or in preparation for the practical manufacture of his improved tackle block was presented to the defendant company from time to time as the expense accrued, and paid. These items aggregated,including
684
FEDERAL REPORTER.
for securing a patent, the sqm of $937.88. From\leeK HArtz, presented his expense bill, and had it paid; and, so soon as the patent issued,peassigried it to the block company, Now, is this court to find the coptract to be one which required Hartz to incur the cost of experiments and .Of patterns, as claimed by Mr. LymaI!, the secretary and treasurer of the company, and the officer who says he made thecontract,or is it to find that the agreement was as construed by the parties with respect to the patent which w,as assigned to the block company? If we construe the plea averring an agreement under which Hartz was to experiment and perfect devices for improving snatch and tackle blocks, and to make sqch patterns, dies, tool!,!;, and machinery as were necessary to tht' ip.anufacturing of such. improvements, at his own expense, being reimbursed only to the extent that he had paid out money for the actual procurement of a patent and by the profit he might make \Ipan such improved blocks as the' block company might choose to artIer from him, no such agreement is proven. The fact that he was for all his outlay in perfecting the device covered by No. 387,071, which he did assign to the company in 1888, including cost of dies, patterns, and tools for making the blocks covered by that patent, and that such reimbursement was made from. week to week, as the work was done or the expense incurred, without question or controversy, is a demonstration that that invention, at least, was devised,perfected, patented, and assigned under an agreement quite unlike tb,.at stated by Mr. Lyman. The alleged agreement of 1887 or 1888 was not even the origin of the business relation of Hartz .and the block company. The avers that those relations had begun in 1886. The evidence sh6ws1;J;1at for years prior .to 1886 the same relation had existed between those who became incorporated in 1886, and who, as a corporation, continued to have their metal blocks made by Hartz as theretofore. Hartz was an independent manufacturing mechanic, having his own machine .shop, and doing work at all times for all who applied. He made blocks from 1886 to 1892 for the block company, at prices agreed upon, from time to time, prior to 1888. The superintendent of the block company was one Ford, who was perhaps looked to for suggestions as to improvements in the articles dealt in by the corporation. In 1888 Ford sold his stock to the daughter of Hartz, and the latter, though never a stockholder, was made a director in Ford's place. He explained that he was never qualified, but the other directors said it made no difference, he could act as one anyhow. The stock held by Hartz's daughter was but 10 shares, and of no significant interest. Hartz says that while occupying this doubtful relation he was asked if he could not devise for the company a m,etal snatch block which would enable to compete with makers of wooden blocks, and that he did out a model, charging them with labor and material. That then, at their request, he made patterns, dies, tools, etc., for which he was his from week to week, and that he caused this fnvention to be patented, and assigned the patent the next day after it, they paying every expense incident to its issuance,
HARTZ V. CLEVELAND BLOCK CO.
685
as well as all his cost and expenses for tools, dies, machinery, etc., proper for the practical manufacture of such blocks under that patent. Thereafter he made for the block company all snatch blocks, according to that patent, which they had from time to time desired, they furnishing him with material, and paying him for his work a price agreed upon from time to time. He denies that he had any general agreement that he was to make inventions for them as charged. With reference to his invention as covered by patent No. 442,679, Hartz says that the company in 1889 complained that their block was not strong enough; that he made two models of a steel block, one 10-inch single and one lO-inch double, and took them to the office, and showed them to Upson, one of the managers of the company; that Upson asked what the tools, patterns, machinery, etc., for their manufacture would cost, and that he replied, "About $5,000, but it might cost more." . Cpson desired to consult the other directors, and, after doing so, reported that the company was not willing to go to such an expense; that they had a sale for their blocks, and would not care to put so much money into any other block. Further improvements were afterwards made upon these models, including the snatch-block attachment, and patent No. 442,679, taken out. He then says that he got an order for two large snatch blocks, and made the head according to his new design; that, when delivered, Mr. Keith, their superintendent, said he could not accept them, but that he urged him to send them out, and that, if returned, he would pay all costs; that they were sent out, and were satisfactory; and that thereafter he received orders for a number during 1891 and 1892, filling the orders at an agreed price. The blocks thus made were very large hand-made blocks. To make smaller ones at a price which would enable him to compete with other styles, he had to make special tools, dies, patterns, and machinery, all of which he did at his own expense, and with the knowledge of the company. No part of the cost and expenses, amount· ing, as he says, to $8,000, was ever borne by the block company, or offered to be paid by it. On one occasion, he says, MI'. Upson came into his shop where he was engaged in making a special machine for making the cheek pieces of the new snatch block, and asked what the machine would cost. He replied, "$1,000, but it might go to $2,000." To this Upson replied: "Say $1,000, or a little more. We are willing to pay half of it. Will that be satisfactory?" To which he replied, "No." This, Hartz says, is the only time that anything was said to him about paying any part of the cost of the new invention, 01' of preparing for making the new block. In some important particulars Mr. Hartz is corroborated in respect to the history of this new invention. Mr. Upson, after stating that he and others of the company had made certain suggestions concerning a new fol6Ul of snatch block to Hartz, and in answer to a question as to what had been said to Mr. Hartz after he had made and exhibited the two models mentioned by Mr. Hartz in his testimony, says: "The models were left to be shown to the directors of the company. We couldn't take the responsibility of going ahead and making the block without
95 FE DE RA,iL 'REPORTER;
shO,wing and cOnsulting with thedire\).tors. Q. Atter you had consulted with tbe directors, what talk did you have with Mr.' H. about manufacturing the stee)block? A. Why, they wanted estim:;lte .from him as to the probable cost of it, or the machinery to make them.' Q) Mr. Hartz has stated that8.fter you had seen these two models,: !you, in beha1f of the Cleveland Block Comto put any money into the of tools /lnd: patterns for th,ese b)oc!t.s. .And, he sa.ys that you did llot· tell him,l/-s a reason for this refusal, that the manufacturers of wood blocks had raised their price so that the block coinpany could now compete with profit with their malleable blocks. You may state whether :M:r..Hartz was correct .in this statement of his, ! and, if not, say wl;l.at, ifan:y. .conversation upon t}il1ssubject .you did have with Mr. Hartz, A. conversation on that point. Q. Do you remember having any convel'sation with him on that point? A. Very likely we did."
.an
,
;
I.
','
" ,
Mr. when asked why Hartz,qid not goon with his invention,and make the dies" pattern&, etc., necessary for the practical manufa£tllre of the new steel 1;Jlock, said,: , "A:. The expense-I don't know just how I'want to state that-the expense of manufacture" or rather the preparation to manufacture, the new block, was such that,.J had not considered it necessary to make a In our snatch block, except as regarded the extra large sizes, which were .made by hand, of which very few were made. Q. In what manner was the block company interested:inthe expense you have referred to in your last answer? A. To the 1 itnecessaryfof ,any one to put any more. money into machinerr for new styles of blockS, and also into expense of advertising and introdue!ng new blocks, as long as the profits Qri ilie style we were using, and the sale dflt;were satisfactory." , .
It is. plain that "necessary," in:tbeanswer last set ,out, was "unnecessary." This is the plain meapiDg' ,of the witness. But even stronger corroboration of Mr. Hartz'sstatemel).tas to the attitude of the cOD;lpany towards.his newsteelbloclr exists., The record book of the Oleveland Block. Oompany contains .these two entries: "Cleveland, March 1, 1892. "The adjourned meeting of stockholders was held, Mr. McLaughlin in the chair.. Mr. H. F. Lyman made a statement in .relation to the new steel block which it was proposed to introduce to the trade in eompetitio:Q. with the steel block made by other parties, and several suggestions were made with the view of bitylng certain machines made by Mr. Hartz. No action was taken, but the matter was referred to the directors to consider." "Cleveland, March 1, 1892. "A meeting of the directors was called to consider the question, which was overIool,ed,ofsharil\g with Mr. Hartz the expense of building machines for making the steel blocks, and the treasurer was authorized to guaranty at least $500;00 toward the expense. Said ll,ll1ount, in case of success, to apply upon the purchase ofslich machines."
Bearing upon the indefiniteness and onesidedness of the agreement sougl:1t to be set up by defendant's plea, is the fact that Mr. Hartz's only ,compensation for the a$signment of all patents taken out by him consisted in his having the business of the block company in the making of the blocks needed by them. We have already commented, .upon the indeterminate charl:\cter of this agreement in respect to time, It is equally so in regard to price; The plea says that Hartz was to have the right to make all blocks required at a "reasonable profit." The evidence does not S'upport this. The testimony of Lyman and Upson is that pric,es for one year were settled,but,that afterwards there were tO,be such prices as could
HARTZ V. CLEVEI,AND BLOCK CO.
887
be agreed upon; that is, the defendant was at liberty to give its work to some one else after the agreed schedule expired, unless Hartz would take such prices as they were willing to pay him. The evidence is hopelessly conflicting upon all the material issues of the plea. That the agreement was such as stated in the plea is highly improbable, and the agreement made by the evidence of Lyman and Upson still more so. The company was not bound to continue this agreement for a day, nor obliged to reimburse Hartz for cost of experiments or of plant essential in making his new devices. Such a contract is inconceivable and unconscionable. Even if clearly proven, it is not such a contract as a court of equity should specifically enforce. Dalzell v. Manufacturing Co., 149 U. S. 315-323, 13 Sup. Ct. 886.. The contract set out in the plea is both indefinite and improbable. The evidence i;utroduced in support of the plea tends to establish an agreement still more indefinite and unconscionable. The truth of the agreement as averred is not proven to our satisfaction. The probabilities are with the statement made by Hartz that his agreement was limited to the specific device assigned by him to the defendant in 1888. But independent of all question as to the definiteness and fairness of the contract deposed to by the members of the defendant corporation, and as to the sufficiency of the evidence to support the plea, we hold that the conduct of the defendant companv in refusing to furnish Hartz with the tools, dies, patterns, and niachinery necessary to make for them the blocks needed. by them was an abandonment of their agreement to pay him "all the costs and expenses of making and perfecting such invention and obtaining patents." That term of the agreement, as interpreted and applied by the parties in respect to the invention of 1888, covered by patent No. 387,071, included the necessary plant for manufacturing the devices covered by the patents to be assigned to them. If it be true, as claimed, that the company asked Hartz to devise a new steel block, which in strength and. cheapness would compete with anything known, and .hedid so, the com: pany was bound to prepare for the practical use of the invention if they wished the benefit. of the device. To say that Hartz should have gone to l).n expense of $8,OQO, as. he did, in and etc., perfecting such a block, and i;u ma,king tools, dies, for its practical manufacture,· 'Vith. I1Q chance of a return save. in the profit he might make uppn .sucll blocks as they might choose to take from him, is incredible. .If defendant's contention is true, the company might have left Hartz with all such machinery on his hands, with no right to wake a block under his own patent. But the learnell counsel for appellee denies that the bloc4: company reo fused to bear the expenses incident to the development and manufacture of the new steel blocks. .To quote from brief of counsel: "As a matter of fact, It did not refuse. Its managers, knowing the condi· tion of the market, said, in substance: 'This is not the time to go to such expense. For the present, and while we can make money with our present tackle blocks in competition with the wooden blocks, such expense is unbusiness-like. Later, we may; but. for reasons stated, not now.' "
G8S 01',
95 FEDERAL REPORTER.
If .this position be conceded, it would operate to deprive the invent· of all benefit from his patent. Hartz could neither use the inven· fOr .himself nor realize themeageJ,' benefits to be derived from nsiilg;it tor the bene:fit of the block company. We think they elect· ed t01'epudiate any right they may have had to become the assignee of thiliinvention, and that they so understood it when they stood by and saw Hartz involving himself in great expense, after themselves refusing to furnish the means to prosecnte its manufacture. DefendaIlt's plea is not snpported: The decree must be reversed for such further proceedings as may be consistent with this opinion.
THE MARION CHILCOTT et aL
(DIstrict Court, D. Washington, N. D. July 24, 1899.)'
t.
SBAMEN-DAMAGES FOR PERSONAL INJURy-LIABILITY OF VESSIl:L.
'While the sixteenth admiralty rule protects a. ship from liability for damages tor assaults committed by her officers, she is liable for injuries inflicted on a seaman by reason of the neglect of the master to protect him from continued abusive treatment by a subordinate officer. The rule that a ship Is not liable to. a seaman In damages for Injuries resulting from negligence of the officers is not applicable when such negligence amounts to a breach of duty; as where the master falls to protect the seaman from continued violence and brutal treatment at the hands of a subordinate officer.
2. ·
SAME.
In Admiralty. Libel in rem by Franz Schwam, seaman, against the ship Marion Chilcott, to recover damages for personal injuries. M. M. Madigan, for libelant. E. O. Hughes, for claimant.
HANFORD, District Judge. The libelant claims damages to the amount of $25,000 for abuse and personal ill treatment alleged to have been suffered by him while serving as a seaman on the ship Marion Chilcott on a voyage from Baltiniore to Seattle. After careful cOJlsideration of the pleadings, evidence, and arguments, I am con· vinced that the libelant sUffered corporal chastisement at the hands of the illate very frequently during the voyage, which was, except on the :firSt' occasion, unnecessary, arid unjustifiable. When discharged, after the' termination of the voyage, the libelant ,was in such poor health that he was taken to the marine hospital with a permit issued to him by the captain,and he was certainly iil a nervous and weak· ened condition, in consequence of his sufferings during the voyage. There is, however, no evidence upon which to base a finding that his injuries are perIilanent. He has shown himself to be an untruthful witnel;!s, and I am convinced that hebas grossly both as to the ill treatment and its effects. There is a decided preponderance I)f the evidence against the libelant in regard to a number of important facts, and convincing proof that the greater ,part of bis suffering was caused otherwise than by ill treatment at the hands of the officers of the ship ; and for the pain and distress now referred to,