Consumers' Twine & Mach. Co. v. Mt. Pleasant Thermo Tank Co., 35106.
| Decision Date | 22 June 1923 |
| Docket Number | No. 35106.,35106. |
| Citation | 194 N.W. 290,196 Iowa 64 |
| Parties | CONSUMERS' TWINE & MACHINERY CO. ET AL. v. MT. PLEASANT THERMO TANK CO. ET AL. |
| Court | Iowa Supreme Court |
OPINION TEXT STARTS HERE
Appeal from District Court, Henry County; Oscar Hale, Judge.
Action in equity for the cancellation of a written contract and 50 $1,000 notes. The opinion sufficiently states the issues and facts. Reversed in part; affirmed in part.E. E. Wagner, of Sioux City, and J. V. Gray, of Mt. Pleasant, for appellants.
J. C. McCoid and Galer & Galer, all of Mt. Pleasant, and Harold L. Beyer, of Grinnell, for appellees.
The Consumers' Twine & Machinery Company, appellant, and the Mt. Pleasant Thermo Tank Company, appellee, are Iowa corporations. The former, located at Sioux City, was at all times material to the present controversy engaged in the business of manufacturing binders' twine and ropes and selling farm supplies. The latter was organized in 1919 for the purpose of purchasing and acquiring by assignment letters patent, and particularly of the watering tanks and troughs hereafter described. The patents in question, which were originally issued to Hilmer N. Enholm, were acquired in 1919 by assignment from H. Woods, who acquired the same by assignment from the inventor. On or about November 15, 1919, the Thermo Tank Company, for a consideration of $50,000, evidenced by 50 $1,000 negotiable promissory notes, assigned all territorial rights to the Consumers' Twine & Machinery Company as follows:
“In the states of Iowa, Wisconsin, Montana, and Wyoming, viz. the counties of all of Nebraska, South Dakota, North Dakota, Minnesota, with the exclusive right to the said second party, his heirs, legal representatives, and assigns, to manufacture and use said nonfreezing cement watering troughs and tanks under the aforesaid letters patent in said territory.”
The letters patent covering inventions referred to are designated in the contract as Nos. 1,251,650 and 1,202,784. On November 15, 1920, the Consumers' Twine & Machinery Company commenced an action in equity in the district court of Henry county, asking the cancellation of the notes upon the ground that same were obtained by fraud, and praying a temporary injunction restraining the payee from selling or hypothecating the notes.
J. F. Waterbury, secretary of the Sioux City corporation, was on May 2, 1921, appointedreceiver therefor by the United States District Court for the Northern District of Iowa. On October 1st, following, he filed a petition in intervention, joining in the allegations of the plaintiff's amended and substituted petition, which was filed April 18, 1921, and praying for the same relief as was there asked on behalf of himself as receiver of the corporation. Later the Thermo Tank Company interpleaded George Felsing, president, and J. F. Waterbury, secretary, of the Sioux City corporation, asserting personal liability against them upon the notes. Petitions in intervention were thereafter filed by the Farmers' & Merchants' Bank of Mt. Pleasant, to which 31 of the notes had been transferred as collateral security for the indebtedness to it of the Thermo Tank Company, also by Zenas Wolever, who had acquired 5 of the notes by purchase from C. B. Ballenger, also by L. H. Rinefort, the Grinnell Motor Car Company, H. C. Estes, and C. Lester Short, who also had acquired some of the notes by purchase or as collateral security for the indebtedness of the payee named therein. Issue was joined upon the several petitions in intervention by all of the appellants, who in their separate answers adopted the allegations of the amended and substituted petition of the Twine & Machinery Company and denied that interveners were purchasers or holders for value.
A trial resulted in the dismissal of the amended and substituted petition of the Consumers' Twine & Machinery Company and of the petition in intervention of the receiver. Judgment was entered separately in favor of each of the other interveners for the full amount of the notes held by them against Felsing and Waterbury, except that the judgment in favor of the intervener bank was for $12,775.14, whereas the judgment entered against the corporation was for $31,411.24. The negotiations resulting in the execution of the contract of November 15, 1919, were conducted on behalf of the Sioux City corporation by Felsing and Waterbury, president and secretary, respectively, and on behalf of the Mt. Pleasant corporation by Ballenger, Estes, and Woods. All of the defeated parties appeal.
[1] The first knowledge of the tanks, which will be presently described, acquired by Felsing and Waterbury, was from Ballenger and Estes, who, as agents for the Thermo Company, were exhibiting them to the public at the Interstate Fair held in Sioux City in the fall of 1919. The tanks are sufficiently described in Exhibit C, which is an article prepared by Ballenger and Estes and published in a bulletin issued by the Twine & Machinery Company, as follows:
It is alleged in the amended and substituted petition that Ballenger, Estes, and Woods, who joined the other two before the contract was executed, represented and stated to Felsing and Waterbury that the patent fully covered and protected the right to manufacture tanks out of cementitious material, with dead air spaces surrounding the water and having a tube extending through the bottom of the tank into the earth below the freezing point and above the bottom to the proper height; that all of said statements and representations were false and untrue, and that the original letters patent issued to the inventor covered only certain small and immaterial parts of the tank, and did not grant the exclusive right to manufacture tanks of cementitious material having dead air spaces surrounding the water as stated, operating upon thermo or nonfreezing principle. All of the allegations of the amended and substituted petition were denied by appellees.
The evidence shows that the effort of the inventor to secure a patent upon a tank giving him the exclusive right to manufacture and sell tanks containing the dead air space as stated, and having a tube extending into the earth for the purpose of cooling the water in summer and preventing freezing in winter, upon the theory of the thermo principle, was unsuccessful. His claim was rejected, and the claim allowed, expressed in the vernacular of the patent expert, is as follows:
“1. A cement receptacle having hollow bottom and side walls, a hollow core member, formed of rigid material disposed within the bottom wall, and including upper and lower plates of different lengths, hollow sectional rigid core members disposed within the side walls of the receptacie, and each including spaced plates, the inner plates of the side core members being shorter than the outer plates and engaging the upper plates of the bottom core member, and the outer plates of the side core members engaging the lower plate of the bottom core member, horizontal plates connecting the inner and outer plates of the side core members engaging the lower plate of the bottom core member, horizontal plates connecting the inner and outer plates of the side core members and forming closures therefor, spacing members interposed between the plates of the side core members, and a tubular member extending through the bottom of the receptacle and having its lower end imbedded in the ground.
2. A cement receptacle having hollow bottom and side walls, a core member disposed within the bottom wall, core members arranged within the side walls and having their upper ends closed, and their lower ends communicating with the core member in the bottom of the tank, there being an opening formed in the bottom wall and in the bottom core member, a bushing seated in said opening, and a tubular member extending through said bushing and having its lower end imbedded in the ground.”
One of the grounds upon which the claims of the inventor referred to were denied was that they had been anticipated by prior inventors, the names and numbers of their patents being given by the Patent Office. We shall not enter into a detailed statement or discussion of appellant's claim that the patent issued to Enholm covers only minor parts of the tank and in no sense grants monopoly to the inventor of the right to manufacture tanks out of cementitious material having dead air space and operating by means of a tube inserted in the earth upon the thermo principle. The extract quoted will suffice to show what the patent in fact covered.
Expert testimony was introduced upon both sides of this question, and while it is, we think, fairly shown, that the Enholm patent is much narrower than all of the parties at the time evidently understood and believed, the evidence...
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