FLETCHER V. NEW ORLEANS ot N. E. R. 00.
'131 , ,
>offer, in mitigation of damages, proof that the plaintiff could, have obtained an engagement elsewhere during the time he remrtined idle. The short answer is, that by the terms of hhe contract the plaintiff expressly bound himself "not to perform in any other theater." He could not have accepted a position under another management with<lut himself violating the contract. The amendment is with,in the {liscretion of the court and is one which clearly should be allowed; to withhold it would simply protract litigation withoutohange of result. The plaintiff is entitled to the judgment demanded in the complaint.
FLETCHER
and others
tI.
NEW
ORLEANS
& N. E. R. CO.l
(Oircuit Court, E. D. Loui8iana. February, 1884.) ARBITRATION.
Under a contract by which tlle defendant was to pay plaintiffs for work done upon certificates and estimates of defendant's chief engineer for the time being, the obligation of tile defendant does not practically arise until the defendant is satisfied that the plaintiffs are entitled to compensation; and it was hdd that the defendant may not avail itself of the labor performed by the plaintiffs. and then" wrongfully, arbitrarily, unreasonlibly, and in bad faith," stand upon the literal terms of the and· refuse to pay. '
On Demurrer. Thomas J. Semmes, J. Carroll Payne, Henry J. Leovy, and Ernest B. Kruttschmidt, for plaintiffs. Robert Matt and Walter D. Denegre, for defendant. P ARbEE, J. Under the terms of the contract sued on in this case, the defendant is to pay the plaintiffs for work done, upon oertificates and estimates of the defendant's ohief engineer for the time being. ."The chief engineer for the time being" is the oreature of the company. Practically, then, under the terms of the contract, the obligation of the defendant to pay the plaintiffs for work done does not arise until the defeudant is satisfied that the plaintiffs-are entitled to compensation. The question in this oase is whether the defendant, under its contract, may avail itself of the labor performed by plaintiffs, and then may "wrongfully, arbitrarily, unreasonably, and in bad faith" stand upon the literal terms of the oontract and refuse to pay. ThEl decisions are to the effect that, "in the absence of fraud, or such gross mistake as would necessarily imply bad faith, or a failure to exercise an honest judgment, his (the umpire's) action in the premises is conclusive." 97 U. S. 402; Sweeney v. U. S. 3 Ct. Rep. 344. In this case "fraud" is not specifically,charged,but "bad faith" and "a failure to exercise an honest, judgment" are. And it seems to me, with the relation between the umpire and the defend1 Reported
by Joseph P. Hornor, Esq., of the New Orleans bar.
732
FEDERAL REPORTER.
arit existing as Been above, that charging the action of the umpire t.o be arbitrary, unreasonable, wrongful, and in bad faith would include all the charges of fraud, collusion, and gross mistake necessary. In Chapman v. Lowell, 4 Cush. 378, it is held that in cases like this the umpire must not act arbitrarily, capriciously, and unl'tiasonably. In a Wisconsin case similar to this it was held: "If 'l:'aud in the arbiter can ever be established by proof that he refused of the work when the same has been duly and to certify the properly performed, it can only be in those cases where the refusal is shown to have been palpably perverse, oppressive, and unjust, so much so that the inference of bad faith and dishonesty would at once arise were the facts known." Hudson v. McCartney, 83 Wis. 331. The difference in meaning between "perverse, oppressive, and unjust," in the Wisconsin case, and "arbitrary, unreasonable, and wrongful," in this case, is so little that the two caSeS may be considered as identical. Without undertaking to determine now how much the plaintiff may be required to prove on the trial of the case of arbitrary, unreasonable, and wrongful action in order to avoid the action, or failure of action, on the part of the defendant's "chief engineer for the time being," I am satisfied enough is alleged in the petition to put the company on its defense. The exception that plaintiffs cannot demand further payment from the company without showing that all laborers, subcontractors, and material-men have been paid, and that no liens are recorded against the company, does not seem to be well taken. The suit is for damages in a large sum, as well as for balance due under the contract. The petition alleges that what, if anything, is due to such laborers, etc., is primarily due from the company, and plaintiffs reserve their rights to sue for it, if they are compelled to pay. Any rights the defendant may have in this regard may be brought in defense. The exception will be overruled; and it is ordered.
In 'l'e
Bankrupt. February 20,
(District COU'l't, S. D. New YO'l'k.
GUA.RANTY-CoNSIDERATION-ASSIGNMENT OF MORTGAGE-INTENT OF PARTIESBANKRUPTCy-PROOF OF DEBT.
Where V., a builder, agreed with G., owner, by contract in writing, to build the latter a house for $8,175, and G. agreed to pay B. therefor $8,175, lawful money, as follows: when topped out, $5,000, by the assignment of a bond and mortgage held byone 8. on certain premises named, and $3.175 when the buildings were completed: and when the buildings were topped out, V. refused to proceed unless the bond and mortgage were gnarantied by S., reasonable doubt having arisen as to the value of the mortgage, and 8. having thereupon assigned the with his guaranty for the consideration of $5,000, expressed in the aSSIgnment, and the mortgage security having turned out worth-
IN BE SOHREYER.
738
Jess, and S. becoming bankrupt, a claim upon his guaranty being presented to the register by the representatives of V. after his death, and disputed on the ground that it was given without any actual consideration; and the attorney who drew the assignment having testified that 1:'. stated at the time that he intended to make the mortgage as good as cash, and that V. ought to have his money: held, that the guaranty should be sustained, as given in accordance with the actual intention of the parties, as upon a modification of the original agreement to that effect, and as supported, therefore, by the consideration named in the assignment; and that the claim upon the guaranty should lJe allowed to be proved in bankruptcy against the estate of S.
In Bankruptcy. T. M. Tyng, for Vanderbilt. A. O. Salter and John L. Lindsay, for bankrupt. BROWN, J. In the case of Vanderbilt v. Schreyer, 91 N. Y. 392, it was held to be competent for the defendant to show by parol evidence that. the guaranty of the mortgage assigned by him to Vanderbilt was without consideration, although the guaranty was expressed in the instrument of assignment, stating a consideration of $5,000 for the whole transaction. Without in the least questioning the correctness of this decision, the counter proposition is also obvious: that it is competent for Vanderbilt also, or his representatives, to show by parol evidence that there was a consideration for the guaranty. Had the original agreement between Gebhardt and Vanderbilt, whereby the latter was to take an assignment of the mortgage in part payment for erecting the building contracted for, provided that the mortgage should be guarantied by the assignor, no question could exist that the consideration of $5,000, mentioned in the assignment of the mortgrge, would be deemed a consideration for the guaranty as well as for the assignment. So, also, if such had been the actual intention of the parties to the original agreement, although the agreement, as'reduced to writing, omitted the stipulation for the guaranty, there could be no question that the guaranty, when given in execution of the actual agreement and understanding of the parties, would be deemed a part of the original agreement, and would be. sustained by the same consideration named in the written assignment of the mortgage, of which the guaranty forms a part. That, in substance and effect, is what the evidence of McAdam, though brief, sufficiently shows to have been the fact. He testifies that Schreyer, when directing him to draw the assignment, told him that there was a difficulty with Vanderbilt about the value of the mortgaged property; that he, Schreyer, intended to make it as good as money, and therefore ordered his guaranty to be inserted on the agreement; that on the next day, when Schreyer called to execute the assignment, it was all read over to him, and that he then said the guaranty was right, and that he intended to make the mortgage as good as money; that Vanderbilt's work was well done, and that he ought to have his money. That it was the intention of Vanderbilt to have the equivalent of money there can be no doubt,so far as Schreyer's guaranty could mn.ke it so. The case is one, therefore, in which both the parties
734
FEDERAL
represented here agree as to what the intention was. Schreyer had received from Gebhardt the full amount of the mortgage in money, or its equivalent. The written agreement between Gebhardt and Vanderbilt was therefore defective in not fully expressing the actual intention of these parties as to the transfer of the mortgage. . In a court of equity, if such a mutual intention was admitted, the agreement would be reformed by inserting the proper provision requiring Schreyer's guaranty. The case is one :in which the maxim of eqllity is applicable, that that will be deemed done which ought to have been done; namely, the constructive insertion in .the original agreement of a provision for the guaranty of the mortgage by Schreyer, according to the actual intention. The agreement itself contains strong evidence that Vanderbilt was to have the equivalent of money. He first contracts to build a house, not fora bond and mortgage, whatever they may be worth, but for so much money, viz., $8,175; next, Gebhart agrees to pay him therefor that same amount of money; and he finally agrees to pay Vanderbilt $5,000, by Schreyer's assignment to him of the bond and mortgage in question. Had the agreement been to pay $5,000 by the delivery of a certain horse, instead of assigning a bond and mortgage, and the horse had died before the time of delivery, it is well settled that Gebhardt could not have tendered the dead animal in payment. In such a case the law presumes conclusively that the intention of the parties was the delivery of a living horse, and not of a dead carcass. So, .if at the time when this bond and mortgage were to be assigned they had become utterly worthless, through the bankruptcy of the bondsman, and the cutting off of the lien of the mortgage by the foreclosure of prior mortgages, the presumption of law would, I think, have been equally conclusive that .Vanderbilt was entitled to an ex:isting bond and mortgage, having value, and not to two worthless pieces of paper. The law looks at the intention of the parties, to be gathered from the agreement itself, or from the surrounding circumstances. In the present case, Vanderbilt might also have shown that he was deceived in the agreement to take the mortgage; or that it was agreed to be guarantied; or that he was to take no risk of depreciation between the time of the contract and the time of the assignment. The written agreement is silent as to who should bear the risk of such depreciatiou meantime. But the agreement shows so clearly a general intention to give the equivalent 'of money in the assignment of the bond and mortgage, that an ambiguity arises concerning the risk of depreciation, such, as it seems to me, WQuld admit parol evidenee even to supply the defect in the written agreement. The evidence shows that Vanderbilt refused to take the assignment of the mortgage without additional security, and stopped work on the buildings. He is dead, and his side of the controversy cannot now be fully known. But as the mortgage was found, not long after, to be worth-
,LYMAN
v.
MAYPOL]!1.
735
less, there was evidently jUst ground., for Va.nderbiWa hesitation. I Bee no reason to question the fact that whatever dispute or contrqversy there was at the time was a ,bona fide controversy, based upon probable grounds, on Vanderbilt's part. An adjustment of suoh a controversy, made by the parties theIllselves,must be presumed prima facie to have been made in accordance with their actual, original intention; and this inte:p.tion is moreover shown, by the testimony Of McAdam, to have been in ,Accordance with the setttlement made. It was at all times competent for the parties to modify their original Agreement by adding a new olause providing for the guaranty. Such a modification would have been sustained as part of the original intention. No other consideration than that intention would have been necessary to sustain it. When an adjustment ,of a bonafide contro. versy on such llo point has been fullye:Kecuted, it should be sustained as 'being, prima facie, done upon a modification of the original writ. ten contract to accord. with 8uchintention ;preoisely as if the ori. ginal agreement had at the satne time bee.n modified accordingly, Schreyer, it is true,deniesthfP sta.tementsofMc,Adam; but the latter is sustained by the evidence .of the acts and conduct of Vanderbilt, and his testimony should, I think, be .. For these res,sons the proof of debt on the gua.ranty is directed to be allowed.
LYMAN 'b. MAYPOLE
ttnd others.
(Circuit Coun, N. D.lUiMis. ;February 11, 1884.) The law permits an inventor to construct a machine which he is engaged In stUdying upon and developing, and place it in friendly hands for the purpose of testing it and ascertaining whether it will perform the functions claimed for it, and if these machines are strictly experiments, made solely with a view to perfect the device, the right of the inventor remains unimpaired: but when an inventor puts his incomplete or experimental device upon the market, and sells it, as a manufacturer, more than two years before he applies for his patent he gives to the public the device in the condition or stage of development 'Which be sells it. In such case his patent cannot be allowed to relate back and cover forms which ,he g<,ve to the public more than two years before be applied for a patent. 2. SAME-PATENT No. 179,581 CONSTRUED-INFRINGEMENT. The Wilfred .C. .J;>yman patent of July 4, 1876, .No.179,581, construed, and heW, not to be by a condenser bead havmg an enlarg-ed drain-pipe instead of a hand-hole, and not 4lwing inside Cones with turned rims or edges.
L
PATENTS FOR INVENTION-PERFEOTING DEVICE_PUBLIC
USE.
.· j George P. Ba1jton, for complainant· . Banning ¢Banning and Charles C. Linthicum, for defendants· . BLODGETT,J. This is IJ.hill to enjoin ll.n,alleged infringement by the issued to the cornplainant for a,n "improve-
In Equity.