Case Name: SPEARS v. WILLIS
Court: New York Supreme Court, General Term
Jurisdiction: New York
Decision Date: 1893-05-09
Citations: 23 N.Y.S. 549
Docket Number: 
Parties: SPEARS v. WILLIS.
Judges: 
Reporter: West's New York Supplement
Volume: 23
Pages: 549–553

Head Matter:
(69 Hun, 408.)
SPEARS v. WILLIS.
(Supreme Court, General Term, Third Department.
May 9, 1893.)
j.. Specific Peefoemance—Sale of Patent Right.
Where it is verbally agreed that defendant shall sell plaintiff a half interest in a patent, and that the parties, as copartners, shall manufacture the patented article, and they accordingly manufacture such article for a number of years, specific performance of the agreement to sell the half interest in the patent will he decreed, and the fact that plaintiff never paid the purchase money is immaterial, where defendant made no demand therefor.
2. Partnership—Accounting.
Though the goods manufactured by the firm were not made according to the specifications of the patent, but were made after patterns furnished by defendant, who had charge of the business, plaintiff is entitled to an accounting against defendant.'
Herrick, J., dissenting.
Appeal from judgment on report of referee.
Action by James Spears against Eben Willis to dissolve a partnership, and for an accounting, and, as an incident to the principal relief sought, to compel the assignment of a half interest in a patent. There was a judgment for plaintiff, and defendant appeals.
Affirmed.
Argued before MAYHAM, P. J., and PUTNAM and HEBBICK, JJ.
Swift & Sanford, (Theodore H. Swift, of counsel,) for appellant.
L. P. Hale, for respondent.

Opinion:
PUTNAM, J.
In the autumn of 1879, defendant being the owner of letters patent No. 189,330, for an improvement in "sap spouts/* the parties entered into an oral agreement that defendant should sell to plaintiff an undivided half interest in said patent for $500, and that plaintiff and defendant, as copartners, should enter into the business of manufacturing and selling sap spouts made under said letters patent. Thereafter they entered into said partnership, and carried on said business under the name of Willis & Spears until 1887. The referee finds—and the evidence seems to sustain his findings—as follows, viz.:
"(5) That on or about the 19th day of January, 1887, Willis & Spears entered into a contract with Charles Miller & Son, of which the following is a copy:
'"Utica, N. Y., Jan. 19, 1887.
" 'Charles Miller & Son—Gentlemen: We do hereby give you the exclusive sale of the Willis sap spout for the United States during the lifetime of the patent, about eight years, in consideration of your buying outright the spouts we now have on hand, paying for them $14 per M. for the large size, or No. 1, $10 per M. for the small size, or No. 2, and additional spouts required for this year are to be paid for at the same rate; and also in consideration of your buying not less than one hundred M. spouts each year after this. The price of spouts to be advanced or reduced in case of an increase or diminished cost of manufacturing them, and you are to fix the price to jobbers and the retail dealers yourselves, in proportion. Terms of payment, half March 15th, and half May 15, of each year. [Signed] Willis & Spears.'
"'Utica, N. Y., Jan. 19, 1887.
" 'Messrs. Willis & Spears—Gentlemen: We hereby accept your proposition of this date, giving us the exclusive sale in the United States of the Willis sap spout for the terms mentioned. Yours, truly,
[Signed] " 'Chas. Miller & Son.' "
"(8) The sap spouts manufactured by the said copartners were not made in strict conformity to the specifications of the patent No. 189,330, but at the commencement of said copartnership the spouts were made after patterns furnished by said defendant, and which patterns were embraced in said sale, and were used as a part of the partnership property, and from time to time different alterations and improvements have been made in the spout which was manufactured by said copartnership, and there is now being manufactured and furnished to said Miller & Son a spout substantially in the. form and in the pattern which was in use by, and being manufactured by, said firm of Willis & Spears immediately prior to, and at the time of, the making of said contract with said Miller & Son. And the spouts which have been manufactured and sold by said copartnership, and which have been furnished to said Miller & Son, are each marked, 'Pat. 1887.''"
"(10) In the fall of 1887 the plaintiff removed from Colton to Canton, where he has since resided, and since that time he has taken no active part in the partnership business, and has given no time or attention to said business. Prior to such removal, both the said copartners had resided at Colton, and the partnership business had been carried on from that place, and each party had contributed about equally of his time and attention to said business.
"(11) Soon after the removal of said plaintiff from Colton the defendant' stated to him that he should not continue the business of making sap spouts, and divide with him, and that there was not enough of the business to divide; that he must buy out the business, or sell,—to which the plaintiff replied that he would sell his interest in the business, and would name a low figure. But no further negotiation was had, and no proposition or agreement made; and thereafter the defendant notified said Miller & Son that he was carrying on said business in his own name, and requested them to change the account to his name, and he tore the name of Willis & Spears from said contract, and from that time the correspondence and remittances from Miller & Son were to the defendant personally."
The defendant claims that from the period that he so tore the name of Willis & Spears from said contract the plaintiff has had no interest in the said business, and he refuses to account with him, or to convey to him a one-half interest in the said patent. Plaintiff has never paid the purchase price for said patent, nor has the defendant ever demanded such payment. The defendant continued to furnish sap spouts to Miller & Son up to the time of the trial of the action.
The answer admits the sale of an undivided one-half of the patent right in question by defendant to plaintiff, and the formation of, the partnership, as alleged in the complaint; and hence, no issue in these regards being raised in the pleadings, the conclusions of the referee, founded on such admissions, cannot be deemed erroneous. Were there not such admissions, however, by the verbal agreement between the parties, under which they had, as copartners, carried on the business for eight years, treating said patent right during that period as partnership property, and under all the circumstances of the case, the plaintiff acquired an equitable title or interest in said invention, which equity will protect. The evidence disclosed an equity in favor of plaintiff, rendering a judgment for specific performance proper. Burr v. De La Vergne, 102 N. Y. 416-422, 7 N. E. Rep. 366; Somerby v. Buntin, 118 Mass. 279; Hapgood v. Rosenstock, 23 Fed. Rep. 87; Adams v. Messinger, 147 Mass. 189, 17 N. E. Rep. 491; Binney v. Annan, 107 Mass. 94; 18 Amer. & Eng. Enc. Law, 139. We therefore conclude that the referee did not err in holding that the equitable title to said patent vested in the firm of Willis & Spears, and in directing an assignment thereof by defendant to plaintiff pursuant to the oral contract, and a sale of the partnership assets, including said patent right.
The defendant claims that the plaintiff was not entitled, under the complaint, to compel an accounting, or to recover in this action, because, as alleged, the partnership was formed to manufacture spouts under the patent No. 189,330, while in fact no spouts were ever made under that patent; that all the spouts manufactured by the copartnership were made under another patent, owned by defendant. The referee finds that the spouts that were manufactured by said copartnership were not made in strict conformity with the specifications of said patent right No. 189,-330, but were made after patterns furnished by defendant, and which patterns were embraced in the sale, and used as part of the partnership property, and from time to time alterations and improvements were made. The fact that the copartners, who, under the partnership agreement, were to manufacture spouts under the above-mentioned patent, in fact made and sold spouts varying from the specifications thereof, does not interfere with the plaintiff's right to recover his share of the partnership profits. It is not material under what patent they made their spouts. Whatever spouts were made were manufactured by them as copartners, and each member was entitled to Ms share of the profits, and to call the other to account. We therefore conclude that the referee properly directed an accounting to be had of the partnership transactions between the parties. If there was any variance between the allegation in the complaint and the proof, in the regard above mentioned, such variance was not material. Civil Code, § 539, 540.
We also think that the judgment properly provided that defendant account for all sales of sap spouts to the day of the entry of judgment. The copartners on January 18, 1887, made a written contract with Charles Miller & Son for the sale to the latter of all spouts which the firm should thereafter manufacture during the life of the patent,—about eight years. This contract was owned by the firm, and was valuable. The defendant afterwards, without the knowledge or consent of plaintiff, assumed to destroy said contract, and make a new one in his own name, and for his oavu benefit, and thereafter to sell spouts under said new contract, made under an improvement of said patent No. 189,330, invented by said defendant. When the contract with Charles Miller & Son Avas made, plaintiff and defendant were copartners, and the owners of all benefits and advantages and profits to be derived under said contract. If plaintiff in any way failed to perform Ms duty as a copartner, either by moving from Colton to Canton, or in neglecting the partnership business, or in any other way, defendant could have procured a dissolution of the copartnership, but until he did so the partnersMp continued. The- evidence faded to show a legal abandonment of the partnership enterprise by plaintiff. The relation between the parties was one of trust and confidence. Each was bound to act in entire good faith to the other. Nor could a clandestine stipulation or contract be made by either for a private advantage to himself. The defendant had no right to destroy the valuable contract which the firm-owned with Charles Miller & Son, or to take a new contract in his own name. Such an act was a fraud on the firm. It was somewhat like one member of a copartnership taking a renewal lease of premises occupied by the firm, as in Mitchell v. Reed, 61 N. Y. 123, and Struthers v. Pearce, 51 N. Y. 357. The fraud here, however, is much more flagrant than in the cases cited, because the defendant, before making a new contract, was compelled to cancel a valid and valuable contract owned by the firm, without any authority whatever to do so. Under the circumstances the new contract made by defendant with Charles Miller & Son, and his receipts thereunder, should inure to the benefit of the copartnership. The contract made by the firm would not expire until 1895. Defendant, having unlawfully assumed to destroy that contract, and take a new one for his own benefit, should be deemed to hold it for the benefit of the firm he has attempted to defraud. This is so notwithstanding the sap spouts furnished since the defendant attempted the destruction of said firm's contract with Charles Miller & Son, although, in substance, in the form and pattern as used immediately prior to the mailing of the said contract, as the referee finds, are not exactly the same. See 17 Amer. & Eng. Enc. Law, 1058-1060; Story, Partn. § 174; 3 Kent, Comm. 51. It is probably true, as defendant claims, that plaintiff has no interest in the new patent' invented by defendant. Burr v. De La Vergne, 102 N. Y. 415, 7 N. E. Rep. 366. But the referee does not provide for the assignment of such patent, or a sale thereof, as a part of the partnership assets. He directs an assignment of an undivided one-half interest in said letters patent Ho. 189,330, and a sale of said patent right. It follows that the judgment shotdd be affirmed, with costs.
MAYHAM, P. J., concurs. HERRICK, J., dissents.