VILLERS v. UNITED STATES.

(Circuit Court of Appeals, Fourth Circuit.

No. 1650.

December 5, 1918.)

CONSPIRACY 47-TO VIOLATE INTERNAL REVENUE LAW-SALE OF LIQUOR THROUGH GO-BETWEEN.

Evidence that defendant had whisky for sale, although he had not paid special tax as a retail liquor dealer, and sold whisky to a third person through an acquaintance, who brought the orders, held sufficient to sustain a verdict for conspiracy with the acquaintance to violate the statute.

In Error to the District Court of the United States for the Northern District of West Virginia, at Wheeling; Alston G. Dayton, Judge. Criminal prosecution by the United States against Victor Villers. Judgment of conviction, and defendant brings error. Affirmed.

Lafayette C. Crile, of Clarksburg, W. Va., for plaintiff in error. Stuart W. Walker, U. S. Atty., and Charles N. Campbell, Asst. U. S. Atty., both of Martinsburg, W. Va., and Harry H. Byrer, Asst. U. S. Atty., of Philippi, W. Va., for the United States.

Before KNAPP and WOODS, Circuit Judges, and ROSE, District Judge.

KNAPP, Circuit Judge. Villers, plaintiff in error, and one Klacko, indicted jointly with him, were convicted of conspiring to carry on the business of a retail liquor dealer without having paid the special tax required by law. It is here urged in his behalf that there was no proof to sustain the charge of conspiracy, and therefore the trial court erred in refusing to direct a verdict for the defendant.

At the time of his arrest, in March, 1918, Villers was the assistant postmaster of Clarksburg, W. Va., and Klacko the clerk or manager of a store in that city. They had become acquainted not long before, and Klacko had learned in some way that whisky could be procured from Villers. Called as a witness for the government, Klacko testified to buying whisky from Villers for himself, and also for one Lazovich, a fellow countryman, whose acquaintance he made about that time. Lazovich was an agent of the Department of Justice, and happened to be in Clarksburg on other business. Learning from Klacko, with whom he became friendly, that whisky could be bought from Villers, he set about getting evidence that would convict him of the offense. Accordingly, he arranged with Klacko, who appears to have been unaware of his purpose, to buy whisky for him from Villers, and four such purchases were made during the next eight or ten days. Lazovich furnished the money, Klacko took the order to Villers, and the latter delivered the liquor at Klacko's store. On the last occasion, and while in the act of handing over a couple of quarts of whisky, Villers was arrested.

These facts, wholly undenied by Villers, were quite sufficient to show that he was engaged in the illegal sale of liquor, and to warrant

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the inference of that understanding and relationship with Klacko which the law regards as a conspiracy. Villers had a quantity of whisky for sale, where or how procured does not appear, and Klacko was not unwilling to help him dispose of it. Each aided the other, and their mutual co-operation effected the criminal result; and what they repeatedly united in doing, both knowing it to be unlawful, the jury might well believe they had in effect conspired to do, and nothing more needs be said in defense of the refusal to direct a verdict. The question was clearly one of fact, and the finding of the jury is conclusive.

The conspiracy having been established, as the jury found, the statement made by Klacko to Lazovich, when Villers was not present, that Villers was the man who supplied him with whisky, was competent evidence against them both, under a familiar and well-recognized rule of law.

We have examined the other questions argued in the brief of counsel, but find none of sufficient merit to require discussion. Affirmed,

In re MODEL INCUBATOR CO.

Appeal of QUEEN CITY FOUNDRY CO., Inc.

(Circuit Court of Appeals, Second Circuit. December 11, 1918.)

No. 101.

BANKRUPTCY 467-REVIEW ON APPEAL-FINDINGS OF FACT.

A finding of facts by a referee, concurred in by the District Court, will not be disturbed by the appellate court.

Appeal from the District Court of the United States for the Western District of New York.

In the matter of the bankruptcy of the Model Incubator Company. From an order of the District Court, the Queen City Foundry Company, Incorporated, appeals. Affirmed.

Gibbons & Pottle, of Buffalo, N. Y. (Frank Gibbons, of Buffalo, N. Y., of counsel), for appellant.

Paul Sheehan, of Buffalo, N. Y., for appellee.

Before WARD, ROGERS, and HOUGH, Circuit Judges.

PER CURIAM. This record shows that on a vital question of fact, viz. whether assuming fraudulent representation on the bankrupt's part the petitioner was in the least misled or influenced thereby, both the referee and the District Court found the fact to be against petitioner's contention. As we remarked in a somewhat similar case, the trial court "had the advantage of seeing and hearing the witnesses, and his finding upon the facts should not be disturbed." In re K. Marks & Co., 218 Fed. 455, 134 C. C. A. 255.

In this instance we are in entire accord with the finding below, and. therefore affirm the order appealed from, with costs.

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MCDOWELL MFG. CO. et al. v. ELECTRIC WATER STERILIZER CO. et al. (Circuit Court of Appeals, Third Circuit. December 27, 1918.)

Patents Nos. 943,188, 951,311, 951,312, 951,313, relating to methods and apparatus for the electrolytic purification of water, held not infringed by defendants' device.

Appeal from the District Court of the United States for the Western District of Pennsylvania; W. H. Seward Thomson, Judge.

Bill by the McDowell Manufacturing Company and the Electric Water Purifying Machine Company against the Electric Water Sterilizer Company and another. From the decree, complainants appeal. Affirmed.

Frederick W. Winter, of Pittsburgh, Pa., for appellants.

David P. Wolhaupter, of Washington, D. C. (E. C. Higbee, of Uniontown, Pa., of counsel), for appellees.

Before BUFFINGTON and WOOLLEY, Circuit Judges.

WOOLLEY, Circuit Judge. This action is double in character. By their bill, the plaintiffs first charge infringement of five patents granted the McDowell Manufacturing Company as assignee of Harry B. Hartman, one of the defendants, and then assert a right to an assignment of four patents granted Hartman, all relating to methods and apparatus for the electrolytic purification of water. The validity of the patents in suit granted on the assignment of Hartman, the defendant inventor, was, of course, not attacked at the trial, but infringement was denied, the plaintiffs' right to an assignment of patents granted Hartman and held by him was traversed, and a counter-claim by Hartman to an equitable title in the patents in suit was set up. At the trial, one of the patents in suit was withdrawn. By the decree which followed, the trial court held the remaining patents were not infringed, denied Hartman's counter-claim to an equitable title in them, and dismissed the plaintiffs' demand for an assignment of Hartman's patents. Out of these diverse findings, the one matter submitted for review on this appeal is the issue of infringement. A discussion of this issue together with the reasoning and findings of the trial court-with which in the main we agree-appears in the unreported opinion of Judge Thomson, of which we shall avail ourselves for an ample statement and discussion of the issues involved and decided:

"The bill in this case charges the defendants with infringement of five Hartman patents, involving the electrical purification of water, namely, Nos. 943.187, 943,188, 951,311, 951,312 and 951,313.

"There are four patents to be considered, patent No. 943,187, sued upon, having been withdrawn at the trial. There is no direct attack on the validity of the patents in suit, and hence the question involved is one of infringement, or, in other words, the scope of the claims relied upon and the application of

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those claims to the defendant's device. The subject in controversy is the purification of water by the action of electricity. This is effected by passing the water under its supply pressure between metal plates called 'electrodes' placed a short distance apart in a box known as an 'electrolyzer,' and connected to an electric circuit. The electric current passes through the water from the positive plate or 'cathode' to the negative plate or anode,' the water at the same time passing between the electrodes. The plates are usually iron or aluminum. The action of the electric current produces a certain amount of gas containing oxygen or ozone. It also produces salts from the plates, which are converted by the impure water into a coagulant material, and this material entrains the impurities and bacteria in the water, which may then be filtered out. The water passes from the electrolyzer into another chamber of such size as to decrease the velocity of the flow, there to be acted upon by the salts or gases. It then passes to a filter or filters, where the impurities are caught in a layer of coagulant which forms on the top of the filter-bed, and the clear water is drawn off at the bottom. To economize in the electricity used, the flow of the current is started and stopped with the starting and stopping of the flow of water through the apparatus.

"The general subject of electric purification of water is old in the art. This is conceded by the plaintiffs. The patents in suit are for methods and apparatus, which are improvements on this general subject-matter, and involve two features of novelty over the prior art: First, the reversal of the electric current through the electrolyzer periodically, so that substantially equal quantities of current are caused to flow in opposite directions between reversals, notwithstanding interruptions in liquid and current flow. The purpose of this periodical reversal of current is to keep the plates clean; that is, to prevent the formation of deposits by well-known electric action upon the electrode plates to such an extent as to prevent the salts from being thrown off the plates, and their efficiency reduced. This feature is involved in patent No. 943,188. The other novel feature consists in making and breaking the electric current with the starting and stopping of the flow of water, and in a manner to maintain the current flow appreciably longer than the liquid flow; the purpose being to insure the electric treatment of all water passing through the apparatus. This feature is involved in patents 951,311-951,313. Patent 951,311 covers the method of water purifying, including the particular step of maintaining the electric current after the flow of the water has ceased. Patent No. 951,312 is on the mechanical feature of the valve connection used for maintaining the flow of the electric current after the liquid flow has ceased; while patent No. 951,313 is for the combination of parts used for practicing the method of patent 951,311, comprising as one of its elements a valve similar to that of patent 951,312. The object in each case is to maintain the electric current somewhat longer than the flow of the liquid.

"The defendants, in answer to the charge of infringement, allege, first, that defendants' apparatus contains an entirely new organization of parts involving different processes of purification of water, from that carried out by the organization of parts provided for in the patents in suit; and second, that the state of the art prior to the application for the patents in suit requires such a limited construction of those patents as to exclude from the claims thereof the apparatus of the defendants. That otherwise, the state of the art would be anticipatory of such patents and invalidate the same.

"The structure and arrangement of defendants' apparatus, and its method of operation, have been stipulated in Plaintiffs' Exhibit No. 5. Inasmuch as this apparatus is manufactured in accordance with, and under the protection of, patents of the defendant Hartman, being Nos. 1,139,969 and 1,139,970, dated May 18, 1915, these patents establish a presumption of non-infringement and right in favor of the defendants. As was said by the Circuit Court in Powell v. Leicester Mills Co., 103 Fed. 476, 'Where a patent has been issued for the alleged infringement device, used by a defendant, he is entitled to the benefit of the presumption arising from such fact, that his device does not infringe the prior patent.' In determining whether defendants' apparatus embodies new and independent invention, not subject to the patents in suit, certain fundamental matters must be considered. The defendants' apparatus

in question relates to the art of purifying water by an electric current, particularly such as are inserted in the local supply line for a building, its action being intermittent as the water is drawn from time to time for drinking purposes. An example of this use of the apparatus of the defendant installed in the Western Theological Seminary of Pittsburgh, being the one upon which this charge of infringement is based.

"There is no doubt that the fundamental electric action in the defendants' apparatus is the same as that in the patents in suit, but this is equally true of every apparatus of the kind in the prior art. The evidence, particularly of Professor Ganz, elaborates the electrolytic methods of treating water. Very generally, it consists of passing the water between electrodes and passing an electric current through the water from one electrode to the other. In one method, not commercial, the electrodes are of some soluble material, such as carbon, which results in the production of gases only-oxygen and hydrogen, but no salts. There is also produced with the oxygen some ozone. The method depending upon the oxygen with the small amount of ozone present, destroying by oxidation the organic matter and bacteria in the water. Another, more practical, method is to use metallic, either aluminum, or iron, electrodes, which form upon electrolysis, salts, which are converted into coagulant material, entraining the impurities, which are then filtered out. In this method, in addition to the salts, some gas is produced, its amount, relative to the amount of salt produced, depending largely upon the voltage of the circuit, a relatively high voltage producing a large amount of gas, and a low voltage little gas and no salts. All the foregoing is fundamental to an electric water purifying apparatus, generally. No claim can be made thereto at this late day by any one, nor can any one infringe any existing patent by making use of such an electrolytic action; for instance, in the patent of Webster granted in 1889, No. 398,101, the single claim of the patent specified, "The process herein described for purifying sewage and other impure water, which consists in passing the same in contact with electrically excited positive and negative electrodes of iron, whereby salts of iron are produced at the positive electrode, which, in re-acting with the alkalis produced at the negative electrode, form a flocculent, precipitate of ferrous hydrated oxide, which, together with the gases generated, effect the precipitation of the solid matter and the purification of the impurities held in solution.'

"Looking at defendants' apparatus with these principles in mind, we find a fundamental difference between the apparatus of the Hartman patents in suit and the defendants' apparatus. This is shown by the accompanying illustration comprising two views, one an interior view of the 'coagulation chamber' of the defendants' apparatus, which is the important feature in defendants' patents 1,139,969 and 1,139,970, under which they are operating. The other shows an interior view of the 'ozoning chamber,' or pipe, of the patents in suit. From the testimony of Hartman, it appears that he found the latter unsatisfactory and abandoned it, adopting the new and more efficient coagulation chamber of defendants' patents. The chamber in each case is that part of the apparatus which receives the electrically treated water directly from the electrode box. In the ozoning chamber the water enters at the bottom of the pipe and passes freely and unhindered through the pipe or chamber, and out at the top to the filter, giving little opportunity for the salts to form a coagulant, nor for any coagulant to be removed by sedimentation, because everything is carried over from the ozoning chamber to the filter. During the period when water is not being drawn, of course any suspended matter in the chamber when the waterflow ceases, will settle at the bottom of the chamber. But when water is drawn again, all of this temporarily arrested matter will again be carried along and deposited on the filter bed. It is quite the reverse in defendants' coagulation chamber, which comprises a long cylinder haxing a relatively large cross-section, compared with that of the supply pipe. There the treated water enters the chamber near the top. The outlet pipe enters the chamber from its top, and extends to a point about one-third away from the bottom of the chamber. As the treated water, with the entrained salts and gases, enters the chamber, the gases rise to the top and are drawn off with the water into the pipe to the first filter through a small