Sibert v. Shaver

The judgment herein is (1) for the enforcement of a rescission of an assignment of respondents’

Clarence Sibert died intestate October 9, 1937, leaving his widow Eena and their daughter Mary Jane. Prior to his decease, he and appellant had long been intimate friends, Shaver having married decedent’s sister. They were frequent visitors in each other’s home. George Shaver was a salesman of market equipment merchandise while Clarence Sibert was a talented jewelry manufacturer. When in 1935 George became convinced of the need for a potato slicer, he told Clarence who promptly commenced work on the invention and thenceforth worked on the device continuously at nights. Shaver purchased the requisite materials and assisted Clarence. Finally they triumphed. They filed an application for letters patent on June 10, 1936, as joint inventors of the slicer and stated they were partners. Sales were immediate, 60 having been made prior to December 1, 1936, at $35 each.

The behavior of the men about the time of their beginning the project is important to the elucidation of the issues. On June 5, 1936, they stated they were partners in their application for a patent. On other previous occasions they had stated in their conversations that they were to do business as partners. February 8, 1937, they filed a certificate with the county clerk that they were doing business as a partnership under the fictitious firm name of S & S Specialty Company and immediately filed a complaint against their debtor alleging they were doing business as partners under the fictitious firm name. Thus, the partners continued their operations until October 9, 1937, when Sibert deceased.

Prior to the passing of her husband Eena Sibert had been an invalid resulting from a nervous breakdown. She had lost weight from 175 to 85 pounds; suffered hallucinations and incoherency of speech. While she was confined in a sanitarium Clarence dined at the Shaver home. As Eena gradually improved appellant continued to carry on the business of the

When in 1946 Mrs. Sibert heard that appellant “had made a million dollars” out of the slicer, she consulted Attorney North. He promptly made an exhaustive investigation of all the facts and of the circumstances of the invention, partnership, application for letters. After having received a report from the patent office he called upon Shaver at the S & S Specialty Company and requested an inspection of the document signed by respondents. Appellant told the attorney that Rena “had been confined in a mental institution and was still crazy” but he promised to get the writing from his lock box. On his call two days later Mr. North examined the assignment and promised to investigate further and report his findings.

Not only did the attorney discover the certificate of fictitious firm name filed by the inventors but during a period of 18 months he visited numerous cafés, drive-ins, kitchen-supply houses and such other places as might use the slicer. He determined that the device had been on the market since a time antedating the assignment in May, 1938, and that Shaver had made numerous sales from August, 1936, to May, 1938, and that the slicer’s value was well established. Thereupon, on September 24, 1947, Rena caused a notice of rescission of the assignment to be served upon appellant. The demand was based on the grounds of fraud, undue influence and mistake of fact.

Mrs. Sibert having qualified as administratrix of her husband’s estate in December, 1947, in March, 1948, her attorney

Findings Have Substantial Evidential Support

That George and Clarence invented the device together as partners, applied for a patent and made the invention an asset of the partnership is clearly established by the proof and by reasonable inferences. The filing of the certificate of a fictitious name and the affidavit attached thereto, the allegations of their complaint filed against a salesman they had employed to make sales, are written evidence which, alone, would have supported the finding of a partnership. In addition there is persuasive parol proof. While the application for a patent was not on a partnership form, the notary who took their acknowledgments testified that “they said they were partners in the application.” Moreover, when, on one occasion the families were gathered at the home of Mrs. Taggart, Shaver said, ‘ ‘ Clarence, make us a potato cutter and we will do all right.” Clarence agreed and commenced at once and continued work on the invention. The witness, Mrs. Weber testified that she had accompanied the inventors to San Diego where she was to introduce them to her friend, a patent attorney, and that in their conversation en route they declared their business in connection with the slicer was on a partnership basis. Such evidence takes on added emphasis in the light of the fact that the brothers-in-law at the beginning agreed upon equal capital contributions, shared expenses for materials and worked together in developing the plans and specifications for the new device. The mere fact that the men made the application in their joint names does not compel a determination that the invention was not a partnership asset as distinguished from a tenancy in common. While consulting

Conceding the fact the utmost value as proof of appellant’s claim, it goes no further than to create a conflict which was resolved against him. But appellant insists that the allegation of the complaint does not support the finding. The complaint alleges that “at the time of his death the decedent was the owner of an equal one-half interest in and to said invention, and letters patent and in and to said partnership. ’ ’ The finding is that each held a one-half interest in the slicer, but subject to an agreement that the invention should be an asset of the partnership. Such slight variance does not create an irreconcilable conflict. That appellant misrepresented material facts relative to the partnership is established by the factual situation already recited. Appellant’s positive declarations to Rena that Clarence had no interest; nothing had been done toward marketing the slicer; it “wasn’t going yet”; it is of little value; no sales had been made,—these were misrepresentations with reference to material facts which, alone, would have warranted rescission. But besides such misstatements the court could not but be impressed by the concealments of important facts from the women. Both of them were in complete ignorance of the status of the slicer’s development. and of its commercial value. But equally as potent ground for rescission was respondents’ reliance upon and confidence in appellant. Neither of them had ever had experience in inventions, patents, promotions or sales. Mary Jane was not of age until the very day of the assignment and Rena’s mind had suffered a serious impairment. In view of such evidence and its adoption by the court relief from the finding is unspeakable in view of the proof that at least one hundred slicers had been produced and sold by 1938— many of them prior to Clarence’s death. In addition to the foregoing Rena proved that Shaver had told her that she must execute the assignment in order to regain her bar pin pledged to Shaver. While that fact was not recited in the notice of rescission, the truth of it indicates that the trial court believed that appellant would not hesitate to oppress the unfortunate related to himself by family, ties.

A surviving partner is a trustee of the trust inherited from his decedent, and of the assets of the partnership. As such he owes the maximum of good faith and personal confidence to the decedent and to the latter’s beneficiaries. (Civ. Code, § 2219.) In all matters connected with his trust, the

Action Not Babbed by Thbee-Yeab Statute

Appellant contends that even though fraud and oppression were established, rescission was barred by the three-year statute. (Code Civ. Proc., § 338(4).) He argues that the letter of Attorney Crum establishes that as of 1940 respondents knew that certain statements made to them by appellant were false and necessarily the statute of limitations commenced to run when they acquired such knowledge. Such argument is predicated upon the assumption that Crum was actually aware of Shaver’s misrepresentations or knew such facts as should have put him on notice that the assignment was not the result of fair dealing by Shaver, citing Nelson v. Nelson, 131 Cal.App. 126 , 131 [ 20 P.2d 995 ].

But Crum was not so circumstanced as to be fairly chargeable with notice of the fraud. While his letter indicates that he had such knowledge his testimony discloses the true situation. All he knew was that an assignment of some sort had been executed. He testified that any references in his letter to misrepresentations of Shaver were based upon his own assumption since he had no actual knowledge of the facts and respondents were unable to supply him with specific details.

Appellant assigns as prejudicial the court’s conclusion that laches was not available to him as a defense. Such ruling was correct. The mere lapse of time does not mean laches.' To make that doctrine applicable it must be made to appear that the party who interposes it as a defense has suffered prejudice by virtue of the delay in commencing his action. Appellant attempts to bring himself within the rnle by his claim that Attorney Nevitt had deceased and that since he was the only disinterested witness to Shaver’s declarations upon which Rena relied his demise has prejudiced appellant’s cause. But there is no indication that Nevitt’s testimony would have supported appellant. Shaver denied a partnership with Sibert ever existed and that Clarence had any interest in the business or in the assets on hand. By virtue of his denials that Clarence ever had an interest in the invention and of his concealment of all his information relative to the joint undertaking with his brother-in-law, appellant caused the delay. But appellant contends that the knowledge of

The court’s finding that respondents rescinded promptly is not arbitrary but is supported by the proof above recited. It cannot, therefore, be disturbed. (Philpott v. Superior Court, 1 Cal.2d 512 , 524 [ 36 P.2d 635 , 95 A.L.R. 990 ]; Reiniger v. Hassell, 216 Cal. 209 , 211 [ 13 P.2d 737 ].) It follows that since appellant’s continued concealment of the true facts as well as his express statements of untruths which they believed caused Rena and Mary Jane to delay their demands, he is estopped from pleading either laches or the statute of limitations. (Hansen v. Bear Film Co., 28 Cal.2d 154 , 178 [ 168 P.2d 946 ]; Benner v. Industrial Acc. Com., 26 Cal.2d 346 , 349 [ 159 P.2d 24 ]; Pashley v. Pacific Electric Ry. Co., 25 Cal.2d 226 , 229 [ 153 P.2d 325 ].)

Action to Establish Partnership

Because the period of limitation commences with the dissolution of a partnership (Shearer v. Davis, 67 Cal. App.2d 878 , 881 [ 155 P.2d 708 ]) and since Clarence’s death dissolved the S & S Specialty Company (Corp. Code, § 15031(4)), appellant contends that the count to establish the partnership, wind up its affairs and make an accounting is barred by the four-year statute of limitations. (Code Civ. Proe., § 343.) Such a bar cannot be successfully raised in the situation here involved. Commencing with the first negotiations between the parties and continuing beyond the assignment of the patent to the time of trial, appellant never ceased to repeat his denial of the partnership. The statute of limitations may not be invoked where he fraudulently conceals the existence of a fact which he was in duty bound to disclose. (Hansen v. Bear Film Co., supra, 178; Sears v. Rule, 27 Cal.2d 131 , 147 [ 163 P.2d 443 ]; Pashley v. Pacific Electric Railway Co., supra, 229.) But appellant did not content himself with denying the partnership with Sibert. He steadfastly and continually repeated that (1) the invention was valueless, and (2) there was no manufacture and sale of the slieer. Also, he concealed through March, 1948,

Judgment affirmed.

McComb, J., and Fox, J., concurred.

A petition for a rehearing was denied July 9, 1952, and appellant’s petition for a hearing by the Supreme Court was denied August 14, 1952. Edmonds, J., and Schauer, J., were of the opinion that the petition should be granted.