The assignment was a fraud in the view of a court of equity, irrespective of any direct misrepresentations. When Koopman informed Upton of the changed situation in England, without informing complainant and, Reizenstein of the facts which had largely enhanced the value of their interests, he was guilty of a breach of the fiduciary duties owing by him to them as copartners. A sale by one partner to another of his partnership interest will be sustained only when it is made for a fair consideration and upon a full disclosure of all important information as to value. The concealment by Koopman of material facts, which it was his duty to disclose, was a fraud which invalidated the assignment. Story on Partnership, § 172; Brooks v. Martin, 2 Wall. 70, 85, 17 L. Ed. 732; Kimberly v. Arms, 129 U. S. 512, 9 Sup. Ct. 355, 32 L. Ed. 764.

We differ from the court below in the conclusion that the license to Brigham was inoperative. It would have been an operative instrument if Koopman had not signed it before the parties separated after their interview in New York in early June. It had been signed by the majority provided for in the partnership articles, and Koopman, as well as all the other members of the copartnership, was therefore precluded from challenging its validity as a transfer of the whole partnership interests. We cannot accept the theory that the complainant or Reizenstein supposed that it was inoperative. It was explicitly recited in the assignment as in existence, and was explicitly transferred by the assignment to Upton and Koopman; and the assertion of the complainant and Reizenstein that this was done merely as a matter of form cannot be allowed to prevail against their deliberate act. But it matters not what their suppositions may have been, so long as it was a valid and binding instrument. Its effect was to divest them and all the partners of any rights or interest in the copartnership property, except to share the royalty which might accrue from the Brigham license.

The conclusion that the license to Brigham constituted the only property of the partnership after it was executed requires a modification of the decree. The complainant was not entitled to any profits realized by Brigham under his license, or derived by the defendant and Upton through the assignment to them. He was only entitled to his fourth of the royalties which Brigham undertook to account for by the license agreement, including, by necessary implication from the terms of the license, the royalty on sales made by Brigham's sublicensees. Any profits above the royalty which might accrue to Brigham from sales by himself or by his arrangements with sublicensees became his. The negotiations by Koopman in England, which culminated in the agreements with Wright & Butler and Rollins & Co., resulted in large profits to Brigham, and incidentally to the associates in the subpool. By the agreement with Wright & Butler that concern undertook to pay Brigham $20,000 cash down, in consideration of the abrogation of certain conditions of a previous sublicense; "such sum being computed at the rate of 22 cents United States currency upon the sale of 800,000 banks guarantied to be sold by the party of the first part (Wright & Butler) from and after the date hereof." Under that provision he or the pool received $20,000; whereas, the royalty for which Brig

ham was to account under his license would have been $8,000. By that agreement Wright & Butler also undertook to take over orders for sales which Brigham had on hand for 400,000 banks and pay therefor $10,000. Under that provision of the agreement Brigham became accountable for royalty under his own license to the extent of $4,000. The decree awarded a recovery to the complainant upon the basis of the payments received by Brigham from his sublicensees; whereas, it should have been upon the basis of the royalties due from him under his license. No accounting was ordered, and the decree adjudged a recovery of one-fourth of the sums of money which it affirmatively appeared had been received by the subpool. We observe, also, that the decree did not provide for the restitution by the complainant of his half of the $1,750 received as the consideration for the assignment. Upon the cancellation of the assignment he was bound to restore what he had received, and the decree should have provided for the deduction of the amount from the amount otherwise recoverable against the defendant.

By the assignment to Upton and the defendant, the complainant and Reizenstein were wrongfully deprived of the share of the royalties which would otherwise have accrued to them under the license to Brigham. Upton and the defendant are jointly and severally liable for the loss induced by their fraudulent conduct. The right of action against quasi trustees who have been guilty of a fraudulent breach of their trust is ex delicto, and the tort may be treated as several or joint, and the trustees have no right of contribution as between themselves. Ervin v. Oregon Ry. & Navigation Co. (C. C.) 20 Fed. 577, 582; Peck v. Ellis, 2 Johns. Ch. (N. Y.) 131; Miller v. Fenton, 11 Paige (N. Y.) 18; Heath v. Erie Ry. Co., 8 Blatchf. 347, Fed. Cas. No. 6,306; Wilkinson v. Parry, 4 Russ. 272; Franco v. Franco, 3 Ves. 75.

We have not overlooked the contention for the appellant that the complainant had a complete and adequate remedy at law, and therefore could not resort to a court of equity. That this position is untenable sufficiently appears by reference to Kilbourn v. Sunderland, 130 U. S. 505, 9 Sup. Ct. 594, 32 L. Ed. 1005, without the citation of other authorities.

The decree is modified, so as to direct an accounting and a recovery in conformity with this opinion, and in other respects is affirmed, with out costs to either party.

On Rehearing.

PER CURIAM. We have considered the application by the appellee for a reargument, and think it should be denied, as we did not overlook the various contentions of the appellee respecting the validity and effect of the license agreement with Brigham. Nor did we overlook the consideration, though we did not refer to it in our opinion, that it does not appear to have occurred to the appellee's counsel that the court could not have adjudged that agreement to be inoperative, void for fraud, or otherwise invalid. Brigham was not a party to the suit, and no decree could have been made in his absence adjudging his license void.

152 F.-12

CANDA BROS. v. MICHIGAN MALLEABLE IRON CO.

(Circuit Court of Appeals, Sixth Circuit. March 21, 1907.)

No. 1,615.

1. PATENTS-JOINT SUIT FOR INFRINGEMENT-PROFITS RECOVERABLE.

In a suit by joint owners of a patent for its infringement, profits cannot be recovered which accrued from infringements prior to the date of the joint ownership, and when the patent was the sole property of one of the complainants.

2. SAME-ACCOUNTING FOR PROFITS-DEDUCTION FOR LOSSES.

On an accounting for profits for infringement of a patent, the infringer is not entitled to deduct from the profits made during a certain period of time a loss subsequently incurred in a separate transaction. On such an accounting only losses occurring concurrently with the making of profits and directly resulting from the particular transactions on which the profits are allowed may be considered in diminution of profits.

[Ed. Note. For cases in point, see Cent. Dig. vol. 38, Patents, § 576.]

3. SAME.

Where infringement of one claim only of a patent is adjudged, the infringer cannot be held to account for profits arising from the sale of a part of the device which was not an element of such claim, although it may have been an element of other claims.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 38, Patents, § 572.] 4. SAME

SEPARATION OF PROFITS.

It is the settled rule that, where the infringed device was a portion only of defendant's machine, which embraced inventions covered by other patents, it is incumbent on complainant to show how much of the profit made was due to such other patented parts, and how much to those of his own invention; but, before such rule is applicable, the burden rests upon the defendant to show the existence of such extraneous elements and the probability that they affected the price of the machine, and this is not done by showing that elements of the combination of complainant's patent and of the infringing machine were also elements of prior patented combinations where they were not separately patented, and were therefore open to use by complainant as parts of his own combination and invention. Appeal from the Circuit Court of the United States for the Eastern District of Michigan.

James C. Chapin, for Canda Bros.

James Whittemore, for Michigan Malleable Iron Co.

Before LURTON, SEVERENS, and RICHARDS, Circuit Judges.

SEVERENS, Circuit Judge. This cause was here in 1903 on appeal from a decree of the Circuit Court dismissing the bill. The suit was for the infringement of a patent granted to Canda, September 29, 1891, for the invention of a draw-bar attachment for connecting railroad cars. The number of the patent was 460,426. Being of opinion that the first claim of the patent was valid, and finding that the defendant infringed it, we reversed the decree, and directed the Circuit Court to enter a decree in favor of the complainants in respect of said first claim, and thereupon to proceed to ascertain the profits and damages and to grant the usual relief. The case is reported in 124 Fed. 486, 61 C. C. A. 194. On entering the proper decree in the court below, a reference to a master was ordered to take proof and state an account

of the profits and damages, and report the same to the court. On coming before the master, the complainants renounced their claim for damages, and the parties went into proof in respect to the profits. It was shown that on October 3, 1899, Ferdinand E. Canda, the patentee, assigned a one-half interest in his patent to the co-complainant, Charles J. Canda, and it came to be owned by them as a partnership. The complainants offered proof to show infringement and damages occurring before the assignment as well as subsequent thereto. Objection was made by the defendant to the proof concerning the period before the assignment. The master in his report divided the whole period of infringement covered by the evidence into three parts: First, that before the assignment; second, that directly following and continuing until the end of the time during which sales were made and profits realized; and, third, a subsequent space of time during which the defendants manufactured casing for a customer who never paid for them, and from whom the debt is uncollectible. For the first period the master found the profits to be $6,905.41, for the second $11,659.50, and the losses from the manufacture in the third to be $6,634.56. The master reported against the allowance of a recovery for the profits accruing during the first period, and in favor of their allowance for the second period; and he also reported in favor of a contention for the defendant that the losses of the third period should be deducted from the profits allowed for the second period. The result was a balance in favor of the complainant of $5,024.94. Exceptions to the report were filed by each party. So far as some of these are material, they will be mentioned later on; but for our immediate purposes it should be stated that the court sustained the complainants' exception to the master's disallowance of the profits for the first period, but overruled the complainant's exception to the master's deduction of the losses of the third period. Having also overruled exceptions to the allowance of the profits for the second period, the court rendered a decree upon this adjustment in favor of the complainant for the sum of $11,930.35. Both parties have appealed.

1. The first question in its order to be considered is whether the complainants were entitled to recover the profits made during the period of infringement while Frederick J. Canda was the sole owner of the patent. The master was of opinion that they could not be recovered in this suit because the other complainant had no interest in them; but the court held otherwise, and allowed them, and we think that in this the court was in error. The general rule is that all the parties suing must have an interest in the recovery in order to warrant a judgment therefor in their favor. Even if that were permissible, the bill did not seek to recover a several decree in favor of one of the complainants for one part of the profits, and a joint decree for another. On the contrary, the complaint was of infringement after the date of the assignment. In support of the ruling of the court in this particular, the learned judge cited Moore v. Marsh, 7 Wall. 515, 19 L. Ed. 37; but that case is not in point for the complainants. The patentee, some time after getting his patent, assigned a one-half interest therein to another party. Subsequently the patentee brought a suit to recover damages for infringement committed before the assignment.

The defendant pleaded the assignment, and insisted that, as at the bringing of the suit another party had become interested in the patent, such other party should have been joined as plaintiff. But the Supreme Court held otherwise, and Mr. Justice Clifford, at page 522 of 7 Wall. (19 L. Ed. 37), said:

"It is clear that unless the plaintiff can maintain the action there can be no redress, as it is too plain for argument that a subsequent assignee or grantee can neither maintain an action in his own name, or be joined with the patentee in maintaining it for any infringement of the exclusive right committed before he became interested in the patent. Undoubtedly the assignee thereafter stands in the place of the patentee, both as to right under the patent and future responsibility; but it is a great mistake to suppose that the assignment of a patent carries with it a transfer of the right to damages for an infringement committed before such assignment."

In the case of Adams v. Bellaire Stamping Co. (C. C.) 25 Fed. 270, cited by counsel for complainants, the suit was brought by a single plaintiff, who was assignee of the patentee, and was also assignee of the damages for prior infringements. The question was whether he could recover for prior and for subsequent infringements and Judge Sage held that he could. This was because he was the assignee of the patentee's damages. The court below erred in including the profits for this period in the recovery, and the decree must be corrected accordingly.

2. The court below also erred in sustaining the defendant's claim of a deduction for the losses incurred by said defendant during the third period of the reckoning, and in deducting those losses from the profits which the complainants were otherwise entitled to recover. In the opinion of the court, the cases of the Cawood Patent, 94 U. S. 710, 24 L. Ed. 238, and Rubber Company v. Goodyear, 9 Wall. 788, 19 L. Ed. 566, are cited as authority for the ruling; but these cases only hold that losses occurring concurrently with the gaining of profits may be taken into account-that is to say, if they are losses directly resulting from the particular transaction on which the profits are allowed. Though called losses, they are really diminutions which are taken into account in reaching the resultant profits of the sales on which profits were made. The general statements made by the justices who delivered the opinions in the cases last cited, and which are here relied on as authority for the claim that all the transactions running through several years are to be looked to, and the profits and losses of a continuous business are to be balanced for a result, do not sustain such a contention. The meaning and authority of such general statements should be limited by the facts of the case in which they were expressed. And it is necessary to impose such limitations in order to make the statements consistent with the law as since declared by the same court. Callaghan v. Myers, 128 U. S. 617, 664, 9 Sup. Ct. 177, 32 L. Ed. 547; Crosby Valve Co. v. Safety Valve Co., 141 U. S. 453, 12 Sup. Ct. 49, 35 L. Ed. 809; Walker on Patents (4th Ed.) § 713.

3. It appears that the proofs before the master included the profits on the bottom plate of the casing, and the report of the master included them. To this the defendant filed an exception, which was overruled by the court. The second claim of the patent included the bottom plate in the combination. The first did not. By reference to our former