Hygienic Chemical Co. v. Provident Chemical Works

• Decision Date: 08 February 1910
• Docket Number: 142.
• Citation: 176 F. 525
• Parties: HYGIENIC CHEMICAL CO. v. PROVIDENT CHEMICAL WORKS.
• Court: U.S. Court of Appeals — Second Circuit

176 F. 525

HYGIENIC CHEMICAL CO. v. PROVIDENT CHEMICAL WORKS.

No. 142.

United States Court of Appeals, Second Circuit.

February 8, 1910

[Copyrighted Material Omitted]

In Error to the Circuit Court of the United States for the Southern District of New York.

Action by the Provident Chemical Works against the Hygienic Chemical Company. Judgment for plaintiff (170 F. 523), and defendant brings error. Reversed in part.

In the following statement and opinion the parties are designated as in the Circuit Court. The plaintiff and the defendant are both corporations engaged in the drug and chemical trade. The Rumford Chemical Works is a corporation carrying on a similar business and claiming to own a certain patent, known as the 'Catlin patent,' for manufacturing granular phosphate.

Prior to May 17, 1900, said Rumford Chemical Works claimed that the plaintiff and the defendant were infringing said patent and threatened suits against them and their customers. The plaintiff and the defendant, upon the advice of counsel decided to test the validity of said patent, and for that purpose on said May 17, 1900, entered into the written agreement which is printed in full in the footnote ^[1] but the especially relevant clause of which reads as follows: 'The cost and expense of such defenses to be equally borne by the parties hereto.'

About June 15, 1900, a suit for the infringement of said patent was brought by said Rumford Chemical Works against the present plaintiff, and it was defended by the attorneys appointed in pursuance of said agreement. Such suit was tried in the Circuit Court for the Southern District of New York (Rumford Chemical Co. v. New York Baking Powder Co. et al., 125 F. 231), and was appealed from a decision therein dismissing the bill to this court, which reversed the decision of the Circuit Court and sustained the validity of said patent (134 F. 385, 67 C.C.A. 367). An application was made to the Supreme Court of the United States for a writ of certiorari to review the decision of this court, and such application was denied (195 U.S. 635, 25 Sup.Ct. 792, 49 L.Ed. 354). All the expenses connected with said suit have been paid by the parties to said agreement as therein provided, except as follows: The defendant has failed to pay its share of $312.90 for attorney's fees in the matter of retaxation of costs, and it is conceded that the judgment to the extent that it includes one-half of said sum, viz., $156.45, is correct; also, assuming that the costs taxed and awarded in said suit are a part of the 'cost and expense' of the defense thereof, the defendant has not paid its proportion of the same. These taxable costs amount to $4,646.46, and the plaintiff seeks to recover in this action one-half the amount thereof, viz., $2,323.23, with interest.

Jellenik & Stern (Nathan D. Stern, of counsel), for plaintiff in error.

Gardenhire & Jetmore (A. P. Jetmore, of counsel), for defendant in error.

Before LACOMBE, WARD, and NOYES, Circuit Judges.

NOYES Circuit Judge (after stating the facts as above).

The first question in this case is whether the obligation of the defendant, under its agreement to defend suits and to bear equally with the plaintiff 'the cost and expense of such defenses,' required it to pay one-half the costs which the decree adjudged that the Rumford Chemical Works should recover from the plaintiff. If the agreement relates only to the cost and expense actually incurred in the conduct of the defense to the suit, it manifestly does not include these taxable costs. On the other hand, if the agreement amounts to an indemnity contract, it may embrace them.

We are unable to construe the agreement as one of indemnity. Suits were threatened against both the parties. If they had not defended jointly, they would have been obliged to defend separately or else default. They were 'desirous of joining and co-operating for their mutual interest and protection. ' They undoubtedly believed that by aiding each other the suits could be more economically and successfully defended. They entered into a defensive alliance. But they were not voluntarily undertaking a joint venture. Considering the agreement as a whole, we see nothing in it to indicate an intention to assume each other's burdens-- to pay jointly a decree for damages, profits, and costs, or any item thereof, which might result from an unsuccessful defense.

Nor is the clause in question, taken by itself, one of indemnity. It strains the words 'cost and expense of such defenses' to hold that they embrace a judgment for costs rendered after the defenses have been concluded. The amount of the judgment rendered in an action is hardly a part of the expense of defending such action. The words 'cost' and 'costs' do not always mean the same thing.

The word 'cost' and the phrase 'taxable costs' generally have quite different meanings. 'Cost' may be considered as synonymous with 'expense.' 'Taxable costs' are allowances made to the successful party to reimburse him for his disbursements made in prosecuting or defending a suit. But to the unsuccessful party they are of the same nature as the damages awarded against him. He...