Buhl v. Stephens
| Decision Date | 08 February 1898 |
| Docket Number | 9,319. |
| Citation | 84 F. 922 |
| Parties | BUHL v. STEPHENS et al. |
| Court | United States Circuit Court, District of Indiana |
A. W Hatch and Tanner & Whitla, for complainant.
Ryan & Thompson and Elliott & Elliott, for defendants.
This is a suit in equity, brought on February 24, 1896, by Frank H Buhl, a citizen of the state of Pennsylvania, against John Stephens and the Midland Steel Company, citizens of the state of Indiana, for a perpetual injunction enjoining and restraining the defendants from violating a parol license for a process for the manufacture of polished steel plates. It is alleged in the bill of complaint that on December 31, 1895, an oral agreement was entered into by the defendant John Stephens, the inventor of the process, with the complainant, Frank H. Buhl, 'whereby it was agreed that your orator should have the sole and exclusive right to manufacture and sell the product made by defendant's process; your orator to have one year in which to develop said process, at the end of which time he should surrender his claim to the exclusive license to use said process, and thereby terminate said contract, or, should he elect to continue to use the process, pay said Stephens a royalty of five dollars per ton, based on a selling price of the product of five cents per pound, the royalty to increase or decrease in proportion as the selling price of the product should increase or decrease, your orator agreeing to manufacture not less than one hundred and fifty tons per month, or, in any event, to pay royalty on that amount, and to keep account books open to the inspection of said Stephens, showing the amount of product manufactured and sold; and, further, that the process should be kept secret, and confined exclusively to your orator and Stephens. ' The bill was put at issue, and referred to the master to take the proofs, and report his findings to the court. In his report he finds 'that the defendant Stephens did enter into the contract with the complainant, Buhl, as alleged in the bill of complaint; and that the contract, according to Buhl's evidence, which is not denied by Stephens, was to continue for the life of the patent,-- a term of seventeen years. ' The master finds that the complainant has made a case entitling him to the relief prayed for, unless his right to such relief is barred by the statute of frauds of this state, which provides that 'no action shall be brought upon any agreement that is not to be performed within one year from the making thereof, unless the promise, contract, or agreement upon which such action shall be brought, or some memorandum or note thereof, shall be in writing, and signed by the party to be charged therewith, or by some person thereunto by him lawfully authorized. ' Horner's Ann. St. 1897, Sec. 4904. The agreement was made in the state of Pennsylvania, where it was to be performed, between the complainant and defendant Stephens, who were each at the time citizens of that state. The agreement is valid, and is provable by parol testimony by the law of that state, where there is no statute rendering parol contracts not to be performed within a year invalid or nonenforceable. The master finds that the oral agreement sued upon is not enforceable, and recommends that the bill should be dismissed. The complainant excepts to the master's report for error (1) in finding that the agreement was one not to be performed within one year from the making thereof; (2) in finding that the statute of frauds of the state of Indiana is a bar to the maintenance of the suit.
On the hearing upon the exceptions, counsel for the defendants pressed upon the court various grounds upon which it was contended that the suit was not maintainable. It was urged that there was a plain, adequate, and complete remedy at law for the recovery of damages for the breach of the agreement, and hence that the court could not entertain the present suit. An action at law would not afford relief so certain, complete, and beneficial to the complainant as would a decree for the specific performance of the contract. The value of the process cannot be accurately ascertained in an action at law. Hence it would be impossible, with any approach to accuracy, to determine how much the complainant would lose from inability to secure the exclusive use of the process. For these reasons the suit must be held to be properly one of equitable cognizance. Indianapolis Water Co. v. American Strawboard Co., 53 F. 970, 977; Binney v. Annan, 107 Mass. 94; Adams v. Messinger, 147 Mass. 185, 17 N.E. 491.
It was also contended that specific performance could not be enforced, because there was no proof of a certain, complete and definite agreement, and because there was no mutuality in the agreement, and it was inequitable, as it was optional with the complainant for the period of one year whether or not it should be carried into effect. This suit was brought within two months after the agreement had been made, and ten months before the expiration of the option. The complainant had one year in which to develop the process, at the end of which time he was at liberty to accept or reject the agreement. It is manifest that the option was reserved for the benefit of the complainant. The defendant Stephens was in no way interested in the proposed development of the process during the year. However much the process may have been developed and perfected, he was to receive no advantage therefrom. He had parted with the exclusive use of the process, and it was to his advantage to have the option determined at once. The bringing of the suit constitutes an affirmation of the agreement, and a waiver of the complainant's right to await the expiration of the year before electing to become bound by the agreement beyond his power of revocation. The agreement does not lack mutuality because the complainant had the right until the end of the year to terminate it. He was not bound to await the expiration of the year, but whenever within that time he elected to accept the license upon the stipulated terms, the agreement became mutually obligatory. Johnston v. Trippe, 33 F. 530, 536. The agreement rests upon a sufficient consideration, and is not inequitable or unequal in its terms. The agreement was, as has been said, for the sale of the exclusive use of a process for the manufacture of polished...
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