81 FEDERAL REPORTER.
was no just foundation, and against which, unless in the way proposed, there can be no effective remedy. It is ur.ged on the authority of Railroad Co. v. Y"tionaI Bank, 102 U. S. 14,and other cases which follow Swift v. .Lyson, 16 Pet. 1, that the Bank, on the facts alleged, became an innocent holder for value, of the notes of the appellants, and that its right to enforce the guaranty cannot be affected by an inquiry into the consideration of the notes. The doctrine ()f Swift v. Tyson, so far as we know, has never been applied in the manner proposed. It is averred in the bill that the notes were made payable to the Miners' Bank as agent or trustee for the Illinois & Missouri Lead & Zinc Oompany, but, if that were not so, and the beneficial interest in the notes were in the bank, yet the title, having come to it as the original payee of the. notes, and not as transferee, would be subject, we suppose, to all infirmities in the original consideration between appellants and the Illinois & Missouri Lead & Zinc Oompany, unless in the circumstances and conditions of the transaction there was in favor of the bank an estoppel in equity. There is none in the law merchant. ' The right of appeal from the decree in favor of the Miners' Bank is not affected by the fact that there· has been no decree against the Illinois & M,issonri Lead & Zinc OomplUlY. That company, though named in the bill as a respondent, was not served with process, and therefore· is not a party to the record, and its presence, though proper, is not necessary to a complete adjudication of the controversy between the appellants and the Miners' Bank and Thompson. The suit is. to be regarded as ancillary to the proceedings on the creditors' bill of the Miners' Bank against Thompson in the same court, and the jurisdiction, therefore, in no manner depends on the diverse citizenship of the parties. Krippendorf v. Hyde, 110 U. S. 276, 4 Sup. Ct. 27. The decree of the circuit court is reversed, and the cause remanded, with directions to overrule the demurrer of the Miners' Bank to the bill, and to proceed in accordance with this opinion.
LEWIN et al. v. WEL'SBACH LIGHT CO. et aI. (Circult Court, E. D. Pennsylvania. May 3, 1897.)
EQUITY JURISDICTION-SUFFICIENCY OF BILL.
A bill which sets forth that the respondents have brought suit against the complainants for the alleged infringement of a certain patent, and that in advance of any adjudication of the validity of the patent the respondents have circulated among the 'customers of the complainants, with Intent to destroy the complainants' business, circulars which are Injurious, rna· liclous, scandalous, threatening, and intimidating," alleges facts which, if sustained, entitle the complainants to equitable relief.
SAME-GRouND OF RELIEF.
Where a bill in equity is brought, by a respondent in a suit based upon the alleged infringement of a patent, to restrain the complainant in the patent suit from threatening and intimidating the customers of. the respondent in that suit from dealing with it, the only legitimate inquiry is whether the acts and conduct of the complainants in the former suit are such as'a court of
LEWIN V. WELSBACH LIGHT CO.
equity should restrain the' owner ola presumptively valld patent trom doing and pursuing. 8.
Where, In such a case, the bill contains an allegation that the patents ot the respondents are invalid, and, even it valid, are not infringed, a demurrer to the bill Is neIther an admissIon nor a denial ot invalidity or noninfringement, but simply challenges the right of the complainants to have either ot these questions trIed In the manner proposed. The allegation of conspiracy in such a bill is of no potency, since, if what has been done Is wrongfUl, its continuance should be enjoined, if done only by one of the defendants, as If done by both of them in c<H>peration; and, if what has been done Is not wrongful, the fact that the defendants may have combined to do It would not make It so.
SAME-SUFFICIENCY OF BILL-ALLEGA'fION OF CONSPIRACY.
Charles G. Coe and Strawbridge & Taylor, for complainants. Wm.Findlay Brown and John R. Bennett, for defendants. DALLAS, Circuit Judge. The bill sets forth that the complain. ants are now endeavoring to become active competitors of the defendants in tbe sale of incandescent lights, etc., and that one of the defendants manufactures such lights, etc., and the other of them is engaged in selling goods made by the former. It states that the Welsbach Light Company has brQught suit against these complainants, in this court, for alleged infringement of a certain patent, and that the complainants have duly appeared in that suit. It avers that the patent so sued upon is solely for a process, and that the complainants cannot be held to be infringers thereof, because, as alleged, they are not manufacturers, but are exclusively engaged in selling the products of a certain. manufacturer, against whom the Welsbach Light Company has brought suit, in the Southern district of New York, for alleged infringement of the patent, and which suit the said manufacturer, who is amply responsible, is vigorously contesting. The bill also avers that the patent referred to is now invalid, under section 4887 of the Revised Statutes, by reason of the expiration of a certain Spanish patent for, as alleged, the same invention. The foregoing is the substance of paragraphs 1 to 8 of the bill. The gist of the complaint is presented in the paragraphs which follow, and may, I think, be fairly reduced to the statement that the defendants in this suit, with ¥'nowledge of the matters already mentioned, and :with intent to destroy the complainants' business,; have conspired to threaten, intimidate, and prevent the customers, present and prospective, of the latter, from dealing with them, "by the, systematic and formulated plans. methods, and concerted conduct and action, in manner and form following," namely, by publishing and distributing "false, injurious, malicious, scandalous, threatening, and intimidating circulars or printed letters," containing intimidating threats of suit on the patent before referr:ed to; by distributing such circulars among the customers and prospective customers of the complainants, and among the trade and the public generally; by spying upon the complainants' business, with the aid of detectives and others, and thus ascertaining their customers; by causing the defendants' attorneys to write letters to the complainants' customers (so ascertained), threatening suit against them on the patent
,81 FEDlilRAL REPORTER,
by causing the a.gents of the defendants to call upon the customers of the complainants and make like threats. The prayers are for an injunction to restrain the commission of the acts complained of,·and for a decree for such damages as may be found bya jury upon a feigned issue to Qe awarded. , The allegation that the patent under which the defendants justify is invalid, and, even if valid, is not infringcd by the complainants, is one which, of course, might be made in defense of the suit which it is admitted the ,defendants have brought against the complainants. that defense may be thought to be, it must be However maintained in that proceeding before its availability can be assumed or adjudged in another. It is a mistake to suppose that, by demurring, the defendants have conceded its sufficiency. The demurrer avers that the bill does not show title to the relief sought, bnt this averment involves neither admission· nor denial of invalidity or of noninfringement, but simply challenges the right of the complainants to ha ve either of those questions tried in the manner they propose; and, in my opinion, it is clear that they are not entitled to have them tried in this suit. Accordingly, the only legitimate inquiry now is: Are the acts and conduct of the defendants, as alleged in the -bill, such as a court of equity shouldrestrain the owner of a presumptively valid patent from doing and pursuing? ,The allegation of conspiracy is bino potency. If what has been done is wrongful, its repetition or continuance should be enjoined quite as surely if done by only one of the defendants as if done by both of them in co-operation; and it is also true that, if that which has been done or is anticipated is not wrongful, the fact that the defendants may have combined to do it would not make it so. I attach no importance to the circumstance that the defendants have informed themselves respecting the customers of the complainants, or to their method of doing so. It is not asserted that this, in itself, has worked any injury to the complainants. It is the use made of the information so obtained, and not the obtaining it, which is the real ground of complaint. What, then, does the .bill allege that the defendants have actually done to the injury· of the cOIlJ,plainants? If nothing more were alleged than that the defendants have given notice, in good faith and in temperate language, of their purpose to proceed against alleged infringers, I would have no hesitation in holding that they had not exceeded theil' right. But the bill goes somewhat further. It alleges the intent of the defendants to be, not to protect and maintain their own rights, but, under color and pretense of that object, to destroy the complainants' business, in advance of any adjudication of the question of their right to maintain and continue it, and that, in purof sucIt intent, the circulars or letters complained of have not been properly framed, but are "false, injurious, malicious, scandalous, threatening, and intimidating." It is not manifestly impossible that this allegation may be sustained, and in such manner as to entitle the complainants to relief, though I may say that it does not seem to me to be proOO;ble, in view of the fact that the complainants have themselves been sued on the patent. that the defendants' good faith ill notifying their purpose to proceed against other alleged infringers
aURKE V. DAVIB.
(if that is the snbstance of all they have done) can be lmccessfully attacked; and the criticism of defendants' connselupon the omission to set out any of the circulars in the bill calls attention to a matter which may be not without significance. If, upon the one hand, those circulars should turn out to be such notices as the defendants could rightly give; or if, on the other hand, they shall, when produced, appear to be mere libels,-this suit could not be sustained. But my examination of the case, as it is now presented, has led me to believe that the bill should be retained, but that the questions which have been adverted to should be reserved for further consideration hereafter; and, accordingly, the demurrer is overruled, but without prejudice, and with leave to the defendants to again present the same matter by answer.
BURKE T. DAVIs.r (Circuit Court of Appeals, Seventh Circuit. luly 17, 1897.) No. 380.
In the absence of exceptions to the report ot a master, there can be no inquiry into the correctness of the facts found, but his misapprehension of the legal consequences of the facts reported is open to correction.
EQUITY-PLEADING-ABANDONMENT OF DEFENSE.
Where an answer sets up only an agreement for a share in profits, and on hearing before the master that contention is abandoned, and no new claim substituted, the defendant is entitled to no relief.
SAME-FINDING UNSUPPORTED BY PLEADING.
In a suit in equity, where the complainant is entitled to, and is awarded, the rellef prayed in his bill, it is error to require, as a conditicm precedent to the enforcement of the decree, that he pay a sum found by the master to be due the defendant, where the facts on which such finding is based are not pleaded.
Appeal from the Circuit Court of the United States for the Northern Division of the Northern District of Illinois. This was a suit in equity by William H. Burke against Frank L. Davis. From a decree entered on the report of a master, complain. ant appeals.
The facts stated in the bill are substantially these: In the year 1888 the complainant, the appellant here, was engaged in the manufacture, importation, and sale of marble and mosaic decorations for buildings, having establlshments at Chicago, BUffalo, New York, London, and Paris. During the time from August, 1889, to July, 1891, he imported large quantities of marbles and mosaics, to be entered at the ports of Chicago and St. Louis, and, for convenience, consigned to the defendant and appellee, Davis, who was in his service as a clerk or agent at Ohicago. This course was adopted for convenience on account of the frequent absences of the compla1nant. Many controversies arose concerning the duties chargeable on the goods imported, and appeals were taken and pros.ecuted in the name of Davis from the decisions of the collector to the board of general appraisers, and, in many instances, from that board to the courts. These appeals were successfnl, and resulted in allowances and judgments in the name of Davis in amounts exceeding $9,000. On June 30, 1891, Davis left the service of the complainant, and upon demand made refused to execute an assignment of the judgments and claims so standing in his name. Thereupon the bill was filed, alleging the facts stated, and praying that the defendant be decreed to assign to the complainant the judgments and 1 Rehearing denied October 7, 1897.