Thе questions hero at issue arise upon three motions to dismiss the hill of complaint, a separate motion being filed by each of the three defendants, appearing specially for the purpose of these motions only. Complainant has also filed a motion to be allowed to bring one of the defendants, Ketchpel, within the jurisdiction of the court by substituted process, pursuant to the provisions of section 57 of the Judicial Code (28 IJSCA § 118).
A number of distinct questions of venue are presented by the three motions which will be hereinafter separately considered. In order that these questions may bo fully understood, it is necessary first to summarize the allegations of the rather lengthy bill of complaint. These may be summarized as follows : The complainant is a Delaware corporation engaged in the business of manufacturing and selling locomotive stokers and fuel conveyors, with its principal place of business in Erie, Pa. Defendant Lower is a citizen and 'resident of the state of Maryland. Defendant Ketehpel is a citizen and resident of the state of Pennsylvania, and the third defendant, the Lower Stoker Company, is a Pennsylvania corporation having offices and *680 being engaged in business similar to that of complainant, in both Pennsylvania and Maryland. Both defendant Lower and Ketchpel were employed, for a number of years, by the Locomotive Stoker Company, a Pennsylvania corporation, which was engaged in the same kind of business. The duties of these defendants were primarily to develop the Locomotive Stoker Company’s inventions and to initiate and prosecute, for the benefit of that company, applications for patents upon inventions made by the company’s employees. Pursuant to contracts (not claimed to be in writing) between them and the company, any inventions which they might make- while in the company’s emрloyment became the property of the company, and they obligated themselves to obtain patents thereon whenever possible and to vest the ownership of such patents in the company. In February, 1928, the company assigned to the complainant all its right, title, and interest in all inventions relating to stokers made by these two defendants while employed by the company, both defendants being fully advised of this assignment. At the same time they both entered the employment of the complainant, where Ketchpel continued until March 15, 1928, and Lower until May 31, 1928. Upon his resignation, Ketchpel became an employee of Lower, even while Lower was still working for the complainant. On June 22, 1928, defendant Ketchpel filed an application for a patent upon an alleged invention in locomotive stokers which forms the basis of the present suit. This application Ketchpel immediately .assigned -to Lower. The original written assignment is now in the possession of defendant Lower in Maryland. Defendant Ketchpel admits that his alleged'invention was first conceived by him while he was employed by the Locomotive Stoker Company, as evidenced by his sworn statement which forms part of the record in an interference proceeding in the Patent Office, between his application and a patent held by the complainant, as assignee of the Locomotive Stoker Company.
At or about the time that Ketchpel made the aforesaid assignment, defendant Lower organized the Lower Stoker Company for the purpose of manufacturing and selling stokers, made in accordance with the alleged invention covered by the application which Ketchpel had assigned to him. A number of these stokers were manufactured'and sold to potential customers of complainant, the latter having no knowledge of the date when Ketchpel first' conceived his alleged invention, until November 22, 1929, after which complainant negotiated with defendant Lower for the restoration of its rights to the alleged invention in controversy, but settlement was not reached and the present suit- was filed. The complainant further alleges that both defendant Lower and Ketchpel practiced deception by their concealment of the alleged invention from the Locomotive Stoker Company and its assignee, the complainant, and were otherwise fraudulent with respect-to their use and development of this alleged invention.
The specific relief prayed for in the bill of complaint may be summarized as follows: (1) A decree that complainant is the sole owner of the alleged invention and application; (2) that all three of the defendants be required to release any interest therein to complainant; (3) that they bе required to account to complainant for all profits which they may have derived from the alleged invention and application, and also to account in damages for such'injury as complainant may have suffered by virtue of their wrongful manufacture and sale of stokers under the alleged invention and application; and (4) injunctive relief against all the defendants with respect to manufacturing, selling, or otherwise- dealing in stokers designed in accordance with the alleged invention and application.
Taking up, first, defendant Ketchpel’s motion to dismiss the bill of complaint, that motion is based upon the ground that, since he is a resident of Pittsburgh, Pa., and since plaintiff is a Delaware corporation, this court has-no jurisdiction over him in the present suit,' because, being founded solely on the fact that it is an action between citizens of different states, it is not brought in the district of the residence of either the plaintiff оr the defendant, as it must be, according to section 51 of the Judicial Code (28 USCA § 112) the pertinent provision of which is as follows: “ * * * Where the jurisdiction is founded only on the fact that the action is between citizens of different States, suit shall be brought only in the district of the residence of either the plaintiff or the defendant.” But complainant contends, through its own special motion, that jurisdiction attaches by reason of substituted service having been obtained upon Ketchpel according to the provisions of section 57 of the Judicial Code (28 USCA § 118), which are as follows: “When in any suit commenced in any district court of the United States to enforce any legal or equitable lien upon or claim to, or to remove any incumbrance or lien “or cloud upon the title to real or personal property within the district where such suit is brought, one or *681 more of the defendants therein shall not be an inhabitant of or found within the said district, or shall not vоluntarily appear thereto, it shall be lawful for the court to make an order directing such absent defendant or defendants to appear, plead, answer, or demur by a day certain to be designated, which order shall be served on such absent defendant or defendants, if practicable, wherever found, and also upon the person or persons in possession or charge of said property, if any there be; or where such personal service itj^on such absent defendant or defendants is not practicable, such order shall bo published in such manner as the court may direct, not less than once a week for six consecutive weeks. * * * ”
The court concludes, for the following reasons, that the motion of defendant Ketehpel must he granted and complainant’s motion must be dismissed. Section 57 of the Judicial Code is not applicable to the present situation. The express language of thаt section requires as a condition precedent to its being invoked that there shall be “real or personal property within the district where such suit is brought.” A patent does not give to the patentee anything more than an intangible property interest, namely, the right to exclude others from the use of the patent. Motion Picture Co. v. Universal Film Co.,
That section 57 of the Judicial Code may not be invoked against defendant Ketehpel is affirmed by the decided weight of authority. The earliest ease, decided in 1890, is Non-Magnetic Watch Co. v. Association, etc.,
“This is an application for an order directing service of process upon the defendant, a Swiss corporation, by publication. The petition states that the suit is brought to remove a cloud upon ‘the title to certain letters patent’ which it is claimed are the property of the complainant corрoration, or rather of its receiver, and which ‘original letters patent, the subject-matter involved in this suit, are in possession of (such receiver).’ This statement is not technically accurate. What the suit is concerned with is the title to the patent itself, — to the patent-right; and the mere custody of the letters evidencing the fact that such patent-right was originally granted to a particular inventor is immaterial.
“The petitioner claims that he is entitled to the relief prayed for, under section 8 of the judiciary act of 1875, which provides for such service upon non-resident defendants when the suit is commenced ‘to enforce any legal or equitable lien upon or claim to, or to remove any incumbrance or lien or cloud upon, the title to real or personal property within the district where such suit is brought.’ The various cases which were cited by the complainant’s counsel interpreting this section are conсerned either with real property, or with such tangible personal property as was susceptible of reduction to actual possession.
1 comnot satisfy myself that the section covers (or was intended to cover) such incorporeal and intangible property as a patent-right, possession of which must of necessity be ideal, not actual, and which cannot be seized or sold under an execution.
Stephens v. Cady,
This decision was not appealed.
To tho same effect is Standard Gas Power Co. of Georgia v. Standard Gas Power Co. of Delaware,
“There must, under the act referred tо, be ‘real or personal property within the district,’ and I agree thoroughly with the views expressed by Judge Lacombe that a patent right is not such ‘real or personal property’ as would come within this language or within this act. A patent right is something granted by the Patent Office in Washington to cm inventor, which ‘right’ he may sell, transfer, or assign, and over which he has, until he divests himself of such ‘right,’ exclusive control; but it is not such real or personal property, in my opinion, as was contemplated by this act, such property as the cowrt cam, seize and act upon as was intended by this law. And the existence of the patent right is coextensive with the limits of the United, States. I do not know that it has a situs anywhere, even if it were of such character as would justify the court in treating it as property under the act in question.
“I am compelled to hold, therefore, that there was no basis here for entertaining this suit under section 8 of the act of Congress of March 3, 1875 (Judicial Code, § 57). Consequently service by publication was insufficient for the purpose of bringing the defendants into court.” (Italics inserted.)
This case also was not appealed.
The same principle underlies the recent decision of the Sixth Circuit in Automotive Products Corp. v. Wolverine B. & S. Co. (C. C. A.) 15F.(2d) 745.
Opposed to the aforegoing authorities we have found only one reported case, Burpee v. Guggenheim,
None of the eases cited in the aforegoing opinion are apposite to the precise point here involvеd. It is significant that the court does not refer to Judge Laeombe’s decision in the Non-Magnetie Watch Company Case, supra, which had been decided twenty-five years previously, and was available in the reports.
Complainant refers to the last paragraph of Equity Rule 8 (28 USCA § 723), and asserts that, since, by virtue of that rule, the court may compel defendant Lower to convey to complainant his interest in the alleged invention and application, (a point to be'hereinafter determined), it is anomalous to say that there is no res within the district for him to convey. But this is merely begging the question. Rule 8 determines what may be done after general equity jurisdiction in personam has been established and exercised, and does not purport to remove the basic condition imposed upon its exercise when the jurisdiction is solely quasi in rem, namely, that the res sought to be affected shall actually be within the district, the burden of proving which fact is upon the complainant. Chase v. Wetzlar,
Coming next to the motion of the Lower Stoker Company,, defendant, that motion is based upon the same ground as the motion of defendant Ketehpel, namely, that since the jurisdiction of the present action must rest solely on the fact that it is one between citizens of different States, pursuant to the requirement of section 51 of the Judicial Code (28 USCA § 112), suit can be brought only in the district of the residence of either the plaintiff or defendant, and this has not been done, because neither plaintiff nor defendant can legally be said to reside in Maryland, the *683 former being a Delaware corporation, and the latter a Pennsylvania corporation.
The court concludes that this motion must also be granted for the following reasons. Diversity of citizenship between the parties is clear, because, for purposes of diversity of citizenship under section 24(1) of the Judicial Code (28 USCA § 41(1), a corporation is a citizen of the state in which it is incorporated. Empire Coal & Transp. Co. v. Empire Coal
&
Mining Co.,
It is well settled that, for the purpоses of section 51 of the Judicial Code, "citizen,” “inhabitant,” and “resident” are synonymous terms, and that therefore a corporation is a resident only of the state of its incorporation, and of the district (when that state comprises more than one district) of tho corporation’s head office. Shaw v. Quincy Mining Co.,
While venue, unlike jurisdiction, is a matter of personal privilege which a defendant may insist upon if done seasonably, or may waive expressly or impliedly. Commercial Co. v. Consolidated Co.,
“The ease at bar is not affected by either af the statutes of Texas on which the counsel for the defendant' in error relies. He contends that the plaintiff in error had consented to be sued in the western district of Texas by doing business and appointing an agent there under the statute of Texas of 1887, e. 128, requiring a foreign corporation, desiring to transact business in the state, ‘to file with the secretary of state a certified copy of its articles of incorporation, duly attested, accompanied by a resolution of its board of directors or stockholders, authorizing the filing thereof, and also authorizing service of process to be made upon any of its officers or agents in this state engaged in transacting its business, and requesting the issuance to such corporation of a permit to transact business in this state, said application to contain a stipulation that said permit shall be-subject to each of the provisions of this act,’ one ofi which was that any foreign corporation sued in a court of the state, which should remove the ease into a court of the United States held within the state, ‘for the cause that such corporation is a nonresident of this state or a resident of another state from that of the adverse party, or of local prejudice against such corporation, shall thereupon forfeit and. render null and void any permit issued or granted to such corporation to transact business in this state.’ Gen. Laws Tex. 1887, pp. 116,117.
“But that statute requiring the corporation, as a condition precedent to obtaining a permit to do business within the state, to surrender a right and privilege secured to it by the constitutioh and laws of the. United States, was unconstitutional and void, and could give no validity or -effect to any agreement or action of the corporation in obedience to its provisions. Insurance Co. v. Morse,
“The acts of congress, prescribing in what, districts suits between citizens or corpоrations of different states shall be brought, manifest the intention of congress that such suits shall be brought and tried in, such a district only, and that no person or corporation shall be compelled to answer to such a suit in any other district. Congress cannot have intended that it should be within the power of a state by its statutes to prevent a defendant, sued in a circuit court of the United States in a district in which congress has said that he shall not be compelled to answer, from obtaining a determination of that matter by that court in the first instance, and by this court on writ of error. To conform to such statutes of-a state would ‘unwisely incumber the administration of the law,’ as well as ‘tend to defeat the ends of justice,’ in the national tribunals. The necessary conclusion is that the provisions referred to, in the practice act of the state of Texas, have no application to actions in the courts of the United States.” (Italics inserted.)
Plaintiff attempts to distinguish this case on the ground that the Maryland statute provides that service -of process upon the corporation’s designated resident agent within the state “shall bind the corporation.” But these words can have no more force and effect than that the corporation, by such appointment, agrees that service upon such agent shall be valid. Under no construction can it be said to amount to a declaration that the corporation is thereby a citizen of the state of Maryland, and, even if such were true, such a declaration would be invalid and of no effect in view of the reasoning of the decision of the Supreme Court in the Denton Case.
*685
Complainant appears to rely largely, if not primarily, upon the case of Ex parte Schollenberger,
Complainant cites a wealth of other decisions which we consider it unnecessary to refer to, because many of them are clearly not in point, and the others are not controlling because contrary to the Denton Case.
The Supreme Court has never qualified its decision in the Denton Case. That decision is succinctly summarized in the following portion of the opinion of the Supreme Court in Re Keasbey & Mattison Co.,
“When the jurisdiction is founded only on the fact that the parties are citizens of different states, the suit shall be brought in the district of which either party is an inhabitant. And it is established, by the decisions of this court, that, within the meaning of this act, a corporation cannot be considered a citizen, an inhabitant, or a resident of a state in which it has not been incorporated; and, consequently, that a corporation incorporated in a state of the Union cannot be compelled to answer to a civil suit, at law or in equity, in a circuit court of the United States held in another state, even if the corporation has a usual place of business in that state. McCormick Co. v. Walthers,134 U. S. 41 , 43,10 S. Ct. 485 [33 L. Ed. 833 ]; Shaw v. Quincy Mining Co.,145 U. S. 444 ,12 S. Ct. 935 [36 L. Ed. 768 ]; Southern Pacific Co. v. Denton,146 U. S. 202 ,13 S. Ct. 44 [36 L. Ed. 942 ]. * * *
“When the parties are citizens of different states, so that the ease comes within the general grant of jurisdiction in the first part of the section, the defendant, by entering a general appearance in a suit brought against him in a district of which he is not an inhabitant, waives the right to object that it is brought in the wrong district. Interior Construction Co. v. Gribney,160 U. S. 217 ,16 S. Ct. 272 [40 L. Ed. 401 ], and eases there cited. But a corporation, by doing business or appointing a general agent in a district other than that in which it is created, does not waive its right, if seasonably availed of, to insist that the suit should have beеn brought in the latter district. Shaw v. Quincy Mining Co., and Southern Pacific Co. v. Denton, above cited.”
See, also, Beech-Nut Packing Co. v. Lorillard Co. (D. C.)
Turning lastly to the motion of defendant Lower, summarized, it is to the effect that, since the bill of complaint alleges a breach of contract by defendant Ketehpel, therefore, he is an indispensable party, and since he, being a citizen and resident of the state of Pennsylvania, is not suable in this court in this ease without his consent, which he has declined to give, and appears only specially for the purposes of his motion, the present suit cannot proceed without him.
Stated in somewhat different language, defendant Lower’s contention is that, since the present suit is founded upon a contract alleged to have been made between defendant Ketehpel and the Locomotive Stoker Company, and since the bill of complaint is, in effect, one for specific performance of that contraсt, Ketehpel is an indispensable party to the suit; that, although the bill is only directed to one alleged invention and application, a decree would unavoidably affect Ketchpel’s right to any and all other inventions that he may have made or conceived during his employment by the Locomotive Stoker Company; that the court is being asked to determine, in Ketchpel’s absence, the basic question of whether or not he had entered into the contract, and, if so, whether it was valid, and whether he had been guilty of conspiracy and fraud to deprive the complainant of its rights to this particular alleged invention and all other inventions relative to the locomotive stoker art which he may have made or conceived during the period of some eight years.
On the other hand, complainant contends that Ketehpel is not an indispensable party for the following reasons: (1) Since, on a motion to dismiss, the averments of the bill must be taken as admitted, Ketehpel did not retain any interest in the alleged invention and application, and, therefore, a decree against Lower could not prejudice Ketehpel; (2) since both Ketehpel and Lower acted in willful disregard of complainant’s rights under its assignment of the contract between Ketehpel and the Locomotive Stoker Company, they should both be treated as trustees ex maleficio, and as such joint tort-feasors and joint obligors may be sued separately; and, lastly (3), even assuming that Ketchpel’s ab *686 senee may make it impossible for this court, in the present proceeding, to grant complainant all of the relief asked for, nevertheless part of such relief may and should be given, namely, defendant Lower should be compelled to assign all his right, title, and interest in the alleged invention and application to complainant; should be enjoined from further use of the same, and should be compelled to account for such profits as he has derived therefrom, and to answer in damages to complainant.
The court concludes that defendant Ketchpel is an indispensable party when the relief sought is considered in its entirety, for the following reasons: Equity Rule 39 (28 USCA § 723) provides as follows: “In all cases where it shall appear to the court that persons, who might otherwise be deemed proper parties to the suit, cannot be made parties by reason of their being out of the jurisdiction of the court,. or incapable otherwise of being made.parties, or because their joinder would oust the jurisdiction of the court as to the parties before the court, the court may, in its discretion, proceed in the cause without making such persons parties; and in such cases the decree shall be without prejudice to the rights of the absent parties.”
A similar provision covering .both aétions at law and suits in equity, but applying only to parties that cannot be joined because they are out of the court’s jurisdiction, is contained in section 50 of the Judicial Code (28 USCA § 111), which reads as follows: “When there are several defendants in any suit at law or in equity, and one or more of them are neither inhabitants of nor found within the district in which the suit is brought, and do not voluntarily appear, the court may entertain jurisdiction, and proceed to the trial and adjudication of the suit between the parties who are properly before it; but the judgment or decree rendered. therein shall not conclude or prejudice other parties not regularly served with process ñor voluntarily appearing to answer; and nonjoinder of parties who are not inhabitants of nor found within the district, as aforesaid, shall not constitute matter of abatement or objection to the suit.” Neither the above rule nor provision of the Judicial Code is, however, to be taken as permitting the court to grañt relief in the absence of parties who are actually indispensable. Waterman v. Canal-Louisiana Bank,
It is clear from the analysis of the bill of complaint, which we have already made, and of the relief asked for, that it is impossible for the court to grant the primary portion of it, without passing upon the effect of the alleged contract between defendant Ketchpel and the Locomotive Stoker Company, because upon that point hinges the answer to the question whether defendant Ketchpel had a right to assign his interest thereunder, as he did, to defendant Lower. Since Ketchpel is not before the court, obviously this basic contract to which he is a party cannot be adjudicated, because he is entitled to an opportunity to be héard and to assert his claim that the con *687 tract was void or voidable, or did not forbid assignment, or indeed to make whatever defense he might see fit to make in opposition to the present claim of complainant.
What has just been said is a sufficient answer to complainant’s argument that defendant Lower must, in this suit, and in the absence of Ketchpel, be adjudicated a joint tort-feasor with him. In reply to complainant’s other argument that, since, on a motion to dismiss, the averments of the bill must be taken as admitted, Ketchpel did not retain any interest in the alleged invention and application for patent, and therefore a decree against Lower could not affect Ketchpel, it is sufficient to point out that the effect of such motion is equivalent to that of a demurrer, and that only allegations of fact, not conclusions of law, are to be taken as true. Scott v. Empire Land Co. (D. C.)
That defendant Ketchpel is unquestionably an indispensable party in the present suit, when the relief asked is considered in its entirety, is borne out by a large number of cases, most of which it is deemed unnecessasry even to cite because the conclusion reached on the facts in the present case seems to bo so free from doubt. See especially Mallow v. Hinde,
In Swan Land
&
Cattle Co. v. Frank,
For a more recent analysis of the decisions bearing upon this question, see Cobb v. Interstate Mortgage Corp. (C. C. A.) 20 F. (2d) 786. See, also, Halpin v. Savannah River Electric Co., supra.
Although we have thus concluded that defendant Ketehpel is an indispensable party when the complaint and the relief prayed for are viewed in their entire aspect, it does not, however, necessarily follow that this court should dismiss the bill completely, and refuse to grant any relief whatsoever to complainant. On the contrary, the court is of the opinion that the character of the litigation is such that the complainant is entitled to some relief against defendant Lower, albeit he is the only party defendant found to be properly before the court. There is no question but that the court may render a more limited decree than that asked for, if to do so will not affect interests' of absent parties, assuming that such parties would be indispensable were the complete relief granted. Waterman v. Canal Louisiana Bank, supra; General Investment Co. v. Lake Shore & M. S. Ry. Co. (C. C. A.)
The extent of the relief against Lower, as to the granting of which the court considers complainant is now -entitled to be heard, is that Lower should be enjoined frоm disposing in any way of any of the rights to the alleged invention and application, which he may have acquired by reason of the assignment from Ketehpel, and from manufacturing, selling, or otherwise disposing of any of the devices designed thereunder, until Lower’s status as assignee shall have been determined by this court after he has had opportunity to file his answer to the bill of complaint and to be heard thereon. Should such latter hearing result in a determination that Lower was an assignee of Ketehpel with notice of the alleged contractual relations between the Locomotive Stoker Company and Ketehpel and the prior assignment of the latter’s rights to' the complainant, then complainant shall be entitled to have that part of the temporary injunction, if granted, prohibiting Lower from disposing in any way of any of the rights to the alleged invention and application which he may have acquired by reason of the assignment from Ketehpel, continue for such further time as to afford it reasonable opportunity to bring suit against defendant Ketehpel in the proper jurisdiction, and until by such suit, seasonably brought, complainant shall have a determination of its rights under its assignment from the Locomotive Stoker Company. In such suit Ketehpel cannot be heard to teay that Lower is an indispensable party because all that need there be sought is (1) a construction of the basic contract between the Locomotive Stoker Company and Ketehpel to which Lower was not a party; (2) a judgment or decree against Ketehpel which would be conclusive against Lower if he should be found, by this court, to be a mere assignee of Ketehpel with notice of the prior assignment.
If, as a result of the hearing on bill and answer in this court, Lower shall be found to have been an assignee of Ketehpel with notice of the prior assignment to complainant, then, pending a determination of complainаnt’s rights as aforesaid in its suit against Ketehpel in another jurisdiction, Lower, in addition to being enjoined from disposing of any of his rights to the alleged invention and application as heretofore provided, should be required by this court to save the complainant harmless by a good and sufficient bond obligating himself to account to complainant for any profits which he may, pending such determination, derive from the alleged invention and application, including those derived from the manufacture, sale, or other disposition of any of the devices designed thereunder, should the suit between complainant and Ketehpel result in a decree favorable to complainant. Conversely, a bond will also be required of complainant obligating it to reimburse Lower for the cost of the bond required of him in the event complainant shall be unsuccessful in its suit against Ketehpel. In other words, this court will not merely retain jurisdiction ovеr Lower pending the outcome of a hearing upon the merits of his own answer to the bill of complaint, but, pending such hearing, may enjoin him from doing anything which might be prejudicial to- complainant and will extend such injunction, if necessary, until Ketehpel’s rights, from which Lower’s are derived, shall be adjudicated. This form of relief will do equity to all parties and at the same time will permit eonsum *689 mation of the pending litigation in the Pat-' ent Office touching the validity of the alleged invention and will not interrupt production and marketing of the devices designed thereunder. Of course complainant’s right to a decree against Lower Stoker Company when sued in the proper jurisdiction is conditioned upon complainant first establishing his rights against Lower.
In accordance with the aforegoing opinion, defendant Lower’s motion will be overruled, and the preliminary relief as above defined will be decreed. The motions of the other defendants will be granted, and complainant’s motion overruled.