UNITED STATES V.AMERlCAN BELL .TELEPHONE CO.
AMERICAN' BELL TELEPHONE
(Circuit Court, D. Maaaachu86tt8. April 4, 1887.)
EQUITY-PLEADING--:-DEHURRER." . .
A defendant in will not ordinarily be allowed to tile a to the whole bill, and, at the Same time several pleas. Even if the court hail the power, to al.low. u.Ch. a procedure, SUch. power will not be exercised, unless for good and ).'ell.sons, and to prevent injustice.
I . .
.George A.Jenks,SoI. Gen., George M. Stearns, U. S. Dist. Atty., John Goode,. Jeff Oh4ndler, and Wm. C. Strawbridge, for the United States. Ofw,uncl'!Jj Smith and JarneB J. Storrow, for defendants.
COL'f, J. The defendant moves for leave to.file demurrer to the whole bill, and at the same time several pleas. Equ\ty rule 32 providelJ that "the. defendant ;maY"J at any time before the taken for conor afterwards, with the leave of the court,demur or plead to the whole bill, or to .part of it, or he may. demur to part, plead to part, and answer as to the residue." According to the PfaCtlCe of English courts of chancery, ",a. defenq,ant maydemqrto one part of a bill, plead to another, answef to another, and as But all these defenses. must clearly refer to separate and distiJ;l<)t;parts of the. bill. For the defendap.tcannot plead to that part of the 1?i;I,l to which he has already demurred; neither can he anSWer to any part to which he .has either demurred or pleaded, the demurrer demanding the judgment of the court w!;lether he shall make any answer, and the plea whether he shall make any other apswerthan what is contained plea." Mitf. & T. Eq. Pl. 411. It was peld in Crescent City Co. v. Butchers' Co. ,J2 FeQ.. Rep. 225, that there was no rule which allows a defendant to demur to the whole bill, to the 'whole bill, and answer tp,the whole bill at the same time, that the of such pleading is that the plea is taken as waiving the demurrer, and the answeI,: lI:B waiving the plea. 1 Daniell, Ch. PI. 787, 788.. It ml:1Y be said, therefore, t4at to grant this motion would be contraryto the regular. and orderly course of pleading in equity causes. But it is by the defendant that it is within the discretion of the court to grant this motion; that, under the authority of Poultney v. City of La Fayette, 12 Pet. 473, every court ,of posses&es the power to mould its rules in relation to the time andmanner of answering, so as to prevent the rule from working inj1,1stice; and that jt is not only in the power of the court, bnt it is its duty. to exercise a sound discreHon upon the subject ,when the purposes of justice, require it; and further, that the rules pre,scribed,by the supreme 90urt were to deprive the courts of the ,United . of this, well-known and: necessary power. Assumjng the power of t4e court togranUbe motion now asked for,.(upon which I.;tl\lc,not elltirely. free. from doubt,) I am clear it. should not'be gQod and and to prevent injustice.
The defendant asks leave to file a demurrer to the whole bili, raising the question of the 'power ofilie government ta maintain this bilI, and also to test the equities of the bill. These two subjects may properly be raised by demurrer; and, in the orderly course of procedure in equity, the demurrer would be first filed and heard. The demurrer would determine whether the bill is without authority or not. The defendant at the same, time to. plead, or to file several pleas, for for:tQefollowing reasons: It is said that the, bill refers to litigation previously had with reference to the scope and validity of the patents in controversy, but that it does not state the result of such litigation, or the decisions therein:, or that the questions offact or questions oflaw, sought to be:raised by this bill; have been argued before the supreme court· in suits for infringement of these patents, imd are now held under adviseby that court, and this defendant's prOper course is to'plead'thesanie. For this reason i't asksleave of the court' to plead any! tti'i.d;:ill. determinations relating to' or affecting the validity or scope of saiq: patents in addition to demurriJ;lg to the bill,: and it represents that the qU'estions wbich it desires to raise by such plea are closely akin to those would be raised by deinurrer, and that much time, expense,'and labor would be saved by presenting them at the same time. Again, it is urged that 'the 'bill purportS to state the contents of certain writteri'''communications .from the1eotnmissionerof patents to Elisha Gray"and of certain rules'ofthe patent-office, and that the defendant is advisetlthat it should present copies thereof to the 'court by pleaJ becanse,the legal effect thereof cannot be otherwise ascertained. I t further represents that the litigation heretof6re had under these patents has resulted in records filling 20,000 printed pages, including more than seven hundred depositions, which have required many years to take, and which have cost each side not less than $300,000; that such records are now bEffore the supreme court on appeal; and have been the subject of 12 days'argmnent before that court, and are now held under advisement. The defendant says that it would be indecorous and contrary to the practice and usages of courts of equity to retry any questions pending beforethesuptemecourt ,until that court shall have pronounced its judgment;and that it would <he unjust to require such extensive litigation to be repeated in this case, until the questions of the power and authority of thiscoult,to entertain this bill, and the propriety of its so doing as a colitt.bf .equity, have been fully determined upon the facts stated in the bill,'alild upon a considemtiori of the results ,of the suits andlitigation referred to in the bill,but not fully stated. It' therefore moves for leave to' pleadsai'd matters, and all matters tending to show laches ol1'the part of'the complainant, in addition to demurring. A proper plea is such as reduces the cause, or some part of Hi to a single pointiand from thence creates It bar ,t6.the suit, or to the part of it to 'Which the plea applies. 1 Daniell, Ch.'Pl. 603. So far as this plea proposes (and thisseenis'to be the main ground of the motion) to set 'upprior litigation 'respeetirig these patents, no bar or estoppel-j,s shown such as would constitute'a good pleajbecause it does
ROGERS V. RIESSNER.
not appearthat the parties are the same, or the subject-matter the same. It follows that the facts relating to prior litigation set out in this motion, and the consiq.erations of the saving of time, labor, and expense, while they might be urged, as suggested by the plaintiff, as a ground for a continuance of the case, afford, in my opinion, no sufficient justification for granting this motion. Nor do I think the failure of the bill to state the contents of the written communications, or the rules of the patentoffice, referred to inthe bill, a sufficient reason for the defendant to ,plead, and at the same time demur, to the whole bill; such a co.urse.being.contrary . , well-established rules of equ.ity ·pleading.., n a . I' to . . .' cause of this seemS to me the ends of JustIce are more likely to be, reached by following the regular and orderly procedure of coui'ts'of and that the court shou.ld heE',itate,unless from grave ,to tlierefiom. ' Motion "
(Oircuit Oourt, 8. D. New York. March 28,,1887.)
2. SAME-EQUITy-TRUST. . . . ·. ' The fact that the royaJties were payable to N. made him trustee ofR.,'sb that R.'s share was due N. at law. and R in equity.
entered lJ,partnership with N. for the purpose of making and s.elling certain patented articles,lind selling territorial rights. ,. R. furnished $1,000, and N, the use of the patent, the title to Which he retained, the prQfiteto be equally divided. A quarter interest hi the patent was sold to ;1;3., angine pl."oceeds of the sale, and a like proportion of the capital furby;',R., became common property. SUbsequently R. and N. made II: supagreement, declaring'that any definite reduction in the capital of N., (the patents,) resulting, from any action of the firm, affected R's in the same 'ratio; that all letters patent and reissues in the same class of itiventions should be at the"expense of the firm, and that R should have threeeighths of all the proceeds thereof; that, in case of dissolution, Rmight take all that should remain of his $1,000 cltpital, after !p.aking the dednctio'll provided, for, and N. should have the privilege of remaining interest in 'the letters patent, paying a proportionate amount'of the expense incurred by the firm: and, in case of negotiations with any other party pending at the time, R should have reasonable and ample time in which to act on Such negotiations, thereby reducing the same to fixed and definite proceeds before said N,(l01l1d effect the dissolution; and, if negot.iations be completed with any ather party for royalties, nothinl; should be construed as depriving It of his full share. Bya contract to WhICh R. consented, the rights of R. being known to all parties to the transaction, N. and R. gave to C. R. & Co., the firm to which Qefendants belong, the exclusive use of the p,atent in! the United States, C. R. & Co. to pay certain license fees to N. A few months later N. gave notice of the dissolution of the partnership with R, and clltimed that R. had no interest in the royalties. an!lsubse9uently assigned to ))". all his remaining interest in the patents, subject to the contract with C. R. & Co. Held, in a suit by R against C. R & Co., that R. was entitled, under the contract·. 1\) his three-eighths of the royalties as proceeds Qf tM patent, wliether the same, were before or, Mter the dissolution l>f-the partnership. ,
R., the orator,