10 F.(2d) 26

street, New York." It is amply shown that the Custodian and now said to be the plainthis place of business was a mere agency; tiff's property relate to pills, and others to there was no independent business there con- salts produced by concentration from Hunducted; the place was occupied by a person yadi water. But this defendant has not made or persons who might be described as clerks nor offered to sell pills or salts. The poremployed by the foreign owners of the trade- tions of decree relating to these articles of marks above mentioned and others, and of commerce are surplusage. the business of getting out of the Hungarian soil a cathartic water known in America as Hunyadi and selling it, not only in the United States, but in many other regions.

[4] Again, in this suit upon registered trademarks only, plaintiff to prevail must prove himself the owner of registrations covering the words "Hunyadi Janos" as applied to a natural mineral water. This compels a stand upon one at least of the above enumerated registrations.

The plaintiff is a citizen of the state of New York, and so is the defendant, and the latter was held to have infringed because he had obtained in Europe and imported and Nos. 14,251, 14,252 may be considered offered for sale in the United States the together. They were both taken out on the water which Saxlehner the owner had, before same date in 1887 under the act of 1881 (21 the United States entered the world war, Stat. 502). Both pictorially set forth the regularly sent to his agent at 130 Fulton same label and legend, but 14,251 was parstreet for sale in America. ticularly restricted to protection of the word From final decree as above outlined de- symbol "Janos" as a trade-mark for natural fendant appealed. aperient water. The statement says so; Hans v. Briesen and Fred A. Klein, both whereas 14,252 is equally plain as to intent of New York City, for appellant. to protect the word symbol "Hunyadi." We are of opinion that protection for the word "Hunyadi" simpliciter was destroyed by Saxlehner v. Eisner, 179 U. S. 19, 21 S. Ct. 7, 45 L. Ed. 60.

Harry D. Nims and Minturn De S. Verdi,
both of New York City, for appellee.
Before ROGERS, HOUGH, and MAN-
TON, Circuit Judges.

HOUGH, Circuit Judge (after stating the facts as above). [1] Since this suit is between citizens of the same state, there is no jurisdiction to consider the charges of unfair competition, and consequently no propriety in enjoining the defendant from simulation of bottle forms and other allegedly unfair practices. In this respect at least the decree complained of was erroneous.

[2] Jurisdiction rests entirely on the fact that the suit is upon registered trade-marks. Section 17, Act Feb. 20, 1905 (Comp. St., § 9502). If there ever was a business at 130 Fulton street of sufficient independent vitality to be seized by the Custodian, it may well be that as appurtenant to that business various rights, including what are usually called common-law trade-marks, have passed to the plaintiff. Stephano v. Stamatopoulos, 238 F. 89, 151 C. C. A. 165, L. R. A. 1917C, 1157. But the statutes have given to the courts of the United States no jurisdiction to enforce such rights between citizens of the same state. Miller Rubber Co. v. Behrend, 242 F. 515, 155 C. C. A. 291.

[3] But not only must plaintiff rest in this action upon its ownership of certain registered trade-marks, but defendant cannot be enjoined from acts it has not done nor threatened to do. Several registrations seized by

As to the registration of "Janos," there is no proof that the Saxlehner who filed that trade-mark was, as provided by the act (21 Stat. 502), located in a "foreign country

which by treaty, convention or law, affords similar privileges to citizens of the United States"; i. e., the privilege of obtaining registration of such trade-marks. Neither the statement nor declaration of No. 14,251 gives any information on the subject, and there is nothing in the evidence. Cf., for necessity of proof of jurisdictional facts under act of 1881. Warner v. Searle, 191 U. S. 195, 24 S. Ct. 79, 48 L. Ed. 145. [5] Quite evidently, the descendants of the Andreas Saxlehner who founded the busi

ness and died in 1889 did not, after the act of 1905 became effective, intend to stand on such precarious rights as were afforded by registration under the act of 1881, for they took out in 1909 registrations 73,036, 73,037, of which the earliest number covers the word "Janos," for natural mineral water, and the later number "Hunyadi Janos," for the same product. As above noted, these registrations were never seized. They are not mentioned in the original or amended bill of complaint; but it is said that, because the Custodian transferred to plaintiff's assignor the 130 Fulton street business "as a going concern," together with "the good will of said business

AMERICAN BRAKE SHOE & FOUNDRY duction cost of the improvements made by

10 F.(2d) 28

Thereupon Sanitary Company filed a claim in this suit, demanding that it be allowed recovery against Railways Company estate for the $19,000 aforesaid and interest. The matter was heard on an agreement as to facts, substantially ut supra; Sanitary Company claiming as damages the above $19,000 "for breach of implied covenant of quiet enjoyment during the term of 21 years," in that it had been "barred and foreclosed of its lease" within a short time after execution thereof.

Admitting that there was an implied cove nant as alleged, and a breach thereof, the court below held that the law prevented allowance of more than nominal damages. From order accordingly, entered by the receivers of defendant, Sanitary Company took this appeal.

Simon Sultan, of New York City, for appellant.

Cotton & Franklin, of New York City (J. A. Fowler, Jr., of New York City, of counsel), for receivers.

Before HOUGH, MANTON, and HAND, Circuit Judges.

HOUGH, Circuit Judge (after stating the facts as above). [1] This is a question of New York law, of which, however, the latest

restatement known to us is our own decision

in Thorley v. Pabst, 179 F. 338, 102 C. C. A. 522. Noyes, J., there concluded (page 345 [102 C. C. A. 529]) that the general rule is that a "tenant who has not paid in advance can, upon eviction by superior title, recover only nominal damages, and can recover nothing for the value of his lease or for improvements." There are certain exceptions duly enumerated, but the court below treated the claim at bar as if it were one for improvements, made not under the compulsion of a contract, but voluntarily, as is usual.

If nothing had been said in the lease about improvements, and they had been lawfully added to the land, only because the tenant was not contractually restrained from improving, the order under review would have been right; the case being on all fours with Matter of Strasburger, 132 N. Y. 128, 30 N. E. 379, because Sanitary Company did not "advance" any rent, and it is certainly liable for no mesne profits. But the agreed statement at bar presents facts not, so far as we know, exhibited in any New York report, and therefore, we think, requiring some investigation into the origin or basis of a rule confessedly prevailing in few jurisdictions, though not peculiar to New

York. Thorley Case, supra, at page 345 (102 C. C. A. 522), quoting Reeves' Real Property.

An explanation of the New York rule given by Mr. Reeves, supra, is that the termination of the tenant's duty, to pay rent is thought sufficiently to compensate him for the loss of his term; i. e., for a breach of the covenant of quiet enjoyment, which is always implied in the usual lease. Mack v. Patchin, 42 N. Y. 167, 1 Am. Rep. 506. But this cannot even yet be called legal reasoning; a priori it would be certain that a rule originating in the early days of American law was once justified by considerations far more formal than the business result above stated.

We think the origin of the New York rule is to be found in two decisions by Chancellor Kent, then Chief Justice Staats v. Executors of Ten Eyck, 3 Caines, 112, 2 Am. Dec. 254, and Pitcher v. Livingston, 4 Johns. 1, 4 Am. Dec. 229. Both these cases grew out of sales of land, wherein the vendor had given warranty both of seizin and quiet enjoyment, and the vendee had been ejected by title paramount to that of the vendor.

It was shown by abundant citation of ancient law that upon a warrantia chartæ demandant could recover only the value of the land at the time the warranty was given, and this was applied to a warranty of seizin in the Staats Case, with the additional holding that, while the ejected vendee could not recover any increment in the value of the loss, he could recover, not only the consideration by him paid, but interest thereupon.

In the Pitcher Case the effort of an evict

ed vendee was to rely upon the covenant for or warranty of quiet enjoyment, and to recover the value of beneficial improvements placed upon the land during occupancy. This attempt to distinguish between the covenants for seizin and quiet enjoyment was disapproved; Kent, C. J., saying: "The covenant for quiet enjoyment respects the possession merely, and it would seem to be unreasonable and very inconsistent, for the plaintiff to recover under one covenant the whole value of the estate, as it was intended to be conveyed, and under another covenant in the same deed distinct and increased damages, because he was not permitted to enjoy that estate."

Consequently, although an evicted vendee might recover upon either of the two covenants, he could not recover substantial damages on both; and since under the covenant of seizin he could recover no more than the consideration paid-i. e., the agreed value

of the land at the time of attempted sale-a reason was found for saying that he could recover no more than that under the covenant for quiet enjoyment.

In respect of improvements, the Chief Justice said: "The subject of the contract [of sale] was the land as it existed and was worth when the contract was made. The purchaser may have made the purchase under the expectation of a great rise in the value of the land, or of great improvements to be made by the application of his wealth or his labor. But such expectations must have been confined to one party only, and not have entered as an ingredient into the bargain."

It was declared repugnant "to the genius of our law" to oblige the seller, on the buyer's eviction, to refund, not only the price agreed upon, but "the expense of the meliorations made." Therefore, since "a seller may be presumed at all times able to return the consideration which he actually received," and since that return is enough to satisfy the covenant of seizin, it must also be enough to satisfy the covenant for quiet enjoyment.

The improvements as made at much greater cost than the obligatory $19,000 deteriorated, as agreed, less than 6 per cent. before eviction, wherefore appellant's loss was more than the amount which "entered into the bargain," and we perceive no reason, even under the New York rule, why that amount is not a proper unsecured claim against the insolvent defendant's estate.

[2] Appellant would be entitled, also, to interest from date of eviction, were it not for the insolvency of the landlord; but, as we gather from the record that the appointment of receivers preceded eviction, the claim cannot bear interest as against the funds in the hands of the court.

Order reversed, and cause remanded, with directions to enter an order in accord with this opinion. Appellant will recover the costs of this appeal.

LYON et al. v. BOH et al.

(Circuit Court of Appeals, Second Circuit. January 15, 1926.)

No. 37.

1. Patents 36-Patent held entitled to whatever favorable treatment arises from commercial success.

But since the covenant for quiet enjoyment goes to the possession only, and except in the rare cases of rent paid in advance a tenant enjoys a possession measured by the rent he has paid, and is almost never evicted when the landlord has advance rent in his pocket, the rule can be practically explained as Mr. Reeves has done it, although Kent, C. J., assuredly did not use such language in justifying it. The rule was applied fer was entitled to whatever favorable treatto leases in Kinney v. Watts, 14 Wend. 38, and that a lease contains by implication a 2. Equity 54-Equity acts in præsenti. covenant of quiet enjoyment is admitted.

Patent for first successful automobile buf

ment arises from commercial success.

Equity acts in præsenti.

held binding on parties and privies.

Decision in another circuit that patent involved therein was not infringed held binding on parties or their privies.

It is observable that, in formulating the rule as to damages for loss of improvements, 3. Patents 327-Decision in another circuit the Chancellor used as the very basis thereof the assumption, perfectly sound in all but the exceptional case, that the expectation of gain through meliorations to be made by the tenant was "confined to one party only, and (could not) have entered into the bargain.”

This is the exceptional case, it was a part of the bargain enforced against tenant by landlord that the former should expend "at least $19,000" on improvements, for which the landlord agreed to compensate the tenant at lease end, subject to deterioration agreed upon as amounting to 100 per cent. in 42 years, or 2.3 per cent. per annum. But such compensation could never exceed $19,000, because everything beyond that sum was a voluntary expenditure, and for improvements so produced there can be no recovery on eviction. Matter of Strasburger, supra.

4. Patents 165-Patentee is entitled to advantages inherent in disclosed invention duly claimed, whether he understood them or not.

Patentee is entitled to all advantages inherent in his disclosed invention and duly claimed, whether he understood such advantages or not.

5. Patents 168(1) -Patentee is estopped by acceptance of Patent Office rulings.

Patentee is estopped by acceptance of Patent Office rulings.

6. Patents 168(1)-Patentee's refusal to claim invention in one-piece automobile buffer held not to estop him from asserting infringement by defendant's one-piece buffer.

Refusal of patentee to claim invention in one-piece automobile buffer on suggestion of