N.Y. Life Ins. Co. v. Fletcher, 117 U.S. 519 (1886)

The New York Life Insurance Company, on the 22d of December, 1877, issued at its home office in the city of New York to Chinonda S. Alford a policy of insurance upon his life for the sum of $10,000. The consideration was $263.80 paid at the time, and the promise to pay a like sum on the 22d of December each year. The company is a corporation under the laws of New York, but it also transacts business in Missouri through agents residing there, and, of course, with reference to the business done in that State, is subject to its laws. The assured was a resident of Missouri, and in December, 1877, he applied to an agent of the company there for p. 520such a policy, and submitted to an examination. He also made certain statements and representations respecting himself, his life, and his past and present health, to which he appended a declaration, warranting their truthfulness and agreeing that they should be the basis of any contract between him and the company, and that if they, or any of them, were in any respect untrue, the policy which might be issued thereon should be void, and that all moneys paid on account of the insurance should be forfeited; and further agreeing, that, inasmuch as only the officers at the home office had authority to determine whether or not a policy should issue on any application, and as they acted only on the Written statements and representations referred to, no statements or representations made or information given to the persons soliciting or taking the application for the policy, should be binding on the company or in any manner affect its rights, unless they were reduced to writing and presented at the home office in the application. The statements and representations with this declaration accompanying the application and forming a part of it, were forwarded to the home office. The policy was thereupon issued and sent to its agent at St. Louis for delivery to the assured. It recited that it was issued in consideration and upon the faith of the statements and representations contained in his application; all of which had been warranted by him to be true, and also in consideration of the cash payment and the annual premiums to be paid. It stipulated for the payment of the amount of the insurance within sixty days after due notice and satisfactory proof of his death, subject to the conditions specified therein. To the policy was annexed a copy of the application, and upon it was endorsed the following notice in red type and conspicuously printed:

The plaintiff replied that two agents of the company at St. Louis, who were personally acquainted with the assured and p. 522•522 OCTOBER TERM, 1885.

knew his past and then physical condition, had solicited him on different occasions to take out a policy in the company; that he told each of them on those occasions that he did not believe he was insurable; that they knew he had been in bad health and had been under medical treatment for diabetes, though he thought he was then well; that they assured him that he was insurable, that the fact that he had had the disease made no difference, and that if he would take out a policy and pay the premiums required he would have no trouble; that finally, about the 18th of December, 1877, he consented to take a policy; that they then told him it would be necessary for him to answer certain questions as a matter of form ; that one of them thereupon read to him certain questions from a printed blank, and as he answered them the other pretended to take down and write in the blank the substance of the answers as given, not reading over to the assured what he had written, nor consulting him about it, nor informing him what it was, but saying that what he did was a mere formality; that when he was asked with respect to his having had any disease of the kidneys he replied that his condition was well known to the agents, who were aware that he had been sick and under treatment by Doctor Brokaw for diabetes, and that the doctor’s office was opposite, and they could go there and find out everything they wanted to know; that the assured had faithfully answered all the questions, but the agents inserted in the blanks false answers ; that he had no reason to suppose that the answers were taken down differently from those given; that after answering all their questions he was asked to sign his name to the paper to identify him as the party for whose benefit the policy was to be issued, and for that purpose he signed the paper twice, without reading it or the written answers ; that the agents did not read to him any part of the application except the questions, and did not read the clause set forth in the defendant’s answer, nor call attention to the fact that his signatures wTere intended as an acceptance or assent to that clause; that when the policy was delivered to him he neither read it nor the copy of the application attached to it; that the agent who delivered it informed him that it was p. 523all right, and he was insured, and he gave no further attention to the matter; that the annual premiums, as they fell due, were paid to said agent, who received them with full knowledge of all the facts; and that, therefore, the company was estopped from pretending that any of the answers as written rendered the policy void.

The law of Missouri provides that “no misrepresentation made in obtaining or securing a policy of insurance on the life or lives of any person or persons shall be deemed material or render the policy void unless the matter misrepresented shall have actually contributed to the contingency or event on which the policy is to become due and payable, and whether it so contributed in any case shall be a question for the jury;” Rev. Stat., Missouri, 1879, § 597B; and that in suits brought upon life policies “ no defence based upon misrepresentation in obtaining or securing the same shall be valid, unless the defendant shall, at or before the trial, deposit in court, for the p. 524benefit of the plaintiffs, the premiums received on such policies.” Id. § 5977.

1. That it is competent for any party, corporation, or individual, employing an agent in the negotiation of a contract, whether of insurance or otherwise, to limit his powers, p. 525provided the limitation is brought home to the knowledge of the other contracting party, otherwise the principal will be bound by the apparent as well as the actual powers of the agent; and as, in this case, the limitation was made a part of the contract between the parties, it was binding upon them.

3. That whether the statements and answers contained in the application of the assured were made by him or not, yet when he afterwards received the policy, with a copy of the application attached and a memorandum endorsed thereon, calling his attention to the copy thus attached, with a request that any errors in the application be reported to the company for correction, it was his duty to report any answers incorrectly written down and thus enable the company to correct them; and that by his failure to do so he must be presumed to have accepted the policy upon the faith of the answers, and to have acquiesced and agreed that it should remain as the basis of the contract of insurance. But the court refused to give any of these instructions, and the defendant excepted. It recognized, however, in its charge, the competency of the company to limit the powers of the agent, and the binding force of the limitation if brought home to the other contracting party, and instructed the jury that there was such limitation in the present case; that the company was not bound by any representations to or by the assured, unless they were put in writing and submitted to the company; that, therefore, what was contained in the application must be regarded as constituting the basis of the contract, unless it could be avoided for fraud ; that if the jury found that at the time of making the application he told the agent that he had had diabetes and referred him to his physician concerning it, and that such agent committed a fraud upon the assured by inserting false answers in the application p. 526and by suppressing the answers actually given, and by concealing from the assured what he had written in the application, and thereby induced him to sign it without knowing what it contained, then the plaintiff was not estopped to recover. The court also charged that if the assured ascertained before the contract was consummated, that is, before the policy was delivered to him and the first premium paid, that the agent had committed a fraud upon him and upon the company, it was his duty to stop and decline to go any further with the transaction; but if he did not discover this before the policy was delivered and the first premium paid, he was not called upon afterwards to take any steps for the cancellation of the contract. To this the defendant excepted. The plaintiff obtained a verdict for the full amount of the insurance money with interest, upon which judgment was rendered.

I. The contract of insurance in this case is a Missouri contract and to be determined by the laws of that State, (a.) The cause of action undoubtedly accrued in Missouri, where the death occurred. Rippstein v. St. Louis Mutual Life Insurance Co., 57 Missouri, 86. (5.) As the New York Life Insurance Company could only do business in Missouri on terms prescribed by the laws of Missouri, Paul v. State of Virginia, 8 Wall. 168, when it issued policies or did business in that State, it subjected itself to the laws thereof, and its contracts of insurance, made under the license granted by the State to do business therein, are to be interpreted according to the laws of Missouri. Its policies, solicited by its agents in Missouri, are entered into and accepted by the citizens of Missouri, with a view to the local law, and are to be interpreted thereunder. Pritchards. Norton, 106 IT. S. 124 ; Bank of Augusta v. Earle, 13 Pet. 519; Taylor v. Holmes, 14 Fed. Rep. 505. So held uniformly by United States courts in Missouri since the passage of the act of March 23, 1874, Rev. Stat. Missouri, 1879, p. 527§§ 5976, 5977. White n . Connecticut Mutual Life Insurance Co., 4 Dillon, 177; Fletcher v. New York Life Insurance Co., 13 Fed. Rep. 526. See also Holmes v. Charter Oak Life Insurance Co., 131 Mass. 64. It follows that §§ 5976, 5977 Rev. Stat. Missouri apply to this contract, and under them it is to be noted: (1) that the doctrine of warranty as Understood in insurance contracts, is done away with, and misrepresentation is not to be deemed material, unless the matter misrepresented actually contributed to the loss, which is to be determined by the jury, see § 5976 ; nor 2d, shall such defence be available, unless the defendant at or before the trial, tenders or returns the premiums received. See § 5977. See White v. Conn. Mut. Life Ins. Co. supra.

It is conceded that the statements and representations contained in the answers, as written, of the assured to the questions propounded to him in his application, respecting his past and present health, were material to the risk to be assumed by the company, and that the insurance was made upon the faith of them, and upon his agreement accompanying them that, if they were false in any respect, the policy to be issued upon them should be void. It is sought to meet and overcome the force of this conceded fact by proof that he never made the statements and representations to which his name is signed; that he truthfully answered those questions; that false answers written by an agent of the company were inserted in place of those actually given, and were forwarded with the application • to the home office ; and it is contended that, such proof being made, the plaintiff is not estopped from recovering. But on the assumption that the fact as to the answers was as stated, and that no further obligation rested upon the assured in connection with the policy, it is not easy to perceive how the p. 529company can be precluded from setting up their falsity, or how any rights upon the policy ever accrued to him. It is, of course, not necessary to argue that the agent had no authority from the company to falsify the answers, or that the assured could acquire no right by virtue of his falsified answers. Both he and the company were deceived by the fraudulent conduct of the agent. The assured was placed in the position of making false representations in order to secure a valuable contract which, upon a truthful report of his condition, could not have been obtained. By them the company was imposed upon and induced to enter into the contract. In such a case, assuming that both parties acted in good faith, justice would require that the contract be cancelled and the premiums returned. As the present action is not for such a cancellation, the only recovery which the plaintiff could properly have upon the facts he asserts, taken in connection with the limitation upon the powers of the agent, is for the amount of the premiums paid, and to that only would he be entitled by virtue of the statute of Missouri.

In Loehner v. Home Mutual Insurance Co., the Supreme Court of Missouri passed upon this point. 17 Missouri, 247, 256. The charter of that company provided that, if the assured failed to state in his application, which was made a part of the policy, any encumbrance that existed on the insured premises, his policy should be void. There was also endorsed on the policy a memorandum that the company would not be bound by any statement of the agent unless contained in the application. The answer to the action on the policy set up that the application did not truly state the encumbrances. A small encumbrance upon the premises was not stated, and on the trial evidence was offered that its existence was made known to the agent of the company7 at the time of the application, but that he refused to write it down, saying that the amount was too trifling. The evidence was excluded, and the Supreme Court sustained the ruling, holding that the objection that the encumbrance was not stated could not be obviated in that way. “ Independently of the statute of the State,” said the court, “ which required the encumbrance to be expressed in p. 531the policy at the peril of its being void, there was a memorandum endorsed on it which made known that the company would be bound by no statement made to the agent not contained in the application. The facts being as represented, they could not give the plaintiffs a right of action on the policy in the teeth of the statute and against the terms of the contract. If the conduct of the agent was such as is alleged, he was guilty of a gross fraud, as is shown by his setting up this defence, which would avoid the policy and give a right of action for the recovery of the premium, but could not, for the reason given, entitle the plaintiff to an action on the policy.”

The case of Ryan v. World Mutual Life Ins. Co., 41 Conn. 168, is in some respects similar to the one before us. There a p. 532policy obtained on the life of Patrick Ryan for the benefit of his wife declared that it was issued and accepted on the condition and agreement that the statements and declarations made in the application therefor, and on the faith of which it was issued, were in all respects true. The application was a part of the policy. It appeared that when the application was made, he was asked whether he had had any of the following diseases: bronchitis, consumption, spitting of blood, or any serious diséase, and the answer, as written, was that he had bad “ none of them.” To the enquiry whether, during the previous seven years, he had had any severe sickness or disease, or had employed or consulted any physician, the answer as "written was “ no.” The authority of the agent was limited to receiving the application, forwarding it to the home office, receiving, countersigning, and delivering the policy, and collecting the premiums. The insured having died, action upon the policy was brought by his widow. On the trial she offered to prove, not that the answers were true, but that different answers "were in fact given, both by her and him, and that the answers were wrongly written by the local agent of the company without the knowledge or consent of herself or her husband. The application was signed without being read. It was held that the company was not bound by the policy; that the power of the agent would not be extended to an act done by him in fraud of the company and for the benefit of the insured, especially where it was in the power of the assured by reasonable diligence, to defeat the fraudulent intent; that the signing of the application without reading it or hearing it read, was inexcusable negligence; and that a party is bound to know what he signs. After observing that the courts of the State had construed the powers of an insurance agent liberally, and held that, in writing the application and explaining interrogatories and the meaning of the terms used, he was to be regarded as the agent of the company, and, referring to the case of Insurance Company v. Wilkinson, in 13th Wallace, the court said: “ But it cannot be supposed that these defendants intended to clothe this agent with authority to perpetrate a fraud upon themselves. That he deliberately intended to defraud them is p. 533manifest. He well knew that if correct answers were given no policy would issue. Prompted by some motive he sought to obtain a policy by means of false answers. His duty required him not only to write the answers truly as given by the applicant, but also to communicate to his principal any other fact material to the risk which might come to his knowledge from any other source. His conduct in this case was a gross violation of duty, in fraud of his principal, and in the interest of the other party. To hold the principal responsible for his acts, arid assist in the consummation of the fraud, would be monstrous injustice. When an agent is apparently acting for his principal, but is really acting for himself or third persons, and against his principal, there is no agency in respect to that transaction, at least as between the agent himself, or the person for whom he is really acting, and the principal. , . The fraud could not be perpetrated by the agent alone. The aid of the plaintiff or the insured, either as an accomplice or as an instrument, was essential. If she was an accomplice, then she participated in the fraud, and the case falls within the principle of Lewis v. The Phoenix Mutual Life Lns. Co., 39 Conn. 100. If she was an instrument she was so because of her own negligence, and that is equally a bar to her right to recover. She says that she and her husband signed the application without reading it and without its being read to them. That of itself was inexcusable negligence. The application contained her agreements and representations in an important contract. When she signed it she was bound to know what she signed. The law requires that the insured shall not only, in good faith, answer all the interrogatories correctlv, but shall use reasonable diligence to see that the answers are correctly written. It is for his interest to do so, and the insurer has the right to presume that he will do it. He has it in his power to prevent this species of fraud and the insurer has not.” 41 Conn. 171, 172. With these views we fully agree.

The instruction given to the jury in the case before us is, in effect, that the assured was bound by his application if it was not avoided for fraud, and that it was so avoided by reason of the false statements contained in it, and that, therefore, the p. 534plaintiff, as his representative, could recover. But if the application was avoided, it would seem to be a necessary consequence that the policy itself was also avoided, and his right limited to recovering the premiums paid. But such was not the conclusion of the court. It directed the jury that if the application was avoided for fraud, he could recover. It does not seem to have occurred to the court that had the answers been truthfully reported, and the fact of the assured having had diabetes within a recent period been thus disclosed, the insurance would in all probability have been refused. If the policy can stand with the application avoided, it must stand upon parol statements not communicated to the company. This, of course, cannot be seriously maintained in the face of its notice that only statements in writing forwarded to its officers would be considered. A curious result is the outcome of the instruction. If the agents committed no fraud the plaintiff cannot recover, for the answers reported are not true; but if they did commit the imputed fraud he may recover, although, upon the answers actually given, if truly reported, no policy would have issued. Such anomalous conclusions cannot be maintained.

The court charged the jury that if the assured had discovered the fraud before the policy was delivered and the first premium paid, it would have been his duty to decline to go any further with the transaction; but if he did not discover the fraud until after such delivery and payment, he was not called upon to take any steps for the cancellation of the p. 535contract. In other words, the jury were told that the assured might take to himself the benefit of the fraud without responsibility for it, if he did not discover it until after it was consummated—a doctrine without authority and wholly indefensible. No one can claim the benefit of an executory contract fraudulently obtained, after the discovery of the fraud, without approving and sanctioning it.

The case of Richardson n . Maine Ins. Co., 46 Maine, 394, is a stronger one in illustration of this doctrine of acceptance. There an application for insurance "was made to an agent of the company. He thereupon filled one containing a statement that there was no mortgage on the property to be insured, and without the knowledge of the applicant signed his name thereto. A policy was accordingly issued, which declared that it was made and accepted in reference to the p. 536application, and that the assured, by accepting it, covenanted that the application contained a just, full, and true statement of all the facts and circumstances in regard to the condition, situation, value, and risk of the property insured, and that if any fact or circumstance were not fairly represented, the policy should be void. Action having been brought upon the policy, the company denied its liability on the ground that the application had represented that there was no such mortgage, when in fact, one existed. The court held that the assured, by accepting the policy, was bound by its covenants, and that he ratified the application.

Claim 1 of reissued letters patent No. 4696, granted to James Sargent, January 2, 1872, for an “ improvement in locks,” on an application filed September 25, 1871, the original patent, No. 57,574, having been granted to him August 28, 1866, namely, “1. In a combination lock for safe or vault doors, a bolt, I, which turns on a pivot or bearing, when said bolt, 1, is used in a lock having no ordinary sliding lock-bolt, and in connection with the separate bolt-work of the door, and so arranged as to receive the pressure of the said bolt-work without transmitting it to the wheels or other equivalent works of the lock,” is not invalid, as being an unlawful expansion of claim 1 of the original patent, namely, “ 1. The rotating tumbler I, when separated and isolated in action from the permutation wheels, and so arranged that any inward pressure upon the bolt will be exerted upon the bearing of p. 537said tumbler, and have no action nor effect upon the said permutation wheels, substantially as and for the purpose herein specified.”

This is a suit in equity, brought in the Circuit Court of the United States for the Southern District of New York, by James Sargent against the Yale Lock Manufacturing Company, to recover for the infringement of reissued letters patent p. 538No. 4696, granted to Sargent, January 2, 1872, for an “improvement in locks,” on an application therefor filed September 25, 1871 (the original patent, No. 57,574, having been granted to him August 28, 1866).

A, represents the plate of a safe door, and B, the case of the lock which is applied thereto. C, C, C, are the combination-wheels* and D, the operating spindle. The spindle passes through a hollow stud, a, of the case, and has screwed upon its inner end the cam E, as shown most clearly in Fig. 6. The wheels themselves rest on the stud a. I, is the bolt, turning on a pivot or bearing, q. Its location is such as to rest closely in the rear of the stem, t, of the heavy bolt work of the door, and to hold it out when in one position, but to allow it to retract, to free the bolt-work, when in the other position, said bolt, I, turning on its pivot or bearing to allow this to be done. H is a sliding-bar, which gives motion to the bolt as it is thrown forward or backward, being connected together by cog-teeth p r. The bar slides on studs, n n, by which it keeps p. 539its horizontal position. G is a lever pivoted at f, to bar IL and serving to throw the latter back. It has a hook, 6, Fig. 2, which engages with the bit, d, of the cam, to draw the bar back. The forward motion is given by the cam striking the end o, of the bar IL L is a magnet of thè form shown in Fig. 5, which is suspended on a pivot, i. Its open end rests between armatures h k, which are separated by a brass pendant, I. The armature h is attached to the end of lever G. When the magnet is in contact with the lower armature, h, the dog, g, will be held away from the wheels ; but when raised and brought in contact with the upper armature, k, the lever is released and the dog is then allowed to fall into the notches of the wheels, to release the bolt. The magnet is raised by a roller, c, of the cam, which strikes a bearing, m, of the magnet.

The bolt may not only be of the circular form shown in the p. 540drawings, but of a segmental form, which will serve the same purpose.

I am aware that the combination-wheels themselves have been made with notches, and so arranged that the ordinary sliding-bolt which rests against their edges may fall back and p. 541within the notches, when they are all set. Such is not the equivalent of my invention, as my express purpose is to avoid all contact of the bolt with the edges of the wheels.”

“ 1. The rotating-tumbler 7, when separated and isolated in action from the permutation-wheels, and so arranged that any p. 542inward pressure upon the bolt will be exerted on the bearing of said tumbler, and have no action nor effect upon the said permutation wheels, substantially as and for the purpose herein specified.

The defendant directs attention to these facts: When Sargent applied originally for his patent, on February 6, 1866, he asked for claim 1 in this form : “ The turning-bolt I, resting on its bearing q, in combination with the mechanism of a combination lock, in such manner as to practically isolate or disconnect it from the main operating parts, substantially as set forth.” Claim 1 having been rejected on the 24th of March, 1866, Sargent, on the ‘29th of June, 1866, changed the claim to the form it has in the original patent as issued, and his attorneys at the same time, in a letter to the Patent Office, explained the new form of claim thus: “ The substance of the first substituted claim consists essentially in providing a rotating tumbler in connection with the bearing on which it rests and the stem of the bolt-work which rests against it, when said tumbler is isolated or disconnected from the combination-wheels, so that any inward motion of the bolt against this tumbler will expend its force against the bearing on which the tumbler turns and rests, and will not reach or affect the permutation-wheels.” The attorneys also said: “ In Mr. Sargent’s device it will be observed that the combination or permutation-wheels are on a different bearing, and located at a distance from the revolving tumbler I, and never in contact therewith, so that the two are practically isolated from each other, and there is no connection between them except through the lever II, which is not within the reach or influence of the pick-lock.” And the specification p. 543of the original patent contained this language: “ The principal advantage of this tumbler consists in its isolation, so to speak, from the combination-wheels and the main working parts. It rests alone on its bearing q, the only part connected . being the cog-bar IL In ordinary locks the sliding-bolt extends back in direct connection with the main working mechanism, and by its constant action and the strain that comes upon it frequently disarranges those parts. This is especially true when the stem or projection t of the heavy bolt of the safe-door rests against the sliding bolt. In this case, when force is applied to the bolt, the wrenching strain upon the bolt and mechanism is very great. In my lock it will be seen that this difficulty is obviated, for any strain that comes upon the circular tumbler, either from the stem t or any other source, is simply expended upon the strong bearing y, and does not reach back to the combination-wheels or any part of the working mechanism. This is of the utmost importance.”

But we think the reissue is not fairly open to this objection. The tumbler in the one claim and the bolt in the other are the same instrument. The words “rotating-tumbler Z,” in the original claim, refer to the tumbler described as resting on a bearing “ around which it turns.” The claim of the reissue, in saying that the bolt I“ turns on a pivot or bearing,” expresses p. 544the same idea. The words in the claim of the reissue, “ when said bolt I is used in a lock having no ordinary sliding lock-bolt, and in connection with the separate bolt-work of the door, and so arranged as to receive the pressure of the said bolt-work without transmitting it to the wheels or other equivalent works of .the lock,” are justified by these words in the original claim, “and so arranged that any inward pressure upon the bolt will be exerted on the bearing of said tumbler, and have no action or effect upon the said permutation-wheels.” The word “ bolt ” in the claim of the original meant what in the claim of the reissue is called “ the separate bolt-work of the door,” because what is called in the former “ the rotating-tumbler I” is called in the latter “ a bolt, I, which turns on a ’pivot or bearing.” The proviso in the claim of the reissue* that the bolt I is to be “ used in a lock having no ordinary sliding lock-bolt” does not expand the claim, but, if anything, restricts it. The statement, in the claim of the reissue, that the bolt I is so arranged as to receive the pressure of the separate bolt-work of the door without transmitting it to the wheels, is justified by the statement in the original claim, that the rotating tumbler I is so arranged that any inward pressure upon the bolt will be exerted on the bearing of the tumbler, and have no action or effect on the permutation-wheels.

The invention of Sargent consists in combining with the p. 545ordinary combination-wheels, and the other working parts of a combination lock which has no sliding lock-bolt, a bolt turning on a pivot or bearing, which is so isolated or removed from contact with the said wheels, as to receive any pressure or strain which may be applied through the separate bolt-work of a safe door, and cut off the communication between the bolt-work of the door and the wheels or fence-lever of the lock, so that the position of the slots in the wheels cannot be determined, for picking the lock, as in the use of the ordinary sliding lock-bolt, which extends back so as to connect with the wheels. The turning-bolt is an incomplete cylinder, or one in which parts of the periphery are cut away. An extended part of the bolt-work of the door bears against a part of the complete periphery of the turning-bolt, in such manner that the turning-bolt receives all pressure and does not allow it to reach the combination-wheels. The ordinary sliding lock-bolt is, therefore, dispensed with.

In the Butterworth padlock, Exhibit E, there is a revolving-bolt combined with the wheel-tumblers by means of a lever, but there is no “ separate bolt-work of the door,” which is one element of the claim in Sargent’s reissue. Of this padlock the plaintiff’s expert, Mr. Henry B. Renwick, says : “ The padlock has the ordinary hasp attached to the case, and the bolt acts to prevent this hasp from being drawn away from the axis upon which the bolt revolves, and not to prevent bolt-works from being forced towards that same axis. The hasp is a contrivance which must be used with two staples, or one staple and a slotted bar, all of which must be outside of the door. Whereas, on the contrary, bolt-works must be inside of the door, and shoot into sockets in the jambs, it being clear that the hasp could not be used in place of bolt-works, or bolt-works in place of a hasp, even if the former were located outside of the door. I do not think that this lock would even suggest the idea of the combination referred to in the first claim of the Sargent reissue. In order to make the lock fit to be used in combination with bolt-works, even after such idea had been suggested, it would be necessary : First. To provide the lock-case with means of securing it to the door. Second. To elongate the spindle and so contrive it and the dial-plate that they could be separated from the wheel-tumblers and put together again, with the door between them. Third. To alter the direction of the slot in the p. 547case through which the hasp enters, so that the tail of the bolt-works could press upon the revolving-bolt in the line of a radius thereof. If the tail of bolt-works, were introduced into the present slot, any hammering of the bolt-works by the handle upon the periphery of the revolving-bolt would tend to turn-the revolving-bolt upon its axis, and thus cause the stump to be pressed upon the wheel-tumblers in such a manner as to facilitate picking, this result being due to the fact that the line of direction through the slot is not in line of the radius to the bolt, but in line of a sector thereof; further, the revolving-bolt in a padlock, owing to its being necessary that it should enter a slot in the hasp, is weakest at the very point where it should be strongest, if it were to be used in connection with bolt-work; and any good constructor would alter the revolving-bolt of the padlock, so that it would be strongest where it is now weakest, in case it was desired to use a revolving-bolt in combination with bolt works.” It is a marked feature of Sargent’s, lock that the direction of the pressure of the bolt-work of the door on the revolving-bolt is in the line of a radius of that bolt, so that the pressure has no tendency to revolve the bolt. This feature is not found in the Butterworth padlock.

As to the question of infringement, the defendant’s lock, Cole No. 2, has in it a bolt which turns on a pivot, and is substantially identical with the like bolt in Sargent’s patent. It prevents and permits the retraction of the bolt-work of the door in the same manner as Sargent’s bolt. There is no sliding-bolt. The turning-bolt is arranged to serve as a stop to two sets of bolt-works, instead of one; but in respect to one set, there is the same mode of operation in both locks. As the claim of Sargent’s reissue does not require that the bearing of the rotating-bolt should be distinct from the bearing of the wheels, the fact that in Cole No. 2 the bearing of the turning-bolt is on the stud on which the wheels turn, makes no difference in principle, because the action of the bolt »is as wholly separated and isolated from the wheels in the one lock as in the other, and in p. 548each the strain from the bolt-work is expended on the turning-bolt and not on the wheels. So, too, the fact that in Sargent’s patent the fence-lever is connected with the turning-bolt by a rack on the end of the lever engaging with cog-teeth on the bolt, while in Cole No. 2 the end of the lever is pivoted directly to the turning-bolt, does not affect the identity of the arrangement as part of the combination covered by claim 1 of the reissue. The defendant’s lock must be held to infringe that claim.

“ The master also reports, that it is in evidence, that, during p. 549the period covered by the accounting, the plaintiff could have manufactured, in addition to the locks he did manufacture, and without materially increasing his manufacturing facilities, all the locks manufactured and sold by the defendant. Exception two of the defendant is to such finding and report, and alleges that the master should have reported that no such additional manufacture by the plaintiff was possible, or that it was impossible without a very great extension of his facilities.

“ The master further reports, that the locks sold by the defendant contained, in addition to the ‘ turning-bolt,’ a device patented by the Rosner patent, for which infringement a claim is made against the defendant in another suit; that, as to the proportion of the reduction of prices above set forth, which should be allowed to the device claimed under the Rosner patent, it is claimed by the plaintiff, and nowhere effectually t disputed by the defendant, ‘ that, in computing the profits on these locks, one-third belonged to and was charged by him to the Rosner patent; ’ and that, admitting this proportion, and allowing, in addition thereto, for any- superior external attractions of the defendant’s locks, and for the number of combinations which they had over those of the plaintiff, and for the shape of the case of the lock, and for the commercial success of the defendant in -effecting sales, where the plaintiff would. p. 550have failed, the master is of opinion that the plaintiff is entitled to recover from the defendant, as damages, one-half of the amount of the reduction in prices caused by the defendant since January 2, 1872; that is, on 1009 No. 3 locks, $1 per lock, being $1009, and on 13,524 No. 5 locks, at 50c. per lock, $6762, being a total of $7771. Exception five of the defendant excepts to the finding and report that the plaintiff is entitled to recover from the defendant, as damages, one-half of the amount of the reduction in prices caused by the defendant since January 2, 1872, and alleges that the master should have reported ‘ no reduction in prices, or no proof of such,’ caused by any infringement by the defendant since said date, and ‘ hence no damages ’ to the plaintiff, ‘ and, consequently, no method of calculating them.’ Exception six of the defendant excepts to the report for that the master erred in making the apportionment of the alleged reduction in the plaintiff’s prices, charging one-half thereof to the alleged infringement of the £ turning-bolt ’ patent, and alleges that no basis existed, in the proof or in law, for such or for any apportionment, or for any award of damages. Exception seven of the defendant excepts to the report for that the master erred in assessing damages which are not the damages suffered by the plaintiff, but are those suffered by the firm of Sargent & Greenleaf, and alleges that the master should have reported that the damage, if any, found to have been suffered by said firm, is not the damage of the plaintiff, who is only one member of said firm, but that the plaintiff’s damage is merely a portion thereof. Exception eight of the defendant excepts to the report for that the master erred in finding and reporting, as damages, the sum mentioned in his report, or any damages whatsoever, and in not reporting that there was no proof of any actual damage suffered by the plaintiff from the alleged infringement.

“ The defendant contends that the competition of the defendant was not the sole cause of the reduction of the plaintiff s prices, and that the proportionate effect of the defendants competition is not attempted to be estimated or ascertained by the proofs. It alleges that the defendant is not responsible for the reduction made in 1873 ; that there were many other causes p. 551which contributed to this reduction; and that the lowering of prices was caused principally by the competition of other fireproof safe lock-makers, and, notably, the New Britain Lock Co., by the fact that safe-makers were making and threatening to make their own safe locks, and by the general lowering of the prices of material and labor and the depression of business.

“ The defendant also contends, that the plaintiff is not entitled to recover from the defendant, as damages, the entire amount of the reduction enforced by the defendant’s competition, but only the damages occasioned by the effect of the presence of the infringement; that the burden of proof is on the plaintiff to fix the value of, and to separate the effect of, the infringing devices; that he failed to do so by any proper proof; and that no basis was afforded to the master on which such damages could be computed. But, as the master allowed damages only for the reduction of prices on the locks sold by the plaintiff, and as the essential feature of those locks was the ‘ turning-bolt ’ device, and as an essential feature of the infringing locks was the infringing 4 turning-bolt ’ device in them, and as the plaintiff could not sell his 4 turning-bolt ’ device unless it was embodied in a lock, and as he was thereby enabled to make his profit on the entire lock, and as he was deprived, by the acts of p. 552the defendant in selling at low prices locks containing the patented ‘ turning-bolt ’ device, of the profit he would otherwise have made on the locks which he actually sold containing the ‘turning-bolt’ device, it seems plain that the defendant’s infringement must be held to have caused the entire loss of the plaintiff by the reduction of prices, after allowing a proper sum for any other patented device contained in the defendant’s locks and for any other causes which gave to the defendant an advantage in selling its locks. This is the basis on which the master proceeded, and it seems to me, on a consideration of the evidence, that the master has made all proper allowances and has arrived at a correct conclusion in fixing, as damages, one-half of the amount of reduction in prices.