310 Mass. 618 | Mass. | 1942
The defendants are American Diesel Engine Corporation, a Massachusetts corporation hereinafter referred to as the corporation, Duplex Diesel Co., Inc., a Massachusetts corporation, and John J. McCarthy of Mal-den. An agreement under seal was entered into between the three defendants and the plaintiff on September 8, 1939, for the settlement, without litigation, of claims of the plaintiff against the defendants. The defendants agreed to cause all “McCarthy Diesel Engine patents” to be vested in the corporation, either as owner or as exclusive licensee, there to remain until the obligations of the defendants to the plaintiff were paid in full. The corporate defendants agreed to pay the plaintiff $25,000 within thirty days. The corporation agreed to give the plaintiff, within thirty days, its interest bearing note, dated September 8, 1939, for $23,000, “payable semi-annually commencing June 1, 1940 from its net earnings as computed in accordance with accepted accounting principles and before the payment of dividends on any class of stock,” and after December 31, 1941, any balance was to be due and payable on demand. In consideration of the foregoing agreements, the plaintiff gave the defendants a general release of all demands.
The defendants made no payment and gave no note as agreed. By the bill, which was filed on October 18, 1939, the plaintiff asked for the establishment of his debt, amounting in all to $48,000, with interest from October 9, 1939, and for the application in payment of his debt of various patents and patent rights of the defendants, which were the subject matter of the agreement between the parties.
I. The defendants appealed from the final decree granting the plaintiff relief. There was an order that the testimony be reported (G. L. [Ter. Ed.] c. 214, § 24). The defendants, however, in writing, waived their rights under this order and therein stated that for the purposes of ap
2. The defendants contend that there was error in establishing the debt of the corporation in the sum of $48,000. They concede that there is an indebtedness of $25,000. The answer to this contention depends upon whether the failure of the corporation to give its note to the plaintiff, as promised, amounts to the creation of a “debt” within the meaning of G. L. (Ter. Ed.) c. 214, § 3 (7), by virtue of which, among other things, jurisdiction in equity is given over suits by creditors to reach and apply, in payment of a “debt,” certain property and interests of the debtor. The first step in a proceeding of this character is the establishment of an indebtedness of the defendants to the plaintiff, and, in essence, this is an action at common law. Stockbridge v. Mixer, 215 Mass. 415, 418. Upon the failure of the,, corporation to deliver the note, the plaintiff’s remedy is for. a breach of the contract, Loring v. Gurney, 5 Pick. 15; Hunneman v. Grafton, 10 Met. 454, 459, and the amount of his damages is involved. It has. been held that where goods are sold to be paid for by a note that is not given, the vendor is entitled to recover as damages the whole value of the goods, unless, perhaps, there should be a rebate of interest during the time of stipulated credit. “The damages are the price of the goods.” Stephenson v. Repp, 47 Ohio St. 551, 554, 555. In a case where the defendant
In the case of Woodbury v. Sparrell Print, 187 Mass. 426, 428, 429, it was said that the word “debt,” as appearing in the statute that was the predecessor of G. L. (Ter. Ed.) c. 214, § 3 (7), was used in its broad sense, and it was held that a claim for loss of rent under a covenant in a lease was a debt within the meaning of the statute. After the decision in that case and the amendment of the statute in question in another particular, it was held in the case of H. G. Kilbourne Co. v. Standard Stamp Affixer Co. 216 Mass. 118, that the word “debt” in the statute as amended did not include all actions founded upon a contractual liability, but included only debts as distinguished from mere claims for damages. In that case the Woodbury case is considered at length, and it is said .that there is nothing in that decision or in the reasoning of the opinion to warrant the extension of the statute to the breach of an executory contract involving wholly unliquidated damages. It was said, however, that the word “debt,” as appearing in the statute, is .to be construed broadly rather than narrowly, and that it may comprehend not only liquidated demands where there is an express or implied promise to pay or an absolute duty raised by law to discharge, but also an agreement for the payment of money which will require some calculation or determination of extraneous facts before its exact amount can be ascertained, provided the debtor has made a dis
In the case at bar there was no express promise to pay. On the contrary, the promise was to give a note. We think that in an action for failure to keep such a promise, the damages would be the amount of the note. In the agreement of the parties the plaintiff released and discharged the defendants from all claims. We think that, by this agreement, it was within the contemplation of the parties that the plaintiff was to receive $48,000 for his release, to be paid, it is true, in two particular ways, $25,000 in cash and $23,000 by a note. There is an implication that the corporation, when it promised to give the note, must have expected that it would have to pay $23,000. It was said in Stoddard v. Mix, 14 Conn. 12, 24, hereinbefore referred to, that the plaintiff could have no other action than upon the special contract, and that at some time he was entitled to recover the actual damage sustained, “one hundred dollars [the amount of the note that was to be given], which the defendant promised to pay.” In the case of Kimpton v. Bronson, 45 Barb. S. C. 618, 625, cited with approval in the Kilbourne case, it is said that the word “debt” has been differently defined, owing to the subject matter of the statutes in which it has been used. “Ordinarily, it imports a sum of money arising upon a contract express or implied ... In its more general sense it is defined to be that which is due from one person to another, whether money, goods or services; that which one person is bound to pay or perform to another.”
The general rule stated in the Kilbourne case has been referred to and followed. See Stone, Timlow & Co. Inc. v. Stryker, 230 Mass. 67, 72; Williamson v. Williamson, 246 Mass. 270, 273; Bethlehem Fabricators, Inc. v. H. D. Watts Co. 286 Mass. 556, 563. In the case of Kirby v. Donovan, 228 Mass. 86, 89, decided about four years after the decision in the Kilbourne case, Boring, J., who was a member of the quorum in the Kilbourne case, said that in that case it was decided that a bill to reach and apply does not lie to enforce a claim for breach of a contract where the dam
We are of opinion that the damages for the breach of the contract to give the note in the case at bar can be said to be liquidated within the definition of liquidated damages announced by Rugg, C.J., in Cochrane v. Forbes, 267 Mass. 417, 420, 421. It is to be observed that that case (decisions in which are also reported in 257 Mass. 135 and 265 Mass. 249) was a bill to reach and apply in payment of a debt, shares of stock owned by the defendants. In that case, the plaintiffs had paid the alleged debtors in advance for oil that had not been delivered. We are of opinion that there was no error in establishing the debt of the corporation in the sum of $48,000.
3. By the terms of the agreement, annexed to and made a part of the plaintiff’s bill, the defendants warrant that they will cause the corporation to be the “owner or exclusive licensee” of all “McCarthy Diesel Engine patents” now issued or pending, subject to an existing license to Hug Motor Car Company; that said patents shall not be transferred, assigned or sold until the obligations to the plaintiff are paid in full; and that any royalties paid by the corporation to the “owners or holders of said McCarthy patents” shall not exceed five per cent of the sales price. The decree orders the defendants to perform the warranty by executing separate assignments of each of said patents and patent rights, and all options and licenses and rights to the corporation, subject to the existing license to Hug Motor Car Company, and subject to the provision as to the limitation of royalties to be paid, and recites that the corporation has an option to acquire the interest of McCarthy in that license. The decree further provides that if $48,000 with interest is not paid as ordered, the letters patent, licenses and options shall be delivered to a special master and sold
The bill alleges that the corporation is the owner of certain patents and patent rights commonly described as the “McCarthy patents or the McCarthy Diesel Engine patents”; that said patents and the rights therein stand “to some extent” in the names of the corporation, Duplex Diesel Co., Inc., and McCarthy, and that under the terms of the agreement of the parties, they are, at law and in equity, the property of the corporation, and that the plaintiff is ignorant “as to "which in said three names” the respective patents and rights stand. Certain patents are listed in the bill as “Among said patents.” The decree recites that McCarthy is in law the owner of certain patents therein listed. The decree then provides for the assignment to the corporation of all “McCarthy Diesel engine patents” and of all options and licenses and rights, as hereinbefore set out.
The defendants contend that the agreement between the parties gave them the option of causing the" corporation to be either the owner or the exclusive licensee of the patents in question subject to an existing license, and that the decree is in error in ordering assignments. It is to be observed that the decree requires assignments of the patents and other rights in disregard of the option as to licensing. The defendants contend that by the terms of “Exhibit 1,” appearing in the record, McCarthy, on August 11, 1939, prior to the time when the agreement between the parties to this suit was made, that is, on September 8, 1939, had already constituted the corporation the licensee of the pat
We are of opinion, accordingly, that the most that can
The defendants make no contention that their interests, as provided for in the agreement between the parties, cannot be reached and applied in satisfaction of the plaintiff’s debt.
The decree as modified in accordance with this opinion is affirmed.
Ordered accordingly.
Exhibit 1 is not a part of the pleadings. — Reporter.
