ALPHONS CUSTODIS CHIMNEY CONST. CO. ▼. H. R. HEINICKE, Incorporated. (Circuit Court, S. D. New York. December 20, 1904.) PATENTS SUIT FOR INFRINGEMENT IMPROVEMENT IN CHIMNEYS. An application for a preliminary injunction against infringement of the Custodis patent, No. 512,504, for a chimney, denied in view of the fact that the patent had not been adjudicated, and that the showing made raised a serious question as to its validity. In Equity. On motion for preliminary injunction. TOWNSEND, Circuit Judge. Motion for preliminary injunction. The complainant is the owner of patent No. 512,504, granted January 9, 1894, to Alphons Custodis for an improvement in chimneys. The patent states that: "Heretofore the inner wall of a chimney was made continuous, and upon expansion of any one of its parts the entire wall would frequently be thrown out of line, and had to be replaced. To remedy this defect is the object of my invention." McCord patent, No. 117,555, granted in 1871, shows that the foregoing statement as to prior constructions was erroneous, or, rather, that sectional chimneys were known in the art. He provided for "a chimney flue * * * in the interior of which are arranged the sections of piping, B, placed one upon another to the upper end of the flue," and stated as one object of his invention to prevent damage from the cracking of the brick walls "produced by the contraction and expansion of the brickwork as well as from the settling of the building." The patented improvement in the patent in suit consists in the provision of steps projecting inwardly from the outer wall of the chimney, and separate independent sections of inner wall so supported upon said steps that any one of said sections can be separately repaired or replaced. The claim is as follows: "A chimney composed of an outer wall having a number of inwardly projecting steps and of a sectional inner wall, which is supported upon said steps, substantially as specified." The prior art shows metal chimneys described in the Clawson patent as provided with an interior flue composed of sections of earthenware tube which are supported upon a suitable base, and in combination with such a sectional chimney a series of flanges so constructed as to unite the sections and at the same time provide independent supports for the chimney at intervals. The patentee says: "In order to support the chimney at intervals, and to relieve the base and the lower sections of too much weight, I form projecting brackets, I, which are secured to rings, F, and may be fastened to a wall or other support near the chimney, so that each bracket may support that portion of the chimney between it and the next one above by means of the lugs, H, and the flanges, L, on the inner sections, as before described. By this construction the strain upon the chimney is divided and relieved." It is contended that these chimneys are not the same thing as the invention of the patent in suit, because the lining is practically continuous, and there is no air space between the lining and shell. On the argument counsel for complainant also assumed that the patent in suit was for a chimney composed of brick, as distinguished from metal. There is not a word in the patent suggesting the provision of an air space in the chimney, or limiting its construction to any specific material. It has already been shown that the prior art covered a sectional construction and inwardly projecting supports. It is unnecessary to consider other prior constructions. The patent in suit is not an adjudicated patent. No facts are stated as to acquiescence, and the alleged infringing chimney is being constructed for the United States government. In these circumstances, as the patents and other publications introduced in defendant's affidavits raise a serious question of validity, its determination should be reserved for final hearing. The motion is denied. KANSAS CITY SOUTHERN RY. CO. v. STEVENSON. (Circuit Court, W. D. Arkansas, Ft. Smith Division. March 4, 1905.) EQUITY-LACHES-SUIT TO ENFORCE TRUST. Where defendant, on resigning the presidency of a railroad company, retained the title to certain property in another state, which had been donated to induce or aid in an extension of the road, claiming that the property was his own and did not pass to the company, which claim was shortly thereafter known to the officers of the company, a delay of over nine years before bringing suit to establish and enforce the trust, in the absence of any showing in excuse, was such laches as to bar the right to relief, where actions at law to recover the property would have been barred, under the laws of the state, in from three to seven years. [Ed. Note. For cases in point, see vol. 19, Cent. Dig. Equity, §§ 191196; vol. 47, Cent. Dig. Trusts, 88 568-573.] In Equity. Read & McDonough, for complainant. ROGERS, District Judge. I must regard the proof in this case as establishing the fact that the donations and subsidies in controversy, received by L. L. Bush in his own name while the president of the Kansas City, Ft. Smith & Southern Railway Company of Missouri, and the donations and subsidies in controversy received by John B. Stevenson, Jr., in his own name while president of the same corporation, were held in trust by each of them for the corporation, and that the said donations so received by the said Bush, and subsequently conveyed by him to said Stevenson, were held by said Stevenson in trust, also, as the property of said corporation, because it is clear that Stevenson, before he took the title, had ample notice of the conditions under which Bush had received the donations and subsidies to put him upon inquiry, which, if followed up, would have disclosed all the facts. Percy v. Cockrill, 53 Fed. 875, 4 C. C. A. 73. Stevenson was a trustee for the company, its president, and he could not be allowed to buy for himself property held in trust by Bush for the company. Nor could he be allowed to buy properties for himself while president which were essential to the operation of the company's road-for instance, the right of way on which it had been built, or property necessary for its business. His duty was to procure such properties for the company, and he could not, for personal gain, be allowed to disregard his duty and violate his trust by antagonizing the very interests it was his duty to subserve and promote. The properties in controversy all lie in Arkansas. The contention is that the corporation could not accept subsidies and donations in Arkansas to aid in building or extending its line of road into the state of Arkansas, (1) because its charter gave it no right to build elsewhere than in Missouri; (2) because to extend its line in Arkansas without compliance with the laws of Arkansas was against the public policy of that state. I have examined with great patience the statutes of Missouri under which the corporation was organized, and I have reviewed the history of all railroad legislation in Arkansas, and examined all statutes which relate to its public policy as regards the construction by foreign corporations of their roads into the state of Arkansas. I have also examined the authorities, and considered carefully the argument of the learned counsel who seeks to uphold the contentions stated. It has proven a very interesting and important inquiry, in a general way; but I do not deem the contentions essential to the correct determination of this case. As throwing light on this subject, I cite 1 Rev. St. Mo. 1889, §§ 2508, 2543, 2568, and the acts of Arkansas of March 22, 1887, March 16, 1881, and March 13, 1880, all of which, except the first act, are found in Kirby's Digest, under the head "Railroads"; and also the following decisions: Bank of Augusta v. Earl, 13 Pet. 587, 10 L. Ed. 274; Thompson v. Waters, 12 Am. Rep. 243: Fidelity Mutual Life Ass'n v. Ficklin (Md.) 21 Atl. 680; Levi v. Thompson et al., 4 How. 17, 11 L. Ed. 856; Executors of McDonogh et al. v. Murdoch et al., 15 How. 413, 14 L. Ed. 732; Paul v. Virginia, 8 Wall. 177, 19 L. Ed. 357; St. Louis v. Ferry Co., 11 Wall. 429, 20 L. Ed. 192; Railroad Co. v. Harris, 12 Wall. 81, 20 L. Ed. 354. But as it is not necessary to decide the contentions suggested, I do not pass upon them, but, following the wholesome rule, will leave these matters to be determined when a case shall arise which makes it necessary to do so. It was also contended that if the Missouri corporation, in point of fact, accepted the donations and subsidies in controversy in the name of its president, as trustee, nevertheless it could gain no footing in a court of equity to enforce the trust, because the trust itself was both ultra vires and in violation of the public policy of the state of Arkansas. That question is pretermitted, also, as not essential to the correct determination of this case. It is contended that the bill cannot be maintained, because of laches in instituting the suit. The evidence of the case is voluminous, and a vast deal of it extraneous and irrelevant. I have gone over it all carefully and patiently, and regard it unprofitable to review it. I consider that it shows the following facts upon which the case must go off: The Kansas City, Ft. Smith & Southern Railway Company, a Missouri corporation, prior to 1890 was building a road in southwestern Missouri to the Arkansas state line, near Sulphur Springs, Benton county, Ark. L. L. Bush was its president. He was building the road under an arrangement by which he was to have so much stock and so many bonds of the company per mile as the road was completed and turned over to the company. Under this arrangement, the exact nature of which is not, in its details, made clear by the proof, Bush had become the owner of $825,000 of stock and $825,000 of bonds of the company for road constructed in Missouri. Bush and the company were both embarrassed for funds to continue the work. G. G. Latta, of Philadelphia, had become involved by indorsements for and advancements made to Bush, and held Bush's stocks and bonds as collateral to secure him therefor. To relieve the road of its embarrassments, some time prior to January 15, 1891, Latta became the owner of all Bush's stocks and bonds; and on the 15th day of January, 1892, Bush resigned as president of the company, and defendant, Stevenson, was elected president in his stead. Latta and his friends afterwards, on the 3d of January,. 1893, sold all the stocks and bonds of the Kansas City, Ft. Smith & Southern Railway Company to the Missouri Coal & Construction Company, also a Missouri corporation, which afterwards changed its name to the Philadelphia Construction Company, also a Missouri corporation. Stevenson, however, under the arrangement made at the sale, remained nominally president of the Kansas City, Ft. Smith & Southern Railway Company, in order to secure certain deferred payments for the stocks and bonds. These deferred payments having been made, Stevenson's resignation as president was accepted on June 12, 1893, although the management of the corporation had passed completely into the control of the Missouri Coal & Construction Company on June 1, 1893, when its own board of directors were elected. When the properties in controversy are sifted, it is admitted that only four tracts of land and the Sulphur Springs town site stock are really in controversy. The other properties described in the bill have either been conveyed by Stevenson to the railroad company, or were acquired by him. after he ceased to be president, or were disclaimed in his answer. The properties in controversy, therefore, are the town site stock, which was owned by Bush prior to April 15, 1892, on which day he assigned it to defendant, Stevenson; the quarry tract, which was conveyed to Bush December 28, 1888 (this land was conveyed by Bush to defendant, Stevenson, along with other properties, on April 15, 1892); the Y property, purchased by Stevenson from one Dunn and wife, conveyed to him March 11, 1893, and the deed recorded May 24, 1893; the Heckman tract, conveyed to Stevenson September 27, 1892, another deed correcting the first being made to him March 23, 1893, and recorded May 24, 1893; and the McGraw tract, conveyed to defendant, Stevenson, April 6, 1892, and the deed recorded May 24, 1893. It will therefore be seen that all this property was acquired by Stevenson before his resignation was formally accepted as president of the Kansas City, Ft. Smith & Southern Railway Company, but the three last tracts were acquired after Latta and his friends had sold all the stocks and bonds of the Kansas City, Ft. Smith & Southern Railway Company to the Missouri Coal & Construction Company, to wit, January 23, 1893. Passing over defendant's evidence, the testimony of the plaintiff's own witnesses, Trimble, Martin, Gentry, and Hibler, proves, that within a few weeks, or, at most, months, after this sale, it was brought to the attention of the officers of the Missouri Coal & Construction Company that Stevenson claimed that the sale of the stocks and bonds of the Kansas City, Ft. Smith & Southern Railway Company to the Missouri Coal & Construction Company (both Missouri corporations) did not carry with it any of the properties in Arkansas, and that Stevenson not only claimed all donations and subsidies in Arkansas, but also the right of way of the railroad company from the Arkansas state line to Sulphur Springs, Ark., and certain railroad iron deposited on the right of way of the road in Arkansas, as his own property. The right of way and some other matters were subsequently adjusted after some litigation between the Philadelphia Construction Company and Stevenson and others, but no steps were taken to recover the properties now in controversy until October 2, 1901, eight years and nine months after the sale of the stock by Latta and others to the Missouri Coal & Construction Company, and more than eight years after Stevenson set up his claim to all the Arkansas properties in controversy. During all this time the proof fails to show that the company was in possession of any of the property in controversy, and by a deed made by Stevenson in 1895 that part of the Y property now in controversy was specifically reserved. from the conveyance. There is no semblance of any allegation in the bill showing any reason why the plaintiff company and those under whom it holds have not taken steps at an earlier date to assert its claim to the property in controversy. The statute of limitations in Arkansas applicable to the recovery of town site stock is three years, and the statute applicable to the recovery of real estate is seven years. The rule in equity in such cases, assuming that Stevenson was a constructive trustee for the Kansas City, Ft. Smith & Southern Railway Company of Missouri, and that the properties in controversy passed to the Missouri Coal & Construction Company by assignment of the stocks and bonds by Latta and others to the latter company, is clearly stated in McCaughey et al. v. Brown et al., 46 Ark. 34: "It was competent for equity to grant the full measure of this relief. It frowns upon a multiplicity of suits, and, when the appellees had successfully invoked its aid to invest them with the legal title, it would not then remit them to an action at law to recover possession; but, having taken jurisdiction of the case for its own exclusive purposes, it would retain the cause to administer the legal after the equitable relief. It is long established that 'courts of equity in cases of concurrent jurisdiction consider themselves bound by the statute of limitations which governs courts of law in like cases, and this rather in obedience to the statute than by analogy.' Farnam v. Brooks, 9 Pick. 212. The evil resulting from delay in the enforcement of legal and equitable rights is the same, and the courts of equity take the same limitations for their guide that govern law courts in analogous cases. This is illustrated in this court by the application of the statute governing actions |