Eclipse Bicycle Co. v. Farrow

23 App. D.C. 411, 1904 U.S. App. LEXIS 5267
CourtCourt of Appeals for the D.C. Circuit
DecidedApril 5, 1904
DocketNo. 1351
StatusPublished

This text of 23 App. D.C. 411 (Eclipse Bicycle Co. v. Farrow) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Eclipse Bicycle Co. v. Farrow, 23 App. D.C. 411, 1904 U.S. App. LEXIS 5267 (D.C. Cir. 1904).

Opinion

Mr. Justice Morris

delivered the opinion of the Court:

This case has twice before been in this court. The result on the first occasion is found reported in 16 App. D. C. 468; that on the second appeal in 18 App. D. C. 101. As in the opinions-then filed the facts of the case down to the time of the later-report have been sufficiently stated, it is needless to repeat them, here.

After the decision of this court on the second appeal and therein anding of the cause to the court below for further proceedings therein, the case went to the auditor of that court for the-accounting which had been ordered. The auditor on June 2, 1902, filed a report in which he found the sum of $4,808 due-from the defendant, the appellant here, to the appellee. Exceptions were taken to the report by both parties, one by the complainaut, which was sustained by the court, and seventeen by the defendant, which were all overruled, and the cause was remanded to the auditor, with directions to restate the account in accordance with the claim of the complainant in the exceptions which. [413]*413had been sustained. This was done and the auditor made a second report, wherein he found a further sum of $12,297.20 due from the defendant to the complainant, with interest on the several instalments thereof from certain specified dates. Again, there were exceptions filed by the defendant, which do not seem to have been formally acted upon by the court at the time, but the cause was again sent back to the auditor for the purpose of consolidating his two reports into one. He thereupon filed a third report, in which he found the sum of $17,105.20 to be due from the defendant to the complainant with interest on various instalments thereof as in the second report The court then considered the exceptions that had been filed to the second report and ratified and confirmed the auditor’s third report, which allowed the sum of $17,105.20 against the defendant, and it adjudged that the complainant should recover costs from the defendant. It did not in terms adjudge that the defendant should pay the amount found due by the auditor’s report or that the complainant should recover the same against the defendant.

From this decree the defendant company has appealed to this court.

It has been suggested in argument, although neither side insists upon the point, that possibly the decree of the court below is not final, inasmuch as it fails to adjudge that the complainant should recover from the defendant the amount found due by the auditor. But since it is desirable that the cause should go to the court of last resort, there to be finally determined, with as few technicalities as possible to obstruct or postpone such final determination, we think that this difficulty, if difficulty it is, may be obviated, under the authority vested by the law in this court to modify, as well as to affirm or reverse, the judgments and decrees of the court below, by the addition in our decree in the premises of a clause to the effect that the complainant should be entitled to such recovery; and this will accordingly be done.

The original decree of the supreme court of the District of Columbia, which was rendered on February 1,1900, and which was affirmed by this court (16 App. D. C. 468), adjudged and decreed that the defendant should account to the complainant, un[414]*414der the contract between them, for royalties upon all devices manufactured by the defendant company, which embodied the inventions of the complainant mentioned in two applications for patents filed by him; and also for royalties upon all devices manufactured by them under letters patent No. 611,073, granted to Alexander Morrow on September 20, 1899, which, although patcntably somewhat different from the complainant’s devices, was held by that court and by this court to have been in the hands of the defendant company a merely colorable and fraudulent evasion of the rights of the complainant under his contract with the company. Confining himself to a strict compliance with the terms of this decree, the auditor found the amount due from the defendant to the complainant to be the sum of $4,808; and this, as already stated, was the substance of his first report.

But in the course of the testimony taken before him during that audit the fact was developed that some time in 1900 or 1901, after the rendition of the first decree of the court below, which; directed an accounting, the defendant company, with the evident purpose of escaping further accountability, had discarded the manufacture both of the devices of the Farrow applications and the device of the Morrow patent No. 611,073, and was manufacturing another device, also produced by Morrow, who still remained the superintendent of the defendant company, designated in the record as “Exhibit E 10,” by which name we will also call it. This Exhibit E 10, as testified by two expert witnesses, has the same general characteristics as one of the Farrow devices, and effects the same result. Other experts testify that it is patentably different. It was contended before the auditor' by counsel for the complainant that this should enter into the accounting. The auditor declined to admit it, but tire court overruled him and ordered the second audit for the purpose of having it taken into the account. It was for the use by the defendant company of this later device that the sum of $12,297.20 was found to be due to the complainant, and the present controversy is over the allowance of this sum. For it is conceded that if the original decree is right the accounting in the first audit is right, and there is at least the sum of $4,808 due from the defendant to [415]*415the complainant. The question for our present determination is whether the complainant should be allowed royalties for the manufacture by the defendant company of the device of “Exhibit E. 10.”

The case has been argued before us on behalf of the defendant, mainly upon the theory that this is like a case of infringement of patent, or a case of patentable novelty wherein it is sought to be shown that some apparently new thing is patentably different from some old device. This is a wholly erroneous theory of the case. We believe that it tvas admitted that the device of the Morrow patent, No. 611,073, was patentably different from the devices of the Farrow applications; and yet it was held that, in view of the contract between the parties by which the defendant company had effectively tied the hands of Farrow, its manufacture of the Morrow device of the patent No. 611,073 was virtually a fraud upon him. The ground of accountability under the contract is not that the Farrow and the Morrow devices are patentably identical, for they are not, but that the manufacture of any other devices by the defendant company, in evasion of its contract with Farrow, is a fraud upon the latter for which the company should account If the contract had been in express terms that, in consideration of the assignment of his inventions by Farrow to the company, the latter would manufacture his devices exclusively, and no other, and should pay royalties to him therefor; and if ¡.hereafter, finding something that suited them better at less price, the company should disregard the agreement, discard the Farrow devices, and manufacture only the new device that had been found, can it he supposed for a moment that the company wonld thereby escape liability under the contract ? But this is substantially the case under consideration. It is a case where equity will pursue a fraud whatever guise it takes.

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23 App. D.C. 411, 1904 U.S. App. LEXIS 5267, Counsel Stack Legal Research, https://law.counselstack.com/opinion/eclipse-bicycle-co-v-farrow-cadc-1904.