Armstrong v. Belding Bros. & Co.

• Citation: 297 F. 728
• Decision Date: 04 February 1924
• Docket Number: 210.
• Parties: ARMSTRONG v. BELDING BROS. & CO.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

297 F. 728

ARMSTRONG v. BELDING BROS. & CO.

No. 210.

United States Court of Appeals, Second Circuit.

February 4, 1924

For opinion below, see 280 F. 895. Certiorari denied 44 Sup.Ct 459, 68 L.Ed. . . . .

The decree appealed from results from the accounting begun before this court affirmed decision on the merits in November, 1909. 174 F. 410, 98 C.C.A. 361. Suit is for infringement of plaintiff's patent 546,251, for a 'skein thread holder.' Very full statements of meritorious novelty in this invention are found in our previous opinion and that of the court below. 172 F. 234. For present purposes it is enough to emphasize the holding, made so long ago, that while skeins of thread or silk were old and well-known articles of commerce, plaintiff's holder furnished so convenient and economical a method of selling, preserving and having ready for instant use the threads of silk that the old silk in the new holder became almost, if not quite, a new article of commerce; it at least commanded a market of its own.

The accounting herein began while the appeal was still pending. In January, 1913, the master filed his first report, which was set aside in the following October, with instructions to the master. In December, 1913, defendant filed what was called an account. Not being satisfied with this account, the master in January, 1914, ordered the defendant to produce certain described books, vouchers, etc. This order not being complied with, it was enforced by the court; but, instead of complying, the defendant showed by affidavit that the books had either been lost or destroyed, and it may be summarily said that the books of account or other original memoranda tending to substantiate the account filed by defendant never were produced. The master reported in December, 1919, awarding to plaintiff $95,794.73, and to this report the defendant promptly filed exceptions.

In May, 1922, the District Court modified the master's findings by subtracting therefrom $31,369.80. Final decree accordingly in the plaintiff's favor for $64,424.93, with interest from the date of the master's report, was entered on the 7th of June, 1922. The transcript of record on appeal was filed in this court in October, 1923. The brief of the plaintiff on this hearing states that there has been 'considerable delay, due to unavoidable causes; but there was also a great deal of delay, due to the fact that the proceedings were not prosecuted by either party as vigorously as they might have been. ' With the addition that the record discloses no 'unavoidable causes of delay,' the truth of the defendant's naive remark is quite obvious.

Defendant appealed from the award as made, and plaintiff against the modification of the master's finding made by the court below.

Gifford, Bull & Scull, of New York City (Livingston Gifford, of New York City, of counsel), for plaintiff.

Robert B. Honeyman, of New York City, for defendant.

Before HOUGH, MANTON, and MAYER, Circuit Judges.

HOUGH Circuit Judge (after stating the facts as above).

We are not disposed to depart from the rule that the findings of a master, involving questions of fact and depending upon the weighing of conflicting evidence, are entitled to that reasonable presumption in their favor which attaches to the findings of a referee or the special verdict of a jury; indeed, it may be said that on all debatable questions of fact the master's report must be treated as unassailable. Tilghman v. Proctor, 125 U.S. 136, 8 Sup.Ct. 894, 31 L.Ed. 664; Davis v. Schwartz, 155 U.S. 631, 15 Sup.Ct. 237, 39 L.Ed. 289; Westinghouse v. Wagner (C.C.A.) 281 F. 453. This, however, does not mean that the appellate court has no duty to examine the principles controlling the master's investigation of facts, and sometimes the results announced by a master are in themselves so surprising as to suggest investigation of his principles or methods.

It is urged that in this case surprising results require investigation, for the result of the decree appealed from is that defendant made a profit of about 43 per cent. on what it sold in defiance of plaintiff's patent; while, if the master's report had stood as filed, it meant that defendant had similarly made a profit of upwards of 55 per cent. Yet the business of making and vending silk in every form is very old and highly competitive, and what defendant sold here was the same silk usable for the same purposes as the skeins of prior commerce. The only change was in the form of container, and that container per se was an inexpensive paper envelope. We have therefore carefully examined this record, to ascertain how and why it was that these results were reached.

The proceedings before the master, however prolonged, are not bulky, and the method of decision is easily seen. The radical difficulty with defendant's case is that it never exhibited, either by oral evidence or documentary proof, just how much it cost to get the silk, treat it, put it in containers, and sell it. We are in some doubt whether this was a refusal to give evidence, or an inability to get evidence. A blunt statement that books and other records which would have cast light upon the matter had been lost in the removal of offices from one building to another in the same city was not persuasive to the master, and is not persuasive to us, when it is admitted that such removal and consequent loss took place while this litigation was going on, and while, therefore, the exigency of the cause should have been present to the minds of the responsible officers of defendant.

We are compelled to think defendant open to the rule, often stated, but never better than in Yesbera v. Hardesty, 166 F. 120, 92 C.C.A. 46, that where a defendant has failed or refused to produce the most satisfactory evidence he leaves his cause exposed to the presumption that, if produced, it would tell against him, and compels the court to rely on less definite and certain evidence. As Severens, J., there remarked, if in the absence of the better proof 'there is still nothing of substance left on which the court can lay hold, there is no help, and the plaintiff must endure his loss. ' If in this case the master had had only what defendant furnished, it amounted by way of assertion to a statement that defendant lost money by infringing, and by way of proof it amounted to nothing at all.

But the article made under this patent was produced and sold by the licensee, a large and well-known manufacturing establishment with which plaintiff is concerned. That factory knew and could prove facts about the silk market, and its own costs and expenses in turning raw silk into silk thread, putting it in holders, and offering it for sale. Defendant also is a large, long-established, and well-known manufacturer of similar articles, and, as above noted, silk thread is a...