National Folding-Box & Paper Co. v. Dayton Paper Novelty Co.

• Decision Date: 10 July 1899
• Docket Number: 4,524.
• Citation: 95 F. 991
• Court: U.S. District Court — Southern District of Ohio
• Parties: NATIONAL FOLDING-BOX & PAPER CO. v. DAYTON PAPER NOVELTY CO. et al.

95 F. 991

NATIONAL FOLDING-BOX & PAPER CO. v. DAYTON PAPER NOVELTY CO. et al.

No. 4,524.

United States Circuit Court, S.D. Ohio, Western Division.

July 10, 1899

Walter D. Edmonds, for complainant.

Wood &amp Boyd, for defendants.

TAFT Circuit Judge.

This is a suit to enjoin the infringement of the second claim of letters patent No. 171,866, to Ritter, for an improvement in paper boxes. The patent has expired, and the case now only involves a question of damages. Judge Sage held that the second claim was valid, and that it was infringed by certain boxes manufactured by the defendant. The case was then referred to the special master to ascertain and state the number of boxes made, the number used, and the number sold by the said defendant company in infringement of the second claim of said letters patent and the number of such paper boxes which defendant had on hand, and the profits derived by the defendant, and the damages suffered by the complainant. The decree contained this clause:

'And whereas, it is contended for the complainant that the accounting should be for the profits resulting to the defendant company from the manufacture, use, or sale of said paper boxes, and it is contended, on the other hand, for the defendant, that the accounting should be limited to the profits resulting to the defendant from the new element covered by said second claim, the court reserves all questions that may arise upon said contentions until the coming in of the master's report, but directs that the master receive testimony relevant to each of said contentions, and that he report upon said testimony in the alternative.'

For reasons which appear in an opinion already filed in this case (91 F. 822), the reference to the master was revoked, and the question of damages submitted to the court on the evidence already produced before the master. By direction of the court and the master, the defendant prepared a statement showing the profits, as it claimed them to be, derived from the sale of the boxes found by the court to be infringements. The amount of profits admitted was $4,718.31 on 915,652 infringing boxes. I am not able, for lack of time, to make a full, detailed statement of the reasons for reaching the conclusions which I have in the case. I have examined all the evidence, and read with care all the briefs. The amount of boxes sold is shown by defendant's books to be 889,172. The defendant's account of gross sales shows that the selling price thereof aggregated $48,606.04, from which must be deducted bad debts, amounting to $356.20; making the gross receipts $48,249.84. This is admitted by complainant to be substantially correct. From this are to be deducted--First, the cost of material; second, factory cost,-- labor, etc.; and, third, the percentage of the general expenses of the defendant's business properly attributable to the manufacture and sale of the boxes. We shall consider these items in their order.

The defendant, in its account, credited itself with $29,965.78 as cost of material. The complainant attacks this item as excessive, and I find that the attack is successful; that from the evidence as to the size of the boxes, the amount of material used for each box, and the cost of material, and making 5 per cent. allowance for wastage, it is entirely possible mathematically to calculate the cost of the total material used during the three years 1889, 1890, and part of 1892. The defendant's statement is merely an estimate. The complainant's statement is based upon the books, and upon the evidence of one Bell, a bookkeeper and stockholder of the defendant, who was very familiar with the prices and details of defendant's business. It would serve no useful purpose to state in detail the calculations, but it suffices to say that, owing to an error in the estimate of defendant's account in the number of boxes per ton of material and in the price per ton of material, the cost of material, instead of being $29,967.50, should be $25,280.41. The brief of counsel for the complainant, taken with the evidence of Bell, quite satisfactorily demonstrates that there is this error in the defendant's account.

Coming now to the second item of cost, to wit, factory cost,-- labor, etc.,-- defendant's estimate was $5, a thousand. Bell's testimony gives the labor required in the making up of the boxes, which, compared with the cost, because of the simplicity of manufacture, is very small, and shows that all the important items do not amount to more than $2.09 per 1,000 boxes. He allows 41 cents in addition for smaller items, difficult of calculation, and is positive that the factory cost ought not to exceed $2.50 per 1,000. His evidence has much more weight than that of Laubach, the president of the defendant, who depends merely on a general estimate, and who admits that in his $5 estimate he included $1 for printing the tops of boxes, which, in fact, was always charged to customers as an extra item, and not included in the regular prices for the boxes, or the total of sales, agreed upon as correct. I have no doubt that $2.50 is ample allowance for the factory cost of the boxes. As there are 889,172 boxes, the amount to be charged for factory cost is $2,222.93.

The remaining item is percentage of general expenses. The aggregate sales of defendant's entire business amounted to $444,128, and the aggregate sales of the infringing boxes amounted to $48,249.84. The ratio, therefore, of the total sales of infringing boxes to the total sales of the entire business is 10.86 per cent., and I shall assume that this proportion of the general expenses is to be credited to defendant in stating the account of profits on the infringing boxes,-- an assumption, I may say in passing, which is exceedingly favorable to the defendant, and which I make only because the complainant does not dispute it. The fact that the amount of capital and general expenses needed in carrying on the infringing box business is much less in proportion to the profit earned than in other departments of defendant's business is apparent from the evidence, and would justify a different division of the general expenses. In the matter of general expenses the complainant concedes the correctness of the items for traveling expenses, rent and drayage as set forth in the account of defendant. The complainant also concedes that the salaries and wages of those engaged, directly or indirectly, in the manufacture and sale of the boxes, as stated by defendant, are also correct, to wit, $21,345.15. The dispute arises with reference to the salaries of the general officers of the company, and in the amount of the interest and discount expenses, and in the miscellaneous expense account. The amount claimed by the defendant by way of interest and discount was $5,215.20. There are errors in calculation in this account amounting to $1,071.35. These errors...