52 F. 752 -

752

FEDERAL REPORTER.

vol. 52.

is to take one of those old levers, and mount it on his tongue, for the purpose of adjusting the angle of his disk gang, instead of placing the lever where Randall placed it. It performs the same function, and no other, when placed on the frame of the m.achine as it did in Randall's old machine. If Randall's lever had been patented, it is quite clear the Corbin lever would· have been an in fringement. If Randall had attached a rod to his lever,' and extended the same forward to the driver's seat, so that the angle of the disk gang could be.controlled from the driver's seat, ;he would have had a device operating upon the same principle and producing the same as is done by the complainant'sleverj and no onl'l., I think, would coritend that it would have been patentable to so atrod to the Randall. lever, and hold it by any common locking deam therefore clearly of opinion that this patent must be. held void for want of novelty.

AMERICAN PAPJDBo-BAG

Co.

V. VAN

NORTwrCK el til.

(oCrcuu Court cir.AppeaZs, Sewnth C1trcuit. October 1,1892.)
1; PATEN'1'S 'FOR· :lNVEN'1'IONS-LroENSE-ROYAL'1'IES-'NOVATION.

Plaintiff to delive.rto defeJ:ldaJ:ltscertain. machines made under a patent. owned by plaintitr, and tolriv:e a license for its use upon payment.by lel!sees for the use of saidIDflchines bytbemeelves, "or by any other person for them or fpr otbers." .Defendants orga!lbed a corporation of wbich they were the sole members. and'the.ml,tchines were delivered to and used by the saId corppration. Held, that the faot: that the delivery was made to the corporation instead of to the defendants perB9n$lly did not constitute a novation,since such delivery, made with the defCJldants' consent, neither extingUished the old obligation nor released the original debtors.

2;, SAME-CORPORATION-EsTOPPEL.

Nordid sur,hdeliverycoJ)stitqte of the contract, sinoe the defendants, by consenting thereto as oftlcers of the corporation, estopped themselves from alleging thaHt was made against tbeir individUal wishes.

8·. SAllIE-DELIVERY OF LIOENSE"":WAIVER. A patentee WQO has delivered certain of his patented mac.hines under a contract in which he agrees to give a license for their use upon royalty is not prevented froID collecting' the royalty by the fact that he has not delivered the license, especially when tile failure lieliver the 1lcens.e was caused by the licensee'sreiusal to meet the patentee and slll"U the license.

Error to the Circuit Court .:If the United States for the Northern District of lllinois. Action by the American Paper-Bag Cpmpany for the use of Frank T. Benner, trustee, against William M. Van Nortwick and T. R. Troendle, tq recover royalties. Judgment for defendants. Plaintiff brings error. Reversed. . Oliver &I for plaintiff in. error·. Goudy, Green!; Goudy and Offield cfcTowle, for defendants in error. Before HAJtl..AN, Circuit Justice, WOODS, Circuit Judge, and District Judge.

AMERICAN PAPER-BAG CO. V. VAN NORTWICK.

153

JENKINS, District Judge. The American Paper-Bag Company, being the owner of certain letters patent of the United States on the construction of machines for the manufacture of satchel bottom paper bags, on the 16th day of June, 1884, contracted in writing with the defendants in error and one H. J. Rogers to deliver to them on lease and license 12 such patented machines, for which a stipulated price was to be paid. The defendants agreed to accept and to execute, on their part, a license for the use of such machinery, of which a copy was annexed to the contract, "and thereafter to pay the license fee, and to perform all other terms and conditions as specified in such license." The plaintiff agreed the use of the machinery so leased "according to to grant a license the said copy hereto annexed." The propos\"ld license annexed to the contract provided, inter alia, that an account should be kept of all bags ma.de by the lessees, "or by any other person for them or for others," by the aid oIthe leased machines, a.nd that the lessees should pay a royalty of 5 cents for every 1,000 bags so made, pa.yable as expressed. The machines were delivered in December, 1884, and were operated until their destruction by fire in March, 1886. The action was brought to the stipulated royalty upon the. 150,000,000 bags alleged to have been ma.nufactured during that period by the aid of such machines. A trial by jury was waived. Upon the. hearing in the court below, at the copclusion of the plaintiff's case, no counter evidence being offered, defendants moved the court to strike out and t'xclude all the evidence, as not tending to sustain the issue on the part of the plaintiff. .The court sustained the motion, to which ruling the plaintiff duly excepted. Thisrulinp; and exception authorize a review of the evidence so far fiS essential to the question whether the facts proven made a primajacie case sufficient, in the absence of counter evidence, to justify a recovery by the plaintiff. The record does not disclose the precise ground of decision. It is said here that it proceeded upon the theory of a novation. The decision is also sought to be sustained upon the ground that the machines were not delivered to the defendants, were not operated by them, and that no license was tendered to or executed by the defendants. 1. We are satisfied that the theory of a novation cannot be sustained. We search the record in vain for evidence to uphold such contention. It appears that the defenda.nts, soon after the execution of the contract in question, organized the Western Paper-Bag Company, to which company these ma.chines .were delivered, and by such company they were operated. The defendants were the officers and managers of that company, and, so far as disclosed by the record, the only persons interested therein. The correspondence with the plaintiff was conducted by the several defendants, at times in an individual capacity and a.t times in a representative capacity, as officers of the company. We find therein no suggestion that the company should a.ssume any liability of the defendants upon the contract, no promises to pay such liability, no consent to substitution on the part of the plaintiff, no release of the defendants. It is essential to a novation, by substitution of a new debtor, that the original the substitute assume and be hound for debtor be discharged, and v.52F.110.8-48

7'54

FEDERAL 'REl'ORTER,

vol:. ,152.

of a newtletltor't1Ccepted bJft'hlfcreditor for and in the original debtor. Thi's is elementary;'!t is said that consent,snbstitution, and release are to 'be inferred from the melt that delivery ofthe n:rachineswas made by the plaintiff to the Western Paper-Eag Compahy,and. that the use of the machines for which royalty is here sought was by the company, and not by the defendantS individually. ,Those facts go to the question of liability of the dMendliritS tinder the contract,and are considered further on; but, standing 11lone, they are not sufficient to work a novation. Delivery of the n:rachines to the company without consent of the defendants would work of'contract by the plaintiff; ,noVa substitution of debtor. Delivery by'the procurementorcbnsent orthe defend/mts is . in fulfillment of the Coiltract, not of itself availing to discharge the original debtor. The with respect to liability 'for royalty f61' use of the ma"Thed'efendants covenanted to p8)'royalty OD' aU bags made by tliem, ,"or by any other penl0n for them ,o,r for others." If such by the compan'Ywas by the prt:>ctirement or consent of the <;lefendants, their liability ",ould not thtJreby be affecte.d, unless there existed the bthe'r' necessary,;c,6nditions ora novation. 'Rsuch use was without the 'consent '6fthe' defendnnts, delivery or the 'machines being also without tHeir c()nsent, therewonld: liability under their· contract. Thete would beno debt to beassumed,and no need to invoke th,¢, If the Western Paper-Bag Company, by reaspn of tM 'Possession and use of the equitably to indemnify the defendants for, their liability to the plaintiff for stich use, that wouldfiotn\1ail as 8. novation. Indemnification' is not substitution. Nor 'lVotlld the defendiU'ltsbe the cqll1pany, by reason Of the use of the 'thachines, with knowledge of th,e:'terms of the arid license, were also bound to respond to the' plaintiff for thet'9yalties here sought to be recovered. Additio)) is' not substitution. In :Such case the one party is bonItd by reason of contract stipulation; the other, if liable at all, upon equitable considerations for the use of property and ptotected right. Nor would it avail to a novation Hthe Western Paper-Bag Company had expressly agreed with the defendants to discharge their liability to the plaintiff. Assumption of liability 'is not novatibn unless there concur the consent of the creditor to' accept the company in lieu of the defendants and a discharge of the latter. Such consent cannot be implied merely from the delivery of the machines. by the plaintiff to and their Use by the company. Such delivery and use may well consist with the continued liability'ofthe defendants under their contract; may well speak thedisinclination of the plaintiff to trust the company for accruing royalties, and a looking to and reliance upon the defendants to respond under the ternls of the inference of a novation sought to be drawn riJerely from such delivery alid use is repelled by the fact that the defendants were the :on1y officers of tbe and the only persons interested therein. It ihlot reasonable to infer that the plaintiff would, without motive and against its interest, discharge the personal liability

AMERICAN PAPER-BAG CO. 11. VAN NORTWICK.

755-

of the defendants for the doubtful responsibility of a corporation of whose. financial <condition it had no knowledge, and of whose existence it was only inferentially informed. There are wanting here the essentials of a novation. There is here neither the substitution of a new obligation nor a new debtor. There is here neither the extinguishment of the old obligation nor release of the original debtor. There is here neither consent of the creditor nor promise by the supposed substituted debtor. 2. It is ipsisted for the defendants in error that they should not be held to their contract, because the machines were delivered by the plaintiff to the Western Paper-Bag Company, and that the use of them for which royalty is here sought to be recovered was by that company, and not by the defendants. At the date of this contract there were three paper manufacturing companies in which the defendants were interested: The St. Louis Paper Company, at St. Louis, Mo.; the Van Nortwick Paper Manufacturing Company, at Batavia, Ill.; and the Appleton Paper & Pulp Company, at Appleton, Wis. Soon after the contract the defendants organized the Western Paper-Bag Company, and were its sole officers and managers, and, so far as appears, alone interested therein. That company wOJ.lld seem to have been formed for the sole purpose of operating under this contract the machines in question. The plaintiff had such knowledge only of that corporation as might be derived from its letter heads upon which the correspondence was in part conducted, and from the official signatures or the defendants, and the use of the corporate name in some of the correspondence. The correspondence was conducted principally upon letter heads of the different corporations, dependent, it would appear, upon the location of the writer. In the latter part of the period of the correspondence, the letter heads of the Western Paper-Bag Company were chiefly used. These letters "',ere signed by one or other of the defendants, sometimes officially, sometimes individually; .and, whether signed in one way or the other, they invariably speak of "our machines." These letters were mainly written by the defendant Troenule, sometimes by the defendant Van Nortwick. So the letters of the plaintiff were addressed, during that period, sometimes to Van Nortwick individually, sometimes to him in his representative ca..pacity, sometimes to Troendle individually, sometimes to him as vice president. and sometimes to the Western Paper-Bag Company. It is clear from the correspondence that delivery of these machines to the Western Paper-Bag Company was with the consent and at the request of the defendants. They alone, so far as appears, and so far as the plaintiff knew, were interested in the company. The plaintiff was not advised of any transfer of the defendants' interest in the machines. It assumed that the company and the defendants were one in fact. It was of no concern to the plaintiff that the defendants had chosen to incorporate and to conduct the business under a corporate name. Delivery could ,be rightfully made pursuant to the direction of the defendapts. Such delivery would be in fulfillment of the contract. Delivery to the company was at the direction of the defendants. Their individual request Of.RSSlillt thereto could as well be expressed by their official signatures

756

. FEDERAL REPORTER,vol

52.

as by'll personal direction. If one, having a personal right to property, directs a certain disposition olit, he is, as against one complying with the instruction, personally bound by the direction given, although in so doing ·he acted in a representative capacity. In such case he cannot be heard to complain of an act he has caused to be done. So here the defendants by their conduct induced delivery of the machines to the corporation with which they were connected and of which they were the moving spirits. It is no answer to say that therein they acted in a representative capacity. If they had personal objection to such delivery, they should have made it manifest. They were silent when it became thetn1lo speak. They cannot now object that the delivery, which as representatives of the company they sought and obtained, was counter to th,ar individual wishes. They are estopped. Swain v. Seamens, 9 Wall. 254, 274; Bronsonv. ChappeU, 12 Wall. 681. The delivery here was' the precise delivery the defendants desired and requested. Under such cir<luinstances, delivery to the company was delivery to the defendants. The royalties soughtto be recovered arose from the use of the machines by the' Western' Paper-Bag Company. The contract determines the liability'ofthe defendants for royalties upon all bags made by the defendants,"or by any other person for them or for others," by aid of the leased machines. 'fhe use of the machines by the company was by permission of the defendants. They were delivered to the company for such use by the defendants' direction. In 1885 the company, by the defendant Rogers, as its president, and the defendant Van Nortwick as its treasurer and manager, contracted in writing with the Mutual Paper-Bag Company for the embodiment in the machines of certain patented improvements. That contract ,has appended the individual consent of each defendant to the disposition of the machines stated in that contract. If that written consent does not speak their continued personal property in the machines, it does declare the rightful possession of them by the company, and their assent to the use of them by the company. The defendants were in fact the company. The manufacture by the company of the paper bags, by aid of the machines, was, if not a making of bags by the defendants themselves, a making by another for them, within the meaning of the contract, for which, by the terms of their agreement, they must respond to the plaintiff. 3. It is urged thlit the plaintiff failed to prove an execution and tender of license as provided by the contract. The evidence discloses that in March, 1885, soon after the delivery of the machines, the plaintiff at :.Boston exhibited to the defendant Troendle the licenses, counterparts of the copy license annexed to the contract, and requested their execution. He objected to the omission of some condition, not declaring its purport, but stating that it was contained in some document then at his hotel. He afterwards said he could not find the document, but would forward it upon his return to minois. He failed to keep that promise. In May following, the plaintiff addressed a letter calling attention to the matter. Failing a reply, the plaintiff, in June, again wrote upon the subject. The

AMERICAN PAPER-BAG CO. V.VAN NORTWICK.

757

defendant Van Nortwick, after some delay, replied, regretting the omission to answer the previous letter, and stating that one of them would soon visit Boston and would see the plaintiff upon the subject. That promise was not kept. The licenses were never demanded by the defendants nor executed. If tender of the licenses were essential to recovery under the contract, we are of opinion that the conduct of the defendants operated as a waiver of performance. The proper licenses were tendered for execution. Failure of execution and delivery was due to the inattention or evasion of the defendants. They are not permitted to take advantage of their own wrong. The licenses contained mutual obligations. The duty of the parties to execute them was concurrent. The defendants' failure to perform excused performance by the plaintiff. U. S. v. Peck, 102 U. S. 64. We are, however, of opinion that tender of an executed license is not a condition precedent to recovery of royalties arising from use of the patented machines. By the contract the defendants agreed to pay a specified royalty for such use. They, or another for them, have had the use 1;tnd reaped the benefit. The delivery of the executed formal license in no way affected that obligation, and was not by any term of the contract a condition precedent to its fulfillment. The obligation to pay was dependent upon the use, not upon the license. The defendants were in no way injured, nor their interest jeopardized, by the omission. Aside from the grant of use, the licenses were mainly for the benefit of the lessor, regulating and restricting the use. The contract was of itself a license to use, fully protecting the defendants against any claim of infringement of the plaintiff's right. It estopped the plaintiff to assert infringement. An agreement to license is as efficacious as a license in that respect, the <londitions being performed by the licensee. A license would be presumed from the mere acquiescence of the plaintiff in such use, and from the relation and acts of the parties. Blanchard v. Sprague, 1 Cliff. 288, 297; McClurg v. Kingsland, 1 How. 202; Chabot v. Overseaming Co., 6 Fish. Pat. Cas. 71; Herman v. Herman, 29 Fed. Rep. 94. The defendants cannot be permitted to escape the obligations of their contract, or the stipulated payment for the use enjoyed, by reason of failure of formal license, which afforded them no additional protection, especially when such failure was brought about by their own negligence or artifice. The judgment is reversed, and the cause remanded, with directions to award a new trial. Mr. Justice HARLAN was not present when this decision was announced, but he participated in the hearing and decision ofthe case, and concurs in this opinion.

758
CAVERLY 11. DEERE (qirC¥.ft Oourt, N. D.
1.

et al.

October 81,1892.)

nu,nois. S. D.

Letters patent No. S03,116. issued Aug-uat 5, 1884, to Sarah Caverly, for a machine for rounding 1/ellt hllondles, consisting of aoylindrical outter head, revolving vertioally, haVing iii 'the center of'its periphery a groove, with cutter knives set diagonally, and adjusted from both sides of the cutter head into the groove, are void for want of novelty, such cutter heads, either. made in a single piece or made of two disks, having been in use long before the date of the invention. The fact ths.t in the machines made under said patent the cutters were set at an angle of 45°, which enabled them to do better work than older machines in which the outters were set at a different angle, does not render the patent valid, since there is nothing in the specificatious defining the angle at which the outters should be set.

J'OR'tNVBNTIONS-PATENTABILITy-NOVELTy-HANDLE CUTTERS.

2. SAllE.

8; SAllE-DATE oj lliVENTION-EvIDENOlll.' Testimony of three sons and a daughter ota deceased patentee, to the effect that the patentee made a model oUhe patented machine 18 years before his application tor patent, and ltlade an operative machine 12 years before such application, is insuffi-

oient to carry the date oftha invention',baok of the application, 'where it appears thattl1eSdwitnesses are not meohanics, all,dthali the three sons were mera boys when the maohines were alleged to have been made, and their testimony is not corroborated.

In Equity. Suitby Herschel Caverly, administrator of Sarah Caverly, for alleged infringement of a patent. deceased, against Deere & Decree dismissing,bill. D. B. Nash, for complainant. , Band, Adama &: Pickard, for defendants.
l3LODGE'l''l'. PistrictJudge. is a bill in equity charging defendof patent No.3Q3,1l6, granted August 5, ants with K. Caverly, for a "machine 1884, to Sarah for rounding bent f,lnd for an injunction and accounting The inventor says of the invtmtion covered' hy.the patent: .

";My invention relates to machines for forming such round or oval or bentwood handles and other WC;>OdW01;k, bent or straight; and it consists in a cylindrical cutter head moun ted on an ordinary frame, and revol ving ver'preferably, of two cylinders or disks tically by suitable gearing, bolted together, having itHhe center Of its periphery a groove the shape and size. of the curve orovllI Guthe dressed handle, and the cutter knives adj usted from'both sides of the cutter head into thll groove. * * * "The cutter head is of cylindrical form, made of steel, iron, or other suitable material, constructed, preferably, of two cylindrical pieces or disks, each having such a curved or .concaved cut on its innel" face, from beyond its diameter to its periphery, that, when they are placed With their curved faces together, the curves or concavesi'il.the disks will forlll a groove in the head the size and shape of the dressed handle. When the cutter heal! is constructed in two pieces, the latter are securely fastened together by bolts pass. ing through bolt holes in each, and nuts, or otherwise prevented from hav. ing independent motion. Each of the disks forming the cutter head has one or more openings or ditches, flaring at the top on the outer face thereof, decreasing in width in their in ward progress, and terminating at the bottom in narrow;rescent-shaped openings in the curve on the inner face of the disk, the metal being concaved and sharply inclined at one end of the recesses, to per-