Court Opinion

ID: 5231312
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:56:57.721873+00
Date Added: 2024-06-11T08:27:40.295698
License: Public Domain

Hotchkiss, J. (dissenting):
Briefly the facts are as follows: Defendant was the owner of patents for an automanual apparatus — an electrical device. It had a factory at Ashtabula, 0., and its patents and other assets seem to have been for some time in the market for sale to any one who might buy.
In 1908, one Dukelow, plaintiff’s assignor, took up the matter of a sale of certain property or rights of the company to the American Telephone and Telegraph Company, with whose executive officers Dukelow was in touch.
On December 27, 1909, Dukelow first met North, president of the defendant company, and then seems to have agreed with North on the terms of his employment, which North was to report to his directors, expressing, however, his own satisfaction therewith. Dukelow continued, both by correspondence and personally, in communication with defendant concerning the details of a sale. He also seems to have continued conferences and negotiations with Vail, president of the American Telephone and Telegraph Company, looking to the same end. Some time in February, 1910, Dukelow had a conference with the directors or executive committee of defendant when the terms of Dukelow’s employment were agreed on and he was asked to put his understanding of them in writing, in pursuance of which, on March 14, 1910, Dukelow wrote defendant as follows, this being the contract relied on:
*761“Boston, Mass., March 14, 1910.
“ Mr. Charles North,
“ President North Electric Co.,
“Cleveland, Ohio:
“ Dear Sir.— Complying with the request of the directors of your company that I should send you a letter confirming my agreement with your company regarding negotiations which I have been and am now having with officials of the American Telephone & Telegraph Company regarding the sale of the Automanual apparatus, patents or other assets or stock of your company, I beg to state that my agreement is that if a sale is made to the American Telephone & Telegraph Company or to any of their associated companies or to parties in the interest of the American Telephone & Telegraph Company of Automanual apparatus, patents, assets or stock of your company, I am to receive from your company, if the sale is made on the basis of $1,000,000 a commission of 10%. Should the sale be made for a less amount than $1,000,000, my commission is to be 7%%. Should a sale be made at a price exceeding $1,000,000, I am to receive from your company a commission of 10% up to $1,000,000 and 15% on the amount in excess of $1,000,000.
“ Yours very truly,
“ CHARLES T. DUKELOW.”
It is conceded that no sale of anything was at any time actually consummated by Dukelow, although he claims that for some time after the date of this letter he kept Vail within the sphere of his influence. There was evidence tending to show that on April 15,1910, North, defendant’s president, told Duke-low that negotiations with the American Telephone and Telegraph Company were off and that negotiations with other parties were pending and would no longer be held in abeyance awaiting a sale to that company. This is denied by Dukelow, and there is documentary evidence strongly corroborating him. But the question is not of present importance. Thereafter North took up negotiations with one Stevens, as the result of which, it seems, that Stevens organized a concern known as the Telephone Improvement Company, which purchased sub*762stantially all of the capital stock of the defendant company and thereby acquired control of defendant, its assets, patents, etc. In 1911 Stevens employed one Johnson to open negotiations with the Western Electric Company, and in January, 1912, an agreement was effected between that company and the Telephone Improvement Company by which they exchanged licenses to use certain of each others patents, and the Western Company paid to this defendant $375,000 in cash. This transaction took place about one year and nine months after the date of plaintiff’s contract, and many months after plaintiff’s negotiations, conferences or other attempts to toward a sale had ceased. The Western Company is concededly a subsidiary of the American Telephone and Telegraph Company.
The court left to the jury the-following questions: (1) Was Dukelow the procuring cause of the sale? (2) Did the contract embrace and authorize plaintiff to sell what was sold? (3) Was the sale concluded during the term of his employment or had his service been ended by discharge or abandonment ? There was a general verdict in defendant’s favor.
I think the a/ppeal must fail. Whether the sale of the license was within the subjects covered by Dukelow’s authority to sell was determined against him by the jury; therefore, the only grounds on which the judgment can be disturbed are that as matter of law the sale of a license was within the purview of Dukelow’s contract; and also without regard for the fact whether or no he was the procuring cause, he was entitled to his commission in the event any sale was at any time effected to a subsidiary of the American Telephone and Telegraph Company. If either of these questions is determined against him, the appellant cannot succeed. As to -the first; the subjects of sale described in the contract were “apparatus, patents or other assets or stock of your company.” A license is not included within any of the above subjects, unless it be “ assets.” While the right of a patentee to issue licenses may be in a certain sense an asset, it is certainly not necessarily, as matter of law, within the meaning of the phrase “or other assets ” as used in this contract, the language of which would seem to contemplate a sale of all the company’s property *763rather than a part. By the words, “apparatus, patents or other assets ” the company’s physical property is described, but to cover the contingency that the sale might take the form of a transfer of the indicia of ownership rather than the physical properties, the phrase “or stock” was added. But for other reasons, I think the contract cannot be said to unequivocally embrace a license. The word “patents” being the greater and comprehending the less, would by inference seem to exclude the latter. Such a construction is most reasonable. The holder of a patent which is for sale may for many reasons prefer not to sell licenses for its use. If he sells his patent, all responsibility for subsequent infringements falls upon the purchaser, who must bear the expense of sustaining his rights; whereas one who licenses another to use, must protect his licenses from infringements, and also defend his invention if its legality is assailed. To put it another way: If after the owner of a patent had employed an agent to sell the patent, the owner himself should negotiate a license for a limited use of the patent by one with whom the broker had been negotiating for a sale of the patent, would the owner, as matter of law, he liable for brokerage on the proceeds of the license ? To my mind the question answers itself. As to the second question, had appellant, at the trial, taken the position that the contract was vague and its true meaning was only to be ascertained by the aid of the circumstances attending it, the verdict for the respondent could not be questioned. But he did not do this. At the trial, as on this appeal, he contended that the contract needed no aid from extrinsic evidence, and yet the major part of his argument is an appeal to this evidence. As I have hereinbefore said, the sole question is, was Dukelow, as matter of law, entitled to commissions in any event ? The contract does not say so. The contract says “ if a sale is made.” The natural interpretation of these words, at least in the absence of any expression to the contrary, I think, would he to read them in the light of the law hearing upon the relations between broker and principal. Under such circumstances, and in this situation, the necessity for the broker to be the procuring cause is undoubted. That appellant had no control over the price, and that his customer was limited to the American Telephone and *764Telegraph Company, as well as the numerous other facts given in evidence, and from which appellant ingeniously argues that the contract carried an obligation to pay whenever and however a sale was made to this customer, at best are but circumstances, and their weight was for the jury in interpreting the intent of the parties.
Briefly, the contract does not contain words of such impelling import as to permit us to construe it as an obligation binding defendant to pay in any event.
The judgment and order should be affirmed, with costs.
Ingraham, P. J., concurred.
Judgment and order reversed, with costs, and judgment directed for plaintiff, with costs. Order to be settled on notice.