Court Opinion

ID: 6581936
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:38:59.780043+00
Date Added: 2024-06-11T15:57:19.210492
License: Public Domain

Carpenter, J.,
(dissenting). The law favors sureties. All contracts sought to be enforced against them are to be construed with reasonable strictness in their favor. This proposition will not be denied. That it applies to this case cannot be doubted. William H. Mallory, one of the parties to the contract, contracted in fact as surety for the American Propeller Company. He, and two others who were his sureties, signed the bond given to secure the performance of the contract. William H. Mallory being dead, the suit is prosecuted against his sureties as well as against his estate. The case turns mainly on the construction of the contract.
The plaintiff was the owner of a patent, and the American Propeller Company was the owner of two other patents, *449all of which were issued by the government of Great Britain and all related to the method of steering propellers. The parties supposed that they could be sold together more advantageously than separately. Hence it was agreed that the plaintiff should assign his patent to the Propeller Company in order that the three patents might be sold to parties in Great Britain. William H. Mallory entered into a personal contract with the plaintiff, in which he undertook that the patents should be sold in one year if practicable ; if not, that Fowler’s patent should be re-assigned to him. By the terms of the agreement they were all to be sold together. If so sold, no matter for what sum, Fowler was to receive, as his portion of the proceeds, the sum of $8,000. If all or either of them were sold for more than $80,000, Fowler was to have ten per cent, of the excess up to $150,-000. Fowler’s patent, without the knowledge of the parties, had been anticipated in Great Britain by the Moodie patent, for which reason it was found impossible to sell it. The other two patents, together with a steam-launch, were sold for the nominal price of ¿£22,000 to a corporation organized in England. Of this sum there was received in cash on account of the patents the sum of $8,625.20. The balance was paid in stock of the English corporations which the committee finds is worthless. At the expiration of the year the plaintiff’s patent was re-assigned to him.
Neither the Propeller Company nor Mallory ever received any benefit whatever from the Fowler patent and the transaction occasioned no loss or damage to Fowler. Upon these facts the question is whether the plaintiff is entitled to recover.
The plaintiff claims that he is entitled to recover $8,000 and interest, and that claim is sustained by a majority of the court. The claim appears to me so palpably inequitable and unjust that I cannot assent to it. My views are strengthened and confirmed by a careful re-examination and re-consideration of the questions involved after the decision was made. The contract, after describing the parties and the patents, and providing that the patents shall be sold *450together, is as follows: “And in ease said letters-patent are so sold, leased or disposed of at any price within the time aforesaid, then the said Mallory, his heirs, executors, administrators, or assigns, are to pay to the said Fowler, his executors, administrators, heirs or assigns, the sum of eight thousand dollars, within six months after the date of such disposal or sale. And in case the aforesaid letters-patent, meaning either or all the said patents, shall be disposed of for a greater sum than eighty thousand dollars, then the said Mallory, his heirs, executors, administrators or assigns, are to pay to the said Fowler, his heirs, executors, administrators or assigns, at the rate of ten per cent., or ten dollars for every hundred dollars, over and above the said eighty thousand dollars, until the amount of such sales reaches the sum of one hundred and fifty thousand dollars, beyond which sum of one hundred and fifty thousand dollars sales the said F. Gr. Fowler is to receive nothing, or no further percentage.” The contract then provides that in case the patents are not disposed of Fowler’s patent shall be returned to him, and that he shall suffer no loss or damage on account of the agreement.
Under this contract one of three results was possible: 1st, a sale of all the patents; 2d, a sale of none of them; and 3d, a sale of one or two of them without the other or others. The first contingency is provided for; a sale of all for any price entitles the plaintiff to $8,000. The second— a sale of none of them—entitles the plaintiff only to a reassignment of his patent. The third—a sale of two of them, not including the plaintiff’s, has actually happened. Now what is the provision of the contract in that contingency? Simply that the plaintiff shall receive ten per cent on the amount received in excess of $80,000. But the plaintiff recovers nothing under that clause in the contract, because the amount actually received for the patent sold is but a little more than three thousand dollars.
Will this contract bear such a construction as to give the plaintiff the sum of $8,000 provided for in. the first clause ? I think not. This was not a “ pooling ” of the patents, as *451I understand the meaning of that term. Neither party became interested as owner in the patent or patents of the other. The proceeds were not to be divided pro rata. The plaintiff was first to be paid $8,000 provided all the patents were sold. There was a possibility that all would not bring more than that sum. No matter, the plaintiff takes the whole. Again, it was possible that all might sell for $150,000 or more. In that event the plaintiff was to receive $15,000; and that was to be the maximum of his compensation. All over that sum, or all over $8,000, as the case might be, belonged to the American Propeller Company. That company received the plaintiff’s patent simply as bailee. And it is from that point of view that this contract is to be considered. Now these defendants have a right to insist that this contract shall be literally and strictly construed. Construing it according to its plain, unambiguous terms, $8,000 is payable only in case all the patents are sold. That being so, the plaintiff is necessarily precluded from receiving that sum if all are not sold. Moreover, a sale of any, less than all, is a contingency expressly provided for in the second clause; and as the sum of $8,000 is not therein named it is excluded by implication. The plain obvious meaning is, that if all the patents are sold, or, possibly, if a part only, including the plaintiff’s, are sold, the plaintiff is to receive $8,000. If all or any of them are sold for more than $80,000, he is to receive ten per cent on the excess. There is no excess and his patent has not been sold. Before he can receive $8,000 it is indispensable that his patent should be sold. The consideration for the promise to pay him that sum is, not the right, or the power to sell, nor both combined, but a sale and the receipt of the price. The promise is necessarily contingent. Until- there is a sale, with a right at least to receive the price, the promise does not take effect. As that has never happened and cannot happen the promise is inoperative. There is a total failure of the anticipated consideration.
Take another view. When this contract was entered into both parties assumed and believed that Fowler’s patent *452was not only valid, but that it had a clear field unobstructed by any conflicting patent. The existence of the Moodie patent was then unknown. It turns out that the existence of that patent renders'the plaintiff’s worthless. It is very clear that the parties were mutually mistaken. They contracted with reference to something which they supposed existed, but which practically did not exist. It is very much like a contract for the sale of a horse which they supposed to be alive, but which in fact was dead; or a ship at sea which the parties supposed to be safe, but which in fact was lost. In such cases the contract is inoperative because the parties were mutualty mistaken as to the existence of a material fact. In that view of the case the plaintiff ought not to recover.
Upon what theory then are the defendants held liable ? Solely on the ground that Mallory, after he had discovered that it was impossible to sell the plaintiff’s patent at any price, sold his own on the best terms he could. And that ground is only rendered tenable by injecting into the second clause of the contract the provision for the payment of $8,000, when the parties had not only failed to put it there but had carefully excluded it. I submit that such a construction falls but little, if any, short of making a contract for the parties.
We judge of principles and policies by practical results. Let us apply that test to the two constructions of this contract. Construed as I construe it, no injustice is done to either party. The plaintiff has had the benefit of an honest and intelligent effort to sell his patent in a foreign country, without trouble or expense to him. The effort failing, his patent has been restored to him in as good condition as it was when he parted with it; while the Propeller Company has only had, as was its right, the avails of its own patents. Both parties doubtless suffered by the existence of the Moodie patent, but neither is held responsible to the other therefor. A contingency 'arose which the parties had not .contemplated and for which they had made no provision My construction leaves them where they left themselves, *453and where the law leaves them, with no contract governing the case. The construction which prevails, by a forced and unnatural interpretation applies the contract to that contingency. It in effect interprets the contract as if it contained a clause in substance like this: “ If it shall so happen that Fowler’s patent is worthless by reason of the existence of another patent, so that it is impossible to sell it, nevertheless if the Propeller Company shall sell its own patents, it shall pay to Fowler the sum of $8,000.” It makes the whole loss resulting from the unexpected contingency fall upon the Propeller Company, while the plaintiff bears no part of it. He is in fact in as good a condition apparently as he would have been if the Moodie patent had not existed. It in effect prohibits the company from selling its own patents except upon a forfeiture of $8,000 to Fowler. It makes Mallory to that extent guarantee that Fowler’s patent shall be salable and valuable. By some mysterious, I may say miraculous legal transformation, Fowler’s patent, the worthless one, is worth more than the three patents combined; for Mallory is compelled to pay more than double the sum he was able to obtain for all of them. Surely a construction which can work out such results must be radically wrong.
In this opinion Loomis, J., concurred.