Paridy v. Caterpillar Tractor Co.

• Decision Date: 26 March 1931
• Docket Number: No. 4404.,4404.
• Citation: 48 F.2d 166
• Parties: PARIDY v. CATERPILLAR TRACTOR CO.
• Court: U.S. Court of Appeals — Seventh Circuit

48 F.2d 166 (1931)

PARIDY v. CATERPILLAR TRACTOR CO.

No. 4404.

Circuit Court of Appeals, Seventh Circuit.

March 26, 1931.

Edward W. Tobin and Edward E. Longan, both of St. Louis, Mo., for appellant.

Frank T. Miller, John M. Elliott, O. P. Westervelt, and Val C. Guenther, all of Peoria, Ill., for appellee.

Before ALSCHULER, EVANS, and SPARKS, Circuit Judges.

SPARKS, Circuit Judge.

This action was instituted on December 4, 1929, for the purpose of establishing a constructive trust against property in the hands of appellee. The action arises out of alleged fraud and wrongdoing of appellee's privies in fraudulently obtaining from appellant information, plans, and a model of an endless track mechanism of which appellant claims to have been the original and sole inventor.

The bill alleges that appellant conceived his claimed invention in June, 1892; that thereupon he drafted plans and constructed a small model thereof, which he retained in his possession and exhibited only in secrecy and confidence to those whose financial assistance he sought for the purpose of securing a patent. On account of sickness and financial distress, he was unable to pay the necessary expense of securing a patent, and was unsuccessful in procuring the assistance of others. This condition prevailed until January, 1899, when two men, unknown to appellant, and who gave fictitious names, proposed to him that if he could demonstrate to them the successful operation of his invention they would furnish the necessary financial assistance to enable him to secure a patent and to develop and market the invention. Appellant permitted these men to make a sketch of his invention, and he delivered his model to them. He never saw or heard from them again until January, 1918, although he made diligent effort to do so. At the time last mentioned he learned for the first time that the names of the men so defrauding him were Benjamin Holt and Alvin O. Lombard, and that they had appropriated the invention to their own use and had applied for patents thereon, in their own respective names, on the following dates: Alvin O. Lombard, May 21, 1901, and May 21, 1907; Benjamin Holt, December 17, 1907, January 4, 1910, March 15, 1910, and April 5, 1910; and that patents were thereupon issued to them. Of these facts appellant had no knowledge until January, 1918, and he had unsuccessfully continued his efforts to enlist financial assistance of others to enable him to secure a patent on his invention.

The bill further charges that after Holt and Lombard had thus acquired the invention, Holt became the principal stockholder and president of Holt Manufacturing Company, which company, with knowledge of all the facts above set forth, began to use appellant's invention in the manufacture and sale of tractors, harvesters, and other machinery; that later Holt Manufacturing Company was acquired by appellee, Caterpillar Tractor Company, and both companies, with knowledge of all the facts above set forth, continued to wrongfully and illegally use appellant's invention in the manufacture of their products up to April 5, 1927, which was the expiration date of the letters patent issued to Holt and Lombard; that as a result thereof Caterpillar Tractor Company received and now holds great gains, profits, and property, which, it is claimed, are impressed with a constructive trust ex maleficio in favor of appellant.

The bill further alleges that immediately after discovering the identity of Holt and Lombard as the parties who had surreptitiously and fraudulently obtained knowledge of his invention and had wrongfully and fraudulently appropriated the same to their own use and benefit, appellant retained one John C. Higdon, now deceased, a member of the bar of the state of Missouri, residing in St. Louis and specializing in the practice of patent law for a great number of years, and in whom he had implicit confidence as to ability, as his attorney to prepare and prosecute the necessary proceedings for the recognition, enforcement, and protection of his rights; that Higdon was then seriously ill, suffering from a stroke of paralysis, and mentally disturbed, and because of illness and disturbed mental condition disregarded instructions and directions of appellant in filing an erroneous action, in the nature of a patent infringement suit, against the appellee et al., and failed to diligently and properly prosecute such erroneous action; that appellant was not aware of the error of his then counsel until after Higdon's death, when he retained new counsel and was advised of the error of Higdon in filing such suit; that since the disposition of such erroneous suit appellant has been endeavoring to enlist sufficient financial assistance to enable him to proceed with this cause of action, in which endeavor he was successful shortly prior to the filing of the instant bill.

In answer to the bill appellee filed its motion to dismiss on the grounds that appellant had previously brought a like action against Holt Manufacturing Company in the same court in which the instant case was tried; that appellee was by stipulation made a defendant in that suit, as the assignee of Holt Manufacturing Company; and that action has been prosecuted and defended to a final decree on its merits, which decree was affirmed by the Circuit Court of Appeals, 24 F.(2d) 1020, and a certiorari denied by the United States Supreme Court, 278 U. S. 617, 49 S. Ct. 21, 73 L. Ed. 540; that the instant bill alleges the same facts in support of the present action as were set forth and relied upon in the prior suit; that the prior decree finds that appellant has no claim whatever against appellee or any one acting for it or in its behalf, and is a bar to further litigation on this matter; that the instant bill shows upon its face appellant's gross laches; that neither appellant's poor health, nor his financial distress, nor his unfortunate choice of counsel, excuses or justifies his delays; and that appellant's allegations of conspiracy, and knowledge thereof on the part of appellee, are not based upon alleged facts, but upon conclusions of the pleader.

The decree in the former suit was, by reference, made a part of appellee's motion to dismiss, but we assume it was not attached to the bill as it does not appear in the record before us. Appellant thereupon filed a motion to strike from the motion to dismiss all those portions, separately, which relate to the prior suit. These motions were argued before the trial court but no evidence was introduced, and subsequently the court overruled appellant's motion to strike and sustained appellee's motion to dismiss the bill. It is upon these rulings that appellant seeks a reversal.

Equity Rule 29 (28 USCA § 723), in so far as it applies to motions to dismiss, is as follows:

"Demurrers and pleas are abolished. Every defense in point of law arising upon the face of the bill, whether for misjoinder, nonjoinder, or insufficiency of fact to constitute a valid cause of action in equity, which might heretofore...