Allison Bros. Co. v. Allison

• Decision Date: 27 November 1894
• Citation: Allison Bros. Co. v. Allison, 144 N.Y. 21, 38 N.E. 956 (N.Y. 1894)
• Parties: ALLISON BROS. CO. v. ALLISON.
• Court: New York Court of Appeals Court of Appeals

144 N.Y. 21

38 N.E. 956

ALLISON BROS. CO.

v.ALLISON.

Court of Appeals of New York.

Nov. 27, 1894.

Appeal from supreme court, general term, Fifth department.

Action by the Allison Brothers Company against Oscar W. Allison to enjoin defendant from manufacturing certain machines, or granting licenses to use them, and to reform certain agreements.From a judgment of the general term (23 N. Y. Supp. 1065) at firming a judgment in favor of plaintiff, defendant appeals.Reversed.

Theodore Bacon, for appellant.

John Van Voorhis, for respondent.

GRAY, J.

The action was brought for the purpose of enjoining the defendant from manufacturing cigarette machines, or granting licenses to use them, etc., and for the further purpose of reforming certain agreements, to which the defendant was a party, and which related to interests in patents for cigarette machines.The first purpose seems to have been abandoned, and the action, being tried upon the latter ground, resulted in a judgment for the plaintiff, reforming the agreements in question in the respects prayed for.The defendant had been a machinist, and became interested in the designing of machines for making cigarettes.Such a machine already existed; but he discovered a new mechanical process, and obtained a patent, in 1880, ‘for a new and useful improvement in cigarette machines.’Subsequently, he assigned to his brother a half interest in the patent.In 1882, Clarke formed a partnership with them, and at first put $5,000 into the business, under an agreement which licensed the firm to use the patented machine for a term of years.Very shortly afterwards, however, that agreement was canceled, and a new agreement was made, by which the two Allisons assigned, each, to Clarke an undivided sixth interest in two letters patent ‘for an improvement in cigarettes and cigarette machines, and any improvements, renewals, or reissues of said cigarettes, cigarette machines, or letters patent * * *, to the full end of the term for which said letters were granted, and for the term of any extension, any improvements thereof, or reissues thereon, * * * meaning hereby to vest in said Clarke one undivided third of said patents, extensions, or improvements thereof.’In 1883, Allen was admitted into the firm, and put into the business the sum of $25,000, purchasing a fourth interest thereof.An agreement, drawn by him, was executed by the parties, by which there was assigned to him by the Allisons and Clarke ‘an undivided fourth part of all patents, machines, machinery, stock,’ etc., ‘now used and owned by parties of the first part in the manufacture of tobacco, cigarettes,’ etc., ‘under the firm name of Allison Brothers and Co., as well as new patents, machines, machinery, or appliances which may be obtained or used in connection with said business,’ the intention of the agreement being declared to be that each of the four parties should have ‘an undivided one-fourth interest in all patents, and improvements on the same which may hereafter be made, machines, stock, and business of the firm of Allison Brothers and Co., making each an equal partner in the same.’The copartnership thus existing was thereafter changed into a corporation, which is the present plaintiff.A bill of sale was first executed, transferring to the new corporation the firm property and its patent interests; but later it was deemed expedient more formally to vest in the corporation the title to the patent interests, and an agreement was executed by the Allisons and Clarke, by which they, holding the record title, assigned to it their respective interests in the described letters patent, which they had ‘heretofore enjoyed as members of the firm, and which had been used by said firm; this transfer to include any improvements, renewals, or reissues of said patented improvements or letters patent,’ etc.The defendant, within a year, became dissatisfied, and severed his relations with the company.After he left, he discovered new mechanical devices for making cigarettes, and there were issued to him five letters patent, each issue being ‘for improvements in cigarette machines.’The object of the present action was to secure to the plaintiff the right to these new patents, by virtue of the assignments which have been referred to.The judgment recovered was based upon findings in each case to the effect that ‘the agreement which the writing was intended to express' was that Clarke or Allen took an equal interest with the others in the patents already issued, and in all the new inventions and improvements which the defendant should make in machinery for the manufacture of cigarettes; and, if the writing was insufficient to express that agreement, the omission was ‘by the mutual mistake of all the parties'; and also, with respect to the corporation that was formed, the finding was of similar import,-that the firm, and each member thereof, agreed to transfer to it every interest in improvements in cigarette machines, including the invention of new devices, etc., and all patents therefor, and, if the bill of sale was insufficient, the omission was caused by the mutual mistake of the parties.In affirming the judgment below, the general term, evidently, was unwilling to place the right to relief upon a reformation of the instruments in question, and it was there held that they were sufficient to vest in the plaintiff the right to any and all after inventions.While it is readily perceived that it may be important to the plaintiff, as conducing to its business success and prosperity, to have the agreements so construed or reformed as to cover all new patents for inventions by the defendant of improvements in those machines, the question to this defendant is of paramount importance; for, if such was his agreement, he had assigned away for all time the product of his inventive talent in the line of its particular development; or, to refer to Mr. Justice Bradley's observation in Manufacturing Co. v. Gill, 32 Fed. 700, had given a ‘mortgage on his brain to bind all its future production.’

As it seems to be usually the case with inventors, the defendant's necessities obliged him to have resort to some one possessed of means, in order to develop the machine on which he was then at work.The moneys went into that work, but not into his pocket.His severance of relations with the corporation, according to his account, was caused by the intolerable continuance of the material wants and the stress of his daily needs, pecuniary provision for which, he says, he was unable to procure to be advanced to him.Whether his account is true, or whether, according to evidence for the plaintiff, his departure was rather due to some unworthy motive to injure it for his own benefit, is, of course, not a controlling consideration.The question is, what had the parties agreed to?With respect to these four instruments, the two first, mentioned as made with Clarke, and afterwards with Allen, only need engage our attention; for under the two subsequent ones, to which the plaintiff corporation was a party, it could get nothing more, in our opinion, than what the firm of Allison Bros. & Co. owned.In the bill of sale the firm transferred to the plaintiff, besides the property and plant on hand, ‘all patents or interests in patents owned by any or either of said firm for improvements in cigarettes and cigarette machines, or machinery for manufacturing same.’The subsequent and more formal assignment to plaintiff transferred to it ‘the rights and privileges enjoyed by said firm’ in certain improvements covered by two described issues of letters patent.The concluding statement, ‘this transfer to include any improvements, renewals, and reissues of said patented improvements, or letters patent Nos. _____,’ etc., adds nothing to broaden the transfer.We must consider, then, what Clarke, and, after him, Allen, obtained from the defendant by the instruments to which they were parties.The assignment to Clarke was of a third interest in specific letters patent, ‘and any improvements, renewals, or reissues of said cigarette machines or letters patent’; and the meaning of the instruments was declared to be ‘to vest in said Clarke an undivided third of said patents, extensions, or improvements thereof.’The assignment to Allen transferred to him from the firm, composed of the Allisons and Clarke, a fourth interest in the patents, etc., used by them in the manufacture of...