*1 Act, supra, punishable by the Penal within Code the mean- ing penal paragraph the first conspiracy statute. judgment superior reversed with directions court dismiss the indictment.
Gibson, J., Curtis, J., Carter, J., C. Traynor, J., con- curred. Aug. F. No. 15988. In Bank.
[S. 1942.] CORPORATION, (a UNIVERSAL SALES Corpora LTD. tion), Respondent, v. CALIFORNIA PRESS MANU (a COMPANY Corporation), FACTURING Appellant. *4 H. Walter Molkenbuhr, Bruce, Molkenbuhr Charles C. & Appellant. Wm. M. Cannon for Linforth and on Amici Curiae be Olney, & Greene as McCutchen, Mannon half of Appellant. Shoup, Schulz, Hugh Center, G. Wallace
Carl R. S. Arthur & Sheehan, Gregory, Hunt Melvin Harold C. Faulkner Respondents. defendant, California
CURTIS, J. appeal an This judg- Manufacturing parts from certain of a Company, Press Corporation, plaintiff, Sales ment Universal favor of Ltd. March contract dated is based a written
The action subsidiary Francisco of the San plaintiff, between the and animal poultry Milling Co., distributor producer types defendant, various a manufacturer of feed, appeal con- questions presented presses. Since *5 primarily cern scope legal the rights this contract and the respective and duties of the thereunder, essential it is disposition in the of this cause that more important pro- the of this writing visions be recited in some detail.
The contract contains introductory three “Whereas” clauses which state that the defendant has manufactured and pellet has sale a press; certain that the believes defendant has that it manufactured a machine which will the produce of a press operated by results cuber plaintiff, now and with greater or capacity; like and that the desires the defendant plaintiff purchase to operate the machine to so as be able advantages. to demonstrate its press cuber mentioned [The English pellet-making is an machine which at that time was by being plaintiff used produce pellets.] to feed agreed It is then that the defendant shall plain- sell and the tiff purchase shall $2,000, payable “upon the machine for $500 delivery and per test” and the balance in $500 installments of by Tliis language proviso month. followed if that operate properly machine does capacity, with sufficient or obligation plaintiff it, shall under no to pay but consequential damages, the defendant shall not be liable for liability exclusively and the of the defendant shall be limited accepting plaintiff to from the return of the machine and refunding payments made. In this connection is stated rejection of that before the machine the defendant shall have privilege, desire, making adjustments it so should such operate satisfactorily. as will enable it to make machine provides contract that in The further consideration of the purchase advantages and the of demonstra- the machine advertising that the tion and defendant will derive from the by plaintiff, agrees that use of machine defendant presses by it, further made as to all sales based plaintiff, nego- sold and whether such sales be otherwise, twenty or plaintiff per tiated cent of the selling belong plaintiff gross price paid by shall and be plaintiff selling the defendant when and as the said part defendant. price is received the contract foster sale of the plaintiff agrees manufactured stipulation Then that machines. follows shall years from in effect for seventeen its date. It is fur- remain agrees “to patent endeavor to ther stated the defendant improvements thereon”; machine, event or in the said agrees regard, plain- defendant that the of success twenty per patent interest in tiff have “a cent such shall patents any improvements may and in thereon that be there- after party; expense prosecuting made either said patents twenty per by” plaintiff be borne “and cent eighty per by” cent the defendant. operated record the machine discloses
intermittently December, 1931, until it never did and that steady function efficiency capacity satisfy and sufficient *6 plaintiff. the During period operation great of this of deal by effort was exerted the employees of each of officers the companies repair attempts both in in the work and to increase productive only capacity of machine, apparently but with the ephemeral endeavoring success. in Without to describe detail press the mechanism plaintiff, of it suf- the delivered the is ficient meal, being heated, to state that is the after mixed and fed die-plate, to a through the of which the material holes extruded in form by pressure. prepared solid The mash pressed through by fed to and perforated die-plate the means horizontally of a worm laid easing. in prin- and enclosed cipal difficulty by operation encountered the in of the tendency this was solidify the of the mash to into a hard cake, which pass properly through would not uniformly or die, holes of frequent so of the clogging machine cleaning necessitated the removal of the die its daily. numerous times
Sometime in knowledge the fall of 1931 and without the of plaintiff, began develop the defendant a variant form of featuring mechanism, standing vertically roller press, casing, in place horizontal, without of encased worm progress change screw. Coincident with its with con- of struction, making the defendant in lost interest further adjustments screw-type press plaintiff on the furnished to the agreement. specified plaintiff, as Meanwhile the encour- aged operation the intermittent successful the contract only perfection machine and convinced that its would involve alterations, a few minor was interesting instrumental sev- companies milling joint eral the trade the outcome experimental respective parties original with the efforts Upon learning device. pellet-producing activity marketing connection with the manufacture and press, roller-type plajntiff advised the defendant that newly-developed it considered machine to be within the purview contract and insist upon would recognition rights its thereunder. The defendant dissented scope
from this version of the between the parties. on the view the defendant’s determined stand matter, any repair well its disinclination to do more as as original July, 1932, work pellet press, plaintiff on the defendant of its return this machine and notified desire to installments, amounting $1,000, requested refund of two on At paid purchase price. which had been account of the plaintiff specific pro- same time made demand for its portionate receipts share collected the defendant later-developed various presses the result the sale these milling companies. comply The defendant refused to with matters, although terms to both after the answer, suit an way was commenced and amended conceding position defendant did its the extent of alter plaintiff’s right under the contract to return machine and liability $1,000, own interest. September
On action instituted this and, by way of an recited the contract amended complaint, many plain- In particular, of the facts above related. alleged tiff subsequent the date contract the eight presses defendant had manufactured and under sold Mill; that such presses trade name of California Pellet merely improvements pellet were on and were based *7 plaintiff; plaintiff to and that had demanded sold the twenty per gross selling price pellet mill cent of the presses per twenty patents and a cent interest in obtained thereon, improvements supplemental thereon. com- and plaint by plaintiff alleged further the sales the defendant of pellet accounting. the mill The presses and asked an plaintiff by to it performed also claimed have all conditions performed by be to under the contract. The defendant its put issue, denials all in and in controverted matters addition pleaded certain affirmative which will defenses to reference be made later opinion. in this hearing found, among
After an trial extended court the other things, that contract a mutual of was the parties cooperate together pool and work and their inven- tive in an to perfect pellet press agreed ideas endeavor improvements manufacture, sold and thereon and to general use; market and introduce it into that dealings in the they practically under the contract did so con- operations thereunder; strue it in their and transactions with exception part of failure on the defendant to plaintiff plans disclose to the defendant’s ideas and improvements reference to certain in substituting pres- roller pressure sure for in extruding screw through die, the feed plaintiff freely and the defendant exchanged, for their benefit, mutual their ideas plans and with reference “pellet press” pursuant provisions contract, to the and the above-mentioned plans ideas and were the result of said cooperation working together and plaintiff and the defendant and of the demonstration of changes by needful the plaintiff’s “pellet press,” use delivered to the plaintiff for purposes contract; “pellet that the mill press” “pellet was press” originally based on the furnished plaintiff any changes merely and improvements were “pellet press” within meaning as in the term used contract. court plaintiff fully further found that the performed all by matters and conditions to performed contract; under the plaintiff that the at all times acted accordance rights with and insisted its under terms contract; plaintiff kept “pellet press” operation and plant long demonstration at any its as as benefit to the activity; could result from such plain- that the tiff not fail, neglect did refuse or to foster the sale of similar machines; plaintiff that the any did not abandon or waive rights its or privileges under the contract its offer return “pellet press” and defendant its demand for a refund paid; the installments
concealment of activities connection with the manufac- marketing ture and “pellet press” mill was a breach legal duty of its violation of the contract in letter both in spirit. appeals The defendant portions judgment from such declare that the twenty is entitled to a per cent (1) interest in a so-called “pellet press,” (2) in a so-called “pellet press,” (3) any mill patents heretofore or here- after (4) obtained thereon, any defendant patents or heretofore hereafter obtained any the defendant on improvements thereon, (5) gross price any selling pellet and all future both presses pellet sales of presses, mill (6) portion from such judgment thereof awards *8 against the defendant for $24,884.70, and interest in the sum $5,665.69. figure of former represents twenty per The of cent gross proceeds “pellet presses” of plus mill sold $1,000 paid by plaintiff upon purchase price “pellet press” delivered it. principal problem presented appeal on this con of a language
sists determination of whether or not the of sufficiently contract is certain and definite render unneces sary respecting resort to extraneous evidence circum surrounding instrument, stances the execution of the the situa tion of parties, executing and their intention in it. is It contention plain that under the terms of the pellet return the press offer to and demand for refund installments paid its of the two purchase price rejection account of the constituted machine and cancelled the contract. this connection con importance assigned trolling provision to the operate properly failure of machine to or with sufficient capacity, obligation purchaser as pay it liability for was removed and defendant seller exclusively limited accepting should be the return of the press refunding payments made thereon. It must be language upon if which conceded the defendant regarded relies with much so assurance is as the sole measure rights obligations contract, under the However, the defendant’s contention tenable. are there provisions other instrument which also taken must into consideration. The fundamental canon of construc applicable tion generally which is contracts is the ascer (Civ. Code, 1636), intention tainment of the section 1638 Code, accordance with of the Civil language agreement, explicit if clear and con and not result, govern interpretation. ducive to an absurd must But portion only not mean that a of a written instru this does ment, although explicit, may it is clear and be selected as fur nishing parties. conclusive evidence of the intentions of the pro Section of the Civil Code embraces the true rule in " viding together, whole a contract is to taken that The every reasonably if give part, practicable, so as to effect to ’’ interpret the other. helping each clause principle announced in the Application last- necessary, therefore, section makes to consider mentioned part plain the document referable to the import from development to be derived tiff’s share the benefits and of promotion sales machines based prosecution its interest in the defendant’s thereon, aswell covering pellet-producing applications device patent may thereon that be thereafter made “any improvements significant phraseology appearing Other party.” either
761 stipulation this connection is that “This shall remain years seventeen hereof and shall effect date from binding and upon inure of the successors and to benefit ’’ assigns parties express of this hereto. The correlation agreement pursuant reference to duration of to marketing language scheme for the with the presses measuring obligations rights, parties and duties with respect agreed and con- purchase to the terms of sale forepart ambiguity tained in the document creates an scope the face of the contract as to the nature and the transaction which to parties intended cover. Such uncertainty terminology must be resolved accordance recognized interpretation. (Civ. Code, with standards of Contracts, 235-236.) 1637; Restatement, § §§ As discovering an aid in all-important element of parties intent contract, may the trial look court surrounding making to the circumstances agree (Civ. 1647; Code, Carlston, ment Smith 205 550 541, v. Cal. § 1091]; People’s Pac. Katz v. Co., & 101 [271 Finance Thrift App. 552, Meyers Cal. 558 ; Nolan, Pac. v. 18 Cal. [281 1097] (2d) 322 App. 319, 12 (2d) 1216]; 784, P. Am. Jur. [63 247), including object, subject and § nature matter of the (First writing Bowers, National Bank v. 141 262 253, Cal. 856]; Grunbaum, 42, Pac. Weaver v. 31 App. (2d) [74 Cal. (2d) 48 P. 12 406]; 776, Am. 242), pre Jur. [87 and the § liminary negotiations (Balfour between parties v. Fresno Co., Canal & Irr. 109 876]; Cal. 226 12 221, Pac. Am. [41 757, Jur. 234), and place thus itself in the § same situation in parties which the contracting. found themselves at the time Proc., (Code 1860; Civ. Wilde, Tennant 98 App. 437, v. Cal. § 445 137]; Pac. Indemnity Co. [277 v. Elec Pacific California Works, Ltd., trical App. (2d) 260, 29 272 (2d) Cal. P. [84 313]; 744, 17 C. S. 321.) J. applicable Also § here is the familiar rule that when contract ambiguous, is a con given by struction the acts and conduct parties with knowledge terms, of its any before controversy arisen has meaning, as to great its is weight, entitled will, when reasonable, adopted by (Work and enforced the court. v. Associated Growers, Almond 102 App. 232, 235 Cal. Pac. 965]; 304, 184.) Jur. reason underlying Cal. rule § duty is that it is give court to effect to the intention parties wholly where it is not at variance cor legal rect interpretation of the terms of the contract, and
practical placed parties upon construction instru (2 ment is the best evidence their intention. Elliott on Con 1537; 787, 249.) tracts, Am. Jur. As was said Mitau § (N. S.) A. 6 L. R. Roddan, : “It to a contract best is be assumed 275] terms, least know what was meant its are the liable intention; party be mistaken as alert to his each rights, interests, own to insistence what his contemporaneously with the execu ever done they terms as under tion of the contract is done under its *10 far should be. Parties are less liable stood and intended it during mistaken the intention their contract have been as to of reflects period practical while harmonious and construction the intention, subsequent are when differences have they than a law, them to and of them then seeks impelled resort to one they practical at with the construction construction variance executory upon execution, every In its placed it. . . . have requires practical or less of a construction contract more given, has been the given parties, it the and when this the law, any subsequent litigation involves construc in which of the adopts practical tion of the construction contract, the construction, rule to be parties and the safest as the true as ” cases.) (citing applied difficulty, in the of the solution light prin Measured of in the well-established these ample evidence in ciples of record interpretation, the reveals the scope in as to findings of the favor of the support controversy. appears in It purpose and the contract operations, with San Francisco in connection its business company) had been Milling Company (the parent plaintiff’s English press” a for using an machine called “cuber in form. Unsatisfied production poultry pellet certain feed English press, superintendent output with the of the 1930, Milling in conceived the idea Company November, defendant, machinery manu interesting an established pellet-making facturing development in of a company, expressed greater efficiency, himself to machine so he many president. As a result of conferences companies representatives respective between the 1931, completed by January, pellet press in a was defen Company, dant, plant Milling where and installed in the 15, Meanwhile, initially operated February on 1931. was organized for commercial plaintiff corporation was ex Many perfected. machine when defects ploitation new during following press months appeared experi- changes mentation and were made numerous construction suggestions response representa- defendant in respective companies improvement tives of as to imperfect mechanism. the machine was While still operation concerned, state insofar as commercial the con- was 30, suit, April tract in dated March was executed relationship change 1931. The between the did not upon signing agreement, persisted they their cooperative press. an develop efforts to and market efficient expense continued to share attendant experimentation suggested improvements—such multiple idea for the extrusion of pellets involv- ing a the addition of double worm and double to the knife original machine, frequent and the defendant’s recommenda- respect tions for alterations of die to various features drilling undertaking and thickness—the plaintiff to demon- processes working through strate its operation a per at cost differential of ton pellets $4 $6 on all manu- making factured and necessary the defendant mechanical adjustments charge. free of
During period plaintiff, convinced of the ultimate pellet-producing success of mechanism, began selling advertising campaign to create machine, market interested milling companies prospective several other pur- inquiries chasers and referred their to the defendant *11 appropriate consideration. Moreover, evidence of its sin- cerity regard, in plaintiff option this the took an more two pellet of the worm-type presses, parent company, and its the Milling San Company, purchased Francisco one of these December, 1931, machines. It not until following was and its press of utilizing a roller instead of pres- manufacture screw sure as medium of force and of the its sale several of these milling companies variant forms to previously recommended by that plaintiff, change the the defendant a manifested of in plaintiff by refusing attitude relation with the proceed to repair further with work on model plain- the delivered to the Learning marketing activity by tiff. of the defendant realizing futility attempting and of to cope longer the original press the features of the in defective view of the lack design defendant’s confessed of in that interest and its recognize plaintiff’s rights refusal to assertion the of certain contract, in new machine under plain- the the terms of the the tiff, July, 1932, to experimental in offered return the press to and both a the defendant demanded refund of the install- paid original ments proportionate on the model and its share gross proceeds received the defendant from the pellet presses, sales of mill contemplated by agree- the the prevail upon ment. Unable to respect, the defendant either plaintiff in September, present litiga- instituted the seeking rights of tion declaration and duties of the parties under contract. Upon of basis the trial court these facts found that
" agree under the terms said contract the mutual was plaintiff cooperate ment of and defendant to and work to gether pool their inventive ideas an per and endeavor to agreed press’ to sold ‘pellet improvements fect and the manufacture, to market thereon and and introduce it into general parties The contract evidence that the use.” bears press regard supplied plaintiff pattern to the did as a particular reference is made perfection, of “test adjust privilege mill ing” it at the and of of words, if it so desire. In other ing the machine should of defendant, having facilities for manufacture ma experimentation benefit be derived chinery, desired the milling operations incident continuous with the and practical to contribute the venture plaintiff undertook experi of mechanism under the direction of demonstration advertising promotion and to do and work employees, enced for an creating pellet- a market efficient purpose promotive cooperation machine. This com producing involving the combination skill and enterprise mon suggests defendant plaintiff of both the efforts relationship a contractual establish intended joint Fur akin to adventurers. themselves between royalty is the clause purpose of this indication ther gross pro share referable to original model, presses based of sales ceeds negotiated or the sales such whether defen relating respective interests the clause dant, and “any improvements machine any patent party.” either made bemay thereon thereafter usually joint sharing there is venture technical in a While enterprise common prosecution losses profits 975; Partnership, 33 C. J. Law of § Modern Rowley’s (2 the fruits the undertak participating mode of 2), *12 parties. agreement [Hamer may be left ing 620].) (2d) P. Whether MacClatchie, thereby created, have contract as a particular parties themselves, joint between the strict relation adventurers involving cooperative effort, depends or some other relation intention, their in accord actual which is determined interpretation ordinary ance with the governing rules 16.) (33 construction of contracts. C. contract J. Such § express; may implied need not be from the conduct of (2 parties. Rowley’s Partnership, 976.) Modern Law The acts parties engaged and conduct the accom plishment speak apparent purposes may above the expressed contrary. (O. K. declarations of the to the Co., Boiler & Welding Minnetonka 103 Okla. Co. v. Lumber 1045].) present In the case interpretation trial court’s parties’ as ex- pressive of engage cooperative their intention to in a scheme calling for pooling promotion inventive ideas common enterprise language is consistent with the of the con- tract as well as with the foregoing showing that evidence until the defendant refused plain- to work further tiff, plans freely exchanged ideas of the were for their necessarily mutual benefit. It follows from such state making record that the court was warranted in above-quoted finding cooperative referable to under- taking of parties. point
The next whether, to be is considered within meaning of the contract, upon” new is “based model the press made for plaintiff treated as an “im so as provement thereon,” urged by embodies, plaintiff, the defendant way a new which in contends, invention no plaintiff. concerns the principal The difference between the “pellet press” originally plaintiff to the delivered and the subsequently mill “pellet press” developed and sold to others essentially in the defendant means used force lies through perforations die-plate. previ mash As stated, plaintiff press pre to the ously furnished through pared perforated material was fed to and forced horizontally worm die-plate means of a laid and enclosed casing. type a roller mechanism, the new standing vertically casing, supplants without the hori zontal, gravity worm. mash then encased The fed by rotary roller, die-plate into the action of the which forced form pressure without contact with the actual exerts place worm die. The roller takes the and the face casing longer necessary. concedes no that the
766
“pellet press” mill improved extruding embraces an mechan- ism, it but attributes annexation efficacy to the demon- changes stration of needful in the many course of the months experimental operation of original model as pursued plaintiff defendant mill of at the San Fran- Milling cisco Company.
At the trial avail was experts patent made of law parties, both and as inferred, would be those witnesses dif sharply opinions equivalence fered their agencies roller worm physical establishing, and the for conjointly factors, with other common the functional rela tionship productivity. essential to commercial upon Based its consideration and evaluation of these conflicting views as gained well as the information inspection from a visual the characteristic machines, features of the two which is proper (Ethel Company evidence a case D. v. Industrial Com., 699, 219 704 (2d) 919]; Cal. P. Vaughan v. [28 Acc. County Tulare, 56 App. Cal. 265 ; Pac. [205 21] MacPherson Co., v. West Coast Transit App. 463, 94 Cal. 466 509]; 24 752, 34), Pac. Cal. Jur. [271 court found changed “none of said differences the essential nature ‘pellet press’ of said and each difference was the substitu ’’ generic equivalent. tion aof It is well settled weight given relative opinion testimony be and factual (Rolland evidence is the trial Porterfield, court. v. 183 Cal. 913]; 469 Hieronymus, 2 Ross v. [191 Cal. App. (2d) 258, (2d) 837]; Co., 265 P. v. Drug Shaw Owl [37 (2d) 191, 4 App. 196 (2d) 588].) P. [40 considering language whether under the contract the can be any rights said have in the press, following new phraseology significant: “of all presses further sales . . . based sold to the party part of the first (plaintiff) twenty . . per . cent of the gross selling price belong thereof shall to the party of the part (plaintiff) paid by first party of the second part (defendant).” scope The broad of this predi clause plaintiff’s right cate of the royalty payments, when re embracing the above-noted covenant improvements, lated reasonably suggests that did not intend to limit their within the narrow confines and technical provisions patent law, but that it was their under standing to associate in a themselves common venture development pellet of a marketable machine, orig- with
767 structure, inal rather than provisional perfected model as " contemplation as the improvements and in thereon” operative experience. further result of Consistent turning observation, on the defendant's citation of cases patent infringement governing refinements of the law only assign improvements holding that a contract to included improvements pat particular machine secured ent, (McAuley Chaplin-Fulton v. Mfg. no avail here. Withers, Ky. Co., 750]; Pa. Atl. Stitzer [66 S. 144 Y. ; Allison, W. Allison Bros. Co. v. N. 277] 956].) Parenthetically might it N. E. noted that *14 appears from the that the machine as which the record parties contracting were no patented, recognition, was not doubt, of the existence of certain defects its then state of operative efficiency. comprehensive “improvements character words
thereon” as parties used should not be overlooked. In Co., American Cone & Co. v. Consolidated Wafer Wafer 247 335 Fed. 429], C. A.C. wherein was considered an assignment of patent a for making a ice-cream device for cones, “as improvements may well all that be made thereto or thereunder,” Judge Hand, taking Learned occasion draw distinction “improvement a between an and an to” “improvement upon” “Every machine, page said at 336: more machine ‘upon’ it, efficient would an improvement speech, common but not ‘to’ significance it. We attach ‘thereto,’ the word signifi and we should attach an added meaning cance as well ‘thereunder,’ we any if could find for . . it. . patentee] Groset free to a new was make [the baker, might cone successfully which plain compete with the tiff, long improvement so as it was not an ‘to’ disclosure first patent.” his Disinfecting similar vein in West Paper Co. Mills, (2d) 803, United States Inc., F. (2d) (cert. F. affirmed den. U. S. 836 S. Ct. 485, 75 L. 1448]), the expres Ed. court with reference to the “improvements sion thereon or at variations thereof” stated page 804: “From the foregoing clear to us that seems what parties had in view was made when this contract was not the provisions technical patent but the law improvement folding of a using. machine such it as was then improvement To effect such provided for the contract plaintiff’s obtaining only the then improve not discovered ment folding Winter had made the old machine and which patent therefor,
was embodied in it also application his but contemplated might Winter there- ‘improvements that make on,' thereof,’ improvements ‘affecting or ‘variations said ’ ” folding by Judge machine. As was noted Hand aptly case, try supra, page the American at Cone 337: “We must posture rather to time, assume the at thought language consider men what most would have such ’’ regard it covered. must borne that what In this in mind subject them had before and what constituted the commercially pellet matter of was a impractical the contract upon” press, employment so their the words “based “improvements joint thereon” in connection their mar- undertaking development promotion strongly they con- machine, suggests ketable were then templating even accomplishment specific of a result though original func- substitution effected some is a Accordingly, tional mechanism. whether roller equivalent screw-type mechanical in the the worm for deter- patent a matter under canons law per- mination The function which the roller this case. that of the compressing forms as a device is so similar to scope model as worm that the contract the new within the improvement may a unitary structure well be treated as an harmony old, finding in based and the trial court’s with this construction will not be disturbed. any claim is there merit to the defendant’s
Nor original price pay failure the full for the *15 to participation machine constitutes a bar indisputably the development of upon and sale the benefits attendant the to the refers improved press. this connection defendant agrees to portion that the contract wherein the defendant of selling of per gross price of plaintiff twenty the pay the cent of “in of presses purchase the further consideration sales ad advantages of and and the demonstration said machine use vertising” defendant “will derive from the that the and plaintiff. “purchase” The words by the said machine” executed necessarily not an do connote “sale” in contract frequently used sale, or but purchase are or consummated 1347, (23 L. agreement buy or sell. R. C. of an to the sense any particular interpretation of these terms 171.) The the whole writing, and by the context of the is controlled case Packing Cutting (Blackwood v. examined. must be instrument ; 248, Rep. 218 Pac. 9 Am. St. 199] 76 o., Cal. [18 C 769 Goetz, Gaba, ; 324 Walti v. Cal. Pac. Estate [116 963] Heath, App. 198, 145]; Cal. MacRae v. Pac. 228].) plaintiff App. not Here was required keep pay to and machine unless it operated “properly capacity,” and with sufficient and the defendant privilege making adjustments to enable the reserved operate satisfactorily.” Thus, machine “to apparent it is obligation plaintiff’s purchase to not but was absolute subject foregoing qualifications was It and conditions. appear open therefore that the was con would contract this point, finding struction on and trial court’s “an purchase” by meant plaintiff part pay serve of the consideration for royalty as ments will not be disturbed view where such is consistent surrounding with the provisions circumstances other and evidencing parties. (Katz contract the intention of the People’s Co., supra, p. 557.) Moreover, Finance & at Thrift the defendant did the advantages derive of demonstration advertising and plaintiff’s original from the use of the working laboratory, stated; machine in the above and undeniably plaintiff by did foster the sales effected prior rupture defendant July, of their relationship in Although 1932. the machines improved presses, sold were the yet finding the trial upon court’s based evidence substantial “improvements” resulted the experimental from operation original model in workshop furnished plaintiff parties’ understanding accordance effectively plaintiff establishes that the deprived should fruits valuable rendered reason services the defendant’s development secretiveness as to the mar keting of the roller mechanism. In such circumstances there plaintiff’s was no failure of consideration part. Moreover, the above recital per purport parties’ understanding formance within the trial court complete found furnishes answer charge mutuality respec of lack of toas obligations promises tive under the contract. stated, As with the did it furnished to demonstrating whatever could done in the machine, adver tising fostering thereof, sales record discloses ample enjoyed evidence the defendant has the fruits plaintiff’s missionary In such situation apart activities.
770
question
mutuality
any
obligation
from
the first
instance,
performance
plaintiff prior
this
to institu
mutuality
of this action was sufficient
create a
tion
seeking
remedy
justify
appropriate
as to
its
relief
this
so
litigation
conform
for
failure of the defendant
with
agreement. (Thurber Meves,
35,
119
terms of
v.
Cal.
1063,
536]; Sayword
Houghton,
37-39
Pac.
51 Pac.
v.
[50
853,
545, 548
Pac.
v.
44];
119 Cal.
52
Wheat
Pac.
[51
Lloyd,
Pac.
v.
Thomas,
;
209 Cal.
314
Gosnell
[287
102]
;
450, 22.)
(2d)
23 Cal. Jur.
Cal.
P.
[10
45]
argument
Likewise without force
coupled
plaintiff’s
that the
offer to return
with
the machine
paid
for a
demand
refund of
installments
constituted a
termination
the contract. The
on which the
provision
defendant
follows: “In the
relies in this connection reads as
or
operate properly
event that said machine shall not
with
(plaintiff)
capacity,
party
first
shall be under no
sufficient
obligation
(defendant)
pay
same,
party
but second
consequential
not be
damages,
shall
liable
liabil
ity
accepting
party
exclusively
second
limited
shall be
part
party
the return
said machine
from
first
language
payments made thereon.”
If
and refund
specifically restricted to the measure of the defendant’s
liability upon
machine, the
.plaintiff’s return of the
par
contemplated
ties
of the con
stipulation
a
for termination
necessarily involving
tract,
the forfeiture
rights thereunder,
simple
been
matter to have
have
would
provided
plain
subse
so
terms.
Instead
“This
quent
agreement
clause
stated
expressly
their
years
agreement shall
in effect for seventeen
from
remain
existing
uncertainty
of such
date hereof.”
Settlement
intent
parties’
of the instrument as to
the face
their
calls for the trial
respect to
duration of
interpretation,
application of the familiar rules of
court’s
Indemnity
(Pacific
Co. v.
Electric
above stated.
California
supra.)
“Liability”
term which is fre
Works, Ltd.,
is a
light
surrounding
circum
quently
in the
construed
obligations
if it refers
all
accrued
stances
determine
liability
contingent
which the
only
particular
par
to some
Dry
Wentworth,
mind.
Goods Co.
(Coulter
had in
v.
ties
Transport
939];
Motor
Rowell Western
Pac.
Co.,
App.
400].)
Relevant to
con
94 Cal.
purpose
incorporating
parties’
thus
sideration
*17
771
provision manifestly susceptible
a
their contract
of varied
apt observation of
Justice
meaning
shades of
is the
Mr.
transparent
crystal,
“A
not a
Holmes:
word is
un
thought
vary
changed,
living
may
it is the skin of a
to
greatly
according
in color
the circumstances
and content
(Towne
Eisner,
in
it
v.
245
and the time
which
is used.”
418,
158,
372,
1918D,
U.
425
62
L.
S. Ct.
L. Ed.
R. A.
S.
[38
254].)
theory
rejecting
that
provi
defendant’s
a
question
for the
release
sion
embraced scheme
defendant’s
trial
liability
contract,
court found
from
under
all
“liability”
only
prescribed
that
so
meant
substance
damages
liability
operate
to
the machine to
due
failure
for
of
agree
rights under
properly, and not
all
a
of
forfeiture
only
is not
scope
consistent with the
ment. This construction
language in
as to
relation to the court’s determination
envisaged by
enterprise
writing,
it
purpose
of
but
harmony
policy
with the settled
not
is
law
likewise
clear
a
a
statement to
to enforce
forfeiture
absence
governing
point
principles
this
well
that effect.
are
(2d)
1
Schoettgen,
App.
418,
v.
423
in Nelson
stated
Cal.
[36
;
courts,
are
favored
(2d)
P.
“Forfeitures
not
665]
agreement
reasonably interpreted
to
an
can be
so as
and if
forfeiture,
duty
it
court
is the
to avoid it. The
avoid a
claiming
party
forfeiture to
burden is
a
show
intention of the
the unmistakable
instrument.
such was
(Quatman McCray,
855];
A further matter recited, relationship court’s'findings, as above trial pursuant their existing between undertaking. In every cooperative contract their regarding party any that neither shall do implied covenant is an there destroying injuring or the effect have thing will which contract, receive the fruits right party the other implied there exists every contract an means which dealing. (17 fair C. J. good S. faith covenant equitable purport principle, Within §328.) withholding regard conduct in information ing roller-type press, the fabrication of the its sale to the public application patent is a and the violation of the according evidence, spirit. contract in letter and Since arrangement partook cooperative joint venture, plain of a the defendant owed to the nature duty fair, open, disclosure, and it cannot tiff the honest right by connivance, suppression or of facts within the deceit know, advantage accept secure or 501, § 3.) gains. (33 C. L. § 36; secret C. J. R. Accordingly, sug unconscionable for the defendant gest president application made individual that because its covering improved machine—a cor patent for letters being poration patents, per being able to file *18 33)—he may keep him privilege (35 A., sonal for U. S. C. rights flowing plaintiff’s self to the benefits therefrom and destroyed. of The defendant’s fruits the contract are defendant, president agreement on behalf of the executed the contained, and knowledge implications with full of the therein accepted advantages upon plaintiff’s all the attendant original press. demonstration of situation and use Such may compels the conclusion not that the defendant evade its obligations by technicality contractual a in reason of patent Analogous principle law. in of Hamer is case v. 620], MacClatchie, (2d) 220 720 P. an action Cal. for [32 accounting recovery unpaid royalties of on certain page patents. “Furthermore, It said 724: was there at plans evidence ideas of these shows were freely exchanged fully justifies their benefit. It mutual finding that, agreement, patent under the terms of the in himby issued to for the benefit defendant was held trust of parties.” both like manner the record here establishes equities participate to in propor of the claim agreed gains tion its incident the devel interest opment improved press. ease, it
In summation this branch of the need of only given the contract in suit be said that the construction by appears intent the trial court be consistent with true so, of is court appellate and where that will though equally interpretation not seem substitute another (Adams Midway Co., Ltd., 205 tenable. Petroleum Cal. v. 224 221, ; Gen. A. & Ins. Pac. Kautz v. Zurich L. [270 668] Co., Ltd., 34]; McNeny 212 582 Touch- 576, Cal. Pac. v. [300
773 stone, (2d) (2d) ; 7 435 Tire Cal. P. Slama [60 986] 25].) Ritchie, App. 555, Protector Co. v. Pac. Cal. [161 remaining points presented The for consideration First appeal require but brief comment. challenge sufficiency noted of performance complaint’s by plea amended of reason “duly” plain allegation omission “That the word performed by performed tiff has all it to be under conditions (Code Proc., § 457.) said contract.” In this connection Civ. urges pleading the defendant that the strict followed rule respect party’s to a assertion of bar the statute limitations according specific to the section and subdivi (Code White, Proc., sion the code Civ. v. § 458; Overton (2d) 99].) App. (2d) 758, (2d) Cal. P. 65 P. general necessitates like exactitude the statement of the alle gation performance permitted However, code. adoption of theory similarity defendant’s as to the statutory requirement regulating pleading the method of respective legal these matters not conclusions would lend present argument. force plea to the proper rule as of the statute of self-operating depends limitations but diligence object for its enforcement on the ing to the insufficiency the plea either demurrer to the timely objection answer (Churchill at the trial. v. Woodworth, 148 Rep. 113 Am. St. 324], approved distinguished ground but in Overton on this White, supra, affirming judgment pleadings on the plaintiff.) favor of charge aOn like basis the defendant’s inadequacy of the complaint amended raise the issue *19 performance is of no avail here where the record shows that parties, pursuant respective to their exhaus positions, tively litigated subject during, the course of the main trial, findings properly matter, court made specific urge plead defendant not the point did of defective ing until after the completed questions trial had been as to all except supplemental accounting (Code case. aspect Proc., Civ. 475.) §
The defendant next contends that the terms judgment are so as to specific broad amount to decree of a performance rights rather a than declaration of parties duties of objec- under the contract. Particular is recognition tion made claim accorded the royalty to the payments patent stipulated interests
774
adjudication,
urges
agreement. The defendant
that such
operating
contemplating
continuance
a
futuro
for
personalized relationship
between the
the stated
time,
principle
equity
con
contravenes the settled
long
personal
extending
period
over
will
tract for
services
(Civ.
3390; Poultry Pro
specifically
Code,
not be
enforced.
California,
The defendant
desig-
(1)
following respects:
its
judgment in
ness of the
the
than the
press
unitary
structure rather
nation of the
computa-
basis for
pellet-making mechanism thereof as the
plaintiff from sales
payments due the
tion of the commission
conjunctive rather
in the
machine; (2)
declaration
the
twenty
disjunctive
right to a
plaintiff’s
than
“pellet
patents
cent
in all
obtained
per
interest
on either.
press,”
“pellet
press,”
improvements
mill
charge
predicated upon the claim that
first
of error
contract,
only
meant
the extrud-
“press,”
term
used in the
did not embrace the
ing
sold and
mechanism of the machine
heater,
mixer,
the feeder and
“accessories”—the
testimony
presi-
nullified
defendant’s
motor—is
entire
was considered the
dent. He stated
machine
unit,
specifications
the adver-
press and sold as
tising
for circulation to
mill-
literature he authorized
various
integral
ing companies
“accessories” as
included
so-called
public.
parts
offered
view of
for sale to
plaintiff’s
support
this evidence
claim that
“press”
in reference
used
word
whole
machine,
operative part
fact that
thereof
some essential
purchased
was
the defendant
from an outside source
rather
than manufactured
it would
serve
defeat
right
plaintiff’s
royalty payments stipulated
the con-
objection
Consequently
tract.
to this feature
defendant’s
judgment
cannot be sustained.
charge
As
of error—the
to the second
declaration
patents
respective
interest
on the
improvements
following quota
machines and
of either—the
Laughlin Engineers Corporation
tion from
case of Homer
Co., 116
(2d)
W.
200-201
App.
Leavitt &
P.
J.
complete
are of
511],
opinion
furnishes a
answer: “We
trial
to construe
province
that it was within the
court
and,
reading
from a
thereof
the contract
whole
where
any
subject
meanings,
phrase
word or
was
to different
then
meaning
given
harmonize
such
should be
as would
with the
arriving
provisions
entirety and,
of the instrument
in its
instrument,
at a true construction of the
all of the surround
ing circumstances
. . . And there
should be considered.
holding
unanimity
almost an
the effect that the terms
may
‘or’
interchangeable
‘and’ and
be construed as
when
*21
necessary
apparent meaning
to effect the
parties.
(Arnold
223];
v.
Cal.
Willis v.
Hopkins,
Pac.
[265
Robinson,
For judgment reasons the is affirmed. Gibson, J., Shenk, J., J., C. Carter, concurred. TRAYNOR, J. I judgment. agree I concur do not premise implicit with the majority opinion parol meaning evidence as to the of the contract was admissible only because ambiguous the contract is on its face. Words are used in an variety endless meaning of contexts. Their subsequently attached to them the reader but is formu only lated the writer and can by interpretation found light of all the circumstances reveal the sense which the writer used the parol words. The exclusion of evidence regarding merely such circumstances because the appear ambiguous words do not to the reader can easily lead to a attribution written meaning instrument of a (Cal. was never intended. Code Proc. 1856, 1860; Civ. see §§ Wigmore on ed., Evidence §§ 2458-2478; Theory 3rd “The Legal Interpretation,” 417, by Harv. L. Rev. Oliver Wendell (then Holmes Chief Massachusetts.) Justice of
Edmonds, J., concurred.
Appellant’s petition rehearing for a September was denied 24, 1942.