Court Opinion

ID: 9546617
Source: CourtListenerOpinion
Date Created: 2023-08-07 17:32:57.542161+00
Date Added: 2024-06-11T15:16:41.378495
License: Public Domain

On Petition eor Rehearing
LATOURETTE, C. J.
On rehearing it is asserted by plaintiff Phillips Screw Company that we were in error in holding that plaintiff was guilty of laches and estoppel. The alleged error is predicated in part on the following language we employed:
“There is nothing in the record to indicate that Mr. Phillips was acting in behalf of Mr. Givnan *288when such statement was made, and, of course, he therefore would not be bound by the same.”
If Frank Phillips were the agent of defendant Givnan at the time the conversation took place it might be an exeusefor the plaintiff’s failure to exert its rights with reference to the Givnan invention. The agency relied upon, however, is refuted by the allegations of the complaint wherein it is alleged:
“That from about 1932 to about 1944 said Henry F. Phillips served as an officer of the Phillips Screw Company and since that date has continued to serve as a technical adviser and consultant therefor.”
There are some discrepancies in the evidence on this phase of the case. However, the impelling evidence supporting the above allegation may be found in the transactions involving the attempted purchase of a 51 per cent of the interest in Givnan’s invention by Henry Phillips prior to the discovery of the worthlessness of the invention. It is quite clear to us that Henry Phillips was acting in said transaction for the plaintiff. This is supported by Mr. Cookingham’s letter to Mr. Givnan,, the pertinent portion of which is as follows:
“I am writing you with respect to Patent No.. 2,395,476 which has been issued in your name. “Some time ago when you were in our employ,, it was brought to our attention that you had applied for a screw patent and at that time we made an investigation to determine whether or not the patent was worth developing. After a checkup by us, it did not seem to us that the invention had enough novelty or merit to justify our putting up any money for its development, and nothing further was done-about it. At that same time we understood that you were making no claim and had no intention of developing the project for your own account, and we therefore gave the mattei no further thought.
*289“It has now been brought to our attention that an attempt is being made to promote this screw actively among potential users, and under those circumstances it is, o.f course, going to be necessary for us to assert our rights.”
The money mentioned in the letter obviously refers to the purchase of the 51 per cent interest aforesaid. That portion of the letter stating that the investigation to determine the value of the patent was made while Givnan was in the employ of the plaintiff company is an erroneous statement of the facts as the evidence clearly indicates that the investigation was made after Givnan had terminated his relationship with the plaintiff. It therefore appears, not only from plaintiff’s complaint but also from the evidence, that at the time in question Henry Phillips was the agent of plaintiff.
It is further argued that equitable defenses are not available in an equity suit to anyone guilty of a breach of trust. This, of course, is the general rule but there are exceptions, one of which is found in the authority relied upon by plaintiff, which is:
“The existence of a confidential relationship between the parties is an important circumstance for consideration in determining whether a delay in seeking to enforce a right constitutes laches, a delay under such circumstances not being so strictly regarded as where the parties are strangers to each other. If an agent has taken advantage of the confidence reposed in him to obtain property of the principal or any other undue advantage over him, lapse of time will not ordinarily bar the principal’s suit for relief, unless the principal delays so long after the transaction as to raise a presumption that he has acquiesced in it and abandoned his claim, in which case relief will be denied. * * *”30 CJS 556, Equity, § 129. (Emphasis supplied.)
*290Menendez v. Holt, 128 US 514, 32 L ed 526, 9 Sup Ct 143, the next ease relied upon by plaintiff, likewise sustains the exception, full recognition being given to the general rule that estoppel will ordinarily not be a defense where a confidential relation exists, the exception being couched in the following language:
“* * * Mere delay or acquiescense cannot defeat the remedy by injunction in support of the legal right, unless it has been continued so long and under such circumstances as to defeat the right itself. * * *
Í ( S& * # #
“ * * * At the same time, as it is in the exer-
cise of discretionary jurisdiction that the doctrine of reasonable diligence is applied, and those who seek equity must do it, a court might hesitate as to the measure of relief, where the use, by others, for a long period, under assumed permission of the owner, had largely enhanced the reputation of a particular brand.”
We have examined with care the other authorities cited. In our opinion they lend no help to a proper solution of this matter.
When plaintiff, on being apprised of the lack of merit in the invention by the American Screw Company and its patent attorney, disavowed any interest in the same, it impliedly acquiesced in the transaction and abandoned its claim. It would indeed be inequitable and unjust to permit the plaintiff, with full knowledge of the facts, after approximately five years’ silence and after defendants had brought the invention to a profitable fruition, to enrich itself at the expense of defendants.
The former opinion will be adhered to.
Brand, J., dissents.