ROGERS V. RIESSNER.
525
not appearthat the parties are the same, or the subject-matter the same. It follows that the facts relating to prior litigation set out in this motion, and the consiq.erations of the saving of time, labor, and expense, while they might be urged, as suggested by the plaintiff, as a ground for a continuance of the case, afford, in my opinion, no sufficient justification for granting this motion. Nor do I think the failure of the bill to state the contents of the written communications, or the rules of the patentoffice, referred to inthe bill, a sufficient reason for the defendant to ,plead, and at the same time demur, to the whole bill; such a co.urse.being.contrary . , well-established rules of equ.ity ·pleading.., n a . I' to . . .' cause of this seemS to me the ends of JustIce are more likely to be, reached by following the regular and orderly procedure of coui'ts'of and that the court shou.ld heE',itate,unless from grave ,to tlierefiom. ' Motion " I.
RoGERS , ;l
v. . :
another. ,:' ,
(Oircuit Oourt, 8. D. New York. March 28,,1887.) 1.
2. SAME-EQUITy-TRUST. . . . ·. ' The fact that the royaJties were payable to N. made him trustee ofR.,'sb that R.'s share was due N. at law. and R in equity.
entered lJ,partnership with N. for the purpose of making and s.elling certain patented articles,lind selling territorial rights. ,. R. furnished $1,000, and N, the use of the patent, the title to Which he retained, the prQfiteto be equally divided. A quarter interest hi the patent was sold to ;1;3., angine pl."oceeds of the sale, and a like proportion of the capital furby;',R., became common property. SUbsequently R. and N. made II: supagreement, declaring'that any definite reduction in the capital of N., (the patents,) resulting, from any action of the firm, affected R's in the same 'ratio; that all letters patent and reissues in the same class of itiventions should be at the"expense of the firm, and that R should have threeeighths of all the proceeds thereof; that, in case of dissolution, Rmight take all that should remain of his $1,000 cltpital, after !p.aking the dednctio'll provided, for, and N. should have the privilege of remaining interest in 'the letters patent, paying a proportionate amount'of the expense incurred by the firm: and, in case of negotiations with any other party pending at the time, R should have reasonable and ample time in which to act on Such negotiations, thereby reducing the same to fixed and definite proceeds before said N,(l01l1d effect the dissolution; and, if negot.iations be completed with any ather party for royalties, nothinl; should be construed as depriving It of his full share. Bya contract to WhICh R. consented, the rights of R. being known to all parties to the transaction, N. and R. gave to C. R. & Co., the firm to which Qefendants belong, the exclusive use of the p,atent in! the United States, C. R. & Co. to pay certain license fees to N. A few months later N. gave notice of the dissolution of the partnership with R, and clltimed that R. had no interest in the royalties. an!lsubse9uently assigned to ))". all his remaining interest in the patents, subject to the contract with C. R. & Co. Held, in a suit by R against C. R & Co., that R. was entitled, under the contract·. 1\) his three-eighths of the royalties as proceeds Qf tM patent, wliether the same, were before or, Mter the dissolution l>f-the partnership. ,
R., the orator,
OF CON'I'RACr-:-PATENTJtIG:llTS.
526 3.
FEDERAL
SA)rm-:rNcmHNG PATITNER-LlABIT.ITY.
J)efcndant M. entered the firm of C. R. & Co. at the time the royalties be:gan to accrue. and en joyed the benefit of the license as a partner in the firm under the contract. }leld, that 1'If. was liable, not on an express contract. but on 'the implied contract to pay for what he has had as a member of the firm, on which the'firm had jt. The .contract of N.and R. with C. R. & Co. provided that', on failure to make Iiaturn or payment 'at the agreed terms, for 10 days, N. had the right to terminate the contract.. 1'eudIng litigation between R. and N. in regard to the wyalties, C. R. & Co. failed to make payment to for more than 10 daYs/ 'whereupon N. claimed the right to terminate the contract, but con· tinuedto accept payments. Subsequently N.'s assignee gave the notice of termination long after this default, but what was done seemed to have been dOne,'not In order to terminate the contract, but to cut'off R.'s rights, and to leave it to continue fonhe benefit of N., and those acting under him. Held, tJilatr>tM provisioll was for thepurpostl of enforcing payment. and ,could be and was waived, and that C. R. & Co., by an acceptance of a' notice of ter· mination long after'wards, could not conclude R.'srights without his consent. ACCORD AND SATISFACTION-RECEIPTS-EvIDENCE. OF CONTRACT-NoTICE-WAIVER.' .' .
4.
,
G.
C. R. & Co. made payment for two months to R.'s attorney, pending.R.'s litigation with N., which litigation resulted in No's favor. C. R. & Co. claimed that this payment was upon an agreement that R. would make no further claim on them, but would look to N. for further indemnity. The reo ceipts were for the amounts paid, and specified that they were for the amounts due for those months. The attorney testified that there was no such agreement. Held, that the presumptiollis that the recelpt$show the transaction, since the verbal testimony was conflicting, and there could be no accord and satisfaction unless the understanding was mutual; that is, of R.'s attorney as well as C, R. & Co. . ', .
6.
PATENTS FOR INVENTIONS-LICENSE-EsTOPPEL.
Defendants questioned the Ylllidity of the of the reissue of one of. the,ql,but showed no that. In the absence of such a showing. they could not dispute licensor's title. . '
7
There was a formal.assignJ:V,e,ll,t to R. of his right by, master of chancery in the suit against ;N. in'tbeIllinois courts.. Defendants, contend that this action, being a suit for an account of license fees bX an assignee of the claim, was not in the jurisdiction of a court of equity. 1Ieldthat, since R.'s rights accrij.ed to him, not through the master's assignment, but by reason of his interest as partner,. and since. not being a party to the contract, he could not sue on it at law, thpugh he had equities in it, a court of equity had jurisdiction. .. SAME-PARTms.
8.
Defendants objected that N." and Y;, N.'s assignee, 'Yere not made parties. that, since R. claimed nothing of them, and they had settled with defendants, they were not J;lecessaryparties.
9.
The judgment of the Illinbis court, though conclusive ,between R. and N., was not conclusive between R. and defendants, since they were not parties, . though the members of the firm had knowledge of the case. and expressed as willing to abideby'it.
In Equity; . George C. Lay, for orator. W. H. ,]jee, for WUEElLER,J., From the pleadings and proofs it appears that the Ofator and one Daniel W. Norris;:who owned letters patent No. 195.385, 1877,. grlil,nted tohim for improvements in incnsed glass vessels, entered into a partnerllhip for the purpose of making and
ROGERS 'V. RIESSNER.
527
,selling the patented articles, and selling territorial rights, by the tefl)lS of which the orator furnished $1,000 as his share of the capital, and Norris the use ofthe patent, the title to which he retain.ed; and the proceeds of any territory which might be ,sold or leased were to be equally divided between them, all !1rrangements for that purpose being subject to the approval of Norris. 'rbey' sold a quarter interest in the patent to one WilHam W. Burgess. which Norris conveyed to him, February 8, 1878, ariq the proceeds of tb", sale, and a like of the capital _furnished by the orator, became, by their understanding, a part of the common property. The patet;lt ,was reissuedJ1;1ly 9,1878, and Norris obtained letters patent No. 2,08,628, dated oatoh",r 1, 1878, for improvemepts in like and on the eighth, of April, 1879, the former patwas again reissued. Then" June 6, 1879, the orator and Norris eI).:tered into another of supplementary to the former, by the terms of whiGh it was declared that any definite or certain, in the capital of (t4e patents,).resulting from the action of the firm, affected the capital of the orator in the same ratio; that all letters and reissues, for improvements in the same clasS of inventions in additioido those provided forin the former agreement, should be the expense of the firm; that the orator should have three,eighths olthe proceeds of said letters patent, and of the proceeds ()f letters patent No. 191),385, including reissues o1'tp.e same; of the'Orator should havetlle privilege'of. taking such portion of the $1; boo by him as sho'\lld remain after making the deductjon provided for, and Norris should have the privilege taking whatever interest might remain in the letterfilpatet;ltby paying a proportionate amount of the expense .of those whio,hwere, at the expense the firm; alld "in case of negotiations with anYotber party pending at any time," the orator reasonable and ample time in which to 9n such negotiation, thereby the sama to fixed ,and definite proceeds before said Norris" should. "be permitte,dto effect a dissolution of sftid partnership afil" therein" provided for; and be with anY' other party, fixed and defi,nite amount of money or other property" shcl1.l1d "bedtlme firm 'as or otherwise, at any fixed, ,and and future time, npthing" therei,n "contained "si)ould "be construed as in any way dellriving said Rogers of his full share; as "provided for, of such amount." After tliJat, June 23, 1879;.a,nd while this partnership agreement was in force, a coLibiact was entered into, on which the orator acted, and to which he cOI\sented, andJ3urgessanq. the firm of C. RiessIler & Co. which then consisted of the defendant Riessner and two " -others, and now consista of the defen,dants,--;-the fact that the orator had an interest in the contract being understood by all engaged in making it,__by the terms of which No.rris and BurgefilS agreed to give that fum the exqlusiVe right to makaand sell the patented improvements throughqut theVilited States, to thelfnd of the term of tbepatent, and that finn agreed to pay certain license fe'es wonthly, Illfd to make returns quarterly toNorris, and "Norris the right to terrpinate the agreement upon fail-
or
·
,,'
',l
c'"
'",'
'.;
.',
f.
528
FEDERAL REPORTER.
,.'
ure to make return or payment for 10 days, and Riessl1er & Co. on four months' 11otice. While this agreement was iIi' force, September 11, 1879, Norris gave notice of the. dissolution of the partnership between him and the orator, and thereaJter. claimed that' the orator had no interest in or right to the of the license fees or royalties accruing due from O. Riessner keo., and November ,4,1879" assigned all hi!'! rCinaining interest iii the patents tdtme Wesley Young, subject to the contract with O. 00., Thereupol1, , 7, 1879, the orator commencedsuit'against Norris in the. state courts ofIllillois, where theyr&sided, to bavehis rights to [the' tbree-eighthsof the, license fees decreed toh!m,Ll,hp for the collectioh of the amount due on that shll.rirbtNotris. 'Riessner' & Co. were informed of this tiori, and.: withheld paymJnt':6'f 1the share claimedhy ,the orator. In 1880, O. CoJailedtomake the royalfles of 1st, for more than 10 days, and Norris chiimed the right to tetnHnate. the contract On that ground. On March 2()', 1880, the court Of Il1inois, in whIch the suit between the tb:at tl1'e orator was entitled to orator and Nprris wasperidi6g" \ the threeceighths interest in the license accruing under the contract with C. Co., and decreed ,that Norris execute an assignment o'hhat i,lYil!re 0'£ the interest in tHaicbhtract, and in default of sucil 'cxecutionby Norris, the same be made by a' master of the court, which of this decree, and was' qone.O;' Riessner & Co. were .fully soon thereafter 'paid to the orator the amount of that share of the royalties up to the of April,1880. Norris the decree, and Riesslier & OP. retained the three:-eighths share from him, and paid it to the orator monthly, to 1, 1882. Oll; the twentieth of that month the supreme court of Illinois reversed the decision in favor of the orator, aild the orator itnmediately applied. for. a rehearing. Riessner & Co. were informed of this, and on December 20th wrote to the orator that, as the case had then been decided in favor of Norris, they did not feel justified in paying him any more until a final decision waS reached; that until then they should withhold all' further' amounts; and, if'the decision should come iti his faVOl', he at once receive 'all that was due him. After that; relying 011 the decision already made, they made terms with the assi&nees ofNorris, and those acting with him 'and under him.. On June 16,'1883, the suprelile court'of Illinois affirmed the 01iginal decree irl'fa\r'orof Norris, and, on July 3d after, Riessner & 00. paid to the orntor's attorney the three-eighths of the royalties for 'November and December, 1882, and gave receipts therefor. They have declined to pay him any further roya:lties, and this suit is brought, for an account and recovery of the same. The mostiII)lportant question that is made is whether the orator was of fees the dissolution of the entitled to partnership; The decision of thestipreme cOlirt of Illinois, having juriSdiction of the parties' and the subject, is conclusive, as between the and' Norris, but not as between the orator andC. Riessner &
529
Co., ,for that firm- was not a party to that suit, although the members hadknow'ledge of it, and for a time expressed themselves to be willing to abide by its The decision of that court is, however, entitled to much weight as an authority upon the question involved. The first partne:rshi:rHtgreement shows clearly that the proceeds of the disposition of the right secured by the patent were to become partnership assets, be'longing to both. The object of the partnership was to manufacture and sell the patented articles, and' to sell territorial rights; and in the fifth paragraphof'theagreement it was expressly provided that the proceeds Of territorY:l3Old or leased should be equally divided between the partners. :Befotethe second agreement they had sold one-fourth oithe right, and its proceeds had gone. into the COrIll110nassets, leaving them the owners of three-fourths ofthat.patept. In the supplementary agreement it wasexpri'lssly agreed that the orator should have three-eighths of the proeeedsof that· patent, and the ,same share in those of the .other patent, graIlted:to Noms after the former agreement. The agreement of C.· Riess'rier.& COi, constituted proceeds of bo.th patents of which the o.rator would by that provision be entitled. to. three-eighths. 13ut;'as ifto· put the matter beyond any question, a clam'e paramount to all others was added, which provided that nothing therein contained should be construed· as in anyway depriving the orator of his full share of any fixed and definite ,amount of money or property: which should become due the firm at any fixed and definite future time. Whether the proceeds of any part of the exclusive rights disposed of should be paid down, become due afterwards, his share, if tlie amount and time were definite,wall effectually·secured ·to him. The promise was to Norris, but was made when he was a partner with the orator, upon aconsideration belotiging to the firrn, and it inured to the benefit of the firm, the same as a promissory note taken to himself for property of the firm would. 8tearruJ v. Houghton l 38 Vt. 583; Leach v. Leach, 18 Pick. 68. The same conclusion is reached that was finally reaohed by the supreme court of Dlinois. After the dissolution, each partner owned his share as tenant in common. Partn. § 107 .. The orator's share of these license fees was three-eighths, as fixed by the terms of the supplementary agreement. At law this was due to Norris, as trustee for the orator. ld. In equity it would be due to the orator himself. Another important question is as to the effect of the failure to make payment for 10 days, and of what was done thereupon by his assignee and by himself. The contract provided that, upon such failure, Norris might termina:tethe agreement by serving notice to that effect. This provision was for security 'o( payment, and could be waived. He did not give any notice of termination, and insist upon it, but alluded to it, and Buffered the contract to continue, and received subsequent payments. The agreement could not be both terminated and continue. When his assignee gave notice, it was long after. it had been left to continue, notwithstanding that default. And what was done does not appear to have been done to really terminate the contract, but to cut off. the orator's rights under it,and leave it to continue under the form of a new onel v.30F.no.8-34
530
for the benefit 'of Norris and those acting under him. Such a contrivance would not defeat the orator's rights, even if they could at all be defeated on such a default, against his will. O. Riessner & 00. accepted the notice of termination long afterwards, but they could not, by that act, dispose of the orator's claim' against themselves without his agreement. Another question is as to the effect of what transpired when the payments of the orator's share for November and December, 1882, was made to his attorney. The testimony of the defendants tends to show that this payment was made upon an agreement that he would make no further claim on them, but would look to Norris for further indemnity. The testimony of the attorney is that there was no such agreement. The receipts are for the exact amounts paid, and specify that they are for the amounts due for those months. It may be that something was said about reaching Nonis, but the presumption is strong that; th,e receipts show the real transaction, and, supported as it is by the testimony of the 'attorney, it is not overcome by that of the defendants.. ) If they so understood it, he did not apparently, and the transaction would .not amount to an accord and satisfaction without a mutual understanding to that effect. ' . Another question Illade is aato the liability of the defendant Mei,er! He entered the firm just before or at the time wheh theroyaltills in question began to accrue. He enjoyed the benefit of the license as .a partner in the firm, under the contract. He is not liable upon any express contract, -but is liable upon the implied contract to pay Jor what he has had as a member of the firm,upon the terms upon whiCh 'the firm had it. , Some has been made about the validity of the ,patents, or of the reissue' one o{ them. The defendants have not, however, so far as has been shown, been evicted from ahy of the exclusive rights which the patents purported to give; ,by any paramount title, but have occupied and enjoyed those rights. They are not, therefore, in any ,position to dispute their licensor's title. White v Lee, 14 Fed. Rep. 789; McKay v. Jackman, 17 Fed. Rep', 641. , , ,The defendants insist that this court, as a, cotirt of equity, has not jurisdiction of this cause, for the reason that it isa suit for an account of license fees, by anassignee of the claim, as th.eyallego; and they rely upon Root v.,Railway 00.,105 U. S.189, and Haywardv. Andrews, 106 U. S. 672,1 Sup. Ct. Rep. 544, in support of this limitation. ,It is an account of license fees that is sought in this case, but not by the licensor, as was the case in Root v. Railway Co., nor by an assignee of a right of action at law merely, as was the case ill Hayward v. Andrews. The orator's rights accrued to him by force of his interest as partner, and they were purely equitable rights, existing independently of the formal assignment by the master in chancery under the decree in Illinois. As the written contract did not run to him, he could not maintain an action at law upon it; as he was the equitable owner of the three-eighths part of the royalties, as they accrued, he could maintain a suit inequityJor
'531
Rnaccount of them; An action at law would:not only not be a full, complete, and adequate remedy, but not any remedy at all. Jurisdiction does not depend on the prayer for an injunction, as is the case often in suits for infringement. The assignment by the master was no greater in effect than one by Norris would have been, and would not give an action at law if Norris had been the owner of one, and would not convert the orator's equitable into a legal right, so as to take away the right to proceed in equity upon it. A suggestion is made that the jurisdiction fails because the amount in dispute does not e±ceed$500. But as the amount of this share appears to have been $230.65 for November, 1882, and $103.38 in December, it clearly endugh appears that the amounts of thesanie for the number of months in controversy will exceed, or reasonably may be claimed to exceed,'$500. It that neither Norris ,or Young is made thattttey, or one ofthem, should be. Butthe defendants have Jullysettled:w'ith them, and' the orato,r nothing of them. ,There is nothhig in ,c(mtroversy in which they haye any interest. The defendants have all the'nghts in respect to the 'orator's claim that these persons had, and the orator has his own controvemy is wholly between the orator and defendants. No others appear ,to,be necessary partie!!. , " " ' Let ,a, de<\ree be entered, for the oratOr for !l-n !l-ccount oC the threeeighths of the license fees, according to the prayer of the bill, with costs.
(April 9,1887;)
Goo. O.
for otator. " , Tu1"l'&6l'fLee & McOlure, for defendants.
WHEELER, J. Further question is made, on settlement of the decree in this case, with respect to the termination of the license by the act of parties other than the orator, and to accounting for what has been done since suit brought. If or Young, his assignee, had power to terminate the contract, without regard to the orator's rights undt!r it, for 'pon-payment of the license fees, lleither o( them did so for that cause, I;lndtheyhad no rightto do it but for that cause. The defendants had the power to terminate the contract by giving notice according to itfl terms, and ceasing to operate under it. They did not do that. If they had, they would have been chargeable only so far., The orator had rights under the contract which the others could not trade away . What was done .about terminating the ·licenl:le appears to. have been to pretend to terminate it'without really doirig so, for the purpose of cutting off the orator's righ,ts. This was of no t!ffect. ,Theycould not do, by indirecti6n,whatwas beyond their power to do directly; What theYAid under the patents was done in pursuance of the original arrangemerit;and the orator is entitled to his share. The rights of the parties are to be determined as they stood at the' commencement of the suit. When deter-
.532
FEDERA.L REPORTER.
mined, an accqunt which follows should cover everything within it to the time of taking the,account. Co. v. Goodyear, 9 Wall. 788. Of course, any qnestion ,as to what is or not within the scope of the accounting decreed may be made before the master, and taken before the courtl according to the rules and practice in such cases.
SIMMONS,
Trustee, v.
BA.YNARD
and others.
lJ. South. Oa.rolina.
'I.
PARTITION-DECREE-CONCLUSIVENESS-ApPEARANCE.
In a sUitlor'partition. all the parties interested were made parties, either plaintiffs or defendants, and all tile were Many of the defendants tiled no answer. They were all represented by counsel, bl,lt no formal was entered, and no notice'of appearance' filed. These attorneys'consented in writing tOl'all orders, without WhOlIl they consented. 'Held, that the irregulfl,rity did, not relieve the parties ,from being bound. ' .. ' , '. . " "'. ." Certain,mirrors were served. but no petition for (Su.ardlan ail litem WlliS .pre· sented, and no appointment was made. 13ut ;fillld an a,nswer, as g-uardian ad litem, for them, with a formal ,consent to act as such Held, since in 'equIty iIifantsara treated as wards of the courts, the decree binds them.
2.
'SAME-iNFANTS.
TRUST-SALE UNDER-Brr.L TO CONFIRM.
Plaintiff purchased at the sale under. the former proceedings in partition as a trustee of all the parties. In attempting to sell the property in the execution of his trust, he met with a grave doubt and a denial of the quantity of land conveyed to him, ancl itwas alleged that the proceedings under which he held were irregular and invalid. The validity of the proceedings depended on matters not of record. Held, that he was entitled to obtain authority to convey from the courts by a suit to confirm Iiis sale, ,to 'which 'all interested in the sale were made parties. · " . ', . '
4. COSTS-PARTITION.
These proceedings. having been caused by the failtrre of the record to disclose the parties represented by theattbrnilYB who 'llippea;red,and in partition it beiI;lg the duty of aU the parties to see that the record is perfect, tll-e fund must bear the costs. . POWER OF SALE"':-ExERCISE OF. '
t5.
The trustee Was empowered to seU:at private sale, before Navember 5, 1883, for nbt less; than, $6,000; and on November 5.1883, at public sahl in Charleston, South Carolina, he sold on" that day, but. the purchaser failed to with his bid. Instead of compelling him to take' the title, he advertised and wId again to one who sold to 1. T. H. and 1. F. H., parties to this proceeding. Held, that the first sale exhausted thE! power, so that the second sale was v o i d . , '. LIMITATION OF ACTIONS-CONCEALMENT-FRAUD-BANKRUP'rCy.
W., one of the parties interested in the lands, became a bankrupt in 1868. His schedule failed to mention his interest therein.. Tbe. assignee took no steps to correct the omission. In 1876, W. gave a deed to his fatber as trustee. The trustee took possession, and the deed Was recorded. Held, that this was not such a fraud as prevented the statute oUimitations.from running, since the essential element of concealment was wanting, the deed having lJeen placed on record.! '. ,
lAs to the effect of fraud and fraudulent concealment on the running of the statute, llee Manufacturers' Nat. Bank v. Perry. (Mass.) n N·. E. Rep.8i. '