134 Pa. 462 | Pa. | 1890
Opinion,
The act of June 2, 1874, P. L. 271, requires persons desiring to form a limited partnership or association to file with the recorder of deeds a statement in writing, duly signed and acknowledged, in which shall he set forth: The full names of the persons associated, with the amount of capital subscribed by each; the total amount of the capital, and when and how to be paid; the character of the business, and the location of the same; the name of the association, with the word “Limited” added thereto; the contemplated duration of the association, not exceeding twenty years; and the names of the officers selected in conformity with the provisions of the act. This act contemplated that the subscriptions to the capital should be payable in cash: Maloney v. Bruce, 94 Pa. 249; but by the supplemental act of May 1, 1876, P. L. 89, it was provided that it should be lawful “ to make contributions to the capital thereof in real or personal estate, mines or other property, at a valuation to be approved by all the members subscribing to the capital of such association: provided, that in the statement, .... subscriptions to the capital, whether in cash or in property shall be certified in this respect according to the
The Automatic Overseaming Button-hole Machine Company, Limited, was organized under the act of 1874, and its supplements ; the statement filed is in due form, and sets forth in detail the various matters required. The capital is fixed at $500,000, of which $496,970 is contributed by Charles R. Deacon, “ in property, at a valuation approved by all the members of the association subscribing to the capital thereof; a schedule containing the name of the party contributing said property, with a description and valuation of the property so contributed,” being inserted, as follows:
“Property contributed by Charles R. Deacon, as follows :
“ Letters patent of the United States No. 286,989, for improvements in button-hole attachments for sewing-machines, dated October 23, 1883, granted to the Banks Button-hole Machine Company, Limited, assignee of Charles M. Banks.
“Letters patent of the United States No. 287,213, for improvements in button-hole sewing-machines, dated October 23,1883, granted to the Banks Button-hole Machine Company, Limited, assignee of Charles M. Banks.
“ Letters patent of the United States No. 305,657, for improvements in button-hole sewing-machines, dated September 23, 1884, granted to Charles M. Banks, and assigned to the Banks Button-hole Machine Company, Limited, October 12, 188-.
“ Right, title, and interest in three certain letters patent of the Dominion of Canada, for the same inventions, patented in the United States by letters patent No. 286,989, dated October 23, 1883, No. 287,213, dated October 23, 1883, and No. 305,657, dated September 23, 1884, and Canadian letters patent having been granted, but not delivered, owing to models not having ■been supplied.
“ And which letters patent, rights, and interests are valued at the sum of four hundred and ninety-six thousand six hundred and seventy dollars ($496,670) by all the members of the association subscribing to the capital stock thereof. The balance of said capital, to wit, three thousand and thirty dollars ($3,030), has been paid in cash by the members contributing the same.’"
Property is corporeal or incorporeal; one may he said, with equal propriety, to have property in a farm or a horse, or in an easement, a franchise, or in letters patent. A patent-right is the subject of assignment, sale, and inheritance. It may not, perhaps, be liable to a sale on a common-law execution, as it has no visible and tangible existence, and is a species of property which is incapable of manual seizure; but the highest courts in New York and California have affirmed the power upon a creditors’ bill to order the assignment and sale of a patent-right for the payment of the patentee’s judgment debts: See Gillett v. Bate, 86 N. Y. 87; Pacific Bank v. Robinson, 67 Cal. 620; and the same power was sustained in Ager v. Murray, 21 Amer. Law Reg., N. S., 469, [105 U. S. 126?] in the Supreme Court of the United States, where Mr. Justice Gray,
But where, as here, the statement is in due form, and contains all the essential requirements of the statute, but the valuation is alleged to be unconscionable, and inserted in the statement without any proper consideration of the inherent or intrinsic worth of the property contributed, the question is one of good faith. All property contributed under'the act of 1876 is to go into the capital “ at the valuation to be approved by all the members subscribing to the capital,” and the subscribers would not be justified, perhaps, in fixing á grossly fictitious and fraudulent valuation to mislead and defraud creditors.
The design of the association was to manufacture extensively a device attachable to the ordinary sewing-machine, for working button-holes, which, it was believed, would come into universal use, not only for factory, but for family uses. Banks’s invention worked the button-hole, but did not cut the cloth; a cutter attachment was afterwards perfected and turned in to the association, and then the device not only cut the cloth, but worked the button-hole in a very perfect manner. When this device was attached to the sewing-machine, however, the needle had to be lengthened, and the operation of the machine was impaired somewhat from the vibration of the needle. Maj. Moore was asked: “ What were those patents worth at that time, independent of your patent and your improvements ? A. That is a very indefinite question; no man can tell the value of a patent until it is tried. Mr. Banks’s patent involved what I regarded as of very great value, — a slide that moves straight forward, stops, a disc turns and moves that again in the same direction, — a thing that had never been done before, and for which he holds the bottom patent. That I regarded as very valuable.” “ Q. Did you ever have an idea yourself that those patents were worth any such sum of money? A. Yes, sir; I did. If you want to know the reason, I will tell you. Q. I would like to have it. A. A patent, as I said, is worth just what it will be able to earn. That patent, which was the ground-floor patent, contemplated in its construction of going into every household in this country, if it could have been made to do it; and I believed at the time it could have been done; and when you contemplate what a country this is, and
This testimony illustrates the great degree of confidence which the members of the association had in the success of their enterprise, and of the value of these patents. It appears that the same patents had previously been put into what was known as the Banks Button-hole Machine Company at the valuation of $500,000. This valuation was made by Dr. Mintzer and Charles M. Banks, the owners of the patents. That company, whilst endeavoring to perfect the action of this device, had some differences to arise between its members, and went into liquidation, and the reorganization was effected under the name of the Automatic Overseaming Button-hole Company, Limited, the patents being put in at the same price, less the amount of cash contributed.
Dr. Mintzer testifies that when Banks sold his patents the device worked quite satisfactorily. He says; “We most clearly defined satisfactorily a principle, but oftentimes it wants close adjustment before it will do practical work. Such was the position when Mr. Banks sold his patents.” He says, further, that he regarded the Banks patent as involving an exceedingly valuable principle, out of which he expected a very large sum of money would be realized; that their counsel was Mr. Connolly, a patent lawyer of very large experience, and, in fixing the valuation, he deferred to the opinion of his counsel, but he joined in the certificate, believing that it was all right and proper. Mr. Deacon testifies that the members of the association agreed to accept the valuation that had been placed upon the patents in the old company; that the capital was $500,000, and they decided to deduct the cash contributed, and the balance Vras agreed upon as the value of the patents.
The case depends upon this testimony; there is practically nothing to support a charge of fraud. The testimony clearly shows that this enterprise was undertaken in good faith, and that the members had the utmost confidence in its final success. They paid in the cash capital, and contributed as much more in aid of the enterprise. The whole trouble was, that, although the invention was valuable in mechanical conception, and was a pioneer invention in its line, yet others, who were active in the same direction, relieved its imperfections, and reaped the reward. The plaintiffs were not deceived. They knew the nature and character of the several contributions made to the association, for these contributions were certified upon the record according to the fact, and they had, besides, actual, personal, and intimate knowledge of the resources of the company. We are of opinion that this was a good-faith transaction, and the judgment should be affirmed.
Judgment affirmed.