Beckwith v. Malleable Iron Range Co.

• Decision Date: 07 August 1913
• Citation: 207 F. 848
• Parties: BECKWITH v. MALLEABLE IRON RANGE CO.
• Court: U.S. District Court — Eastern District of Wisconsin

207 F. 848

BECKWITH v. MALLEABLE IRON RANGE CO.

United States District Court, E.D. Wisconsin.

August 7, 1913

Supplemental Opinion, August 27, 1913.

The complainant was awarded a decree for infringement, pursuant to which the cause was referred to a master to take an account of the number of infringing devices made, sold, and used by, also the gains, profits, and advantages received by or accruing to, the defendant; also the damages suffered by the infringement. The matter being thus before the master, a summons or subpoena was issued to the defendant requiring it to appear; to render a sworn statement of account, in writing, of the number of infringing devices made, sold, or used, the details of sales, and the gains and profits made thereon; also requiring specification in such account these further items:

'First. The whole number of ranges made by you with reservoirs described in claim 11 of the patent to complainant, No 787,425, and referred to in said decretal order.

'Second. That you specify, giving the names and addresses of the persons purchasing said infringing reservoirs, also the date of the purchase, the number purchased, and the size and complete description of the range with reservoir attached so purchased.

'Third. That you indicate, for the period of your infringement of said patent, the selling price of each of said ranges and also of each of said reservoirs, together with the other elements of claim 11 of said patent, and the discounts freights, and rebates or credits of any description allowed to the purchaser and also the net amount of money actually received by you for: (a) The range; (b) the reservoir.

'Fourth. That during the period of your said infringement you indicate and itemize the manufacturer's cost of the range, itemize the cost for labor and cost for material, and also for the same period that you itemize the manufacturer's cost of the reservoirs, the contact plates, and all attachments used in connection therewith, itemizing the cost for material and the cost for labor.

'Fifth. That you indicate the cost and expense (for the period of said infringement) of selling said ranges with infringing reservoirs attached down to the time you ceased to infringe.

'Sixth. That you indicate the entire profits derived by you from each sale of said ranges with said infringing reservoirs attached as provided in said decree.

'Seventh. That you indicate the entire profits derived from the sale of ranges with reservoirs attached on account of the utilization of the features contained in the letters patent referred to in the decree in this case.

'Eighth. Also specify the gains and savings made by you during the period mentioned in said decree, by the use of said infringing reservoir over the style formerly used by you.

'Ninth. Also specify the price at which you sold your ranges without reservoirs; also your ranges with reservoirs; and also the actual cost to you of said ranges without reservoir and the actual cost to you of said ranges with said reservoir during the infringing period referred to in said decree.

'Tenth. That you have with you in court all the books and vouchers in your possession on which the said data were originally entered, together with all books and vouchers in your possession which show the cost of labor and materials used in making said infringing reservoirs, especially all daybooks journals, ledger, order books, blotters, and cashbooks used by you during said infringing period.'

Upon the return day the defendant moved to quash the master's summons and refused to comply therewith or to furnish the sworn statement required thereby, excepting as to the tenth paragraph respecting the production of the books and papers. The master overruled the motion. An adjournment was taken, and upon the adjourned day defendant produced a sworn statement, and also its books and records. Such statement showed the number of infringing devices sold but did not contain the other information called for by the summons. The master adhered to his ruling, and the matter was thereupon certified to the court for its directions. On March 7, 1912, Judge Sanborn, presiding therein, rendered a decision quashing the master's summons and directing the accounting to proceed. The judge held, in effect, that equity rule No. 79 (new rule No. 63 (198 F. xxxvii, 115 C.C.A. xxxvii)) was not applicable to an accounting in a patent infringement suit. Thereupon the complainant made an application to the Circuit Court of Appeals for a writ of mandamus compelling this court to vacate its order quashing the master's summons, and such writ was awarded; the court ruling, in substance, that equity rule No. 79 was applicable to the situation, and that the accounting proceed in accordance with such rule. Re Beckwith, 201 F. 519, 119 C.C.A. 614; Re Beckwith (C.C.A.) 203 F. 45.

The mandate having been complied with, and the matter being about to be noticed for further proceeding before the master, the defendant has now made application to strike from the master's summons the requirements contained in all of the items excepting the first, eighth, and tenth.

Harry C. Howard and Fred L. Chappell, both of Kalamazoo, Mich., for complainant.

A. L. Morsell, of Milwaukee, Wis., and Thos. A. Banning, of Chicago, Ill., for defendant.

GEIGER, District Judge (after stating the facts as above).

The Court of Appeals, in disposing of the matter which was presented to it, and in ruling that the situation was covered by equity rule No. 63, observed that, the status of an infringer of a patent being recognized as that of a trustee ex malificio, the rules respecting the burden of proof as announced in Westinghouse Co. v. Wagner Co., 225 U.S. 604, 32 Sup.Ct. 691, 56 L.Ed. 1222, 41 L.R.A. (N.S.) 653, and Garretson v. Clark, 111 U.S. 120, 4 Sup.Ct. 291, 28 L.Ed. 371, are not inconsistent with the applicability of such equity rule, and concludes that 'it cannot be open to question that patent accountings are within the general provision of equity respecting the remedies of accounting, and that equity rule No. 79 (new rule No. 63) is both applicable thereto and mandatory in its requirements. ' Re Beckwith (C.C.A.) 203 F. 45.

Equity rule No. 63, thus held to be controlling, reads as follows:

'All persons accounting before a master shall bring in their respective accounts in the form of debtor and creditor; and any of the other parties who shall not be satisfied with the account so brought in shall be at liberty to examine the accounting party viva voce, or upon interrogatories in the master's office, or by deposition as the master shall direct.'

It has been suggested that, intermediate the commencement and termination of the proceedings before the master, the court ought not to give directions respecting the course of the procedure. Ordinarily this is true, but, in view of the history of the case and the importance of the question as one of practice, I have concluded to entertain the application and determine it as seems right and consonant with the remedy of accounting as the same is to be followed under the rule.

What, then, is the correct practice to be pursued before a master under the rule in question, taken in connection with the accompanying rule No. 62 (198 F. xxxvi, 115 C.C.A. xxxvi), relative to the powers of the master?

'The master shall regulate all the proceedings in every hearing before him, upon every reference; and he shall have full authority to examine the parties in the cause, upon oath, touching all matters contained in the reference, and also to require the production of all books, papers, writings, vouchers, and other documents applicable thereto, and also to examine on oath, viva voce, all witnesses produced by the parties before him, or by deposition, according to the acts of Congress or otherwise, as here provided, and also to direct the mode in which the matters requiring evidence shall be proved before him, and generally to do all other acts and direct all other inquiries and proceedings in the matters before him, which he may deem necessary and proper to the justice and merits thereof and the rights of the parties.'

It may be observed that rule 63, formerly rule 79, is identical in language with the sixty-first rule of the English chancery practice which was in existence in 1842, when the equity rules which were in force in this country prior to the adoption of the recent new rules were adopted. The English rules, or 'new orders,' as they were called, were adopted in 1828 and worked many changes in the then English chancery practice, not the least of which was respecting the taking of accounts before masters. It had been the custom to require each and every item in the accounting to be proven under proceedings involving tedious interrogation and examination of items of account, whether admitted or disputed. The change wrought by the new rule is commented upon by Mr. Smith in his work on Chancery Practice, vol. 2, p. 114, referred to by the Supreme Court of the United States in Thomson v. Wooster, 114 U.S. 104, 5 Sup.Ct. 788, 29 L.Ed. 105, as 'the most authoritative work on English Chancery Practice in use in March, 1842, when our equity rules were adopted. ' The author says:

'The 61 N.O. (new orders) directs all parties accounting before the master to bring in their accounts in the form of debtor and creditor. This account is prepared as an affidavit; the body of the affidavit containing a verification of the accuracy of the schedules, in which are contained the details of the account. This affidavit is a substitution

...