Hobbie v. Jennison, 40 F. 887

40 F. 887 | U.S. Circuit Court for the District of Eastern Michigan | 1889

Brown, J.

Plaintiffs’ position in this ease is that there was cither a sale of the steam-pipe to Harvey & Son, with the knowledge that they were to resell to the Hartford Company, in which case the defendant would be held liable as an infringer, under the ruling in Hatch v. Hall, 30 Fed. Rep. 613, and Hatch v. Adams, 22 Fed. Rep. 434; or that Har-vev was the agent of Ayrault, Jennison & Co. in selling to the Hartford Company, and that such sale was made in the state of Connecticut, in violation of plaintiffs’ rights as the assignee of this territory. But about the only evidence which tend^ to show an agency on the part of Harvey 1» the agreement of May 12lh, wherein Ayrault, Jennison & Co. agreed to pay Harvey & Son a commission of 10 per cent, upon all orders they might obtain for this casing. This agreement, however, was made a month after Harvey had notified- them of his proposed contract to put in four miles of pipe for the Hartford Company, and a week after his proposed contract-with such.company had been accepted; and was undoubtedly made for the purpose of securing Harvey’s influence in the sale of the pipe, not only in Hartford, but in other eastern cities. It is pertinent in ihis connection to notice that, on the 8th of May, Harvey wrote to Loomis, saying that he was sending all over for prices for iron pipe to be delivered at Hartford. In fact, Harvey, in his testimony, states that, before he had any communication upon the subject with Ayrault, Jennison & Co., he had closed the contract with the Hartford Steam Company to lay several miles of pipe for them. On the day following his contract of May 12th, Harvey writes to Loomis:

“I have been up to Saginaw, and have made inquiries about prices, and the best that they will do now is $20 per thousand, board measure, delivered on board cars at Saginaw. But this company have split partnership, and there will be two firms manufacturing this next week, and lam figuring with them both, and will try to get it cheaper. L am also figuring about freight from different points, so as to get the cheapest freight to Hartford.”

We think the other evidence completely rebuts any presumption of agency arising from the contract of May 12th. Not only does the correspondence between Harvey and the Hartford Company indicate that he was negotiating with defendant for them, but the pipe was shipped directly to them, and, except in the first instance, upon their order, and was paid for by them, as well as the freight from Bay City to Hartford. The books of Ayrault, Jennison & Co., which were also putin evidence, show that the account was kept with the Hartford Steam Company, a general statement of which account was sent them in a letter of November 19th. Considered in the light of surrounding circumstances, wo are not prepared to accept the theory that Harvey & Son were the agents of the defendant, or that the sale of the pipe was made to them. Indeed, Harvey himself swears that he was acting as the agent of the Hartford Company in getting prices,-and that Loomis relied upon him in the matter. We regard the contract of May 12th simply as an instance of a custom which may he common enough among purchasing agents, but to which no court has yet been found to lend its sanction. He was evidently acting for the Hartford Company, which was relying- upon his judgment, zeal, and discretion in making the purchase, and had no right to take a commission from the defendant without at least disclosing' that fact to his principal. Mechem, Ag. § 943; Insurance Co. v. Insurance Co., 14 N. Y. 85; Scribner v. Collar, 40 Mich. 375.

As the pipe was delivered by defendant’s firm upon the cars at Bay City, upon the written order either of'Harvey & Son or the Hartford Company, there can be no serious question that this was a sale and delivery at Bay City, although, if the order had been verbal, it would probably be held, under the statute of frauds, that the property in the pipe did not pass until it had been received and accepted by the steam company in Hartford. This was the conclusion of Judge Coxe in Hobbie v. Smith, 27 Fed. Rep. 656, arising out of a similar transaction by the defendant. See, also, U. S. v. Shriver, 23 Fed. Rep. 134; Backman v. Jenks, 55 Barb. 468, and other cases cited in Judge Coxe’s opinion.

The ease, then, reduces itself to the simple question whether, conceding the sale to have been made at Bay City, the defendant can be held as an infringer by reason of his knowledge that the property was to be used in a territory of which plaintiffs held a monopoly; for we take it to be clear that if the sale had been innocently made, that is, with the expectation that the pipe was to be used in defendant’s own territory, there could be no doubt that he would not be chargeable. Were this an original proposition, we should be strongly inclined to hold that the vendor of a patented article, who sells the same for the purpose of or knowing that it will be resold or used in territory belonging to another, is equally amenable to suit as if the sale were made in such other territory. The patent laws give to the patentee the exclusive right to use, as well as to manufacture and sell, within the territory properly belonging to him; but it is difficult to see how this right can be properly protected, if the assignee of other territory, who may perhaps possess greater facilities, superior energy, or a larger amount of capital than himself, may flood his territory with the patented article, by means of the easy device of selling and passing the property within the territory owned by himself. Indeed, the gist of the offense to the plaintiffs in this case consists, not more in the actual sale in their territory, than in the use of the article sold, since their own market has been impaired to the exact amount of the profits they would have realized from such sale if made by themselves. This seems to us not only a just and reasonable construction of the law, but in line with the long list of cases which hold that where a party makes one or more elements of a patented combination, with the intent that they shall be used in the completed combination, he is liable asan infringer. Richardson v. Noyes, 2 Ban. & A. 398; Bowker v. Dows, 3 Ban. & A. 518; Wallace v. Holmes, 9 Blatchf. 65; Saxe v. Hammond, 1 Holmes, 456; Manufacturing Co. v. Zylonite Co., 30 Fed Rep. 437; Schneider v. Pountney, 21 Fed. Rep. 403; Travers v. Beyer, 26 Fed. Rep. 450.

The supreme court, however, seems to have taken a different view of this very question in the case of Adams v. Burke, 17 Wall. 453. In this case an undertaker purchased patented coffin lids of certain manufacturers, who held the right from the patentee to manufacture and sell in a circle whose radius was 10 miles, having the city of Boston as a center. The undertaker, however, lived outside of this circle, within a territory owned by the plaintiff, and made use of the coffin lids .in his business. The owner of the territory in which he carried on his business brought suit against him as an infringer, and the court held that, the sale having been made by a person who had full right to make, sell, and use within his own territory, such sale carried with it the right to the use of the machine without as well as within such territory. The action in this case was brought against the user, but the court announced a principle of law which is equally applicable to the seller. If the user of the article is not liable to the patentee, it is because he purchased it of a person who had the legal right to sell it, and, if it were legal for him to buy, it was equal]y legal for the other party to sell. In the opinion of the court, as well as the dissenting opinion in this case, it is stated in substance that the question raised was whether an assignment of a patented invention for a limited district, such as a city, county, or a state, conferred upon the assignee the right to sell the pal ented article to be used outside of such limited district. We have sought to distinguish this case from the one muter consideration, by searching for evidence that the sale was made under the belief that the property was to be used within the territory of the seller; but neither in the report of the case in the supreme court, nor in the circuit, (1 Holmes, 40,) is there an intimation that the sale was made with the expectation that the property would be used or consumed within the territory. Indeed, the inference from the fact that the purchase was made by an undertaker, whose place of business must have been knoun to the manufacturer, is decidedly the other way. If the sale had been made innocently, the importance of this fact would certainly not have escaped the attention of the court and counsel; and we think wc are bound to accept the case as authority for the broad proposition that the sale of a patented article by an assignee within his own territory carries the right to use it everywhere, notwithstanding the knowledge of both parties that a use outside of the territory is intended. The case was followed by Judge Coxe in Hobbie v. Smith, 27 Fed. Rep. 656, and by Judge Sawvee in McKay v. Wooster, 2 Sawy. 373. It may, perhaps, admit of some doubt, especially in view of the strong dissenting opinion in that case, whether this doctrine will be adhered to should the question ever be reargued; but, of course, the case is the law unto this court, and must be followed, until overruled by the court which pronounced the opinion. We think it covers the case under consideration, and consequently there must be a judgment for defendant, with costs.