Lyndon v. Wagner Electric Manufacturing Company

• Decision Date: 02 December 1920
• Citation: 225 S.W. 711,285 Mo. 77
• Parties: LAMAR LYNDON v. WAGNER ELECTRIC MANUFACTURING COMPANY, Appellant
• Court: Missouri Supreme Court

225 S.W. 711

285 Mo. 77

LAMAR LYNDON v. WAGNER ELECTRIC MANUFACTURING COMPANY, Appellant

Supreme Court of Missouri, First Division

December 2, 1920

Appeal from St. Louis City Circuit Court. -- Hon. Karl Kimmel Judge.

Affirmed.

Albert Blair and Charles A. Houts for appellant.

(1) The contract of March 2, 1912, and as modified by the contract of April 12, 1912, gave the defendant the right to elect between operating as a licensee, and making an outright purchase of the patent. There is no evidence that defendant ever exercised its right of election, and until it did so elect there could be no liability on its part to pay either the royalty provided for, or the purchase price. (2) Paragraph two of the contract of March 2, 1912, is ambiguous in that it impliedly, though not expressly, gave the Wagner Company the right to withdraw from the contract, if within 40 days from its date, its investigation of the validity of the patent produced unsatisfactory results, Because of this ambiguity it was the duty of the court, in ascertaining the true meaning of the paragraph in question, to apply the following rules of law: (a) Whatever is implied in a contract is as much a part of the contract as though expressly set out. Southern Ry Co. v. Franklin Railroad, 44 L. R. A. 297; 6 R. C. L. p 856; Lawler v. Murphy, 8 L. R. A. 133; Driver-Harris Co. v. Driver, 70 N.J.Eq. 34; Driver-Harris Co. v. Driver, 71 N.J.Eq. 271. (b) The whole context is to be considered in ascertaining the intention of the parties, even though the immediate object of inquiry is the meaning of an isolated clause. 6 R. C. L. p. 838; Kauffman v. Dader, 108 F. 171. (c) The meaning of the paragraph in question being doubtful, plaintiff was bound by the interpretation which he and Mr. Layman put upon it. 13 C. J. pp. 523, 524; Farley v. Pettes, 5 Mo.App. 262; Counts v. Medley, 163 Mo.App. 555; Bruner v. Wheaton, 46 Mo. 363. (3) Under a proper interpretation of paragraph two of the contract, the defendant was only obligated to make the first payment of $ 750 if upon investigation it found the patent to be of satisfactory validity. Defendant's refusal to pay the $ 750, until it secured the modifications of the original contract, which are embodied in the contract of April 12, 1912, and its payment of that snm, upon the execution of the contract of April 12, 1912, furnished a sufficient consideration for the modifying contract of April 12, 1912. Adams v. Helm, 55 Mo. 468. The mutual agreement of the parties to modify the original contract furnishes a sufficient consideration for the modified contract. Domenico v. Alaska Packers Assn., 112 F. 554; Welsh v. Mischke, 154 Mo.App. 728; Cannon-Weiner Co. v. Boswell, 117 Mo.App. 474; Schneider v. Chew, 157 Mo.App. 354; Carman v. Harah, 182 Mo.App. 365. (4) The plaintiff sued on the contract of March 2, 1912. This contract was modified in important respects by the contract of April 12, 1912. As plaintiff did not plead the modified contract, he cannot recover in this action, even though, under a proper pleading, he might be entitled to relief. Bagnell Timber Co. v. Ry. Co., 180 Mo. 463; Veach v. Norman, 109 Mo.App. 387; Lanitz v. King, 93 Mo. 519; Carman v. Harah, 182 Mo.App. 365; Whitlock v. Beach, 174 Mo.App. 428; Goller v. Oil Co., 179 Mo.App. 48. (5) Under the terms of the original contract, as modified by the agreement of April 12, 1912, the obligations of the Wagner Company terminated on the second day of October, 1912, unless at that time it elected to go forward with the contract, and made the payment of one thousand dollars, as provided in the modified contract. The Wagner Company did not elect to go forward; refused to pay the one thousand dollars, and notified plaintiff of its determination to withdraw from the contract, and that it would cause a re-assignment of the patent to be made. Its obligation of the contract thereupon terminated. (6) In addition to the rights of withdrawal provided by the modified agreement of April 12, 1912, paragraph 8 of the original contract, also gave the Wagner Company the right to terminate the agreement at the expiration of two years. It so desires. Prior to that date it notified the plaintiff of its determination to abandon the contract, and continued notice of its abandonment of the contract was contained in its answer to a suit brought by the plaintiff for the one thousand dollars referred to in paragraph two of the original contract, and in the modified agreement of April 12, 1912, which suit was pending and being contested by defendant at the expiration of the two-year period referred to in paragraph two of the original contract.

Rippey & Kingsland for respondent.

(1) The right of an inventor and patentee under the patent laws of the United States is to exclude others from making, using or selling the physical embodiments of the subject-matter of the invention, and this right is a property right vested by law in the inventor and patentee. Jewett v. Suspender Co., 100 F. 647; Victor Co. v. The Fair, 123 F. 424; Rubber Tire Co. v. Rubber Co., 154 F. 363; Blount Mfg. Co. v. Yale & Towne Mfg. Co., 166 F. 558; Walker on Patents (5 Ed.), p. 185, sec. 151. (2) A license by an inventor or patentee granting a right to make, use and vend the invention is a privilege of value sufficient to constitute a consideration for a covenant upon the part of the licensee to pay a royalty or rental charge for the enjoyment of the privilege. Kelly v. Porter, 17 F. 519; Wilson v. Nentges, 26 Minn. 288; Sherman v. Champlain, 31 Vt. 162; Walker on Patents (5 Ed.), p. 366, sec. 307. (3) A license agreement executed and delivered is deemed to continue in force and the licensee is chargeable with the royalty or rental fee until the license is rescinded, and the license can only be rescinded in the manner and within the time prescribed by the contract. Ford v. Dyer, 148 Mo. 528; White v. Lee, 3 F. 222; Dare v. Boylston, 6 F. 493; McKey v. Lupton, 95 F. 291; Holmes v. McGill, 108 F. 238; Chemical Co. v. Johnson, 203 F. 993; Hiner v. Aldrich, 255 F. 785. (4) The contract of March 2, 1912, is clear and unambiguous and it therefore follows that extrinsic evidence is inadmissible to contradict, add to, subtract from, or vary the terms of the contract. 9 Cyc. 590; 17 Cyc. 567; Davis v. Shafer, 50 F. 764. (5) The letter of April 12, 1912, did not constitute a modification of the contract of March 2, 1912, and therefore was properly excluded from evidence for the reasons that (a) It does not on its face purport to be a modification; and (b) There was no consideration for a new and modified contract. 9 Cyc. 349; Lingenfelder v. Brewing Co., 103 Mo. 578. (6) The question of interpretation and construction of the legal effect of the letters offered to show that the contract has been modified or rescinded should not be submitted to the jury. Interpretation and construction of the legal effect of written statements is a matter solely for the court. Ford v. Dyer, 148 Mo. 528; Wolff v. Campbell, 110 Mo. 120.

OPINION

WOODSON, J.

This suit has instituted by the plaintiff in the Circuit Court of the City of St. Louis against the defendant, to recover seven installments of $ 1500 each alleged to be due him as royalties under a lease of license dated March 2, 1912, executed by the plaintiff to defendant. The trial resulted in a judgment for the plaintiff for the amounts sued for, plus interest, which amounted to $ 1529.50 each. After moving unsuccessfully for a new trial the defendant appealed the cause to this court.

The facts of the case are substantially as follows:

The plaintiff was an electrical engineer of high standing in his profession, and as such was connected with the Edison Electric Company, of New York, and the defendant was a Missouri corporation organized and existing under the laws of this State, and was engaged in the manufacture and sale of electric motor appliances in the City of St. Louis, The plaintiff was the sole inventor and patentee of a certain system of propulsion and battery-charging of electric vehicles, covered by United States patent issued to him, dated March 20, 1906, and numbered 815,360. On March the 2nd, 1912, the patentee, the plaintiff, and defendant entered into the following contract or license, whereby the former authorized the latter to manufacture and sell the said device, (Formal facts omitted): "This agreement made this 2d day of March, 1912, by and between Mr. Lamar Lyndon, a resident of New York City, party of the first part, hereinafter called 'Lyndon,' and the Wagner Electric Manufacturing Company, a corporation of Missouri, with principal offices in the City of St. Louis, Missouri, party of the second part, hereinafter called the 'company.'

"Witnesseth Whereas, said Lyndon is the inventor and owner of United States Letters-Patent No. 815,360 of March 20, 1906, referring to system of propulsion and battery-charging of electric vehicles; and whereas the Company desires to undertake the manufacture of the system involved in said patent. Now, therefore, in consideration of the agreements hereinafter set forth, and the sum of $ 1 paid by the Company to said Lyndon, receipt of which is hereby acknowledged, the parties agree as follows:

"1. The said Lyndon agrees that the Company may elect between the privilege of purchase outright of the said patent or operating thereunder an exclusive license on the following terms:

"(a) Purchase Outright. Within one year from the date that the Company offers for commercial sale an electric machine combining the functions of a driving motor for a vehicle and a convertor for charging the battery of said vehicle from the alternating current source of supply, the Company may acquire full ownership and title to said patent upon the payments of twelve...