Woodworth v. Cook

NELSON, Circuit Justice. 1. The evidence is very strong in this case to show that, according to the actual agreement between the patentee and the defendant at the time of the assignment of the 4th of July, 1843, the latter was to possess the right not only to construct and use the six machines within the territory mentioned, but also to vend their products, without any restriction as to place. The deposition of Mr. Boyd is very particular and explicit on this point. It was the subject of discussion in the negotiation, and was deemed a very material part of the contract on the part of the defendant; so much so, that he refused to become the purchaser if restricted in the exercise of this right, as provided for in one of the clauses in the assignment. To remove the objection and give the unrestricted right of sale, the last clause was interlined at the bottom of the instrument, as follows: “It is understood that said Cook has all the rights I have in the county of Washington, under the said patent, to use six machines, and no more.” Upon this evidence, assuming that the clause thus inserted has not the effect, when taken in connection with other parts of the contract, to give the unrestricted right of sale, according to any legal interpretation of the instrument, a court of equity would probably, on a proper application, direct the contract to be reformed, by the insertion of a clause to the effect claimed; and, if so, it seems to be an established rule in equity, that the matter thus entitling the party to an amendment of his contract may be set up by [564] way of equitable defence against a proceeding involving the rights of the parties under the instrument, and which would not be maintainable if the clause in question had formed a part of the contract. In other words, it may be set up by way of defence to a proceeding to enforce a specific performance of the contract, where the clause omitted through mistake or accident would, if found in the instrument, constitute a ground of defence. Com. Dig. “Chancery,” 2, C, 16; Joynes v. Statham, 3 Atk. 388; Pitcairn v. Ogbourne, 2 Yes. Sr. 375; Legal v. Miller, Id. 299; Mason v. Armitage, 13 Ves. 25; Flood v. Finlay, 2 Ball & B. 15; Gillespie v. Moon, 2 Johns. Ch. 585; Price v. Dyer, 17 Ves. 357; 1 Story, Eq. Jur. § 161. I am inclined to think, notwithstanding the insertion of the last clause in the agreement, that, taking the whole instrument together, and giving to each and all of its provisions a consistent interpretation, the sale of the products of the machines was restricted within the limits of the county within which their operation was confined; and that there is nothing in the restrictive clause necessarily repugnant to the one relied on by the defendant as qualifying it. It is not to be denied, however, that unless the view taken by the defendant as to the effect of the qualifying clause is the correct one, it is difficult to perceive its object or materiality, as that clause, if confined simply to the number of machines to be used, would be but a’repetition of what had already been fully provided for. The defendant’s view, therefore, though not sustainable upon any proper legal interpretation of the instrument, tends to confirm the evidence as to the mistake or misapprehension of the effects of it, claimed in the answer. Upon the whole, I should be disposed to acquiesce in the ground and principle of the defence thus set up, were it not for the consideration that the rights of a bona fide purchaser have intervened, which would or might be seriously prejudiced by allowing the contract to be reformed at this late day, or by giving effect to the defence, which would be the same thing. Wilson and Gibson having purchased all the right of the patentee within the state of New York, subject to certain previous grants, and, among others, the one in question, and paid for the same a valuable consideration, the enlargement of the defendant’s contract beyond what appeared ripon the face of it, to the prejudice of these subsequently acquired rights, would be unjust and inequitable, and constitutes ground that must prevent the interference of the court. In the aspect of the case in which the relief is prayed for against the terms of a written instrument, these assignees are to be regarded as bona fide purchasers, and as presenting at least an equal equity against the correction of the mistake, to their prejudice, with that presented by the defendant in favor of it. The authorities on this point were referred to in the ease of Gibson v. Cook [Case No. 5,393]. That the unrestricted sale of the products of the machines operated in the territory in question would not be prejudicial to the rights of these assignees, is a proposition I cannot assume or admit. It is manifest that a right to vend the products in the markets at the cities below on the Hudson river, would seriously affect the value of the machines in operation in those cities, and, of course, the price of the rights under the patent. If so, then the rights of the assignees, as bona fide purchasers, intervene, and, upon the principles above stated, forbid the interference of the court. 2. I am inclined to think that the assignment from Woodworth to Cook, according to the fair import of its terms, was made úpon the express condition that he should observe strictly the limitation in regard to the sales of the products of the machines; and that, on a breach of the condition, the patentee had a right to avoid the contract and to be remitted to his original rights. This would seem to be not only the intention of the parties in inserting the condition, but also the legal effect and operation of the stipulation; and upon this view the bill has been framed. It is to be observed, however, that the defendant is also remitted to his original position and rights under the Woodworth patent, as the contract must be avoided altogether, if at all. It cannot be obligatory upon the one party and not upon the other. The bill assumes, and properly, as its foundation, that the contract has been rendered null and inoperative by the breach of the condition; and that, since the breach, the defendant has been running the machines in violation of the patent. In this view of the case, he may' well set up, as he has done in the answer, any right belonging to him, as it respects the use of the said machines, prior to the assignment in question. It seems that two of these machines were constructed and used under a right acquired from the original patentee during the first term, and were in use at the expiration of that term. According, therefore, to the case of Wilson v. Rousseau, 4 How. [45 U. S.] 646, the defendant had a right to continue in the use of them, notwithstanding the first extension. This ground affords a complete answer to the charge of infringement as it respects these two machines. 3. Woodworth, the patentee, is, we think, properly joined with Gibson as a plaintiff. He being a party to the assignment, it was, perhaps, necessary to make him a party to the suit, in order to take advantage of the breach of the condition, notwithstanding the whole of the beneficial interest is in Gibson. Besides, for aught that appears, he is yet the owner of a portion of the interest in the patent, and, as such, interested in upholding it; and he may be interested indirectly in the infringement itself. [For other cases involving this patent, see note to Bicknell v. Todd, Case No. 1,389.] There must be a decree for the plaintiffs, and a reference to a master to take proof of the loss of profits sustained on account of the infringement, upon the principles above stated.