Eno v. Prime Mfg. Co.

• Decision Date: 29 October 1943
• Citation: 314 Mass. 686,50 N.E.2d 401
• Parties: ENO v. PRIME MFG. CO. (two cases).
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

314 Mass. 686

50 N.E.2d 401

ENO

v.PRIME MFG. CO. (two cases).

Supreme Judicial Court of Massachusetts, Norfolk.

Oct. 29, 1943.

Suit by Mary T. Eno, administratrix of the estate of Frank F. Eno, deceased, against Prime Manufacturing Company to recover compensation for use of a patented process in manufacture of shoes under a license agreement and for breach of such agreement. Eno Systems, Inc., petitioned for leave to intervene as a party plaintiff. From a decree denying plaintiff recovery under licensing agreement but allowing plaintiff recovery for breach of agreement not to use process after license was terminated and from a decree denying intervention, plaintiff, defendant and intervener appeal.

Affirmed in part and in part reversed and bill dismissed.Appeal from Superior Court, Norfolk County.

Before FIELD, C. J., and DONAHUE, QUA, DOLAN, and RONAN, JJ.

A. Brayton, of Boston, for plaintiff.

M. Jenckes, of Boston, for intervenor Eno Systems, Inc.

D. P. Ranney, of Boston, for Prime Mfg. Co.

RONAN, Justice.

The plaintiff, the administratrix of the estate of Frank F. Eno, who, it is alleged, invented a certain process in the manufacture of shoes, seeks to recover compensation from the defendant for the use of the process under a license granted by him to the defendant on May 26, 1933, and terminating on May 16, 1940, and damages, from the last mentioned date to July 1, 1941, for breach of the license agreement by the failure of the defendant to cease using the process upon the termination of its license. The suit was heard upon the issue of liability by a judge who made a report of the material facts and entered an interlocutory decree in accordance with these findings. The suit was then referred to a master for the assessment of damages. Two exceptions of the plaintiff were sustained and the remaining exceptions of both parties to the report of the master were overruled. The report as modified was confirmed. All parties appealed from a final decree enjoining the defendant from using the process, adjudging that there was nothing due the plaintiff for the use of the process by the defendant during the period of the license, and ordering the defendant to pay $20,670.19 as damages for the use of the process after the termination of its license, with interest.

It appears from the transcript of the evidence, the report of material facts, and the exhibits, that Eno claimed to have discovered a method by which insoles, too thin to channel a leather rib out of the sole itself through which it could be sewed to the upper of the shoe, could be used by making a rib out of adhesive tape with a filler which was to be attached to the lower surface of the insole. Ridderstrom, the president of the defendant, had developed a machine that would lay the adhesive tape on the insole in accordance with Eno's process. On May 26, 1933, the parties entered into a contract in the form of a letter signed by the defendant, a copy of which was assented to by Eno and retained by the defendant. This contract recited that Eno had developed a new method for making an insole and that Ridderstrom had developed a machine capable of putting this method in use. Both Eno and Ridderstrom were to furnish a certain attorney with the plans and other necessary information in order to enable the attorney to prepare applications for patents on the process and the machine. The patent on the machine was to be assigned to the defendant. The defendant agreed to commence the manufacture of the machines and to purchase the adhesive tape and filler, and thereafter for a reasonable period to distribute these machines and materials to shoe manufacturers, and to endeavor to have them adopt the process in order that from the experience gained from the practical use of the process a mutually satisfactory agreement could be made between the plaintiff's intestate and the defendant ‘for the distribution of profits.’ The defendant agreed that it would ‘justly and properly compensate Mr. Eno, the inventor, for the use of his invention in such arrangement as shall be satisfactory to all parties,’ but this if they were unable within a reasonable time to enter into a contract for the distribution of the process then the defendant agreed to cease using it. The defendant commenced in February, 1935, and has sincecontinued to furnish its machines to shoe manufacturers, to license them to use the process, and to supply them with the adhesive tape and filler. Eno secured United States patent No. 1,998,125 on April 16, 1935, and a Canadian patent, No. 356,557, on March 17, 1936. Eno, and after his death the plaintiff carried on negotiations with the defendant for a permanent plan for the use of the process by the defendant including the amount of compensation that should be paid for its use, but these negotiations were unsuccessful and the plaintiff on May 16, 1940, notified the defendant to cease using the process. She gave a license on May 27, 1940, to Eno Systems, Inc., to use this process, and cancelled this license on June 30, 1941. Eno Systems, Inc., v. Eno, 311 Mass. 334, 336, 41 N.E.2d 17.

The defendant contends that the contract provided for a temporary arrangement which was to continue only long enough to permit the parties to secure from actual experience in putting the machines and process upon the market an approximation of the profits and then to agree upon such apportionment of them as would give Eno fair compensation for the use of the process, and that, as the parties never agreed, this preliminary contract ‘was not a legal, binding contract and was void for uncertainty.’ One of the purposes of this contract was to afford a reasonable trial period and if the parties, who, we assume, were acting in good faith, were unable to agree upon the compensation to be paid to Eno, then the transaction was to come to an end and the defendant was to cease using the process. The defendant, however, could not use the process for several years and, by failing to agree upon the share of the profits that should be paid to Eno, escape all liability to pay. The defendant was to ‘justly and properly compensate’ Eno. These words, if they stood alone, were adequate to bind the defendant to pay fair and reasonable compensation for that which it had received. Contracts phrased in somewhat similar words in defining the measure of compensation to those who have performed services or supplied materials in reliance upon the promised compensation, have been held sufficiently definite to maintain actions to enforce them. Noble v. Joseph Burnett Co., 208 Mass. 75, 94 N.E. 289;Silver v. Graves, 210 Mass. 26, 95 N.E. 948;Brennan v. Employers' Liability Assur. Corp., Ltd., 213 Mass. 365, 100 N.E. 633;Dixon v. Lamson, 242 Mass. 129, 136 N.E. 346;Ferris v. Boston & M. R. R., 291 Mass. 529, 197 N.E. 506;Fenton v. Federal St. Building Trust, 310 Mass. 609, 39 N.E.2d 414;Henderson Bridge Co. v. McGrath, 134 U.S. 260, 10 S.Ct. 730, 33 L.Ed. 934;Allan v. Hargadine-McKittrick Dry Goods Co., 315 Mo. 254, 286 S.W. 16;Von Reitzenstein v. Tomlinson, 249 N.Y. 60, 162 N.E. 584.

The judge found that Eno had fully performed his part of the contract; that both Eno and the plaintiff had endeavored to agree with the defendant upon the amount of compensation to be paid for the use of the process, but that they were unableto do so, and that Eno and the plaintiff were not guilty of laches in failing to notify the defendant sooner than May 16, 1940, to cease using the process. The parties did not intend that the payment of compensation should be left entirely to the decision of the defendant. Whitten v. New England Live Stock Ins. Co., 165 Mass. 343, 43 N.E. 121;McCrillis v. L. Q. White Shoe Co., 264 Mass. 32, 161 N.E. 902. While it may not have occurred to them at the time the contract was executed that several years might elapse in fruitless negotiations to settle the matter of compensation, yet, from the language employed in their contract, the nature of the subject matter with which it dealt, and the circumstances attending its execution, it is clear that the parties never contemplated that one of them should for years have the free use of the process. A contract is not necessarily incomplete because one of its terms was to be exactly fixed at a future time. If, as here, one of the parties intended to pay, and the other to accept, reasonable compensation, and the former has continued for years to enjoy the benefit of what it has received from the latter, then, although the parties have not agreed upon the amount of compensation, an obligation to pay for the use of the process could be implied. Speirs v. Union Drop Forge Co., 180 Mass. 87, 61 N.E. 825;Evers v. Gilfoil, 247 Mass. 219, 141 N.E. 926;Kirkley v. F. H. Roberts Co., 268 Mass. 246, 167 N.E. 289;Weiner v. Pictorial Paper Package Corp., 303 Mass. 123, 20 N.E.2d 458;Corthell v. Summit Thread Co., 132 Me. 94, 167 A. 79. The source of Eno's compensation, however, was the profits, and the parties never contemplated that payment should be made upon any other basis or from any other funds. The implied obligation of the defendant was to be measured by a fair share of the profits, if any, that were derived from the business during this period. Danforth v. Allen, 8 Met. 334;First Nat. Bank v. Watkins, 154 Mass. 385, 28 N.E. 275;Barron v. International Trust Co., 184 Mass. 440, 68 N.E. 831;Baker v. James, 280 Mass. 43, 181 N.E. 861;Murphy v. Shinberg, 304 Mass. 1, 22 N.E.2d 597.

Eno was hired by the defendant for a year in March, 1935, and for six months in October, 1937. His duties were to interview shoe manufacturers and to endeavor to have them use the process. He was paid wages for this work. While there was testimony by the defendant's treasurer that he and Eno had conferred in reference to making a new agreement for the use by the defendant of his process, yet there was a conflict in the testimony and the judge was not plainly wrong, as the...