223 Wis. 463 | Wis. | 1937
A motion to substitute Joseph J. Schmitt as a party to these proceedings and to this appeal in the place of the Acme Company has been made. The objection to such substitution on the part of the Norcor Company, by its receivers and creditors, is that the Acme Company is not a good-faith corporation; that it was illegally organized to enable attorneys to prosecute the case under an arrangement which is “unlawful and savoring of champerty and maintenance;” that the result of the transactions by the organizers of the company is to create a corporation for the practice of law; and that its acts in connection with this case are illegal. In order to sustain the many objections, we would have to read into the transactions of Schmitt and those with whom he dealt in endeavoring to finance this contest with the Norcor Company a number of factors that do not appear so readily as they are vigorously stated by the receivers and creditors. Schmitt had a valid claim against the Norcor Company. He assigned it to one Ginocchio, who organized a corporation, to which he assigned the claim. Meritorious
The Acme Company, plaintiffs in the first action, filed its claim December 31, 1932, in the receivership proceedings for royalties due under the contract. On January 30, 1933, and on December 19, 1935, the orders described in the statement of facts were made and entered. There being no appeal from the order of January 30, 1933, and the order of December 19, 1935, in so far as it reviews and comfirms the former order not being appealable (sec. 274.33, Stats.), the appeal from that part thereof must be dismissed. The only questions are as to the validity of the claim for excess royalties, of the claim of renewal of the contract for the
The Norcor Company entered into the contract with Schmitt to secure from Schmitt certain rights with reference to the manufacture of a folding chair which each believed Schmitt controlled. The agreement was made by the Norcor Company to secure certain advantages which it now claims it could have properly made use of without payment to Schmitt of a large sum of money. Schmitt insists he sold his rights to the Norcor Company, refrained from engaging in the manufacture of chairs, and is entitled to his payment. Pie had arranged for a method of constructing a folding chair with some novel features possessing sales possibilities, applied for a patent, and was intending to engage in the manufacture of the chairs. His plans were changed by the inducement of the Norcor Company and such rights and information as were his were sold to it. The Norcor Company acquired something of value under the contract entered into with good faith on the part of each. It is a valid contract and its effectiveness was determined in the Acme Case, supra. It follows that Schmitt is entitled to the benefits of the contract as provided therein, and the evidence sustains the inference that there were sold during the second year of the contract chairs sufficient in value to entitle Schmitt to the excess royalties allowed in the order. The part of the order appealed from by the receivers of the Norcor Company, which allows the claim covering the excess royalty of $358.96 for the second year, is affirmed.
Claimant appeals from the order denying him allowance for'royalties during the fourth year, commencing in June,' 1932. " Pie claims' to be entitled to $10,000, and that since tide■ -Norcor Company was in the hands of the receiver for eleven-months and-two days of the fourth year, $9,166.66 thereof' shotild be held to be a receivership expense and
“With the foregoing and other objects in view the invention consists of the novel construction, combination and arrangement of parts as hereinafter more specifically described, and illustrated in' the accompanying drawings*470 wherein is shown an embodiment of the invention, but it is to be understood that changes, variations and modifications can be resorted to which fall within the scope of the claims hereunto appended. ...
“It is thought the many advantages of a folding chair, in accordance with this invention can be readily understood, and although the preferred embodiment of the invention is as illustrated and described, yet it is to be understood that changes in the details of construction can be had which fall within the scope of the invention as claimed.”
Although these quoted sections are not controlling, they may serve to illustrate the possible inclusions of equivalents while still within the scope of the scheme of the originator.
The evidence establishes the manufacture and sale of more than one hundred thousand chairs during the third year. That these chairs are fairly chargeable under the contract between Schmitt and the Norcor Company seems clear. The chair which Schmitt had built and was seeking to protect by a patent before entering into the contract was offered in evidence and is referred to in the record as Exhibit 10. The other chairs involved were ruled to be within the contract in the Acme Case. Any finding to the contrary is against the great weight and clear preponderance of the evidence. The testimony of Schmitt is positive in its identification of the chairs. Testimony of witnesses experienced in patent matters, while differentiating certain of the chairs in evidence from the descriptions of the patent, was to the effect that the prior art did not show the combination of elements upon which the Schmitt application was built; that each of the elements found its counterpart in function and operation in each of the chairs in evidence. A review of the testimony, if considered independently of the preceding trial, leads to the conclusion that the Schmitt chair was a novel ..combination of elements present in his application and in Exhibit 10, the chair first made by the Norcor people under the contract,
The claimant refused to consider the contract at an end, and at all times consistently claimed that the use of the practical information as well as such protection as given by the application for a patent covering the elements and the particular combination thereof and the patent entitled him to the benefits provided for in his contract. The various modifications of the style as to shape and upholstery which the Norcor people created did not destroy or take out of the chair the inventive work which Schmitt sold to them. Schmitt had devised an efficient and serviceable process in the construction of a folding chair. It was these that were bargained for under the contract. It does not seem to be necessary to analyze the testimony further than to make the observation that the figures in the tabulation of chairs disposed of in the third year relied upon to show the number of chairs manufactured and sold during that year were figures coming from the Norcor Company itself.
The receiver testified that after his appointment he conferred with the attorneys, knew why the receiver was appointed, knew there had been a contract with Schmitt, that an accounting was to be had under the decision in the Acme Case; and that he was told to go on making the chairs. He said:
“I knew in a general way how the chairs had been constructed before the receivership and we went right on making chairs. To me they were mechanical folding chairs.”
Mr. Krueger, who was president of the Norcor Company, had testified in the Acme Case, and this testimony was before the court at the time the decision was made:
“I learned that other chairs on the market infringed on our chairs about three or four months after we signed the contract. We manufactured this chair after that. We*472 manufactured this chair since 1929 up to the present time. I thought the contract was broken. When we refused to, didn’t pay any further payments, we didn’t consider there was a contract in force after that time. But we continued to make and sell the chair.”
The receiver, since his appointment, operated under the contract and obtained the advantages of it to the extent that chairs were manufactured and sold by him. To that extent alone should Schmitt’s claim be preferred to that of other general creditors. The royalties of five per cent per chair, provided for in the contract, must, in equity and fairness, be considered as an operating expense and allowed as such. There is no merit in proportioning the $10,000 claim merely on the basis of time elapsed during the fourth year before and after receivership, as proposed by claimant. The acts of the company in the third year of the contract had fixed a liability for $10,000 in the fourth year, which would come due whether chairs were manufactured or not. That liability was the company’s before the receivership, and it is the basis of the claim against the estate, subject to the reduction by the aggregate of five per cent per chair manufactured by the receiver, which is to be allowed as an operating expense of the receiver. The cause must be remanded for the lower court to ascertain the invoice price of chairs manufactured and sold by the receiver in the fourth year, and five per cent of that amount must be allowed as a receivership expense. The balance of the $10,000 must be allowed as a claim against the estate.
By the Court.- — Appeal from the order confirming the allowance of the claim for $29,938.25 dismissed; order allowing excess royalties'amounting to $358.96 affirmed; order disallowing the claim for $10,000 reversed; cause remanded for further proceedings in accordance with this opinion.