36 N.Y.S. 944 | N.Y. Sup. Ct. | 1895
On and prior to January 1, 1891, the defendants .Bufford and Kitson were the owners of three letters patent, duly issued to them, one on the 15th July, 1890, and the others on December 9, 1890, upon certain improvements in pipe tongs or chain wrenches invented by Bufford. These letters were for the term of 17 years.. In the complaint it is alleged that on or about January 1, 1891, the plaintiffs and Bufford and Kitson entered into a copartnership under the name of the Ithaca Drop-Forge Company, for the purpose of manufacturing pipe tongs or chain wrenches that should embody the improvements covered by the said patents; that, by the terms of the agreement of partnership, the plaintiffs were to furnish the necessary capital stock for the purpose of erecting a plant, purchasing machinery and tools, together with the necessary stock and appliances for the purpose of manufacturing the wrenches, and also furnish the necessary funds to defend any suit for infringement; that Bufford and Kitson agreed to assign to the company their letters patent, so that the partnership would be the entire owners of the same; that Bufford and Kitson were to receive one-fifth of the profits, and the plaintiffs four-fifths; that the plaintiffs performed on their part, but Bufford and Kitson did not assign the patents, and, on the contrary, on the 19th December, 1893, assigned the ■same to the defendants Williams and Redfield, who had knowledge of plaintiffs’ rights. Judgment was asked that the rights of the parties in the patents be determined; that the assignment to Williams and Redfield be set aside, and a conveyance be made by Bufford and Kitson to the firm. This action was commenced on February 6, 1894.
The referee finds that a partnership was formed on or about January 1, 1891, and by the terms of the agreement the plaintiffs “were to furnish the necessary capital stock for establishing a plant, purchasing machinery and appurtenances for said purpose of manufacturing said chain wrenches, and introducing the same to the market, and also to advance to said company the funds necessary to defend any suit that might be brought for infringement of any letters patent of the United States by reason of the manufacture, use, or sale of such chain wrenches, and to prosecute infringers of said three letters patent, Nos. 432,195, 442,306, and 442,569; that, in consideration thereof, the said defendants George W. Bufford and John E. Kitson agreed to transfer and assign to said company their said three letters patent, set forth as aforesaid; and that the said co-partnership was to have all right, title to, and interest in and to the said three letters patent, and the exclusive right to manufacture and sell the said Champion chain wrench under the protection of said three letters patent; and that said Bufford and Kitson were to receive one-fifth of the said plant, machinery, patents, etc., and of the profits of said business; and that the plaintiffs were to receive the other four-fifths of the property, patents, and of said profits; that the name adopted by said copartnership was the Ithaca Drop-Forge Company, and the said copartnership since that time has been, and still is, carrying on business under that name, making
It is not alleged or found that the partnership, as claimed by the plaintiffs, was for any definite period. If so, it was a partnership at will, and dissolvable at the pleasure of any of the parties. Story, Partn. § 269. McElvey v. Lewis, 76 N. Y. 373. In such a case the general rule is that equity will not interfere to enforce specific performance of the agreement of partnership. Pom. Spec. Perf. § 290. Equity will interfere “only when the partnership is for a definite period, or such decree is necessary to invest one of the parties with legal rights which he could not otherwise possess.” Pars. Partn. (4th Ed.) § 205. There was undoubtedly some arrangement between the plaintiffs, either individually or as officers of a corporation hereafter referred to, and Bufford and Kitson, that resulted in the manufacture of the Champion chain wrench, embodying the improvements covered by the patents in question. It appears that a contract to furnish a large quantity of them had been made with assent of Bufford and Kitson, and this contract to a large extent had not been filled when Bufford and Kitson transferred the patents. It may be that to enable the plaintiffs or the corporation they may have represented, or the firm, if there was one, to carry out this contract, a court of equity would give relief. It therefore becomes important to consider the question of what the relation was in fact between the parties.
By the judgment in this case, it is determined that there was between these parties a partnership from January 1, 1891, one of the terms of which was that the partnership should be the entire owner of the patents from that date, and have a transfer thereof from Bufford and Kitson. It is, in effect, claimed by the appellants that the finding of the existence of a partnership is against the weight of the evidence; and that, even if there was a partnership for some purposes, it was not one of its terms that the firm should become the entire owner of the patents, or that they should be transferred to the firm. Prior to 1891 there had been formed at Ithaca a corporation under the name of the Hague Expansion Horseshoe Company, with a fixed capital of $25,000. Its members were the plaintiffs and one Hague. Machinery had been purchased, and a plant established, for the manufacture of the Hague expansion horseshoe, and it had been to some extent manufactured. The plaintiffs had furnished the money necessary to purchase the machinery and plant in the
Up to the time Bufford left, about 7,000 wrenches had been made and put on the market, and there was an outstanding order for several thousand more. The price of the wrench was from $2.50 to $18. It does not appear what amount of profits had been made. The situation of the accounts does not appear, and no dividends were. made. In January, 1891, the value of the patents in question was uncertain. They might turn out to be valuable, or they might be ' worthless. The project for the manufacture of the wrenches was clearly an experiment. It is not probable that at that time the plaintiffs would be or were willing that Bufford and Kitson should have, as found by the referee, a fifth interest in their valuable property in return for what might be not only of no value, but a source of considerable expense. The theory as claimed by the defendants is more plausible,—that the manufacture was undertaken upon the understanding that, if it proved a success, the plaintiffs would give-for the patents a certain amount of the stock of the corporation. This view is considerably corroborated by the testimony of one of the plaintiffs, given, as I infer, in 1892, in another action, to the effect that, if the wrench proved a success, the patentees were to be . given for their patents a certain amount of the stock of the company. - - - ■
The true test of partnership is the intention of the parties. Pars. Partn. (4th Ed.) § 54; Bank v. Walker, 66 N. Y. 428. Here the question is, what did the parties intend in January, 1891, when they entered upon this transaction? If a partnership, as found by the referee, then Bufford and Kitson had the same control over the property as the other parties, and had like power to bind the members. Can it be said in this case that it was the intention of the parties .that Bufford and Kitson should have the same powers and rights over the plant and the business that the plaintiffs had? It seems to me not. :
Reference has thus far been made to some of the main features of the case. A careful examination of the evidence leads us to the conclusion that the finding of the referee of the formation of a partner-. ship which involved the entire ownership by the partnership of the patents in question is against the weight of the evidence. A reversal of the. judgment must follow.
It may be that the plaintiffs have still some basis for relief to give them the protection of the patents as to the wrenches contracted . to be furnished with the knowledge and consent of the patentees. But this subject need not be considered here.
Judgment reversed, and new trial ordered; costs to abide the event. All concur.