Johnson v. Union Switch & Signal Co. — 37 N.Y. St. Rep. 876

Majority

p. 876

Charles R. Johnson, Pl’ff, v. The Union Switch & Signal Co., Deft.

(New York Superior Court, General Term,

Filed March 2, 1891.)

Headnote

1. Contract—Construction—Termination.

A contract between the parties hereto provided that plaintiff should be the general manager of defendant, and assign to it the exclusive right to use all his inventions; that the contract should continue for a period of ten years, subject to termination by either party by one year’s notice in writing after the second year, or by the death or inability of plaintiff. By the 8th clause it was provided that, on the termination of the agreement, said company (by reason of the expenditures that shall have been made during the continuance of this agreement) shall have a license (not exclusive) to use all the inventions that may have been used by it, on payment of $6,500 a year, payable quarterly. In 'an action for an instalment of the sum last mentioned, Held, that a discharge of the plaintiff did not terminate the agreement within the meaning of the 8th clause, and that" plaintiff was not entitled to recover.

3. Same.

In such case, if defendant thereafter used the inventions, plaintiff would be entitled to the value of that use.

3. Same—Bes adjudicata.

A judgment against the defendant for a quarterly payment recovered by an assignee of the plaintiff is not admissible as a final adjudication as to the liability; of defendant under the 8th clause, as the parties are not the same, and plaintiff is not estopped by the former judgment.

4. Same—Promise made by president op corporation,

A promise made by the president of the defendant on such discharge that the royalty would be paid is not binding on the defendant in the absence of proof that he was authorized to make it or to put a construction on the contract.

Exceptions ordered to be heard in the first instance at general term, the complaint having been dismissed.

George N. Miller, for pl’ff; John W. Houston, for def’t.

The action was a written contract between the parties to the action. It provided, 1st, that plaintiff be made general manager of the defendant; 2d, that he receive $5,000 each year as salary; 3rd, that he thereby granted, sold and conveyed to the said company, except as thereinafter provided, the exclusive right to the use of all the inventions of the plaintiff relating to the signal business that he then had or might thereafter acquire, and also the right to use certain inventions designated; 4th, that the company pay for the use of the inventions $3,000 each year in quarterly payments; 5th, that one Henry Johnson be employed; 6th, that the plaintiff in addition to the other compensations to him receive ten per cent of net profits.

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7th. It is mutually agreed that this contract shall continue for a period of ten years, subject to termination by either party, however, by one year’s notice in writing to the other party at any time after the second year or by the death of Charles R. Johnson or by his permanent inability to perform his duties as general manager.

8th. It is further mutually covenanted and agreed that in the event of the termination of this agreement, the said company (by reason of the expenditures that shall have been made during the continuance of this agreement) shall have a license (not exclusive) to use all of the inventions that may have been used in carrying on the business of the company, on the payment of $6,500 per year; said sum to'be paid quarterly ; and shall be entitled to purchase from Charles R. Johnson or his executors the exclusive right to use all of the said inventions upon as favorable terms as he or his executors may be willing to grant to any other parties.

9th. That the agreement shall take effect from June 1, 1886; and,

10th. That in the event of the business of the company being terminated by circumstances over which its officers have no control, the contract should be null and void, and the license to use the inventions referred to, should cease, and all rights therein should revert to the plaintiff.

The action was for a quarterly payment under the eighth section of the contract. The plaintiff claimed that there had been a termination of the contract, within the meaning of that section caused by a breach of the contract on defendant’s part in discharging, without cause, the plaintiff from its service. The defendant took the position that the termination meant was such as had been provided for in the earlier part of the contract in its 7th section.

If there were no break between the sections and the word eighth omitted, by reading the two sections together as if they were one, it would be clear that the words continue and terminate of the early part of the section referred to the same condition that is indicated by the words termination and continuance of the later part of the section. There was no necessity of using “ said ” or “ aforesaid.” The words having been once used, and nothing intervening to indicate a purpose to change the meaning, a repetition of the words is a repetition of the meaning.

The construction of the plaintiff involves the following reading : That in the event of a breach of this agreement, by the company, the company shall have a license (not exclusive) to use, etc. A contract should not be construed so as so provide m its executory aspects for bringing about its breach, if it be possible to avoid such a construction. Such a construction would involve the idea, that by the 8th section the plaintiff intended to offer to the defendant a motive to discharge him.

The 8th section, in its provisions, shows what was meant in the use of the words “ termination of this agreement.” Immediately after these words is the clause in parenthesis “ (by reason of the expenditures that shall have been made during the continu

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anee of this agreement)” The termination was to be at the end of the intended continuance. The expenditures were such as would be made through ten years, or if notice were given through three years. Such was the consideration to the plaintiff for making the license. If his discharge would make the provision operative, then it might be a discharge at the end of a day’s service as well as the end of a year’s service, as well when a few dollars had been expended, as when several hundred dollars had been. At the end of a day’s service many inventions might have been used for the business of the company or only one. If a breach by discharge terminated the contract then by the 8th section if the defendants used that one invention they would be bound to pay $6,500 a year, which was intended by the parties to be the compensation for the use of all inventions that might be employed in the company’s business through ten years.

There appearing to be no reason for the use of the word termination in the 8th section in any other sense than that of the words continue and terminate in the 7th section, it must be held that a breach of the contract by the defendant did not terminate the contract within the meaning of the 8th section.

It does not follow from this, that if it used, as the complaint avers it did, after plaintiff’s discharge, the inventions of plaintiff that had been used in the business, the plaintiff will be deprived of a valuable property right without compensation, for , the defendant is liable for the value of that use.

The answer, taking all its averments together, does not admit that there was a termination of the contract as provided for in the 8th section.

It is claimed that a judgment-roll offered by plaintiff was improperly excluded. It was in an action against this defendant brought by one Miller as the assignee of the present plaintiff of a quarterly payment under § 8. In that action Miller recovered. It is urged that the judgment was a final adjudication, as to the parties to this action, of the issue of whether the present defendant was liable under § 8.

The fact that the action was not between the same parties is a valid objection to the judgment-roll as evidence, unless the objection is obviated by considerations growing out of the rules of estoppel. It is said that the parties to this action are in privity with the parties to the former action. Of course there is no privity so far as the defendant is concerned, because it was a party. As to the present plaintiff being in privity with the former it could rest only on their relation as assignor and assignee. While there may be a privity of estate or of title, there is none as respects the judgment in favor of the present plaintiff. If there were it would bind them mutually to the estoppel growing out of the relation and if the plaintiff of the former action had been defeated, as to a single quarterly payment under the contract, the present plaintiff would be bound by it, and would have no action against the defendant for the other instalments. But the present plaintiff is not bound by the estoppel, because he did not gain his interest after the so-called estoppel came into existence. In no

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sense did the plaintiff of the former action represent the present plaintiff. Mor is the present defendant in the position of one who takes a right burdened with what will constitute an estoppel, for all its rights as presented in this action were in existence prior to the judgment. The defendant is not estopped by the judgment inasmuch as it does not claim through one who is estopped by it. 2 Smith’s L. C., 664-665; Carver v. Jackson, 4 Peters, 83; Campbell v. Hall, 16 N. Y., 575 .

The judgment roll was correctly excluded.

Certain pleadings in actions between the present parties were given in evidence. It is urged by the plaintiff that as in them the defendants admitted and averred a “ wrongful termination of the contract ” that was an admission of the termination, which put in operation the provisions of the eighth section. This, however, is opposed to the views that have been expressed as to the construction of that section.

At the time that the plaintiff was discharged by the president of the company, the plaintiff said to him: “Of course you will pay me the $6,500 a year royalty?” and was answered: “Yes, oh, yes; we shall pay the royalties." There was no evidence that the president was authorized by the company to make this promise for it or to put a construction upon the contract that had been made.

The exceptions are overruled, and judgment ordered for defendants upon the direction that complaint be dismissed, with costs.

Sedgwick, Ch. J., and Truax, J., concur.