lowing statement of the rule made in City of Detroit v. Detroit City Ry. Co. (C. C.) 55 F. 569, and approved in Pullman's Palace-Car Co. v. Central Transportation Co., 171 U. S. 138, 146, 18 S. Ct. 808, 43 L. Ed. 108, was again approved: "It is very clear from an examination of the authorities, English and American, that the right of a complainant to dismiss his bill without prejudice, on payment of costs, was of course except in certain cases. Chicago & A. R. Co. v. Union Rolling-Mill Co., 109 U. S. 702. The exception was where a dismissal of the bill would prejudice the defendants in some other way than by the mere prospect of being harassed and vexed by future litigation of the same kind." In the Skinner & Eddy Case it was further said: "The usual ground for denying a complainant in equity the right to dismiss his bill without prejudice at his own costs is that the cause has proceeded so far that the defendant is in a position to demand on the pleadings an opportunity to seek affirmative relief and he would be prejudiced by being remitted to a separate action. Having been put to the trouble of getting his counter case properly pleaded and ready, he may insist that the cause proceed to a decree." MORRIS, District Judge. The plaintiffs parte Skinner & Eddy Corp., 265 U. S. 86, have moved that the bill of complaint, filed 44 S. Ct. 446, 68 L. Ed. 912. There the folby them against the Shevlin-Hixon Company to enjoin the alleged infringement by that company of letters patent No. 1,123,155, owned by the plaintiffs, be dismissed without prejudice and with costs against the plaintiffs. An answer has been filed. No counterclaim is therein made. No testimony has been taken by either party. After the motion was set down for hearing, H. J. Burns asked to be made a party defendant. In his petition of intervention he alleges that he is the manufacturer of the apparatus claimed to infringe; that the apparatus in the plant of the Shevlin-Hixon Company, here complained of, was installed by him; that he assumed the defense of this suit, and has paid the expenses thereof with the knowledge of the plaintiffs; that he is informed and believes that prospective customers of defendant's apparatus have been threatened by the plaintiffs with infringement suits; that his business has been thus interfered with to his damage; and that he desires to avoid a multiplicity of suits and further damage to himself by having the question of whether or not the apparatus manufactured by him is an infringing one finally and promptly settled in and by this suit. In his proposed answer, which was submitted with the petition to intervene, Burns makes the allegations usual in an answer filed in an infringement suit. He also repeats therein the statements made, as above narrated, in his petition of intervention. He prays in his answer, not only that the bill of complaint be dismissed, but also, in reliance upon Kessler v. Eldred, 206 U. S. 285, 27 S. Ct. 611, 51 L. Ed. 1065, that the plaintiffs be perpetually enjoined from suing or threatening with suit on patent No. 1,123,155 either Burns or any purchaser, actual or prospective, of Burns' apparatus constructed and operating like the device alleged in the bill of complaint to operate in infringement of that patent. The motion of plaintiffs to dismiss their bill and the motion of Burns to intervene as a party defendant have been heard together. Affidavits have been filed by the plaintiffs and by Burns. The Shevlin-Hixon Company has done nothing with respect to either motion. There is no local rule touching the voluntary dismissal of bills in equity. In the absence of such a rule the general principles of law pertaining thereto must govern. These principles have been recently summarized by Mr. Chief Justice Taft in Ex In Kessler v. Eldred, 206 U. S. 285, 27 S. Ct. 611, 51 L. Ed. 1065, it was held that the manufacturer of an apparatus after he has prevailed in an infringement suit instituted against him may, by a new suit brought by him for that purpose, obtain a decree of a court of equity restraining the person who was defeated in the infringement suit from interfering with the business of the manufacturer by bringing other infringement suits, based on the same patents and with respect to the identical device, against the customers of the manufacturer. [1,2] Before taking up the questions of Burns' right to intervene, the right of an intervener to obtain affirmative relief not obtainable by the original defendant, the right of an intervener to oppose a motion of a plaintiff to dismiss its own bill, and, if an intervener has such right, whether a person who delays making an application to intervene and to obtain affirmative relief until after plaintiffs move to dismiss their bill does not come too late successfully to oppose the motion to dismiss, let Burns' right to prevail in his opposition to plaintiffs' motion be first tested as if he were the original and sole defendant, and that, as such 2 F.(2d) 747 defendant, he had filed the answer he now offers to file. As the general rules touching the right of a plaintiff to dismiss his own bill apply with like force to an infringement suit in equity against the manufacturer of the alleged infringing device, Burns could not, even if he were an original and sole defendant, prevent the dismissal sought by the plaintiffs, unless he could show prejudice otherwise "than by the mere prospect of being harassed and vexed by future litigation of the same kind." If Burns has here shown that he would be otherwise prejudiced, it is because, and only because, he has shown by his allegations, affidavits, and prayer for affirmative relief that he is here in a position to obtain the affirmative relief he desires, and that he would be prejudiced by being remitted to a new action. Yet, even if it be assumed that a manufacturer of an apparatus who is a successful party defendant in an infringement suit may in that suit obtain by way of affirmative relief an injunction of like tenor as that which may be awarded to him in an independent suit (Kessler v. Eldred, 206 U. S. 285, 27 S. Ct. 611, 51 L. Ed. 1065), the only affirmative relief which Burns has here placed himself in a position to demand is that of immunity from future litigation and its consequences. Hence, as I view it, the affirmative relief here sought is not of a character to take this case out of the general rule under which a plaintiff may, as of course, dismiss his bill without prejudice on payment of costs. Turning from questions of law to the facts set up by the affidavits and alleged in the proffered answer, it is not there established, or even shown probable that, should the question of whether or not Burns' apparatus does infringe plaintiffs' patent be settled in favor of Burns in a suit between the plaintiffs and Burns, the plaintiffs would thereafter institute or threaten to institute suits against Burns' customers, actual or prospective, or otherwise interfere with his business. But Burns is not a party defendant. Is he a person who is entitled under equity rule 37 to intervene? The maker of an alleged infringing article has in many cases been permitted to intervene in a suit instituted against one who has sold or used the article. Wenborne-Karpen Dryer Co. v. Dort Motor Car Co. (D. C.) 300 F. 404; Continuous Extract. P. Corp. v. Eastern Cotton Oil Co. (D. C.) 264 F. 340; Baldwin v. Abercrombie & Fitch Co., 228 F. 895, 898, 143 C. C. A. 293; United States Expansion Bolt Co. v. H. G. Kroncke Hard ware Co. (D. C.) 216 F. 186; Foote v. Parsons Non-Skid Co., 196 F. 951, 118 C. C. A. 105. But, were Burns permitted to intervene, obviously he could not, any more than could an original defendant, defeat plaintiffs' motion without first putting himself in a position to seek affirmative relief. In the case at bar Burns did not seek to become a party to the cause or to obtain affirmative relief therein until after plaintiffs' motion to dismiss the bill had been filed. I think he comes too late, particularly as no reason has been given to explain his delay in making his applications. Cowham v. M'Nider (D. C.) 261 F. 714; Tower v. Stimpson (C. C.) 175 F. 130; Foote v. Parsons NonSkid Co., 196 F. 951, 118 C. C. A. 105. See, also, Pullman's Palace Car Co. v. Central Transportation Co., 171 U. S. 138, 18 S. Ct. 808, 43 L. Ed. 108. But, were he not too late, is it clear that an intervening party defendant may set up in his answer every counterclaim of an equitable character that he may have against the plaintiff? Under equity rule 30 the right of an original party defendant to set up in his answer his counterclaims against the plaintiff is very broad. American Mills Co. v. American Surety Co., 260 U. S. 360, 43 S. Ct. 149, 67 L. Ed. 306. It may be that the right of an intervening party defendant with respect to setting up counterclaims is, under equity rule 30, as broad as that of an original party defendant. But to permit, over the objection of the plaintiffs, a person to intervene not pro interesse suo only but as a party defendant (as to which see Chester v. Life Ass'n of Am. [C. C.] 4 F. 487), and then to permit such intervening party defendant to set up against the plaintiffs a counterclaim for affirmative relief that is not available to the original defendant, and to which the original defendant is not entitled, would be conferring upon such third person broad rights, indeed, with respect to the litigation, and might be extending the rights of such third person beyond the point intended by equity rules 30 and 37. See Curran v. St. Charles Car Co. (C. C.) 32 F. 835. But, as Burns' opposition to plaintiffs' motion to dismiss must fail in the case at bar upon other grounds, it is here neither necessary to determine nor is it determined whether it must also fail for want of power or right in Burns to seek in this cause affirmative relief that was not available to the original party defendant, the only person whom the plaintiffs elected to sue. For the reasons stated, I am of the opin 2. Chattel mortgages 63-Trust receipt reserving title in vendor until payment of purchase price held not "chattel mortgage." A trust receipt exacted from buyer by seller of goods intended to be manufactured, reserving title in seller to property or its proceeds until payment of purchase price, pursuant to prior memorandum contract of sale, held not a "chattel mortgage" within Rev. Code Del. 1915, § 2855, making affidavit essential to its validity. [Ed. Note. For other definitions, see Words and Phrases, First and Second Series, Chattel Mortgage. 3. Bankruptcy 143 (1) Local law determines whether property in hands of bankrupt was subject to levy or lien by creditors. Under Bankruptcy Act, § 70 (Comp. St. § 9654), vesting in trustee property which prior to the petition might have been levied upon and sold under judicial process against bankrupt, whether such property could be so levied upon and sold must be determined by the local law of the state. 4. Bankruptcy 184(1)-Property held by bankruptcy under trust receipt retaining title in seller until payment of purchase money not vested in trustee. Under Bankruptcy Act, $70 (Comp. St. 8 9654), and amendment of 1910 embodied in section 47a, subd. 2 (Comp. St. § 9631), and statutes of Delaware, property purchased by bankrupt for manufacture under contract and trust receipt reserving title in seller did not vest in trustee, unless by reason of Conditional Sales Act (Laws Del. 1919, c. 192). 5. Bankruptcy 143(1)-Title to property under conditions rendering it immune to liens by creditors not vested in bankrupt's trustee. Amendment of 1910 to Bankruptcy Act embodied in section 47a, subd. 2 (Comp. St. § 9631), does not vest in trustee rights, reme dies, and powers over property which, though coming into custody of bankruptcy court, was in possession of bankrupt under such circumstances and conditions that prior to his bankruptcy it could not have been impressed with lien by creditor of bankrupt. 6. Bankruptcy 140(1)-Failure of seller to file memorandum of sale contract with trust receipt under conditional sale act held to vest title in trustee. Where property was held by bankrupt under trust receipt pursuant to prior contract of sale providing therefor, such trust receipt was substantially a conditional, sale contract, and memorandum of sale was material part thereof, and under Laws Del. 1919. c. 192, when it was not filed, trustee in bankruptcy acquired title as against the seller; he being deemed a lienholder without notice of petitioner's rights, by virtue of Bankruptcy Act, § 47a, subd. 2 (Comp. St. § 9631). 7. Bankruptcy 140(1)-Seller under trust receipt held entitled to reclaim property and proceeds from trustee, notwithstanding noncompliance with Uniform Conditional Sales Act. Though sale contract and trust receipt were not filed as required by Uniform Conditional Sales Act, Laws Del. 1919, c. 192, where, before bankruptcy proceedings, receiver, under Rev. Code Del. 1915, § 3883, took possession of property and proceeds, and seller petitioned for their return, hearing was had, and matter taken under advisement, seller was entitled to claim property as against trustee, since actual return by receiver, even if within four months prior to bankruptcy, would not have created voidable preference. In Bankruptcy. In the matter of the bankruptcy of the Ford-Rennie Leather Company. Separate petitions by Schmoll, Fils & Co., Inc., and Doherr, Grimm & Co., seeking to reclaim property from trustee. Petitions granted. William S. Hilles, of Wilmington, Del., for certain general creditors. E. E. Berl (of Ward, Gray & Neary), of Wilmington, Del., for trustee. James I. Boyce, of Wilmington, Del., for Schmoll, Fils & Co., Inc. Caleb S. Layton (of Marvel, Marvel, Layton & Hughes), of Wilmington, Del., for Doherr, Grimm & Co., Inc. Ford-Rennie MORRIS, District Judge. Leather Company was adjudicated a bankrupt by this court on July 31, 1924. By separate petitions filed in the bankruptcy cause Schmoll Fils & Co., Inc., and Doherr, Grimm & Co., Inc., now seek to reclaim and obtain from the trustee in bankruptcy certain skins, or the proceeds thereof, delivered by the petitioners, respectively, to the bankrupt under terms and conditions set out in whole or in part in "trust receipts" delivered by the bankrupt to the petitioners. The trustee in opposing the petitions contends that the petitioners are without title to the skins, and that, if, in fact, they have title, they are not in a position successfully to maintain it against the trustee. In support of these ultimate contentions the trustee asserts: (1) That the right of the petitioners in, to, or against the skins is not that of 2 F.(2d) 750 legal ownership and title, but is that arising under an invalid and ineffective chattel mortgage; (2) that, if the petitioners have the legal title to the skins, their title, by reason of the provisions of the Bankruptcy Act and the doctrine of ostensible ownership, cannot prevail against the trustee; and (3) that, if under the terms of the contracts between the parties the title to the skins was reserved to the petitioners, the contracts were contracts of conditional sale, and the provisions therein reserving title are void as against the trustee in that as to Schmoll Fils & Co. the whole of the contract was not recorded, as required by chapter 192, volume 30, Laws of Delaware, and as to Doherr, Grimm & Co., no part of the contract was filed for récord. The trustee has, however, urged but little the last-stated point. He has, on the contrary, stressed the contention that the proper field for use of the trust receipt is narrow; that it was not here employed in that field; and that when not so employed it is invalid as against a trustee in bankruptcy for the other reasons urged by him. In the case at bar both petitioners were dealers in hides and skins. The bankrupt was a leather manufacturer. On December 5, 1923, Schmoll Fils & Co., whose petition will be first considered, was the owner of certain skins with the acquisition of which by the petitioner the bankrupt had been in no wise concerned. With respect to those skins the petitioner and the bankrupt entered into an arrangement as follows: "New York, December 5, 1923. "Ford-Rennie Leather Co., Dupont Bldg., Wilmington, Del.-Dear Sirs: We beg to confirm our sale to you as follows: "Quantity: About (5 per cent. more or less) 38 bales of Cordoba goatskins, of which 17 bales Mataderos, 17 bales Campos, 4 bales Desechos, at 39 cents per pound for the Mataderos and Campos; Desechos at two-thirds price. Shrinkage guaranteed not to exceed 3%. "Insurance: Ex warehouse New York. "Shipment: Prompt shipment from New York. "Terms: Payment 90 days' draft upon arrival of goods, interest for buyer's account. "Remarks: Sellers will either invoice these goods immediately, in which case buyers will give a trust receipt with sellers' option of filing same, or sellers will ship the goods on memorandum, and final invoice will be rendered only at the maturity of the draft when same will be paid. "The fulfillment of this contract by the sellers is subject to wars, revolutions, blockades, strikes, acts of Providence, prohibition of export or import of the merchandise sold, delays and/or withdrawals of steamers, all cases of force majeure and consequences thereof, and any other contingency over which the sellers have no control. "Goods actually shipped, but lost, destroyed, or damaged in course of transportation, shall be deemed delivered under this contract. Hides and/or skins to be of the usual quality and assortment of their kind. No claims shall be valid unless made in writing within two weeks after the goods are delivered. Any controversy or claim made in time under this contract shall be settled amicably or by arbitration in New York City (unless otherwise stated). No claim for difference in kind or quality shall be valid unless at least 90 per cent. of the goods are in original condition and packing. In no case can the goods be left for the sellers' account. "Goods arrived on dock are deemed delivered to buyers, and sellers may substitute delivery order in place of domestic shipping documents for all purposes of this contract. "No warranties of any kind (either expressed or implied) form part of this contract, unless specifically set forth in writing. Unless otherwise stated, any sales tax hereafter imposed by the United States government shall be added to the above price. "Duty, if any, for buyer's account. (This includes both import and export duty.) "Term c. i. f. does not include war risk unless so stated. "Each shipment to be considered a separate contract. "Yours very truly, "Accepted: "Schmoll Fils & Co., Inc. Ford-Rennie Leather Co., "[Signed] James I. Ford, Three days later Schmoll Fils & Co. wrote the bankrupt thus: "We understand these skins have arrived at your tannery, and in order that you could take prompt delivery we surrendered bill of lading to the New York agents of the B. & O. Railroad, with instructions to wire release of this merchandise to the agent at Wilmington. Draft and trust re ceipt will follow by next mail." On December 10 Schmoll Fils & Co. again wrote the bankrupt as follows: "New York, December 10, 1923. "Messrs. Ford-Rennie Leather Co., Dupont Building, Wilmington, Del.-Gentle men: Inclosed is draft for $13,870.09 maturing March 7th, covering invoice of December 4th, of 38 bales Cordoba goatskins, plus interest and revenue stamp charges as per the inclosed statement. "We also inclose trust receipt covering this merchandise. Please accept our draft and sign the trust receipt, returning it to us as promptly as possible. "Very truly yours, "Schmoll Fils & Co., Inc., The draft was accepted and the trust receipt signed by the bankrupt, and both were returned to Schmoll Fils & Co. The trust receipt is in the following language: "Received from Schmoll Fils & Co., Inc., New York, the merchandise specified in the bill of lading, the property of Schmoll Fils & Co., Inc., viz.: 20,002 twenty thousand two Cordoba goatskins, marks: S Argentina 365–367/370 372-384/394 418/421-423/ 425 427/429-431/435 437/438 447/450, pledged under the terms of their acceptance dated December 10, 1923, for ($13,870.09) thirteen thousand eight hundred seventy dollars nine cents issued by us for our account. In consideration of the delivery of said merchandise as the property of Schmoll Fils & Co., Inc. (with liberty only to manufacture), until all bills of exchange, trade acceptances or notes given by us to the said Schmoll Fils & Co., Inc., for the purchase price thereof shall have been paid. "We agree to keep said property insured at its full value against loss or damage of any nature, by fire, or otherwise, insurance payable in case of loss to the said Schmoll Fils & Co., Inc., for its account with the understanding that the said Schmoll Fils & Co., Inc., is not to be chargeable with any expenses incurred thereon. "Schmoll Fils & Co., Inc., may cancel this trust, and take possession of said goods wherever the said goods may then be found, in the event of any suspension or failure, or bankruptcy, or assignment for the benefit of creditors on our part, or of the nonpayment at maturity of any obligation or acceptances made by us for or in connection with said merchandise. "The intention of this agreement is to protect and preserve unimpaired the ownership and right of the said Schmoll Fils & Co., Inc., in and to said merchandise in whatever form or condition it may be and to give said Schmoll Fils & Co., Inc., all rights in respect to said merchandise until the pur chase price thereof has been fully paid. 38 bales Cordoba goatskins lot 19, stamped Z 3. Dated: New York, December 11, 1923. "Ford-Rennie Leather Co., "James I. Ford, Treasurer." Many of the skins came into the possession of the trustee in bankruptcy. Others were destroyed by fire before the adjudication in bankruptcy, and the bankrupt received the insurance money therefor. The draft was not paid in whole or in part by the bankrupt. The petitioner seeks to have the remaining skins returned to it and the insurance money received by the bankrupt for the burned skins paid to it. The trust receipt was recorded in the office designated the recording of conditional sales contracts by the statute of the state of Delaware for and chattel mortgages. The memorandum of December 5 was not recorded. Is the title to the remaining skins in the petitioner or in the trustee in bankruptcy? One of the things essential to be considered in this connection is the legal nature and effect of a trust receipt. The most comprehensive discussion of the trust receipt that I have found or to which I have been referred is the monograph of Mr. Karl T. Frederick published in the issues of the Columbia Law Review for May and June, 1922. Mr. Frederick says that in the typical case the trust receipt is used when R., an importer, desiring to obtain from abroad merchandise for manufacture or sale in this country, requests his bank to issue a letter of credit authorizing A. B. & Co., from whom the goods are to be purchased abroad, to draw their drafts upon the bank for the cost of the goods to be supplied by them. The credit is delivered to the importer, or sent direct to A. B. & Co., or transmitted to them through an institution located near them. In consideration of the issue of the credit the importer agrees to repay to the bank all amounts that may be paid out by it under the credit, together with interest and commissions. He likewise agrees that the bank shall be and remain the owner of the merchandise so purchased and of all doeuments of title thereto and of the proceeds thereof until the payment to the bank as agreed to shall have been made, and that upon receipt from the bank of the possession of the merchandise he will deliver to the bank a trust receipt. A. B. & Co. ship the goods, taking the bill of lading to the order of the bank "notify R." The seller draws its draft upon the bank for the amount of the purchase price of the goods, attaches to it the bill of lading and other necessary pa |