General Electric Co. v. Westinghouse Electric & Mfg. Co.

• Decision Date: 04 April 1906
• Citation: 144 F. 458
• Parties: GENERAL ELECTRIC CO. v. WESTINGHOUSE ELECTRIC & MFG. CO.
• Court: U.S. District Court — Northern District of New York

144 F. 458

GENERAL ELECTRIC CO. v. WESTINGHOUSE ELECTRIC & MFG. CO.

United States Circuit Court, N.D. New York.

April 4, 1906

Hinsdill Parsons (Lewis Carr, of counsel), for complainant.

Guthrie Cravath & Henderson (William D. Guthrie, of counsel), for defendant.

RAY District Judge.

The action was commenced in the Supreme Court of the state of New York and removed by defendant to this court. The bill of complaint after alleging the incorporation and residence of the parties states, in substance, that both companies, at the time of making the contract in question, were and still are engaged in the business of manufacturing and selling electrical apparatus and devices and that the General Electric Company was and now is engaged in the manufacture of series-parallel controllers of the distinguishing name 'K2 series-parallel controllers' and other similar controllers, and controllers involving a blow-out device, and others operating on the same general principles. There is no allegation that defendant company was or was not then engaged in making or selling any of these controllers. That March 31 1896, the parties entered into a contract wherein it was provided, among other things, that:

'The Westinghouse Company shall not manufacture, for use in the United States, as hereinafter provided, electric brakes or the 'K2 Series-Parallel Controller' or any series-parallel controller of the general type of the 'K2 Series-Parallel Controller' (and other similar controllers now being manufactured by the General Company such as controllers of the types now designated as K, L, BA and S, respectively), or operating upon the same general principles irrespective of its form and the details of its structure or operation, or any controller involving a blow-out device. The General Company shall sell and deliver to the Westinghouse Company, with reasonable business promptness, such controllers and electric brakes, as it shall, from time to time, order, at the lowest prices at which it sells the same to others less a discount of thirty (30) per cent. in the case of controllers and twenty (20) per cent. in the case of brakes, but in no case shall such discount to the Westinghouse Company exceed one-half of the difference between such lowest price and manufacturing cost.

'The Westinghouse Company shall sell the K2 Series-Parallel Controller and other series-parallel controllers of the same general type or operating upon the same general principles, and controllers involving the use of a blow-out apparatus, and electric brakes, manufactured by the General Company, to the exclusion of all other controllers of the same general type and operating upon the same general principles, and of all other electric brakes, and the General Company shall likewise sell the overhead trolleys manufactured by the Westinghouse Company, to the exclusion of all other overhead trolleys.

'In case the General Company shall refuse to furnish the Westinghouse Company with any series-parallel controllers or any electric brakes, or shall fail to deliver the same with reasonable business promptness, or if in any instance the controllers or electric brakes offered by the General Company are not adapted to the purpose for which they are required by the Westinghouse Company, the Westinghouse Company may manufacture such series-parallel controllers or electric brakes to such extent as, and so long as, the General Company shall have refused or failed to furnish the same, or to such extent as and so long as the controllers or electric brakes offered by the General Company are not adapted to the purpose for which they are required by the Westinghouse Company.

'In case the General Company shall manufacture and sell any overhead trolleys in violation of this agreement, or the Westinghouse Company any series-parallel controllers or electric brakes in violation of this agreement, then the party so manufacturing and selling such overhead trolleys, controllers or brakes, as the case may be, shall pay to the other party, as liquidated damages and not as a penalty, fifty (50) per cent. of the price at which such overhead trolleys, controllers or brakes, as the case may be, are, at the time, being regularly sold to users by the party entitled under this agreement to the exclusive manufacture of the same.

'The provisions of this section shall apply to parts of controllers, electric brakes and overhead trolleys as well as to the complete devices.

'The General Company shall comply with the reasonable directions of the Westinghouse Company in respect to the marking (except as to the numbers of the patents under which the device is manufactured) of all controllers and electric brakes and parts thereof ordered by the Westinghouse Company.

'All annual periods provided for in this agreement shall be computed with reference to the first day of May, 1896, and this agreement shall terminate fifteen years from the said first day of May, 1896.'

That the contract is in full force and effect and that complainant company has in all respects complied with and performed the obligations and conditions of such contract, and is ready, able and willing so to do. That the defendant has violated such contract, viz.: That the Westinghouse Company has, since the date of said contract, in violation of its said covenants, manufactured, is now manufacturing and threatens to continue to manufacture, for use in the United States, large numbers of series-parallel controllers of the general type of 'K2 series-parallel controllers,' or operating upon the same general principles, irrespective of their form and the details of their structure or operation, and large numbers of controllers involving a blow-out device, notwithstanding that it is agreed and provided in and by said contract that the General Company should have the exclusive right to manufacture such controllers for use in the United States; that the Westinghouse Company has sold, is now selling and threatens to continue to sell for use in the United States large numbers of such aforesaid controllers not manufactured by the General Company, in violation of the terms and provisions of said contract.

The bill of complaint then alleges the effect of the violation of the contract as follows:

'Eighth. That the manufacture of such aforesaid controllers by the Westinghouse Company for use in the United States and the sale and continued sale by the Westinghouse Company of such aforesaid controllers not manufactured and sold to it by the General Company has caused and will cause the General Company to lose large profits which it would make by the manufacture and sale to the Westinghouse Company of the controllers so sold; that such continued sale of controllers by the Westinghouse Company injuriously affects and will continue to injuriously affect the value of the exclusive right of the General Company to manufacture and sell controllers, in such way, and to such extent that damages thereby sustained by the General Company cannot be adequately ascertained; that the plaintiff has no knowledge of the exact number of sales of such aforesaid controllers by the Westinghouse Company not manufactured by the General Company or the dates of said sales, or what sales thereof are being made from time to time and that an accounting herein is necessary to ascertain the damages suffered by the plaintiff by reason of the sales thereof heretofore made; that the damages which the plaintiff has suffered and will suffer are incapable of measurement in an action at law; that the plaintiff has no plain, adequate or complete remedy at law in the premises, and that an injunction herein is necessary to avoid a multiplicity of actions.'

The relief demanded is an injunction restraining further or future violation of the contract by defendant; an accounting concerning all manufacture and sales of such controllers in order to ascertain and determine the damages already sustained; and judgment for the amount of the damages so ascertained and found due complainant company; such other and further relief as may be proper. This is a mere naked agreement between these companies, completing in the manufacture and sale of electrical appliances generally; but not, so far as appears, in the manufacture or sale of controllers of the kinds referred to (1) that the defendant company would not manufacture for use in the United States such controllers; (2) That complainant company would sell and deliver such rollers to the defendant company with reasonable promptness at a stated reduction in price; (3) that the defendant company would sell such controllers to the exclusion of all others of the same kind; (4) that the complainant company would sell overhead trolleys made by the defendant company to the exclusion of all other overhead trolleys; (5) That if complainant company should fail to supply controllers pursuant to the contract defendant company might manufacture them; (6) that if complainant company should manufacture and sell any overhead trolleys in violation of the agreement it would pay the defendant company as liquidated damages and not as a penalty 50 per cent. of the price at which said overhead trolleys were at the time being regularly sold to users; (7) that if defendant company should manufacture and sell any of the controllers in violation of the agreement it would pay the complainant company as liquidated damages and not as a penalty 50 per cent. of the price at which such controllers were at the time being regularly sold to users. There is no allegation in the bill of complaint that either of these articles were patented, or that the exclusive right to manufacture and sell either resided in either party outside of this agreement. It is evident that each of the parties...