Automatic Switch Co. v. Monitor Mfg. Co.

180 F. 983, 1910 U.S. App. LEXIS 5545
CourtU.S. Circuit Court for the District of Maryland
DecidedJune 15, 1910
StatusPublished
Cited by8 cases

This text of 180 F. 983 (Automatic Switch Co. v. Monitor Mfg. Co.) is published on Counsel Stack Legal Research, covering U.S. Circuit Court for the District of Maryland primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Automatic Switch Co. v. Monitor Mfg. Co., 180 F. 983, 1910 U.S. App. LEXIS 5545 (circtdmd 1910).

Opinion

ROSE, District Judge.

This is a suit in equity for an alleged infringement of certain claims of patents 716,504 and 757,853, both originally issued to George H. Whittingham, one of the defendants.

In 1888 Whittingham, then about 20 or 21 years of age, applied for a patent for an automatic switch for electric motors. He organized the Automatic Switch Company of Baltimore City and sub[984]*984scribed for all its-stock. He paid for it by (1) assigning the patent to be issued, and by agreeing to assign (2) all foreign patents he might obtain' for the same invention, and (3) any improvements upon said switch or any contrivance or device whatsoever which he might invent or in any wise become possessed of or interested in, bearing upon a switch for operating electric currents. He remained in the employ of the company for nearly 16 years. During that time he-obtained a number of patents. Some, including the two in suit, were for improvements in switches. Some were for other electrical devices. The company at its own cost prosecuted the application for all these patents, and all of them were assigned to it. In 1897 one David H. Darrin became the New York sales agent of the Automatic Switch Company. In 1898 the company gave him for five years the exclusive agency for the sale of its goods in Greater New York and New Jersey. He says as the direct outcome of this agency he went into the elevator business on his own account. Its success, he testifies, depended largely upon his control in the New York territory of the Automatic Switch Company’s products. In 1901 Whit-tingham told Darrin he would like to buy the stock of the Automatic Switch Company, the majority of which was then and had been for many years in other hands. Whittingham says that Darrin asked to share in the purchase. Darrin says Whittingham asked for his help, and to get it showed him the agreement of September 5, 1888, binding Whittingham to assign all future switch inventions to the company. Whittingham denies that he ever showed Darrin that agreement or said anything about it. He claims never to have seen it from the day on which it was executed until it was offered in evidence in this cause. However this may be, Whittingham and Darrin agreed to buy the stock not owned by Whittingham and to pay for it something over $9 a share. It was planned that each should get one-half of the total issued stock, and that the salary to be paid each by the company should be the same. Nothing was said about the Darrin agency contract. Neither had sufficient ready money to pay for the stock. Each indorsed for the other. Whitting-ham lent Darrin $600 in cash. Darrin was elected president. They got along well together until Darrin wanted a renewal of the exclusive agency contract for the D. H. Darrin Company which he had organized, and to which he had assigned the contract. Whittingham did not want to renew it. Darrin as president of the company, but without the authority of the directors, gave a new contract to a clerk of the Darrin Company and the latter immediately assigned the contract to that company. At the next election the directors of the Automatic Switch Company declined to re-elect Darrin president and put Whittingham in his place. While Whittingham was president the company sold its switches in the New York territory to anybody who wanted to buy them and could pay for them. Darrin, so long as he did not control the New York agency, would not use the Automatic Company’s switches in any elevator built by his company. He testifies that rather than buy Automatic Company’s switches when other people in the same territory could buy them- he used other switches so inferior in quality that it seriously injured the reputation [985]*985■of the Darrin elevators. He seems to have persuaded himself that he had the right to the exclusive agency, no matter what the other stockholders of the switch company thought about it.

Meanwhile the struggle between him and Whittingham for the control of the Automatic Switch Company was carried into the courts. Darrin obtained an injunction restraining Whittingham from voting certain shares of stock at the annual election for directors to be held in January, 1904. The company’s by-laws said that no election could take place unless a majority of the stock was represented at the meeting. Whittingham stayed away to break a quorum. Darrin came. A little over one-third of the shares were represented. Darrin’s friends were elected directors. The Court of Appeals of Maryland finally held that under the state corporation law as it then stood the shares present at an annual meeting could elect whether they were a minority of the whole number or not, and no matter what the company’s by-laws might say about it. So soon as this decision was handed down, Darrin took control1 and put an end to Whittingham’s connection with the company in any capacity other than as a stockholder in it. Whittingham swears, and Darrin does not deny, that Darrin said he would never allow the company to make a dollar so long as Whittingham had any stock in it. Whit-tingham offered to buy Darrin’s stock. Darrin would not sell unless given the exclusive New York agency. On those terms Whit-tingham, would not buy. Whittingham began legal proceedings to secure control of the annual election to be held in January, 1905. Then an agreement was made. Darrin was to dismiss all the suits against Whittingham, several of which were pending. He was to pay Whittingham 820,000, and to pay the agent who negotiated the arrangement $2,500. In return all the Whittingham stock was to become Darrin’s. Darrin dismissed the suits. A time and place for the payment of the money and the transfer of the stock was appointed. Darrin came bringing his money in large part in $5 and $10 notes. It took time to count these. While the parties were still together, a deputy sheriff appeared with an attachment in a new suit that Darrin had caused to be brought against Whittingham. Whit-tingham “had taken the precaution to transfer the stock to the name of the agent. The latter claimed that the stock was his, and he had sold it to Darrin, and that the money to be paid for it belonged to him. Darrin dropped the attachment. Whittingham says he feared Darrin would bring other suits against him. Therefore, so soon as he received his $20,000, he invested it. How he does not say. He at once transferred these investments to his wife. Darrin did bring two other suits. Why the record does not disclose. The defendants’ brief says they were fruitless. A very little while after Whitting-ham sold his stock, he came to Baltimore. He called at the shop of one William C. O'Brien, whom he had known for a long while. Some eight years before O’Brien had been in the employ of the Automatic Switch Company. Whittingham says that O’Brien was working on some original electrical devices for some of which he was seeking patents. O’Brien and Whittingham agreed to form a corporation. Mrs. Whittingham was to pay $2,400 for two-thirds [986]*986of the stock; O’Brien $1,200 for one-third. The company was to buy O’Brien’s business, inventions, patents, and, machinery for $2,-200. It was a part of the bargain that the company should employ' Whittingham as one of its officers. What was 'agreed to be done was doné. The corporation was organized under the name of the Whittingham Manufacturing Company, and started its career with O’Brien’s business and $1,400 of cash. After the bill in this case was filed, the company changed its name to the Monitor Manufacturing Company. O’Brien still holds one-third of the stock which' was issued to him. Mrs. Whittingham still has the two-thirds which were issued to her, less one share transferred to her husband, the defendant Whittingham.

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Cite This Page — Counsel Stack

Bluebook (online)
180 F. 983, 1910 U.S. App. LEXIS 5545, Counsel Stack Legal Research, https://law.counselstack.com/opinion/automatic-switch-co-v-monitor-mfg-co-circtdmd-1910.