Provident Chemical Works v. Hygienic Chemical Co.

• Decision Date: 14 May 1909
• Parties: PROVIDENT CHEMICAL WORKS v. HYGIENIC CHEMICAL CO.
• Court: U.S. District Court — Southern District of New York

170 F. 523

PROVIDENT CHEMICAL WORKS v. HYGIENIC CHEMICAL CO.

United States Circuit Court, S.D. New York.

May 14, 1909

This is an action submitted upon agreed facts, and arising upon a contract between the parties to share the 'cost and expense' of defending certain suits brought by the Rumford Chemical Works upon patent No. 474,811. Both plaintiff and defendant were concerned in the manufacture of granulated phosphate, upon the production of which the patent in question was taken. They were each interested in establishing the invalidity of the patent, if possible, and being individually each threatened with suits by the Rumford Chemical Works, they entered into an agreement on May 17 1900, by which they mutually promised 'that any and all suits brought by said Rumford Chemical Works * * * shall be fully and faithfully defended, as follows: If brought against any person or persons * * * west of the Mississippi river, or in the states of Wisconsin, Illinois, Mississippi, and Tennessee, the same shall be defended under the supervision of the said Provident Chemical Works through attorneys appointed by it; and, if brought against a resident of any other of the United States, the same shall be defended under the supervision of said Hygienic Chemical Company through attorneys appointed by it, the cost and expense of such defenses to be equally borne by the parties hereto.'

The Rumford Chemical Works commenced a test suit against the plaintiff and two of its customers on the 15th day of June 1900, which eventually resulted in the establishment of the patent in favor of the Rumford Chemical Works by the Circuit Court of Appeals for the Second Circuit on the 7th day of July, 1904. Application was made for a writ of certiorari to the Supreme Court, and this was denied on December 9, 1904 thus closing this litigation.

The parties shared all expenses of this litigation during its continuance, in accordance with the contract, but the defendant refuses to pay the costs and disbursements which the complainant in that suit taxed against this plaintiff and which amounted to $4,646.46, and likewise refuses to pay one-half the disbursements of the plaintiff to its attorneys, Von Briesen & Knauth, which were incurred for the purpose of reducing these costs. The amount of these is $312.90. The plaintiff sues for one-half of each of these sums under the contract. The position of the defendant is that the costs taxed were not part of the 'cost and expense of such defenses.'

The defendant likewise pleads a counterclaim which arises upon the contract under the following circumstances: The Rumford Chemical Works had brought other suits beside the one which was made a test, and one of these suits was against the Hygienic Chemical Company. This was dismissed on July 21 1904, by an order entered in the clerk's office of this court dismissing the bill with costs in favor of the defendant by reason of the failure to except or reply to the answer, but the Rumford Chemical Works began another suit on August 2, 1904, in which the Hygienic Chemical Company was defendant, together with certain individuals. This suit came on for a hearing before Judge Holt on April 12, 1907, at which he dismissed the bill. Upon appeal to the Circuit Court of Appeals for this circuit, Judge Holt's decree was reversed on February 11, 1908, and a decree for an injunction and accounting was entered in accordance with the opinion of the Circuit Court of Appeals upon its mandate. A writ of certiorari has been granted by the Supreme Court in that case, and the proceedings are still pending undecided in the Supreme Court. After the decision of the Circuit Court of Appeals in the case against the plaintiff herein, the plaintiff notified the defendant that it would not be liable for any further cost in carrying on the litigation between the Rumford Chemical Works and the defendant, but this notice the defendant repudiated and alleged that it would hold the plaintiff to the contract. The defendant has paid the sum of $2,065.83 for disbursements and legal services since the decision of the Circuit Court of Appeals in the case of the Rumford Chemical Works against the plaintiff herein, and claims the right to charge the plaintiff with one-half of...