Glucose Sugar Refining Co. v. St. Louis Syrup & Preserving Co.

• Citation: 135 F. 540
• Decision Date: 25 February 1905
• Docket Number: 5,086.
• Parties: GLUCOSE SUGAR REFINING CO. v. ST. LOUIS SYRUP & PRESERVING CO. et al.
• Court: U.S. District Court — Eastern District of Missouri

135 F. 540

GLUCOSE SUGAR REFINING CO. v. ST. LOUIS SYRUP & PRESERVING CO. et al.

No. 5,086.

United States Circuit Court, E.D. Missouri, Eastern Division.

February 25, 1905

R. H Parkinson and W. B. Homer, for complainant.

Rassieur Schnurmacher & Rassieur, for defendant.

ADAMS District Judge.

This is a suit on letters patent of the United States No. 491,234 for an injunction and accounting, in which the defendant preserving company and Rudolph Wintermann, its president, are made defendants. Besides the formal and unnecessary confederacy clause, the only averment of fact making the defendant Wintermann liable is as follows:

'Your orator further shows that the said St. Louis Syrup & Preserving Company has carried on and is carrying on said infringement as aforesaid under the direction and with the knowledge and authority of said Rudolph Wintermann, president thereof.'

A demurrer for misjoinder of Wintermann as a defendant is filed. In view of the allegations of the bill, it is necessary to consider whether a president of a corporation may be joined in a bill for an injunction and accounting in a patent case merely because, as such president, he directs the business of his corporation.

As already seen the charge is that the corporation is doing the wrongful act, but is doing it under the direction and with the knowledge and authority of its president. There is no charge of any other misconduct on the part of the president than such as is incidental to his position as chief executive officer of the corporation. There is no charge that he is personally infringing complainant's rights, or that he is deriving any personal benefit therefrom, or that he is making use of a sham corporate organization to shield himself from liability for his own wrongful conduct, or that the corporation is insolvent or otherwise irresponsible for its conduct. The question, therefore, is whether, in a bill in equity for an injunction and accounting against a corporation alleged to be engaged in infringing complainant's patent, the president of that corporation may properly be joined as a defendant merely because he is such president?

A corporation is an artificial body-- an entity separate from its officers, directors, and stockholders. It is authorized by the law under which it is created to do certain business, and is by the same law held accountable for its conduct. As such artificial body, it is not self-actuating or controlling. It is necessarily moved to action by an outside force, and it is only when this outside force, which is the board of directors or executive officers, directs an act to be done, that the corporation acts at all. In a theoretical sense, it is true, the executive officers are said to be agents of the corporation, but in reality they are the moving force itself of the corporation. In these respects executive officers of a corporation differ materially from the agent of a natural person.

The general rule that agents are not excused from liability for their wrongs or torts because while performing the wrongful acts they are acting for and in the service of another cannot be gainsaid. Mitchell v. Harmony, 13 How. 136, 14 L.Ed. 75. But the application of this rule to the president of an existing solvent corporation, when acting solely for the corporation in the conduct of its business, and when sued with the corporation in equity for an injunction and accounting in a patent case, is another matter. What beneficial purpose can be subserved by joining a president or other executive officer as a defendant in such a case? The injunctive order, whether preliminary or final, against a corporation, may, and properly does, go against the corporation itself, its officers, agents, servants, and employes, so that they, and each of them, are as effectually enjoined without being made parties to the suit as if they were made such parties. And if any accounting for profits is decreed, it is firmly settled that such a decree goes only against the party which by the use and sale of the infringing device has made the profits. Elizabeth v. Pavement Co., 97 U.S. 126, 24 L.Ed. 1000; Keystone Mfg. Co. v. Adams, 151 U.S. 139, 14 Sup.Ct. 295, 38 L.Ed. 103; Coupe v. Royer, 155 U.S. 566, 583, 15 Sup.Ct. 199, 39 L.Ed. 263; Belknap v. Schild, 161 U.S. 10, 26, 16 Sup.Ct. 443, 40 L.Ed. 599.

In exceptional cases, where damages to the owner of a patent, other than for the profits made by the infringer, are allowed, it is equitable, at least, whatever may be the strict rule at law, that the real infringer, who has received the sole advantage and benefit accruing therefrom, should primarily be made to respond; and certainly, as between one so benefited and the agent acting only in the line of his duty, the doctrine of respondeat superior should prevail.

When the corporation itself is not shown to be insolvent or otherwise unable to respond to any possible decree for damages, and when no showing is made that the individual officer is making any colorable use of the corporation for his own benefit, and when no showing is made that he is individually interested, it is not equitable to subject him personally to the expense and trouble of making a separate defense. A possibility exists that it might be convenient to have him bound by the decree for damages, if one should be rendered, so that in the event the solvent corporation should become insolvent, and the damages not collectible from it, the complainant might have immediate recourse upon him. But in a case where, at the institution of the suit, facts do not exist to render the necessity of any such recourse probable enough to justify a showing to that effect, the court cannot anticipate such a contingency and make provision for it. The practical result of the contention of complainant's counsel would, as was admitted by him in argument, render all the executive officers and directors of a corporation, if not, indeed, its stockholders, subject to a suit in all cases when their corporation, however, solvent, and with whatever good faith it acted, should be sued for the infringement of a patent. I am unable to reach a conclusion in this case that would justify such inequitable, useless, and expensive procedure.

Some language employed by the writer of this opinion in the case of Peters v. Union Biscuit Company (C.C.) 120 F 679, 686, is referred to by counsel of complainant in support of his contention; but, when the peculiar facts of that case are considered, it will be observed that...