28 A.D. 94 | N.Y. App. Div. | 1898
These actions are brought to recover royalties which the plaintiff claims have become due to him and the defendant Harman from the Fahys Watch Case Company by reason of the manufacture of certain watch cases patented by Skidmore & Harman and manufactured by the Fahys Watch Case Company under contracts from them. There were two contracts, one made on the 5th of April, 1884, and the other on the 21st of October, 1886.
By the terms of the first contract Skidmore & Harman, the pai’ties of the first part, agreed to give, and did give, to the Fahys Watch Case Company, party of the second part, the exclusive and sole right to make and manufacture silver watch cases under letters patent of the United States, granted to the parties of the first part on the 19th of February, 1884, and numbered 293869, and the party of the second part agreed to make the said cases as fast as the market might require. The contract provided for the payment of a certain royalty by the party of the second part to Skidmore & Harman, "with a change in the amount of the royalty in certain circumstances. It also fixed the price at which the watch cases would be put upon the market to wholesale dealers. It then contained a provision substantially that if, by reason of competition or other causes, it became necessary to reduce the price the party of the first part would reduce it until their profits, or the sum to be paid to them, did not
The contract sued upon in the second of these actions was substantially the same, except that it provided for the making of gold and gold-filled watch cases instead of silver, and reserved the right to Skidmore & Harman to license three other corporations named in that contract to make the same cases. In other respects the contract was substantially like the first one, and the same questions arise in the one action as in the other.
The actions were brought for royalties accruing in 1893 and 1894. The defense in each action was substantially that the patent was invalid and void; that there was a total failure of consideration under the contract, and that the defendant, the Fahys Watch Case Company, had and claimed no monopoly and benefit under the contract during the years 1893 and 1894. A supplemental answer was interposed setting up the determination of the United States Circuit Court, in the southern district of Hew York, that the patent claimed by Skidmore & Harman was invalid. This judgment was entered in 1896 and after the commencement of these actions. It is alleged in the complaint and admitted by the answers- that Harman was made a defendant because he declined to be joined as plaintiff. He interposed no defense to the action, and in the further progress of this opinion no attention will be paid to his presence, but whenever the word defendant is used it will be. understood to refer to the Fahys Watch Case Company, which is the real defendant in the action. The learned referee who determined both actions found, as a matter of fact, that in .the years 1893 and 1894 the Fahys Watch' Case Company did not have the undisturbed enjoyment of the privileges intended to be granted to it by .said contract, and had no exclusive right or monopoly, and did not enjoy any exclusive monopoly, in the sale of the said cases referred to in the contract.
It appeared that disputes had arisen between Skidmore and the. defendant in regard to royalties which were claimed to be due under these contracts in 1891, and Skidmore brought an action on each contract to recover the'royalties due in that year, and other actions to recover royalties due in 1892. These actions were tried and judgments rendered in favor of the plaintiff in all of them. The judgment rolls in these actions were put in evidence. As the actions were brought upon the same contracts as the actions now before us, those judgments, so far as they construe the contracts, are final determinations of the rights of the parties, not only as to matters which were put in issue therein, but as to every other matter which might have been litigated in them. (Embury v. Conner, 3 N. Y. 511; Cromwell v. County of Sac, 94 H. S. 351.) It appeared in those cases that after' the making of the contracts upon which those actions were brought the plaintiff prepared models or samples of the cases to be made under the contract as it was provided that he should do, and various changes were made in those samples until finally a.structure was produced which was approved by the plaintiff as the proper form of construction of a watch case under the agreement and was accepted by the defendant. It appears in the present actions that the sample thus made and accepted by all parties is the model of those manufactured in 1893 and in 1894, and upon which royalties are claimed. It further appeared in the former actions that at about the time of the execution of the contract upon which the suits were brought one Fitch asserted that the watch case made according to the sample was an infringement upon an invention previously patented by hini, and thereupon, for the purpose of securing to the defendant the undisputed right to make and sell the watch cases mentioned in the agreement as changed by the sample, Skidmore & Harman, with the knowledge and approval of the Fahys Watch Case Company, procured-from Fitch the right to use his patented invention and agreed to pay him a royalty therefor. These facts are not disputed in the present actions.
As has been said, it appears and is found by the referee that the watch cases manufactured under each of these contracts in 1893 and
But if the referee had been correct in his finding that the Fahys Watch Case Company did not have the exclusive right and the undisturbed enjoyment of the privileges intended to be granted, yet
The learned referee held that the case of Skinner v. W. M. & H. M. Co. did not apply because the defendant did not stamp the watch cases manufactured in 1.893 and 1894 under the Skidmore patent, and did not make any claim to the privileges conferred or attempted to be conferred upon it by Skidmore’s contract. But in that conclusion he entirely overlooks the fact that it did stamp the articles under the Fitch patent which it acquired from Skidmore and which it would have no right whatever to use except so far as Skidmore had bestowed it, and thus it did in fact make use of the privileges which it acquired as the necessary result of the contract with Skidmore. It must not be forgotten that the claim here is based upon an entire failure of consideration, and the defendant cannot succeed unless it established that claim. It is not sufficient that it should show that it was interrupted in its exercise of the right, or that by competition it was forced to reduce the price of its articles. If it appears that it made any use of the privileges which it acquired from Skidmore and received any benefit from those privileges in the manufacture of these articles during 1893 and 1894, there clearly was not an entire failure of consideration, and the defendant is bound to pay royalties. If. for any reason growing out of the contract the amount of royalties which it should pay is to be diminished or it suffered any damages because of a breach on Skidmore’s
The result of our examination .of the cases is that the judgment of the learned referee was erroneous and must be reversed and a new trial ordered before another referee, with costs to the appellant to abide the event of the action.
■ Van Brunt, P. J"., Barrett, Patterson and McLaughlin, JJ., concurred.
Judgment reversed, new trial ordered before another referee, with costs to appellant to abide event...