New York Paper-Bag Mach Co. v. Union Paper-Bag Mach Co.

• Decision Date: 01 November 1887
• Parties: NEW YORK PAPER-BAG MACHINE CO. v. UNION PAPER-BAG MACHINE CO. [1]
• Court: U.S. District Court — Eastern District of Pennsylvania

32 F. 783

NEW YORK PAPER-BAG MACHINE CO. v. UNION PAPER-BAG MACHINE CO. ^[1]

United States Circuit Court, E.D. Pennsylvania.

November, 1887

Frederic H. Betts and Wayne MacVeagh, for complainant.

Francis T. Chambers and George H. Harding, for respondent.

BUTLER J.

On the twenty-sixth day of January, 1880, Leinbach & Wolle copartners in trade, entered into a contract with Mark L Deering, in the following words:

'That whereas the party of the first part, (Leinbach & Wolle,) and the party of the second part, (Deering,) have each and severally applied to the United States patent-office for a patent covering a new style of paper bag, known as the 'Square Satchel-Bottom Bag,' and whereas these applications have been adjudged in interference one with the other; now, therefore, it is mutually agreed by and between the parties hereto as follows, to-wit: Party of the first part, for and in consideration of the sum of one dollar in hand paid by party of second part, the receipt whereof is hereby acknowledged, and also in consideration of the covenants and agreements on the part of the party of second part to be performed and kept, hereby agree to withdraw their application for said patent aforesaid in favor of Mark L. Deering, party of second part, so that the patent-office may at once allow a patent to him; and furthermore, said party of first part agree to have issued to said Deering ten thousand dollars of the full-paid stock of a company about organizing in New York, to be styled the 'New York Paper-Bag Machine & Manufacturing Company,' or in lieu thereof, at their option, to pay him the sum of one thousand dollars in cash. Party of the second part, for and in consideration of the covenants and agreements of the party of first part to be performed and kept, and also for one dollar in hand paid, the receipt whereof is hereby acknowledged, hereby agrees and binds himself to assign over to the 'New York Paper-Bag Machine & Manufacturing Company,' when said company shall have been organized as aforesaid, the patent which shall be granted to him by the United States patent-office, covering the said new square satchel-bottom bag as aforesaid, with any and all future patents which he may be able to obtain covering paper bags, and he also agrees to apply for an interference with the patent heretofore granted to one Daniel Appel, of Cleveland, Ohio, the aforesaid company to pay all expenses, and, when a patent has been allowed him on that claim or claims, to also assign that patent over to the above named company.

'In witness whereof the parties have hereunto set their hands and seals.' This agreement was signed by the parties, duly acknowledged, and recorded in the patent-office.

Leinbach & Wolle promptly proceeded to form the contemplated company; but encountered great difficulty in persuading others to embark in the enterprise; and it was not until the sixth day of December, 1884, that they succeeded in organizing a company.

Deering, although anxious for a speedy execution of the contract, exhibiting much uneasiness and dissatisfaction with the delay respecting it, appeared to acquiesce; and fully justified Leinbach & Wolle in believing he did. He did not, however; and before many months had elapsed he sought other purchasers. He applied to the defendants with this view, and continued to communicate with them from time to time, urging the purchase. On the first of February, 1881, he wrote as follows:

'E. J. Howlett & Co., 520 Commerce St., Phila.-- GENTLEMEN, SIRS: Inclosed please find patent for improvement in manft. of paper bags. You may remember I called upon you in the summer of 1879; at that time my patent was with interferences with the Cleveland Paper Co.'s. I next wrote you a letter in August, same year, to which I received an answer dated Sept. 5, '79, saying you would buy my patent if awarded to me, and would give me more for it than any one else. I was again in Philadelphia the latter part of August, or the first of Sept., 1880; called at your place of business, but you were at the seaside at that time. This time I had the patent with me, as you will see it was issued May the 11th, '80.

'I suppose you are aware that the Cleveland Paper Co. have had some eight or ten patents issued to them on paper bags; all of them, however, is intended to avoid my patent. My atty. claims that they all are infringements upon mine, and that it is impossible for them to make a bag of that description without infringement with mine. On Saturday last, Jany. 19th, I made it my special business to go in their machine-shop; there I saw, as I were already informed, a machine for making a bag, which is a face similar of mine; but, if course, the clame the have so many patents the do not infringe upon me, and I clame it is impossible for them to make a square satchel-bottom bag without infringin on me. I am informed by good authority that the intent to buil a number of those machines, and manufacture the bag the clame in spite of me. Now, if such is the case, it will not pay me to put an injunction upon them, as I am not in the bag business, but I really want to see some one do so. Now, I propose to assign to you my patent for five hundred dollars, which will let me out just about clear.

'You are the only party who they are afrade of, and for that reason I hope that you will take this off my hands. Then I will keep still, and let them go ahead, and when the proper time comes I hope you will straighten them out good. Hoping you will give this proposition due consideration, and hear from you soon. Very truly yours, MARK L. DEERING.'

On the twentieth of April following, the defendant took an assignment, on the terms proposed; and three days later recorded it.

Leinbach & Wolle continued their efforts for the formation of a company. For more than a year, however, after this assignment, they had no communication with Deering, nor with his assignee, the defendants. They were aware of Deering's uneasiness and eagerness for prompt performance of the contract, of his poverty, and anxiety to realize something upon his invention. They continued to write him, stating their failures and prospects, apparently seeking to hold him steady respecting his engagements. He, however, made no reply; and they were unaware even of his whereabouts. About a year later, in April, 1882, Leinbach & Wolle, having seen the record of the assignment, tendered the defendants $1,200 and demanded a transfer of the patent. This being refused, they hunted up Deering, and, on the twenty-seventh of September, tendered him the sum named in the contract, and demanded an assignment. He also refused, on the ground that he had nothing to assign. On the third of October, 1884, the defendants commenced suit against Leinbach & Wolle for infringement of the patent. On the sixth of December following, Leinbach & Wolle succeeded in forming a company. Addressing themselves again very earnestly and persistently, to Deering, and offering him $10,000 of stock in this company, they eventually succeeded in inducing him to accept the offer, and execute an assignment to the company.

The bill sets forth these facts, (about which there seems to be no room for dispute,) and in addition thereto alleges a verbal understanding between Leinbach & Wolle and Deering, contemporaneous with the written contract, or nearly so, that the contemplated company should not, or need not, be formed until after the completion of machinery (then in process of construction) for the manufacture of bags; further avers that the defendants had knowledge of Deering's previous contract, when taking their assignment; and that the assignment was obtained through fraudulent misrepresentations, respecting Leinbach & Wolle's ability to carry out their undertaking.

It is thus seen that the plaintiff's case is, or appears to be, presented in a double aspect: (1) As founded on the legal title to the letters patent, derived through Deering's assignment of 1885; the relief sought being the cancellation of the alleged fraudulent and inoperative assignment, an apparent incumbrance or cloud upon the title, from which litigation and trouble is threatened. (2) As based upon an equitable title, arising out of Deering's original contract with Leinbach & Wolle; the relief sought being the specific execution of this contract, through an assignment of the legal title by the defendants.

The first aspect or proposition is readily disposed of. The alleged fraud on which it rests had no existence. The bill founds it on the alleged knowledge of the previous contract, when taking the assignment, and the alleged misrepresentations to Deering. But it is quite clear that Deering had a right to sell the legal title which remained in him, and the defendants a right to purchase, notwithstanding they had the information imputed. The facts as stated in the bill, do not, therefore, constitute a fraud. If Deering was imposed upon in parting with his interest, (of which we do not find any reliable evidence,) he alone could complain of it.

As respects the second aspect or proposition, a question of law lies at the threshold, about which, however, there seems little room for controversy. Ordinarily equity cannot be invoked for the specific performance of contracts respecting personal property; an action at law for the breach being held to afford an adequate remedy. In 1 Pars.Cont. 522, it is said:

'This distinction, in equity, regarding specific performance, is well...