National Wire Bound Box Co. v. Healy

• Citation: 189 F. 49
• Decision Date: 10 January 1911
• Docket Number: 1,717.
• Parties: NATIONAL WIRE BOUND BOX CO. et al. v. HEALY.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

189 F. 49

NATIONAL WIRE BOUND BOX CO. et al. v. HEALY.

No. 1,717.

United States Court of Appeals, Seventh Circuit.

January 10, 1911

The decree appealed from orders appellants, within one month of the date of the entry thereof, to execute to appellee, his heirs and assigns, a written assignment of the invention known as 'means for making box blanks,' serial number 230,249, and the invention known as 'a combined carriage and 'former' for wire bound blank machines,' serial number 228,443; appellee, his heirs and assigns, being given control of such applications for letters patent in place of the appellants.

The decree further orders appellants to execute to appellee written assignments of the following letters patent:

1. Patent number 799,854, granted by the United States, on the invention of 'Improvements in Wire Bound Boxes,' later surrendered to the United States, and for which re-issued letters patent No. 12,725 was granted November 26 1907 to the appellant National Wire Bound Box Company.

2. Patent number 806,411, granted December 5, 1905, by the United States to the appellant National Wire Bound Box Company on said invention of the 'Box Blank Machine with Traveling Staplers.'

3. Patent number 907,586, applied for December 4, 1905, granted to said National Wire Bound Box Company December 22, 1908. This patent covers said invention: 'Improvements in Wire Bound Boxes' except that the cleats are rabbeted instead of being step-mitered.

4. British patent number 16,138 granted by the United Kingdom of Great Britain and Ireland on August 8, 1905, to Alfred Julius Boult and by him assigned on April 19, 1906, to said National Wire Bound Box Company of South Bend, Indiana, U.S.A., on said invention 'Improvements in Wire Bound Boxes.'

5. British patent number 16,139 granted by the United Kingdom of Great Britain and Ireland on August 8, 1905, to Alfred Julius Boult, and by him assigned on April 19, 1906, to said National Wire Bound Box Company, on said invention, 'Box Blank Machines with Traveling Staplers.'

6. French patent number 356,753 applied for and granted August 8, 1905, by the French Republic to said National Wire Bound Box Company on said invention 'Box Blank Machine with Traveling Staplers.'

7. Austrian patent number 28,366 applied for August 8, 1905, and granted by the Empire of Austria to said National Wire Bound Box Company on said invention 'Box Blank Machine with Traveling Staplers.'

8. Austrian patent number 30,972, applied for August 8, 1905 and granted by the Empire of Austria to said National Wire Bound Box Company, on said invention 'Combined Carriage and 'Former."

9. German patent number 183,216 applied for August 9, 1905, and granted by the German Empire to said National Wire Bound Box Company, on said invention 'Box Blank Machine with Traveling Staplers.'

10. German patent number 184,840, applied for June 9, 1906, and granted by the German Empire to said National Wire Bound Box Company, on said invention 'Improvements in Wire Bound Boxes."

The decree provides that, in case the assignments thus ordered are not made, the same shall be made through the Master in Chancery.

Further facts are stated in the opinion.

Russell Wiles, Floyd R. Mechem, Daniel P. Murphy, and Philip C. Dyrenforth, for appellants.

Dan. W. Simms, Clarence W. Nichols, George T. Buckingham, and Arthur F. Durand, for appellee.

Before GROSSCUP, BAKER, and SEAMAN, Circuit Judges.

GROSSCUP Circuit Judge, delivered the opinion.

The decree appealed from is based upon the finding that the appellants Inwood, Lavenberg and Robinson were, at the date of the decree, and during all the time theretofore since the first day of June, 1904, jointly and severally trustees of appellee, and as such trustees, made each and all of the foregoing inventions for, and on behalf of, and for the sole use and benefit of appellee.

The testimony in the case is voluminous, covering 2617 printed pages. The findings of fact by the Master are also voluminous, covering 82 printed pages. The ultimate facts, determinative of whether the decree should stand or not, or what should be its modifications, can be more compactly stated.

The patents and applications involved in this suit relate to machines employed in the manufacture of wire bound packing boxes. Through corporations, the stock of which were owned by him, appellee was, at the time of his transactions with appellants, the owner of the broad basic patents covering this character of machine, together with the improvements that, up to that time, had been made thereon. This gave him full control, supposedly at least, of the art of manufacturing wire bound packing boxes by machinery. The patents and applications involved in this suit are mere improvements upon, and extensions of, this art.

The relations of the parties began in March 1904; in furtherance of which, in April 1904, the South Bend Healy Box Company was organized, of which appellants Robinson and Inwood (Lavenberg was subsequently included) were the sole stockholders and directors, and to whom was granted a license for certain territory therein named, lying around South Bend-- the understanding being, that if this Company was successfully launched, Robinson, Inwood and Lavenberg were to have the further right to promote appellee's patents exclusively throughout the United States.

Up to this time, appellee had expended $62,000 of his own money, and ten years of time and effort, in introducing and launching his wire bound packing box enterprise commercially. The machines actually used for the making of boxes, at this time, were those known as the Rosback machines, and a later machine known as the Flora machine. The Flora machine, at this time, consisted in plans and working drawings made by the inventor. To the appellants Robinson, Inwood and Lavenberg, appellee exhibited these Rosback machines, and the plans and working drawings of the Flora machine-- the purpose, obviously, being to put appellants into possession of the knowledge of the art. The Rosack machines did not prove satisfactory. Rosback himself, the inventor, was employed for six weeks to make them operate, and with him worked Inwood and Lavenberg. Rosback then gave up the attempt and left the plant-- appellants and appellee looking to the Flora patent to produce a machine that would be satisfactory. Appellants claim that the Flora machine also proved unsatisfactory, because it was found to be too expensive.

Up to this time, June 1, 1904, the general understanding had been, as stated, that Robinson, Inwood and Lavenberg were to have the exclusive promotion of the organization of corporations, under appellee's patents, throughout the United States. No formal contract to that end, however, was drawn. June 1, 1904 a formal contract was drawn, covering nine cities and the country adjacent thereto, within which Robinson and Inwood (Lavenberg subsequently becoming a party thereto) secured the exclusive right to organize box manufacturing and selling companies under appellee's patents. Subsequently other cities were added to these, and some territory exchanged for other territory. But at no time was the contract made to cover the United States. This contract, and the ones following it, granted to appellants the exclusive right to promote the organization of corporations within the territory named, for the purpose of manufacturing wire bound packing boxes by the patented machine of appellee, and selling the same according to the terms of a license and agreements, to be granted by appellee to each company so formed in each of such cities. Minimum license fees were fixed, as also minimum cash bonuses and a stock bonus of ten per cent., the bonuses to be divided one-third to appellee and two-thirds to appellants. Six months was fixed as the time within which these corporations should be organized and purchase their first set of machines, for failure of which the agreement was to forthwith cease and become void. This is known as the option agreement. The Master finds, however, that concurrently with this agreement 'a general verbal understanding was reached * * * that the complainant (appellee) would give the defendants (appellants) promotion contracts of the general purport of the South Bend, Nine Cities and Cleveland contracts herein referred to, which should cover the United States, excluding the territory of Chicago, for which the complainant (appellee) had already given a promotion contract to a third person. ' Obviously, the restricted contract drawn was with a view of ultimately extending it to the whole of the United States, with the exception named, in case appellee's experience with appellants, in the specific territory named, turned out to be satisfactory.

The Master also finds that there was a general verbal understanding that Robinson, Inwood and Lavenberg would assign to appellee 'any and all inventions made by them, relative to the wire bound box industry, and * * * would make and sign any papers necessary to enable the complainant (appellee) to get patents, and that there would be no charge or compensation for the complainant (appellee) to pay them, and complainant (appellee) agreed to take out patents on such inventions so assigned him'-- this understanding between the parties, that the ownership and control of all the patents relative to the wire bound box art should be in appellee, being a means to enable appellants to promote their contracts of promotion.

Pursuant to the relationship thus established, appellants entered upon the work of promotion, Robinson being chiefly engaged in looking up people with money who were desirous of investing and Inwood and Lavenberg in fitting up the factory and getting ready to manufacture samples of the boxes to exhibit...