Bettendorf v. Bettendorf

• Decision Date: 19 October 1920
• Docket Number: 31724
• Citation: 179 N.W. 444,190 Iowa 83
• Parties: ELIZABETH H. BETTENDORF, Appellee, v. JOSEPH W. BETTENDORF, Appellant
• Court: Iowa Supreme Court

179 N.W. 444

190 Iowa 83

ELIZABETH H. BETTENDORF, Appellee, v. JOSEPH W. BETTENDORF, Appellant

No. 31724

Supreme Court of Iowa, Des Moines

October 19, 1920

Appeal from Scott District Court.--F. D. LETTS, Judge.

SUPPLEMENTAL OPINION DECEMBER 2, 1920.

THE plaintiff, widow of Wm. P. Bettendorf, recovered judgment against Joseph W. Bettendorf for $ 522,392.34, from which judgment he appeals. As her demand was for judgment in the sum of $ 3,000,000, she subsequently perfected an appeal, and may be referred to as appellee. Other parties were in the case, but nothing is now claimed against them.--Modified and affirmed.

Modified and affirmed.

Lane & Waterman, and Cook & Balluff, for appellant.

Shepard McCormick, Thomason, Kirkland & Patterson, Frank D. Thomason and Albert W. Hamann, for appellee.

LADD J. WEAVER, C. J., EVANS, PRESTON, STEVENS, and ARTHUR, JJ., concur. SALINGER, J. (dissenting).

OPINION

LADD, J.

William P. Bettendorf died intestate, June 3, 1910. He left a widow, Elizabeth H., whom he had married September 9, 1908, his first wife having departed this life several years before. He was without children; but a father and mother, Michael and Katherine Bettendorf, and one brother, J. W. Bettendorf, survived him. Aside from household furniture, life insurance, patents, and royalties owed for their use, his estate consisted of 643 shares of the capital stock, consisting of 1,000 shares of the par value of $ 100 each, issued by the Bettendorf Axle Company. This property, other than such as was exempt to the widow, passed to the administrator, J. W. Bettendorf, who qualified as such a few days after decedent's death. No claims were filed; and, save the cost of administration, the widow was entitled to one half of the estate, and the parents to the other half.

The Bettendorf Axle Company was incorporated on January 1, 1895, with a capital of $ 500,000; $ 100,000 in common stock, divided into shares of $ 100 each; and $ 400,000 in preferred stock, issued as a means of borrowing money. Whether any of the preferred stock was outstanding at the time of the transactions hereinafter referred to, does not appear; and, as such stock was not referred to in defendant's propositions or argument, and as there was no suggestion of any mistake's having been made in omitting its consideration from the court's computation, it requires no further attention. Of the common stock, 355 shares had been issued to J. W. Bettendorf, 2 shares to others, to qualify them to act as directors, and 643 shares to W. P. Bettendorf. The enterprise developed rapidly, under the masterful guidance of the decedent, and, at the time of his death, the net value of the company's property, after all deductions, exceeded $ 2,000,000.

William P. Bettendorf was a man of inventive genius and marked constructive ability, a rare combination of qualifications for great enterprise. Throughout the growth of this company and development of the plant, he was the dominant and controlling spirit, even in matters of detail. He had begun life as a clerk in a hardware store. For a time he was superintendent of a plow company. Having moved to Davenport in 1886, he began the manufacture of metal wheels; and, later on, having lost the management of this business, he turned his attention to making hollow metal axles; and to do this, the company was organized, as recited. This business expanded into the manufacturing of steel parts for railroad cars, out of which large profits were realized. The idea developed was that of working of sheet steel cold by the pressure of powerful hydraulic presses in steel forms or dies, and thereby producing steel brake beams, car bolsters, car underframes, cast steel trucks, and possibly other parts. These so differed from the parts then in use that some difficulty was experienced in disposing of the product; but the decedent, who planned all the necessary machinery, obtained orders by devising forms or dies or necessary machinery to produce parts meeting the ideas of the master mechanics of the several railway companies. He not only invented the several parts, but the mechanisms to produce them, and any changes therein to meet the whim or judgment of railway experts, required as a condition to contracting therefor. A large number of patents had been obtained by him, and others applied for,--over 100 altogether. He had entered into an agreement with the Bettendorf Axle Company, December 26, 1903, reciting that, under previous contracts, it was indebted to him, up to December 31st following, in the sum of $ 60,000, stipulating the payment thereof at the rate of $ 12,000 per annum, that said contracts were canceled, and that decedent--

"Transfer and set over to the party of the second part, and to its successors and assigns, the authority and license of applying and using the inventions and improvements described and claimed in any or all of said letters patent to the manufacture in the county of Scott, in the state of Iowa, and nowhere else, to the full end of the terms of said letters patent, respectively, of all kinds of wagons and wagon parts; also of all kinds of body and truck bolsters, car underframes, and car parts for railroad cars only, and to no other purpose; and of all of the aforesaid improvements in brake beams, and according to the designs as described and claimed in said letters patent, respectively; and to sell the same in any foreign country so long as, and no longer than, said first party may remain the owner of foreign patents on said improvements and designs, respectively, or until he shall make other arrangements concerning the disposal of said foreign patents or rights thereunder. And first party does hereby further sell, transfer, and set over to second party a similar authority and license of applying and using all the inventions and improvements which may be described and claimed in any applications for letters patent of the United States which have been filed by him in the patent office of the United States and which relates to the manufacture of wagons and railway cars, or parts thereof; and further agrees that he will grant to second party a similar authority and license of applying and using all such inventions and improvements for which he shall at any time hereafter, while employed by the second party, during the existence of this contract, receive letters patent of the United States of America. It is now agreed between the parties hereto that the amount of the royalties or compensation to be paid by the second party to the first party, his heirs or assigns, for the right of the second party to manufacture and sell any or all of the articles which the second party may produce under the licenses herein granted to it by the first party, and also the compensation which the first party shall receive from the second party in addition to the salary, if any, which he may be entitled to receive as an officer of the second party, so long as he is actually engaged in and about the active management of the second party's business, shall be ascertained and paid as follows: 'If in any calendar year, commencing with the first day of January, 1903, the net earnings of second party from all departments of its business shall be more than sufficient to enable it to pay a dividend of seven (7) per cent for such year upon all the shares of its preferred capital stock outstanding, then thirty-five (35) per cent of the remainder of said net earnings for such year which may have accrued exclusively from the railway department of second party's business shall be paid to the first party by the second party.' If in any one calendar year there shall be no net earnings in excess of the amount necessary to pay a dividend of seven (7) per cent on all of second party's outstanding preferred stock, then the first party shall not be entitled to receive for that year any royalties or extra compensation in excess of the salary of such office in said corporation which he may then hold."

Nothing had been paid decedent under this agreement, though, according to the computation of J. W. Bettendorf, $ 540,000 was owed him thereunder at the time of his death; while appellee contends that the royalties then amounted to $ 802,340.

Upon the petition of the plaintiff, J. W. Bettendorf was appointed administrator of the estate of decedent on June 8, 1910, and duly qualified. Though an inventory was filed, the appraisement was waived, at his instance, by the heirs of the estate. He was elected president of the company June 18 1910, and, on July 9th, the widow and parents of the decedent entered into a contract with the company, by the terms of which the latter released a claim of about $ 122,000 which decedent had overdrawn on his salary and dividend account with the company, and the widow and parents relinquished all royalties mentioned. On the same day, the widow and parents transferred all letters patent held by decedent, and those applied for, to J. W. Bettendorf as trustee, with authority and obligation on his part to permanently license the company to make use thereof without exacting any compensation; and this he did immediately. These papers, of course, would not affect the relative proportions of the widow and parents in the patents and royalties; for the transfer enhanced the value of the stock in its entirety to the extent of the value of said patents and royalties, less the claim against decedent; but it resulted in increasing the value of the stock of J. W. Bettendorf to the extent of 355/1000 of such difference, for which he neither paid nor undertook to pay anything. In the latter part of May, 1911, he suggested to the plaintiff the purchase of her portion of the stock in the company; and, on June 1st, following, made a...