Troy Iron and Nail Factory v. Corning et al. ORDER. This cause came on to be heard on the transcript of the record from the District Court of the United States for the Eastern District of Louisiana, and was argued by counsel. On consideration whereof, it is now here ordered, adjudged, and decreed by this court, that the decree of the said District Court in this cause be, and the same is hereby, reversed and annulled, and that this cause be, and the same is hereby, remanded to the said District Court, with directions to dismiss the petition of the claimant. THE TROY IRON AND NAIL FACTORY, APPELLANT, v. ERASTUS CORNING, JOHN F. WINSLOW, AND JAMES HORNER. In 1834, Burden obtained a patent for a new and useful improvement in the machinery for manufacturing wrought nails and spikes, which he assigned to the Troy Iron and Nail Factory, and also covenanted that he would convey to that company any improvement which he might thereafter make. In 1840, he made such an improvement, for making hook and brad-headed spikes, with a bending lever, which he assigned to the Troy Iron and Nail Factory in 1848. Before this last assignment, however, viz., in 1845, Burden made an assignment with Corning, Horner, and Winslow, in which, amongst other things, it was agreed, that both parties might thereafter manufacture and vend spikes of such kind and character as they saw fit, notwithstanding their conflicting claims. Owing to the peculiar attitude of the parties to each other at the time of making this agreeme, and the language used in it, it cannot be construed into a permission to Corning, Horner, and Winslow, to use the improved machinery patented by Burden in 1840; and the right to use it, having passed to the Troy Iron and Nail Factory, a perpetual injunction upon Corning, Horner, and Winslow will be decreed.1 THIS was an appeal from the Circuit Court of the United States for the Northern District of New York. *The facts are all stated in the opinion of the court. The bill was filed in the Circuit Court, by the Troy [*194 Iron and Nail Factory against Corning, Winslow, and Horner, to restrain them from violating a patent issued to Henry Burden on the 8th of September, 1840, for new and useful improvements in the machinery for making hook, or brad 1 s. c., 15 How., 451; 1 Blatchf., 6 Fed. Rep., 892; Lilienthal v. Wash 468. CITED. Putnam v. Hollender, burn, 8 Id., 709. headed spike, which patent had been assigned to them; and also to account for the profits. After the proceeding, mentioned in the opinion of the court, the Circuit Court passed the following decree: This cause having heretofore been brought to a hearing upon the pleadings and proofs, and counsel for the respective parties having been heard, and due deliberation thereupon had, and it appearing to the said court that the said Henry Burden was the first and original inventor of the improvement on the spike machine in the bill of complaint mentioned, and for which a patent was issued to the said Henry Burden, bearing date the 2d of September, 1840, as in said bill of complaint set forth, and that the said complainants have a full and perfect title to the said patents for said improvements, by assignment from the said Henry Burden, as is stated and set forth in the said bill of complaint. But it also further appearing to the court, on the pleadings and proofs, that the instrument in writing, bearing date the 14th of October, 1845, stated and set forth in the said bill of complaint, and also in the answer of the said defendants thereto, entered into upon a settlement and compromise of certain conflicting claims between the said parties, and among others of mutual conflicting claims to the improvements in the spike machine in said bill mentioned, and when said instrument was executed by the said Henry Burden of the one part, and the said defendants of the other; the said Henry Burden, at the time, being the patentee and legal owner of the said improvements, and fully authorized to settle and adjust the said conflicting claims, did, in legal effect, and by just construction, impart, and authorize, and convey, a right to the defendants to use the said improvements in the manufacture of the hook-headed spike, without limitation as to the number of machines so by them to be used, or as to the place or district in which to be used. Therefore, it is ordered, adjudged, and decreed, that the said bill of complaint be, and the same is hereby, dismissed, with costs to be taxed, and that the defendants have execution therefor. From this decree, the complainants appealed to this court. It was argued by Mr. Johnson and Mr. Stevens, for the appellants, and Mr. Seward and Mr. Seymour, for the appellees. *195] *As the case turned mainly upon the construction of the agreement of October 14, 1845, (which is inserted Troy Iron and Nail Factory v. Corning et al. in the opinion of the court,) only such of the arguments of counsel will be given as relate to that construction. The counsel for the appellants contended, Third. It is respectfully submitted, that the instrument of the 14th of October, 1845, does not convey to the defendants any right or title to said invention, or give them any authority to use it in manufacturing hook-headed spikes. Such was not the object or intention of the parties. This instrument was executed under the following circum stances: At the June term of the Circuit Court, 1843, Mr. Burden recovered a judgment for $700, against the defendants, for violating this patent. On the 2d of October, 1843, Mr. Burden filed his bill in equity in said Circuit Court, to restrain the defendants from further infringing the patent, and for an account. After this bill was filed, the defendants ceased using the invention, for a short time; and then commenced using it again, as Mr. Burden was informed. Mr. Burden, therefore, on the 13th of November, 1844, made a new affidavit, to obtain an injunction upon his bill previously filed; and, on the 20th of November, obtained an order for an injunction by default. On the 25th of November, 1844, the defendant Winslow, and two men by the name of Osgood and Blanchard, made affidavits in said cause, for the purpose of moving the court to open the order granting an injunction; in which affidavit, they all swear that defendants did not use Mr. Burden's invention, in making hook-headed spikes, but made them with machinery entirely different in principle and mode of operation. The machinery, by which the defendants claimed to make the hook-headed spike, after the bill was filed, is described in two patents, granted to the defendants, or some of them. Prior to these legal proceedings, in November, 1844, the parties had been endeavoring to settle, but did not succeed; subsequently, negotiations for a settlement of the suit were renewed. Mr. Burden claimed that he had the exclusive right to manufacture the hook-headed spikes by machinery, and insisted that defendants should cease making such spikes by machinery. Defendants insisted they had a right to make such spikes by their own machinery, which they insisted, in their affidavits, made November 25th, 1844, was entirely different, in principle and mode of operation, from that patented to Mr. Burden. VOL. XIV.-14 209 Troy Iron and Nail Factory v. Corning et al. *Mr. Burden claimed, that defendants had violated. *196] his patent for machinery for making horseshoes, and told defendants, if they did not immediately desist from using his horseshoe machine he would prosecute them, and they did desist and stop, six months before the settlement was made. It is necessary and proper to take these facts and circumstances into consideration, in giving a construction to the agreement of the 14th of October, 1845. "It is well settled, that in the construction of all contracts, the situation of the parties and the subject-matter of their transactions may be taken into consideration, in determining the meaning of any particular sentence or provision. Extraneous evidence is admissible, so far as to ascertain the circumstances under which the writing was made, and the subject-matter to be regulated by it." Sumner v. Williams, 8 Mass., 214; Fowle v. Bigelow, 10 Mass., 384; Wilson v. Troup, in the Court for the Correction of Errors of N. Y., 2 Cow. (N. Y.), 228-9; Nesmith v. Calvert, 1 Wood. & M., 40. I. This agreement does not, by its terms, convey, or purport to convey, or in any manner to give or invest the defendants with any interest in, or right or authority to use the machinery patented in September, 1840, to make hook-headed spike. 1st. It was contended by the defendants, (and, as we understand the decree, so decided,) that the 2d clause in the agreement, in legal effect, did impart, authorize, and convey to the defendants a right to use the said improvements, without limitation as to the number of machines used by them, or as to the place or territory where they might be used. The 2d clause of the agreement is in these words: "And it is further agreed, that the said parties may each, hereafter, manufacture and vend spike of such kind and character as they see fit, notwithstanding their conflicting claims. to this time." After the judgment at law, in 1843, there was no conflict as to the right of defendant to use Mr. Burden's improvement in manufacturing hook-head spike. That had been fully settled against the defendants, by the suit at law, and conceded by them. The defendants did not claim the right to use Burden's invention; but only the right to make said spike by machinery, which they claimed was different from Mr. Burden's, both in principle and operation. Mr. Burden denied this right claimed. by the defendants, and claimed that he had the exclusive right Troy Iron and Nail Factory v. Corning et al. to make such spike by machinery. This was the only con flicting claim, as to the right to make spike at the time of the settlement. By this clause in the agreement, Mr. Burden relinquished his pretensions to the exclusive right to make hood-headed *spike by machinery; but he gave no right [*197 to the defendants to use his improvements in manufacturing such spike. Whether Mr. Burden was right or wrong in his pretension to the exclusive right to make such spike by machinery, can in no manner affect the construction of the agreement. The intention of the parties, as expressed in the agreement, taken in connection with the state of facts and circumstances under which it was executed, and the subject-matter intended to be regulated by it, must control the construction of this clause. Mr. Burden supposed he had such exclusive right, and simply relinquished it, without the most remote idea that he was conveying to the defendants any right to use his improvement, much less, that he was conveying an interest in his patent equal to one half of it. The settlement of the equity suit,-the relinquishment by Mr. Burden of his pretension to exclude the defendants from making hook-headed spike by machinery, and the settlement, by defendants, of Mr. Burden's claim against them, for infringing his horseshoe patent, for which he had threatened them with a suit,-fully satisfies every clause in the agreement; and it cannot be stretched to the enormous extent claimed by defendants, without interpolating other important provisions, which cannot at law be accomplished by parol evidence. An assignment, or any other conveyance of any part of a patent, or of any interest in or under it, must be in writing. Contracts, which by law are required to be in writing, cannot rest partly in writing and partly in parol. Is it not most extraordinary that the defendants did not have this agreement recorded in the Patent-Office until the 21st of August, 1848, if they had had the least idea that it conveyed to them such an important right as they now claim? Patent Act of 1836, § 11; Curtis on Pat., p. 478. This instrument has neither the form nor substance of a license or assignment, or any other conveyance of an interest in a patent heretofore in use or known. If the parties had intended this instrument as a conveyance of any interest in Mr. Burden's improvement, it would have been very easy to have said so. Nesmith v. Calvert, 1 Woodb. & M., 40; Iggulden v. May, 7 East, 242. The court below fell into the mistake, that the cause |