Opinion of the Court. required to work his patented invention at the premises of the parties desiring to obtain a license, and then to demonstrate its practicability and instruct the parties in its use, with the previous understanding, however, that if successful and satisfactory, the parties should then repay the expenses incurred by him, and execute a regular form of license contract adopted by him; that a copy of the form of license adopted by Tilghman at the time was annexed to his bill, and it is there found; that about midsummer, 1873, one of the defendants applied to his agent to obtain a license to use the patented invention; that the nature of the license and agreement issued by the plaintiff, the mode of accounting and of changing the license rate was explained to him, and he then agreed to execute a license and agreement accordingly; that, on the faith of that agreement, machinery was supplied and erected by Tilghman at the works of the defendants, and a demand was then made by Tilghman's agent for the repayment of the cost of the machinery and for the execution of the regular license and agreement; 'that, after much delay, the cost of the machinery was repaid to Tilghman, but the defendants, on April 25, 1874, positively refused to execute the license and agreement, being the same issued to others in the same business; that the defendants were then served with notice to desist from using the patent process; that several monthly payments of royalty had previously been received from the defendants on the faith of their promise to execute a regular license and agreement; that, since their refusal so to do, the defendants had continued to send monthly reports of work done and checks therefor to the agent of Tilghman, as if in payment under a license, but such checks were returned to them, as they had no authority to use said process; that the right had been reserved to Tilghman and his agents, in all licenses executed by him, to visit and inspect machines operating his said process; and that, on the 26th of June, 1874, his agents formally applied for and were refused admission at both factories of the defendants, the foreman in each case asserting the express directions of the defendant Hartell not to admit either of them. One of the interrogatories put in Opinion of the Court. the bill was whether a license was not tendered to the defendants to execute, and whether they had not refused to execute it. The rest of the matters in the bill were in the usual form of a bill for the infringement of a patent. Thus, in that case, the plaintiff showed distinctly in his bill that he had made an agreement with the defendants, and under it had supplied them with machinery; that they had used such machinery and paid him royalty for its use, and had continued, after they refused to execute a regular license and agreement, to send reports of work done and checks in payment therefor, as if in payment under a license; and that they had violated a right claimed by the plaintiff and his agents to visit and inspect machines operating his process. Those allegations amounted substantially to saying that what the defendants had done they claimed to have done rightfully, under an agreement with the plaintiff. That is a very different case from the one stated in the bill in the present suit. In the opinion in Hartell v. Tilghman, it is stated that the plaintiff in that suit set out in the bill what the court understood to be a contract with the defendants for the use by the latter of his invention; that he declared that the defendants had paid him a considerable sum for the machines necessary in the use of the invention, and also the royalty which he asked, for several months, for the use of the process secured by the patent; and that he alleged that afterwards the defendants refused to do certain other things which he charged to have been a part of the contract, and thereupon he forbade them further to use his patent process and then charged them as infringers. The Circuit Court had decided in favor of the plaintiff, and this court reversed the decree, with directions to dismiss the bill without prejudice. That was done by this court in view of the averments of the bill, and on a consideration of the evidence in the case, as to the verbal agreement made between the parties, and the transactions between them which took place under it. The case of Wilson v. Sandford, 10 How. 99, is cited by the court in Hartell v. Tilghman. In that case, the bill was filed to set aside a contract which the plaintiff had made with the Opinion of the Court. defendants for the use of machines under a patent belonging to the plaintiff, and to restrain the use of them, as infringements, on the ground that the contract had been forfeited by the refusal of the defendants to comply with its conditions. The case of Albright v. Teas, 106 U. S. 613, was the case of a bill, where the parties were citizens of the same State, brought in a court of that State for moneys alleged to be due under a contract whereby certain patents granted to the plaintiff were transferred to the defendant. The bill prayed for an accounting of the amounts due the plaintiff for royalties under the contract, and for a decree therefor. The case was removed into the Circuit Court of the United States, but that court held, on final hearing, that it had no jurisdiction, because the case did not arise under any law of the United States, and remanded the case to the state court. This court affirmed the decree, citing as authority Wilson v. Sandford, and Hartell v. Tilghman. In Dale Tile M'f'g Co. v. Hyatt, 125 U. S. 46, the cases above referred to were reviewed, and it was stated that it had been decided in those cases that a bill in equity in the Circuit Court of the United States, by the owner of a patent, to enforce a contract for the use thereof, or to set aside such a contract because the defendant had not complied with its terms, was not a case arising under the patent laws; and it was said that the bill in Hartell v. Tilghman alleged that the defendants had broken a contract by which they had agreed to pay the plaintiff a certain royalty for the use of his invention and to take a license from him, and thereupon he forbade them to use it, and they disregarded the prohibition. The same view was taken of Albright v. Teas. The case of Marsh v. Nichols, 140 U. S. 344, is to the same purport. We are entirely satisfied that the Circuit Court ought not to have dismissed the bill in this case for want of jurisdiction, but ought to have proceeded to hear it upon the merits and the proofs put in; and the decree is Reversed, and the cause remanded to the Circuit Court with a direction to hear it upon the merits. Statement of the Case. PENDLETON v. RUSSELL. ERROR TO THE SUPREME COURT OF THE STATE OF NEW YORK. No. 236. Argued and submitted March 24, 1892. - Decided April 18, 1892. Four children of S. H. P., deceased, recovered judgment in the Circuit Court of the United States for the Western District of Tennessee against a life insurance company, a corporation of New York, on a policy insuring the life of the deceased, to which judgment a writ of error was sued out, but citation issued against only one of the plaintiffs. On this the company gave a supersedeas bond, securing the sureties by pledging or mortgaging some of its property. Proceedings were then taken in the courts of New York, under direction of the Attorney General of that State, which resulted in the dissolution of that corporation, and the appointment of a receiver of its property, who, by directions of the court, appeared in this court and prosecuted the writ of error in order to release the property pledged. After sundry proceedings the judgment of the Circuit Court was eventually reversed, and the case was remanded to the Circuit Court. A new trial was had there, but without summoning in the receiver, who did not appear, and judgment was again obtained against the company. This judgment was filed in the proceedings in New York as a claim against the assets of the company in the hands of the receiver, and the claim was disallowed by the highest court of that State. Held, that the appearance of the receiver in this court for the purpose of securing a reversal of the judgment below and the release of the mortgaged property gave to the Circuit Court in Tennessee no jurisdiction over the case, after the dissolution of the corporation, which could bind the property of the company in the hands of the receiver, or prevent the receiver from showing that the judgment was invalid because rendered against a corporation which had at the time no existence, and possessed no property against which the judgment could be enforced. THE Court stated the case as follows: The facts out of which the present case arises, briefly stated, are as follows: On the 14th of July, 1870, the Knickerbocker Life Insurance Company of New York, for a stipulated annual premium of $364.60, issued a policy for the sum of ten thousand dollars on the life of Samuel H. Pendleton, payable to the claimants on his death. By its terms, the failure to pay the annual premium on the days designated, or to pay at Statement of the Case. maturity any note, obligation or indebtedness given for the premium, rendered the policy void. The first premium was paid. The second premium, falling due on the 14th of July, 1871, was not paid. For it the assured drew two drafts on parties in New Orleans and gave them to the agent of the company, one a sight draft, for $44.50, which was paid, the other for $325, payable three months after date, which was presented to the drawees for acceptance, and afterwards, on its maturity, for payment, but it was neither accepted nor paid. The assured having died, an action was brought in September, 1875, by the claimants- his children - upon the policy, against the insurance company, in a state court of Tennessee, to recover the amount of the insurance. On motion of the company, the action was transferred to the Circuit Court of the United States for the Western District of Tennessee. The cause was there tried, and, in May, 1881, a judgment was recovered by the claimants for $15,175. To review the judg ment a writ of error from the Supreme Court of the United States was sued out by the company, and a supersedeas bond given in the sum of twenty thousand dollars. To secure the sureties on that bond the company mortgaged certain of its property situated in Brooklyn, New York, to the amount of fifteen thousand dollars, and assigned to them a mortgage for six thousand dollars on property in Jersey City. Upon the writ of error a citation was issued, but by some oversight or inadvertence both the writ and citation were directed to and served only upon one of the four defendants in error. Whilst the cause was pending in the Supreme Court of the United States upon this writ of error, an action was brought in the Supreme Court of New York by the attorney general of the State, in the name of the people of New York, against the insurance company to dissolve the corporation and forfeit its corporate rights, privileges and franchises, and, on the 29th of December, 1882, a judgment to that effect was rendered, dissolving the company and forfeiting its corporate privileges, rights and franchises, and appointing Charles H. Russell receiver of the property of the corporation. Soon afterwards the receiver ascertained the pendency of the cause in the VOL. CXLIV-41 |