2. LIBEL AND SLANDER (§ 71*)-DEFENSE-INTENT.

A contention that the alleged libelous words were intended to convey an innocent meaning will not avail defendant, except in mitigation of damages, where the jury are satisfied that ordinary bystanders or readers would certainly have understood them in the other sense.

[Ed. Note. For other cases, see Libel and Slander, Cent. Dig. § 173; Dec. Dig. § 71.*]

3. COURTS (§ 489*)-JURISDICTION-PATENTS-STATE AND FEDERAL COURTS. While under Judicial Code (Act March 3, 1911, c. 231), c. 2. § 256, subd. 5, 36 Stat. 1100 (U. S. Comp. St. 1913, § 1233), federal courts have exclusive jurisdiction of an action, the main purpose of which is to establish a patent, or enjoin an infringement, or recover damages for infringement, the state courts are not thereby prohibited from passing on patents, their validity or infringement, or their nature or extent, where the injury arises merely as an incidental part of an action for libel.

[Ed. Note. For other cases, see Courts, Cent. Dig. §§ 404, 1324-1330, 1333-1341, 1372-1374; Dec. Dig. § 489.*]

4. LIBEL AND SLANDER (§ 101*)-BURDEN OF PROOF-INFRINGEMENT OF PATENT-PRIVILEGED COMMUNICATION.

In an action for damages from a libelous communication sent by defendant company to plaintiff's customer, charging plaintiff with infringing defendant's patent in connection with the article sold, the burden was on plaintiff to show, not merely that the article was not an infringement, but that defendant knew that it was not and that its statement was false, since, if defendant acted under an honest, though mistaken, belief, the communication would be privileged.

[Ed. Note. For other cases, see Libel and Slander, Cent. Dig. §§ 150, 273, 275-280; Dec. Dig. § 101.*]

5. LIBEL AND SLANDER (§ 139*)—SPECIAL DAMAGES-PLEADING.

In an action for slander of title to property, plaintiff must plead special damages..

[Ed. Note.-For other cases, see Libel and Slander, Cent. Dig. §§ 393396; Dec. Dig. § 139.*]

6. LIBEL AND SLANDER ($ 139*) — COMPLAINT - SPECIAL DAMAGES CIENCY OF ALLEGATION.

SUFFI

In an action for damages from a libelous communication sent by defendant to plaintiff's customer charging plaintiff with infringement of a patent, an allegation of the complaint that plaintiff was obliged thereby to deduct $300 from its contract price was insufficient as an allegation of special damage, where it appeared that plaintiff was not legally bound to make any deduction.

[Ed. Note. For other cases, see Libel and Slander, Cent. Dig. §§ 393– 396; Dec. Dig. § 139.*]

Action by Wittemann Bros. against the Wittemann Company. On demurrer to complaint. Overruled.

Holm, Whitlock & Scarff, of New York City, for plaintiff.
Clifford Seasongood, of New York City, for defendant.

CRANE, J. The plaintiff and the defendant are each engaged in the business of manufacturing machinery for brewers. The defendant evidently has letters patent covering certain machines or parts thereof, but it is not alleged that the plaintiff has any such patent. Prior to December of 1912 the plaintiff installed its carbonating system under contract for the Keystone Brewing Company, of Dunmore, Pa., and thereupon the defendant sent a communication to that com

*For other cases see same topic & § NUMBER in Dec. & Am Digs. 1907 to date, & Rep'r Indexes

pany which is the basis of this action for libel. The plaintiff sets it forth, with innuendoes, as follows:

"The carbonating system installed for you (thereby meaning the Keystone Brewing Company) by Wittemann Bros. (thereby meaning this plaintiff) is an infringement, and it must lead to patent litigation from us (thereby meaning the defendant) in the near future; you (thereby meaning the Keystone Brewing Company) should have a valid bond protecting you (thereby meaning said brewing company) against any patent suits and damages thereunder executed not by an irresponsible company or individual, but by a perfectly solvent concern or individual; our (thereby meaning defendant's) carbonating process for breweries is covered by an absolutely valid and substantiated patent in regard to the absolute preservation of the aromatic qualitative properties of the gas collected."

The defendant has demurred to the complaint as stating insufficient facts to constitute a libel, and also because the Supreme Court has not jurisdiction of such a cause.

[1, 2] There are two charges in the alleged libel which must be dealt with separately, and the first is that which is said to attack the plaintiff's financial standing. The words are:

"You should have a valid bond protecting you against any patent suits and damages thereunder executed not by an irresponsible company or individual, but by a perfectly solvent concern or individual."

As much harm may be done by words carrying a patent insinuation or suggestion as by direct statements or charges. The plaintiff had sold and installed the carbonating system for the Keystone Brewing Company, and it might very reasonably be expected that if the latter was to look for protection against infringement suits brought by the defendant it would turn to the plaintiff for that protection. It certainly would not bond itself at its own expense, but would demand of the plaintiff such security. Neither would it be supposed that the plaintiff, if a responsible business concern, would furnish the bond of a surety company or of individuals, but would give its own written. guaranty or obligation. When, therefore, the defendant wrote that the Keystone Brewing Company should have security executed not by an irresponsible company, but by a solvent concern, it is a natural assumption that it had reference to the plaintiff's financial condition. It used words which would reasonably convey such a meaning to a customer desiring no trouble or loss. The force of suggesting or insinuating statements was not lost to the dramatist who gave us Iago, and the law cannot close its eyes to their deadly possibilities. It may be that the defendant intended to make no reference to the plaintiff, and that the words only apply to sureties other than the plaintiff; but if the language is ambiguous, and capable of an innocent as well as of a harmful meaning, the question becomes one for the jury to settle. Demos v. New York Evening Journal Publishing Co., 210 N. Y. 13– 19, 103 N. E. 771. It is of no avail for the defendant to urge, except in mitigation of damage, that he intended the words to convey an innocent meaning, if the jury are satisfied that the ordinary bystanders or readers would certainly have understood them in the other sense. Newell Lib. & Slan. (2d Ed.) 769. The plaintiff therefore sets forth a sufficient cause of action in libel under this first charge.

[3] As to the second charge, the plaintiff alleges that, having installed the carbonating system for the Keystone Brewing Company, the defendant notified that company in writing that the system was an infringement, which must lead to litigation by the defendant, as its carbonating process for brewers is covered by an absolutely valid and substantial patent; and the plaintiff further alleges that these statements made by the defendant were absolutely false, and known to be false, and made maliciously, with the intent to injure the plaintiff in its business. The demurrer to this part of the complaint is that the state courts have no jurisdiction to try such a cause, as the District Courts of the United States, by section 256 of chapter 2 of the Judicial Code, subdivision 5, have exclusive jurisdiction of all cases arising under patent right laws of the United States. A determination of this point turns upon whether this case arises under the patent law, or whether the question of patent rights is merely incidental to a cause over which the state court has jurisdiction. The state court is not prohibited from passing upon patents, their validity or their infringement, their nature or extent, when the inquiry arises as an incidental part of a case properly triable in a state court. Where the main purpose, however, of the action, whatever its form, is to establish a patent or to enjoin infringement, or to recover damages for infringement, the state courts have no jurisdiction. See Middlebrook v. Broadbent, 47 N. Y. 443, 7 Am. Rep. 457; Saxton v. Dodge, 57 Barb. 84, 115; Pratt v. Paris Gaslight & Coke Co., 168 U. S. 255-261, 18 Sup. Ct. 62, 42 L. Ed. 458; Snow v. Judson, 38 Barb. 210.

[4] This action is not brought to sustain any patent rights of the plaintiff, for it has none so far as the pleadings go; neither is it brought to invalidate defendant's patent. It is an action in the nature of a willful and malicious injury to property, and is based upon the allegations that the defendant, having a patent, or else knowing that it had no patent, falsely and maliciously and willfully charged the plaintiff with infringing its patent, well knowing that its words were false. Willful deceit is the gravamen of the action. Thus the plaintiff cannot recover by merely showing that its article is not an infringement; it must go further, and show that the defendant knew it was not an infringement, and knew the falsity of its statement. If the defendant, honestly believing that the plaintiff was an infringer of its patent, sent out notices to users stating the fact, and warning them against further use, there would be no cause for libel if it should subsequently appear that the defendant was in error. The statements would be in the nature of privileged communications. Wren v. Weild, L. R. 4 Q. B. 730; Hovey v. Rubber Tip Pencil Co., 57 N. Y. 119–125, 15 Am. Rep. 470. I therefore conclude that the state court has jurisdiction of a case based upon a willful, malicious, false statement of infringement, as the main case is for malicious injury, and the infringement or validity of the patent, if any, a collateral issue. A judgment for the defendant in such a case would not establish its patent, or prove the plaintiff an infringer, as such a judgment might be based upon lack of malice.

[5, 6] Special damage, however, must be pleaded and proved in an action for slander of title to property. Linden v. Graham, 8 N. Y.

Super. Ct. 670; Bailey v. Dean, 5 Barb. 297; Kendall v. Stone, 5 N. Y. 14; Childs v. Tuttle, 48 Hun, 228; Germproof Filter Co. v. Pasteur Co., 81 Hun, 49, 30 N. Y. Supp. 584. This action, so far as it is based upon this second charge of infringement, is in the nature of a slander of title, and the complaint must plead special damage. Alleging that the plaintiff was obliged to deduct $300 from its contract price does not allege any damage, as the plaintiff could have enforced its contract at law, and was not legally bound to make any deduction. The complaint, therefore, is good in so far as the alleged libel states insolvency, and it is bad under the charge of infringement for failure to plead special damage.

As the complaint does state a good cause of action, the demurrer must be overruled, with $10 costs, and leave given to plead anew. Demurrer overruled, with $10 costs, with leave to plead anew.

(88 Misc. Rep. 262)

MORRIS et al. v. SUERKEN.

(Supreme Court, Special Term, New York County. December, 1914.) LANDLORD AND TENANT (§ 148*)-ASSIGNEE OF LEASE-LIABILITY-COVENANT TO PAY TAXES.

Where a lease, with covenant by the tenant to pay all taxes when due, was assigned during the term, subject to its terms, the assignee was not liable for failure to pay a tax which did not become due until after the landlord accepted a surrender of the lease within the term.

[Ed. Note. For other cases, see Landlord and Tenant, Cent. Dig. §§ 520-532; Dec. Dig. § 148.*]

Action by Melvin L. Morris and others, as trustees under the last will and testament of Levi Morris, deceased, against John P. Suerken. On motion by plaintiffs for a judgment on the pleadings. Motion denied.

Maurice S. Hyman, of New York City, for plaintiffs.

Kurzman & Frankenheimer, of New York City (John Frankenheimer, of New York City, of counsel), for defendant.

GOFF, J. The complaint sets forth a lease by the plaintiffs to defendant's assignor of certain premises for 15 years from May 1, 1899, to May 1, 1914, and the assignment of the lease to the defendant, subject to its terms. The particular term at issue is:

The tenants "agree that they will pay all taxes and assessments which shall be levied or imposed upon said premises during the demised term when such taxes or assessments shall become due."

The plaintiffs claim that the defendant failed, on request, to pay the first half of the taxes for the year 1914, and that he is liable therefor. The answer sets up a surrender of the premises to the plaintiffs, accepted by them on April 30, .1914, and by way of affirmative defense that the defendant and his assignors have paid taxes on the premises for a total of 15 years, and that until 1911 the taxes were imposed in the month of September and payable on the first Monday

For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 151 N.Y.S.-52

of October in each year, of which the respective parties had knowledge, and because of which they intended to obligate the lessee to pay only such taxes as were imposed and payable during the demised term and for a total of 15 years. It must be assumed for the purposes of this motion that there was such an actual surrender of the lease on April 30, 1914, and acceptance thereof by the plaintiffs. Is the defendant liable to pay a tax which did not become due and payable until after his surrender of the premises because of the covenant above quoted, by which he agreed to "pay all taxes which shall be levied or imposed * * during the demised term when such taxes * * * shall become due"?

* * *

In

The cases relied upon by the plaintiffs do not govern this case. Ogden v. Getty, 100 App. Div. 430, 91 N. Y. Supp. 664, the cove nant was to pay "all such taxes as should, during the said term, be laid, levied, assessed, or imposed on, or grow due or payable out of, or for or by reason of, the demised premises." The decision of the court was based entirely on the broad and unqualified language of the covenant and especially upon the unlimited word "imposed." the present case the qualification is very clear: "When such taxes * * * shall become due." In Rundell v. Lakey, 40 N. Y. 513, 518, Grover, J., says:

In

"We have already seen that the real and only question between the parties was whether the plaintiff was liable for the payment of the tax, being owner at the time it was imposed by the board of supervisors, or whether the defendant, being owner at the time of the completion of the roll by the assessors, was liable."

This is not the question in the case at bar.

On the other hand, the defendant cites the case of Whitman v. Nicol, 38 N. Y. Super. Ct. 528, where the court construed a covenant in a lease to pay "all taxes and Croton water rates that might be imposed or assessed or become a lien on the premises at any time during the term, when due and payable." Monell, C. J. (Speir, J., dissenting), says (pages 531, 532):

"But here the covenant is to pay taxes only when they are due and payable, and there cannot be a breach until the tax becomes due and payable. The mere imposition of the tax does not raise the liability to the landlord, so that he may maintain the action. The tenant has guarded against that by expressly limiting his obligation to a default in payment after the imposed tax becomes due. * * It may be claimed, however, that it will be presumed, from the mere imposition of a tax, that it was immediately due upon the imposition being made. That may be so in respect to its lien upon the premises, but no presumption can be raised in respect to a personal obligation to pay, which is limited to the time when the tax in fact becomes due."

The learned counsel for the plaintiffs comments on the "certain antiquity" of this decision. That certainly need not condemn it, and the case of Rundell v. Lakey, supra, relied upon by him, antedates the Whitman Case by at least five years.

I do not regard the qualifying words "when due" as mere surplusage. On the contrary, they not only qualify the liability, but create it, and until the taxes are due no liability to pay them exists. As stated by Ingraham, P. J., in Ayer v. Bonwit, 161 App. Div. 122, 126, 146 N. Y. Supp. 301, 304: