BATE REFRIGERATING CO. V. GILLETT.
right or wrong. Phi)),ips v. City of Detroit, 3 Ban. & A. 150; Whipple v. Hutchinson, 4 Blatchf. 190; Hamilton v. Simons, 5 Biss. 77. It does not follow, because Eastman may have the right to avail himself of the new evidence, if such there be, or to set up new defenses, that the defendants can be permitted to do so in this indirect manner. A breach of an injunction, amounting to contempt, may be oommitted even by aiding one who acts in an official capacity and under authority of law. Woodward v. Earl Lincoln, 3 Swanst. 626; 2 High. Inj. § 1435. The defendants must therefore be held in contempt, but, as they have disclaimed all intention to violate the injunction, and have, so far, purged themselves of a wanton and willful disobedience, the court will impose it nominal fine of $10 on each of them; and it is further ordered that they pay the costs of this motion, and a reasonable counsel fee.
and others, impleaded, etc·.
(OiJrcuit OOU'l't, D. New Jersey. April 22,1887.)
PATENTS FO}t lNvENTIONs-lNFRmGEMENT-!NJUNCTION-BREACH-SALE.
A suit was brought against several, as partners in the steam-ship business, to recover damages for the infringement of a patent by use upon one of their ships, and for an injunction. While the action was still pending, they sold <lut their business, ships, and property to a corporation, which assumed all their debts and liabilities. After the sale. the corporation was not made a party to the suit; but the suit progressed and an injunction was granted. HeW. that the corporation, never having been made a party to t.he suit, is not 'bound by the injunction; and neither it nor its agents can be punished for refusal to obey the injunction·
.In Equity. Dickerson &- Dickerson, for complainants. John R. Bennett, for defendants. Lord, Day & Lord, for Brown.
WALES, J. This is an application for an attachment for contempt against Vernon H. Brown, who is the accredited agent of the Cunard Steam-Ship Company, Limited, at the port of New York, and hasthe entire control and· management of its business at that place, for the violation of an injunction granted in the above suit. The bill in this cause was filed on the fifth of February, 1878, against the Cunard Steam-Ship Company, which was impleaded with certain individuals named therein, for the infringement of letters patent No. 197,314, dated November 27, 1877, for "improvement in processes for preserving meats during transportation and storage." 'l'he answer of that company was filed on the thirtieth of March, 1878, and a decree, sustaining the validity of the patent, and ordering an injunction, was entered November 14,1881. This decree was vacated on September 29,1882, and reinstated March 29, 1883·....
At the time of filing the bill, and putting in the answer, the Cunard Steam-Ship Company, as it was then known and called, was an association or partnership of four persons, transacting business under the name and style of the British & North American Royal Mail Steam-Packet Company,but the association appeared to the suit,· and answered, without taking exception to the misnomer. The Cunard Steam-Ship Company, was incorporated on the twenty-third of May, 1878, under the BntlshCompany act of 1862, and on or about July 1, 1878, succeeded to the property and business of the British & North American Royal Mail Steam-Packet Company. On the organization of the incorporated company, the four individuals, constituting the old association or partnership, became four of the six shareholders of the corporation, and were the controlling owners and managers of it. Other purchasers of shares came in afterwards; so that prior to April 25, 188o, the partners owned not more than one-fourth of the stock, and were represented by only three members in a board of eight directors. By an agreement made between the partnership and the corporation, at the time of the sale and transfer of the partnership property, business, and good-will, the corporation agreed to "pay, satisfy, and discharge all the debts, liabilities, and obligations of the vendors whatsoever, and adopt, perform, and fulfill all contracts and engagements binding on them,and at all times keep the vendors indemnified against such debts, liabilities, obligations, contracts, and agreements, and against all actions, proceedings, costs, damages, claims, and demands in respect thereof." The alleged disobedience of the injunction was. the transportation of covered meat by the Pavonia, one of the vessels of the Cunard SteamShip Company, Limited, on or about April 25, 1885. The PaVQn.ia was a new vessel, built by the corporatfon, and never belonged to the old partnership. According to the statement of Mr. Brown, the company rented certain cubic space in that vessel to a third person, at so per cubic ton, which space was occupied by a refrigerating box put into the vessel by the shipper at his own expense, in which box, on one occasion, to-wit, April 25, 1885, he shipped covered meat in a manner claimed to be an infringement of the complainant's patent. The company had nothing to do with the covering, shipment, or caring for the meat, except that the ship's tackles hoisted it from the wharf to the deck, and that a certain quantity of steam was furnished from the vessel's boilers to compress the air used in the refrigerating process. The use of steam for compressing air in the refrigerating process is not, by itself, an infringement, but becomes so, it is claimed, when used in combination with the complainants' process for preserving meat. It is not claimed that the partners sold and transferred their property to the company, or that it was accepted by the latter, with any fraudulent intent, on either part, to evade a decree in this suit; nor is it denied that the complainant had knowledge of the sale and transfer at, or about, the time they were made. Mr. Brown never acted as agent for the partnership. He was appointed agent of the corporation, on October 1, 1886. On these facts, in support of the motion, it is contended (1) that,
BATE REFRIGERATING 00. V. GILLETT.
where there is simply a transfer ofall its property and business, by and from the individual members of a partnership to the same individuals orgafi" ized as a corporation, the corporation is immediately and directly bound, and becomes', ipso facto, It substituted party to any litigation which may be pending against the partnership; (2) that, even if this is not so always, it is certainly so under the peculiar circumstances of the assumption or obligations which exist in the present case, and in which the corporation agrees with itself to fulfill every engagement, and to perform every duty) of the old partnership; (3) that if the corporation does not become, by its act of incorporation, a substituted party in the original litigation, yet it is so far affected by the injunction as to be bound by it, and a violation of such injunction by it is to be treated by the court in the same way asa violation by the original party. The Cunard Steam-Ship Company, Limited, is not and never was a party to the record in this euit,and can be bound, by the decree rendered, only as a privy to one or more of the in the suit, or as purchaser, pendente lite. A judgment binds aU parties to the record,and also those whom they represent, or who are in privity with them, and claim under them. By "privity" is meant the mutual or successive relationship 'to the rights. of property.; and. therefore a judgment, to be binding on one who is not a party to the record, must bind him in relation to some spedfic right of property which is directly affected by the judgment. 3 Bouv.lnst. 373; 1 Greenl. Ev.§ 139; Hurav. Haven, 52 N. H. 162; Corulolidated Frwit-JarCo. v. Whitney, 2 Ban. & A. 30· ._The interlocutory decree rendered in this suit is against the parties -defendant'on the record, who have been adjudged guilty of the tort complained of in the bill, that is, of acts committed by them prior to the filing of the bill, and restrains and prohibits any repetition by them of -such acts m the future; but in no manner does it relate to, or affect the title to,or interest in, liny property which the corporation now holds, as vendees of the defendants. Identity of interest, in the property affected by the judgment, makes the grantee or vendee of that property privy to his grantor or vendor, whenever the sale or transfer is made after the judg* ment has been rendered. But here, the corporation acquired all its rights -of property before the decree was entered, and it has not been shown' how, or in what way, that decree concerns, 01' directly affects, any of the property which was assigned or transferred by the partnership to the corporation. Until this has. been done, the corporation cannot be said to be in "privity" with the defendants, in the proper sense of that term. This is not the case of a fraudulent transfer of property to avoid the effect -of a decree. Such cases have occurred, and eome of them were cited on the argument, where a court of equity was able to. see through the disguise, and to disregard it. In Mayor v. Staten Island Fe:rry 00., 64 N. Y. 622, where it was evident that the transfer was colorable, and for the purpose of avoiding an injunction, it was not allowed to prevent the issuing of an attachment .against the fraudulent transferee. So, also, the. mere change of the corj>orate name, or the consolidation of two or more corporations, will not
. prevent the enforcement of legal or equitable claims against the respon· sible parties. Broughton v. PeJfIJJacola, 93 U. S. 270; York &:M. L. R. R. Co. \'. Winans, 17 How.40j The Key City, 14 Wall. 653. If, even in the absence of fraud, it could bemacle to appear that the original partners in the association, who voluntarily appeared to this and are parties of record, had,on the twenty-fifth of April, 1885, the controlling management and direction of the business and affairs of the Cunard Steam-Ship Company, Limited, and willfully violated the injunction, a different case would be presented from the one now before the 'Court, and there might be less doubt of the propriety of granting the motion. A corporation is an artificial body, and there is no identity hetween it and the persoils whoeompose it. Here the corporation is a,n entire stranger to the record, and the admitted facts do not Show that privity in interest and it and any of the defendants in the suit, which is necessary to bring it within the scope of the decree. The rule of lis pendens is founded on constructive notice.and principles .ofpublic policy, and is' intended tG' operate for the prevention of indefi;nite litigation, in reference to sOJ;lle specific thing. . It begins with the 'service of it summons or subprena;and operates from that time; but it is notice only to those who have acquired title to, or interest in, the prop:ei'tyinvolved in the litigation, since the bringing of the suit! from and under It party to the record against whom judgment is finally rendered. One who buys or acquires property under such circumstances becomes bound by thejudgment against the party from whom he buys or acquires ·title, so far as the judgment ,affects that specific property. Consolidated Pruit-Jar Gb. v. Whitney, supra; Daniel v. Hodges, 15 Reporter, 534jGreen v.Slayter, 4 Johns: Ch. 38j LeUck Y. Wells, 48 N. Y. 586. In the last-cited case, the rule of lis pendens is characterized as being a hard one, not a favorite of the courts, and it was held that a party claiming the benefit of it must clearly bring his Case within it. As the corporation was not the purchaser of any property involved in this suit, it cannot come under the operation of the rule. The agreement by the corporation,to pay the debts and fulfill the con. tracts of the partnership, must be restricted to its expressed. terms and meaning, and these do not extend beyond, or embrace Jl10re than, the payment of ascertained amounts, and the performance of contracts and obligations existing at the time the agreement was made. At that time 'the partnership owed no debt to, and had no contract with, the complainant. It may become obligatory upon the corporation to pay the damages which may be finally awarded against the partnership in this suit, but it will be the right of the partnership to enforce that payment. As to the complainants, the agreement is 'res inter alios acta. An attachRlent for con,tempt is a summary proceeding, and the writ is granted only in cases which are free from any teasonabledoubt on the 'law or the facts. CaliforniaPaving (h; v. MoliWr, 113 U. S. 609,5 Sup. 618. . The motion is refused.
KITTLE V. DE GRAAF.
(Oz"rcuit Oowrt, S.D. Ne'll! York.
PATENTS FOR lNvENTIONS-INFRINGEMENT-lNJUNCTION-EXPIRATION OF PAT ENT.
It lsno ground for a demurrer to a bill for infringement of a patent that the patent, at the time of filing' the bill, had only 21 days to run, when by the rules o(courts an injunction if applied for, could have been granted within 4 days, and would thus have had 17 days to run.
In Equity. Demurrer to bill. James P. Foster and Oharle8 N. JudBon, for complaiuant. James A. Whitney and Frederick A. Burnham, for 4efendan1s. COXE, J.. This is an equity action for infringement. The bill, mutatia mutandia, is in the usual form. The principal grounds of demurrer areJiir8t, t1;lat has no jurisdiction, for the reason that the action was commenced 21 days prior to the expiration of the patent, and the complainant has ample remedy at law; 8econd, that it appears from the bill that the complainant has been guilty of laches in asserting his rights. As the patent in question, and the conduct of the complainant, which is now the subject of criticism, were recently examined by this court in Kitae v. Hall, 29 Fed. Rep. 508, care should be taken not to confound what was proved in that action with what is alleged in this. The present controversy should be confined strictly to the averments of the bill, !Lnd every reasonable inference must be permitted in their support. Lorillard v. Olyde, 86 N. Y. 384,389. The question to be determined is, does the bill upon its face show that the court is without jurisdiction? or, stated in another form, did the bill, when placed upon the files of the court, present a case upon which, if uncontradicted, the complainant would be entitled to the relief prayed for? It was conceded on the argument that the fact that the patent expired three weeks after the 90mmencement of the action was not alone sufficient to oust equity of jurisdiction. By rule 36 of this court, notices of motion are to be served at least four days before the hearing. It is entirely clear, therefore, that, had a notice of motion for a preliminary injunction been served with the subpcena and bill, an injunction might have been granted, and, if the defendants had not appeared, it probably would have been granted, and would have remained in force for a period of 17 days. A case can easily be imagined where the protection of an injunctiop.,even for so short a period, would be of vital importance. As the allegations of the bill entitled the complainant to equitable relief at thtltime the action was commenced, though only for a short period and on narrow grounds, the cause should not now be dismissed. It is thonght that the doctrine laid down in Olark v. Woo8ter, 119 U. S. 322,7 Sup. Ct. Rep. 217, is conclusive of the present controversy. v;30F.no.9.-44