and therefore that the plaintiffs are entitled to an allowance of damages, which is the branch of the case we have been thus far considering, then there will be nothing to consider in relation to the defendant's counter-claim for the balance of the contract price. But suppose your determination should be that the defendants have duly performed the contract; that there was no breach on their part, and therefore that the plaintiffs are not entitled to damages,-the question then arises, what are the rights of the parties with reference to the balance of the unpaid contract price-$5,900-which the defendants seek to recover on their counter-claim? and this is the next question for consideration.

Ordinarily, upon its being determined that there has been no breach of a contract, it follows as a consequence that the parties to whom anything is due on the contract are entitled to recover the amount thus due. In the contract in question it was specially provided that upon completion of the work to the satisfaction of the superintendent, and fulfillment of guaranties, the defendants should receive payment of the balance due upon the contract, provided the said superintendent should certify in writing that the defendants were entitled thereto. By this provision it was made a condition precedent to the right of the defendants to payment of the balance of the contract price on completion of the work, to obtain the certificate of the superintendent in writing that they were entitled to such unpaid balance. No such certificate has been obtained by the defendants from the superintendent, and it is understood as a fact in the case that the superintendent has refused to make the certificate.

It follows, therefore, that even though you should be of the opinion that the defendants have performed their contract by putting into this building such an apparatus as their guaranty required, still they are not entitled to recover the balance of the contract price unless the non-production of the certificate of the superintendent can be avoided or excused. This state of the case results from the fact that the parties chose to make a contract by which the architect or superintendent was made the judge between the parties of the completeness and sufficiency of the work, and by which the right of the defendants to payment of the final balance of the contract price was made dependent upon the execution by the superintendent of a certificate that they were entitled thereto. The court cannot change. the contract which the parties made, or make a new contract for them. But, though the non-production of the superintendent's certificate, if not in some legal manner excused, prevents a recovery by the defendants of the balance of the contract price, it ceases to be a bar to such recovery when such facts are shown as in the law excuse or avoid its non-production; and I now proceed to state to you what it is necessary for the defendants to establish to bring about that result.

If the fact be that the apparatus which the defendants put into the plaintiffs' building in all substantial and material respects fulfilled the requirements of the contract, and the architect or superintendent fraudulently, or in bad faith, refused to give to the defendants the certificate provided for by the contract; or if the certificate was withheld in consequence of gross mistake of the superintendent, or failure on his part to exercise an honest judgment on the question of the sufficiency of the apparatus,-then the defendants would be entitled to recover the balance of the contract price, although the certificate is not produced. What was contemplated by the contract was that, after the apparatus was put in operation in the building, the superintendent, with full knowledge of all such facts as would enable him to exercise his judgment in the matter, should in good faith, and upon his best judgment, decide for the parties whether the apparatus met the requirements of the guaranty, and whether, therefore, the defendants were entitled to the balance of the contract price remaining unpaid. If he so exercised his honest judgment, then his decision against the right of the defendants to a certificate cannot be questioned here on the ground merely that he committed an error of judgment. What the law exacts from an arbiter thus chosen, is an understanding of the facts upon which he is to exercise his judgment, and good faith. For example, if an architect or superintendent to whom such a power had been delegated, in the face of a manifest. performance of a contract,-a performance with which he ought in right and justice to be satisfied,-were to perversely, wrongfully, and unjustly refuse to give the required certificate, that would be evidence of bad faith; and in such case, it appearing that the refusal to give the certificate was not the result of the exercise of a candid and honest judgment, there would be no doubt of the right of the party to recover what might be due him on the contract, notwithstanding he had not received a certificate. Really the question in a case like this is, has the superintendent exercised the authority given him to determine whether the party has performed his agreement and is entitled to payment, with an honest purpose to carry out the real intention of the parties as collected from their agreement? And, as tending to establish bad faith, it is competent to show that the person to whom the power was given to make the required certificate, perversely, wrongfully, and unjustly withheld the certificate; that he was actuated by ill-will, prejudice, partiality, caprice, or motives inconsistent with an intent to exercise his honest judgment of the sufficiency of the work. But, as I have said, if the case is one where the superintendent honestly exercises his judgment upon the question, mere error in his conclusions will not avoid the non-production of the certificate; nor is such error of judgment sufficient to show fraud or bad faith or mistake. The mistake that will avoid the production of the superintendent's certificate must be gross. It must be a mistake in some matter of fact by which he is led to a false result. It must be

more than a merely erroneous conclusion arrived at on consideration of all the facts. One test of such a mistake is that it is of such a kind, and so obvious, that when brought to the notice of the arbitrator who is to decide the question, it would induce him to alter the result to which he had come in the particular specified. It must be a mistake as to a fact upon which the judgment of the superintendent or arbitrator has not passed as a part of his investigation, and of such a nature, and so proved, as to lead to a reasonable belief that he was misled and deceived by it, and that if he had known the truth he would have come to a different result. Boston Water-power Co. v. Gray, 6 Metc. 131. In the language of one of the decisions cited on the argument, the mistake, to be available in such a case, must be one which shows clearly that the superintendent was misled, deluded, or so far misapprehended the facts that he did not exercise his real judgment in the case. McAuley v. Carter, 22 Ill. 57.

Considering all the testimony bearing on the subject, with the suggestions in relation thereto which have been urged by counsel, you will determine whether the non-production of the certificate is avoided or excused. If it is, and if the contract was fully performed, then the defendants are entitled to recover on their counter-claim for the unpaid balance of the contract price. If the production of the certificate is not avoided or excused, then the defendants are not entitled to recover on that counter-claim, notwithstanding you may think that the apparatus satisfied the requirements of the guaranty.

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Pending the trial, the plaintiff Mack, by whom alone this suit was originally commenced, has amended his pleadings by making one Alexander Guiterman a co-plaintiff, and so a recovery of damages is sought in favor of both plaintiffs. This being so, if you find that the plaintiffs are not entitled to recover, and that the defendants are, your verdict will go against both the plaintiffs.

In re MERRILL and others, Bankrupts.

(District Court, N. D. New York. 1884.)

BANKRUPTCY PROMISSORY NOTE-INDORSER-PART PAYMENT-NOTE FOR BALANCE-PETITION IN BANKRUPTCY.

The principle that the taking of a promissory note does not extinguish the original debt except by express agreement, has little application to a case where the parties sought to be charged are not makers but indorsers, and when, prior to the date of the second note, (given for balance after part payment of the first,) their legal status is completely changed by the filing of a petition in bankruptcy.

Prior to the filing of the petition the bankrupts were charged as indorsers on a note for $1,500, made by one Gaylord. After the filing of the petition, the claimant, who was the holder of the note, received a payment of $500 thereon and a new note similarly indorsed for the balance, $1,000. The register found that this transaction was a payment of the $1,500 note which was thereupon given up. The claimant first proved the $1,000 note but subsequently offered to surrender it to the assignee and filed a supplemental proof for the balance alleged to be due on the original $1,500 note. The register found that the $1,000 note was provable because made and delivered before the actual adjudication in bankruptcy. The question now comes before the court upon exceptions filed by both parties to the report.

Richard C. Steele, for claimant.

Charles F. Durston, for assignee.

COXE, J. The original and supplemental proof should be expunged. The former, for the reason that the note upon which it is founded was made and delivered after the filing of the petition in bankruptcy; the latter, upon the authority of In re Montgomery, 3 N. B. R. 426.

The cases cited by the counsel for the claimant, holding that the taking of a promissory note, does not extinguish the original debt unless by express agreement, have, I think, but little application to a case where the parties sought to be charged are not makers but indorsers, and where, prior to the date of the second note, their legal status is completely changed by the filing of a petition in bankruptcy.

In re PEVEAR and another, Bankrupts.

(District Court, N. D. New York. 1884.)

BANKRUPTCY-FRAUD-ALLEGED RETAINING OF MONEY AND EFFECTS BY BANK

RUPT.

In a proceeding against a bankrupt by his assignee for an alleged retaining of money and effects, fraud being charged and a summary remedy demanded, the court should be clearly satisfied that the accusations of the petition are sustained by the proof.

In September, 1880, the assignees of the above-named bankrupts presented to the court a petition representing that the bankrupts had fraudulently concealed and withheld from them $10,500 in money, besides a large amount of merchandise. The petitioner's prayer is for an order directing the bankrupt to pay over said sum and return said merchandise. The court thereupon made an order referring it to the register in charge to take proof of the allegations of the petition and report the same to the court with his conclusions

thereon. On the fifteenth of May, 1884, the register made his report, in which he found that no money belonging to the assignees has been withheld by the bankrupts or either of them. The case is now before the court on exceptions filed to the said report.

Henry M. Field, for assignees.

Daniel L. Benton, for bankrupts.

COXE, J. It cannot be said, upon the evidence submitted, that the register has reached an incorrect conclusion. In a proceeding of this nature, where fraud is charged and a summary remedy demanded, the court should be clearly satisfied that the accusations of the petition are sustained by the proof. The evidence is not of this convincing character. It is contradictory, conjectural, and replete with inaccuracies. It cannot be said that fraud on the part of the bankrupts has been so clearly established that the court would be justified in making the order asked for in the petition.

I do not think that the findings of the register should be disturbed. Exceptions overruled.

PATENT

ALLEN V. DEACON.

(Circuit Court, D. California. July 28, 1884.)

UNSTAMPED ARTICLE-INNOCENT INFRINGER-SECTION 4900, REV. ST. In the case of a patented article which does not bear the required stamp or label, recovery shall not be had upon infringements occurring while the infringer is ignorant of the patent, under the conditions stated in section 4900, Rev. St., but shall be limited to infringments arising after notice.

In Equity.

W. H. Sharp, tor complainant.

John C. Hall, for defendant.

SAWYER, J. The defendant had been employing the patented article in steam-engine condensers manufactured by him for several years prior to 1875, in entire ignorance of the existence of the patent sued on. The patentee did not affix the word "patented" to the article manufactured by him, or to a label attached, or in any other way indicate that it was patented. Several engines in steamers came into the port of San Francisco, having the article manufactured and sold, by authority of the patentee, in their condensers, without any indication that it was patented, and the defendant had often examined them. He was entirely ignorant that there was a patent upon it till the month of June, 1875. While building the condensers of the Constantine, at that time, after he had got the larger part of the patented packing in, he was notified that there was a patent upon it. This was the first information he had of the patent. He at once of

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