FIG. 4.

37

Dittbenner Patent in Suit, Considerably Reduced in Size.

These drawings clearly demonstrate that appellee's structure differed materially from the disclosures relied upon by appellant. For example, none of the prior machines were supplied with a hopper centrally located. In each of the previous machines, the so-called anvil knife was located in the throat of the hopper. Two sections make it possible for an operator to more readily locate trouble and adjust the knives. The location of the knives in relation to each other in appellee's "hog" obtained such advantages as may be attributed to cutting as with shears over cutting by chopping or whittling. This last difference, according to the expert testimony, marked a distinct advance in this art. Appellee's machine was not, therefore, anticipated by anything disclosed by the prior art.

It is claimed, however, that by reason of a definition of the word "case," appearing in the description of appellee's patent, claims 3 and 4, above quoted, do not describe the machine that represents the advance claimed by appellee for its "hog." In the description the patentee says:

"The case of the machine is made up of a lower rectangular base section 1 and an upper semi-cylindrical section consisting of a pair of laterally spaced intermediate plates 2 and a pair of longitudinally spaced segmental doors or case sections 3, 4."

By including the lower rectangular base section in his description of the word "case," and applying such a meaning to the same word in claims 3 and 4, no advance over the prior machines was shown. In other words, appellant contends an element described as "an anvil knife supported by said case," cannot be read so as to mean "an anvil knife supported by the upper section of the case."

While it is doubtless improper to import into any combination an

element not therein found, we are justified, when the intention is clear and the language somewhat unfortunate, in giving to all modifying words and phrases a significance ascertainable only by reference to the description. In each of these claims we find the words, “in a machine of the character described," and this clause should modify (and either expand or restrict as the words and circumstances warrant) the elements enumerated in the combination which constitutes the claim. The "machine of the character described" was a sawmill "hog" that had been specifically and carefully described, with particular emphasis placed upon the location of the hopper and the anvil knives.

The detailed drawing leaves no doubt but what the word "case,” as here used refers to a part of the section inclosing the upper portion of the rotor or cutter disks. The anvil knives are supported on the sides of the anvil and the anvil is not attached to the base. The precise location of the anvil knife and the meaning which patentee had in mind when he used the word "case" is clearly disclosed by reference to the last clause of claims 3 and 4. The words in claim 3, "Said knives being arranged to pass in an angle and to cut with a drawing, shearing action substantially as described" and the words in claim 4, "and the cutting edges of which angle knives lie in a plane extending tangentially to a circle struck from the axis of said disk, whereby the said knives co-operate to cut with a drawing, shearing action, substantially as described," make the location of the anvil knives certain and definite, irrespective of the detail drawings to which reference is appropriately made. Moreover, there is nothing about the use of the word "case" that would ordinarily include the base of the machine. Rather the opposite understanding would be inferable. We conclude all three claims are valid.

[3] Noninfringement. Appellant seeks to avoid infringement on two grounds: First, that appellee's machine is provided with three top sections, two of which are movable and one normally immovable. and containing the hopper as a part of it, while appellant's machine is provided with but two upper sections, in one of which is located the hopper. We agree with the court below "that the difference is one of form merely." Barber v. Otis Motor Sales Co., 240 Fed. 723, 728, 153 C. C. A. 521.

Appellant further contends that his machine escapes infringement because one of its case sections is not adjustable. Appellee's adjustment is a vertical one (see 7, Fig. 4), but the claim merely calls for adjustability. Only such adjustability as will permit the knives cooperating, so as to secure the successful drawing, shearing action, is required. Obviously a very slight adjustment is all that is necessary, and appellant's machine, being provided with a movable section, to which the anvil, bearing the anvil knives is attached, is adjustable. It matters not how the adjustment is secured-whether by the use of a simple shim or otherwise, the claim is infringed if the section is adjustable. The only testimony in the case is to the effect that appellant's machine is supplied with an adjustable case section, and with this statement we agree.

The decree is affirmed.

(250 Fed. 513)

BROWN et al. v. PENNSYLVANIA R. CO.

PENNSYLVANIA R. CO. v. BROWN et al.

(Circuit Court of Appeals, Third Circuit. April 1, 1918.)

Nos. 2319, 2320.

1. APPEAL AND ERROR ~1022(1) -REVIEW-FINDINGS.

A finding of fact by the master, approved by the trial court, will not be disturbed on appeal, unless it appears from the evidence that both the master and the court had made a clear mistake.

2. CANALS

21-BONDS-ACQUISITION-VIOLATION OF CONTRACT.

In a suit between bondholders of a canal company and a railroad company, which controlled the canal company and had agreed to purchase unpaid interest coupons detached from the bonds of the canal company, evidence held insufficient to show that the railroad received bonds of the canal company in exchange for moneys it advanced to pay interest coupons, which it was bound to purchase on default.

3. JUDGMENT 736-CONCLUSIVENESS-MATTERS CONCLUDed.

A decree finding a railroad company liable for the failure of a canal company, which it controlled, to make sinking fund appropriations as required by a mortgage given to secure bonds, and which ordered the railroad company to make payments to the sinking fund, was not a conclusive adjudication as to the distribution of such fund, and that question might be raised in subsequent proceedings, for the sinking fund was not then in existence.

4. MORTGAGES 99-CONSTRUCTION-PURPOSES FOR WHICH MADE.

A mortgage should be construed, not arbitrarily by its terms, but with reference to the purposes for which it was made and the objects intended to be achieved in its operation.

The Pennsylvania Railroad Company purchased a system of canals from the state, which for a number of years it operated directly, and then organized the Pennsylvania Canal Company, to which it transferred the property, taking practically all of its stock in payment. Thereafter it controlled the canal company through such stock ownership. On its organization, the canal company made an issue of bonds secured by mortgage, to which contract the railroad company became a party by agreement to purchase interest coupons on their maturity in case of default by the canal company. The mortgage also required the canal company to provide out of its net earnings, if sufficient for that purpose, a sinking fund of $20,000 per annum, but, if not sufficient therefor, then such sum as should be equal to the net earnings, for the payment of the principal of the bonds secured. Other provisions of the contract provided that, on default in payment of principal or interest, the trustee might enter and take possession of the property of the canal company, and appropriate the net income to payment in full, first, of the interest, and, second, the principal. Held that, as the railroad company induced holders of underlying securities, which were first liens on the property, to take bonds secured by the mortgage, and as the principal and interest might well exceed the amount to be realized from the sinking fund, the principal of the bonds is payable out of the sinking fund in priority to interest coupons. 6. EQUITY 394-MASTER-FEES.

A master's fee of $20,000 is excessive by at least $10,000, where the service rendered was found in a few brief meetings, held at intervals during a period of less than three months, and in the preparation of two reports, which, while thorough, could not have been difficult, and could not have occupied more than two months, had the master done nothing else.

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes 162 C.C.A.34

7. ATTORNEY AND CLIENT 141-COUNSEL FEES-ALLOWANCE.

An award of $200,000 in favor of attorneys for holders of the bonds of a canal company, who recovered from a railroad company, which controlled the latter, nearly $2,000,000, held excessive.

S. ATTORNEY AND CLIENT 155-COUNSEL FEES-ALLOWANCE.

Where the general bondholders of a canal company, which was controlled by a railroad company, recovered against latter and compelled it to pay a sum of nearly $2,000,000 for distribution among the bondholders, the proceeding must be deemed adverse as to the railroad company, though it held some bonds of the canal company, and, in allowing attorney's fees, nothing should be charged against the bonds held by the railroad company, for otherwise the principle that counsel fees are not recoverable from the adverse party to the cause might be violated.

Cross-Appeals from the District Court of the United States for the Eastern District of Pennsylvania; Oliver B. Dickinson, Judge.

Suit by Alice Frances Brown and others against the Pennsylvania Railroad Company and others. From the decree (244 Fed. 980), complainants appeal, as does the named defendant. Reversed, with directions.

Thomas Raeburn White and John Cadwalader, Jr., both of Philadelphia, Pa., for plaintiffs.

John Hampton Barnes and Francis I. Gowen, both of Philadelphia, Pa., and Charles Evans Hughes, of New York City, for defendant railroad company.

Before BUFFINGTON, MCPHERSON, and WOOLLEY, Circuit Judges.

WOOLLEY, Circuit Judge. The questions in these cross-appeals arose on the distribution of a fund which was paid under a decree of the District Court (229 Fed. 444), affirmed by this court (235 Fed. 669, 149 C. C. A. 89), holding the Pennsylvania Railroad Company liable for the sinking fund of the General Mortgage of the Pennsylvania Canal Company.

The trustee of the mortgage filed a petition showing that the railroad company had paid him $1,923,408.16-the principal and interest of the amount decreed-and praying instructions as to its distribution. The court referred the matter to a master. The master's findings are substantially as follows:

(1) That there are $1,948,000 bonds outstanding, and $2,590,354.03 unpaid interest coupons outstanding and held exclusively by the Pennsylvania Railroad Company, including coupons detached and purchased and coupons still attached to bonds it owns;

(2) That the fund should be applied to payment of the principal of the bonds in preference to payment of interest coupons;

(3) That of the total number of bonds outstanding, the Pennsylvania Railroad Company validly owns 384, the principal of which, like that of bonds otherwise held, is payable out of the fund before interest;

(4) That no compensation shall be allowed the Committee of bondholders for its services in prosecuting this litigation, but that the sum

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

of $3,406.87 be allowed for its expenses, and the sum of $250,000, be allowed plaintiff's counsel as fee for prosecuting the litigation and raising the fund; and

(5) That all bonds participating in the fund (including those held by the railroad company) shall contribute ratably to the payment of these allowances.

On exceptions by both parties, the court affirmed all the master's findings except the allowance for counsel fees, which it reduced to $200,000, and then added a master's fee of $20,000. Both parties appealed from the decree, specifying errors which we shall state as we approach the consideration of the several questions they raise.

Appeal of Alice Frances Brown et al.

As this controversy in its present stage is between the main body. of bondholders on the one hand and the Pennsylvania Railroad Company as an individual bondholder on the other, we shall for convenience refer to the former as the general bondholders and to the latter as the railroad company.

The general bondholders assert error in the part of the decree by which the railroad company was allowed to prove its bonds and participate in the fund. They base their charge on the allegation that the bonds proved were given the railroad company in exchange for moneys it had advanced the canal company to pay interest coupons which the railroad company had contracted with the bondholders to purchase on default, and that bonds which the railroad company received in a transaction whereby it prevented a default to escape its liability to purchase, were in effect acquired by a violation of its contract, and are not, therefore, validly provable against the fund.

[1] We need not discuss now whether in thus acquiring bonds the railroad company violated its contract with the bondholders, for the first question is whether the bonds were so acquired. That is a question of fact and on that question the master has found that the facts do not warrant the inference upon which the charge is made. On exception, the court approved the master's finding.

We are bound to sustain this finding, under the familiar rule, unless it appear from the evidence that both master and court have made a clear mistake.

[2] The evidence, which is not in dispute, is briefly this: Moneys were advanced from time to time by the railroad company to the canal company for a variety of purposes, amounting by the end of 1873 to $1,465,200. Of this sum, $232,000 had been advanced admittedly to aid the canal company in paying interest on its bonds. On the last day of that year, the canal company gave to the railroad company 10,000 shares of the stock of the Susquehanna Coal Company at par and thereby discharged $1,000,000 of this obligation, leaving a balance of $465,200 due the railroad company. As the credit of $1,000,000 was entered generally, it was doubtless applicable to the earliest items of the account, and discharged in part an item of $1,023,200 brought over as a balance from the previous year. This left, on December 31, 1873, a balance of $465,200, which included the $232,000