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notice attached to a patented machine the conditions of its use, and the supplies which must be used in the operation of it under pain of infringement of the patent.”
The case is also in striking contrast with what we have here, by reason of the fact that the plaintiff's patented device is the only one with which motion picture films can be used successfully," and for the further reason that after the device was sold and paid for it continued to be subject not only to a restriction as to supplies which could be used with it, but to "conditions as to use or royalties which the company which authorized its sale might see fit after the sale from time to time to impose." Commenting upon this feature, the court said:
"The perfect instrument of favoritism and oppression which such a system of doing business, if valid, would put into the control of the owner of such a patent, should make courts astute, if need be, to defeat its operation. If these resti'ctions were sustained, plainly the plaintiff might, for its own profit or that of its favorites. by the obviously simple expedient of varying its royalty charge, ruin any one unfortunate enough to be dependent upon its confessedly important improvements for the doing of business."
In the Victor Talking Machine Case, supra, the court said: "The abstract of the bill which we have given makes it plain: That whatever rights the plaintiff has against the defendants must be derived from the license notice' attached to each machine; for no contract rights existed between them."
The question in the Standard Sanitary Manufacturing Co. Case, as well as in Straus v. American Publishers' Association, was whether or not a combination of 80 per cent. of all the manufacturers of enameled ware or of 75 per cent. of all the publishers of books, copyrighted and uncopyrighted, for the purpose of fixing prices and eliminating competition, was exempt from the operation of the anti-trust laws, merely because enameling is a patented process, and some of the books published were protected by copyright. Clearly no such question arises here. Were the plaintiff in a combination with 75 or 80 per cent. of the manufacturers of automobiles, for the purpose of fixing prices and restricting competition, we would have a similar case. The chief reliance of defendants seems to be upon Dr. Miles Medical Co. v. Park & Sons Co., 220 U. S. 373, 31 Sup. Ct. 376, 55 L. Ed. 502. The complainant there was engaged in the manufacture and sale of proprietary medicines, prepared by means of secret formulas, but touching which there was no patent or other statutory grant. It adopted an intricate system for maintaining uniform prices to the retail as well as to the wholesale trade. In the respect in which the case has a bearing upon the question here under consideration, it may best be distinguished by the following excerpt quoted from the opinion:
“The first inquiry is whether there is any distinction, with respect to such restrictions as are here presented, between the case of an article manufactured by the owner of a secret process and that of one produced under ordinary conditions. The complainant urges an analogy to rights secured by letters patent. Bement v. National Harrow Company, 186 U. S. 70 (22 Sup. Ct. 747, 46 L. Ed. 1058). In the case cited there were licenses for the manufacture and sale of articles covered by letters patent with stipulations as to the prices at which the licensee should sell. The court said, referring to the
act of July 2, 1890 (pages 92, 93): 'But that statute clearly does not refer to that kind of restraint of interstate commerce which may arise from reasonable and legal conditions imposed upon the assignee or licensee of a patent by the owner thereof, restricting the terms upon which the article may be used and the price to be demanded therefor. Such a construction of the act, we have no doubt, was never contemplated by its framers.'
“But whatever rights the patentee may enjoy are derived from statutory grant under the authority conferred by the Constitution. This grant is based upon public considerations. The purpose of the patent law is to stimulate invention by protecting inventors for a fixed time in the advantages that may be derived from exclusive manufacture, use, and sale."
It may be noted that the passage here quoted from Bement v. National Harrow Company was subsequently again approved in the Standard Sanitary Manufacturing Company Case, supra.
By drawing attention to the fact that the plaintiff's automobile here is covered by letters patent, we do not intimate the view that the patents of themselves would be a sufficient basis upon which to grant the relief sought. As has been frequently held, the statutes conferring exclusive rights upon the patentee do not of their own vigor perpetuate such rights indefinitely, and therefore an unconditional sale of a patented article releases it from the patentee's control. So, going a step further, the patentee cannot unconditionally sell the article patented, and by attaching a notice thereto so extend the scope of the patent as to enable him successfully to claim that a violation of the provisions of the notice constitutes an infringement of his statutory right, as was the contention in the "Sanatogen” Case (Bauer v. O'Donnell). The plaintiff here makes no such claim. It is asserting only the right, to be exercised within such limits as may be prescribed by statutory law or considerations of sound public policy, expressly to contract with the person to whom it delivers possession of its patented product to reserve to itself a measure of the absolute ownership and control with which admittedly it is invested. So far as we are advised by the contract, and that is all that we have before us, the plaintiff's system of selling its cars cannot be made the means of laying an unreasonable restraint upon the free play of competition or of dealing oppressively with the public. Presumably the contract was adopted in good faith, to accomplish an object which apparently is in itself legitimate. It is of no present interest that in some of its provisions it may be harsh, or even unenforceable as against the consignee; he is not complaining. If he desires to withdraw from the relation, that is his right, but he cannot at the same time claim all the benefits of the contract and repudiate its burdens.
The objection that the complaint is insufficient to disclose jurisdiction in the court below we have considered, but it is deemed to be without merit.
The judgment will be reversed, with directions to overrule the motion to dismiss, and to take further proceedings not out of harmony with the views hereinbefore expressed.
(Circuit Court of Appeals, Third Circuit. August 21, 1917.)
1. BANKS AND BANKING 2-18(1)--STOCKHOLDERS-DOUBLE LIABILITY.
Where a person, with full knowledge of the fact, becomes a record shareholder in a national banking association, the double liability imposed by Rev. St. § 5151, continues until by his act he removes his name from the record, and a transfer of his shares without a change in the corporate
records does not free him from liability. 2. BANKS AND BANKING Cm 249(3)-NATIONAL BANK-SHAREHOLDERS-LA
Where a person becomes and for a time continues to be a registered shareholder in a national banking association without knowledge of that fact, he does not incur the double liability imposed by Rev. St. § 5151, unless he approves the transfer by a ratification which implies an intended approval with full knowledge, and until such ostensible shareholder does or assents to some act of the party creating the alleged relation, no estoppel can arise.
[Ed. Note.-For other definitions, see Words and Phrases, First and
Second Series, Ratification.] 3. BANKS AND BANKING O250(5)—SITAREHOLDERS—PRIMA FACIE LIABILITY.
Proof that defendant was a shareholder of record in a national banking association and that she did nothing to remove her name establishes a prima facie case of the liability to assessment for the double liability im
posed by Rev. St. 5151. 4. BANKS AND BANKING 250(5)—SUIT AGAINST STOCKHOLDER—BURDEN OF
PROOF-SHIFTING OF BURDEN.
Where a bank receiver suing to enforce an assessment against a share holder makes out a prima facie case, the burden of proving nonliability
shifts to the shareholder. 5. BANKS AND BANKING C 249(3)—SHAREHOLDERS-LIABILITY—"RATIFICA
Where a husband without her knowledge transferred to his wife on the books of a national banking association stock owned by him, the wife's indorsement of a check payable to the husband and indorsed by him, which was drawn in payment of a dividend declared before the transfer, does not amount to a ratification rendering her liable as a share.
holder; the check not indicating that she was the holder of the shares. 6. BANKS AND BANKING Cm 249(3)-STOCKHOLDERS--LIABILITY-EVIDENCE
In suit by the receiver of a national bank to enforce an assessment against defendant, who appeared on the books of the association as a shareholder, where defendant denied liability on the ground that the shares had been transferred to her by her husband without her knowl. edge, and that she had never ratified the transaction, the fact that de fendant, at the request of her husband, who, in answer to questions, merely informed her that he had made a mistake, indorsed a power of attorney on the back of the certificates to such stock, did not, where she was not informed that the certificates were in her name, establish a ratification of the transfer, rendering defendant liable as a shareholder, and a
contrary finding was warranted. 7. EVIDENCE 66-PRESUMPTIONS.
Where a wife indorsed certificates of bank stock which had been transferred on the books of the banking association to her by her husband without knowledge, there is a presumption of law that she knew the nature of the transaction, For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes
8. EVIDENCE O 86-PRESUMPTIONS-EFFECT.
A presumption stands in lieu of evidence of the fact, and may support
a finding if not rebutted. 9. APPEAL AND ERROR 1002_REVIEW_VERDICT.
Where the presumptions and evidence are conflicting, a verdict of the
jury thereon is conclusive. 10. TRIAL 177--BINDING INSTRUCTION-EFFECT OF REQUEST.
A prayer by each party for binding instructions in his favor is equivalent to a joint request for a finding of fact by the court, and does not amount to a submission without the intervention of a jury within Rev. St. $$ 619, 700 (Comp. St. 1916, 88 1587, 1668); hence the direction of a verdict by the court is conclusive.
In Error to the District Court of the United States for the District of New Jersey; Thos. G. Haight, Judge.
Action by Christopher L. Williams, as receiver of the First National Bank of Bayonne, against Mary A. Vreeland. There was a judgment for defendant, and plaintiff brings error. Affirmed.
Barber, Watson & Gibboney, of New York City (Stuart G. Gibboney and George M. Burditt, both of New York City, of counsel), for plaintiff in error.
Pierre P. Garvin, of Jersey City, N. J., for defendant in error.
Before BUFFINGTON, MCPHERSON, and WOOLLEY, Circuit Judges.
WOOLLEY, Circuit Judge. The single question is, whether the defendant is liable for an assessment, under Section 5151, R. S., on stock standing in her name on the books of an insolvent national bank.
In September, 1913, William H. Vreeland was the record owner of 125 shares of stock of The First National Bank of Bayonne, and Mary A. Vreeland, his wife, was the record owner of 15 shares. After the declaration of a dividend, and before its payment on October 1st following, Vreeland resolved to make a present to his wife of 100 of his shares. He did not, either then or later, disclose or even remotely intimate to her his intention, but proceeded to carry it out by surrendering to the bank certificates in his name for 100 shares, and having issued certificates in her name for a like number, and requesting that a cheque for the declared dividend on these shares be drawn in her favor. It being impracticable to comply with this request, because dividend cheques had already been drawn to shareholders of record upon the closing of the books, he accepted the new certificates in his wife's name and a cheque for dividends thereon in his own name.
Within a day or two Vreeland changed his mind about presenting the shares to his wife, and without mentioning the matter to her, consulted the bank's president as to a method of getting them back in his name, representing that the shares were good collateral and if given to his wife it might be awkward to get them again. The bank official advised him to procure his wife's signature to the customary power of attorney on the back of the certificates, and instructed him how the shares could again be placed in his name by transfer and registration of the wife's certificates (which had not been registered) and registra.
OmFor other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes
tion of the new certificate to be issued. He thereupon secured his wife's signature, but never surrendered the certificates for transfer or registration. He endorsed the dividend cheque and presented it to his wife, who likewise endorsed it and got the dividend. To that extent he carried out his idea of a gift, without telling his wife the measure of his first intention.
With the certificates of Mary A. Vreeland endorsed and outstanding, the bank failed, and a receiver took over its affairs. The Comptroller of the Currency levied an assessment under Section 5151, R. S., of 100 per cent. against the bank's shareholders. Although. 115 shares were then standing in the name of Mary A. Vreeland on the stock ledger and notice of assessment on that number was mailed to her, the receiver treated 100 of these shares as though they belonged to her husband. In enforcing the assessment against both Vreelands (who were without money yet were possessed of property), the receiver took the bond of William H. Vreeland for $25,000, conditioned for the payment of his assessment of $12,500 on 125 shares (25 shares admittedly being his and 100 being the shares represented by his wife's certificates then in his hands). In this bond his wife joined to bar her dower. At the same time Mary A. Vreeland gave a bond for $3,000, conditioned for the payment of her assessment of $1,500 on her 15 shares. In this bond her husband joined. Execution was issued on both, followed by sales resulting in deficiencies. Mary A. Vreeland paid the deficiency on her bond and thus fully met the assessment against her 15 shares. William H. Vreeland had in the meantime gone into bankruptcy, and was unable to meet the deficiency on his bond, amounting to $5,660.80 and interest. Thereupon the receiver shifted his attack and instituted this suit against Mary A. Vreeland on her liability under Section 3151, R. S., upon the 100 shares which stood in her name, seeking to recover the deficiency on her husband's bond, given to meet the assessment enforced against him on the same 100 shares.
The trial court found it unnecessary, as we do, to pass upon questions raised as to the release of the wife's liability because the certificates for the shares had not been registered and because demand for the amount of the assessment had been made upon and settlement accepted from her husband. The determining question was and is, What was the liability of the wife on the record entry of her stock holding at the time of the assessment?
At the trial, the receiver proved that the defendant was a record shareholder. This the defendant admitted but pleaded her ignorance of it, showing by the testimony of others the circumstances how she became such and by her own testimony how she in ignorance continued such. The receiver also proved that she had done nothing to cause her name to be removed from the record. This also she admitted.
As there was no dispute in the testimony, counsel agreed that there was no question for the jury, and on motions for binding instructions for both the plaintiff and defendant, submitted the question to the court.
The question submitted, as we understand it, was not a question of what is the legal liability of a record shareholder of a national bank