Union Shipbuilding Co. v. Boston Iron & Metal Co.

• Decision Date: 17 December 1936
• Docket Number: No. 2397.,2397.
• Citation: Union Shipbuilding Co. v. Boston Iron & Metal Co., 17 F. Supp. 318 (D. Md. 1936)
• Court: U.S. District Court — District of Maryland
• Parties: UNION SHIPBUILDING CO. v. BOSTON IRON & METAL CO.

17 F. Supp. 318

UNION SHIPBUILDING CO. v. BOSTON IRON & METAL CO.

No. 2397.

District Court, D. Maryland.

December 17, 1936.

Semmes, Bowen & Semmes (by Gaylord L. Clark), of Baltimore, Md., and Edwards, Bower & Pool (by Clifton V. Edwards), of New York City, for plaintiff.

Morton H. Rosen, of Baltimore, Md., and Herbert A. Baker, of Boston, Mass., for defendant.

CHESNUT, District Judge.

The plaintiff in this case is the owner by assignment of United States Patent No. 1,500,282, issued July 8, 1924, to Frederick C. Stauffen, on application filed March 4, 1924. The patent is entitled a "Hauling-out system for scrapping vessels and apparatus for the same." It is a modified form of the ordinary marine railway. The plaintiff is a Delaware corporation engaged principally in the business of repairing and scrapping vessels doing business in Maryland, and with a plant situated on the Baltimore Harbor. The defendant, a Maryland corporation, is engaged generally as a dealer in scrap iron and metal and has a plant for scrapping vessels also located on the Baltimore Harbor adjoining Ft. McHenry. By its bill in equity in this case the plaintiff alleges infringement of its patent by the defendant and seeks an injunction for the future and an accounting for the past. The defenses are (1) lack of invention in view of the prior art and (2) laches and estoppel. Apart from these, the infringement is admitted. The case has been submitted for final decree upon the pleadings and testimony.

It appears from the evidence that the business of scrapping steel vessels first assumed importance about the year 1923. Prior to that time such vessels as were available for scrapping were not large in number and prior to the development of the oxy-acetylene torch the labor involved in the process of scrapping was so great as to render the business unprofitable. But as a result of the surplus shipping after the World War, and in the United States probably increased by the Washington Conference for the Limitation of Armaments in 1922, together with the then available relatively economical process of scrapping steel vessels due to the use of the acetylene torch, the business assumed substantial proportions. In 1923 the defendant had acquired by purchase a large number of obsolete or unused vessels with the intention of scrapping them, but then not having any suitable plant of its own available for the work, entered into negotiations with the plaintiff and subsequently made a contract with the plaintiff dated April 30, 1923, for the scrapping of a number of such vessels at the price of about $7.00 per ton. In the course of negotiations for this contract Herman Schapiro, the president and presumably the chief owner of the defendant corporation, conferred from time to time with Mr. Sterrett, the then president of the plaintiff's predecessor corporation and, according to the testimony of Mr. Schapiro in this case, in relation to the manner of doing the work, he called to the attention of Mr. Sterrett an economical method of hauling the vessels out of the water which he had seen in the previous year on a visit to the shipyards of Petersen & Albeck in Copenhagen, Denmark. About the same time or shortly thereafter, Mr. Sterrett conferred with Frederick C. Stauffen who was then an engineer employed by the Union Shipbuilding Company, and instructed him if possible to devise and construct a more economical device or system for hauling the vessels out of the water and scrapping them than was then customary at the plaintiff's plant. Stauffen, no longer in the employ of the plaintiff, as a witness in this case, testified that he was not advised by Mr. Sterrett in any detail as to what was desired, but only given the general instructions to construct an apparatus or system for the purpose mentioned that could be operated with more economy than the only previously available means which necessitated the use of the ordinary marine railway at the plaintiff's plant. There was no testimony to contradict Stauffen on this point, and I therefore accept it as a fact. Stauffen says that with these general instructions he immediately overnight devised the method of operation which was subsequently embraced in the patent in suit. As already indicated, it is merely a modified form of the well-known marine railway and varies from the latter chiefly in the elimination of the use of the "cradle."

For the purposes of this case, a brief but sufficient description of a marine railway is as follows: It consists of two pairs of parallel ordinary railroad tracks based on sufficiently firm foundations of concrete constructed on an inclined plane beginning on the shore and extending down into the water for the necessary depth of approximately twenty feet or more as the particular plant requires. Each pair of parallel tracks are a few inches distant from each other and the space between the two pairs is several feet. Between and resting upon each pair of the tracks a system of rollers is provided, on which rests a movable platform of substantial timbers (the cradle) which is itself level on top, but on the underneath side is provided with longitudinal members sufficiently thin to permit their resting upon the two pairs of rollers. The numerous individual rollers are spaced apart, and kept in alignment and lateral motion prevented by side frames which move with the rollers as they roll on the rails, and the cradle rolls on the rollers. After the cradle is run down the tracks into the water the ship, while still floating, is guided or steered on to the cradle and at its in-shore end is placed in the appropriate position and is then gradually drawn out of the water up the inclined plane by a cable attached to hoisting machinery, and the outshore portion of the ship, as it ceases to be buoyed up by the water, is made stationary to prevent it from falling over by the use first of keel blocks and later by bilge blocks. When the ship has been drawn entirely out of the water and is resting on the cradle it is then in condition for repairs or scrapping.

The cost of a marine railway is approximately $250,000 as a minimum, and the operation whereby a large ship is thus hauled out of the water necessitates for several days the labor of divers and is an operation which is relatively costly, and of course involves the use of the whole marine railway which represents a large capital investment. The market price for scrap iron is generally so low that there is no profit in scrapping steel vessels if the process necessitates the use of the ordinary marine railway. It was this situation which seemed to make imperative to the parties some modified form of the marine railway for extensive use in scrapping steel vessels, in order that the cost of the operation could be brought within the bounds of profitable operation.

Schapiro says that he described in a general way to Sterrett the method for the more economical hauling of ships out of the water, when intended to be scrapped, which he had observed in Copenhagen, but did not describe the apparatus in detail. He says, however, that the essential feature of the method was to eliminate the use of the cradle by floating the vessel directly upon the rollers between the parallel tracks and then attaching the cable to the bow of the vessel and drawing it up the ways on the rollers. This is the essential feature of the Stauffen patent. Mr. Sterrett is now dead and there was no other witness to the conversation between Schapiro and Sterrett, but there is some inferential corroboration of the fact that Petersen & Albeck did use some form of a marine railway without a cradle, from their letter to the plaintiff put in evidence as Plaintiff's Exhibit No. 18.

The more economical hauling out system devised by Stauffen was promptly constructed by him at the plaintiff's shipyards and the work of demolishing the vessels as provided for in the contract of April 30, 1923, between the parties, was begun in September of that year and concluded in accordance with the contract. Several months thereafter the defendant had purchased additional ships for scrapping and Schapiro offered the work to Mr. Sterrett, the then president of the plaintiff, but they could not agree upon a price as Mr. Sterrett then wanted $12.00 per ton for the work which Schapiro says was an impossibly high price for him to pay in view of the then prevailing market for scrap metal. Schapiro determined he would have to do the work himself and proceeded to lease a plant for that purpose known then as the South Plant of the Bethlehem Steel Company, adjoining Ft. McHenry, being the same property which was subsequently acquired by the B. and O. Railroad and is now again leased and operated by the defendant. This property had been used for shipbuilding and was provided with the foundation for a marine railway on which the defendant in 1924 constructed a hauling-out system for ships substantially similar to that at the plaintiff's plant, although differing in some little detail particularly with regard to the size of the rollers used. One Muth, formerly an employe of the plaintiff, who had worked under the supervision of Stauffen and who had left the employment of the plaintiff, became an employe of the defendant and aided in the construction of the defendant's plant. The cost of the work was approximately $13,000, including several thousand dollars in repairs due to an accident. No secret was made by the defendant of its new construction and use of its hauling-out system; and the plaintiff was fully advised of its construction and operation, and in fact sent its manager and other officers to particularly inspect the apparatus. The manager, Cowles, who was in the employ of the plaintiff's predecessor from 1923 to 1932, testified that after inspecting defendant's apparatus he advised Mr. Sterrett that it was substantially similar to the plaintiff's system, and on instructions from Sterrett he gave...