Brusie v. Peck Bros.
54 F. 820
2d Cir.
1893
Check Treatment
SHIPMAN, Circuit -Judge,

This is a writ of error to tbe circuit court for tbe southern district of New York, which entered judgment for the defendant upon the verdict of the jury in its favor. The important facts in the case are as follows: On August 18,1873, the plaintiff and the defendant, a Connecticut corporation, entered into a written contract, whereby the plaintiff, who was the owner of letters patent for a lawn sprinkler, granted to the defendant the sale and exclusive right to manufacture and sell the said lawn sprinkler under said patent thereafter on the terms and conditions following: The defendant to manufacture and sell the said lawn sprinklers of good material, made in a workmanlike manner, to use its best endeavors to introduce them and increase their sale, to pay to the plaintiff, Bussell Brusie, a royalty of §2 for each sprinkler known as “No. 1” so sold, and to sell said No. 1 sprinklers at a price not less than ?15 each, unless said price should be changed by the joint agreement of the plaintiff and defendant. The contract also provided that said Brusie shall have the privilege of selling said sprinklers on the condition that he shall procure the same to be made by the defendant, and should pay it a profit of 28 per cent, on the cost of manufacturing the same; no royalty to be paid on the sprinklers so made by the defendant and furnished to said Brusie to be sold by him. in the following year serious differences arose between said parties. The plaintiff was of opinion that the defendant had violated its agreement, and forbade it to manufacture any more of the machines, but manufactured and sold them on his own account, at a reduced price; and the defendant thereafter manufactured and sold machines which the plaintiff regarded as an infringement of Ms patent.

In December, 1875, the plaintiff brought an action upon this contract against the defendant before the supreme court; of the state of New York, in which both equitable and legal relief were sought. The complaint prayed for a a injunction against selling infringing sprinklers, the cancellation of tbe contract, for damages, and an account of sales. By direction.of the court the action was stricken from the equity calendar, was set down for trial as an action at law, and the question of the amount due for royalties was submitted to a jury. One of the defenses was the non-infringement of the letters patent by the new lawn sprinkler which the defendant manufactured subsequently to the alleged rescission of the contract by the plaintiff. The letters patent were not in evidence, but the question of similarity between the respective machines was tried, and the following question was. submitted to the jury: “Do each of the three lawn sprinklers, Exhibits B, 0, and D, substantially embody the same device or idea, and accomplish practically the same results by means of the same mechanical principles?” I) was the Brusie sprinkler, B and 0 were the two “Peck sprinklers.” The jury answered in the affirmative, and rendered a verdict for the amount of royalties which were conceded to be due, if anything was due.

This action was one at law to recover the amount of royalties alleged to be due by the manufacture of the infringing sprinkler *822after December 10, 1875. Tbe plaintiff introduced tbe judgment record in tbe case in tbe state court, witb oral evidence of tbe question submitted to and answered by tbe jury, as conclusive evidence that tbe sprinkler known as “Peck’s Improved,” wbicb was manufactured after tbe alleged rescission, was, in substance, tbe patented machine. Tbe circuit judge admitted tbe evidence, but refused to regard it as conclusive, and submitted to tbe jury tbe question of infringement as a question of fact. Another defense was tbe alleged failure of tbe plaintiff to observe on bis part tbe conditions contained in tbe contract. Tbe circuit judge charged that if tbe plaintiff, without any justification arising from tbe previous conduct of tbe defendant, entered ugon tbe market as a competitor witb it in making these sprinklers, and selling them himself, be was not entitled to recover in this action, and submitted to the jury tbe question whether tbe plaintiff violated tbe contract without justification arising from the defendant’s previous nonperformance of its agreements. The jury returned a verdict for tbe defendant. Tbe assignments of error present, in various forms for review, tbe correctness of tbe action of tbe circuit judge, in tbe two particulars which have been named.

1. Tbe conclusiveness of tbe judgment record in tbe state court. Tbe jury found that tbe three lawn sprinklers embodied tbe same device, and accomplished tbe same result by means of tbe same mechanical principles. They did not find that tbe alleged infringing machines embodied in their “structure and operation the substance of tbe invention” described in tbe letters patent. Curt. Pat. § 808. Tbe device and tbe mechanical principles, wbicb were open to tbe public, might have been in each machine, and therefore the proper question for determination was whether mechanism constituting tbe invention described in and protected by tbe patent, and operating in substantially tbe same way, and producing tbe same result, was used in tbe new machines. If the invention of tbe letters patent was not used, it was immaterial bow similar tbe two machines were in other respects. Tbe question whether tbe invention of the patent was used by tbe defendant was not actually determined in tbe state court, although it could have been; but it is only in respect of matters actually in litigation and determined that tbe judgment is conclusive in another action. Cromwell v. County of Sac, 94 U. S. 351.

2. The second alleged error relates to tbe validity of tbe defense by reason of tbe plaintiff’s unjustifiable violation of tbe contract. This part of.tbe case depends upon tbe question whether tbe respective undertakings of tbe two parties to tbe contract shall be construed to be independent, so that a breach by one party is not an excuse for a breach by the other, and either party may recover damages for tbe injury be has sustained, or are dependent, so that a breach by one relieves tbe other from tbe duty of performance. Kingston v. Preston, Doug. 634. “Where tbe agreements go to tbe whole of tbe consideration on both sides, tbe promises are dependent, and one of them is a condition precedent to tbe other. If tbe agreements go to a part only of tbe consideration on both sides, *823the promises are so far independent.” 2 Pars. Cont. 189. By the contract which is the foundation of this suit Brusie granted to the defendant the sole and exclusive right to manufacture the patented sprinkler, and the sole right to sell, except that Brusie could sell sprinklers manufactured Tby the defendant, paying it 25 per cent, profit upon the cost of such manufacture. The defendant promised to manufacture sprinklers of good material, to use its best endeavors to introduce the same, to pay a royalty of #2 upon each machine sold, and not to sell below $.15, unless the price was changed by joint agreement. Brusie, having manufactured and sold at reduced prices, calls upon the defendant to pay a royalty of $2 upon every machine which it sold, and to recover damages for Brusie’s violation of the contract in a separate action. The contention' of the plain tiff would have weight if Brusie’s fulfillment of his part of the contract had not been vital to the ability of the defendant to fulfill any part of its contract. The plaintiff bound the defendant not to sell at a less price than $15, unless the price should be changed by joint agreement. Hp thereby impliedly promised that the price imposed upon the defendant should be maintained, unless altered by joint consent. The defendant’s ability to pay the royalty depended upon noncompetition by Brusie at reduced prices. Tie could not become, as he did, the defendant’s active competitor, lower prices without consent, and still compel the defendant to sell at not less than SI5, and pay a royalty of $2 per machine. This breach by Brusie of his undertakings, when found to be unjustifiable by any previous conduct of the defendant, relieved it from the obligation which it had assumed. There was no error in the charge, and the judgment of the circuit court is affirmed.