Campbell v. Automatic Die & Products Co.
| Decision Date | 15 December 1954 |
| Docket Number | No. 33851,33851 |
| Citation | 123 N.E.2d 401,162 Ohio St. 321,55 O.O. 195 |
| Parties | , 55 O.O. 195, 104 U.S.P.Q. 77 CAMPBELL et al., Trustees, Appellees, v. The AUTOMATIC DIE & PRODUCTS CO., Appellant. |
| Court | Ohio Supreme Court |
Syllabus by the Court.
1. A written contract by which a patentee of a device gives one agreeing to manufacture it an exclusive right to manufacture and sell the device is not per se illegal and void and violative of Section 3 of the so-called Clayton Act, Section 14, Title 15 U.S.C.A. because of the inclusion of a provision to the effect that the manufacturer will not make or sell any similar device and will not engage in any business competing therewith.
2. Where such device is never produced for sale or marketed and a controversy arises between the patentee and the manufacturer regarding the performance of the contract and the respective rights of the parties thereunder and such controversy is voluntarily submitted by the parties to arbitrators for full and final disposition as stipulated by the terms of the contract, the manufacturer is estopped, after the arbitration proceeding has progressed to a considerable extent, to raise the question of the illegality and unenforceability of the contract based on the provision relating to the manufacture and sale of a similar device and the engaging in any business competing therewith.
The present case involves the validity of a court approved arbitration award, which award was made pursuant to provisions of a contract covering the manufacture and sale of automobile mufflers.
On January 30, 1950, John M. Campbell and Philmore J. Haber, Trustees of the Cork-a-Lite Development
Trust, hereinafter designated the trust, and The Automatic Die & Products Company, an Ohio corporation, hereinafter called Automatic, entered into a written contract relating to the manufacture and sale by Automatic of Campbell Super Silent automobile engine mufflers.
Pertinent provisions of such contract as they may have a bearing on this case are:
'3. The trust hereby grants to Automatic the exclusive license and right to manufacture and sell, in the United States of America, the Campbell Super Silent automobile engine muffler * * *.
* * *
* * *
'6. Automatic agrees to pay the trust a minimum royalty of five hundred dollars ($500) per month, on the last day of each calendar month, commencing with the month of February, 1950. * * *
* * *
* * *
'8. Automatic is hereby given the right at any time to cancel this agreement and be relieved from further responsibility thereunder, and from further minimum royalty payments upon six (6) months' written notice, but any such cancellation shall not be effective before February 1, 1951.
* * *
* * *
'10. Automatic will commence the production of mufflers as soon as possible, and will use its best endeavors to market and sell to as wide an extent as its facilities permit the mufflers which are the subject matter of this agreement. Automatic agrees that it will not manufacture or sell any muffler other than the Campbell Super Silent automobile engine muffler, and will not, at any time, engage in any business competing therewith.
* * *
* * *
'15. Automatic may sublicense others to manufacture and sell the mufflers under the terms of this agreement, with the same royalties to the trust.
* * *
* * *
No mufflers were manufactured for sale, and a dispute arose between the trust and Automatic with respect to the performance of the contract and the respective rights and obligations of the parties thereunder.
As provided by paragraph 24 of the contract the controversy was referred by the parties to two arbitrators, one selected by each side, for decision. These arbitrators were unable to agree and pursuant to paragraph 24 they selected a third arbitrator.
On December 19, 1952, after many months of consideration and deliberation, an award in the sum of $5,000 was made to the trust by two of the arbitrators, the third registering a dissent on the ground that the contract was illegal and unenforceable.
Subsequently, the trust filed a petition in the Court of Common Pleas of Cuyahoga County to confirm the award. Automatic filed an answer alleging that the contract was illegal and void and a crosspetition praying that the petition be dismissed and that the award be set aside.
A hearing was had in the Court of Common Pleas, and all the arbitration proceedings, including the written reports of the arbitrators, were introduced in evidence.
Thereafter, the court rendered judgment in favor of the trust, confirming the award and ordering Automatic to pay the trust the sum of $5,000.
An appeal from such judgment was taken to the Court of Appeals, which affirmed the judgment below. There was no written opinion by either of the lower courts.
The allowance of a motion to require the Court of Appeals to certify its record brings the cause here for review on its merits.
Spieth, Spring & Bell, William M. Nelson, Jr., Cleveland, and James S. Pedler, Jr., Akron, for appellant.
Halle, Haber, Berick & McNulty, Cleveland, for appellees.
Automatic, in seeking a reversal of the judgment of the Court of Appeals and the rendition of a final judgment in its favor by this court, makes three principal contentions:
1. The contract of January 30, 1950, between the trust and Automatic is illegal and void because the second sentence of paragraph 10 thereof represents an attempt by the trust to enlarge its patent monopoly contrary to public policy and in violation of Section 3 of the so-called Clayton Act, Section 14, Title 15 U.S.C.A.; hence any attempt by arbitrators to award royalties to the trust under such contract is a nullity.
2. The question of the illegality of the contract could be raised at any time before the arbitration award was made.
3. The award of royalties by the arbitrators being illegal can not be enforced in a court action to confirm the award.
Section 3 of the Clayton Act reads as follows:
'It shall be unlawful for any person engaged in commerce, in the course of such commerce, to * * * make a sale or contract for sale of goods, wares, merchandise, machinery, supplies, or other commodities, whether patented or unpatented, for use, consumption, or resale within the United States * * * on the condition, agreement, or understanding that the * * * purchaser thereof shall not use or deal in the goods, wares, merchandise, machinery, supplies, or other commodities of a competitor or competitors of the * * * seller, where the effect of such * * * sale, or contract for sale or such condition, agreement, or understanding may be to substantially lessen competition or tend to create a monopoly in any line of commerce.'
For convenience, we repe...
To continue reading
Request your trial
-
Morrison v. Circuit City Stores, Inc.
...875, 877 (1994); Menardi v. Petrigalla, 11 Ohio App.3d 9, 11, 462 N.E.2d 1246, 1249 (1983) (quoting Campbell v. Automatic Die & Prod. Co., 162 Ohio St. 321, 329, 123 N.E.2d 401, 405 (1954)). Moreover, in addition to a constitutionally-recognized right to a jury trial, Ohio courts hold the "......
-
Bos Material Handling, Inc. v. Crown Controls Corp.
...the proposition that an antitrust claim may be arbitrated under Ohio law. Its reliance is misplaced. Campbell v. Automatic Die & Products Co. (1954) 162 Ohio St. 321, 123 N.E.2d 401, 405, held that a party is estopped from raising a federal antitrust claim in a judicial proceeding after fin......
-
Re/Max Intern., Inc. v. Zames
...law to favor and encourage arbitration. Brennan v. Brennan, 164 Ohio St. 29, 128 N.E.2d 89 (1955); Campbell v. Automatic Die & Products Co., 123 N.E.2d 401, 162 Ohio St. 321, 329 (1954). A court should not deny arbitrability unless it may say with positive assurance that the arbitration cla......
-
Cleveland Bd. of Edn. v. Internatl. Bhd. of Firemen & Oilers Local 701
...to such proceedings and to favor the regularity and integrity of the arbitrator's acts." Campbell v. Automatic Die & Products Co. (1954), 162 Ohio St. 321, 329 [55 O.O. 195, 198, 123 N.E.2d 401, 405]. Indeed, this court has held that "[a] mere ambiguity in the opinion accompanying an arbitr......