Hygienic Chemical Co. v. Provident Chemical Works

176 F. 525 | 2d Cir. | 1910

NOYES, Circuit Judge

(after stating the facts as above). The first question in this case is whether the obligation of the defendant, under its agreement to defend suits and to bear equally with the plaintiff “the cost and expense of such defenses,” required it to pay one-half the costs which the decree adjudged that the Rumford Chemical Works should recover from the plaintiff. If the agreement relates only to the cost and expense actually incurred in the conduct of the defense to the suit, it manifestly does not include these taxable costs. On the other hand, if the agreement amounts to an indemnity contract, it may embrace them.

We are unable to construe the agreement as one of indemnity. Suits were threatened against both the parties. If they had not defended jointly, they would have been obliged to defend separately or else default. They were “desirous of joining and co-operating for their mutual interest and protection.” They undoubtedly believed that by aiding each other the suits could be more economically and successfully defended. They entered into a defensive alliance. But they were not voluntarily undertaking a joint venture. Considering the agreement as a whole, we see nothing in it to indicate an intention to assume each other’s burdens — to pay jointly a decree for damages, profits, and costs, or any item thereof, which might result from an unsuccessful defense.

Nor is the clause in question, taken by itself, one of indemnity. It strains the words “cost and expense of such defenses” to hold that they embrace a judgment for costs rendered after the defenses have been concluded. The amount of the judgment rendered in an action is hardly a part of the expense of defending such action. The words “cost” and “costs” do not always mean the same thing. The word “cost” and the phrase “taxable costs” generally have quite different meanings. “Cost” may be considered as synonymous with “expense.” “Taxable costs” áre allowances made to the successful party to reimburse him for his disbursements made in prosecuting or defending a suit. But to the unsuccessful party they are o'f the same nature as the damages awarded against him. He pays them because they are an incident to the judgment, not because they are z.ny part of the expenses of his own defense.

But it is urged that the taxed costs should in this case be treated as a part of the expense of the defense, for the reason that, if there had been no defense, there would have been no costs. This reason is not entirely true. Some costs would have been taxed against the defendant, had no defense been interposed. And, if true, it cannot be regarded as a good reason. There is no ground for assuming that, in the absence of any agreement with the defendant the plaintiff would have permitted the Rumford Chemical Works to take a decree pro confesso against it. It cannot be said that suits would not have been separately defended if the agreement for mutual assistance had not been entered into.

For these reasons, we think that the trial court erred in rendering judgment for the plaintiff to recover one-half of the decree for costs.

The next inquiry relates to the defendant’s counterclaim. The evident object of the agreement was that the parties should unite in the defense of suits, so as to test the validity of the patent. When the test suit had been decided by this court, and certiorari had been, denied by the Supreme Court, we think that the contract did not contemplate new and further litigation.' Its purpose had been fulfilled. There was no reason why the plaintiff should have borne any part of the subsequent expense in the second suit of trying the question whether the defendant had made or sold the infringing article..

But the defendant apparently contends that the recent decision of the Supreme Court of the United States in the second suit affords ground for the claim that the defendant was not bound by the decision of this court in the test suit, and' could try the question of the validity of the patent on its own account. We do not so interpret that decision. It was wholly based upon the insufficiency of the evidence actually offered to show privity, and the Supreme Court intimated that, had the testimony in this case been present, its conclusion would have been different. And in view of the terms of the agreement in question, it is impossible to see why the defendant was not bound by the decree in the test case. It participated in, contributed to the expenses of, and had full right of control over, such litigation. The decision of the Circuit Court in dismissing the counterclaim was right.

The judgment of the'Circuit Court in favor of the plaintiff is modified, by reducing it to $156.45, with 'interest from February 1, 1905, and costs, and, as so modified, -is affirmed, without costs in this court.