. FEDERAL REPORTER.
and others v. ROSENSTOCK and others.
(OircUit Oou1't, S. D. New York,
PATENTS-AGREEMENT AND LICENSE-ASSIGNMENT OF PATENT-INJUNCTION.
A party who purchases a patent and takes an assignment thereof, with knowledge of an existing agreement and license granted to another, will be bound thereby, and may be restrained from violating the terms of the agreement. EqUity does not generally decree specific performance of contracts relating to per.sonal property, but will do so when the subject is the exclusive right to manufacture and sell a patented article, and in such a case will also enjoin the breacllof a negative covenant.
In Equity. J. Hueston, for complainants. Dickerson ct Dickerson, for defendants. WALLACE, J. The complainants' motion for a preliminary injunction is founded on a bill which shows that in August, 1884, one Alice D. Hadlock, who was then the owner of a patent for an improvement in bustles, entered into an agreement with the complainants which is set out. By the terms of that agreement Hadlock, in consideration of certain royalties to be paid from time to time by the complainants, conveyed to them "the sole and exclusive right and privilege to manufacture and sell" the patented bUEltle anywhere in the United States, with the exception that they were not to sell the bustles in Chicago, and reserving to Hadlock herself the privilege to manufacture and sell the bustles in any part of the United States. By the second clause of that agreement Hadlock covenanted "not to form any stock company or copartnership for the purpose of manufacturing the bustle." By the third clause she agreed that complainants might pros· ecute infringers, and that any moneys which might be the outcome of any suits for infringement brought by complainants should belong to them. The bill further alleges that defendant Rosenstock asserts that October 4, 1884, he obtained an assignment of the patent from Hadlock, and is now the sole and exclusive owner thereof; that al· though complainants have fully performed their agreement with Had· lock the defendants assert that his rights under said agreement have been forfeited and terminated; and that the defendant Rosenstock is now manufacturing and selling the patented bustles in the city of New York. It is also alleged that Rosenstock had full knowledge of all the rights and equities of the complainants at the time he acqnired the assignment of the patent. The prayer of the bill is for an injunction restraining Rosenstock from interfering with the complainants' rights and privileges under their agreement with Hadlock, and from making, selling, and using the patented bustles. The defend· ants claim that Rosenstock is now the owner of the patent,and ad, mit that he purchased it from Hadlock with kpowledgeof,the terms of the agreement between her and the complainants.
As the requisite diversity of citizenship between the parties, and is alleged in the bill to confer jurisdiction upon this court, the jurisdiction does not depend upon the patent laws, but upon general principles of equity. Assuming that the complainants did not acquire by their agreement with Hadlock the legal title to the patent, and therefore could not maintain an action for infringement except in the name of the owner or with the owner joined as a party, it is nevertheless true that they.acquired an extensive beneficial interest in the patent. The second clause of the agreement shows that the right reserved to Hadlock was intended to be a personal privilege merely. The complainants, therefore, acquired the whole monopoly of the patent except in Chicago, and subject to the right of Hadlock to sell the bustles when she manufactured them herself or bought them from the complainants or their vendees. If Hadlock were now selling the patented articles in New York, not manufactured by herself or by the complainants, no doubt is entertained that she could be enjoined at the suit of the complainants. The complainants would not be restricted to a remedy at law for damages for breach of covenant. Equity will enjoin the breach of negative covenants whenever it would decree a specific performance of the agreement between the parties. Such a remedy is said by a commentator of authority to furnish the complement to the relief by specific performance. Bisp. Eg. § 46l. Although equity does not, as a general rule, decree specific performance of contracts relating to personal property this is because, ordinarily, adequate compensation in case of a breach may be obtained by way of damages at law. It is apparent that s.uch a consideration cannot apply to an agreement like the present, because from the nature of the subject-matter it would be impossible in many cases to ascertain the damages which licensees might sustain by reason of being deprived of their rights to use an invention. Agreements for the assignment of a patent, and for delivery of chattels which can be supplied by the vendors alone, and for renewals of leases, are among those which will be specifically enforced, (Binney v. Annan, 10'7 Mass. 94; Fry, Spec. Perf. § 33; Furnival v. Crew, 3 Atk. 83-H7; Burke v. Smythe, 3 Jones & L. 193; Willis v. Astor, 4 Edw. Oh. 594,) and are sufficiently analogous in their character to the present agreement to bring. this case within the authorities. As Rosenstock had full knowledge of the complainants' equities these equities are upon the title he acquired, and restrict his rights to the same extent as though the title remained in Hadlock. He can be compelled to do and not to do those things which Hadlock ought or ought not to do. He knew, or was bound to know, that if Hadlock intended by a sale of her patent to pnt it out of her power to perform her agreement with complainants the transaction was intended as a fraud :lpon them. He was either a party to this fraudulent design, or he intended to recognize complainants' rights. In either case he stands
towards the complainants in the place she would occupy if she now owned the patent, and must abide by the agreemeni. An injunction is granted.
THE SIDNEy. 1 THE WILLIAM
PROVIDENOE WASHINGTON INs. CO. v.
and her Consort,
(District Oourt, S. D. New York. ,January 30, 1885.)
A cargo of wheat, from the west to New York, was laden at Buffalo, through M. & Co., forwarders, on the canal-boat W., and insured by them as part of the price of freight agreed upon. At the beginning of the season, M. & Co. had taken out an "open policy" with the libelants "for whom it may concern," which required that each transaetion under it should be entered in an accompanying policy book, or indorsed on the policy, stating the persons 011 whose account it was effected. A certificate payable to order was issued on thifl transaction to M. & Co., in their names, without the words" on account of whom it may concern," or eqnivalent words, and their names only were entered in the policy book. M. & Co. delivered the certificate, indorsed by them, along with the bill of lading signed by the captain of the W., which they also signed, to the agents of the owners, paying some $200 prior charges, and also making' further advances to the captain for the trip. They took from the master a separate bill of lading in which they were described as shippers, and in which the Loat and cargo were consigned to their own New York agents, for their own prutection. While the 'Vorden was coming down the Hudson, in charge of the Sidney, both vessels belonging to the same owner, a steam-tiue on the 8id· ney burst; the vessels drifted and stranded npon an island and the W.'s cargo was lost. The owners abandoned to thE' insurers, who paid them as for a total loss, and, claiming to be suhrogated to the rights of the owners against the carriers, filed a Ii bel against the S. and W. to recover for the loss. Held, that the consignees, the carrier, and M. & 00. had each an insurable interest in the cargo to its whole valne; that a policy" for whom it may concern" assures all persons, having an insurable interest, that are intended to be covered by it, whether known to the insurers or not; that the conditioll8 of the policy and the certificate in this case limited the general words of the policy, and that only M. & Co., the persons named, were" the assured" under the policy; and that the persons and interests assured could not be enlarged by parol evidence, and that the libelants, on paying the owners, as indorsees of the certiticate, were subrogated to the rights of M. & 00. only.
SAME-CAnmERS-AGE!<[Cy-BENEFI'J' OF INSURANCE.
M. & Co., in procuring freIght and making advances on account of the carrier, acted as his agents. The insurance effected by M. & 00. was intended for the benefit of the shipper, the carrier, and for themselves, and was effected upon the request and authority of bot h, there being no express reference to suhrogation in the policy. Held, that such subrogation is a mere equity, depending on the actual relation of the various parties to one another, and is therefore subordinate to the equitable rights existing between a principal and his agent, who effects the insurance for the benefit of both; that the payment by the insurers in this case to the owners, was, III effect, the same as a payment to M. &
lRellorted by R. D. & Edward Benedict, Esqs., of the New York bar