Case Name: WEAGANT v. BOWERS, Collector of Internal Revenue
Court: United States Court of Appeals for the Second Circuit
Jurisdiction: United States
Decision Date: 1928-02-06
Citations: 24 F.2d 362
Docket Number: No. 99
Parties: WEAGANT v. BOWERS, Collector of Internal Revenue.
Judges: 
Reporter: Federal Reporter 2d Series
Volume: 24
Pages: 362–365

Head Matter:
WEAGANT v. BOWERS, Collector of Internal Revenue.
Circuit Court of Appeals, Second Circuit.
February 6, 1928.
No. 99.
Adrian C. Humphreys and Marion W. Ripy, both of New York City, and Robert N. Anderson, of Washington, D. C., for plaintiff in error.
Charles H. Tuttle, U. S. Atty., of New York City (Prank Chambers, Asst. U. S. Atty., of New York City, of counsel), for defendant in error.
Before MANTON, L. HAND, and AUGUSTUS N. HAND, Circuit Judges.

Opinion:
AUGUSTUS N. HAND, Circuit Judge
(after stating the facts as above). In spite of the allegations of the complaint that the payments to the plaintiff were bestowed and accepted as gifts, there is a reference in the pleading to the instrument of October 3, 1917, and 'it is distinctly alleged that by that instrument the Marconi Company "promised to give to the plaintiff one-third of the net receipts or profits which it might thereafter obtain from the sale of any patents or applications for patents granted in foreign countries on said inventions or discoveries."
The writing of October 3,1917, is, therefore, apparently a basis for the payments, and when examined is found to contain on the part of the plaintiff an assignment, not only of existing inventions, but of all improvements made "or which he may hereafter make - on the same," and on the part of the Marconi Company a promise to pay Weagant one-third of its net receipts from certain of his patents. Can it be said that the two writings of February 5, 1914, and October 3,1917, the first of which is referred to in the complaint as the contract under which plaintiff worked, and the second of which is referred to as the basis of the payment to him of profits derived by the Marconi Company from his inventions, do not embody the agreement of the parties? If they do, there was no gift, but there were taxable earnings. The plaintiff'has relied on the instrument of October 3, 1917, in stating his causes of action. Since the bill of particulars was filed, the complaint must be read with the bill of particulars and treated as including the latter. Richardson v. Gregory, 219 App. Div. 211, 219 N. Y. S. 397, affirmed in 245 N. Y. 540, 157 N. E. 849.
In such a situation the plaintiff must avoid the instrument of October 3, 1917, as a binding contract. He might in his complaint have showed that the instrument was not the final memorial of the' understanding of the parties, as, for example, that it was thereafter modified or rescinded or legally superseded. To do this he should have set out the particular facts.
The instrument of February 5,1914, contains no statement of any term of employment and embodies no mutual promises, yet the pleading which denominates it a contract speaks of it as terminated on January 1, 1920. Was there some other contract which fixed the term of employment until January 1, 1920? If there was, there would be no consideration for the instrument of October 3, 1917, unless the promise therein to assign improvements which plaintiff "may hereafter make" covered those made after cessation of the term of employment, for the plaintiff would already be bound by the writing of February 5, 1914, to turn over to the Marconi Company all inventions while he was employed by the latter.
The complaint, when read with the bilí of particulars', becomes at best self-contradictory. At worst, its general allegations that the payments to plaintiff were gifts is explained away by the more specific terms of the writing of October 3,1917, and the sums which were paid are thereby shown to have been turned over as compensation for services, and as such to have been lawfully taxed. Thus the complaint fails to state a cause of action, either because it is self-contradictory and inconclusive, or because it shows that the sums paid represented taxable income.
Yet, in view of the allegations that the payments were bestowed and accepted as gifts, and that both parties to the transactions intended them as such, we think the plaintiff should have another chance to re-frame his pleading. He may accordingly allege and prove, if he properly can, that the instrument of October 3, 1917, did not embody the final agreement of the parties under which the payments in question were made. Furthermore, if he alleges that the employment ending January 1,1920, was had under an agreement that he should work for that term, he may also allege and prove that in the assignment, in the writing of October 3, 1917, of all "improvements" which the plaintiff might "hereafter make," the word "hereafter" (the meaning of which may not be clear in all circumstances) related only to improvements made prior to the termination of his employment. For, if such were the fact, there would apparently be no consideration for the writing of October 3,1917, and a reasonable ground would exist for the contention that the payments were gifts.
The judgment is reversed, but the order for judgment is affirmed as to the portion dismissing the amended complaint, but modified, so as to permit the plaintiff to file a further amended complaint in conformity with the views set forth in this opinion..