Finley v. Asphalt Paving Co.
| Citation | 69 F.2d 498 |
| Decision Date | 19 February 1934 |
| Docket Number | No. 9760.,9760. |
| Parties | FINLEY et al. v. ASPHALT PAVING CO. OF ST. LOUIS. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Lawrence C. Kingsland, of St. Louis, Mo. (John D. Rippey and John H. Cassidy, both of St. Louis, Mo., on the brief), for appellants.
Lambert E. Walther, of St. Louis, Mo. (Philip C. Wise and Delos G. Haynes, both of St. Louis, Mo., on the brief), for appellee.
Before GARDNER, WOODROUGH, and BOOTH, Circuit Judges.
Sam E. Finley, the owner, and the National Fin-Mix Corporation, an exclusive licensee in a certain territory of patents covering apparatus for and method of preparing bituminous cement aggregate composition, as plaintiffs, brought this suit for alleged infringement of the patents in the usual form against Asphalt Paving Company of St. Louis, defendant. The defendant in its answer pleaded, among other things in bar, a license by contract and estoppel. A motion for advance trial, under Equity Rule 29 (28 USCA § 723), on the defense of license having been sustained, a separate trial on that issue was had, resulting in a decree by the District Court holding that the defendant was a licensee under the patents in suit and, therefore, had not infringed upon any of the rights of plaintiffs under the patents. The court made extensive findings of fact and conclusions of law, and entered its decree that the bill of complaint be dismissed at the plaintiffs' cost. The plaintiffs appeal and present forty-seven assignments of error.
The court found upon the evidence before it:
That plaintiff Sam E. Finley is the owner and patentee of United States letters patent Nos. 1,462,904, and 1,522,431; that National Fin-Mix Corporation is and was at all of the times herein mentioned an exclusive licensee under the said patents, with certain territorial limitations, and with the right to sublicense the said patents.
The charter of the city of St. Louis provides for the letting of public work, including paving, to the lowest responsible bidder, and the board of public service of that city was the official administrative body having the duty of defining specifications for paving to be paid for in whole or in part by special assessment against private property; and that prior to April 10, 1931, there were only two mixers constructed under the letters patent installed in St. Louis, one being in the plant of the Central Paving Company, whose stock was controlled by the same person who had control of the stock of the plaintiff National Fin-Mix Corporation, and the other in the plant of the Bridges Asphalt Paving Company. That there were nine responsible contractors engaged in the asphalt street paving business under contracts let by the city at the time.
7. The plaintiffs wanted to have the board of public service adopt the exclusive specification of asphalt paving materials mixed in a mixer and according to the process described in the plaintiffs' letters patent, and solicited defendant and other asphalt paving contractors in the city to assist the plaintiffs to secure the adoption of such exclusive specification of their mixer and process.
8, 9. The board having invited all the responsible asphalt paving contractors in the city to attend a hearing on the question of the adoption of such specification, the plaintiff corporation and the defendant met, and the plaintiff corporation represented to the defendant that if it would co-operate with the plaintiffs and the said specifications were adopted by the city of St. Louis, defendant could procure from plaintiff corporation a mixer and the right to use the process upon the payment of a deposit of $2,250 when the mixer was ready for delivery, and a rental or royalty of 40 cents per ton for the first fifteen thousand tons and 25 cents per ton for the subsequent amount of mixture prepared on said mixer, the said deposit to be absorbed by a refund or a deduction of 15 cents per ton on the price of the first fifteen thousand tons, and that such mixer could be furnished within five weeks.
10. The defendant advised that it would not lend its co-operation and assistance in securing the adoption of such specifications unless it was assured that it could obtain the mixer on the terms represented, and demanded that the assurance be reduced to writing, whereupon, the writing was signed and delivered by the corporation to defendant on April 9, 1931, the writing being as follows:
11. The defendant had, less than two years previously, erected a new asphalt paving mixture plant with a so-called "pug-mill" at a cost of about one hundred thousand dollars, and as the city specifications had previously permitted the use of either pug-mill type mixture or rotary pressure mixture, all of the asphalt paving contractors had been on an equal footing in competition on city work so far as the kind of mixture was concerned, and had competed successfully with the Central Paving Company and Bridges Asphalt Company, using the Finley rotary pressure mixer.
12. After the plaintiff corporation and the defendant had come to their understanding and defendant was assured that it could obtain the plaintiffs' mixer and method, and on April 10, 1931, the board of public service had its hearing on the question of the adoption of exclusive specifications of plaintiffs' mixer and process. The members of the board knew at the time and the president of the board announced that only the two plans referred to were equipped to comply with such an exclusive specification and that the other seven responsible contractors were not.
13. The purpose of the hearing before the board was to satisfy the board as to two points: (1) That the adoption of the proposed specification and the letting of contracts thereunder would not result in increased cost to the taxpayers; and (2) that the competitive bidding system would not be interfered with. Representatives of the companies which had the plaintiffs' mixer stated that the exclusive specification would not result in increased cost of paving work. The other contractors were asked by the president of the board whether, under the exclusive specification, they would be as free to bid in competition in street paving work as theretofore. One of them who owned a large asphalt plant erected at a cost of $85,000, equipped with a pug-mill mixer, made answer: "That is what they (plaintiff corporation) told me." The defendant, being called on, said: "The thing we are concerned in of course, is the question of competition." And being asked, if in the event the board adopted the specification his company would be free to bid on the specification, he replied: "Yes, I have been told we would, because we have been assured we could receive one of those mixers." Being further pressed to answer whether as an independent bidder his company would be free to bid competitively on the work, he said: "At the present time we would; yes, because of the fact that we have been assured, as I have stated, by the mixer people, we could have one of the mixers or they would arrange to secure asphalt from another plant at our cost." Other independent contractors at said hearing answered that they felt they would be free to bid if they could get one of the mixers. The representatives of the plaintiff corporation, present at the hearing, heard these statements by the president of defendant corporation and representatives of the other independent contractors.
Inquiry was made at the hearing into the cost of alterations in the plants of the independent contractors for installation of a Finley mixer, and the information was elicited by the president of the board that the cost would run from $6,000 to $8,000, which cost could be amortized over a period of years at the rate of 10 per cent. per annum.
That the board of public service, by the representations so made in said hearing with the approval of the plaintiff corporation, was led to believe and did believe that the plaintiffs would furnish to any of said contractors a mixer on a basis that would not increase the cost of the paving to the taxpayers and which would leave the individual contractors as free to compete with the Central Paving Company and the Bridges Asphalt Paving Company as they had been under the then existing alternative specifications for street paving work, and that the independent contractors would be able to obtain a license to use the mixer for an unlimited number of years and thus be enabled to amortize the cost of altering their plants to install a rotary pressure mixer over a sufficient period of time so as not to add to the cost of street paving work as would result if such expenditure had to be charged off in the year in which it was incurred.
The board of public service by the said representations was also induced to believe and did believe that until defendant, or any other independent contractors, installed a Finley mixer in its own plant, the plaintiff would supply defendant and any other of said contractors with asphalt mixture complying with said specifications at a price no higher than it...
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