1. The assignee of a chose in action cannot proceed in equity to
enforce, for his own use, the legal right of his assignors merely
upon the ground that he cannot maintain an action at law in his own
name. So
held where the owner of letters patent assigned
them, together with all claims for damages by reason of the
previous infringement of them, and the assignee filed his bill to
recover such damages.
2.
Root v. Railroad Company, 106
U. S. 189, cited and approved.
The case is stated in the opinion of the Court.
MR. JUSTICE MATTHEWS delivered the opinion of the Court.
This appeal brings into review the decree of the circuit court
sustaining a general demurrer to the amended bill of the
complainant and dismissing the bill for want of equity.
The case made by the amended bill and exhibits is this:
Page 106 U. S. 673
Aaron H. Allen was the owner of reissued patent No. 1,126
granted to him upon the surrender of original patent No. 12,017,
dated December 5, 1854, for a new and useful improvement in seats
for public buildings, which was extended for seven years from
December 5, 1868, and which consequently expired by limitation
December 4, 1875. The complainant claimed to be the sole and
exclusive owner in equity of all claims for damages arising out of
or occasioned by infringements of said reissued letter patents
committed after September 18, 1869, and of all claims for gains and
profits, derived by others by reason of such infringements, by
virtue of certain written instruments, set out as exhibits to the
bill.
The first of these is an instrument dated September 18, 1869, by
which Allen grants to J. W. Schermerhorn & Co. "the sole right
and privilege of manufacturing and selling school furniture, made
according to" the reissued patent "for a tilting seat on the lever
principle," subject to the terms and conditions of an indenture
between the parties, which, however, is not set out. On April 22,
1881, John H. Platt, as assignee of James W. Schermerhorn, George
M. Kendall, and George Munger, bankrupts, transfers to the
complainant all the interest of the bankrupts in the Allen patent,
and all causes of action arising to him, as assignee of the
bankrupts, by reason of his interest in the said patent, and
especially his claim in a certain suit then pending, brought by
Allen in the Circuit Court of the United States for the Southern
District of New York against the City of New York.
The second and only other instrument of title exhibited is an
assignment from Allen, the patentee, to the complainant dated March
8, 1880, whereby Allen transfers to him and to his assigns all his
right and interest in the suit, mentioned in the assignment from
Platt, against the City of New York,
"together with all claims for damages arising since the
eighteenth day of September, 1869, against any persons, firms, or
corporations, by reason of infringements of letters patent of the
United States for a tilting seat supported on the lever
principle,"
being the reissued patent specified in the bill. And the
complainant is thereby further constituted the attorney in fact of
Allen irrevocably, in his name to demand and recover all such
damages,
Page 106 U. S. 674
for his own use, paying all expenses, but accounting for thirty
percent of all sums recovered to Allen until the latter shall have
received $6,600, and no longer.
It is alleged in the amended bill that in the suit against the
City of New York a decision was reached sustaining the validity of
the patent, but no final decree therein has been entered, and that,
owing to the delays incident to that litigation while waiting for a
decision upon the validity of the patent, neither Allen nor
complainant have been in a situation to prosecute other infringers
or sooner to file this bill. It is also alleged in the amended bill
that the defendants have infringed the said letters patent since
September 18, 1869, and until the expiration thereof, and in
violation thereof
"have manufactured, sold, and used the said invention for
improvements in seats for public buildings, patented as aforesaid,
whereby great injury resulted to your orator, and great gains and
profits accrued to the said defendants,"
for which, accordingly, an account is prayed, and a decree for
the amount thereof and for damages.
The original bill was filed December 1, 1881, Allen being a
co-complainant, and the amended bill on May 25, 1882, the original
bill having been dismissed as to Allen.
It is manifest that the right claimed by the complainant
receives no support from any title derived from Allen through J. W.
Schermerhorn & Co., for the right of the latter under the
instrument of Sept. 18, 1869, was that of mere licensees. They
could maintain no action for damages or profits against infringers,
for they had no interest in the patent, nor was there any
assignment to them of any right of action accrued or to accrue to
Allen. In addition to this, the license itself only extended to the
manufacture and sale of school furniture, and there is no
allegation in the amended bill that the defendants had infringed
the patent in that respect. That branch, therefore, of the
complainant's bill is removed from the case, and he is relieved
from the embarrassment which, it is alleged in argument, is
occasioned by the uncertainty produced by alternative and
inconsistent titles, and which is made one of the grounds for
claiming the right to resort to equity. The case, then, is left to
stand upon the right derived under
Page 106 U. S. 675
the contract between Allen and the complainant of March 8, 1880,
and the single question remains whether the assignee of a chose in
action may proceed by bill in equity to enforce for his own use the
legal right of his assignor merely because he cannot sue at law in
his own name.
It is admitted that according to the rule declared and
established in
Root v. Railroad Company, 105 U.
S. 189, the patentee could not, in his own name and
right, maintain the present suit, and the original bill, in which
he was a co-complainant with the appellant, was accordingly
dismissed as to him. To permit the latter to proceed in equity upon
the mere ground of the assignment to him would be substantially to
abrogate that rule. The principle was stated to be that the relief
granted to a patentee in equity by the recovery of profits and
damages against an infringer was "incidental to some other equity,
the right to enforce which secures to the patentee his standing in
court;" that
"the most general ground for equitable interposition is to
insure to the patentee the enjoyment of his specific right by
injunction against a continuance of the infringement, but that
grounds of equitable relief may arise other than by way of
injunction,"
and among these, by way of illustration, was mentioned that
"where the title of the complainant is equitable merely;" but it is
the obvious meaning of the passage to limit the exception to cases
where the purpose and necessity of the resort to a court of
chancery are to enforce the peculiar equity personal to the
complainant, and not merely the legal right of which he is the
beneficial owner. If the assignee of the chose in action is unable
to assert in a court of law the legal right of the assignor, which
in equity is vested in him, then the jurisdiction of a court of
chancery may be invoked, because it is the proper forum for the
enforcement of equitable interests and because there is no adequate
remedy at law; but when, on the other hand, the equitable title is
not involved in the litigation, and the remedy is sought merely for
the purpose of enforcing the legal right of his assignor, there is
no ground for an appeal to equity because, by an action at law in
the name of the assignor, the disputed right may be perfectly
vindicated and the wrong done by the denial of it fully redressed.
To hold otherwise would be to enlarge the jurisdiction of courts of
equity to an extent the limits of which could
Page 106 U. S. 676
not be recognized, and that in cases where the only matters in
controversy would be purely legal rights.
In opposition to this view, a passage from Story Eq.Jur. sec.
1057
a, is cited and relied on in argument, in which that
learned author, after stating that it had been
"recently held that the assignee of a debt not in itself
negotiable is not entitled to sue the debtor for it in equity
unless some circumstances intervened which show that his remedy at
law is or may be obstructed by the assignor,"
adds that
"this doctrine is apparently new, at least in the broad extent
in which it is laid down, and does not seem to have been generally
adopted in America. On the contrary, the more general principle
established in this country seems to be that wherever an assignee
has an equitable right or interest in a debt or other property (as
the assignee of a debt certainly has), then a court of equity is
the proper forum to enforce it, and he is not to be driven to any
circuity by instituting a suit at law in the name of the person who
is possessed of the legal title."
In the next paragraph, however, it is admitted that
"If the assignment be of a contract involving the consideration
and ascertainment of unliquidated damages, as in case of the
assignment of a policy of insurance, then, unless some obstruction
exists to the remedy at law, it would seem that a court of equity
ought not or might not interfere to grant relief, for the facts and
the damages are properly matters for a jury to ascertain and
decide. But the same objection would not lie to an assignment of a
bond or other security for a fixed sum."
The doctrine referred to in this passage as "apparently new" is
that stated by Vice-Chancellor Shadwell in
Hammond v.
Messenger, 9 Sim. 327, 332, where he said:
"If this case were stripped of all special circumstances, it
would be simply a bill filed by a plaintiff who had obtained from
certain persons, to whom a debt was due, a right to sue in their
name for the debt. It is quite new to me, in such a simple case as
that, this Court allows, in the first instance, a bill to be filed
against the debtor by the person who has become the assignee of the
debt. I admit that if special circumstances are stated and it is
represented that notwithstanding the right which the party has
obtained to sue in the name of the creditor, the creditor
Page 106 U. S. 677
will interfere and prevent the exercise of that right, this
Court will interpose for the purpose of preventing that species of
wrong being done, and if the creditor will not allow the matter to
be tried at law in his name, this Court has a jurisdiction in the
first instance to compel the debtor to pay the debt to the
plaintiff, especially in a case where the act done by the creditor
is done in collusion with debtor. If bills of this kind were
allowable, it is obvious they would be pretty frequent; but I never
remember any instance of such a bill as this being filed
unaccompanied by special circumstances."
And accordingly, the Supreme Judicial Court of Massachusetts, in
Walker v. Brooks, 125 Mass. 241, held that
"A court of equity will not entertain a bill by the assignee of
a strictly legal right merely upon the ground that he cannot bring
an action at law in his own name, nor unless it appears that the
assignor prohibits and prevents such an action from being brought
in his name, or that an action so brought would not afford the
assignee an adequate remedy."
And Chief Justice Gray, delivering its opinion in that case,
referring to the passage from Story to the contrary, said:
"But the adjudged cases, including those cited by the learned
commentator, upon being examined, fail to support his position, and
show that the doctrine of
Hammond v. Messenger is amply
sustained by earlier authorities in England and in this
country."
This conclusion he then verifies by a review of the cases from
the time of Lord Chancellor King, whose decision in
Dhegehoft
v. London Assurance Co., Mos. 83, was affirmed in the House of
Lords, 4 Bro.P.C. (2d ed.) 436, followed by Lord Hardwicke, in
Motteaux v. London Assurance Co., 1 Atk. 545, and Lord
Loughborough, in
Caton v. Burke, 1 Bro.Ch. 434, to
Vice-Chancellor Knight Bruce, in
Rose v. Clarke, 1 You.
& Col. 534; and in this country from
Carter v. United
Insurance Co., 1 Johns.Ch. (N.Y.) 463, by Chancellor Kent, and
Ontario Bank v. Mumford, 2 Barb. (N.Y.) Ch. 596, 615, by
Chancellor Walworth, including several others in various states. He
then points out that in
Riddle v.
Mandeville, 5 Cranch 322, the principal case cited
by Mr. Justice Story in support of his statement, a bill in equity
by an endorsee of a promissory note against a remote endorser was
sustained by this
Page 106 U. S. 678
Court, upon the ground that in Virginia, the law of which
governed the case, no remedy at law could be had against him,
except by the circuitous course of successive actions by each
endorsee against his immediate endorser, and that, in that
particular case, the intermediate party was insolvent, and that
Chief Justice Marshall, who delivered the opinion in that case, did
not consider it as establishing the general proposition for which
it was cited, was manifest from his opinion in the later case of
Lenox v.
Roberts, 2 Wheat. 373, in which the assignee of all
the property of a banking corporation was allowed to maintain a
bill in equity in his own name upon a promissory note which had not
been formally endorsed to him, for the reason that, "as the act of
incorporation had expired, no action could be maintained at law by
the bank itself."
The same doctrine had received a pointed application by this
Court in the case of
Thompson v. Railroad
Companies, 6 Wall. 134. That case was commenced in
the state court in Ohio, by the parties in interest, in their own
name, although only beneficially entitled, in accordance with the
Code of the state. It was removed into the circuit court, where the
plaintiffs filed a bill in equity, because their title was
equitable merely. A decree in their favor, on appeal, was reversed
by this Court; Mr. Justice Davis remarking, in the opinion, that
"this case does not present a single element for equitable
jurisdiction and relief," and added:
"The absence of a plain and adequate remedy at law is the only
test of equity jurisdiction, and it is manifest that a resort to a
court of chancery was not necessary in order to enable the railroad
companies to collect their debt."
That decision has been cited with approval in the subsequent
cases of
Walker v.
Dreville, 12 Wall. 440;
Van Norden
v. Morton, 99 U. S. 378, and
Hunt v. Hollingsworth, 100 U. S. 100.
In the present case, the complainant had a plain and adequate
remedy at law by an action in the name of Allen whose willingness
to permit his name to be so used, in accordance with his agreement
to that effect, is manifest from the fact that in the original bill
he was named as one of the complainants.
Page 106 U. S. 679
There was therefore no error committed by the circuit court in
dismissing the amended bill for want of jurisdiction in equity.
Decree affirmed.