65 N.Y.S. 486 | N.Y. App. Div. | 1900
The plaintiff" brings this action to recover liquidated damages for the breach of. a written contract, entered into by the parties thereto on the 26th day of January, 1893. It appeared from the" contract and ‘ the evidence that the plaintiff was possessed of the exclusive knowledge and ownership of certain inventions, formulas, secrets and process for the manufacture of varnishes. The defendant was a manufacturer and dealer therein, and for the purpose of placing the invention of the plaintiff upon the market the contract was executed. By its terms, so far as is important to any questions which the case presents, the plaintiff agreed to.deliver to the defendant the process and formulas by which the varnish was to be manufactured, and to instruct the defendant and its employees in such manufacture and the secrets thereof. In consideration the defendant agreed to pay royalties therefor, not exceeding in the aggregate the sum of $50,000, computed at 25 cents a gallon for varnish listed at a price of $3 or over per gallon, and for all under that price 5 cents per gallon; upon mixtures of these grades the royalty to be calculated on the basis of the amount- and .value of the ingredients entering into the mixture. It was guaranteed that these royalties for the first five years should equal at least' $2,300 per annum, of which $2,500 was to be paid upon the execution and delivery of the contract and formulas, and charged against the royalties at the rate of $41.66 per month for five years; also $1,800 per annum in monthly sums of. $150 at the end of each month for the period of five years, the
After the execution and delivery of. the contract the parties entered upon its performance and ,the defendant made payments thereunder as required by its terms until the 11th day of February, 1898, amounting in all to the sum of $11,500, which the plaintiff accepted and retained. On the last-named date the defendant sent its check for the monthly payment of $150 and. notified the plaintiff that' with the payments already made this fulfilled the terms of the contract and it requested a receipt in full of its terms. The plaintiff declined to give a receipt in full or discharge the defendant from liability under the contract, although fee retained and receipted for the amount of the payment. Prior to the last-named date differences had arisen between the parties respecting the terms as well as the fulfillment of the contract, and on August 2, 1897, the plaintiff began this action to recover damages for a claimed breach of the same.
It is quite evident that the varnish, which it was expected would be manufactured from the formulas furnished by the plaintiff under the contract, would be of an uncertain quality which might not. answer the requirements of the trade. The terms of the contract show plainly that this contingency was contemplated, as therein, the plaintiff was to furnish the secret formulas from which the manufacture might be made, instruct the employees in the process, continue and renew .such instruction in such formulas and secret process, and in such methods as he might thereafter devise, to' the end that they might be practically used and applied. The defendant was:
The process by which this' varnish was produced clearly shows that not only was considerable skill required in selecting, preparing and mixing the ingredients, but great care was required in applying heat, and the most careful attention was necessary in order to detect the simmering noise which indicated when the temperature was, to be reduced by the introduction of cold oil. The whole operation seems to have been one of much delicacy, and slight departures destroyed perfect, even good results. In the nature of the case, therefore, it is evident that the parties understood when they contracted that the production of the varnish in marketable quantity and quality involved more or less of experiment; and while it is equally evident that both parties believed that the process was able to produce a superior varnish, yet the plaintiff knew the difficulties •attending its production, ■ and the ’ defendant knew, that it had never-been produced in marketable quantity and practically applied. The contract is, therefore, to be construed as contemplating and providing for the production of an article which, to some extent, was experimental. If more were needed to prove that the contract is to be construed in this light the acts of the parties thereunder, as disclosed by the evidence, is abundant to support the view. The plaintiff was at the. factory in Jersey City for a considerable period
For present purposes, we assume that the plaintiff’s formula which he delivered to the defendant only contemplated or called for the 113 varnish and that the 871 was a mere product in the process of its manufacture. The testimony of the plaintiff is that he made but one run of this varnish in connection with O’Brien and that he never instructed any one else how to make it. It is not pretended that he made 113 in connection with Sharkey. The latter failed to give his attention with sufficient quickness to hear the simmer indicating the critical point when the temperature .was to be reduced by the addition of oil; and he failed to gain the necessary
It is clearly evident that if there was fault .in the plaintiff in the respect we have, mentioned, the defendant could not be properly charged with a breach or "cast in damages. Upon such question the answer could only be properly returned by a jury. The extent of the instruction and whether it was sufficient and the good faith of the plaintiff in connection therewith after complaints and requests-were made to him for instruction in manufacture were questions of fact and bore directly upon the breach of the contract which the plaintiff claimed. The' evidence upon which the plaintiff relied to establish an admitted breach of the contract consisted of an admission, contained in the answer of the defendant and in a statement made in a letter written by the defendant bearing date June 25, 1896.
The'rule governing the effect" of admissions contained in a pleading requires that the matter shall be taken as á whole, and the admission is limited by any statement therein which qualifies or explains. (Oakley v. Oakley, 69 Hun, 121; affd. on appeal, 144 N. Y. 637.) It cannot be extended beyond its fair import. (Duschnes v. Heyman, 2 App. Div. 35.4.) And the same rule is applicable to any written admission connected with other matter in the same writing or referred to therein. The matter in the answer, upon which reliance is had, admits that the defendant has ceased for several years to manufacture and use any varnish manufactured according to the formulas furnished by the plaintiff. But this statement is preceded by a denial that it has refused or neglected to manufacture and sell as provided by the contract, and it is followed by a denial that, in so ceasing to manufacture, it has done any act in violation of .the terms of the contract as provided in the-last paragraph of the 2d clause of the contract, upon the violation of which the claim of a breach is founded. It is evident from the discussion already had and from
But aside from these considerations, it is conceded that during the whole period from the date of the contract up to the commencement of the action, the defendant was manufacturing varnish, selling the same and paying the plaintiff royalties thereon. It was also paying the stipulated monthly sum, and indeed it continued to pay under the contract after the commencement of the action and until the expiration of the five years’ time specified therein. The plaintiff, it is true, protested against the course uf business, made demands from time to time that it be changed, and that more varnish he manufactured and in accordance with his formula. Yet he did not at any time refuse the payments as made, but accepted the same in their entirety. There is'no dispute of fact upon the subject. It was competent for the plaintiff to waive the manufacture of varnish under his formula and to accept what was tendered as being in fulfillment of the contract. As he knew of the breach of the contract from the beginning, assuming that failure to manufacture 113 constituted a breach, and accepted performance of the contract thereafter as it whs performed by the defendant, it constituted a waiver of such conditions as he might have insisted upon prior thereto. (Lawrence v. Dale, 3 Johns. Ch. 23 ; Dunn v. Steubing, 120 N. Y. 232; Schiffer v. Dietz, 83 id. 300; Gallagher v. Nichols, 60 id. 438.) The duty rests upon the party to act promptly upon the first discovery of the breach; he may not accept acts which are insisted upon as a performance of the contract by the other party and then be permitted to rescind and sue on the breach. (Meyer v. Hallock, 2 Robt. 284; Am. Manganese Co. v. Virginia Manganese Co., 21 S. E. Rep. 466.) Nor can a party avoid the legal consequence of such act by protesting that he does not subject himself to the consequences of it. (International Contracting Co., v. Lamont, 155 U. S. 303.)
Van Brunt, P. J., Patterson and Ingraham, JJ., concurred.
Judgment and order reversed, new trial granted, costs to appellant to abide event.