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Duke & Sons, and another with the Lone Jack Company. contracts were respectively as follows, so far as material:
The Duke Contract.
"This agreement, made this 11th day of June, 1885, between the Bonsack Machine Company and W. Duke, Sons & Co., witnesseth, that whereas, the manufacturers of cigarettes who use the Bonsack machines, except the Lone Jack factory, have so far declined to put the machines on their fine brands, for the reason that they fear that there may be a prejudice against machinemade work, which might injure the sales of their goods, and whereas W. Duke, Sons & Co. are willing to put the machines on their best brands, and to do all their plain work on the Bonsack machines: Now, therefore, it is agreed that the said W. Duke, Sons & Co. will at once put two machines on their finest brands, and as fast as practicable will relieve themselves of brands until they do all their plain work on the machines, and in consideration of this undertaking the Bonsack Machine Company agree to allow W. Duke, Sons & Co. from this day a drawback which will reduce their royalty to twenty-four cents per one thousand cigarettes, whether printed or not, and as soon as they shall make their entire plain work of all brands and qualities on the said machines their drawback shall be such as to reduce their royalty to twenty cents per 1,000 cigarettes. The amount paid on which such drawbacks are allowed is thirty cents for nonprinted work and thirty-three cents for printed work. And it is agreed that this arrangement is permanent, unless the said W. Duke, Sons & Company shall divulge the same, or unless they shall fail to put the machines on their fine work as above stated, in which event the Bonsack Machine Company may, at its pleasure, refuse thereafter to allow the said drawback."
The Lone Jack Contract.
"This agreement, made this 30th day of September, 1885, between the Bonsack Machine Company, of the first part, and the Lone Jack Cigarette Company, of the second part, witnesseth, that the said party of the second part shall use the machines of the said party of the first part for the manufacture of their cigarettes, paying therefor the sum of thirty cents per 1,000 for nonprinted work and thirty-three cents per 1,000 for printed work, payable at the end of each month. And it is agreed that the Lone Jack Company shal! advertise their goods as made on the Bonsack machines, and by such advertisements bring into favorable notice the Bonsack cigarette machines, and that the Bonsack Machine Company shall contribute in monthly payments, payable at the end of each month, in cash, to the Lone Jack Cigarette Company, a sum of money equal to fifteen cents per 1,000 cigarettes made during the preceding month and not printed, and a sum equal to cents per 1,000 cigarettes on the printed work made during the preceding month by the Lone Jack Cigarette Company; such payments to be in full satisfaction and payment, upon the part of the Bonsack Machine Company, for the advertisements to be made by the Lone Jack Cigarette Company as aforesaid."
Neither of these contracts contained a clause imposing secrecy upon either party to it.
At the trial of the case the Bonsack Company offered to read two depositions, one of James B. Duke, a member of the firm of W. Duke, Sons & Co., and W. H. Butler, an officer of the Kinney Tobacco Company, which was a large manufacturer of cigarettes. The court refused to allow the two depositions to be read. The following are extracts from them, respectively. That of James B. Duke contained the following passages:
"Q. 11. You have said that Kinney Tobacco Company knew of the contract with W. Duke, Sons & Co. before Kinney Tobacco Co. contracted for the use of the Bonsack machines. Please state what rate of royalty the Kinney Tobacco Co. paid for the use of the Bonsack machines. A. 11. Thirty cents per thousand.
"Q. 12. In your judgment, what was the value to the Bonsack Machine Co. of the services rendered by W. Duke, Sons & Co., together with the money consideration paid by it, as compared with the price paid by Kinney Tobacco Co., the same being, as you say, a money consideration alone of thirty cents per thousand? A. 12. In view of the risk, W. Duke, Sons & Co.'s terms were not so favorable; in other words, I will say that the service rendered by W. Duke, Sons & Co., together with the money consideration, in my judgment, was worth more than the thirty cents per thousand cigarettes.
"Q. 13. What, if anything, was said to Mr. D. B. Strouse by you and Francis S. Kinney, Esquire, president of the Kinney Tobacco Co., at the time you were negotiating for Bonsack machines in 1888, relating to the terms of the contract the Bonsack Machine Co. had made with W. Duke, Sons & Co.? A. 13. We stated to Mr. Strouse that we considered that W. Duke, Sons & Co. were entitled to all they received. We regarded the services of W. Duke & Sons, as they were the first manufacturers who successfully brought the product of the machines to the favorable attention of the public, as being more than equivalent to the difference in the money considerations paid."
The deposition of W. H. Butler contained the following passages: "Q. 7. What was the result of the corporation of W. Duke, Sons & Co. making its entire work on the Bonsack machines, so far as relates to the other manufacturers making use of the Bonsack machines? A. 7. It demonstrated that machine-made cigarettes might supplant hand-made cigarettes. The result was that the other large manufacturers largely adopted machines for making their work, and to-day ninety per cent. of the cigarettes made in this country are made on the Bonsack machines, I think.
"Q. 8. What was the probable value of the services rendered by the corporation W. Duke, Sons & Co. in placing the Bonsack machines prominently and favorably before the public, together with the money consideration paid by W. Duke, Sons & Co., as compared with the rate of royalty of thirty cents per thousand for nonprinted cigarettes and thirty-three cents per thousand for printed cigarettes? A. 8. I consider that the value to the Bonsack Machine Co. of the services rendered by the corporation W. Duke, Sons & Co., together with the money royalty paid by it, was more than equal to paying the Bonsack Machine Co. thirty cents per thousand for nonprinted and thirtythree cents per thousand for printed cigarettes."
The defendant's bill of exceptions states that it—
"Offered to introduce witnesses Edmund Schaefer and J. Stewart Walker to show by them that they were for many years associated as officers in the conduct of the business of the Lone Jack Cigarette Company, and were well acquainted with the contract relations between the Lone Jack Cigarette Company and Bonsack Machine Company, before and after the year 1885, touching the renting of the machines of the latter company; that the Lone Jack Cigarette Company paid for the renting of the said machines royalties of 30 cents per thousand cigarettes nonprinted, and 33 cents per thousand cigarettes printed, of which 15 cents was paid in money and balance in servvices, that is to say, in consideration of said money reduction, the Lone Jack Cigarette Company agreed to advertise, and did advertise, their cigarettes as made on the Bonsack machines, and by its advertisements to bring said machines into favorable notice; that the said Lone Jack Cigarette Company agreed to render and did render services to the Bonsack Machine Company in furnishing opportunity to its operatives in its factory so as to make them skilled and prepared to be sent off for service in any factories where said machines were used, and allow the machines and tubes of the Bonsack Machine Company to be tested in its factory, the said Lone Jack Cigarette Company finding tobacco and paper for the purposes of all such tests; that this undertaking on the part of the Lone Jack Cigarette Company caused it many and serious interruptions and inconveniences, and resulted in large losses of tobacco and materials, so that this undertaking on the part of the Lone Jack Cigarette Company jeopardized its business so that they were losers in business, and finally had to wind up: and that the witnesses would testify positively that in their judgment the royalty paid to the Bonsack Machine Company in the shape of money and services as afore
said exceeded in fair values the money paid by Hess & Co. of 30 cents for nonprinted and 33 cents per thousand for printed work."
The court below refused to allow the witnesses, Schaefer and Walker, to testify. No evidence was given on the trial by the plaintiff below, Hess & Co., to sustain the averment of the declaration that the plaintiff was ignorant, until after the 1st day of August, 1890, of contracts made by the Bonsack Company giving better terms than had been accorded the plaintiff. A good deal of evidence at the trial below related to an answer in equity, which the Bonsack Company had prepared, and left for a few weeks in the clerk's office, to a bill which had been exhibited against it by the Lone Jack Cigarette Company in the circuit court of Lynchburg, on May 1, 1890. The answer had never been filed or used in the suit, and was soon withdrawn from the clerk's office by the Bonsack Company. The suit itself never came to a trial. This answer was offered in evidence by Hess & Co. in the trial below of the present suit, and, against the objection of the Bonsack Company, was allowed by the court below to go to the jury. The chief object of Hess & Co. in using this alleged answer as evidence at the trial below was to show that the Bonsack Company had denied in that paper the claim they were making at the trial, that the services rendered by the Lone Jack Cigarette Company, and stipulated for by the contract, were of material value to the Bonsack Company. The answer alleged, among other things, that most of the stock of the Lone Jack Company had been taken and was held by parties who owned stock in the defendant company. It alleged, furthermore, that the main reason that defendant company agreed with the plaintiff company to reduce royalties was that the latter company had not succeeded. It claimed to have lost money. Its stockholders being principally officers and stockholders of the defendant company, who had embarked in the new enterprise of manufacturing cigarettes, induced and persuaded the defendant company to make a reduction in royalty, thus insuring its success, and at the same time preventing it from being said that any manufacturers who had taken hold of said machine had failed, or done other than succeed. The answer, except so far as this paragraph did so, did not deny that the object of the contract with the Lone Jack Company was to secure the services indicated by the contract itself, but rather that the Bonsack Company had not realized their expectations in that respect.
At the trial below, the Bonsack Company, by its attorneys, moved the court to give to the jury the following instructions:
Instructions Prayed for by Defendant.
"(1) The court instructs the jury that for the plaintiff to recover in this action they must believe from the evidence that by the contract between the parties to this suit it was agreed that no one using defendant's machines then had, or should thereafter have, machines for less royalty than that provided to be paid by the plaintiff, and they must further believe that other parties did then have, or were thereafter furnished, machines by the defendant at less royalty. And in considering the royalties paid by other parties the jury is instructed to take into account not only the money royalty that may have been paid by other parties, but other consideration, such as services, etc., as well, at a fair, honest, and equivalent value.
"(2) The court instructs the jury that the answer of the defendant in the
case of the Lone Jack Cigarette Company against the defendant must be considered by the jury in reference to that suit; and the defendant is not precluded by any statement made in that answer, but the amount of royalty paid to the defendant by the Lone Jack Cigarette Company, whether in money, services, or otherwise, depends upon all the proofs in this case relating to that matter.
"(3) The court instructs the jury that, while it may consider the answer of the Bonsack Machine Company in the suit brought against it by the Lone Jack Cigarette Company as tending to show the construction the Bonsack Machine Company at that time placed upon the contract which it had made with the Lone Jack Cigarette Company, yet the same may be overcome or explained by other testimony, and in determining the true construction of and real intent of the said contract they must consider all the testimony that has been introduced touching that subject as tending to explain or rebut the admissions in the answer of the Bonsack Machine Company, so far as the said admissions bear upon the issue in the case on trial.
"(4) The court instructs the jury that for the plaintiff to recover in this action it must appear to the jury by a preponderance of testimony that the defendant company has broken or failed to perform its part of the contract made between the plaintiff and defendant, and that the plaintiff has sustained damages by such breach of the contract, and the jury can find only so much of the amount demanded in the declaration as the plaintiff has shown it sustains as a loss by reason of such breach of the contract.
"(5) The court instructs the jury that, should they believe from the evidence that the language contained in the two letters, one of the 26th of March, 1887, and the other of the 25th of April, 1887, when viewed in the light of other correspondence of the parties, the subsequent written contract, and other evidence was not relied upon by the plaintiff, and was not intended by the parties to be incorporated into the contract, then they must find for the defendant; and in estimating the royalties, upon which they shall base their verdict, in case they find for the plaintiff, they must exclude all such royalties as accrued after and under the written contract, dated March 7, 1890. "(6) The court instructs the jury, if they believe from the evidence that the clauses contained in the two letters of the 26th of March and the 25th of April, 1887, now relied on by the plaintiff in this suit, viewed in the light of other correspondence of the parties, of the plaintiff's written contract of March 7, 1890, and of other evidence, were not relied upon by the plaintiff when he leased the defendant's cigarette machines, or were not intended by the parties to be incorporated into the contract, then they must find for the defendant. And said clauses, and the provisions contained in them, not having been embraced in the said contract of March 7, 1890, there can be no recovery, in any event, on account of the royalties accruing after the date of said contract.
"(7) The court instructs the jury that the burden is on the plaintiff corporation to show that it paid to the defendant corporation the 30 and 33 cents per thousand, without knowledge of a lower rate or royalty being given by the defendant to others; and if they shall, from the evidence, believe that the plaintiff has failed to prove by a preponderance of evidence that said payments were made without knowledge of a lower royalty to others, then they must find for the defendant.
"(8) The court instructs the jury that if they believe from the evidence the defendant contracted it had not and would not furnish machines to others at a royalty or rate lower than 30 cents per 1,000 cigarettes nonprinted, and 33 cents per 1,000 cigarettes printed; that said defendant has violated said contract, and that said plaintiff has not proved it has sustained damage thereby, -then they shall find only nominal damages in favor of said plaintiff.
"(9) The court instructs the jury that under the pleadings in this cause, to enable the jury to find for the plaintiff, the burden of proof is on the plaintiff to show-First, that the contract set out in the declaration is the contract which was made between the parties; second, that the defendant has violated the said contract; third, that the plaintiff has been damaged by such violation of the contract; and, fourth, the amount of the damages which the plaintiff has sustained by reason of the violation of the said contract by the
"(10) The court instructs the jury that all prior negotiations and contracts between the plaintiff and defendant relating to the hiring or leasing of machines by defendant to plaintiff are merged in the contract between said parties of the 7th of March, 1890, and if they believe from the evidence that there has been no breach of said contract of the 7th of March, 1890, then they must find for defendant."
To the giving of said instructions, or any of them, the plaintiff, by its attorneys, objected, and the court sustained the objection, and refused to give the instructions, and each of them, in the form in which they were presented. And thereupon the And thereupon the plaintiff company, by its attorneys, moved the court to give to the jury the following five instructions:
Instructions Prayed for by Plaintiff.
"(1) The court instructs the jury that the correspondence between the plaintiff and defendant, which has been introduced in evidence and read to the jury, constitutes a contract between the parties. And upon the subject of royalty, or compensation to be paid by the plaintiff to the defendant for the use of the defendant's machines, said contract was that the rate of said royalty should be thirty cents per thousand for all cigarettes not printed and thirty-three cents per thousand for all printed cigarettes; and this rate of royalty, or compensation for the use of defendant's machine, to be paid by the plaintiff, was based upon the assurance given by the defendant to the plaintiff that such rate was in accordance with the terms of the defendant, which were uniform, and not different from those given to any other manufacturer, and that said terms were the same to all.
"(2) And if the jury believe from the evidence that the defendant company, before and at the time when the plaintiff was using its said machine, had contracted with, and did allow the use of the said machine by, other persons engaged in the manufacture of cigarettes upon terms different and more favorable than those required of the plaintiff, such conduct was a breach of said contract by the defendant company.
"(3) The court further instructs the jury that if they believe from the evidence that the contract between the plaintiff and the defendant company has been broken by the defendant company, the measure of the damages to which the plaintiff is entitled is the difference between the royalty paid by the plaintiff to the defendant company and the royalty paid by the Lone Jack Cigarette Company, or that paid by the Duke, Sons & Co. to the defendant, whichever royalty may be the smaller paid by either of said companies. And in estimating the royalty upon which they shall base their verdict in case they find for the plaintiff, they must exclude all such royalty as accrued after and under the written contract dated March 7th, 1890.
"(4) The court instructs the jury that the answer of the defendant company in the case of the Lone Jack Cigarette Company against the defendant company, which has been introduced in evidence, must be considered by the jury in reference to the bill as an answer to which it was prepared, and only so much of said answer must be considered as bears upon the issue now being tried, as defined by the rulings of the court.
"(5) The court further instructs the jury that when the plaintiff, in the letters to the defendant company, inquired the terms and price for which the defendant company leased its machines, and stated that plaintiff understood that the defendant company gave better terms than offered to the plaintiff, it was the legal duty of the defendant company to inform the plaintiff of the terms of any contract it may have had with other parties which were different and better than those offered to the plaintiff."
To the giving of these five instructions the defendant objected, which objection was overruled by the court, and the instructions given. The trial resulted in the following verdict:
"We, the jury, find for the plaintiff, and assess its damages at the sum of eight thousand two hundred and thirty-two dollars and twenty-nine cents,