Provident Chemical Works v. Hygienic Chemical Co. , 170 F. 523 ( 1909 )

HAND, District Judge

(after stating the facts above). I will first consider the plaintiff’s claim. The words “cost and expense of such defenses” ought reasonably to be interpreted as including any expense directly caused by defending the suits. It may be that “cost,” if used alone, could have been limited to a disbursement made in exchange for a quid pro quo, though we do use the word also to indicate loss without anything received in exchange, as in the expression, “You will find it to your cost”; but the word “expense” clearly covers any disbursement, whether made in purchase of the services of lawyers, or without any quid pro quo whatever. It must include all sums whose payment became necessary because the suits were defended, rather than settled without litigation. Among the sums which the plaintiff was obliged to pay because it had interposed a defense, were the sums taxed for costs and disbursements to the complainant in the patent suit, the Rumford Chemical Works. These were an expense arising from the defense, for the reason that without any defense there could never have been any such expense. The parties certainly meant to share every loss which should be occasioned by the impending contest, and the contest could not have gone on without assuming the risk of costs in case of defeat. I do not suppose that the plaintiff would have consented to allow its case to be conducted by attorneys chosen by the defendant, if it had supposed that the bill of costs those attorneys were running up was a matter of indifference to the defendant.

Judge Revintritt’s decision in Munro v. Maryland Casualty Co., 48 Misc. Rep. 183, 96 N. Y. Supp. 705, is distinguishable. In that case the casualty company had agreed to assume the defense of any suit brought against the insured for negligence. This promise was “to defend at its own cost.” Such an agreement made by one in the position of a lawyer certainly did not include the obligation to pay the costs in case of defeat. The promise was, not to pay all expense which might result from contesting the plaintiff’s claims, but to conduct the defense of the litigation.

I think, therefore, that the plaintiff should have judgment upon its claim for the full amount of $2,323.23.

Next, as to the counterclaim of the defendant. The question is, whether the parties intended to share the expenses of more than one litigation carried to a conclusion. The words used are “any and all suits,” and these words were clearly required by the fact that the Rumford Chemical Works, as is usual, purposed to carry on a general attack against both the parties hereto and their customers. I have no doubt that the cost of all litigation in all these suits was to be shared by the parties up to a time when it became reasonably certain that the validity of the patent had been definitely decided. After that point it could not have been to the mutual advantage of either party to continue to fight, although it might have been to the separate advantage of either. However, it was the mutual advantage of both which dictated the contract in question, and their obligations must be limited to that purpose. It was reasonably certain, after the denial of the writ of certiorari by the Supreme Court in the suit of Rum-ford Chemical Works against the plaintiff, that the validity of the patent was established. The success which the defendant had in the subsequent litigation, and the possibility of its ultimate success in the Supreme Court, does not, so far as the statement of facts goes, depend upon the invalidity of the patent, but upon whether the defendant was in fact an infringer. If the validity of the patent is still in issue, this fact should have been stated in the agreed facts, and, as the facts are, I can only consider the decision of the Circuit Court of Appeals, from which it clearly appears that the second suit did not involve the validity of the patent. So far as the plaintiff is concerned, the contract conclusively established that, whether the defendant was an infringer or not, it had an active interest in .the litigation. After that litigation was determined, the plaintiff could not have had the slightest interest in the question of whether the Rumford Chemical Works could hold the defendant in a suit.

I qonclude, therefore, that the second litigation was not within the meaning of the contract between the parties, and that therefore the plaintiff was not responsible to the defendant for the costs incurred in that contest.

I therefore direct that judgment be entered for the plaintiff in the sum of $2,479.67, with interest from December 29, 1904, upon $2,323.-23, and that the counterclaim be dismissed upon the merits, with costs.

I do not find any statement in the agreed facts showing when the bill for services was paid to Von Briesen & Knauth, and so I cannot award interest upon that sum, unless the parties agree.