Court Opinion

ID: 8800105
Source: CourtListenerOpinion
Date Created: 2022-11-26 14:28:16.306451+00
Date Added: 2024-06-11T17:03:51.322393
License: Public Domain

AIvSCHURER, Circuit Judge
(dissenting). I cannot concur in the conclusion that the notes here in question represent consideration to the licensor for granting the exclusive license. The contract nowhere so states, but specifies “a royalty of 50 cents per horse power,” etc., and provides for the guaranty of the annual minimum of “royalties” of the stated sums, and for the giving of the notes “as evidence or prepayment of such sum.” The notes bear no interest till after their maturity at the respective times for payment of the minimum royalties, and so, if a present consideration, the payee’s beneficial use of it is postponed till the minimum royalties would become payable. While the contract mentions these minimum sums as being payable “in any *285event,” these words, in my judgment, are but a different form for stating that for each of those years the royalties shall not -be less than the sums named; and, besides, elsewhere in the instrument arc found conditions under which the payments might never accrue. Section 8 provides for cancellation of the contract by either party in case the other does not comply with its terms; section 9 for cancellation by licensee in case it is enjoined and cannot have practical monopoly of the rights granted, but in this case “it shall be liable for all royalties up to that time accrued,” and shall have no further use of the patents. And so, if for any such reason the contract is terminated further royalties thereunder cannot accrue, any more than can rent accrue after the termination of the tenancy. In re Roth & Appel, 181 Fed. 667, 104 C. C. A. 649, 31 L. R. A. (N. S.) 270; Atkins v. Wilcox, 105 Fed. 595, 44 C. C. A. 626, 53 L. R. A. 118. These conditions seem to me quite inconsistent with the inference that the notes represent anything but royalties, as specified. The claim is on the notes, and I believe the District Court was right in rejecting so much thereof as did not represent the minimum royalties accrued at time of bankruptcy. On the authority of the recent opinion of the Supreme Court in Re Frank E. Scott Transfer Co., 240 U. S. 581, 36 Sup, Ct. 412, 60 L. Ed. 811 (April 3, 1916), it would seem that a claim based on an anticipatory breach of the contract through the bankruptcy would have been provable to the extent of the resultant damages shown.