Krug v. Roberts Cone Mfg. Co.

• Decision Date: 30 April 1923
• Docket Number: No. 14331.,14331.
• Citation: 213 Mo. App. 628,250 S.W. 621
• Parties: KRUG v. ROBERTS CONE MFG. CO. et al.
• Court: Missouri Court of Appeals

250 S.W. 621

213 Mo. App. 628

KRUG v. ROBERTS CONE MFG. CO. et al.

No. 14331.

Kansas City Court of Appeals. Missouri.

April 30, 1923.

Appeal from Circuit Court, Buchanan County; L. A. Vories, Judge.

Petition in nature of bill of interpleader by Henry Krug against the Roberts Cone Manufacturing Company and others and Frederick A. Bruckman and others. From judgment declaring defendants Roberts Cone Manufacturing Company and others to be owners of the fund, defendants Bruckman and others appeal. Affirmed.

Albert E. Dieterich, of Washington, D. C., and Groves & Watkins, of St. Joseph, for appellants.

Toulmin & Toulmin, of Dayton, Ohio, and William E. Stringfellow, of St. Joseph, for respondents.

TRIMBLE, P. J.

The litigation herein reviewed arose upon the filing of a petition in the nature of a bill of interpleader by Henry Krug, trustee of a certain fund hereinafter described, to have the interested parties secure an adjudication of their respective claims with regard to nearly $7,000 of interest accumulated on said fund while in the hands of said trustee awaiting the outcome of certain patent-infringement litigation then pending in, but now determined by, the federal courts. Neither the decree of the federal District Court, nor the judgment of the United States Circuit Court of Appeals, affirming the decree, made any disposition of the interest accruing on the fund during the pendency of the patent-infringement litigation; and after such litigation was determined, both the winners and losers therein laid claim to said interest. Hence the trustee invoked the aid of a court of equity to obtain a decree settling the question to whom said interest should be paid.

Some time prior to April 12, 1918, the following named defendants herein, to wit, Frederick A. Bruckman, George W. Weatherly, Alexander McLaren, and the American Cone & Wafer Company, a corporation (all of whom will, for brevity, be hereinafter designated as "Bruckman et al."), holders of a patent on certain automatic ice-cream conemaking machines, brought suit in the St. Joseph Division of the United States District Court for the Western District of Missouri, against the following named defendants herein, to wit, Roberts Cone Manufacturing Company, a corporation, Webster M. Roberts, Park D. Roberts, and C. H. Becher (hereinafter, for brevity, termed "Roberts Cone Mfg. Co. et al."), for infringement of complainants' patent and to recover royalties for the use of the machines found to be an infringement of that patent. That litigation resulted in a decree in the District Court in favor of the complainants, Buckman et al., and against the defendants therein, Roberts Cone Mfg. Co. et al., establishing the fact of infringement and adjudging a recovery of the royalties arising and to arise during the pendency of the litigation.

The defendants in that suit immediately gave notice of an appeal, but there being some question as to the amount of the supersedeas bond necessary to be given, the decree provided that by agreement of parties, in lieu of an appeal bond, the defendants should deposit in the American National Bank of St. Joseph, Mo., in the name of Henry Krug, trustee, a sum equal to the royalties on cones manufactured on said infringing machines. The decree further provided that if upon appeal it was affirmed the money so deposited should be immediately delivered to the complainants, hilt if the appellate court held there was no infringement, then such deposit should be immediately redelivered to the defendants in that suit.

The decree made no mention of interest on the money deposited in lieu of bond, nor did the decree in any way provide for the recovery of interest. And the fund which is the subject of the controversy herein is interest which the trustee agreed to pay for the use of the money while on deposit in his bank in his name.

It further appears that the trial in the federal District Court was concluded about 9:20 o'clock at night of March 22, 1918. The court announced its decision in favor of complainants. Counsel for defendants gave notice of an appeal. Whereupon counsel for complainants stated that the appeal bond ought to be fixed at $50,000, as he was informed the defendants had in the last year sold a hundred million cones, on which complainants were entitled to a royalty of 45 cents per hundred. The court remarked that the bond ought not to be so large as to Prohibit an appeal. Whereupon complainants' counsel suggested that the money for the royalties be paid into court. Counsel for defendants objected to paying the money into court "on account of the interest," but said that they were willing to pay it to some trust company. The court said that ought to be satisfactory to complainants and that it thought $10,000 would be a sufficient bond. Counsel for defendants asked:

"Why give a bond? We will put the money in a trust company and leave it with the trust company until the Court of Appeals reaches an agreement."

Counsel for complainants said it seemed to him they ought to be entitled to interest. Counsel for defendants retorted, "You can't have interest if we put in a bond." And the Court remarked, "If the defendants lose the use of the money, they should not pay interest" Counsel for complainants replied that they had lost the use of the royalties. The court then orally directed that the decree be drawn providing for, the payment of the money to some trust company or bank in lieu of a supersedeas bond, and then remarked that an arrangement could be made with a trust company to pay a small rate of interest.

As counsel for the respective sides were anxious to get away that night for their homes in the East, the decree was not drafted then, but counsel for each side afterward prepared drafts of a decree which were submitted to the judge who, adopting substantially the decree prepared by counsel for complainants, prepared one of his own and sent it to the clerk of the court at St. Joseph to be entered of record. This was done on April 12, 1918.

The trial of the case was conducted for the complainants by Mr. Dieterich of Washington, D. C., and for the defendants by Mr. Toulmin of Dayton, Ohio. Although, previous to the trial, Groves & Watkins of St. Joseph, Mo., had acted as local assistants to Mr. Dieterich, in certain preliminaries, and Culver & Phillip of St. Joseph had, previous to the trial, acted in a similar capacity for Mr. Toulmin (doing whatever he directed them to do and having no authority to do more than what they were told to do), yet none of the local assistants had any part in, or were present Curing, the trial; nor were they present at the time of the colloquy above mentioned, which took place immediately upon the close of said trial. Nor did any of such local assistants have any part in the preparation of the decree which was later prepared and entered.

Mr. Toulmin at the conclusion of the trial had only 10 minutes to catch his train, so he left the selection of a trust company and of a trustee to his clients and Mr. Phillip.

Thereafter, Henry Krug was suggested as a satisfactory trustee, and it was ascertained that he was willing to pay 4 per cent. interest on the money deposited with and held by hint under the trust.

Before the decree had been prepared, and about April 4th, Mr. Bacher, secretary and treasurer of the Roberts Cone Mfg. Co., called on Mr. Phillip and told him the patent-infringement case had been decided and that an amicable arrangement had been made by which the Roberts Cone Mfg. Co. was to deposit the amount of the royalties with a trustee, so that if on appeal it was finally decided that the complainants in that case were entitled to royalties, they could be paid over to them. Becher asked Phillip to draw the decree or a contract which would cover the matter. Phillip declined to do so, saying he knew nothing about the matter, but immediately wrote to Toulmin referring the matter to him, as being the one in possession of the facts and terms of the agreement but signifying his willingness to draw it if Toulmin desired him to do so. Backer at that time was ready to turn the first payment over to the trustee, but wanted the decree to be entered or contract drawn before doing so.

Toulmin, in the meantime, had prepared his draft of the decree, and sent it, with the draft prepared by the other side, to Phillip, who immediately sent them to Judge Woodrough, who had decided the case, and later the Judge notified Phillip, as did also Mr. Groves, that the decree determined upon had been sent to the clerk of the court to be entered. Philip assumed that the sending by Toulmin of the two drafts of the decree obviated the necessity of any answer to his letter.

The decree was entered on the 12th of April as heretofore stated, and on April 23d or 24th a written agreement, prepared and signed by Groves & Watkins in behalf of Dieterich and themselves as attorneys for complainants, was presented by them to Phillip who, thinking that it carried out not only the terms but the legal effect of the decree, and authorized the putting up of the money instead of giving a bond, signed it, knowing that was what Bacher wanted done, and immediately telephoned Bacher to go ahead depositing the money. The latter made the first deposit the next day, amounting to $15,000, which was estimated would cover the royalties accruing to that date. The appeal to the United States Circuit Court of Appeals was then perfected. After the deposit of the first amount, a report to the trustee was made each month of the sales of cones made during the preceding...