New York Bank Note Co. v. Hamilton Bank Note Engraving & Printing Co.

• Decision Date: 17 January 1905
• Citation: 180 N.Y. 280,73 N.E. 48
• Court: New York Court of Appeals Court of Appeals
• Parties: NEW YORK BANK NOTE CO. v. HAMILTON BANK NOTE ENGRAVING & PRINTING CO. et al.

180 N.Y. 280

73 N.E. 48

NEW YORK BANK NOTE CO.

v.HAMILTON BANK NOTE ENGRAVING & PRINTING CO. et al.

Court of Appeals of New York.

Jan. 17, 1905.

Cross-Appeals from Supreme Court, Appellate Division, First Department.

Action by the New York Bank Note Company against the Hamilton Bank Note Engraving & Printing Company and the Kidder Press Manufacturing Company. From a judgment of the Appellate Division (87 N. Y. Supp. 200), reversing an order of the Special Term denying a motion to confirm the report of the referee after an interlocutory judgment granting plaintiff an injunction, both parties appeal. Reversed.

See 50 N. Y. Supp. 1093; 65 N. Y. Supp. 1; 67 N. Y. Supp. 827; 75 N. Y. Supp. 520.

Charles F. Brown, George B. Lester, and Harmon S. Graves, for Hamilton Bank Note Engraving & Printing Co.

George Burnham, Jr., Victor J. Loring, and F. A. Burnham, for Kidder Press Mfg. Co.

Edward P. Lyon and Percival C. Smith, for New York Bank Note Co.

CULLEN, C. J.

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,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 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 withoutrequiring 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 no wise 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 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 $6,000. 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...