Powder Company v. Burkhardt

• Decision Date: 01 October 1877
• Citation: 24 L.Ed. 973,97 U.S. 110
• Parties: POWDER COMPANY v. BURKHARDT
• Court: U.S. Supreme Court

97 U.S. 110

24 L.Ed. 973

POWDER COMPANY v. BURKHARDT.

October Term, 1877

ERROR to the Circuit Court of the United States for the District of Massachusetts.

This was an action in the nature of trover, by the Laflin and Rand Powder Company, of New York, against Gottlieb F. Burkhardt, for the alleged wrongful conversion of certain acids, glycerine, and other raw materials, bought by him under execution, as the property of Carl Dittmar.

At the trial by the court, a jury having been waived, the plaintiff put in evidence a contract entered into July 4, 1871, between Dittmar as party of the first part, and the company as party of the second part, which, after reciting that he was the inventor and discoverer of an explosive compound called by him 'dualin,' for which he had obtained letters-patent, and of which he was then engaged in the manufacture and production at Neponset, Mass., and that the company desired 'to obtain, in connection with the said party of the first part, the sole and exclusive right to use and sell to others said 'dualin," provides as follows:——

'First, The said party of the first part agrees to manufacture and produce and 'dualin' in suitable packages and cartridges, as required by the said party of the second part, from time to time, in quantities sufficient to supply the demand for the same, and all sales of the same produced and effected by the party of the second part, it being fully understood and agreed that the said party of the first part has the sole and exclusive right to manufacture 'dualin,' except as hereinafter modified, and that the said party of the second part has the sole and exclusive right to sell such dualin under said letters-patent, and such sole and exclusive rights are hereby granted, fixed, and determined as aforesaid.

'Second, The dualin manufactured and put up by the party of the first part under this agreement, for sale by the party of the second part, shall be of the best quality in all respects, and shall be packed in catridges and packages to the satisfaction of the party of the second part, and according to its directions, by and through its executive officers.

'Third, All the goods manufactured by the said party of the first part shall be consigned to the said party of the second part for sale; and all orders for explosives given to or received by said party of the first part are to be turned over and transferred to the party of the second part, to be filled by it.

'Fourth, The said party of the second part hereby accepts the said sole and exclusive right of sale of said dualin, and engages to enter into the business of selling the same to the best of its power and ability, the principal design being to create a demand for the use of dualin, and to control the same for the joint interest of the parties concerned.

'Fifth, The net profits arising from such sales shall be divided equally, share and share alike, between the said parties, and shall consist of the difference between the actual cost of manufacture and the net proceeds of sales. Such cost of manufacture to include transportation to New York; but neither in such cost of manufacture or expenses of sale shall be included any charge for rent or use of buildings, storage on the premises of the parties, or insurance, other than marine insurance actually paid or personal commissions; and no sales shall be made at less than eighty (80) cents per lb., unless by consent of both parties.

'Sixth, Any and all losses, by explosion or otherwise, shall be borne equally by the said parties, so far as loss of the crude material or dualin is concerned; but the party of the second part assumes no risk on the buildings or machinery of the manufacturer.

'Seventh, Regular books of account, containing regular entries of all the matters pertaining to this agreement and the carrying out of the same in detail, shall be kept by the said parties respectively, and free access shall be had to the same at all reasonable times by both of said parties or their legal representatives; and statements shall be made embracing all the particulars above mentioned in full, so that the net profits can be ascertained by both parties from time to time, as and when required by either, but not oftener than once in three months. All the statements and accounts rendered and made out for the purpose of ascertaining the amount of the net profits shall be verified under oath by the party making or rendering the same, provided such requisition is desired by the other party. A division of net profits shall be made as above stated every three months.

'Eighth, The said party of the first part hereby guarantees the validity of the said three letters-patent, and agrees to defend the same, and to protect the said party of the second part in the rights hereby granted, and save them harmless in defending the same from any and all infringements thereof. The costs and damages of any suits in such protection or defence to be equally shared. The party of the first part agrees to pay the party of the second part, at the expiration of the contract, the half part of the costs belonging to the party of the second part, with interest annually.

'Ninth, This agreement is binding upon the heirs, administrators, executors, successors, and assigns of the said parties, and shall continue during the term of ten years; and in case the party of the first part shall make any new invention or discovery in explosives or explosive compounds, or any improvements therein or relating to the same in the matter of the explosion of the same or otherwise, the provisions of this agreement shall apply thereto in all respects the same as though incorporated therein at the beginning.

'Tenth, In case of the default on the part of the said party of the first part, or his failure to comply with and carry out the provisions of this agreement on his part, according to the true intent and meaning thereof, the said party of the second part shall have, and in that case the party of the first part hereby grants to the party of the second part, the license and right to manufacture dualin under said letters-patent for the aforesaid term of ten years, and to sell the same, subject to the provisions of this contract, or to the division of net profits; and, in order to provide for such case, the said party of the first part covenants and agrees to teach some person, to be named by the said parties and mutually agreed upon, the practical method of manufacturing dualin, in all the particulars and manipulations thereof, to the best of his knowledge and ability, so that the person above referred to may understand the same fully and practically in all respects.

'Eleventh, The party of the second part shall sell no other explosive compound than said dualin and common gunpowder, and such other explosives as may be manufactured by said party of the first part during the term aforesaid of this agreement, unless it shall be in the interest of both parties.

'Twelfth, The party of the second part shall advance to the party of the first part, on his requisition therefor, for the purposes of paying salaries, for labor, for incidental expenses of manufacture, and for his personal account, semi-monthly, an amount for salaries, $100; for labor, $200, if necessary; for his personal account, $250 and such further reasonable sums as may be required for incidental expenses of manufacture; and shall also procure and furnish to the party of the first part, on his requisition, all the new materials needed to manufacture said explosives in quantities sufficient to supply the demand created by the party of the second part, or the money necessary for the purchase thereof, the said advances and the cost of such new material to be charged to said party of the first part against the manufactured goods to be consigned to the party of the second part as above provided.'

The plaintiff then introduced evidence tending to show that the goods in the declaration mentioned were raw materials used in the manufacture of dualin, and were in the possession of Dittmar at his factory, for the purpose of being so manufactured under said contract; that the greater part of said raw materials had been procured and paid for by the plaintiff, and had become its property, and afterwards was furnished and delivered by it to Dittmar upon his requisition therefor, to be manufactured under said contract; that the balance of said raw materials had been purchased by him to be manufactured as aforesaid, with money furnished him by the plaintiff, upon his requisition therefor, under said contract, which requisition specified the amount required for each bill; that while the said raw materials were at said factory to be manufactured into dualin, under said contract, Burkhardt procured and directed them to be sold upon an execution issued upon a judgment in his favor against Dittmar, and that he bought them at the sheriff's sale upon said execution; and that afterwards, and before the bringing of this action, the plaintiff demanded them of the defendant.

The plaintiff further introduced evidence tending to show that, in the accounts between it and Dittmar, all the raw materials, when...