United States v. American Bell Tel. Co.

• Decision Date: 01 November 1886
• Citation: 29 F. 17
• Parties: UNITED STATES v. AMERICAN BELL TELEPHONE CO. and others. [1]
• Court: U.S. District Court — Southern District of Ohio

29 F. 17

UNITED STATES v. AMERICAN BELL TELEPHONE CO. and others. ^[1]

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

November, 1886

A. G Thurman, Grosvenor Lowry, Jeff. Chandler, and P. H. Kumler Dist. Atty., for the United States.

Joseph E. McDonald, Richard A. Harrison, and J. J. Storrow, for American Bell Telephone Co.

Perry &amp Jenney, for local telephone companies.

JACKSON J.

Proceeding upon the general theory that a patent is a contract between the inventor on the one side, and the government on the other, founded on conditions or considerations prescribed by law, those moving from the former being the production of some new invention or discovery beneficial to the public, in consideration of which the government grants to the patentee the exclusive privilege, for a limited period, to make, vend, and use the invention throughout the United States, with the right to invoke the aid of its courts for the protection and enforcement of these rights or franchises, the complainants seek, by their bill in this case, to have certain letters patent, numbered 174,465 and 186,787, embodying the electric speaking telephone, issued to Alexander Graham Bell, March 7, 1876, and January 30, 1877, respectively, declared void, set aside, and annulled, on the ground that they were fraudulently, surreptitiously, and improperly obtained on the part of said Bell, by means of alleged false statements, on which the government relied, and on the faith of which it was induced to issue said patents. In the event said letters patent should not be declared wholly invalid and void, because of the alleged fraud of said Bell in procuring their issuance, the bill further seeks to have said letters patent treated as contracts, 'reformed, and modified, as in law and equity and good conscience they ought to be,' for the reason that, by inadvertence, accident, and mistake, they embrace more than said Bell was entitled to claim, etc. Alexander Graham Bell, who is averred to be a resident of the District of Columbia, is made a party defendant; but having neither appeared, nor been served with process, he is not before the court.

It is alleged in the bill that prior to the institution of this suit said Alexander Graham Bell had divested himself of all right, title, and interest in the said letters patent, which, together with the grants therein contained, he had transferred to the American Bell Telephone Company, a corporation chartered and duly organized by and under the laws of the state of Massachusetts. The American Bell Telephone Company, as the owner of said letters patent, together with several corporations chartered by the laws of Illinois, Pennsylvania, and Ohio, designated in the pleadings as the 'local or licensee' companies, 'associates,' 'copartners,' 'representatives,' and 'agents' of the American Bell Telephone Company, are made defendants. There has been no service upon or appearance by the Illinois or Pennsylvania companies. The 'local or licensee' corporations of Ohio are before the court by regular service of process and appearance. The averments of the bill touching the jurisdiction of the court over the several defendants are as follows:

'Your orator further shows that the said defendants, the American Bell Telephone Company, duly incorporated under the laws of Massachusetts; and the Central Union Telephone & Telegraph Company, a corporation duly chartered under the laws of Illinois; and the Erie Telephone & Telegraph Company, incorporated under the laws of the state of Massachusetts; and the Central District & Printing Telegraph Company, incorporated under the laws of the state of Pennsylvania; and the Cleveland Telephone Company, the City & Suburban Telegraph Company, the Miami Telephone Company, and the Buckeye Telephone Company, the latter four incorporated under the laws of Ohio; and the defendant, Alexander Graham Bell,-- all of whom are made defendants to this bill,-- are present, and are found and have property within the jurisdiction of this court, and are now engaged in carrying on the business of telephony, and maintaining a close monopoly thereof, in the said district,-- that is to say, in said Eastern and Western division of said Southern district, and in said Northern district of Ohio,-- under and by virtue of said patents to said Bell, and by the means and in the manner hereinafter set forth. Your orator further shows that the defendant the American Bell Telephone Company owns all the telephone instruments used in the business of telephony in the United States conducted under the authority of its patents, and especially all those used by said defendants, or any or either of them, in the state of Ohio; the said instruments that are used by them in said state being in number over 20,000. Its local associates and copartners, the said companies, respectively, own their wires and poles, and contribute the same as their shares, respectively, of the capital of the business, while the American Bell Telephone Company furnishes the franchise and exclusive right of said patents, and the telephone instruments, together with a contract stipulation with each of said local companies that the American Bell Telephone Company will also supply counsel, and maintain all such suits, and do all things, to make the business an exclusive and close monopoly, without charge or burden to the local company or corporation; that the local association, copartnership, or joint stock company thus formed, divides the profits of the business between the American Bell Telephone Company and the said local association, on terms agreed upon between the parties, and the share of the American Bell Telephone Company, as your orator is informed and believes, is set apart weekly, and accounted for by said local company, and is collected by agents of the American Bell Telephone Company, who visit said local company for that purpose, or otherwise paid to said American Bell Telephone Company; that the telephone being a necessary agent in conducting commercial business affairs, the said business is carried on in the manner hereinbefore stated in every city and town of importance in the United States, and between cities, towns, and places in different states, and is so carried on by said defendants in the Eastern division of the Southern district aforesaid, and in the Western division thereof, and the Northern district of said state; and that the said other defendants or sub-companies are part owners and copartners, agents, and representatives of the said American Bell Telephone Company within each of the division and districts aforesaid of the state of Ohio, and that the said American Bell Telephone Company is entitled to, and has an interest in, all and singular the property, rights, and business of the other said defendants; that the said American Bell Telephone Company does business in each of said divisions and districts by the sale and grant of licenses to use said patents, by the renting or lease of said telephone instruments, by sharing in the earnings and profits of each of said local companies, by holding stock in the same, by having an interest in the rights, property, and business thereof, by supporting and maintaining each of said companies in litigation, by the employment of officers, agents, and servants in each of said divisions and districts, and by divers other means and devices.'

Subpoenas were issued to the marshals of the Southern and Northern districts of Ohio for the American Bell Telephone Company, and the local companies resident therein, reciting that the American Bell Telephone Company (impleaded with others) was 'a corporation doing business and found in the state of Ohio.'

The returns of the marshals thereon were as follows:

'Received this writ at Columbus, Ohio, on the twenty-third day of March, 1886, and on the twenty-fourth day of March, 1886, I served this writ on the defendant the American Bell Telephone Company (which is a corporation doing business and found within the Eastern and Western divisions of the Southern district of the state of Ohio) by reading the same to A. D. Bullock, the president of the City & Suburban Telegraph Company, and delivering him a duly-attested copy thereof, (the said City & Suburban Telegraph Company being an agent and partner of the said the American Bell Telephone Company, within said Southern district of the state of Ohio,) on March 24, 1886; also served this writ on said defendant the City & Suburban Telegraph Company by reading the same to A. D. Bullock, its president, and delivering to him a duly-attested copy thereof, on March 24, 1886.

'H. C. URNER, U.S. Marshal. 'By RICHARD C. ROHNER, Deputy.'

On the writ sent to the Northern district this return was made, viz.:

'Northern District of Ohio-- ss.: Served this writ on the defendant the American Bell Telephone Company (which is a corporation doing business within said district) by delivering a true and certified copy thereof to James P. McKinstry, vice-president of the Cleveland Telephone Company, the said Cleveland Telephone Company being an agent and partner of the said the American Bell Telephone Company, within said Northern district of Ohio, on March 31, 1886; also served this writ on said defendant the Erie Telephone & Telegraph Company by delivering a true and duly-certified copy thereof to James M. McKinstry, its general superintendent, on March 31, 1886.

'W. F. GOODSPEED, U.S. Marshal. 'By GEO. WYMAN, Deputy.'

These returns, while varying slightly in form, recite that the American Bell Telephone Company is doing business and found within each of said districts, and that the writ was served upon it by reading the same, or delivering a certified copy thereof, to the president or vice-president of...