Case ID: ad_71/html/0099-01.html
Source: Caselaw Access Project
Author: {"author": "Ingraham, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Joseph B. De Lery, Respondent, v. Henry H. Rogers and The De Lery Light Company, Appellants.
    
      Causes of action, one to recover damages for a failure by the individual defendant to advance money, as agreed, towards the business of the defendant corporation, and the other to rescind the agreement because of such failure— they shouldbeseparatdy stated.
    
    The complaint in an action brought against Henry H. Rogers and the De Lery Light Company alleged that the plaintiff had patented certain inventions and that, for the purpose of promoting the sale of such inventions in foreign countries, he made a contract with the defendant Rogers, by which he agreed to assign the patents to a corporation organized for the purpose of manufacturing articles covered by the letters patent, in consideration of which he was to receive a cash payment and thirty per cent of the stock of the company; that such contract further provided that Rogers would, from time to time, provide a reasonable amount of money to enable the corporation, thus organized to properly conduct the business of making and selling the patented articles.
    The complaint further alleged that in pursuance of this contract the plaintiff transferred the patents to the corporation thus organized, the defendant, the De Lery Light Company, and received the money and the stock to which he was entitled, but that the defendant Rogers had failed and refused to provide á reasonable amount of money , to enable the corporation to carry on its business and had managed the company improvidently and improperly, with intent to deprive the plaintiff of his interest in said company, so that the plaintiff’s inventions were practically worthless.
    Judgment was demanded that the defendants be enjoined and restrained from in. any way disposing of the articles covered by the letters patent; that the contract and agreement be canceled and surrendered and that the plaintiff recover the sum of §100,000.
    
      Held, that at least two causes of action were sought to be alleged; one for the rescission of the contract and one to recover damages from Rogers because of his failure to comply with his contract to furnish money to the corporation, and that the plaintiff should be required to separately gtate such causes of action.
    
      Qumre, whether the facts alleged were sufficient to sustain either of such causes of action.
    Appeal by the defendants, Henry H. Rogers and another, from an order of the Supreme Court, made at the Hew York Special Term and entered in the office of the clerk of the county of Hew York oh the 11th day of February, 1902, denying the defendants’ motion to require the plaintiff to state, separately, several causes of action claimed to have been set forth in the complaint, and also to require the plaintiff to make his complaint more definite and certain.
    
      D. Walter Brown, for the appellants.
    
      Rollin Tracy, for the respondent
   Ingraham, J.:

It is somewhat difficult from this complaint to understand just what cause of action the pleader wished to allege. It is alleged that the plaintiff had made certain inventions for which he had secured letters patent, and that he entered into negotiations with the defendant Rogers under the full understanding that the main consideration to the plaintiff for entering into.said agreements was for the purpose of aiding and promoting his interest in the sale of such inventions and improvements in foreign countries; that, in pursuance of such understanding, an agreement was made whereby the plaintiff was to •assign the patents to a company to be organized, and in consideration thereof was to receive a cash payment and thirty per cent of the stock of the company to be organized for the purpose of manufacturing articles covered by the letters patent; that such contract further provided that the said Rogers would, from time to time, provide a reasonable amount of money to enable the corporation thus organized to properly conduct the business of making and selling the articles covered by the patents; and that, in pursuance of this contract, the plaintiff transferred the patents to the corporation thus organized, the defendant, the De Lery Light Company, and received the money agreed to be paid to him and the stock to which lie was entitled under the contract; but that the defendant Rogers had failed and refused to. provide a reasonable amount of money to enable the corporation to carry on its business, and has managed the "company improvidently and improperly, with intention to deprive the plaintiff of his interest in the company and to prevent his participation in such benefits, so that the plaintiff’s, inventions .are ■practically worthless and of no value whatever, all of which is due and owing to the illegal and wrongful acts of the defendants, and the judgment demanded is that the defendants be enjoined and restrained from in any way disposing of the articles covered by the letters patent; that the said contract and agreement be canceled and surrendered, and that the plaintiff recover the sum of $100,000.

There is no allegation that the corporation organized is under the control of Rogers ; that any demand has been made that the corporation commence any action to enforce the agreement of Rogers to pay to it sufficient capital to enable it to conduct its business; no tender of the money and stock that the plaintiff has received is alleged; nor does the plaintiff offer to restore to the corporation or to Rogers the money or stock that he has received as a condition for a rescission of the contracts. Upon these allegations of the complaint I do not think that the action could be maintained as an equitable action, either for the injunction demanded or for the rescission of the contracts.

There is, however, the allegation of the making of the contract by which Rogers agreed to pay to the corporation the necessary money to enable it to conduct its business, and that he has violated that contract; and it may be that sufficient facts are alleged to justify a recovery of the damages that the plaintiff could show that he has sustained in consequence of this violation of the contract by Rogers. The plaintiff’s counsel in his brief stated that he had three remedies. The one he adopted he characterizes as an “ action in equity to rescind and for equitable relief, offering in his complaint to restore, in case he is not entitled to retain what he had received; ” but I can see no offer in the complaint to restore anything; and he is certainly not entitled to receive back from the corporation a transfer of the patents, or to prevent the corporation from acting under them without tendering back or offering in his complaint to restore the stock that he has received.

As I read this complaint, there are at least two causes of action sought to be alleged; one -for the rescission and one to recover damages from Rogers because of Rogers’ failure to-comply with his contract to furnish money to the corporation ; and I think these two causes' of action should be separately stated. The corporation is alleged to be a party to the second contract, which it is alleged Rogers has violated. So far as the plaintiff seeks to rescind this contract and get back his patents, if he does seek that relief, although it is not demanded, that action would be primarily against the company, and Rogers, as being a party to the contract under which the patents were assigned, might be a proper party to that action as one interested in the controversy. On the other hand, so far as the action for damages is concerned, it would seem that the company was neither a proper nor necessary party. The complaint does not allege that the corporation has violated its contract, and the only relief that plaintiff could have would be a money judgment against Rogers. I am inclined to think, therefore, that there are two distinct causes of action ; and without intimating an opinion that the facts alleged are sufficient to sustain either, I think the plaintiff should be compelled to state separately these two causes of action, namely, one an equitable action for a rescission as against the company and the other the legal cause of action for damages against Rogers. As this would necessitate the service of a new complaint, it is not necessary to pass upon the further branch of the motion by which the defendant sought to require the plaintiff to make the complaint more definite and certain.

The order appealed from should be reversed, with ten dollars costs and disbursements, and the motion granted to the extent indicated, with ten dollars costs. ' '

Van Brunt, P. J., Patterson, McLaughlin and Hatch, JJ., concurred. ' •

Order reversed, with ten dollars costs and disbursements, and motion granted to the extent indicated in opinion, with ten dollars costs.