Banschbach v. Meuer

• Decision Date: 15 April 1941
• Citation: 297 N.W. 402,237 Wis. 454
• Parties: BANSCHBACH v. MEUER et al.
• Court: Wisconsin Supreme Court

237 Wis. 454

297 N.W. 402

BANSCHBACH

v.MEUER et al.

Supreme Court of Wisconsin.

April 15, 1941.

Appeal from an order of the Circuit Court for Dane County; Alvin C. Reis, Judge.

Reversed.

Action by Edward A. Banschbach, plaintiff and respondent, commenced May 16, 1939 against defendants and appellants, John Meuer and Albert Besnah, for the recovery of certain moneys alleged to be due plaintiff under a contract between the parties. Defendants' answer contains, first, a plea in abatement; second, general defensive matters; and, third, a counterclaim. The plaintiff's reply contains a motion to strike the plea in abatement; a demurrer to the plea in abatement, a demurrer to the entire answer; and a demurrer to defendants' counterclaim. The defendants' counterclaim is based upon alleged false and fraudulent representations made to them by the plaintiff relating to the subject matter of the contract upon which the plaintiff's cause of action is based. On April 13, 1940 the court below entered an order striking the plea in abatement and sustaining the plaintiff's demurrer to the separate defensive matters, and the plaintiff's demurrer to defendants' counterclaim. From this order defendants appeal. The material facts will be stated in the opinion.Sauthoff, Hansen, O'Brien & Kroncke, of Madison, for appellants.

Alton S. Heassler and Ralph E. Axley, both of Madison, for respondent.

MARTIN, Justice.

[1] The plaintiff demurred to the sepaate defenses pleaded in the answer and also demurred to the answer as a whole. These demurrers reach back so that the sufficiency of the substance of the complaint can be determined. Stephens v. Wheeler, 193 Wis. 164, 171, 213 N.W. 464 and cases cited.

Does the complaint state a cause of action? It in substance alleges that prior to January 8, 1929 the plaintiff conceived, designed, and patented a safety barrier or gate for use at railroad crossings on highways, the purpose of which is to safely arrest vehicles of all sizes at high speeds without damage to the vehicles or injury to the occupants; that on or about June 12, 1937 plaintiff entered into a written contract with defendants, by the terms of which, among other things, the plaintiff assigned, transferred, and set over to the defendants, and each of them, an undivided one-third interest in the exclusive right and license during the life of the patent to manufacture sand sell such safety gates and products appertaining to said patent, and the defendants expressly agreed by the terms of said contract to pay to the plaintiff the sum of $25 per week each and every week from the date of a certain corporation to be organized by the parties, which corporation was organized on October 15, 1937; that pursuant to said agreement defendants have paid the plaintiff the sum of $505, that there is now due and owing plaintiff on said contract from defendants the sum of $1,545. A copy of the written contract is attached to the complaint and made a part of it. It is further alleged that defendants have refused to make any payments under the contract since July 30, 1938. The prayer of the complaint is for judgment against defendants for the sum of $1,545 with interest and costs.

The written contract between the parties, in which plaintiff is the party of the first part and defendants are the parties of the second part, so far as here material, provides: “That in consideration of One Dollar ($1.00) in hand paid by each of the parties to the other, the receipt of which is hereby acknowledged, and in further consideration of the agreement to furnish and provide for all necessary and required capital funds and credit by the said Parties of the Second Part for filling and completing all orders solicited and received, and for carrying on and promoting the building, manufacture and sale of all safety gates pursuant to and according to the provisions and purposes of said patent; that said Party of the First Part hereby grants to the Parties of the Second Part, John Urban Meuer and Albert N. Besnah, individually, each for his own use, his successors and assigns, an undivided one-third (1/3) interest of the exclusive right and license, during the life of said patent and any extensions, improvements and discoveries thereof, to manufacture and sell any and all safety gates and products in any way appertaining to said patent, including all drawings and specifications now in possession of said Party of the First Part. That in further consideration of the agreements herein by both parties, the said Party of the First Part hereby sells, transfers and conveys to the Parties of the Second Part individually, each for his own use and his legal representatives, an undivided one per cent (1%) interest of the right and title in and to the Letters Patent thereof aforesaid, to the full end of the term for which said Letters Patent are granted, as fully and entirely as the same would have been held by the Party of the First Part, had this sale and conveyance not been made, including any and all improvements, further inventions or discoveries which said Party of the First Part may make, come upon, invent, discover or otherwise acquire with reference to the said patent, which shall become subject to the terms of this agreement in the same manner as herein provided relative to the original patent.”

The agreement further provides that plaintiff will be paid a royalty of three per cent of the gross sale price received from the manufacture and sale of the safety gates described in the patent, and that both plaintiff and defendants, as individuals, are to receive a commission of five per cent on all safety gate sales personally made, solicited, and sold. The contract further provides: “It is further agreed and understood between the parties hereto that the Party of the First Part shall receive a drawing account in the amount of Twenty-five ($25.00) Dollars per week, commencing on the date of incorporation, hereinafter referred to, and after the first safety gate is sold and paid for, the party of the First Part shall receive a drawing account of Sixty ($60.00) Dollars per week, all of such advances to be charged and deducted from royalties, commissions or dividends that may be declared by the corporation, representing his interest therein.”

[2] The plaintiff contends that this contract imposes a personal liability on defendants for payment of the $25 per week drawing account from the date of the organization of the corporation (October 15, 1937) to the time of the commencement of this action. Whether the provisions of the contract impose a direct personal obligation on defendants or whether they be held as guarantors of the payment need not now be decided. The immediate question is, Does the complaint state a cause of action against defendants? We must hold that it does.

The first defense is a plea in abatement in which is alleged the contract between the parties, to which reference is made in the complaint. It is further alleged that on October 30, 1937 the parties entered into a further contract pursuant to which they assigned to the corporation all of the rights or benefits each of said parties had by reason of their contract of June 12, 1937. It is further alleged that in exchange for the rights and benefits assigned to the corporation, the corporation issued fifty shares of its common capital stock to each of the parties; that after the corporation was organized, the plaintiff and defendants were elected as directors and officers at its initial meeting; that by agreement of all parties, the plaintiff's drawing account in the sum of $25 per week as advances, was entered upon the books of the corporation and that thereafter plaintiff was paid his weekly drawing account by the...