Lion Tractor Co. v. Bull Tractor Co.

• Decision Date: 12 February 1916
• Docket Number: 4481.
• Citation: 231 F. 156
• Parties: LION TRACTOR CO. v. BULL TRACTOR CO.
• Court: U.S. Court of Appeals — Eighth Circuit

231 F. 156

LION TRACTOR CO. v. BULL TRACTOR CO.

No. 4481.

United States Court of Appeals, Eighth Circuit.

February 12, 1916

This is an appeal from an order of the District Court for the District of Minnesota, granting a preliminary injunction enjoining the appellant from manufacturing, using, or selling the gasoline engine or tractor known as the 'Lion tractor,' embodying the construction and combinations set forth and claimed in the application for letters patent of the United States No. 865,463, filed by D. M. Hartsough, on October 7, 1914, or any traction engine or tractors embodying any of the constructions, or any of the distinguishing features of the so-called 'Lion tractor,' designed and invented by D. M. Hartsough, while in the employ of the plaintiff, from January 12, 1914, to November 13, 1914. The material allegations in the complaint, so far as they are necessary for a full understanding of the issues involved on this appeal, are:

That P J. Lyons, the president of the plaintiff corporation, the Bull Tractor Company, had before the organization of that corporation been president of the Gas Traction Company, which was engaged in the manufacture and sale of a gasoline engine known as the 'Big 4,' and has for a number of years been, actively and constantly, engaged in the manufacture and sale of gasoline traction engines, and thereby became personally well known in connection with the manufacture and sale of the latest and best types of such engines, so that the use of his name in connection with the manufacture and sale by plaintiff of such engines has become a valuable asset to the plaintiff.

That one D. M. Hartsough was the inventor of the gasoline tractor known as the 'Big 4,' and was one of the promoters of the company which first manufactured it. He was also the inventor of another traction engine, the one known as the 'Bull tractor,' also manufactured by the plaintiff. That on August 20, 1913, P. J. Lyons and one P. H. Knoll were copartners under the style of Lyons-knoll Investment Company and on that day they entered into a contract with Hartsough whereby he agreed to convey to them the exclusive right to manufacture and sell in the United States the traction engine described as the 'Little National tractor,' and this contract was on January 6, 1914, assigned for a valuable consideration by Lyons and Knoll, together with all rights conveyed to them by Hartsough, to the plaintiff, a corporation formed for the purpose of engaging in the manufacture and sale of these tractors.

That many changes and improvements were made in the traction engine referred to in the contract with Hartsough, which was put upon the market on January 6, 1914, under the trade-mark of 'Bull tractor,' and this tractor was extensively advertised. That the uniform retail price for which this tractor is sold is $395, which was much less than tractors of that kind had theretofore been sold. The contract provided that, if the complainant complies with certain conditions, mentioned in the contract, for six months, then the contract shall remain in force as long as the parties comply with the terms of the contract, and Hartsough bound himself that 'he will not, during the life of the agreement, connect himself directly or indirectly with the manufacture or sale of any similar competing machine, or which is an infringement on that machine.'

That P. J. Lyons, one of the parties to the original contract, is president of the plaintiff company, and has been since it was incorporated, and before that time had been president of the Gas Traction Company, which had manufactured the gasoline traction engine known as the 'Big 4.' That said Lyons had, by reason of his connection with these companies, become well and favorably known, personally and by reputation, throughout the United States, to those contemplating the purchase of gasoline traction engines, to a greater extent than any other person engaged in the manufacture and sale of such engines, and that this reputation is a valuable asset belonging to the plaintiff now, so much so that the use of the name 'Lion tractor,' or any name of the same or a similar sound, would lead many purchasers to believe that it is manufactured by the company with which he was connected. That, before the plaintiff company was organized, Lyons and Hartsough had terminated their connection with the Gas Traction Company. That certain individuals, mentioned in the complaint, organized a company called the 'Hartsough Tractor Company,' which name was afterwards changed to 'Lion Tractor Company,' which was done for the purpose of misleading the public into the belief that the tractors which they were selling were those made by the plaintiff and Mr. Lyons.

That on January 12, 1914, Hartsough entered into a written contract with the plaintiff, by which he became associated with it in the capacity of mechanical adviser, his work to consist in giving assistance in the construction of plaintiff's tractor and to improve, simplify, cheapen, and accurate said tractor, and that he would commence the erection of an improved Bull tractor, to be built outside of plaintiff's factory, the expense of the experiments and building of such tractor to be paid by the plaintiff. It was further provided, that this contract was in no wise to alter, change, or amend the prior contract with Lyons & Knoll, or the plaintiff. Royalties were to be paid on both designs at the same rate as agreed upon in the first contract of August 20, 1913. There was also a provision in that last contract that the plaintiff could cancel the same if it desired to do so, the cancellation to take effect 30 days after notice thereof. On October 13, 1914, the plaintiff gave notice of cancellation of the second contract to Hartsough, and paid him in full for his services and expenditures up to November 13, 1914, the expiration of the 30 days.

That, soon after the second contract had been made with Hartsough, Hartsough informed plaintiff that he had begun work of completing an improved tractor, and presented his bills, which amounted to $2,434.36, to the plaintiff, all of which was paid by the plaintiff, who also paid him his salary for the entire time. That thereafter Hartsough exhibited to the plaintiff an incomplete two-wheel gasoline traction engine, upon which he was then working under the contract of January 12, 1914, stating that he would have the said engine completed, to be tested in a short time. That in September, 1914, Hartsough informed the plaintiff that he was building for it under the contract of January 12, 1914, a gasoline traction engine, that could be manufactured at an expense of $30 to $35 less than the Bull tractor, and was more effective. That about a week later he showed them that engine, and it is the same identical engine now designated by the defendant as the 'Lion tractor,' and on November 12, 1914, Hartsough made a test of this new engine in the presence of the officers of the plaintiff.

That by reason of the last contract, and the fact that all the expenses thereof, as well as the salary of Hartsough, were paid by the plaintiff, it is the owner thereof; but the defendant claims it as its property, designating it as the 'Lion tractor,' and that on October 25, 1914, the defendant advertised this tractor in a number of newspapers. In that advertisement it was stated that the defendant, then doing business as the 'Hartsough Tractor Company,' had been formed to manufacture and sell the tractor or engine invented by Hartsough, known as the 'Lion tractor,' and continued to advertise the same in a large number of newspapers. It also offered to sell this 'Lion tractor' for $50 less than the price at which the plaintiff sells its 'Bull tractor.'

That this was the first notice the plaintiff had that Hartsough had violated his agreement with it, and thereupon they immediately notified Hartsough, as well as all the parties composing the Hartsough Company, that the Bull Tractor Company had the exclusive right to manufacture and sell this machine in the United States, and called upon Mr. Hartsough to carry out the terms of his contract with them,...