Court Opinion

ID: 6970833
Source: CourtListenerOpinion
Date Created: 2022-07-24 02:02:06.517836+00
Date Added: 2024-06-11T09:12:17.025369
License: Public Domain

Mr. Justice Wilkin delivered the opinion of the court: The only substantial controversy between the parties is as to the proper meaning of the contract of December 9, 1895, in the use of the words “net profits,” as therein stipulated. It may be conceded, as contended by counsel for plaintiff in error, that the term “net profits,” unqualified, would mean the remainder after deducting all expenses of every kind in the manufacture and sale of the machines. But this contract expressly provides how the “net profits” shall be ascertained. The only ambiguity or indefiniteness in the agreement is found in the words, “labor at the average shop cost per man, arrived at in the manner customary with said party of the second part.” The manner customary with the Bates Machine Company of arriving at the average shop cost per man was to add to the actual cost of labor the operating expenses of the company in salaries of officers and office men, taxes, insurance, advertising, and all other items of general expense, which amounted in the aggregate to about sixty per cent of the sum expended in the actual payment of labor. When that fact was ascertained the contract ceased to be in anyway uncertain, and we think the construction so placed upon the contract a fair and reasonable one, — at least so far as the company is concerned, — and its custom as ascertained fully sustained by the evidence. We also think the evidence fully authorized the conclusions reached by the master in the statement of the account between the parties. But counsel for plaintiff in error insist that it was error to overrule its objections to the master’s report and disallow the cost of drawings, patterns, catalogues, advertising, etc., because the defendant, by his answer to the original bill, admitted that said items of expense were proper to be charged against the gross receipts. The part of the answer upon which the contention is based is as follows: “Fifth — This defendant admits that a considerable sum of money was laid out and expended for the purpose of paying the expense of patent litigation, but he avers that he has paid back to the Bates' Machine Company, from royalties and commissions due him, all of the said money; and he also avers that the expense connected with the advertising, cataloguing, and all other printed matter explaining the method of the operation of the Cookson heater, has been paid for and deducted as part of the cost of manufacturing the heater in accordance with the license contract, and consequently this defendant avers that such advertising matter is no longer an item of expense of a possible item of loss in the settlement of this controversy. “Sixth — This defendant denies that twenty-three different sizes of heaters, requiring expensive patterns, were made, but he says that there were eleven patterns made at the expense of said company, and he also avers that every dollar of the expense for said patterns was paid by this defendant out of and from the royalties accruing to him under said contract of license set forth in said bill.” These clauses of the answer, fairly construed, amount to no more than an averment that upon a full and fair accounting, in accordance with the license contract, the items of expense therein named have been deducted as part of the cost of manufacturing, and that the only patterns made at the expense of the company had been paid for by defendant out of royalties or commissions due him. Nothing is said, either in the bill or answer, about the manner customary with the company in ascertaining the cost of labor, etc. The answer does no more than to aver that the sixty per cent added by the master in his construction of “the license contract” covered all the expenses of drawings, patterns, advertising, and all other items of general expense, and that the same had been paid by commissions due the defendant. Certainly, it cannot be seriously contended that the defendant, by his answer, admitted that the cost of drawings, patterns, catalogues, advertising, etc., should be allowed in addition to the sixty per cent which actually was allowed. In other words, the answer cannot be fairly construed to admit charges and expenses beyond those actually covered by the license contract. On the whole record we think the decree of the circuit court is right and that the jhdgment of the Appellate Court affirming the same is proper. It will accordingly be affirmed. Judgment affirmed.