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the cotton season, paid by the railway at said compress; and also in like manner, will reimburse the railway for any and all expenses incurred in putting in proper shipping condition cotton received at the port from the compress company, with heads open, bands off, or insufficient density, provided such expenses are incurred and bills rendered to the compress company, or it notified, within 60 days after the cotton has been unloaded at the port, and the payment of such expenses to be made by the compress company within 30 days after the bill of the railway therefor shall have been rendered to the compress company.
"(7) That the compress company shall not undertake, do, or perform, for any person, for less price than herein provided for, services substantially similar to those herein agreed to be performed for the railway company by means of the payment of any rebate, commission or drawback out of the charge of the compress company for compression as provided for herein; but if the compress company should, because of competition of other companies, or for other good reasons, undertake, do, or perform services substantially similar for a less price by other means than by rebate, commissions, or drawback, in that event the railway company shall have the benefit of any rate allowed to such person or persons.
"(8) That it will execute and deliver unto the railway company, simultaneously with the execution of this agreement, a good and sufficient bond in the penal sum of $10,000, with sureties to be approved by the railway company, conditioned upon its faithful performance of each and every one of its covenants in this agreement contained.
"And the railway company hereby covenants and agrees:
"(1) That it will pay unto the compress company, in weekly settlements, during the life of this agreement, such sums as may be determined by applying such reasonable charge not exceeding seven and one-half cents per 100 pounds, when destined to mill points in South Carolina, North Carolina, and Virginia; and when destined to South At.antic ports, Gulf ports, Virginia ports, Baltimore, Philadelphia, New York, and Boston, proper and for export, interior eastern points, points in Canada, and points north of the Ohio river, eight and one-half cents per 100 pounds as ordinarily and contemporaneously paid by the railway company at other compresses, for similar services performed under substantially similar circumstances and conditions, to the bill of lading weights of the cotton of the railway company during the preceding calendar month: Provided, however, that when the railway company shall issue its bill of lading for compressed cotton to be delivered to it for shipment at the compress of the compress company, then the compress company shall look to the shipper of such cotton for its charges, and not to the railway company."
"(2) That it will furnish upon the tracks used by the compress company in loading cotton for account of the railway company, as and when required, and within reasonable time after notice of such requirement, such cars as may be necessary for the loading and shipment of such cotton as may be compressed for account of the railway company, and, in the event that the railway company shall fail to furnish such sufficient supply of cars within forty-eight hours after notice in writing of the requirement of the compress company therefor, then the railway company shall and will be responsible for all cotton actually delayed by its said default from and after the expiration of forty-eight hours from the service of such notice, in all respects as if the same had been actually delivered unto the railway company at the expiration of such forty-eight hours, but not otherwise."
The evidence tended to prove that in making delivery by the Kansas City, Memphis & Birmingham Company at Birmingham for further transportation by the Southern Railway, the custom had been sometimes to make direct delivery to the Southern Railway Company, without the intervention of any other parties; this when the cotton was not intended to be compressed at that place, and sometimes to deliver it to the Belt Railroad to be taken to the works of the compress com
pany, by which it would be delivered to the Southern Railway Company after it had been compressed. This was the course pursued when for any reason the probable expectation would be that the cotton would be compressed, as, for instance, when the ultimate destination would be a distant point. In the latter case it was customary for the Kansas City, Memphis & Birmingham Company to notify the Southern Railway Company of the arrival and delivery of the freight to the compress company, and forward that company's receipt therefor. If, as was the case in this instance, the through freight had been paid in advance, the first-named company would deduct its own proportion, and turn over the balance to the Southern Railway Company. That was what was done here.
The cause was submitted to the jury under instructions from the court, some of which were excepted to. Certain requests for instructions were presented in behalf of the railway company, which were refused, and exceptions were taken to the refusal. A verdict was rendered in favor of the plaintiffs in the sum of $4,000, and the interest thereon, and judgment was entered accordingly.
The grounds on which a reversal is prayed are:
1. That there was no evidence to sustain the verdict.
2. That the court erred in denying a motion of the plaintiff in error for a peremptory instruction to the jury.
These may be disposed of together. From what has been said of the evidence, we think the court was required to submit to the jury the question of the agency of the compress company in receiving the cotton, if, indeed, the contract between that company and the railway company and the undisputed facts did not, of themselves, establish such agency. If the latter view were to be taken of the case, the court would have been required to have instructed for the plaintiff. We think it is not necessary to decide whether such action would have been proper, for there was other evidence from which the jury might have found that the employment of the compress company was for the purpose of facilitating the transportation by reducing the bulk of the cotton, and was an expedient whereby the railway company would more easily earn the stipulated freight than if it should transport it in its larger bulk. If it was done for the convenience of the railway company, or mainly for its convenience, it surely would not be unreasonable to find that during the time while the compress company had the possession it was holding it as an agent or employé of the railway company.
3. In the course of its instructions the court charged the jury as follows:
"I charge you that it would not be a delivery of this shipment of cotton to the Southern Railway Company if you believe the Kansas City, Memphis & Birmingham Railway Company delivered it to the Birmingham Belt Line R. R., and they in turn delivered to the Railroad Compress, unless you should also find that the compress company was the agent of the Southern Railway Company, and authorized to receive cotton for the Southern Railway Company for shipment over that line; and in that case delivery to the compress company would be a delivery to the Southern Railway Company. If the cotton was lost or stolen while in the compress company's possession, the Southern Railway Company would be liable."
We think there was no error in this. It was sufficiently favorable to the plaintiff in error. It required as a condition to the plaintiff's recovery that the jury should find that the compress company was an agent and authorized to receive cotton for the railway company. It is urged that there was no evidence justifying this charge. But, for reasons already stated we think otherwise.
4. The court also instructed the jury as follows:
"If you believe from the proof that the Kansas City, Memphis & Birmingham Railroad Company and the Southern Railroad Company had an agreement or understanding that when cotton arrives in Birmingham over the road of the former company for the East that it was to be compressed at Birmingham, and that it would be a delivery to the Southern Railway Company when the Kansas City, Memphis & Birmingham Railroad Company delivered it to the Railroad Compress, or if there was no such express understanding, but you believe from the proof that business of this character had been conducted in this manner for such length of time and with such frequency as to amount to a custom, and, in the absence of any express agreement or understanding, both roads had so acted in such transactions as to lead the other to believe that cotton delivered at the Railroad Compress by the K. C., M. & B. R. R. to be compressed and forwarded over the Southern Railway would be considered a delivery and treated by both roads as a delivery to the Southern; and, if you believe the K. C., M. & B. Railroad in this case relied upon this custom so established, and delivered the cotton in question, believing at the time it would be a delivery to the Southern, and the Southern would so accept it, then the Southern Railway could not relieve itself from liability in this case if the cotton was lost or stolen while in the compress by insisting that the cotton was not delivered to it."
It is objected that "there was not a scintilla of evidence to justify this charge." The correctness of the conclusion as matter of law is not challenged, and we think the jury would have been justified in finding that the practice had been substantially that which the court made a condition to a verdict in favor of the plaintiffs. Of course, we are not to be understood that the evidence did prove such a custom. It was for the jury to draw conclusions of fact from the evidence.
5. Requests were presented for instructions in regard to the requisites of constructive delivery of the cotton by means of the transmission of way bills, expense accounts, and shipping instructions. These instructions were refused, and properly so, for they would have only tended to confuse the jury. It was clearly proved and is admitted that the cotton was actually delivered to the compress company on the 18th and 19th of March, 1903.
Another objection is that the court refused an instruction that, if the jury could not find any evidence from which to determine the quality and value of the cotton, they would not be justified in rendering a verdict for it. But the bill of lading stated the quantity, and witnesses testified to the current value, and there was no conflict on either subject. For the court to have given an instruction which would present these subjects to the jury as though they were matters of doubt would be diverting their minds into a region of supposed doubt where none in fact existed.
There is really only one important question in the case, which is
that of the relation of the compress company to the Southern Railway Company, and that has been determined against the latter. Its misfortune is in having put in its place a dishonest agent. The judgment must be affirmed, with costs.
HALL'S SAFE CO. et al. v. HERRING-HALL-MARVIN SAFE CO. (Circuit Court of Appeals, Sixth Circuit. June 20, 1906.)
1. CORPORATIONS-CONTRACTS-BINDING EFFECT ON STOCKHOLDERS.
A contract made by a private corporation on a sale of its property, business, and good will, that it will not again engage in business in competition with the purchaser, is not binding individually on a stockholder, even though he may have been an officer acting for the corporation in the transaction.
[Ed. Note. For cases in point, see vol. 12. Cent. Dig. Corporations, §§ 663, 664, 1457.]
2. TRADE-MARKS AND TRADE-NAMES-RIGHT TO USE NAME IN TITLE OF CORPORATION-UNFAIR COMPETITION.
Hall's Safe & Lock Company, a corporation, and its predecessors in business were engaged for many years in the manufacture of safes, which were marked and known generally as "Hall's Safes," and acquired a good reputation. The company sold its property, business, and good will, which were subsequently acquired by complainant, and went out of business. The individual defendants whose name was Hall, and who had throughout their business lives been engaged in the making of safes, subsequently organized a corporation for that purpose under the name of "Hall's Safe Company." Held, that the adoption and use of such name was within their rights, provided it was so used as not to mislead the public into the belief that the company's products were those of the Hall's Safe & Lock Company or its successors in business, against which complainant was entitled to an injunction.
[Ed. Note.-Unfair competition, see notes to Scheuer v. Muller, 20 C. C. A. 165; Lare v. Harper & Bros., 30 C. C. A. 376.]
3. SAME-INFRINGEMENT BY CORPORATION-LIABILITY OF STOCKHOLDERS.
Stockholders in a corporation are not individually liable or subject to injunction because of unfair competition practiced alone by the corporation.
Appeal from the Circuit Court of the United States for the Southern District of Ohio.
Judson Harmon and W. C. Cochran, for appellant.
Before LURTON, SEVERENS, and RICHARDS, Circuit Judges.
SEVERENS, Circuit Judge. Circuit Judge. The parties to this controversy are engaged in the business of manufacturing and selling safes. The complainant is a corporation organized under the laws of New Jersey. The defendant the Hall's Safe Company is an Ohio corporation, and the other defendants are citizens of that state. The bill was filed for the purpose of obtaining an injunction restraining the defendants from carrying on the business of manufacturing or selling fireproof or burglar proof safes or vaults under the name of the "Hall's Safe
Company," or under any other trade-name substantially or essentially the same, and calculated to deceive the public or intending purchasers into the belief that they are dealing with the complainant, or with the establishment founded by Joseph L. Hall and carried on by complainant, when they are dealing with the defendants, and from advertising their products as "Hall's Safes," and from marking them with that name, and for the recovery of profits and damages already lost and suffered by the complainant from acts of the like character, and there was a prayer for general relief.
The facts, about which there is not much controversy, are these: From about the year 1847 to 1867, one Joseph L. Hall had, in successive co-partnerships with other persons, been engaged at Cincinnati, Ohio, in the manufacture and sale of fire and burglar proof safes. In this business he had been the principal and managing member of his firms. In the latter year (1867) he with other persons organized a corporation under the laws of Ohio by the name of "Hall's Safe & Lock Company," for the purpose of carrying on the same business. Its factory and principal office were located at Cincinnati, and its business of selling safes extended throughout the United States and into foreign countries. Its safes were known as "Hall's Safes" and "Hall's Standard Safes," and certain styles of them were marked "Hall's Standard Safes," and the safes had a good reputation. In March, 1889, the said Joseph L. Hall, who was at that time the principal stockholder in the corporation last mentioned, died. He sons, Edward C., William H., and Charles O. Hall, were also stockholders. The first two became, successively, presidents of the corporation. The stock of Joseph L. Hall continued part of his estate, and the business went on as before until May 4, 1892, when the corporation sold to the Herring-Hall-Marvin Company, a New Jersey corporation, all its "real estate and leasehold interests, tools, machinery, fixtures, merchandise, trade-marks and good will," and the Hall's Safe & Lock Company covenanted and agreed that it would close up its affairs and be dissolved and would not in the future engage or continue in said business. This sale and agreement was assented to by the above-named sons of Joseph L. Hall, who are the individuals made defendants in this cause. Edward C. Hall and William H. Hall at or about the date of the transfer became stockholders (as we must suppose), directors, and, respectively, president and treasurer, of the Herring-Hall-Marvin Company, at stated salaries agreed upon at the time of said transfer. But in 1895 these persons were deposed from their offices, and their salaries reduced, and on August 1, 1896, they resigned their offices as directors. Their resignations were accepted, and they withdrew from the company. At the time when these parties became associated with the Herring-Hall-Marvin Company, a written agreement with that company was entered into by each of them, which, after stating the terms of their employment, contained the following stipulation:
"And in consideration as aforesaid, I, the said Edward C. Hall (in the other contract, William H. Hall), do hereby covenant, promise, and agree that I will not, so long as the Herring-Hall-Marvin Company may desire to retain my services as above, engage, either in the state of Ohio, or in the state of