108 F. 709 | 4th Cir. | 1901
This case comes up on cross appeals from the circuit court of the United States for the district of Maryland. Albert H. Henderson and Elias E. Eies were co-partners “in the joint business enterprise or pursuit of utilizing, promoting, manufacturing, selling, or, in any manner that may be mutually agreed upon, using any of the inventions, improvements, letters patent, privileges, power, or authority in which they, the said partners, are joint owners.” The co-partnership articles were dated June 11, 1888. Its duration was indefinite. Either party could dissolve it by giving notice of 60 days in writing, giving reasons for the desire to dissolve. Thereupon the co-partnership shall be dissolved 60 days after the date of said notification. After some ineffectual negotiations respecting the purchase by Ries of his partner’s interest, Ries gave the notice of his intent to dissolve the co-partnership March ■ 20, 1896. Thereupon A. H. Henderson filed his bill for an accounting between the co-partners, and a settlement of the affairs of the co-partnership. The articles of the co-partnership are set out as an exhibit to the bill. They are verbose and obscure. Out of them grows the controversy. The co-partnership property is described in the second article. All inventions, improvements, and letters patent in which the co-partners shall thereafter become joint owners shall be assigned, set over, and conveyed to the co-partnership, and thereupon shall become the sole property of the co-partnership, for its sole use, benefit, and behoof. Ries was an inventor. So the third article provides that, if he shall make or obtain any inventions, improvements, or letters patent, and both parties shall agree to become joint owners in any or all of them, Henderson shall be entitled to one undivided half interest in any or all of such inventions, improvements, and letters patent in consideration of the payment by him of all fees and expenses incurred in the preparation, prosecution, and procurement of letters patent of the United States and such foreign countries as may mutually be agreed upon, and on the further consideration of the payment by him (Henderson) of all necessary fees, annuities, taxes, and expenses for maintaining such chosen foreign letters patent legally in force for a period of not less than five years. This article also provides that Henderson could acquire an undivided half interest in any or all the inventions, improvements, and letters patent which Ries might thereafter make or obtain on payment of such consideration as they might agree upon. In the fourth article Henderson covenants to pay all expenses in' maintaining and continuing the co-partnership until its earnings shall' justify the joint payment of such expenses by both parties. Thus we see that Henderson binds himself to pay all fees and expenses incurred in obtaining letters patent of the United States and of foreign countries, and the necessary charges for maintaining the patents in foreign countries for at least five years, and contents himself for reimbursement by the receipt of a half interest in such patents. He then binds himself to pay the expenses of maintaining
The answer having been put in, and the cause coming up for a hearing, the court below held that Henderson could make no claim for repayment of moneys disbursed under the third article. The court held, however, that under the fourth, fifth, and sixth articles, he could claim payment in full for all moneys paid out under them, and tito casé was sent to a master to take that account. The master reported that on the taking of this account there was due to Henderson by the co-partnership a balance of $7,718.52. This was confirmed by the court, and Hies was ordered to pay his share thereof as a member of the co-partnership, there being no funds as profits, tin* sum of |v>,859.2G, half the gross sum. To this decree both parties except, and have filed their assignments of error. The complainant assigns for error: (1) That the court held that Henderson could not recover for moneys paid out under the third article of the co-partnership. (2) That the court erred in not holding Ríes personally respon
As to the first assignment: The court below held that Henderson could not call upon Ries for reimbursement of moneys paid out under the third article. There can be no doubt that under this article Henderson could become a joint owner in such of the future inventions, improvements, and letters patent of Ries as he and Ries should agree upon; and for his joint interest, and in consideration for the acquisition of such joint interest, should pay all fees and expenses incurred in the preparation, prosecution, and procurement of letters patent of the united States and of foreign countries, with the additional consideration of the payment of all fees, annuities, taxes, and expenses for maintaining the foreign patents for a period of five years at least. And for such other inventions, improvements, and letters patent as they did not agree to be joint owners in Henderson could get a half interest by paying such sum of money as they could agree upon. The joint ownership in the one case and the half ownership in the other was the equivalent of and the satisfaction for the money paid out. It will be noted that the only word used in this article as to the moneys is the word “payment.” Compare that with the provisions of the fifth article. There the word used is the “advancement.” The word “payment” indicates a finality. The word “advancement” indicates toe return of the money advanced in some way.
As to the second assignment of error: The complainant insists that the advancements made under the fifth article were to be repaid by Ries to Henderson. But this article does not say so. On the contrary, it says “that the money or equivalent consideration for such repayment shall be derived from the moneys or equivalent consideration received by this co-partnership,” “at such time as the condition of the partnership shall warrant,” in no case to exceed 25 per cent, of toe total amount received by the co-partnership for „ the sale or use of one patent. In the tenth article the payment of these advances is provided for out of the profits of the co-partnership. There is no error in this.
The third and fifth assignments of error require a further statement in order to understand them. Anterior to toe formation of the co-partnership, on June 11,1888, there were two agreements entered into between Henderson and Ries; one on August 27, 1885, the other February 28, 1886. The agreement of August 27th recites: That Ries had devised new and useful improvements in underground conduits and conductors for electric railways, and that Henderson is desirous of assisting him in perfecting the device. That toe parties had agreed to co-operate in bringing the device to perfection, and that the invention and letters patent should be their joint property; Henderson to bear all expenses to be incurred in making or conducting any experiments with the device and taking out letters patent; the amount of such expenses to be returned out of the net proceeds in any manner arising out of toe invention or letters patent, until the
The defendant also obtained leave to appeal, and is here on 10 assignments of error. These go to the conclusion that complainant was entitled to he repaid from the co-partnership assets any part of the advances made under the fourth, fifth, and sixth articles of co-partnership, especially that he was not entitled to repayment of any moneys obtained from John M. Dennison under agreements between Bies, Henderson, and Dennison, one of which is dated April 21, 1892; that complainant has a lien on the co-partnership property. for advances, and the right to sell the same in satisfaction of his lien; to the confirmation oi the master’s report on the amount due to Henderson.
We concur with the court below in the opinion that the language of the fourth, fifth, and sixth articles of co-partnership are to be construed as securing the complainant, Henderson, for the repayment and reimbursement in full for all expenses incurred under these articles. Indeed, the language is express, and can bear no other interpretation. It is expressly provided that Henderson shall he paid for these advances. The defendant insists that Ries is not personally liable for them. In this the court below and this court also concur. This being so, then the advances must be paid by the co-partnership. In order to understand the assignment of error as to Dennison, a brief statement is necessary. Finding himself unable at the time to meet the necessary payments, Henderson borrowed
As to the lien: The court below held that all advances made by Henderson were made to the co-partnership, and that Ríes was not individually liable therefor. In this we concur with him. This being so, the advances became and were a debt of the firm to Henderson. In winding up the business of the firm, this debt must be paid to him, in subordination, it is true; to the claims of outside creditors. As there are in this case no creditors of this class, then Henderson is the only creditor of the co-partnership. The rule is universal tfiat, before co-partners can share in the assets of a dissolved co-partnership, all of the debts must be paid; and the creditors of the co-partnership have a right to be paid out of the assets for such payment. Henderson, being a creditor of the co-partnership, has such a right. 2 Daniell, Ch. Prac. & PL (3d Am. Ed. by Perkins) 1247. In Lindl. Partn. p. 352, it is thus stated:
“Bach partner may be said to have an equitable lien on the partnership property for the purpose of having it applied in discharge of the debts of the firm, and to have a similar lien on_ the surplus assets for the purpose of having them applied in payment of wliat may bo due to the partners, respectively, after deducting what may be due from them, as partners to the firm. This right, lien, quasi lien, or whatever else it may be called, does not exist for ahy practical purpose until the affairs of the partnership have to be wound up, or the share of the partners has been ascertained.”
See, also, Clay v. Freeman, 118 U. S. 106, 6 Sup. Ct. 964, 30 L. Ed. 104; Hobbs v. McLean, 117 U. S. 567, 6 Sup. Ct. 870, 29 L. Ed. 940.
We see no error in so muck of tlie decree as confirms tbe master’s findings on tbe amounts due complainant. Tbe decree of tbe circuit court is affirmed in all respects.