ARGUED AND DETERMINED
AUTOMATIC PHONOGRAPH EXHIBITION CO. 'II. NORTH ,GRAPH CO.
(Oircuit Oourt,.S. D. New YO'l'1c. January 21,1891.)
owning letters p'atent for phonographs, organized various local subcompanies, authorizing them to rent out machines to the publiC. Complainant, who owned letters patent for a coin-slot machine, to be used in connection with phonographs, made an agreement with defendant wherein the latter agreed to use its best endeavors to induce the various subcompanies to grant complainant the exclusive right to use the coin-slot machine within their respective territories. In pursuance of such agreement, defendant acquired from the,various local subcompaniessuc/l exclusive right fortbe period of five years. Defendant then directed the variou!> local subcompanies to,sell machines directly to the public, instead of leasing tbem 'as theretofore, which complainant alleges Will irreparably injure its busiIl,E'lss;' Held, On motion by complainantfor a preliminary injunction to restrain such c\lntemplated sales, that it would not be pre,umed that the agreement between complainant and defendant, which was formally executed under seal, by mistake orpitted a clause authorizing defendant to direct such sales by the local subcompanies to the general public, and that a preliminary injunction would issue.
Defeudant,which received 15,000 shares of complainant's stock as a con sidera, tion for the agreement, cannot defeat 'the motion for preliminary injunction on the ground that complainanthad "never been legally organized as a corporation, and that the contract was ultra 'lWres. ' ,
On Motion fQr Preliminary Injunction. Bill by the Automatic Phonograph Exhibition Company to enjointhe North American Phonograph Company from compelling its various subt10mpanies to sell phonographs to the public. The North American PhonQgraph Company owns various patents for phonographs. It has conducted' its business by the formation of various local companies throughout the United States, and has granted an exclusive license to each of them to nse the phonograph within its territory, with a right in the local companies to sublicense the use of the machines to the general public. The North American Company in such .agreement of license also reserved the r1ght ofQompelling the local companies to sell -the machines' outright to v.45F.no.l-l
J'EDERAL REPORTER, vol. 45.
the public after January 1, 1890. The complainant, the Automatic Phonograph Exhibition Company, owns patents for a coin-slot machine, designed to be used in connection with phonographs, and on April 19, 1890, it entered into an agreement wjth, defendants and others, known as the "Six-Party Agreement," under 'Which defendant agreed to use its best endeavors to induce the local companies to enter into contracts with defendant, giving the latter exclusive right to use the phonograph in connection with the coin-slot machine. 'This six-party agreement contained no reservation of the right to sell phonographs directly to the public in favor of defendant. Pursuant 'to this six-party agreement, complainant eJltered into contracts with the various local phonograph com:pY:which it obtained the exclusive right to 'use phonographs in cohne&tibri with a coin..slot machine for a period of five years. Complainant then invested large sums of money in a manufacturing plant, and put on the market a large number of phonographs with coin-slot attachments, which are each earning on an average about two dollars per day. In December, 1890, defendant directed the various local companies' in the United States to sell, machines directly-hi 'the public, stead of licensing their use as heretofore. Against such contemplated sale defendant immediately protested, as being in violation of the six-party agreement, and of its contracts with the;various-clocal'companies, and stating that such contemplated sales would utterly and entirely destroy business. Defendant now moves' for a preliminary injunction restraining such contemplated sales. Johtn H. Kitchen, for complainant. J. Adriance Bush, for defendant. LA OMBE"Ciicuit Judge. This motion must be determined upon the papers as they stand. It is not disputed that the six-party agreement to which both defendant and complainant were parties was in the form set forth in the bill. Its fourth clause, theref6re, contained an agreeroent on the part of the defendant to use its best endeavors, so far as it could legally do so, to induce its licensees to enter into agreements with the complainQ.nt similar to the one annexed to such six-party agreement, and which did not contain the reservations which had been inserted in contracts made with sllchlicensees before, the friendly offices of the defendant had been thus secured. It is insisted that the six-party agreement was signed in such form by a, mistake, and defendant prays, or is about to pray, that it be reformed in that respect. ' It is, however, manifestly an important document, formally executed under seal, presumably with all the deliberation which attends the execution of such instruments, and upon this motion for a preliminary injunction it must be expressi,ng the intention of the parties, certainly unless held as I,L perfectly clear case offraud or ,mutual mistake of fact were made out. is, not lawfully organized as a The objections that! 1:4e that for various reasons such contracts are ultra vires, should DQt avail to defeat this motionullder the laid down in 4rms 00, v. Barlow, 63 N. Y. 62, and Railway 00.: v. McOarthy, 96 U.
SPELLMAN V. O'I'1'Y 0.1" NgW ORLEANS.
S. 258. as the underJhe contract, and still, holds, 15,000 shares of the complainant's stock. " , , The injunction may continue until further action of the coMtin the wrms of the order; but with an express reservation of the graphophones. '
R. CO.tI. SAME.
Cowrt,E. D. Lo,Uiriana.ll'ebruary 5, 11;191.)
.A city ordinance, prohibiting aoy ratIroad:company from allowing the sale of fruit, vegetables, or perisha,ble,freighJ; arriving in the city over its lines from cars on the tracks, from any platform, Ilhed, or building lj.tthe depot on the grounds of the complj.ny, is, where the merchandise dected largely comes from other states an interference, with and, if not based on coBsiderations of pUblio health, or intended to prevent the crowding and obstruction of streets and Pllblio places, but solely to hinder competition between non-resident shippers andresidenJ; licensed dealers in the same line, it is unconstitutional and void,
In Equity. Bill for injunction. W. W. BUW6, for complainant Spellman. Girault Farrar, for complainant railroad. F. B. Lee, for city of New Orleans. Before PARDEE and BILLINGS, 1J.
PER CURIAM. The submission is upon applications for injunctions pendente lite. These suits are brought-the one by the receiver of a railroad company, and, the other, by the railroad company itself-to enjoin the city from enforcing, at the depots and grounds of the complainants, the following ordinance:
fruit, vegetables, produce, 01' merchandise from cars, platforms, sheds. warehouses, grounds, or other property owned or controlled by any rail·' road company or companies in the city of New Orleans. ' "Section 1. Be it ordained by the council of the city of New Orleans that ordinance No. 4090, C. S., adopted November 5th, 1889, be amended and reo enacted so as to read: · That it Shall be unlawful for any railroad company or companies in the city of New Orleans to allow the sale of fruit, vegetables. market produce, perishable or merchandise, except pears, peaches, berries, and melons, arriving over their line in the city of New Orleans, froJ». cars on the tracks, from any platform, shed, or building at the dopot OJ l,iepots, on the grounds Or other pl'operty owned or controlled by such railroad company or companies in the city of New Orleaos. '" "Sec. 4. Bejtfurther ordained that the prOVisions of this shaH apply Iikewl.se to the levee and steam-boat lanl1ings of this city, except iuthe, ease of fruits just' arriving from tropical cotl0tries, on vessels plying to this
"No. 4891, COUNOIL SERIES. " An ordinance amending ordinance 4090, C. S., to prohibit the peddling Ci(