Virtue v. Creamery Package Mfg. Co.

• Decision Date: 22 August 1913
• Citation: 142 N.W. 930,123 Minn. 17
• Parties: VIRTUE et al. v. CREAMERY PACKAGE MFG. CO. et al.
• Court: Minnesota Supreme Court

123 Minn. 17

142 N.W. 930

VIRTUE et al.

v.CREAMERY PACKAGE MFG. CO. et al.^*

Supreme Court of Minnesota.

Aug. 22, 1913.

Appeal from District Court, Steele County; Arthur B. Childress, Judge.

Action by D. E. Virtue and others against the Creamery Package Manufacturing Company and another. Judgment for plaintiffs, and defendants appeal. Reversed, and new trial granted.

Syllabus by the Court

Defendant Owatonna Manufacturing Company manufactured a combined churn and butter worker. It owned a patent upon a device known as the ‘two speed,’ by the use of which the churn was turned rapidly for making butter and slowly for working it. Plaintiffs used a device upon a combined churn and butter worker manufactured by them that would have been an infringement, had defendant's patent been valid; but it was void. Defendants made representations to plaintiffs' customers that plaintiffs' churn was an infringement on their patent, and threatened prosecution for infringement. Such representations and threats were actionable.

The laws of competition do not countenance misrepresentation of the business or goods of a competitor.

There was evidence for the jury on the question whether the agents making such representations bound defendants, under the rule that a principal is responsible for the torts of his agent committed in the course of his employment or in the line of his duty, with a view to the furtherance of his master's business, and not for a purpose personal to himself.

The owner of a patent may, in good faith, warn against infringement and give notice of intention to enforce his rights; but if his patent is void he may not make representations of infringement or threats of prosecution to the injury of another.

These representations were material. The ‘two speed’ principle was essential to any successful combined churn and butter worker. There is evidence that they damaged plaintiffs.

Such representations were not rendered harmless by the fact that plaintiffs' churn was afterwards found to infringe a different patent owned by the other defendant.

An action will lie for malicious prosecution of a civil suit, though there is no interference with the person or property of the person sued. To maintain such action, plaintiffs must prove malice and palpable want of probable cause.

The right of action does not accrue until such suit is terminated favorably to the defendant therein.

In the patent infringement suit commenced by the Creamery Package Manufacturing Company against these plaintiffs, an interlocutory decree was entered sustaining that company's claims in substantial particulars. This decree is not res judicata, but it is decisive that these plaintiffs have not yet prevailed.

As to the patent suit prosecuted in the name of the Owatonna Manufacturing Company, the evidence is sufficient to require submission to the jury of the question whether the prosecution was malicious, and probable cause is not conclusively proven.

A patent is presumed valid until the contrary is proven beyond a reasonable doubt, and its issuance, when fairly procured, justifies suit by the patentee for infringement against one using the same device; but when it is proven that an invention was in use prior to the issuance of the patent, the burden of proof is on the patentee to establish its validity.

There is evidence that, after commencement of the suit for infringement of the ‘two speed’ patent, a conference was had, and defendants' attorney showed to the attorney and an officer of the complainants other letters patent which had been issued prior to the complainants'. This evidence was insufficient to show that the complainants thereafter continued such suits with knowledge that their patent was void, in the absence of proof as to the nature of the prior patents which were so produced.

Advice of counsel is a complete defense to an action for malicious prosecution of a civil action only when it appears that the prosecutor fully and fairly stated all the facts within his knowledge, or which by reasonable diligence he might have learned, to a reputable attorney, and that in bringing the action he in good faith acted on the advice given him. The question whether in this case these defendants acted in good faith, and in reliance on the advice of their counsel, was, under the evidence, for the jury.

A claim for malicious prosecution of a civil action is ruled by Rev. Laws 1905, s 4076, subd. 5, allowing six years for commencement of an action for any injury to person or rights not arising on contract, and not by 4078, limiting actions for libel, slander, assault, battery, false imprisonment, or other tort resulting in personal injury, to two years.

A judgment for defendants in a prior action in the federal courts to recover treble damages for alleged combination in restraint of trade, in violation of the Sherman Anti-Trust Act (Act July 2, 1890, c. 647, 26 Stat. 209 [U. S. Comp. St. 1901, p. 3200]), was not res judicata of plaintiffs' right to maintain a common-law action for interference with their business by false representations, threats, and malicious prosecution.

Combination in restraint of trade was the gist of the action in the federal court. It is not the gist of the common-law action.

A joint tort may be committed without the existence of any conspiracy or combination in restraint of trade.

The false representations charged in this case were all made by officers or agents of the defendant Creamery Package Manufacturing Company. The infringement suit which failed was in the name of the defendant Owatonna Manufacturing Company. There was evidence to go to the jury as to the liability of both defendants, under the rule that all who actively participate in the commission of a tort, or who procure, command, direct, advise, encourage, aid, or abet its commission, or who ratify it, are jointly and severally liable, even though they act independently or without concert of action or common purpose, provided their acts concur in tending to produce one resulting event.

There was evidence that plaintiffs owned some patents. There was none that their value had been destroyed by the alleged wrongs, or as to the extent to which it had been injured. There was evidence that plaintiffs owned a manufacturing plant, but none as to the amount it had been damaged. There was evidence that plaintiffs expended time and money in the defense of the infringement suit. The evidence is vague as to the necessity thereof, and there is no evidence of the value of plaintiffs' time. Plaintiffs claim damages for injury to their business and its good will. Their total sales from the inception of this business were less than $8,000, and the total profits less than $3,000. Held, a verdict awarding $57,500 was so excessive as to indicate passion and prejudice.

Damages must be proven with reasonable certainty. To recover damages for injury to property, there must be fair proof of the existence and amount of damage. To recover for expenditure of time and money, there must be evidence of the necessity thereof, and of the value of such time. Upon proper proof there may be a recovery for injury to business, its reputation, standing, and good will. Such damages must not be speculative and conjectural; yet, where it is certain that damages have accrued to plaintiffs from defendants' wrongful acts, plaintiffs will not be denied a recovery of any damages whatever, solely because of uncertainty as to the amount of damages sustained.

An exclusive sales contract existing between defendants was admissible to show the relation between them at the time of the acts complained of. The prior contracts between them were immaterial and inadmissible.

Evidence of defendants' prices and profits on churns, and evidence that plaintiffs did not intend to infringe defendants' patents, and believed they were not doing so, was inadmissible.

A copy of a writing, not shown to have emanated from either of the defendants, was inadmissible.

A judgment of dismissal is not evidence in a subsequent suit between the same parties for the same cause.

A suit on an alleged cause of action that does not in fact exist is not an election of remedies.

It was error to instruct the jury that their verdict must be for or against both defendants, and that the only question for them to determine was whether or not there was a conspiracy between them to injure plaintiffs.

A trial court may in its discretion permit evidence of collateral facts, when of probative value; but it is error to receive such evidence to such an extent as to overshadow the real issues.

The court began its charge with instructions on punitive damages, and, after withdrawing from the jury plaintiffs' claim to recover for violation of state and federal laws relating to contracts in restraint of trade, followed with a long discussion of the proper construction of those laws. The charge was so given as to furnish insufficient guidance as to the facts necessary to warrant a recovery or as to the measure or elements of damage. There was such failure to charge on vital issues as entitled defendants to a new trial. W. A. Sperry, of Owatonna, and A. C. Paul, of Minneapolis, for appellant Owatonna Mfg. Co.

Cohen, Atwater & Shaw, of Minneapolis, for appellant Creamery Package Mfg. Co.

Harlan E. Leach, of Owatonna, for respondents.

HALLAM, J.

Plaintiffs recovered a verdict. Defendants appeal separately from an an order denying their alternative motion for judgment notwithstanding the verdict or for a new trial. Together they make 334 assignments of error. It is hardly to be expected that we will take all of these seriously. We will accordingly refer mainly to those argued in the briefs of counsel.

The issues in the case are simple. The Owatonna Fanning Mill Company was incorporated in the early 90's, and has since been engaged in the manufacture of fanning mills and some other farm machinery. Plaintiff Virtue has been the principal factor in the...