58 N.Y.S. 889 | N.Y. App. Div. | 1899
Lead Opinion
On the 24th of September, 1894, the parties to this action made a contract, reciting that the plaintiff was in possession of a certain invention for which he had made application for letters patent, and that the defendant desired to secure the exclusive license to manufacture and sell the invention throughout the United States. For the purpose of carrying into effect the desire of the defendant, it was agreed that the plaintiff should grant to him the exclusive right and privilege to manufacture and sell the invention throughout the United States, which the defendant agreed to do. The defendant further agreed to keep books of account of the articles manufactured and sold and render monthly statements,,, and to pay to the plaintiff at the-time of the rendition of each statement a royalty of five cents upon each article manufactured. The contract contained the following provision : “It is further agreed by the party, of the second part that the royalties he sliall pay unto the. party of the first part, the above rate, shall amount.in the aggregrate each separate year to at least Three Thousand Dollars ($3,000), and should the accumulated royalties at the royalty named not reach the sum of Three Thousand Dollars, the party of the second part be entitled to continue- this license by making up the deficit by payment of cash.” As the result of the first year’s business the royalties amounted to
The royalty for each article manufactured was to be five cents, and that sum the defendant agreed to pay to the plaintiff by the express terms of the contract. It was clearly the ' desire of the plaintiff to obtain an income of at least $3,000 a year out of his royalties; but the amount of royalties to be paid was not fixed at that sum, and there is no express agreement on the part of the defendant to pay it. There is no provision in the contract that, if the royalties did not reach that sum and the deficit for any year should be made up by the defendant, he should be at liberty to credit the excess of payment made in any one year upon subsequent royalties. So that if the contract is to be construed as claimed by the plaintiff, it would require the defendant not only to manufacture the articles and assume the risk of putting them upon the market and finding that they, were desirable, but,.in doing so, to practically subject himself td a penalty of a considerable amount in case the parties to the contract should be mistaken as to the desirability of the article. This is not a probable arrangement to have been made. But whether it is probable or not, the question whether it was made is to be determined solely by a consideration of the words in which the parties saw fit to frame the contract that they •did agree upon. In the agreement as quoted the defendant refers to the royalties he shall fay unto the party of the second part. The words “ he shall pay ” are used here, not by way of an agreement to pay, but by Way of a description of the royalties referred to in the preceding clause of the contract providing for the payment of them. The agreement is that those royalties shall amount to $3,000 a year. But there is no agreement to pay that amount in that particular portion of the contract, and the defendant can only
This conclusion is strengthened by a subsequent clause-of the contract which provides “ that in the event of the non-fulfillment of the terms of this agreement by the party of the second part, by failing to continually make sales or payments of royalty and herein provided so that the aggregate income of the party of the first- part shall now be less than $3,000, then the party of the {first), second part may at his option terminate .this license by serving a written notice of his intention so to do, giving the party of the second part thirty days from the receipt of said notice to fulfill the terms of these presents, otherwise this license to remain in full force and effect during the entire term for which .said patent may be granted.”
It is clear from this portion of the contract that the parties contemplated that the sales might not be sufficient to make the aggregate income of the licensor $3,Q00, and in case that condition of affairs came to exist, they authorized the licensor to put an end to the contract. But this provision of the contract is in direct contra
It seems to us that the plain construction of this provision of the contract is that, if the royalties arising from sales did not reach the. aggregate amount of $3,000, and the defendant did not make up. that deficit so as to entitle himself to retain the contract, then the plaintiff would be at liberty, either to permit the contract to stand, receiving such royalties as were actually earned, or to give notice of his intention to put an end to it if he saw fit, in which case the defendant would be called upon to determine, within thirty days, whether he should pay enough to make up the full $3,000, or allow the contract to terminate. This construction, as it seems to us, makes the whole contract consistent, and it is the construction which the learned trial justice should have given to it. It was erroneous, therefore, for him to hold that the defendant was under an absolute contract to pay the full sum of $3,000 in each year, without regard to the royalties earned.
In view of the conclusion which we have reached, we have not thought it necessary to examine any of the other exceptions taken by the defendant. For this error the judgment and order must be reversed and a new trial,ordered, with costs to the appellant to abide the event.
Yan Brunt, P. J., and O’Brien, J., concurred • Patterson, J., dissented.
Dissenting Opinion
(dissenting):
This action was brought to recover a balance of moneys claimed to be owing by the defendant to the plaintiff upon a contract, in writing. The principal question before us is one relating to the proper construction of that contract as affecting the liability of the defendant. On the trial a verdict was directed for the plaintiff, and from the judgment entered thereon the defendant appeals.
The amount sued for in this action is a balance of $3,000 claimed to be due on the 24th of September, 1895, that is, for the first year of the currency of this contract, It is not disputed that, during that year, the defendant manufactured' funnels; it is not claimed that the plaintiff manufactured any. It was not asserted by the plaintiff that he had a patent; -all that he owned was the invention.
I It is not necessary to consider any of the exceptions in the case. The refusal of the court to take evidence that the plaintiff had failed to obtain a patent'was not error. It was shown that the patent had been applied for, and the record discloses that the application proceedings were continued for two years, and until some time' in 1896. Ror was it error to refuse to allow, on the trial, an amendment of the answer. The nature of the amendment proposed was so radical as to constitute an entirely new defense.
The judgment and order should be affirmed, with costs.
Judgment and order reversed, new trial' ordered, costs to appellant to abide event.