Snailham v. Isherwood

151 Mass. 317 | Mass. | 1890

C. Allen, J.

The plaintiff’s bill alleges that at the outset it was agreed between the parties that the defendant should hold the letters patent, when issued, for the benefit of the plaintiff and Arnett as well as of himself, and on their demand should assign one third interest to each, but that he afterwards sold the same. At the hearing, the allegations of the bill were found to be true. It appears by the further pleadings, that a settlement of the plaintiff’s claim for a share of the proceeds of such sale was afterwards made, whereby the plaintiff received the sum of one hundred and thirty-five dollars, and that he thereupon executed a receipt in full to the plaintiff; and this bill is brought to set aside the settlement and receipt, on the ground that the defendant obtained the same through fraud. It was found by the court that the plaintiff was induced by the defendant’s fraud to make the settlement and give the receipt, and it was thereupon decreed that the same be set aside and be deemed null and void, “ except in so far as they relate to the fractional share of the profits of said patent which the plaintiff was to receive under the terms of said settlement.” A final decree was entered, awarding to the plaintiff $966.67, being one sixth part of the sum received by the defendant upon the sale of the letters patent, together with improvements already made or to be made on the invention covered thereby.

Upon the report, there appear to be three questions now to be determined: 1. Whether the evidence was sufficient to authorize the finding of fraud on the part of the defendant. 2. If so, whether the effect of that finding should be to set aside the whole settlement, or whether the agreement to accept one sixth part of the sum received should stand as an independent agreement, unaffected by the fraud. 3. Whether the plaintiff is entitled to a fractional share of the whole sum received by the defendant, or only of such part thereof as may be found to be the value of the letters patent alone.

1. The finding of fraud was well authorized by the evidence. There was a manifest concealment of material facts. The defendant occupied a position of trust towards the plaintiff. Good faith on his part was necessary. Cfheney v. Gleason, 125 Mass. 166, 176. It might well be found that the plaintiff was intentionally misled by the defendant in making the settement.

2. We are unable to discriminate between the different steps or stages of the negotiations for a settlement, and to hold one part valid and the other invalid. The agreement by the plaintiff to accept one sixth of what the defendant received, instead of one thii’d, is not to be taken by itself alone, but it is to be regarded rather as only one step in the progress of the settlement. Though this fractional proportion was accepted as the basis of a settlement, it was not the settlement itself, and if the settlement itself failed through the defendant’s fraud, the preliminary agreement failed also. Before the settlement was completed, the fraudulent conduct of the defendant intervened, which had the effect to entitle the plaintiff to avoid the settlement as a whole, including the preliminary agreement. The whole negotiation looked to one final result, narnety, the settlement of the controversy. That settlement being avoided by reason of the defendant’s fraud, he is not entitled to hold on to the benefit of a preliminary agreement, which was merely intended as a basis of the settlement.

3. It was the duty of the defendant, in case he should sell the patent, to sell it for a price by itself, and to keep it separate from other property or rights in which the plaintiff was not interested. By virtue of his agreement, the defendant held the letters patent in trust, and if upon a sale he accepted a lump sum for that and other property, it is impossible to determine how much the trust property brought; and ordinarily under* such circumstances a trustee is not entitled to call upon the court to apportion the consideration. International Trust Co. v. Boardman, 149 Mass, 158. National Bank v. Insurance Co. 104 U. S. 54, 57. In the present case, there is no reason for departing from the usual course, and the plaintiff is entitled to a decree for one third part of the whole sum received by the defendant, viz. $5,800, with interest.

Decree accordingly„