814
FEDERAL REPORTER.
The peculiar phraseology of this section, when compared with section 1024:, seems to sustain this view. Under section 1024,1 when there are two or more acts of the same class of crimes or offenses, all be joined in the same indictment; and, if several indictments are found, they must be consolidated, however numerous the acts may be. Bu.t in the section 5480 "the indictment may severally charge offenses to the number of three," and no more. The demurrer is sustained. Let the defendant plead over.
CONSOLIDATED MIDDLINGS PURIFIER Co. v. WOLF and others.' (Oircuit Oourt, E. D. Pennsylvania. October 8, 1886.)
1.
PATENTS FOR INVENTIONS-INFRINGEMENT.
A patentee granting a license to manufacture and sell cannot file a bill upon the patent as for an infringement, upon the failure of the licen.;ee to pay the royalty, unless a condition of forfeiture be inserted in the agreement, but is left to his action for his royalty or rent.
2.. SAME-DAMAGES-PROFITS. An action merely for an account of profits and damages on a license can· not be maintained in equity. There must be some equitable ground of relief in addition to the mere demand for an account of that kind.
In Equity. H. R. Brown and R. Mason, for complainant. Charles Howsen and Henry Howsen, for defendants. Before BRADLEY and MoKENNAN, JJ. BRADLEY, J., (orally.) In the case of Consolidated Middlings Purifier Company against Wolf and others, we have come to the conclusion that the bill cannot be sustained. It is founded on an allegation of infringement of the patent, and not on a claim for royalty under the hcense granted under the patent. As a bill for infringement of the patent we think it cannot be sustained; that the license which was given authorized the defendants .to make and sell the middlings purifier machine, and reserved the royalty, to be paid on the manufacture and sale of the :machines. ,The manufacture and sale of machines would naturally, if not necessarily, OCCl1l' during the month, and, of course, the payment of the royalty at the end of the month was a subsequent matter, and not a condition precedent, and depended on agreement to pay at ISCC. 1024. When there are several charges against any person for the samc act or ·transaction, or for two 01' llIore or transactio1\s connected together, or for two or Illore acts' or transactions of the sallie class of crimes or offenses, which may be properly joined, instead of ha'iing several indictments the whole may be joined in one in: dictmentin separate counts j and, if two or more indictments are found in lIuch cases, lhe court may order {belli to be .consolidated. 2 Reported by C. B. Taylor. Esq., of the Philadelphia bar.
CONSOLIDATED MIDDI,INGS PURIFIER CO. V. WOLF.
Sli"i
the end of the month upon the return of the number of machines and the kind of machines manufactured and sold. This aspect of the license demonstrates that it was an absolute license to manufacture and sell. Now, we are clearly of opinion that under such a license the failure to pay the royalty stipulated and agreed to be paid does not forfeit the license, unless some condition of forfeiture for nonpayment be inserted in it, and that the power to manufacture and sell is not at an end upon non-payment, but that the licenser, the patentee, or person granting the license, is left to his action for the royalty or rent, and cannot file a bill upon the patent as for an infringement. Ii is contended, however, that by a certain clause in the license the complainant may resort to the patent, on the ground that the parties defendant have acted outside of their license, not only manufacturing and selling machines, but granting. the right to use The clause is as follows: "Unless said Wolf and Hamaker elect to sell with license to use, which they may do on payment of the license fee, which is in all cases a condition precedent." All that the defendants have dope, according to our view of the evidence in the case, is to manufacture and sell; and that they have done in piusuance,of their license. The consequences which result from such manufacture and sale in giving to the purchaser a right to use, are consequences for which the defendants are no more answerable than the complainants who gave the license in the form in which it stands. We therefore think that there is nothing in the license itself, or on its face, which authorizes the complainant, under the circumstances of this <lase, to file a bill for the infringement of the patent. The next question is whether the complainant may in this suit re<lover royalties under the license; it being shaped and framed as a suit for infringement of patent, for profits realized by defendants, and damages sustained by complainant. Without stopping to inquire whether a suit for royalty under a partial license may be joined with a suit for an infringement of patent for acts done outside of the license, we think that in this case the bill is so clearly based on the allegation of infringement, and the causes of action are so distinct from one another, that some claim should have been made in the hill for a decree under the license in order to enable the complainants to have a decree for the royalty. But we doubt whether that would have been sufficient. A suit for l·oyaltyon a license is a suit at com· man law, or, if in equity, it is a suit on general equity, not dependent at all upon the patent law, and not within the jurisdiction of the <lircuit court of the United States, un) the parties ate citizens of different states. So that, if the suit, as to the allegation of infringement of patent, and the claim for damages and profits for that cause, fails, and it remains simply a suit ou the license for the royalty, the question arises whether the circuit court, as a court of equity, would have jurisdiction.
816
FEDERA.L REPORTER.
There is no difficulty about citizenship. The complainants are citizens of Michigan, and the defendants are citizens of Pennsylvania. This court, therefore, would have jurisdiction of the case, if an ordinary court of equity would have jurisdiction. But the supreme court of the United States, in the case of Root v. Railroad 00., 105 U. S.189, have, after much consideration, held that a suit merely for an account of gains, profits, and savings on a license cannot be maintained in equity. There must be something more. There must be some equitable ground of relief in addition to the mere demand for an account of that kind. In view of the decision in the case reo ferred to, we are satisfied that the cause of action on the license is not within the equitable jurisdiction of the court, and therefore, if there had beeR a prayer in this bill for relief on the license for a recovery of the royalty, I do not think it could have been maintained. If that were all that was lacking, perhaps we ought to allow the complainants to amend their bill. Still, if it were amended, I do not see how, under the decision in Root v. Railroad 00., we could sustain the bill. The bill is therefore dismissed, without prejudice, to the complainants as to the rights they may have under the license.
MORRISON fl.
GLOBE
PANORAMA 00.
817
MORRISON and another v. GLOBE PANORAMA CO. and others.l (Oircuit Oourt, E. D. Miaaouri. September 27, 1886.) CORPORATIONS -FRAUDULENT ORGANIZATION AND MANAGEMENT PAID- Up STOCK-FRAUDULENT DIVIDENDS-RECEIVERS. NOMINALLY
Where a corporation was organized with intent to defraud creditors and subsequent purchasers of stock, and the stock was issued to the organizers of the company as fully paid up, in consideration of the transfer of property to the company worth one-eighth the par value of the stock; and the directors of the company, in pursuance of a fraudulent scheme to wreck it, and appropriate its assets, voted notes to themselves for a pretended indebtedness, failed to keep books showing the company's income and expenditures, as required by law. and failed to pay the rent of a valuable leasehold property held by th,e plaintiff with intent that it should be forfeited under a provisIOn of the lease; and all the officers of the company were inculpated; and bona ,fide purchasers for value of stock, issued as aforesaid, filed their bill reciting- said facts, and praying for the appointment of a receiver, and that the defendants, to whom the company's stock was issued, be compelled to pay the balance due thereon to the company, and the par value of the stock held by plaintiffs to them, and that said directors, and the other defendants who have received - fraudulent dividends, be compelled to repay the same: held, that the bill does not state a case entitling plaintiffs to equitable relief.
In Equity. Demurrer to bill. This is a suit brought by the plaintiffs, on behalf of themselves and other similarly situated stockholders in the Globe Panorama Company, against said company and A. J. Cooper, I. R. Krum, T. E. Patterson, J. E. Young, and G. S. Ingraham. The bill states that said corporation was organized under the laws of lllinois, and has its home office in Chicago; that its capital stock is $200,000; that the articles of incorporation were filed by certain irresponsible commissioners, and said Cooper, Krum, and Patterson, but that the real incorporators were said Cooper, Krum, Patterson, . Young, and two other parties, all of whom were named in the articles of incorporation as subscribers for stock, but that the parties not joined as defendants only subscribed for one share each; that said subscribers for the company's stock, with intent to cheat and defraud the plaintiffs, and others who might become stockholders orcreditors, fraudulently caused property, worth only $25,000, to be conveyed to said company for the sum of $200,000, and caused the whole of the capital stock of said company to be issued to them in payment therefor as fully paid up stock, though there remains due in reality, upon the stock so issued, $175,000; that plaintiffs purchased stock so issued, believing it to be fully paid up, and without notice of said fraudulent acts; that the directors of said company, said Ingraham, Patterson, and Cooper, have conspired together, and with others, to wreck said company, and convey all the assets to themselves; that they have not kept books, as required by the law of Illinois, showing the income and expenditures of the company; that fraudulent dividends have 1 Edited
by Benj. F. Rex, Esq., of the St. Louis bar.
v.38F.no.16-52