Drake v. Hall

• Decision Date: 02 November 1914
• Docket Number: 2110.
• Parties: DRAKE v. HALL.
• Court: U.S. Court of Appeals — Seventh Circuit

220 F. 905

DRAKE v. HALL.

No. 2110.

United States Court of Appeals, Seventh Circuit.

November 2, 1914

Rehearing Denied January 15, 1915.

John C Lawyer, of Macomb, Ill., for appellant.

Before BAKER, SEAMAN, and KOHLSAAT, Circuit Judges.

SEAMAN Circuit Judge.

The decree presented by this appeal awards accounting and other relief against the appellant for his use of letters patent (U.S. No. 906,396), issued December 8, 1908, in favor of both parties to the suit as joint patentees. Under such grant the rule is elementary that each of these patentees was vested with an undivided half interest therein, creating the relation between them of cotenants for all benefits of the grant, so that each became entitled to use thereof without accountability to the other cotenant. No relation of copartnership is involved in such ownership, and whatever may have been the theory of ownership upon which the appellee's bill for equitable relief was framed and filed, the decree plainly proceeds and rests its rulings upon this proposition: That the evidence establishes conversion by the parties of their patent ownership from the relation of cotenancy fixed by the grant to that of copartnership therein.

Undoubtedly the patentees may by agreement thus change the nature of their ownership and use of the patent into a copartnership business, and proof of such arrangement would furnish support for the decree. In another view, it may be that proof of their agreement or conduct as copartners in the manufacture and sale of goods under the patent, would authorize relief between the parties for an accounting of profits and losses arising in such business. Without proof, however, of one or both of these conditions in the appellant's use of the patent, as charged in the bill, no accountability arises, and the issue is thus narrowed to such inference of fact as may be derived from the evidence.

The essential facts are undisputed, in substance as follows Appellant and appellee were copartners in business in and from 1906, up to February 22, 1911, engaged in the manufacture of tanks and troughs of various kinds 'along the line of sheet metal goods,' under the name of Illinois Sheet Metal Works. In 1908 an 'improvement in stock troughs' was devised and they made application as joint inventors for a patent, which was granted and constitutes the patent in controversy, the expense thereof being paid out of copartnership funds. Thereafter these patented stock troughs were manufactured and sold in the course of the business, no express agreement appearing in reference thereto prior to dissolution. On February 22, 1911 their copartnership was dissolved, the appellee retiring from the business, under two contemporaneous written agreements, in substance as follows:

(1) A dissolution agreement providing (in the usual form) for sale to and purchase by the appellant of the property and business and assumption of liabilities, for a consideration named, together with these provisions in reference to the patent:

'It is mutually understood that in this sale, the patent for stock troughs, No. 906,396, is not included, but that said patent is still owned by the parties hereto as copartners, but not to be used in the business of the party of the first part (appellant) as partnership property, but under lease to be executed between the parties hereto, separate and distinct from this contract.'

Also, that:

'This agreement is a complete and final completion of said copartnership business except as to said patent.'

(2) An instrument reciting that 'the parties hereto are the owners of patent No. 906,396'; that the appellant, having purchased the appellee's interest in the copartnership business, 'desires to manufacture and handle said patent'; that it is agreed that the appellant 'shall have the exclusive use and control of said patent' for one year, and the right to like exclusive use and control 'for an additional ten years' thereafter, at his option, upon giving notice in writing of 'his acceptance of said option,' at least 90 days prior to February 22 1912; and that he is to pay the appellee for 'said exclusive use...