Page images
PDF
EPUB

The protests are therefore sustained and the collector directed to reliquidate the entries accordingly."

Edwin W. Sims, U. S. Atty., and D. Frank Lloyd, Asst. U. S. Atty. Gen. (William A. Robertson, Special Atty., of counsel), for the United States.

Lester C. Childs, for importers.

CARPENTER, District Judge. Decision affirmed.

UNITED STATES ex rel. FRIEDMAN et al. v. UNITED STATES EXPRESS CO.

(District Court, W. D. Arkansas, Ft. Smith Division. July 13, 1910.) 1. MANDAMUS (§ 133*)-INTERSTATE COMMERCE-EXPRESS COMPANIES-TRANSPORTATION OF INTOXICATING LIQUORs.

Interstate Commerce Act Feb. 4, 1887, c. 104, § 3 (24 Stat. 380 [U. S. Comp. St. 1901, p. 3155]), makes it unlawful for any common carrier subject to the act to make or give any undue or unreasonable preference or advantage to any particular person or locality or description of traffic, or to subject any particular person, locality, or description of traffic to any undue or unreasonable prejudice in any respect whatsoever. Held that, where an express company doing interstate business refused shipment of intoxicating liquors offered by petitioners in Arkansas for transportation to purchasers in that portion of Oklahoma formerly called the Indian Territory, petitioners were entitled under such section to mandamus to compel the express company to transport and deliver such liquor as an article of commerce not prohibited by law from being introduced into that part of Oklahoma to which it was consigned.

[Ed. Note. For other cases, see Mandamus, Cent. Dig. § 268; Dec. Dig. § 133.*]

2. STATES (§ 9*)-ADMISSION INTO UNION-EFFECT.

Since Congress has no power to admit a state into the Union except on an equal footing with the original states in accordance with the rights, powers, and duties defined by the Constitution, the admission of Oklahoma fixed her status and that of her people as that acquired by the other states of the federal Union, under the Constitution, anything in the enabling act (Act June 16, 1906, c. 3335, 34 Stat. 267 [U. S. Comp. St. Supp. 1909, p. 155]) to the contrary notwithstanding; and conferred on such state the exclusive power to enact its own laws, regulating intrastate commerce and in the exercise of its police power regulating the introduction and sale of intoxicating liquors.

[Ed. Note. For other cases, see States, Cent. Dig. § 4; Dec. Dig. § 9.*] 3. COMMERCE (§ 15*)-INTERSTATE COMMERCE-SUBJECTS-INTOXICATING LIQUORS.

Intoxicating liquors are articles of commerce so far as the interstate commerce law is concerned, and hence no state may prohibit their introduction within its borders.

[Ed. Note. For other cases, see Commerce, Dec. Dig. § 15.*]

4. INDIANS (§ 35*)-INTRODUCTION OF LIQUOR INTO INDIAN TERRITORY-STATUTES-NONINTERCOURSE ACT-REPEALED.

Since by the enabling act by which Oklahoma was admitted into the Union (Act Cong. June 16, 1906, c. 3335, 34 Stat. 267 [U. S. Comp. St. Supp. 1909, p. 155]), the state was left with jurisdiction of the introduetion of intoxicating liquors from Oklahoma into that part of the state For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes

known as Indian Territory, and was authorized to control the sale of liquor through its own courts, the nonintercourse act (Act Cong. Jan. 30, 1897, c. 109, 29 Stat. 506), forbidding the introduction of intoxicating liquors into Indian Territory, was no longer in force in that part of Oklahoma formerly known as Indian Territory after its admission as a state so as to prevent the introduction therein of liquor from Arkansas in interstate commerce.

[Ed. Note. For other cases, see Indians, Cent. Dig. §§ 61, 62; Dec. Dig. § 35.*]

Petition for mandamus by the United States, on relation of Louis Friedman and another, doing business as Friedman & Co., against the United States Express Company. Demurrer to petition overruled.

The complainants filed their petition for a mandamus to compel the defendant to accept and transport intoxicating liquors to complainants' customers residing in that part of the state of Oklahoma commonly known as the Indian Territory. The petition was filed under section 10 of the act of Congress approved March 2, 1889 (Act March 2, 1889, c. 382, 25 Stat. 862 [U. S. Comp. St. 1901, p. 3172]), which is as follows:

"Sec. 10. That the Circuit and District Courts of the United States shall have jurisdiction upon the relation of any person or persons, firm, or corporation, alleging such violation by a common carrier, of any of the provisions of the act to which this is a supplement and all acts amendatory thereof, as prevents the relator from having interstate traffic moved by said, common carrier at the same rates as are charged, or upon terms or conditions as favorable as those given by said common carrier for like traffic under similar conditions to any other shipper, to issue a writ or writs of mandamus against said common carrier, commanding such common carrier to move and transport the traffic, or to furnish cars or other facilities for transportation for the party applying for the writ: Provided, that if any question of the fact as to the proper compensation to the common carrier for the service to be enforced by the writ is raised by the pleadings, the writ of peremptory mandamus may issue, notwithstanding such question of fact is undetermined, upon such terms as to security, payment of money into the court, or otherwise, as the court may think proper, pending the determination of the question of fact: Provided, that the remedy hereby given by writ of mandamus shall be cumulative, and shall not be held to exclude or interfere with other remedies provided by this act or the act to which it is a supplement."

Complainants allege, in substance, the receipt of mail orders from customers residing in that country. Complainants put up the goods in suitable packages for shipment and transportation, marked and branded as required by the laws of the United States for the shipment of intoxicating liquors by common carriers, for shipment to various points in that portion of the state of Oklahoma, formerly called the Indian Territory, and that these packages were offered to the defendant, who is a common carrier and engaged in carrying goods from Ft. Smith, Ark., to points in that part of the state of Oklahoma formerly called the Indian Territory; that complainants had received bona fide orders as stated, and in response to said orders they tendered for shipment to said defendant the package consisting of intoxicating liquors with the amount of money charged by said express company for transportation to their customer at Manford, in that part of Oklahoma known as the Indian Territory; that said express company refused to accept said package for shipinent, and refused to transport the same to the point stated; that the package was properly marked and branded, as the United States laws require, and was not refused because it was not so properly marked and branded, but solely because it contained intoxicating liquors. Complainants further allege that such refusal on the part of said defendant to ship any intoxicating liquors into that part of Oklahoma formerly known as the Indian Territory is an undue prejudice and disadvantage to complainants in their business, and by such refusal they will sustain great loss, to remedy which they seek the relief, prayed for.

For other cases see same topic & § NUMBER in Dec. & Am. Digr. 1907 to date, & Rep'r Indexes

In Equity. Suit by Michael C. Neenan against the Otis Elevator Company. Decision for the defendant, but decree held in abeyance. This is a bill in equity to compel the defendant to reassign to the complainant certain patents conveyed by him to it on the 24th day of May, 1904. The case turns almost wholly upon the construction of the contract, which provided, in substance, as follows: First, second, third, and fourth, that the complainant for $500 should assign to the defendant two existing patents and one patent then applied for, and granted on February 9, 1909; fifth, that on the 1st day of July, 1904, the defendant should pay a further sum of $500, and upon the issue of the entire patent $1,000; sixth, that the defendant should likewise pay a specified royalty upon every elevator embodying any of the patents referred to with certain specifications as to the amount of royalties; seventh, that the defendant should further, "if it elects to continue to manufacture the elevators," pay to the complainant $8,000 within three years from the date of the agreement; eighth, that defendant might at any time cancel the agreement by returning the patents; ninth, that beginning with January 1, 1907, the defendant "shall guarantee that the royalty upon elevators erected and constructed by it * * shall amount to not less than three thousand dollars;" tenth, that the defendant would test the apparatus with reasonable diligence, "and, if such test results satisfactorily, within such further reasonable time as is convenient to put such apparatus into practical use."

The complainant has assigned all his patents to the defendant, and the defendant has paid the complainant $500 on the completion of the contract, $500 on July 1, 1904, $1,000) subsequently, which was the sum due him upon the issuance of the patent, $8,000 on April 11, 1907, $3,000 on January 1, 1907, and the same amount on January 1, 1908. It likewise tendered the sum of $3,000 on January 1, 1909, but that the complainant refused. The defendant in February or March, 1906, tested the patented apparatus in a testing tower which is a part of its factory at Yonkers, N. Y., and found it to be satisfactory. Subsequently it paid to the complainant, as above stated, the $8,000 provided in the contract; but it has not put any elevator manufactured under the apparatus into practical use since the contract was made.

The complainant specifies four instances in which the defendant could have put the apparatus into practical use, and which he says it refused to accept. These four are as follows: The Beaver Building, the Metropolitan Tower, the Ritz-Carleton Hotel, and the Park Row Building. In each of these cases the complainant urged the defendant to put in the elevator, but the defendant declined to do so. The first building was the Beaver Building, in April, 1906, at which time the complainant had an interview with Mr. John, one of defendant's engineers, and they went over the Beaver Building together. Both agreed that the change could be made, but the complainant says they agreed it could be readily made, and John says that the work would have had to be rebuilt and would have entailed considerable expense for rebuilding, including the overhead work, the ropes, and the system of counterbalances. There had been a defect in the elevator in the Beaver Building which was improved at less expense without the installation of a new elevator. The next building was the tower of the Metropolitan Life Insurance Company in 1907. The complainant procured of the architect a request for specifications for the use of the elevator for that tower, and on February 1, 1907, one Brown, consulting engineer of the defendant, wrote an unfavorable opinion of the complainant's patent for use in the building in question, referring to it as "an untried and experimental device," and as a "theoretical and erroneous, untried safety device." He was asked for his opinion in this matter not as defendant's engineer, but as an expert. Upon this opinion apparently the architects in charge of the tower declined to install the elevators. The next building was the Ritz-Carleton Hotel. The defendant refuses to submit a proposal or consider putting in the complainant's elevator, giving as a reason that it was unwilling to install a new type of elevator in so important a building, containing as it did 18 or 20 elevators. This matter of the RitzCarleton Hotel came up in October, 1908. Toward the end of that year the defendant offered to install at a value below cost the elevator in the Park Row Building. Only one elevator was to be installed in that place and nego

tiations were pending, but while they remained undecided the complainant returned the guaranty check and demanded back the patents assigned, after which the negotiations were dropped by the defendant. On January 12, 1909. the complainant sent the letter returning the check of $3,000 and redemanding his patents assigned under the contract.

Harry E. Knight and Martin A. Ryan, for complainant.
Ewing & Ewing, for defendant.

HAND, District Judge (after stating the facts as above). The complainant's contention that the defendant has canceled the agreement under the right reserved in the eighth paragraph is certainly unfounded, and may be dismissed without serious consideration. This leaves as unperformed by the defendant the provision of the ninth and tenth. paragraphs, and to determine whether it is in default on those paragraphs their meaning first must be determined. The ninth paragraph does not mean, as the complainant insists, that the defendant shall construct elevators each year whose royalty shall amount to $3,000. The guaranty is no more than a promise that in any case the complainant shall receive $3,000. I do not, of course, mean that the complainant has no independent interest in the erection of elevators, or that the defendant could monopolize his patent, and refuse to exploit it mala fide. That situation is covered by the tenth paragraph; but under the ninth the defendant only agrees that, in case its bona fide efforts to exploit the invention shall not result in royalties equal to $3,000, it will nevertheless pay that amount, and so insure the complainant of a certain minimum of royalties regardless of the success of his invention. This meaning is the usual one attached to the word "guarantee,” a word commonly used to cover the default of another, upon his own obligation. It should not usually be interpreted as an undertaking by the guarantor to perform the obligation itself. While in this contract the performance guaranteed consisted of certain acts of the guarantor itself, still, if the obligation extended to the performance of those acts, it should have been so written. To omit a direct obligation and to substitute an agreement of guaranty indicated an intention, not to promise to perform the acts guaranteed, but to make a payment in case they were not performed.

There remains, therefore, the question of the tenth paragraph. I agree with the complainant's construction that, if the test was made and proved satisfactory, the defendant by this stipulation agreed actually to put the apparatus into practical use, and that it would be none the less in default on its part if it failed to do so, even though it had done its best to install the invention. The condition of the test could only have been to ascertain in advance whether the apparatus could be used practically, and, as it proved satisfactory and the defendant had signified its election "to continue to manufacture the elevators" by the payment of $8,000 as was provided in the seventh paragraph, it was certainly too late thereafter to say that it could not find a place for the apparatus. This stipulation in the tenth paragraph is, however, limited by very vague terms as to the time within which performance must be made; and, besides, the degree of performance is also left undetermined. The words are "within such further reasonable time as is

convenient to put said apparatus into practical use." The phrase "within such further reasonable time as is convenient" does not, of course, extend the time during the whole length of the patent. To adopt such a construction would be to deprive the covenant of any meaning. I think there would be no question of this if the words "as is convenient" were omitted; and I do not regard them as contributing any definite extension of the time. Indeed, I can see very little that they add to the words "within such reasonable time." They can hardly be held to signify more than that defendant should not disarrange its ordinary business for the purpose of putting in the complainant's eleva

tors.

Therefore, the tenth paragraph appears to me to bind the defendant to find a place within which it can put the apparatus into practical use within a reasonable time, and the four years which have elapsed since the test proved the apparatus satisfactory is a reasonable time. I must conclude, therefore, that the defendant is in default upon the contract. Before accepting the apparatus, it should have ascertained whether its. business opportunities justified it in assuming that it could find a place to install the apparatus, for, although it may honestly and bona fide at the present time find that it was mistaken in its judgment or in the value of the apparatus, that is a mistake the responsibility of which it must bear. In short, I cannot interpret the stipulation as no more than a promise to use the apparatus, if in any case it might from time to time find it useful. But, although this construction puts the defendant in default, it by no means justifies the relief in equity which the complainant demands. As I have already said, the stipulation in no way indicates the number of elevators which the defendant should install, and that omission, indeed, was probably necessary from the nature of the business. Therefore the default in question would have been answered by the installation of a few elevators, because although the defendant promised absolutely to put in some elevators, and impliedly promised to put in all that it reasonably could with due regard to its business interests, still, if it had put in two or three, it would not have been in default upon the absolute part of its covenant, and to show a default upon the implied part the complainant must show that it has unreasonably or in bad faith refused to put in others. In other words, although its obligation was absolute to put the apparatus into some practical use within a reasonable time, the degree of such use necessarily depended upon the opportunities of the defendant's business. Now, in so far as concerns the breach of what I have called the absolute part of the defendant's obligation that is, the requirement to put the apparatus to some practical use it is not enough to base a rescission upon. That part of the covenant certainly does not go to the whole consideration as it must if rescission is to be granted. Kauffman v. Raeder, 108 Fed. 171, 52 C. C. A. 126; Howe v. Howe & Owen Ball Bearing Co., 154 Fed. 820, 83 C. C. A. 536. It is no doubt true that it is impossible to assess the damages upon that breach, but if I am right in construing the absolute undertaking to be wholly indefinite in degree, and if it would be satisfied by any small performance, obviously it was very far from going to the whole consideration, and the impossibility of assessing damages will not be enough.

« PreviousContinue »