Crutcher-Rolfs-Cummings, Inc. v. Ballard
| Citation | 193 U.S.P.Q. 570,540 S.W.2d 380 |
| Decision Date | 30 June 1976 |
| Docket Number | No. 1059,CRUTCHER-ROLFS-CUMMING,INC,1059 |
| Parties | , Appellant, v. Sam L. BALLARD, Appellee. |
| Court | Texas Court of Appeals |
A. H. Evans, Vinson, Elkins, Searls, Connally & Smith, William LaFuze, Houston, for appellant.
Jack Hayden, Houston, John R. Feather, Dallas, for appellee.
Sam L. Ballard brought this suit against Crutcher-Rolfs-Cummings, Inc., to recover for breach of a patent license agreement and for breach of a confidential relationship. Trial was to a jury who answered the issues in favor of Ballard. Judgment was entered that Ballard recover actual damages of $674,873.02 and punitive damages of $650,000.00, for a total of $1,324,873.02. The defendant corporation (hereinafter called 'CRC') appeals.
The appellant is a Texas corporation founded in 1933 for the purpose of manufacturing, selling and renting pipeline equipment. In 1949 Ballard approached the president of the appellant corporation, Mr. A. S. Crutcher, to solicit his assistance in developing a cold pipe vertical bending machine. Ballard demonstrated to Mr. Crutcher and several corporate officers a scale model of his machine. The president was favorably impressed and Ballard was immediately placed on the corporation's payroll. The parties agreed that Ballard would utilize the corporation's shop facilities in building a cold pipe vertical bending machine of his design capable of bending 30 pipe. The corporation agreed to pay all the expenses incidental to securing a patent. A royalty of 5% Was agreed upon. A letter reflecting the terms of their agreement was drawn and signed on November 8, 1949, by Ballard and A. S. Crutcher.
In March, 1950, Ballard filed in the United States Patent Office a patent application for a vertical pipe bending machine operated by cables. On November 3, 1950, the United States Patent Office declared an interference to determine priority of inventorship between the application filed by Ballard and one filed June 14, 1948, by John L. Coody. Ballard contended before the Board of Patent Interferences that he conceived and reduced to practice the invention prior to Coody, and that Coody derived the invention from him.
The invention was born from the need which arose in the pipeline industry for a portable machine for field use which would perform smooth cold bending of large diameter steel pipes of the type used in cross country oil and gas pipelines. Such pipes are generally within the range of 12 to 36 inches in diameter and bend specifications require that the bends be full, round, smooth and wrinkle free.
The Ballard machine is operated by a single cable for bending pipe in a vertical plane. A frame is provided which is movable along the right of way of the pipeline and it carries a fixed mounted, downwardly facing, bending die near the upper portion. The die is shaped to receive the upper semi-periphery of the pipe to be bent and is longitudinally curved to the bend desired in the pipe. Below and at one end of the die is a holding shoe which is employed for engaging the underside of the pipe and preventing downward movement during the bending operation. The bending is accomplished by the use of a single cable which is drawn by a winch through a series of pulleys.
In contrast to the Ballard machine which bends the pipe vertically, Coody's machine bends it horizontally utilizing hydraulic force applying means. Both, however, use multiple force applying means and the same essential elements: a fixed curved bending die, a movable holding shoe, and a movable stiff straight bending shoe having a part overlapping the die.
Cinch, Inc. was the owner of the license to the Coody patent application and was actively competing against the appellant in the pipe bending machine market. By decision of the Board of Patent Interferences, Ballard was awarded priority of the invention and Cinch filed suit to set aside this decision. This litigation was ultimately settled by agreement in 1954 in which Ballard and CRC agreed not to sue Cinch for infringement of any patent claims by reason of the manufacture, use, sale or rental of hydraulically-operated pipe bending machines and Cinch agreed not to sue CRC for infringement of any patent claims by reason of the manufacture, use, sale or rental of cable-operated pipe bending machines.
On December 6, 1954, Ballard and the appellant reconfirmed their license agreement by executing a second written instrument. By its terms Ballard granted to the appellant the exclusive, indivisible right and license to manufacture, have manufactured, use and sell the apparatus embodying the inventions as disclosed by Ballard's patent and patent applications and any and all modifications and improvements that Ballard then owned or controlled or might own or control during the term of their agreement. The appellant agreed to pay a royalty of 5% Of the net selling price and of the rental receipts of the pipe bending machines.
By 1965, the appellant's competitor, who was manufacturing the Coody hydraulically-operated pipe bending machine, was capturing the greater portion of the pipe bending machine market. In January 1966, the appellant purchased all of the issued and outstanding shares of its principal competitor, the CGM Corporation (successor to Cinch), and thereby acquired 82.04% Of the outstanding shares of the Crose United Corporation.
In February 1966, Ernest E. Cummings, a director and vice president of CRC approached Ballard to persuade him to sign a letter of agreement to the effect that Ballard would not be entitled to a royalty on the hydraulically-operated bending machines manufactured, used or sold by CRC. Ballard was not persuaded and refused to sign the agreement.
In May 1966, the appellant transferred substantially all of the operating assets of CRC to Crose United Corporation. Also in May 1966, the name Crose United Corporation was changed to CRC-Crose-International, Inc., (hereinafter called 'Crose'). The assets transferred by the appellant included hydraulically-operated bending machines, but did not include the cable bending machines. Thereafter, the appellant continued leasing and selling cable-operated bending machines and Crose continued leasing and selling hydraulically-operated bending machines and paying royalties therefor to the successors of the Coody patent rights.
The jury found, in part, that: 1) the pipe bending machines and bending sets manufactures, used, rented or sold by Crose were substantially in accordance with, or the equivalent of, the Ballard pipe bending machines; 2) a confidential relationship existed between Ballard and CRC from November 1949 through February 1966; 3) CRC breached the confidential relationship by failing to pay royalties and the net revenue resulting from the manufacture, use, sale and rental of pipe bending machines by Crose; 4) $674,873.02 would compensate Ballard for the breach of confidence; 5) CRC failed to perform under the contract by transferring assets to Crose; 6) $674,873.02 would compensate Ballard for the breach of contract; 7) the president of CRC knew or should have known of the failure to pay royalties; 8) Ballard should recover punitive damages of $650,000.00.
We note at this point in our discussion that the appellant has assigned 68 points of error. Among these are numerous no evidence or legal sufficiency points of error. With each such point of error, we shall view the evidence in a light most favorable in support of the jury finding and consider only the evidence and inferences which support the finding and reject the evidence and inferences contrary to the findings. Miller v. Riata Cadillac Company, 517 S.W.2d 773 (Tex.Sup.1975). In considering the appellant's insufficient evidence or factual sufficiency points of error, we shall examine the whole record to determine if the evidence supports the jury's findings. In re King's Estate, 150 Tex. 662, 244 S.W.2d 660 (1951).
The appellant first contends in points of error 1 through 7 that the trial court erred in failing to submit issues inquiring as to the vicarious liability of appellant for the business activities of Crose. The argument is that special issues 3, 4 and 5 are worded such that the jury was required to assume that vicarious liability existed.
The special issues 3, 4 and 5 which were submitted to the jury and their answers thereto are as follows:
'SPECIAL ISSUE NO. 3
Do you find from a preponderance of the evidence that Crutcher-Rolfs-Cummings, Inc. breached the confidential relationship with Sam L. Ballard by failing to pay royalties on the net revenue resulting from the manufacture, use, sale and rental of the pipe bending machines and bending sets of CRC-Crose International, Inc. between May 1966 and May 17, 1972?
Answer 'We do' or 'We od not'. Answer: We do.
If you have answered Special Issue Nos. 2 and 3 'we do', and only in that event, then answer:
SPECIAL ISSUE NO. 4
What amount of money, if any, do you find from a preponderance of the evidence will compensate Sam L. Ballard for the breach of the confidential relationship by Crutcher-Rolfs-Cummings, Inc. in failing to pay royalties on the pipe bending sets manufactured, used, rented and sold by CRC-Crose International, Inc. from May 1966 through May 17, 1972?
Answer in dollars and cents. Answer: $674,873.02.
Do you find from a preponderance of the evidence that Crutcher-Rolfs-Cummings, Inc. failed to perform under the license agreement of December 6, 1954 by transferring in 1966 the manufacturing, using, renting and selling of vertical hydraulic pipe bending machines and bending sets to CRC-Crose International, Inc.?
Answer 'We do' or
We cannot agree that these special issues assume vicarious liability. Ballard does not complain of the actions of Crose. The wrong complained of is the use of the device by the appellant...
To continue reading
Request your trial
-
Trevino v. HSBC Mortg. Servs., Inc. (In re Trevino)
...Co. of Maryland v. Stool , 607 S.W.2d 17, 25 (Tex. App.–Tyler 1980, no pet.) (citing Crutcher–Rolfs–Cummings v. Ballard , 540 S.W.2d 380, 386 (Tex. Civ. App.–Corpus Christi 1976, writ ref'd n.r.e.) ); Provident Sav. Life Assurance Soc'y of N.Y. v. Ellinger , 164 S.W. 1024, 1026 (Tex. Civ. A......
-
City of Hope Nat. Med. Center v. Genentech
...by the courts where a confidential relationship has been created on the basis of the inventor's secret"]; Crutcher-Rolfs-Cummings, Inc. v. Ballard (Tex.App.1976) 540 S.W.2d 380, 387 [a confidential relationship was formed when an inventor entrusted his secret to a manufacturer]; Ewen v. Ger......
-
Copenhaver v. Berryman
...to meet the minimum requirements of Rule 418, T.R.C.P., and are therefore waived. Crutcher-Rolfs-Cummings, Inc. v. Ballard, 540 S.W.2d 380, 389 (Tex.Civ.App. Corpus Christi 1976, writ ref'd n. r. e.), cert. denied, 433 U.S. 910, 97 S.Ct. 2978, 53 L.Ed.2d 1095 (1977); Inman v. Padrezas, 540 ......
-
In re E2 Communications, Inc.
...Company of Maryland v. Stool, 607 S.W.2d 17, 25 (Tex.App. — Tyler 1980, no pet.) (citing Crutcher-Rolfs-Cummings v. Ballard, 540 S.W.2d 380, 386 (Tex.Civ. App.— Corpus Christi 1976, writ ref'd n.r.e.); Provident Say. Life Assurance Soc'y of N.Y. v. Ellinger, 164 S.W. 1024, 1026 (Tex.Civ.App......
-
When a Patent License Fails: Looking At and Beyond the Patent Issues
...1990); Licette Music Corp. v. A.A. Records, Inc., 601 N.Y.S. 2d 297, 297-298 (App. Div. 1993); Crutcher-Rolfs-Cummings, Inc. v. Ballard, 540 S.W.2d 380 (Tex. Civ App. Corpus Christi 1976). 28Univ. of Colorado Found, Inc. v. Am. Cyanamid Co., 196 F.3d 1366, 1371 (Fed. Cir. 1999) (reciting st......
-
Table of Cases
...155–156n16 Crescent Int’l, Inc. v. Avatar Communities, Inc., 857 F.2d 943 (3d Cir. 1988), 122 Crutcher-Rolfs-Cummings, Inc. v. Ballard, 540 S.W.2d 380 (Tex. Civ. App. 1976), 187 Curtiss-Wright Corp. v. Edel-Brown Tool & Die Co., 407 N.E.2d 319 (Mass. 1980), 179 Curtis v. Ziff Energy Group, ......
-
Remedies for Trade Secret Misappropriation
...resulted from fraud, malice, or gross negligence. See Tex. Civ. Prac. & Rem. Code § 41.003(a); Crutcher-Rolfs-Cummings, Inc. v. Ballard , 540 S.W.2d 380, 388 (Tex. Civ. App. 1976) (holding that punitive damages are recoverable where the conduct is found to be malicious or intentional). Howe......