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come into possession by doing the complainant a legal injury, a wrong, that makes such possession wrongful. A contract prohibiting alienation to a particular class is held to be lawful. It is admitted to be lawful. How, then, can the restriction upon alienation become unlawful in a court of equity, and how can a third person be heard to declare it unlawful, when an attempt is made to enjoin one from inducing a party to it to violate it? Is it valid at law and void in equity? If it is valid, it is property, and a court should be authorized to protect it, as any other property may be protected that is menaced by a wrongdoer. The law of the land accords with good morals. In Heath v. American Book Co. (C. C.) 97 Fed. 533, the defendant knowingly induced the schoolbook board of counties to purchase books from him, and discard those of the plaintiff, which they by contract were obligated to take. The defendant was held liable for damages. No fraud or misrepresentation was alleged. The learned judge followed Lumley v. Gye, 2 El. & Bl. 216, in which a singer was maliciously induced by defendant to break her contract with another, and the defendant was held liable for damages. In Angle v. Chicago, etc., R., 151 U. S. 1, 14 Sup. Ct. 240, 38 L. Ed. 55, the plaintiff was prevented from completing a contract by the defendant bribing its officers and inducing by false allegations the Legislature to withdraw a grant of land, and a bill in equity to reach the property held by the defendant and adjudged applicable to the payment of plaintiff's damages was sustained. The opinion states that "it has been repeatedly held that if one maliciously interferes in a contract between two parties, and induces one of them to break that contract, to the injury of the other, the party injured can maintain an action against the wrongdoer,” and in support of this instances Green v. Button, 2 Cr. Mees. & R. 707; Lumley v. Gye, 2 El. & Bl. 216; Bowen v. Hall, 6 Q. B. D. 333, 337; Walker v. Cronin, 107 Mass. 555; Jones v. Stanly, 76 N. C. 355, 356; Haskins v. Royster, 70 N. C. 601, 16 Am. Rep. 780, and thereupon the opinion proceeds:
“Under these authorities, if the Omaha company had by its wrongful conduct simply induced the portage company to break its contract with Angle, it would have been liable to him for the damage sustained thereby. A fortiori, when it not only induces a breach of the contract by the portage company, but also disables it from performance.”
In Moran v. Dunphy, 177 Mass. 485, 59 N. E. 125, 52 L. R. A. 115, 83 Am. St. Rep. 289, it is said:
"But in view of the series of decisions by this court from Walker v. Cronin, 107 Mass. 555, through Morasse v. Brochu, 151 Mass. 567, 25 N. E. 74, 8 L. R. A. 524, 21 Am. St. Rep. 474; Tasker v. Stanley, 153 Mass. 148, 26 N. E. 417, 10 L. R. A. 468; Vegelabn v. Guntner, 167 Mass. 92, 44 N. E. 1077, 35 L. R. A. 722, 57 Am. St. Rep. 443; Hartnett v. Plumbers' Supply Association, 169 Mass. 229, 47 N. E. 1002, 38 L. R. A. 194, and Weston v. Barnicoat, 175 Mass. 454, 56 N. E. 619, 49 L. R. A. 612, to Plant v. Woods, 176 Mass. 492, 57 N. E. 1011, 51 L. R. A. 339, 79 Am. St. Rep. 330, we cannot admit a doubt that maliciously and without justifiable cause to induce a third person to end his employment of the plaintiff, whether the inducement be false slanders or successful persuasion, is an actionable tort."
See, also, Doremus v. Hennessy, 176 111. 608, 52 N. E. 924, 54 N. E. 524, 43 L. R. A. 797, 802, 68 Am. St. Rep. 203.
In Garst v. Charles, 187 Mass. 144, 72 N. E. 839, it appears that the defendant and one Bickford, persons separately engaged in the retail drug business, agreed that Bickford should buy of the plaintiff a proprietary medicine manufactured by him under a contract, wherein he agreed not to sell it at retail at less than a specified price, and that subsequent purchasers should obtain and sell it only under such agreement. Bickford made the purchase and turned it over to the defendant, who advertised and sold it at less than the specified price. The opinion, after stating this history, continued:
"All this was in pursuance of a conspiracy between the defendant and Bickford that Bickford should make this contract and break it, to the injury of the plaintiff, for the benefit of the defendant. A conspiracy to deprive one of the benefit of a contract with another is unlawful. Carew v. Rutherford, 106 Mass. 1, 8 Am. Rep. 287; Walker v. Cronin, 107 Mass. 555; Vegelahn v. Guntner, 167 Mass. 92, 44 N. E. 1077, 35 L. R. A. 722, 57 Am. St. Rep. 443; Plant v. Woods, 176 Mass. 492, 57 N. E. 1011, 51 L. R. A. 339, 79 Am. St. Rep. 330. The defendant's arrangement with Bickford that he should break the contract was a wrong upon the plaintiff, intended for the defendant's advantage. The scheme was fraudulent. The purpose of the defendant was to induce the plaintiff to part with his property at a comparatively low price to a person who was, in fact, a retail druggist, and who represented by his words and conduct that he wanted the medicine to sell at retail, and who agreed not to sell it at less than the regular retail price, when, in fact, he was obtaining it under an arrangement to turn it over to the defendant at the wholesale price, to be sold by him at retail at less than the regular price. The defendant was a party to this scheme of fraud, and presumably was the author of it. He should be held liable for the wrong. Exchange Telegraph Co. v. Central News (1897) 2 Ch. 48; Dodge Co. v. Construction Information Co., 183 Mass. 62, 66 N. E. 204, 60 L. R. A. 810, 97 Am. St. Rep. 412. In this respect the case is very different from Garst v. Hall & Lyon Co., 179 Mass. 588, 61 N. E. 219, 55 L. R. A. 631. See, also, Taddy et al. v. Sterious et al. (1903) 1 Ch. 354. The suit is one which calls for relief in equity. The damages are of a kind that cannot be accurately computed or easily estimated. The remedy at law is not complete and adequate, and an injunction with damages for the injury already suffered gives the only proper relief.”
In American Law Book Co. v. Edward Thompson Co. (Sup.), 84 N. Y. Supp. 225, Justice Bischoff states the facts and his conclusions as follows:
“By preliminary injunction in an action for injunctive relief the plaintiff seeks to restrain the defendant from making agreements with subscribers to the plaintiff's encyclopedia, whereby the defendant undertakes to indemnify these subscribers against claims for damages for their breach of contract in declining to receive and pay for the plaintiff's books, and from conducting and defraying the expenses of the defense to any action brought against the subscriber by the plaintiff. The complaint alleges that these agreements have been systematically offered by the defendant to the plaintiff's subscribers for the purpose of causing them to subscribe to the defendant's encyclopedia, and to repudiate their subscriptions for the work published by the plaintiff; and the allegations further disclose the making of intentional misrepresentations by the defendant to these subscribers as to the relative merits of the encyclopedias for the purpose of inducing the breach of contract. The defendant admits the making of the agreements in question, but asserts that the plaintiff has no remedy in equity upon the allegations of the complaint; the contention being that the plaintiff has his remedy at law' for each contract broken, that the party to that contract has the right to break it and pay damages, and that what the party can do another person may ask him to do without re
straint by injunction. It is also argued that the cases in which an injunction has been granted to prevent the solicitation of a breach of contract are found to have involved only contracts for personal services, and that there is no precedent for such an injunction as the plaintiff seeks. If there be no exact precedent for this injunction, none is needed. The complaint avers, and the affidavits support the averment, that the defendant is engaged in an attempt to obtain business which the plaintiff has secured, having no regard to fairness of competition, but with resort to trick and device. Whether the subscribers are in each instance actually led by the defendant's misrepresentations to break the particular contracts is not important, and is not an essential averment of the complaint. Intentional false statements, made with a view to obstruct the plaintiff's business and to divert it to the defendant, are charged, and the solicitation of the subscriber's breach of contract is but a more active step in the same scheme of unfair competition. The fraudulent intent, followed to fruition in the actual inducement to persons dealing with the plaintiff to break their contracts for the intended benefit of the defendant, and to the intended injury of the plaintiff, is the basis of the defendant's wrong; a wrong which our system of remedial justice recognizes as the subject of relief.”
In Dr. Miles Medical Co. v. Goldthwaite (C. C.) 133 Fed. 794, the defendant was restrained from interfering with contracts, similar to those now under consideration, by inducing their violation by the parties thereto, and from selling the medicine as complainant's_in other than the original packages and at the contract price. In Dr. Miles Medical Co. v. Platt, 142 Fed. 606, and two other cases (U. S. Cir. Ct. N. D. of Ill.), Judge Kohlsaat made a similar holding, as did Judge Cochran in Hartman v. Park (U. S. Cir. Ct., E. D. of Ky.) 145 Fed. 358.
The case at bar must be carefully distinguished from cases where the purchase is from one who has a right to sell to the purchaser. Such was Keeler v. Standard Folding Bed Co., 157 U. S. 660, 15 Sup. Ct. 738, 39 L. Ed. 848. Cases must also be differentiated where the facts do not even show a contract. Such was Bobbs-Merrill Co. v. Straus (C. C.) 139 Fed. 155. In Garst v. Hall & Lyon Co., 179 Mass. 588, 61 N. E. 219, 55 L. R. A. 631, it is said:
"It is not averred that the defendant ever made any contract or agreement with the plaintiff, or had any dealings with him. No fraudulent act or conduct of the defendant in obtaining the medicine is set out, although the word 'fraudulently' is used in characterizing his acts. This word adds nothing to the averments of fact in the bill. The statement of the alleged fraud is too general to be the foundation of a decree. Nichols v. Rogers, 139 Mass. 146, 29 N. E. 377; Nye v. Storer, 168 Mass. 53, 46 N. E. 402. The averments of the bill in this particular would be entirely satisfied by showing a purchase of the medicine by the defendant from a person who bought it of the plaintiff's vendee, or from one who bought it of a purchaser from the vendee. The agreed statement of facts shows that the defendant obtained it in this way: The defendant did not buy the medicine of the firm of wholesalers who received it from the plaintiff, and who agreed to sell it subject to the above conditions, but bought it of a person who bought either from this firm, or from a purchaser from this firm.”
If the defendants in the case at bar stood in a like innocent condition, why have they not proved the same under their oaths and shown that they purchased in good faith and from a person, who so far as they had notice, could sell without breach of a contract not to sell to them. As already
As already stated, the effort to hide the history of their purchase is sufficient evidence of their unlawful participation
in the breach of the contract. But the fact of selling the goods thus obtained is not the only legal injury by the defendants to the complainant. They tear the very prescription from the bottles, so that the consumer may not know how to use the medicine, whether he is using it advantageously or injuriously, and the defendants by removing all enumeration of the diseases for which the medicine may be used, deprive the purchaser of the complainant's advice and representations in such regard. This seems to be a ruthless proceeding, both as regards the consumer and the complainant. The defendants urge that the medicine has an element—alcohol—that is dangerous for certain diseases enumerated by the complainant. Plainly, then, the medicine should be administered with care. But the defendants send broadcast the remedy without limitation as to dose or disease. This is a palpable menace to the patient, and to the complainant's business, and should be enjoined. Dr. Miles Medical Co. v. Goldthwaite (C. C.) 133 Fed. 794; Hartman v. Park (U. S. Cir. Ct., E. D. of Ky.) 145 Fed. 358. But the defendants, vigorously engaged in selling the medicine, urge that it is dangerous for certain diseases for which the complainant advertises it, and that the complainant, thus inequitable, should not be heard against the defendants, who are using their ample opportunities to market this very medicine, so alleged by themselves to be dangerous. This is a strange attempt at defense. The claim that Dr. Phelps' participation in the discovery of the product is not as asserted in the complainant's literature does not prevent defendants from taking advantage of any fame such alleged connection of Dr. Phelps has produced for the remedy. However, it is not perceived that the representations regarding his relation to it are necessarily false. The other affirmative defenses raised by the defendants to shield themselves are not approved. Dr. Miles Medical Co. v. Platt, 142 Fed. 606, and other cases (U. S. Cir. Ct., N. D. of Ill.).
The complainant is entitled to an order (1) restraining the defendants, their agents and servants, and all persons acting in concert or connivance with them from purchasing, directly or indirectly, the compound from any person who has entered into the contract above stated with the complainant, or from any person who has not entered into such contract, where defendants have notice or knowledge of such relation or absence of contractual relation to the complainant, and restraining the defendants, their agents and servants, and all persons acting in concert and connivance with them from selling such compound now or hereafter obtained from any such person or persons; (2) in any case where the defendants may become authorized to sell the compound, restraining them from doing so, unless the package containing it bears all the directions for using Paine's Celery Compound, and the precise representations as to the purposes and diseases for which it may be taken, as shown both on the label and the carton containing the bottle.
The details of the terms and scope of the injunction will be determined more precisely upon the settlement of the order herein. At the time of settling the order, ruling on the exceptions to the answer herein will be made.
HILI. SIDE CHEMICAL CO. V. MUNSON & CO.
(Circuit Court, D. Connecticut. July 5, 1906.)
No. 1,062. TRASE-MARKS-SUIT FOR CONTRIBUTORY INFRINGEMENT--WAIVER OF CLAIM
AGAINST PRINCIPAL INFRINGER.
Complainant brought a suit for infringement of a trade-mark, which was settled by stipulation, and a decree entered establishing complainant's exclusive right to the trade-mark from that date; but it was stipulated that neither the defendant therein nor its customers should be held liable for past infringements. Held that, having thus waived all claim against the principal infringer, a court of equity would not thereafter entertain a suit by complainant for contributory infringement against one who had made and furnished to such infringer the cartons
used by it containing the infringing trade-mark.
PLATT, District Judge. The essential facts in this case can be briefly stated. Plaintiff makes and sells a medical preparation known as “Terraline,” distinguished by name, label, and manner of putting up. Defendant is charged in the bill with selling counterfeit packages or cartons containing the trade-mark and other devices and designs of the plaintiff to others, thereby enabling them to palm off
upon the public a similar preparation, in fraud of plaintiff's rights and in deception of the public. The defendant makes paper boxes, and if it has done any wrong at all, it has done it by selling the cartons to others, and thus enabling them to infringe. This is what it did: In January, 1889, R. K. Helphenstine and James E. McKahan entered into business at Washington, D. C., under the name of the Terraline Company, and on their letter-heads Helphenstine appears as president and McKahan as secretary. Defendant's predecessor furnished boxes or cartons for the Terraline to that company, anu after 1891, while connected with the National Folding Box & Paper Company, continued the sales. In January, 1898, an order was sent to the defendant corporation from that company for 100,000 boxes. These were made, and 25,000 of them were delivered to the Terraline Company, the balance remaining in the hands of the defendant. The Terraline Company about that time became financially embarrassed, and made no payments on the order. May 5, 1898, said Helphenstine assigned his one-half interest in the Terraline Company and in the registered trade-mark, “Terraline,” to his partner, James E. McKahan, which assignment was duly recorded in the Patent Office May 9, 1898. The business was then reorganized under the name of the Hillside Chemical Company, a West Virginia corporation, with its principal place of business at Newburgh, N. Y. (the complainant), which acquired whatever rights McKahan had under the assignment. Helphenstine organized the Glyza Chemical Company, which was continued at the old Washington stand of the defunct
, Terraline Company. In July, 1898, the complainant wrote to the