Court Opinion

ID: 7843611
Source: CourtListenerOpinion
Date Created: 2022-09-08 17:05:59.381009+00
Date Added: 2024-06-11T16:20:37.084388
License: Public Domain

Berdon, J.,
dissenting. The majority holds that, on appeal, the dispositive issue is whether the plaintiffs, Robert A. Levine and Stephen C. Wardlaw, and the named defendant, James V. Massey III, intended that “the invention”1 referred to in their April 1, 1977 agreement (L/W/M agreement)2 pertained only to the *285capillary tube-float device. The trial court, however, concluded that it was the intention of the parties that “the invention” referred to the capillary tube-float device and the manual reader. The trial court wrote: “It appears to the court that when all is said and done it was the intention of the parties to share the profits on those inventions which were known to the parties at the time of entering the agreement on April 1, 1977, and to likewise share improvements which were dominated by the known inventions.”3
*286Despite the fact that the parties do not dispute the factual findings of the trial court, and despite the fact that these findings clearly support the conclusion of the trial court, the majority nevertheless has decided to reverse the trial court on what it claims to be a matter of law. The majority justifies its action by concluding that the L/W/M agreement unambiguously does not include the manual reader as part of the invention and, therefore, that the actual intent of the parties is irrelevant. In other words, the majority has looked only to the “four corners” of the document, and has refused to consider extrinsic evidence bearing on the true intent of the parties.
The majority’s analysis, however, is flawed for two reasons. First, the “four corners” doctrine is not the law of this state today, nor should it be. The trial court, therefore, was justified in considering extrinsic evidence in determining the meaning of the contract between the parties. Second, even if the majority is correct in asserting that “a contract is to be interpreted according to the intent expressed in its language and not by an intent the court may believe existed in the minds of the parties,” this rule cannot apply when the contract itself is imbued with ambiguity. Because several portions of the L/W/M agreement are ambiguous, the court was required to utilize extrinsic evidence to elicit the true meaning of the agreement.
I
While it is true that under the “four corners” doctrine, a court may not consider any extrinsic evidence unless a contract is ambiguous, the more modern view, propounded by Professors Corbin and Farnsworth, *287recognizes that “the meaning of language may vary greatly according to the circumstances” and that “all language is infected with ambiguity and vagueness and that even language that seems on its face to have only one possible meaning may take on a different meaning when all the circumstances are disclosed . . . .” 2 E. Farnsworth, Contracts (1990) § 7.12, pp. 277-78. Under this theory, extrinsic evidence is always available to be used for interpreting the intent of the parties. Id., p. 272. After all, as Professor Corbin observed, “[n]o contract should ever be interpreted and enforced with a meaning that neither party gave it.” 3 A. Cor-bin, Contracts (Sup. 1994) § 572B, p. 443; see 2 Restatement (Second), Contracts § 212, comment (b), and § 209, comment (a) (1981); see also Uniform Commercial Code, General Statutes § 42a-2-202.
Indeed, in Sims v. Honda Motor Co., 225 Conn. 401, 623 A.2d 995 (1993), we rejected the “four corners” doctrine in interpreting a general release agreement, choosing instead to embrace the modern approach and to make it crystal clear that evidence is admissible to determine the actual intent of the parties. In Sims, the injured plaintiff had signed the contract with the intent of releasing only one defendant from liability, but the contract expressly discharged from liability “any and all” other parties from “any and all” claims arising from the incident. Id., 404. Chief Justice Peters, writing for the court, declined to enforce the plain meaning of the all encompassing release, and instead adopted a Corbin-like approach which “provides for consideration of extrinsic evidence of the parties' actual intent and does not confine interpretation of the release to its four corners.” Id., 413.
Indeed, it is well established that the meaning of the language itself can be ascertained and interpreted only in light of the situation of the parties and the circumstances surrounding them. Buckley v. Buckley, 144 *288Conn. 403, 409, 133 A.2d 604 (1957); United Aircraft Corp. v. O’Connor, 141 Conn. 530, 538, 107 A.2d 398 (1954). Therefore, evidence that sheds light on the intent of the parties is admissible to construe the contract itself.
The Restatement (Second) of Contracts, § 212, comment (b), explained this concept as follows: “It is sometimes said that extrinsic evidence cannot change the plain meaning of a writing, but meaning can almost never be plain except in a context. Accordingly, the rule [making extrinsic evidence of intent admissible] is not limited to cases where it is determined that the language used is ambiguous. Any determination of meaning or ambiguity should only be made in the light of the relevant evidence of the situation and relations of the parties, the subject matter of the transaction, preliminary negotiations and statements made therein, usages of trade, and the course of dealing between the parties. . . . But after the transaction has been shown in all its length and breadth, the words of an integrated agreement remain the most important evidence of intention.”
The undisputed evidence on the record pertaining to the circumstances surrounding the execution of the L/W/M agreement and the conduct of the parties clearly supports the trial court’s finding that “the invention” included the manual reader. Indeed, the record is abundant with evidence that the parties, both before and after executing the L/W/M agreement, clearly intended that the manual reader was part of the invention they were trying to market.
On February 26, 1977, a little more than one month before they entered into the L/W/M agreement, the parties met with a potential licensee to display their invention. They demonstrated the manual reader as part of the invention and led the licensee to believe that *289the invention was “a complete system,” including the capillary tube-float device and a manual reader. Just over one month later, the parties entered into the licensing agreement with Becton, Dickinson and Company. In this agreement, the parties again referred to an “invention.” The plaintiffs conceded in their brief to the trial court that this use of the word “invention” referred both to the capillary tube-float device and to the manual reader.
Even more indicative of the intent of the parties than the circumstances surrounding the execution of the L/W/M agreement, however, is their subsequent conduct. Since signing the agreement in 1977, all of the parties have conducted themselves in a manner indicating that they intended “the invention” to include both the capillary tube-float device and the manual reader.
On April 20, 1977, nineteen days after they executed the L/W/M agreement, the parties issued a check from their partnership account to pay their patent attorney for processing the patent application for the manual reader. Wardlaw, in whose name the patent for the manual reader was initially registered, voluntarily assigned one-third interests in the manual reader patent to Levine and Massey. Since 1977, the parties have shared equally in the royalties of the manual reader and there is no evidence that Levine or Wardlaw ever contested Massey’s share of the royalties that Massey received under their agreement with the eventual licensee, Becton, Dickinson and Company. Later, in a “proposal for the development” of the auto reader, Wardlaw admitted that Massey was “one of the participants in the development of the original [capillary tube-float device] and reader . . . .” (Emphasis added.)
Finally, the three inventors shared in the royalties on the auto reader for more than one year before the *290plaintiffs brought this action. During this time, Massey was paid approximately $500,000 in royalties on the auto reader by Becton, Dickinson and Company. Indeed, Wardlaw and Levine brought this action only after Massey refused Levine’s request to modify the L/W/M agreement in order to cut off Massey’s rights to the royalties in the auto reader commencing in 1996.
We have repeatedly held that “[i]n construing the intended meaning of terms in a contract, the conduct of the parties regarding their use is a proper consideration.” Lar-Rob Bus Corp. v. Fairfield, 170 Conn. 397, 407-408, 365 A.2d 1086 (1976). Indeed, their conduct “is given great weight in the interpretation of the agreement.” (Emphasis added.) 2 Restatement (Second), Contracts § 202 (4) (1981). This is so because “[t]he parties to an agreement know best what they meant, and their action under it is often the strongest evidence of their meaning.” Id., § 202, comment (g). In this case, the conduct of the parties strongly supports the trial court’s finding that the L/W/M agreement’s reference to “the invention” included both the capillary tube-float device and the manual reader.
Three years ago, in the case of Voll v. Lafayette Bank & Trust Co., 223 Conn. 419, 613 A.2d 266 (1992), this court succinctly summarized both the role of the trial court in interpreting contracts and the standard of review we employ in reviewing the trial court’s findings in this regard. Justice Callahan, writing for the court, wrote that “[a] contract is to be construed according to what may be assumed to have been the understanding and intention of the parties. Ginsberg v. Mascia, 149 Conn. 502, 505-506,182 A.2d 4 (1962). The intention of the parties is a question of fact to be determined from the language of the contract, the circumstances attending its negotiation, and the conduct of the parties in relation thereto. Kakalik v. Bernardo, 184 Conn. 386, 393, 439 A.2d 1016 (1981). The trial *291court’s finding of fact with respect to intent is reversible on appeal only if the court’s finding was clearly erroneous. A. Dubreuil & Sons, Inc. v. Lisbon, 215 Conn. 604, 609-10, 577 A.2d 709 (1990); Kakalik v. Bernardo, supra [393].” (Internal quotation marks omitted.) Voll v. Lafayette Bank & Trust Co., supra, 426.4 That, of course, is not the case here. The evidence conclusively supports the trial court’s factual determination that the parties intended that the term “the invention” in the L/W/M agreement include the manual reader. This court, therefore, should affirm the judgment of the trial court.5
II
Even if the majority is correct that the meaning of the contract must be determined from the “four corners” of the agreement, however, no one claims that this rule has any application when the contract itself *292is ambiguous. See, e.g., TIE Communications, Inc. v. Kopp, 218 Conn. 281, 288-89, 589 A.2d 329 (1991); Cody v. Remington Electric Shavers, 179 Conn. 494, 500, 427 A.2d 810 (1980). Although the majority reads the L/W/M agreement as a model of clarity, I find it to be patently ambiguous as to the meaning of the word “invention,” thereby requiring the court to consider extrinsic evidence bearing on the intention of the parties.
The first contract recital provides, in part, that “whereas, the parties have jointly invented a method and apparatus for the measurement of blood counts and other similar tests for which they have made applications for United States Letters Patent, Serial No. 673, 058, filed April 2, 1976, and indicated as being allowable on December 17, 1976, and desire to define their rights and interests in said invention and in any Letters Patent which they or any of them may obtain relating to the invention . . . .” The majority uses the wording of this recital to conclude that “[t]he only invention to which those particulars apply is the jointly invented capillary tube-float device.”
If this reading of the contract is correct, however, then the first operative paragraph of the agreement is wholly without purpose. That paragraph provides that “[t]he parties shall apply through their patent attorney for and endeavor to obtain in their joint names Letters Patent of the United States for said invention, and any Letters Patent obtained therefrom shall be held by them in equal shares as tenants in common.” (Emphasis added.) At the time the parties entered into this agreement, however, they already had applied for and endeavored to obtain patents for the capillary tube-float device. In fact, they had filed the patent application, Serial No. 673,058, with the United States Patent Office on April 2, 1976, one full year earlier. The Patent Office had ruled on December 17, 1976, four *293months before the parties executed the contract, that the application for the patent was allowable. Yet this paragraph of the L/W/M agreement clearly contemplated a patent which the parties would apply for and seek in the future and which would be included in the contract term “invention.” Obviously, the “plain language” of the agreement is not so plain, and the term “invention” refers to more than simply the capillary tube-float device. The exact meaning of “invention,” therefore, can be ascertained only by reference to extrinsic evidence.
Furthermore, the recital to the contract quoted above is rife with other ambiguities. First, the reference to “the measurement of blood counts and other similar tests” (emphasis added) connotes equipment that includes the manual reader, the very purpose of which is to measure blood counts.
Second, the contract refers to “applications for United States Letters Patent,” but goes on to list only one serial number for these patent applications. (Emphasis added.) As indicated above, one week after signing this agreement, the parties paid their attorney for processing a patent application for the manual reader, and the patent was awarded shortly thereafter. Indeed, as the defendant explained in his posttrial brief to the trial court, “[t]he only reason that the [manual] reader instrument was not listed by serial number in the [L/W/M agreement] . . . was because the patent application for the reader had not been assigned a serial number by that date.” The reference to “applications,” therefore, can be construed as meaning the patent for the manual reader. (Emphasis added.)
Third, the parties refer specifically to future patents, which also can be construed as relating to the patent application for the manual reader.
*294Finally, the contract as a whole, including the description of the measurement of blood counts, clearly contemplates the application for additional patents and the making of additional improvements, all of which make ambiguous the meaning of the term “invention.” Even if the “four corners” rule applies, therefore, these ambiguities should prevent this court from attempting to discern the meaning of the contract without referring to extrinsic evidence to ascertain the intent of the parties.
Accordingly, it is clear that, pursuant to the L/W/M agreement,6 the named defendant is entitled to a one-third share of the royalties on the auto reader. Therefore, I respectfully dissent.

 The contract also referred intermittently to “the invention” as “the basic invention.” Neither party contends that “the basic invention” means something different than “the invention.”

 The L/W/M agreement read as follows:
“AGREEMENT
“This agreement entered into this 1st day of April, 1977, by and between Stephen C. Wardlaw, residing at 16 Pine Orchard Road, Branford, Conn., Robert A. Levine, residing at 31 Pilgrim Lane, Guilford, Conn., and James V. Massey III, residing at 80 Driftwood Lane, Trumbull, Conn.
“whereas, the parties have jointly invented a method and apparatus for the measurement of blood counts and other similar tests for which they have made applications for United States Letters Patent, Serial No. 673,058, filed April 2,1976, and indicated as being allowable on December 17,1976, and desire to define their rights and interests in said invention and in any Letters Patent which they or any of them may obtain relating to the invention; and
“whereas, the parties have entered into a license agreement with Becton, Dickinson and Company, dated effective as of April 1, 1977.
“now, therefore, the parties agree as follows:
“1. Application and Joint Ownership. The parties shall apply through their patent attorney for and endeavor to obtain in their joint names Letters Patent of the United States for said invention, and any Letters Patent obtained therefrom shall be held by them in equal shares as tenants in common.
“2. Costs and Profits to be Shared. All fees, charges and expenses incurred in connection with the development of the invention and obtaining, maintaining, and protecting the said Letters Patent shall be borne and paid by the parties in equal shares; and all profits, royalties or other payments derived by the parties from the invention or Letters Patent shall be divided equally among them.
“3. Restrictions on Transfer. None of the parties shall sell, assign, or mortgage his share or interest in the invention or said Letters Patent or grant any license thereunder without the previous written consent of the others.
*285“4. Improvements. If any of the parties at any time shall make or acquire any improvement or apply for or obtain any patent for any improvement upon said invention, he shall forthwith disclose the same to the others, and shall execute and do all applications, documents, instruments, and other things necessary for obtaining Letters Patent for and assigning the same, as the case may require, to the end that the same shall be vested in the parties in equal undivided shares or interest, and the same shall be held by the parties upon the same terms and conditions as the Letters Patent to be applied for under Paragraph 1 hereof.
“However, improvements made by and Letters Patent issuing therefrom which relate to the use of capillary tubes, but which are not dominated by any claims contained in any of the patent applications or Letters Patent of the basic invention, shall not be subject to equal shares among the parties. Any such improvements and Letters Patent not dominated by the claims of the basic invention shall remain the property of the inventor. In the event that such improvements of Letters Patent, because of the language of the aforesaid license agreement with Becton, Dickinson, become subject to its royalty provisions, then any such royalties paid by Becton, Dickinson to parties other than the inventor shall be paid over by such parties to the inventor. The calculations for such payment will be made to the end that the inventor shall be made whole as though he had licensed his improvement or Letters Patent individually to Becton, Dickinson and Company.
“in witness whereof, we caused our signatures and seals to be affixed hereto.
[Signatures of Stephen C. Wardlaw, Robert A. Levine and James V. Massey III]”

 The trial court noted that “[i]t is conceded that the defendant Massey has a one-third interest in the Manual Reader patent.” After reciting detailed testimony, the trial court concluded: “In short the combination of Dr. Ward-law’s diary of the invention process and Dr. Levine’s testimony appears to make it clear that sometime in 1976, clearly prior to the parties’ agreement in 1977, the Manual Reader in the form that was introduced at trial *286was well along in the invention process. Because the Manual Reader appears to have existed as a clear concept, it is the holding of the court that it is within the contemplation of the parties when they talk about ‘the invention’ in the agreement between the parties to share profits.”

 Moreover, “the determination of what the parties intended to encompass in their contractual commitments is a question of the intention of the parties, and an inference of fact. As an inference of fact, it is not reversible unless the trial court could not reasonably have arrived at the conclusion that it reached. Otto Contracting Co. v. S. Schinella & Sons, Inc., 179 Conn. 704, 709, 427 A.2d 856 (1980); Hydro-Hercules Corporation v. Gary Excavating, Inc., 166 Conn. 647, 653, 353 A.2d 714 (1974); Bianco v. Darien, 157 Conn. 548, 557, 254 A.2d 898 (1969); Finlay v. Swirsky, 98 Conn. 666, 671, 120 A. 561 (1923).” Bead Chain Mfg. Co. v. Saxton Products, Inc., 183 Conn. 266, 274-75, 439 A.2d 314 (1981).

 The majority contends that, according to this interpretation of the L/W/M agreement, “the very purpose for entering into the agreement would be abrogated” and the document would become a “meaningless agreement.” See footnote 9 of the majority opinion. These are incorrect statements. The contract sets forth the rights of the parties with respect to the capillary tube-float device and the manual reader, and it governs the rights of the parties in the event that one of them invents an improvement on those devices “which relatefs] to the use of capillary tubes.” In such a case, if none of the patent claims of the capillary tube-float device and none of the patent claims of the manual reader dominate any of the patent claims of the improvement, then the inventor of that improvement need not share credit with the other parties. For all other improvements, however, the contract provides that the inventor must share credit with the other parties. The contract, therefore, performs a valid function.

 The trial court found that the manual reader patents, in the parlance of patent law, “dominated” those of the auto reader. “By domination we refer, in accordance with established patent law terminology, to that phenomenon, which grows out of the fact that patents have claims, where-under one patent has a broad or ‘generic’ claim which ‘reads on’ an invention defined by a narrower or more specific claim in another patent, the former ‘dominating’ the latter because the more narrowly claimed invention cannot be practiced without infringing the broader claim. To use the words of which the board seemed to be enamored, the broader claim ‘embraces’ or ‘encompasses’ the subject matter defined by the narrower claim. In possibly simpler terms, one patent dominates another if a claim of the first patent reads on a device built or process practiced according to the second patent disclosure.” In re Kwplan, 789 F.2d 1574, 1577 (Fed. Cir. 1986). The agreement clearly provided that if either Levine, Wardlaw or Massey made or acquired any improvement on the invention, and that improvement was dominated by the invention, then the remaining inventors would share equally in those royalties for the improvement.