Myers v. Steel Mach. Co.

• Decision Date: 20 May 1904
• Citation: 57 A. 1080,67 N.J.E. 300
• Parties: MYERS et al. v. STEEL MACH. CO.
• Court: New Jersey Court of Chancery

57 A. 1080

67 N.J.E. 300

MYERS et al.

v. STEEL MACH. CO.

Court of Chancery of New Jersey.

May 20, 1904.

(Syllabus by the Court.)

Bill by George R. Myers and others against the Steel Machine Company. Decree for complainants.

This bill is filed by George R. Myers, Joseph T. Kavenaugh, and George W. Howard, severally and jointly, trading as the American Machine Company, against the sole defendant, the Steel Machine Company, a corporation of this state, asking that the defendant company be restrained from selling or attempting to sell certain described printing presses which it is alleged the defendants are about to do, contrary to the terms of an agreement made by the defendant with the complainants, and also asking that the defendant company may be decreed specifically to perform that agreement The complainants annex to the bill of complaint a copy of the agreement upon which they base their right to the relief they seek. It is made between the defendant the Steel Machine Company, party of the first part, and the complainant, party of the second part. It is dated on the 21st day of December, 1901, and witnesses that the party of the first part (the Steel Machine Company, defendant) "does hereby agree to sell to the said parties of the second part [the complainants in this cause], and the said parties of the second part do hereby agree to purchase of the said party of the first part all the Johnston Automatic Printing Presses with Automatic Patent Feeds that the said party of the first part may manufacture at the following schedule of prices. Size 16x9, $350, with the W. G. Johnston Feed. Size of form No. 2, 10x15, $650, with the W. G. Johnston Patent Feed. Size of form No. 3, 15x18, $800, with the W. G. Johnston Patent Feed. The said presses and feed to be tested, inspected and in perfect order before being packed and crated, and guaranteed to be in good working order when put up for running, all breakage by transportation to be replaced by said party of the first part, and all parts not complete to be furnished free of charge, payment for said Presses and Patent Feed to be made in thirty days from delivery or two per cent off for cash payment on presentation of bill of lading. The said party of the first part agrees to manufacture and to continue to manufacture the Johnston Automatic Printing Press with Feed with due diligence barring strikes and other uncontrollable delays, and to sell the said machines to the parties of the second part and to no other person or persons in the United States, Great Britain and Canada: provided, however, that the said parties of the second part shall purchase from the said party of the first part all the Johnston Automatic Presses with Feeds the party of the first part shall manufacture. And provided further that in case the parties of the second part shall fail to purchase from the party of the first part all machines manufactured as aforesaid for a period of three months, that then and in that event the party of the first part reserves the right to sell to the other parties such machines as they may have on hand undisposed of at prices not less than those quoted or sold for by the parties of the second part. And the party of the first part agrees to deliver at least two machines per month during each month beginning with January 1st, 1902, and in the event of the said party of the first part failing for three consecutive months to deliver said two machines per month then the said parties of the second part shall be at liberty to have such machines built by a responsible concern paying the said party of the first part the difference in its costs and the aforesaid selling price." The complainants further allege that, acting upon the said agreement securing to them the exclusive privilege of purchasing the printing presses therein described, they spent large sums of money for advertising and inviting purchasers to buy from them, relying on the agreement in question as their protection. That they have delivered to the defendant company orders for $32,000 worth of the machines in question, but that the defendant company has failed and refused to deliver such machines in good working order. The complainants set forth in detail the names of vendees from whom they obtained agreements to purchase the presses, which agreements, the complainants say, they have been unable to fulfill, because the defendant company has refused and failed to carry out their agreement The bill of complaint further states that the Johnston Automatic Printing Presses with Patent Feed (the machines which the defendant agreed to manufacture, and of which the complainants were to have the exclusive sale) are built under letters patent issued to one William G. Johnston, who has assigned the same to George G. Green, president of the defendant company, in trust for the use of that company. That the complainants have been unable to avail themselves of the privilege given them by the agreement (in case the defendant failed for three consecutive months to deliver two machines a month) to build said machines themselves or obtain them to be built, because the defendant company has in its possession all the drawings, patents, and patterns relating to the construction of those machines. The complainants charge that the defendant company, with intent to deprive the complainant of the benefits secured to them by the said contract, has refused to deliver the said presses, although they have at least four manufactured and ready for delivery, which they have offered to sell to other persons than the complainants at lower prices than those at which the complainants have been offering to sell them. That these acts of the defendant company are in fraud of the complainants' rights, and are contrary to the express provisions of said agreement, which declares that the defendant company, if it sells any presses to other parties than the complainants, must sell them at prices not less than those for which the complainants offer said machines for sale, and that under said agreement the defendant can only sell at those prices in case the complainants shall fail to take and pay for the machines as provided in the contract, and the complainants aver that they have not refused to accept said machines, but, on the contrary, they say they have always been ready to accept the same, and that the defendant company has refused to deliver them. The bill of complaint contains a clause alleging the insolvency of the defendant company and the illegal issue of its stock. This charge, and any relief sought thereon, was abandoned at the hearing of the cause. The complainants pray that the Steel Machine Company, defendant, may be decreed specifically to perform the agreement of the 21st day of December, 1901, set forth in the bill of complaint, that it may be enjoined from selling or attempting to sell the machines referred to in that agreement, contrary to the terms thereof, to any other persons than the complainants, and from advertising that it is authorized to sell said machines, and from selling or disposing, or attempting to sell or dispose, of the patent rights under which the machines were built.

A preliminary injunction was allowed, after a hearing, restraining the defendant company from selling or attempting to sell, in the United States, Great Britain, or Canada, Johnston Automatic Printing Presses with the Johnston Patent Feed to any other person or persons than the complainants, and for the prices at which they are sold by the complainants.

The defendant company has answered the bill of complaint. It admits the execution and delivery of the agreement, copy whereof is annexed to the bill of complaint, and leaves the complainants to prove what they may have done and expended in efforts to advertise and sell the machines in question. It admits that the complainants had placed with the defendant company several orders for machines, and alleges that it had carried out its contract with the complainants so far as it was permitted to do by the complainants. It denies that the defendant company's failure to furnish two machines a month is in any way attributable to the defendant, and that the complainants' inability to carry out any contracts that they may have made for the delivery of the machines was in any way due to the defendant company's failure to perform its contract with the complainants. The defendant admits that the machines in question are manufactured, built, and constructed under letters patent granted by the government to William G. Johnston, and that Johnston has assigned said patents to the defendant company, but it denies that the said machines can be built under any letters patent about to be granted by the government to George G. Green, as trustee for the defendant company. The defendant denies that it has failed to furnish any of the machines in good working order to the complainants under said agreement, and denies that in fraud of the contract, or for the purpose of breaking the same, it has refused to deliver said machines; denies that it has on hand any of said machines, except two, which were shipped to the complainants under the contract after approval by them, and which they subsequently returned. The defendant company further denies that it has offered the said machines for sale in violation of said agreement, and expressly denies that it has offered to sell them to the parties named in the bill of complaint. The defendant then states the circumstances of the case to be that in the month of December, 1901, George G. Green was applied to by William Johnston and William G. Johnston to form a company for the manufacture of the said machines, to be known as the Johnston Automatic Printing Press and the William G. Johnston Patent Feed combined; that subsequently the complainant Kavenaugh represented to said Green that he (Kavenaugh) was a member of the American Machine Company, which had a contract with the...