Hitchcock v. American Plate Glass Co.

• Decision Date: 26 June 1919
• Docket Number: 2451-2453.
• Citation: 259 F. 948
• Parties: HITCHCOCK v. AMERICAN PLATE GLASS CO. AMERICAN PLATE GLASS CO. v. HITCHCOCK. CRUIKSHANK v. SAME.
• Court: U.S. Court of Appeals — Third Circuit

259 F. 948

HITCHCOCK v. AMERICAN PLATE GLASS CO. AMERICAN PLATE GLASS CO. v. HITCHCOCK. CRUIKSHANK v. SAME.

Nos. 2451-2453.

United States Court of Appeals, Third Circuit.

June 26, 1919

Marshall A. Christy, of Pittsburgh, Pa., for complainant.

Charles M. Clarke, of Pittsburgh, Pa., and Francis T. Chambers, of Philadelphia, Pa., for defendant American Plate Glass Co.

Ward Bonsall, of Pittsburgh, Pa., for defendant Cruikshank.

Before BUFFINGTON, WOOLLEY, and HAIGHT, Circuit Judges.

Waiving damages, the complainant demanded an accounting of profits gained by the American Plate Glass Company from savings which it made by the use of the infringing apparatus, and of profits gained by Cruikshank, the designer and builder of the infringing apparatus, from building the same for the defendant company and from building like apparatus for other plate glass manufacturers.

Savings by the defendant company gained by infringement involved savings in many items, such as labor, power, repairs lubricants, breakage, runner iron, plaster, and grinding sand. The evidence of savings made in these items was voluminous and the issues arising therefrom were sharply controverted. Both parties appealed from the decree. The decision on these cross-appeals, as indicated by an opinion corresponding in length with the volume of the evidence, is of interest to no one except the parties directly concerned. It will on the request of the judge writing the opinion be omitted from the report of the case. The opinion of the court on the appeal of Hitchcock from that part of the decree which relieved Cruikshank from accounting, however, contains rulings on the law of accounting that extend beyond the parties. This part of the opinion is reported as follows:

WOOLLEY Circuit Judge.

The complainant, by his bill of complaint, made James W Cruikshank, the designer and builder of the infringing apparatus, a party defendant in this action; and, waiving damages, prayed an accounting by him for the profits he had gained from building the infringing apparatus for the American Plate Glass Company, his codefendant, and also for building like apparatus for other plate glass manufacturers. The master found Cruikshank liable to the complainant for profits he had made under a contract with the defendant company for installing the infringing apparatus, amounting to $2,268.34; and found against the complainant's claim of profits gained by Cruikshank in installing infringing apparatus for other concerns. Cruikshank appealed from the first finding, and Hitchcock from the second.

It is stipulated that the profits gained by installing the apparatus for the defendant company amounted to the sum found by the master, but whether these profits enured to Cruikshank or to another was designedly left open for decision. The facts out of which this phase of the controversy arose are not controverted; their inferences, however, are in sharp dispute. In so far as they relate to the appeal of Cruikshank, the facts are briefly these:

The infringing apparatus was installed by Cruiskshank under a contract made between himself and the defendant company, the American Plate Glass Company. Pending its performance Cruikshank assigned the contract to Glass Machinery Company, a corporation whose character and whose relation to Cruikshank and his transactions will presently be considered in the discussion of Hitchcock's appeal against Cruikshank. The contract was between the parties individually and not between them and their assigns. Nor was the assignment made with the assent, or so far as we are informed, with the knowledge of American Plate Glass Company. Tested by the contract rights of the contracting parties, in which, manifestly, in the absence of novation, the American Plate Glass Company would have no right of action on the contract against Glass Machinery Company, or Glass Machinery Company against American Plate Glass Company, it must be assumed that the contract made between the parties remained a contract between them, notwithstanding the attempted assignment, and that profits made under the contract enured to the one who contracted for them. Having contracted to install an apparatus and to receive therefor a consideration that included a profit,-- which has since been found to be an infringing profit-- and having been paid directly a part of the moneys under the contract, Cruikshank could not assign his liability for his act of infringement by assigning the contract and its profits to another. The act of infringement admittedly being solely his in origin and in part performance, and being jointly his in completion, he is liable for the profits derived from his invasion of the complainant's rights, whether he got all of them or voluntarily divested himself of some of them. If this were not so, every tortfeasor could forgive his own wrong by assigning the instrument under which he contracted to do the wrong, and thereby escape liability to the party he has injured.

We direct that the part of the decree from which Cruikshank appealed be affirmed.

We shall next review Hitchcock's appeal from that part of the decree which relieved Cruikshank from liability for the other infringements.

The bill of complaint charged the American Plate Glass Company with one act of infringement and James W. Cruikshank with several. The sole parties joined as defendants in this action were the American Plate Glass Company, as user of the infringing apparatus, and Cruikshank, as designer and builder of that apparatus and of several others. Each party appeared and assumed sole responsibility for the acts of infringement thus severally charged. Cruikshank neither in his pleadings nor in his testimony at the trial disclosed the existence, or the relation to the infringements, of Glass Machinery Company, with the result that the case proceeded to decree in the District Court, and was reviewed in this court on appeal, without Cruikshank disclosing that company or asserting its liability for the infringing acts charged to him. It was only after the interlocutory decree for an injunction had been entered against him and affirmed, and after he was called upon under that decree to account for infringing profits, that he brought to light the Glass Machinery Company and attempted to shift to it his responsibility for infringement. It was on this issue thus raised on the accounting and not on the issue as made by the pleadings that the part of the decree now under review was entered.

If Glass Machinery Company was the sole infringer in making and installing infringing apparatus for concerns other than the defendant company, Cruikshank had his opportunity to plead that fact to the bill of complaint and thereby defend to that extent against the charge of infringement made against him. This plea should have been-- by analogy to like pleas both at law and in equity-- not in bar of the action, but in abatement of the action on the ground of misjoinder. Such a plea would, of course, have involved disclosure by Cruikshank of Glass Machinery Company as the proper party. The complainant could then have amended and have prosecuted his action against the real infringer. This, Cruikshank did not do when under the rules of good pleading he was afforded an opportunity; nor did he do it until he was called upon to account for profits he had gained by infringements which the court, by its decree, found he had committed. The accounting was made and the decree thereon was entered by the lower court and brought before this court for review, however, on the issue of liability between Cruikshank and Glass Machinery Company. We are not prepared to say, in the light of a variety of circumstances occurring in the accounting, that Cruikshank's defence of the liability of Glass Machinery Company, thus tardily made, cannot now be heard,-- though the question is a close one-- but we are satisfied, that by the character of his pleading, Cruikshank has estopped himself to deny personal liability for infringements in which he personally participated to the extent of profits which he actually received from them.

The starting point of this phase of the appeal is a stipulation entered into between Hitchcock and Cruikshank that 'profits gained from the installation of substantially the same apparatus (as that of the defendant company) for other plate glass manufacturing companies herein above mentioned amount to $11,948.31. ' There being no question as to the amount of profits thus gained by infringements other than that of American Plate Glass Company, the question here is: Who got the profits? The master found that Cruikshank did not get them, because they were paid to and were received by Glass Machinery Company under contracts between that corporation and glass manufacturers. From this finding, approved by the District Court, Hitchcock appealed.

The basis of Hitchcock's appeal is, that Glass Machinery Company was a corporation organized, owned, controlled, and used by Cruikshank as a mere cloak to avoid personal liability for the injury he was doing the complainant by infringing his patents, and that, in consequence, Cruikshank is liable to the complainant for whatever earnings the Glass Machinery Company gained by such infringements. Cruikshank's reply to this contention is, that the Glass Machinery Company was not a corporation used as a cover for his transactions, but was a separate entity legitimately conducting business under contracts made in good faith with glass manufacturers for the installation of glass grinding apparatus under his patents, which, until found otherwise in this litigation, were regarded by everyone as valid. The complainant's contention in a word is based on fraud and that this fraud consists in...