Dalzell v. Fahy's Watch Case Co. — 52 N.Y. St. Rep. 354

Majority

p. 354

Allan C. Dalzell, App'lt, v. The Fahy's Watch Case Co., Resp't.^[1]

(Court of Appeals,

Filed May 5, 1893.)

Headnote

Pleading—Assignment of patents.

In an action upon an agreement for the transfer to defendant of plaintiff’s right and title to certain inventions and letters patent on request, the complaint alleged that plaintiff owned certain letters patent; that they were the ones mentioned in said agreement; that plaintiff did duly assign, transfer and set over unto defendant, or for its use and at its request, said letters patent; that defendant has manufactured a large quantity of articles under the same, and has received a certain ret sum therefrom; that plaintiff has demanded his share thereof, hut defendant has refused to pay or account therefor. On demurrer, Held, that the complaint was clearly sufficient; that if the assignment was not as complete as defendant was entitled to have it, it should have refused to accept it or use the patents, hut having taken an assignment of the patents under the agreement and used them, it cannot refuse to pay the share of the profits stipulated in the contract.

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Appeal from judgment of the New York superior court, general term, affirming a final judgment entered in favor of the defendant upon its demurrer to the plaintiff’s complaint. The complaint is as follows:

“ Plaintiff herein complaining of the above-named defendant shows to this court, and alleges:

“ 1. On information and belief that at all the times hereinafter mentioned the defendant was and still is a corporation duly created, organized and existing under the laws of the state of New York:

“ That heretofore there were issued, in due form of law, unto this plaintiff by the United States of America five several letters patent, as follows:

“Number 329,284, granted October 27, 1885;

“Number 329,285, granted October 27, 1885 ;

“Number 329,286, granted October:. 27, 1885;

“Number 384,620, granted September 7, 1886 ;

“ Number 355,144, granted December 28, 1886; and being the same letters patent mentioned in the contract duly made, executed and delivered interchangeably between the parties hereto, a copy of said agreement being hereunto annexed and made a part hereof.

“ That thereafter and under and by virtue of said annexed contract in that behalf, this plaintiff did, on or about December 27, 1887, duly assign, transfer and set over unto the defendant or for its use and at its request the letters patent aforesaid.

“ That thereafter and ever since the defendant, as plaintiff is informed, verily believes and alleges, has manufactured and sold under said letters patent and contract upwards of one million two hundred and fifty thousand of the commodities thereby covered and referred to, and that after all the deductions authorized by said agreement from the proceeds of such sales, there remains received by defendant and being net profits the sum of one hundred and fifty thousand dollars.

“ That plaintiff has duly and fully done and performed all the matters and things by him to be done and performed under said contract on his part, and from said defendant demanded his said moiety of net profits thereunder accordingly, but the defendant has refused to pay over said moiety nor account thereof, to plaintiff’s damage seventy-five. thousand dollars.

“ Wherefore, plaintiff demands judgment against defendant for seventy-five thousand dollars, besides the costs and disbursements of this action.”

The contract annexed to the complaint is as follows:

“ Whereas, Allan 0. Dalzell, of Sag Harbor, on Long Island, in the state of New York, now employed by the ‘ Fahys Watch Case Company,’ a corporation of the state of New York, has obtained a number of Letters Patent of the United States for improvements in Watch Cases, Watch Movements, Jewelry, etc.

“And whereas, The said, The Fahys Watch Case Company, is

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desirous of acquiring an interest in said inventions and patents, and in all future inventions of said Allan 0. Dalzell and the patents obtained thereon:

“ Now, this Indenture witnesseth, That for and in consideration of the sum of one dollar to the said Allan C. Dalzell in hand paid by the said Fahys Watch Case Company, the receipt of which is hereby acknowledged, the said Allan C. Dalzell hereby agrees to assign, sell and set over unto the said, The Fahys Watch Case Company, all the right, title and interest in all inventions and the Letters Patent obtained thereon which the said Allan C. Dalzell may now have and which he may hereafter acquire by future inventions and Letters Patent thereon or otherwise relating in any way or important in and valuable to the business of The Fahys Watch Case Company, provided the said, The Fahys Watch Case Company, may desire to manufacture under said Letters Patent, and shall require in writing the said Allan C. Dalzell so to assign said patent or patents. In consideration of which the said, The Fahys Watch Case Company hereby agree to and with the said Allan 0. Dalzell, that the said The Fahys Watch Case Company, when in manufacture under any patent so assigned or to be assigned as aforesaid will furnish all the machinery and money it deems necessary to conduct the business of manufacturing and placing the goods so manufactured upon the market, and that the net profits arising from the sale of the said goods so manufactured under patents aforesaid, after deducting all costs and expenses, including cost of manufacture, selling, bad debts, etc., shall be equally divided between the parties hereto.

“ In witness whereof, the said Allan C. Dalzell has hereunto set his hand and seal, and the said, Fahys Watch Case Company, has caused its corporate seal to be hereto affixed and attested by its secretary, and these presents to be signed by its president, the twenty-first day of April, in the year eighteen hundred and eighty-six. ”

The demurrer is upon the sole ground that the complaint does not state facts sufficient to constitute a cause of action.

Edmund F. Oldham, for app'lt; William A. Jenner, for resp't.

The complaint is clearly sufficient. It contains a plain and precise statement of facts constituting the plaintiff’s cause of action. It specifies five patents which were issued to him at the dates mentioned, and avers that those patents are the same that are mentioned in the contract annexed to the complaint; that under the contract the plaintiff did at a date mentioned duly assign, transfer and set over to the defendant, or for its use and at its request, the patents mentioned; that it has manufactured and sold under the patents and contract a large quantity of the commodities covered by and referred to in the patents, and that after all the deductions authorized by the contract, there remained net profits received by it amounting to the sum of $150,000; that he has demanded his half of such net profits ; that it has refused to pay that share to him, and he demands judg

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meat. So far as we can perceive this complaint is absolutely unassailable. It is quite true, as contended by the defendant, that the plaintiff was bound to assign to it not only the letters patents, but all the inventions. We may assume that the plaintiff has not assigned the inventions, but we cannot assume that he has refused to do so. The averment in the complaint is that upon the request of the defendant he assigned the patents, and that it has used them and made the net profits by the use of them. It has, therefore, had the substantial benefit of the agreement thus far. If the plaintiff’s assignment was not as full and complete as it was entitled to have, it should have refused to accept it, or to use the patents, and then it could have compelled him to perform his contract, or have sued him for damages. But having taken an assignment of the patents under the agreement, and used them, it cannot refuse to pay the share of the profits stipulated in the contract. If it now wishes an assignment of the inventions it must demand it, and if refused, it may compel the assignment by suit or recover damages for the refusal; or it may retransfer the patents to the plaintiff and refuse further to use them. But it cannot retain the patents and use them without any liability to pay the stipulated compensation for their use. So, too, if the defendant has suffered any damages because the plaintiff has refused to assign the inventions, it may interpose a counterclaim for such damages in this action.

The agreement requires the plaintiff to assign the patents to the defendant, and it is claimed that the complaint is defective because it alleges that he assigned, transferred and set over the patents “ to the defendant, or for its use.” But it is alleged that the assignment was thus made at its request. It certainly would be a performance of the contract on the part of the plaintiff if, at the request of the defendant, it assigned the patents to some person for its use, and it thereafter used them and had the benefit of them. It is quite hypercritical to say that the letters patent mentioned in the complaint are not those referred to and contemplated by the contract. It is alleged that they were issued to the plaintiff; that they are the same letters patent mentioned in the contract ; that the patents were assigned to the defendant at its request, in pursuance of the contract, and that it used them. What further allegations were needed ?

This complaint cannot be condemned as insufficient without applying rules for its construction more stringent than have ever prevailed in this state, in despite of the provision of the Code, §519, which requires the allegations of pleadings to be liberally construed, with a view to substantial justice between the parties.

The judgments of the general and special terms should be reversed and judgment given for the plaintiff upon the demurrer, with costs, with leave, however, to the defendant, within twenty days after the filing oí the remittitur in the court below, upon payment of all the costs subsequent to the demurrer, to answer the complaint.

All concur.