180 N.Y. 280 | NY | 1905
Lead Opinion
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *283 In 1891 the plaintiff's assignor, a corporation bearing the same name as that of the plaintiff, but incorporated under the laws of the state of New Jersey, was doing a large business in furnishing strip tickets, which, printed on both sides and consecutively numbered, were used by the elevated railroads, the ferries and other transportation companies. The defendant, the Kidder Press Manufacturing Company, at this time manufactured a press known as the "Kidder Perfecting Press," the distinguishing feature of which was its ability to print on both sides of the paper by successive operations *285 but without taking the roll of paper from the press. This rendered the press especially available in the printing of strip tickets, but by itself the machine could not produce such tickets which required to be consecutively numbered and the space between the tickets perforated so that they could be easily separated. As found by the trial court several devices were invented by Mr. Kendall, representing the bank note company, and Mr. Kidder of the press manufacturing company, by the attachment of which to the press the latter was able to print, number and perforate tickets. The devices or attachments were not patented, nor does it appear by the evidence that they were patentable. Under these circumstances the two companies on the 12th day of October, 1891, entered into a written agreement whereby the Kidder Company agreed to manufacture and deliver to the bank note company another press in addition to the one theretofore furnished, with numbering and perforating attachments adapted to the printing of strip tickets, for the sum of $4,500. The details of the press are specified in full in the contract, but are not material to this controversy. The contract contains these further provisions:
"It is hereby agreed that the price of the press shall be the sum of Four thousand Five hundred dollars (4,500), but that the amount of this contract shall be the sum of Six Thousand Dollars (6,000), the additional Fifteen hundred dollars ($1,500) being a payment to the Kidder Press Company by the New York Bank Note Company for an insurement, protection, guarantee, contract, and delivery to the Bank Note Company of a monopoly of all future machines built or that may be built by the Kidder Press Company or any party on the lines of its patents on the press herein contracted for, upon which there can or may be printed strip tickets substantially the same as those now printed by the New York Bank Note Company or of similar form or design, to wit:
"The Kidder Press Company hereby agrees not to sell any presses on which strip tickets may be printed, as aforesaid, that they make, control, are interested in the patents on, may *286 be interested in the patents on, or have been interested in the patents on, to any one except the New York Bank Note Company, the object being to insure the said press or presses against being used for the printing of strip tickets of form, design or purpose similar to those now printed or that may be printed by the Bank Note Company upon the press now operated by it, purchased from the Kidder Press Company.
"But there is nothing in this contract, nor is it the intention of either of the contracting parties, to limit the sale of this press alluded to above either as the one now used in the Bank Note Company purchased from the Kidder Press Company, or the one hereby contracted for to be delivered to the Bank Note Company by the Kidder Press Company, for any purpose except for printing of strip tickets substantially the same as those now made by the Bank Note Company. On the contrary, it is the pleasure of the Bank Note Company, its officers and directors, as well as, presumably, the profit of the Kidder Press Company, that it shall make, sell, deliver and collect the money for as many presses similar to the one now in use by the Bank Note Company, heretofore adverted to, or the one hereby ordered from the Press Company, and shall enjoy all of the emoluments of the utmost possible extension to the Press Company's business by reason of the sale of printing presses identical with those herein alluded to.
"The Fifteen hundred dollars ($1,500) paid or to be paid to the Kidder Press Company, as herein mentioned, is for the purpose of securing to the New York Bank Note Company whatever advantages may arise from the impossibility of any of its competitors obtaining or using a press built by the Kidder Press Company of substantially the same design as those which the Bank Note Company is contemplating using in its strip ticket business aforesaid.
"The contract shall remain in force not to exceed a term of twenty years from the date of this contract.
"The Press Company hereby agrees not to make alterations or additions to any existing presses that they have already built that would enable the press to print strip tickets without *287 requiring the parties owning the press, or might buy it thereafter, to make the same terms and agreements regarding it as though it were a new machine.
"The Kidder Press Company hereby states that the only presses of their manufacture upon which strip tickets can be possibly run are as follows:
"One owned by Allen, Lane and Scott, of Philadelphia, and "One owned by Weed, Parsons and Company, of Albany.
"And the Kidder Press Company hereby agrees not to sell any press to either of the two foregoing concerns without an agreement which shall bring the presses that they now have, as above enumerated, capable of printing strip tickets, within the same restrictions as though these two presses above enumerated were sold to them new, subsequent to the date of this contract.
"It is hereby agreed and assented to by the Kidder Press Company and the New York Bank Note Company that the most feasible and proper way to protect the interests of the Bank Note Company in and to the proper control and ownership hereby acquired in the Kidder Perfecting Press, which is the technical name by which the machinery herein adverted to is known, is that whatever sales of this press or presses are made by the Kidder Press Company shall be made to the New York Bank Note Company for the account of the party desiring to use the press or presses, and the New York Bank Note Company shall execute a perpetual lease to said third party for such money as the Kidder Press Company shall nominate; but the New York Bank Note Company shall in nowise part with the title in and to the machine delivered, but shall retain its actual ownership of the press or presses under agreements preventing its use for all purposes except strip tickets within the United States; but that the presses shall not under any pretext whatever be taken outside of the jurisdiction of the United States of America during the said twenty years. And this form of agreement, as substantially set forth herein, it is hereby agreed by the Kidder Press Company shall be used in whatever sales are made of its Perfecting *288 Presses. And the New York Bank Note Company shall deliver to the Kidder Press Company the full consideration it (the Press Company) may nominate, and the Bank Note Company shall have its own agreements with the purchaser in accordance with the above plan, and litigate at the Bank Note Company's own expense the agreements with said purchaser or purchasers if the agreements are broken."
The Kidder Company furnished the press under this contract. The bank note company paid the full sum of six thousand dollars. In 1892 the defendant the Hamilton Bank Note Company, a business competitor of the plaintiff, obtained the contract for printing the elevated railroad tickets. In December of that year it purchased from the Kidder Company a perfecting press substantially like the one sold to the plaintiff's assignor, but without the strip ticket attachments and not subject to any restriction against its use in the printing of such tickets. In December, 1892, the plaintiff's predecessor, the New Jersey corporation, assigned all its property and contracts to the plaintiff, a corporation organized under the laws of West Virginia and thereupon the New Jersey company was dissolved. The Kidder Company had refused to furnish to the Hamilton Company the strip ticket attachments, but after the dissolution of the New Jersey corporation, and in the autumn of 1893, it not only furnished such attachments, but also constructed and delivered to the Hamilton Company an additional press with attachments complete. The trial court held that the contract was assignable and that all rights of the New Jersey corporation under it had passed to the plaintiff; that the sales by the Kidder Company to the Hamilton Company constituted breaches of the agreement; that at the time of the purchase of the first press the Hamilton Company had no knowledge of the contract rights of the plaintiff but that the subsequent purchases of the attachments for the first press and of the second press were made with knowledge of the plaintiff's rights. An interlocutory judgment was rendered enjoining the Hamilton Company from using either press for the purpose of printing strip tickets *289 and from selling or parting with the same except under valid restrictions prohibiting such use. Judgment was also awarded to the plaintiff for the profits made by the Hamililton Company in the printing of strip tickets on such presses, and a reference ordered to ascertain such profits, and the Kidder Perfecting Company was enjoined from selling any more presses without proper restrictions against their use in strip ticket printing. By the judgment, as amended by the trial court, the profits for which the defendants were directed to account were restricted to the time subsequent to the purchase of the strip ticket attachments placed on the first press.
From this judgment both parties appealed to the Appellate Division. That court modified the judgment by extending the period for which the defendants were directed to account back to the time of the sale of the first press, holding that the trial court erred in its finding that the press was purchased by the Hamilton Company without knowledge of the plaintiff's rights. That court modified the judgment by directing that the plaintiff recover of the defendants damages sustained by it by the breaches of the contract, which damages should be "the profits made by the defendant the Hamilton Bank Note Company upon all strip tickets printed by it upon the two aforesaid presses purchased from the Kidder Press Manufacturing Company, known as the Kidder Perfecting Press on proof before the referee that the Kidder Perfecting Press was the subject of a monopoly for strip ticket printing by virtue of outstanding patents, or was the only available machinery for printing strip tickets, or on proof that the Hamilton Company could not have obtained the contracts to print said tickets, except by means of the Kidder Perfecting Press, and in the absence of such proof that the damages shall be the saving in profit on said tickets by the use of the Kidder Perfecting presses, from the profits it would have made by printing the same on the press in its possession or known to and purchased by it prior to December 29th, 1892." It will be noted that one of the effects of this modification was to render the Hamilton Company liable for any profits obtained *290 through printing strip tickets on the press purchased by it in December, 1892, the Appellate Division holding that the finding of the trial court that such purchase was made without knowledge by the Hamilton Company of the plaintiff's rights was against the weight of evidence. A reference held under this judgment resulted in a report awarding the plaintiff six cents damages. This report was confirmed by the Special Term and final judgment thereon was entered. Again, both parties appealed to the Appellate Division. On the plaintiff's appeal the judgment was reversed and a new reference ordered to ascertain its damages. The second reference resulted in an award to the plaintiff for $73,058.86 damages, with interest thereon, amounting in the aggregate to $105,248.38. A motion to confirm this report was denied at Special Term. On appeal that order was reversed by the Appellate Division. The award of the referee was modified so as to award the plaintiff the sum of $60,546.95 with interest from November, 1902, the date of the referee's report. Final judgment was entered on this decision. From that judgment both parties appealed to this court, the plaintiff claiming that the award to it should be increased by a further allowance of interest.
On this record it is quite plain that an error has been committed in practice which requires a reversal of the judgment below and a new trial of the cause. As already stated, the trial court found as a fact that the defendant the Hamilton Company, when it purchased the first press, had no knowledge of the rights of the plaintiff's predecessor under its contract with the Kidder Company. The Appellate Division not only reversed this finding of fact, as it was authorized to do, but it made a finding of fact to the contrary and modified the interlocutory judgment so as to accord with the new finding. This the Appellate Division had no authority to do, but should have ordered a new trial to which the defendants were clearly entitled. In this respect the practice in this case before us has been substantially the same as that condemned by our decision in Van Beuren v. Wotherspoon
(
As the parties have been in litigation for some ten years, and the defendants challenge the right of the plaintiff to maintain the action at all, as well as the rule of damages established by the decisions of the Appellate Division, question which will arise on any new trial in the same manner as they have on the trial already had, we think it but fair to dispose of those questions so that the parties may not be remitted to a litigation of indefinite continuance. The appellants first claim that the contract between the Kidder Company and the plaintiff's predecessor was personal and not the subject of assignment. This claim was fully discussed by the Appellate Division on the appeal from the interlocutory judgment. (
The appellants claim that the contract itself was void, as violating the provisions of the act of Congress known as the Anti-Trust Act and as in restraint of trade. The objection that the contract contravened Federal legislation was not made in the courts below and cannot be raised in this court for the first time. (Purdy v. Erie R.R. Co.,
The last question to be considered is the rule of damages. The plaintiff has been awarded the whole profits that accrued to the Hamilton Company under its contract with the elevated railroad company for printing strip tickets, so far as those tickets were printed on these presses. We think this was erroneous. As already said, the plaintiff had no monopoly of printing strip tickets. The most that can be said is that by its exclusive possession of a particular device it was able to do the work at a less cost than its competitors. The defendant, the Hamilton Company, had obtained the contract from the elevated railroads before it entered into any negotiations with the Kidder Company or made any purchase from it. The profits accruing to it from that contract did not necessarily or presumptively proceed from the use of the Kidder presses. Such profits involved many other elements.First, the contract price may have been large and generous, and the contract, therefore, profitable under any circumstances.Second, there may have been either a profit or loss in the purchase of the materials used. The same is true also as to the cost of labor, rent, expenses of conducting business. These items, which properly constitute no factor of the plaintiff's damages, form the basis *296
of the award made by the courts below. If we assume that the other elements of the cause of action were properly established, then the plaintiff was entitled to recover not the profit made by the defendant, the Hamilton Company, under its contract, but the profit that company made from the use of the restricted presses; that is to say, the difference between the cost of printing the tickets by those presses and the cost of printing them by other presses or devices obtainable by the Hamilton Company, and the burden of proof was on the plaintiff to establish such difference in cost. This is the rule established by the Supreme Court of the United States in patent cases, and the plaintiff's rights to the exclusive use of the press for strip ticket printing under this contract cannot be greater than if it held such right under letters patent. In Mowry v. Whitney (14 Wall. 620) the measure of damages was held to be "what advantage did the defendant derive from the use of complainant's invention over what it had in using other processes then open to the public and adequate to enable him to obtain an equally beneficial result." (Approved, Tilghman v. Proctor,
I advise a reversal of the interlocutory and final judgments and that a new trial be granted, costs to abide event.
Concurrence Opinion
I concur with Chief Judge CULLEN's opinion that the modification by the Appellate Division was, in effect, a reversal of the finding of fact by the trial court, that the Hamilton Company purchased the press of the Kidder Company without knowledge of the rights of the plaintiff's predecessor under its contract with the Kidder Company. That was a question of fact upon the evidence and if the Appellate Division deemed that the evidence was insufficient to sustain it, and that it warranted a contrary finding upon the subject, it might have directed a new trial of the issue. It could not, (as its opinion clearly shows that it has done), order a judgment for damages, which, necessarily, is based upon a different determination as to the issuable facts. I, also, concur with his opinion in the view that the contract was not unenforceable, as being in restraint of trade. It imposed no restraint upon the Kidder Company in the sale of presses. It created no monopoly. It operated, simply, to protect the plaintiff's predecessor in the enjoyment of its rights in a press, which, by the joint skill and industry of the parties, accomplished certain extraordinary results in the process of printing tickets. It prevented a dangerous competition, or rivalry, in the business of the plaintiff's predecessor and the loss of a benefit, to which it was entitled upon legitimate business principles. All competition was not excluded; but such competition, only, as would prevent that company from reaping the profits of the possession of a press, which, by the addition *298 of the particular devices, made possible economies in the time and cost of printing strip tickets. The restraint was not upon the manufacture and sale by the Kidder Company of its presses; but, only, upon the use of a machine for the manufacture of strip tickets by the purchaser. I think it was quite lawful for the party, in contracting for the purchase of a press, to contract, further, for the protection of a business, which depended for its success upon the use of the press with peculiar attachments, or devices.
I, also, concur with the opinion, in what is said upon the error in the adoption of a rule of damages, which gave to the plaintiff all of the profits accruing to the Hamilton Company under its contract for the printing of tickets upon the Kidder presses. I think the burden of proof rested upon the plaintiff to establish what saving, if any, resulted to the Hamilton Company and, hence, what profits, from the use of the Kidder presses, and the terms of the order of the Appellate Division, with respect to the interlocutory judgment referring for proof of damages, appear to have so placed it.
But I am compelled to differ in opinion with respect to the question of the assignability of this contract. In my opinion, it was assignable and passed to the present plaintiff upon the transfer to it by its predecessor, the New Jersey corporation. The plaintiff, as it was found by the trial court, succeeded to the business of the New Jersey company and became possessed of all its assets and property. It was, in fact, but a reorganization of the old New York Bank Note Company, under the laws of another state, to take over the business and effects of that company. How the element of personal trust, or confidence, which may confer upon the agreements of parties the character of non-assignability, could be found in this contract I am unable to understand. It did not prevent an assignment by its language and what are the features, which make it a non-assignable instrument? They are said to be in those provisions, which prescribe that the title to presses manufactured by the Kidder Company for others should be vested in the New York Bank Note Company, which should transfer them *299
by form of leases; accounting to their manufacturer for the price received. But, while that may be regarded as creating an agency, it was not one as ordinarily constituted; for the bank note company did not procure the purchasers. The arrangement was one made, altogether, for the benefit of that company and was intended as its protection against an unfair business rivalry. It was the "most feasible and proper way to protect its interests," as the contract terms it. The moneys proceeding from the sale of presses did not belong to the bank note company; but were to be handed over to the Kidder Company. The plaintiff was, of course, a different corporate entity from its New Jersey predecessor; but it possessed the same business interests; had the same corporate purpose and was as capable of performing the duties imposed upon it by the contract, as was its assignor; for the main obligation was to pay over moneys received from purchasers of presses. The work of a corporation is done through its servants, or agents, and, therefore, the contract could not involve the personal relation, or confidence, which might be predicated of it, where it was to be performed by a natural person. (New England IronCo. v. Gilbert Elev. R.R. Co.,
I vote, therefore, for the reversal of the judgment upon the other grounds discussed in the chief judge's opinion.
O'BRIEN, BARTLETT, HAIGHT and VANN, JJ., concur with CULLEN, Ch. J.; GRAY, J., reads for reversal; WERNER, J., absent.
Judgments reversed.