i'BDERAL REPORTER,
vol. 40.
ments,aoo declaring that,when made and promulgated,a willful and unlawful violation of them should be held a crime against the United States, .and the violators punished as presoribed in the act. The supreme court of the United States is authorized by aot of congress to adopt. certain rules for the government of the inferior courts, which, when made, have the force and effect of law as muoh as if such rules were directly enacted by congress, and approved by the president. The same effect is to be given to the rule and regulation made by the seoretary in this case. The act of congress denounces the violation of it as a crime, and presoribes the penalty. The criminality of the violation of the rule, and the liability of the offender to indictment and to punishment upon trial and conviction, result directly and exclusively from the legislation of congress. Numerous decisions made by the supreme court of the United States might be cited to maintain the position stated, but they are so well known to the profession that reference to them is deemed unnecessary. .The demurrer is therefore overruled.' . PARDEE,
J. I concur in the foregoing opinion and ruling.
, BOWLING et
al. v.
TAYLOR.
(Q£rcuit CO'UR't, D. Connecticut. l"lovember 91,1889.) Complainants, who were manufacturing under patents Itaya whichconBisted of a stiffening blade having a sheet of rubber on each side, and. au outer layer of cloth over each sheet, and defendant, who was making twokmds "Bridgeport" and the" Self.Attaching, "-both of Which complainants claimed to be infringements on their patent, entered into an agreement by which complainants.licensed defendant to make the "Self-Attaching," provided he would not mak,El the" Bridg· port" stay i and defendant agreed to make no stays consillting of a steel, ",'layer of gutta-perena, and two outer layers of fabric. ,By a supplemental.agreement they confined themselves to the manufacture of the "Self-Att/loching" by the defendant, and the "Ypsilll.nti No.1" by complainants, the latter being a stay of the double layer kind; but it was agreed that oomplainants might put. a cheaper double layer stay on the market, provided they would furnish defendaI).t, ,at a certain price, the same quantity of such cheaper stay as should be sold by themselves. Complainants put a cheaper stay-"Ypsilanti No. 2"-on themarket"and.filled defendant's orders for the same, and afterwards\ against the protest of defendant, began t,o mak;e and sell a still cheaper stay, callen the" America. "of which 'tlley offered to let defendant have the same quantity as sold by them, at the same. price as \VIIS paid by their agent. Defendant refused to take thllm, and, claiming: that complainantshad broken their agreement in selling the cheaper stay, ..America. " to' the injury of the sale of "Ypsilanti No.2," he commenoed the manufacture:of the" Bridgeport,:" and also of a stay in which glue or paste was' substituted for gut,ta-percha.Held, , thllt this contract was not ill, restraint of tr",de. . " '. 9 BAME-BREAOlI-!NJUNCTION. '" Nor was there such material breach of .the contract by complainants as would justify refuSal of defendant to carry out his part of the cO,ntract; for which reason a temporary injuootion should be granted against the manufalltuJ.le by defendant of stay.s containing a .stiffening blade with one or tw. 0 layers of gutta-percha; and two . outer La}'ers Of fabric, but not against the manufacture of the stay in which PlISte or gluelilsubstittlted for gutta-percha.· '.'
L
CONTRACTS-RESTRAINT OJ' TRADE.
.
. .
·In Equity., ·Motion for preliminllry injunotion.
BOWLING ". TAYLOR.
405
Sherman H. Hubbard and Henry Stoddard, for defendant.
Greenbaum
Hayes, for complainants.
SHIPMAN,J. 1'his is a motion for a preliminary injunction in a bill in equity, by citizens of the state of Michigan, against a citizen of the state of Connecticut, which is brought for a permanent injunction against the further violation by the defendant of his agreement not to make ladies' stays in the manner alleged to have been secured to the complainants by their patent. On October 5, 1888, the complainants were manufacturing, under three patents to E. C. Bowling and one to Elsie M. Smith, ladies' dress stays, which consisted of a stiffening blade, having a sheet of rubber on each side thereof, and an outer covering of cloth over each sheet. The defendant was also then manufacturing a ladies' stay, called the "Bridgeport Stay," consisting of a stiffening 'lade, with a single layer of gutta-percha on one side, and an outer layer of fabric on each side. He was also manufacturing,under a patent to Roscoe B. Wheeler, a, stay .called the " SeH.Attaching Stay," consisting of a blade, a gutta-percha .strip on ,one side, and a layer of cloth on the other side. Ea(;h of these forms Jvasclaimed by the plaintiffs to be an infringement of the principal Bowling patt'nt, a reissue of which had been applied for. They had .also commenced in the patent-office an interference proceeding in regard to the Wheeler patent, and had threatened the dehmdant with a 8uit. On Oetober 5, 1888, the parties entered into a written agreement, which was amended on the same day by a subsequent agreement, which agreements were, in substance, as follows: The complainants licensed the defendant, under their patents, to make ,and sell stays "designed to operate u,pon the self-attaching principle," i. lithe Stay" described in the Wheeler patent, provided he ehould make no Bridgeport 'Stays, except he could sell 3,000 gross then in process of construction, .and fill all orders theretofore received. ' The complainants agreed not to make the self-attaching stays of the Wheeler patent, and to make no effort to annul or disturb it; and the defendant agreed that he would make no stays consisting of a, steel, a layer of gutta-percha, and two outer layers of textile fabric. Minimum prices were fixed for the self-attaching and the double layer stays, which the complainants were then mak. The complainants sold to the defendant their interest in the English and French patents of Wheeler. By the supplemental agreement the parties agreed to confine their manufacture re;;pectively to the stays known'a:s the "Self-Atbtehing" and the "Ypsilanti No. 1." If, however, the complainants should deem it advisable to put upon the market a cheap stay of the double layer kind,they should, upon demand, furnish the defendant, at a price of 50 cents per gross, a quantity of said stays equal to that put out and sold by the complainants. In the event .of the putting out of this cheap stay, the net price to the trade should be the'sameby both parties; the complainants to fix the price. 'l'hecheap .stay, cailed "Ypsilanti No.2," was immediately put upon the market; -.the price was fixedj the defendant commenced to order; orders
e.,
..
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_._-
406 were filled. The 'anticipated reiSsue was delayed, arid, 'fur II time,denied; and infrlngers'sprltng ,u.'P,'who put cheap goods' nport the market. The firm which sold all of the complainants'stays in the city of New York, other'than those',sOld byTaylor,wll.8 very that the complainantsshould make a cheaper stay than the IINo. 2;" which would cost 361 cents per gross, and which they would sell from' 25 to 35 cents, -at a loss:to,themselves,....-'Rnd thus undersell the cheap goods of their rivals,anddesttoy competition; and in January, 1889, the complain. ants promised that they would send the New York firm 6,000 gross of these cheap goods. They informed the defendant of this plan on January 4 orS, 1889) and asked him if he would take some of these goodS at 361 cents, and sell at a loss. He declined, and said that 8uch R course would injure the sales of "No.2;" and that it was a breach of the contract;ed that he' would resume the manufacture ()f the Bridgeport stay. On January 9, 1889, complainants telegraphed defendant as follows: "After -consultation, we are agreed that the fewer cheap stays made, the better.. Shall ship Model Co. only enough for present orders." Upon receipt of, thiatelegram,' defendant telegraphed complainants, asking at what.price they could furnish 10,000 gross of these cheap stays, ahd on January'10th wrote complainants, protesting against the sale of this cheap edition of ::No. 2 stay, and stating that his attorney regarded itasanabaIidonmentofthe contract. On January 11th complainants telegraphed defendant: "Cannot fill orders for cheap stays under 30 days. Price, 361 cents;"-andon January 16th, upon the return of Mr. Bowling, he telegraphed defendant: "Have limited Model Co. to 6,000 gross cheap stays. Will place 'you on equal terms as to price and quantity. Price 31 cents, net cash, f,o. b. Ypsilanti." This stay was called "The American." ,:The defendant resumed the manufacture of the Bridgeport stay, at 'a cheap rate. July, 1889, the reissue of the Bowling patent was granted, and thereafter in Detroit, in Bridgeport,and in New York, and by correspondence;. both by telegraph and by mail, much talk and negotiation were bad between the parties respecting the discontinuance by the defendant of the tnanulacture of his cheap stays. This negotiation ended :as follows. On August 23, 1889, defendant wrote complainants the following letter:
In
"OEFICE OF Taos. P. TAYLOR,MAmTFAOTURER OF FOLDING BUSTLES, . DRESS S'rAYS, DRESS SHtELDS, DRESS EXTENDERS, CORSET CLASPS, ANn·STEELS· ..(Dictated.) BRIDGEPORT, CONN.,. August 23rd, 1889. "The Ypsilantt Dress Stay Co., Ypsilanti, Mich.-GIDj:TLEMEN: Since my letter of recent date, 1 have decided to discontinue the manufacture of tbecheap stays which have been tbesubjeet of our recent controversy; and to· manUfacture. Jnstead, l\ stay of a different chararter, which will not in any under your patents. J:,vilLpuit Qutsamples of the Ypsilanti No.2 at once, and will endeavorl.o pusb.their sale in aCCOlidance with the of our contract. Jshould also like to requt'st immediate information as to what you intend to do with me about the. cheaper star. which you are now selling under the name of" American." In accordance with my talk with Mr. BOWling 'when here, I shall be entitled to Ii large quantity of these stays at
OOWI,ING tI. TAYI,.OR.
407
:(l()st. ' Kindly'figure out.tbe cost,and let me kno.w in what quantity you can sUpply them; and, I will place an order at once. With best regards, I am, "Yours, very truly, " 'THOMAS P. TAYLOR. "Po S. I have about 1.200 Ibs. thin gutta-percha, running 17 to 18 yds. to the pound, wbich I should lib to Bell at $1.25 per p()und.» He also sent them a sample of his proposed cheap stay, which. if 1 understand the matter correctly, did not contain gutta-percha, but made with paste or glue. The complainants telegraphed defendant, August 29th: "You are entitled to about 13,000 gross cheap stays, at 81 cents gross. Unless you stop at once manufacturing and selling cheap stays, will push suit against you." And, in reply to the defendant's telegram, "What do you mean by cheap stays. Does the stay with glue come under your patent?" complainants telegraphed: "Under your contract, you have no right to make stays like sample sent us.» The defendant replied, on August 31st, tbat this telegram put an end to negotiations, so far as he was concerned, and is cohtiiluing the manufacture of the Bridgeport stay. It is not intended to give either a f;Jomplete,and detailed statement, or a summary of the conversation, correspondence, and negotiations, as detailed by ther4efendant, JromSeptember, 1888, to Augus,t 31,1889, but to give so much as will explain' tbe leading matter of defense in the affidavits and in the argument, viz., an alleged breach of contract 9Y tl,e ,plainants ihputting upon the market their cbeap " American" stay, to the injury oftbe sale of "No. 2." Much has been attempted to be made bfthe complainants"C'onductin this regard; but the correspondence shows, to my mindthat",if the outcry which was made was not made merely to accomplish business purposes, an undue and exaggerated importance has been given to the matter. Happoors· that about 13,000 gross oftbis cheap atay,anlounting to $5;(lOO, are all that have been sold; the ,.correspondence irom complainants' telegram of January 9tl;1 to the defendant's letter of August 23d, much weakens the weight whichi$ attempted to I;>e given to this alleged breach of contract, if it does not show 'that it has no w('ight at alU :The correspondence does not now 'show t9 me that up to the present time there is an adequate reason why the (contract should not be carried out in accordance with a fair and roosonconstruction of it. Inlight discuSS tbe various matters of defense more at length, but I prefer:to postpone such discussion until full proofs have been made. Tbe defendants insist that the contract is void because it is in restraintoftrade, was unreasonable and oppressive, and attempted to create a monopoly. If the construction was true which be seeks in argument to place upon the contract, viz., that he is excluded for all future time, from the manufacture of any,sta,y produced byanyoth6r method or .by any other person, but can only manufacture the" Self-Attaching Stay,",tbe argument of the defendant would have more weight. But the contratlt was one in regard to the manner in which the parties .should exercise ,their .alleged. patent-rights, aildhad.reference merely to the manufacture of goodsund.er IfIcorrect)y the character:01 the stay which, the; defendant !
408
FEDERAL REPORTER,
proposed to make in his letter of August 23d, and a sample of which he sent to the complainants, it did not contain gutta-l'ercha or its equivalent, and its manufacture should not have been objected to by theeomplainants; but, inasmuch as, long prior thereto, the defendant had been improperly violating his agreement, I do not think that the subsequent error of the, complainants oughtto be considered an adequate excuse for his oonduct. They should, however, withdraw their opposition or objection to his manufacturing a paste stay. Let a preliminary injunction issue, restraining the defendant' from the manufacture or sale, pendente 'Zite, of stays containing a stiffening blade, with one or two layers of guttapercha and two outer layersof fabric; it being also provided that the substitution of paste or glue for gutta-percha is not, during the continuance of the injunction, to be considered a breach of it.
BURNHAM: 11. RUNKLE.
Oourt, D.
New Jeraej/.
November tIS,
ColftllAO'l'-CON8TRUCTlON-NOTATION.
employed by. raise money to be deposited· a.! a guaranty forlnlof a cOlltract awarded to defendant. borrowed the mORey from plaintiff, and deposited it, and defendant undertook to pay this money to M. if it should be for. feited. Di:lfendantfailedto perforn:l the contract, by reason of, whic11 the deposit wa,a forfeited, and 11e became liable to M. forthe amount and interest, and also liable for damages for breach of Contract. To secure release from 'liability for damages,. de. fendant ex,ecJlted a power of J.t' aut110rizing hi1;l1, to receive anytlling dU,e him under the contract, and to do anythin/l: necessary to obtain his release, etc..; and J. entered iRto an agreement with plaintiff by 'which he agreed, on behalf of d,efelldant,.t1:lat defendailt would pay to plaintiff the balancedue !;lim on account of amount loaJ:led by plaintiff to M·· lor Which defendant was responsible to said M. that defendant was bound .by the agreement to pay plaintiff the balance due ; , ' . 'r . , i..;
At Law., .Trial by the court, a jury having been waived by the stipulation of the parties. citizen of L9ndon, England, who Action by Santiago J. against .Daniel Runkle, a sues for the use of FrauciscoG. · ;citizenof New Jersey I to recover money due on a written . Babbitt & Lawrence, fOl'plaintiff· . TfaUiB ct Edwards, for defendant. WAI,F.8, J. 'fhisaction is founded on a written agreement, which was entered into by the plaintiff and defendant, and out of certain with negotiations for the loan of a large sum of transactions money to the eityof Havana, in the island of Cuba', and for obtaining the award of Ii contract to the defendant and others for the construction of water-works for supplying the city with water.. On an examination of the testimony, and It consideration of the oral and written arguments of .counsel,' the' courtfin,ds the following facts to be proved by the evidence,
