Court Opinion

ID: 5186184
Source: CourtListenerOpinion
Date Created: 2022-01-06 04:48:46.975297+00
Date Added: 2024-06-11T08:26:45.557920
License: Public Domain

Patterson, J.
(dissenting):
This action was brought to recover a balance of moneys claimed to be owing by the defendant to the plaintiff upon a contract, in writing. The principal question before us is one relating to the proper construction of that contract as affecting the liability of the defendant. On the trial a verdict was directed for the plaintiff, and from the judgment entered thereon the defendant appeals.
*114The contract was made on the 24th of September, 1894, and it recites that the party of the first piart (the plaintiff) was in possession of an invention relating to automatic funnels, for which he had made application for letters patent, and that the.defendant, being desirous of securing the exclusive license to manufacture and sell funnels of the plaintiff’s invention, the plaintiff granted to the defendant power- and privilege, to the exclusion of all others, to manufacture and sell such funnels. The defendant agreed at once to manufacture the funnels and to use his best endeavors and facilities and to- constantly continue to make all possible sales of funnels throughout the United States, to keep books of account of all funnels manufactured and sold and render monthly statements from said books to - the plaintiff and to pay a royalty of five cents upon each funnel manufactured. The contract then contains this stipulation, viz.: “ It is further agreed by the party of the second part (defendant) that the royalties he shall pay unto the party of the first part the above rate shall amount in the aggregate each separate year to at least Three Thousand Dollars ($3*000), and should the accumulated royalties at the royalty named not reach the sum of Three Thousand• Dollars, the party of the second! part he entitled to continue this license by making up the deficit by payment of cash.” The contract also. continued this further stipulation, viz.: “It is further agreed' and mutually understood that in the event of the non-fulfillment of the terms of this agreement by the party of the second part, by failing to continually make sales or payments of royalty and herein provided so that the aggregate income of the party of the first part shall noio he less than $3,Q00, tlien the party :of the (first), second part may, at his option terminate this license by serving a written notice of his intention so to do, giving the party of the second part thirty days from the receipt of said notice to fulfill the terms of these presents, otherwise this license to remain in full force and effect,” etc.
The amount sued for in this action is a balance of $3,000 claimed to be due on the 24th of September, 1895, that is, for the first year of the currency of this contract, It is not disputed that, during that year, the defendant manufactured' funnels; it is not claimed that the plaintiff manufactured any. It was not asserted by the plaintiff that he had a patent; -all that he owned was the invention. *115The parties were not contracting with reference to an actually issued patent, nor is there anything contained in the agreement by way of 2’epresentation, warranty or otherwise that a patent should be secured. The obligation of the defendant was to pay royalties upon the manufactured articles invented by the plaintiff — and not upon articles patented by the plaintiff. The stipulation respecting the payment -of “ royalties ” to the extent of $3,000 a year, is a positive promise that the plaintiff shall receive that much so long as the contract endures. The provision that if the royalties shall not reach the sum of $3,000 the party of the second part should “ be entitled to continue ” the license by making up the deficit by payment in cash, cannot be construed as an exclusive alternative for the non-pay^ ment of a deficiency in the $3,000 for any one separate year of the existence of the contract. So long as that contract continued, the defendant was bound for each separate year to pay ■at least the sum of $3,000 as and for royalties. The obligations •of the parties are fixed from year to year, and the provision with' respect to the continuance of the license by making up the ■deficit by payment in cash was not agreed upon as the only consequence of a failure of the defendant to make the payment; for by the subsequent provision of the contract above quoted, it is declared that the failure of the defendant to 'make payments, so that the .-aggregate income of the plaintiff shall not be less than $3,000, gave to the plaintiff the option to terminate the license by serving a written notice of his intention so to do, and allowing the defendant thirty days’ time in which to perform his contract by making payment. The established relations concerning the continuance of the •contract, the exercise of an option by the plaintiff to terminate it, .-and the notice necessary to terminate it, show that the arrangement .respecting the payment of this $3,000 of royalty was an arrangement from year to year, and that, at the expiration of each year, an indebtedness arose from the defendant to the plaintiff, for any defi-ciency in the annual income intended to be secured to the plaintiff, •of $3,000. If such a deficiency existed at the end of any year, then the future status of the defendant, as to the contract,- was to be determined at the option of the plaintiff. On the 24th of Sep-tember, 1895, the defendant owed the .plaintiff the balance of moneys •claimed in the complaint, under his covenant to pay it.
*116The case is not within Wing v. Ansonia Clock Co. (102 N. Y. 531), for here the parties have not made the forfeiture of the coutraet the only remedy open to the plaintiff, nor the only consequence of the defendant’s failure to perform.
I It is not necessary to consider any of the exceptions in the case. The refusal of the court to take evidence that the plaintiff had failed to obtain a patent'was not error. It was shown that the patent had been applied for, and the record discloses that the application proceedings were continued for two years, and until some time' in 1896. Ror was it error to refuse to allow, on the trial, an amendment of the answer. The nature of the amendment proposed was so radical as to constitute an entirely new defense.
The judgment and order should be affirmed, with costs.
Judgment and order reversed, new trial' ordered, costs to appellant to abide event.