Foreman's Systems, Inc. v. Milk Dealers' Crate Corp.

• Decision Date: 14 March 1923
• Citation: 13 Del.Ch. 351,120 A. 358
• Parties: FOREMAN'S SYSTEMS, INCORPORATED, a corporation organized and existing under the laws of the State of Delaware, v. MILK DEALERS' CRATE CORPORATION, a corporation organized and existing under the laws of the State of Delaware, and AMOS L. FOREMAN
• Court: Court of Chancery of Delaware

120 A. 358

13 Del.Ch. 351

FOREMAN'S SYSTEMS, INCORPORATED, a corporation organized and existing under the laws of the State of Delaware, v. MILK DEALERS' CRATE CORPORATION, a corporation organized and existing under the laws of the State of Delaware, and AMOS L. FOREMAN

Court of Chancery of Delaware, New Castle

March 14, 1923

BILL FOR SPECIFIC PERFORMANCE. On January 15, 1915, one Amos L Foreman addressed the following proposal to the stockholders of Foreman's Systems, Incorporated, the complainant in this suit:

"To the Stockholders of Foreman's Systems, Inc., a Corporation of the State of Delaware--

Gentlemen I, the undersigned, being the holder of letters Patent and Patent Applications of the United States as follows:

"United States Patent No. 915,581 dated March 16th, 1909, for improvements in bottle carrying crates,

"United States Patent No. 1,050,823 dated Jan. 21st, 1913, for improvements in bottle carrying crates,

"Application for patent, serial No. 547,034 for improvements in bottle washing, rinsing and sterilizing machine.

"do hereby agree to sell, assign, transfer and set over to this Company all my right, title and interest, in, to, by, from and under certain Letters Patent and Patent Application above mentioned, with the further agreement to assign all my right title and interest to patents or patent applications covering any and all subsequent improvements made by me and under my control for and in consideration of the issue to me, my heirs, executors or assigns of the full-paid non-assessable common capital stock of this company to the amount of One Hundred Thousand Dollars, being understood by me that the acceptance of this proposition by you is dependent upon the amendment of the charter of the Company, authorizing an increase of its present capital stock, to an aggregate amount of Two Hundred Thousand Dollars.

"Upon the acceptance of this proposition and your delivery to me to [of] the stock above indicated, I will make, execute and deliver under your direction all proper instruments of writing to carry into effect, fully and completely the terms of the above stated proposition.

"[Signed] Amos L. Foreman. [Seal.]

"Witnesses:

"J Irwin Doan.

"C A. Wallford."

On the same day the stockholders, in meeting duly assembled, responded to the foregoing offer by adopting the following resolution, as appears from the minutes of the meeting:

"A motion was duly made by Mr. Doan and seconded by Mr. Crossgrove that the proposition offered the stockholders of this company by Mr. Foreman to sell out-right to the company the certain letters patent and patent applications as set forth in the letter herewith attached be accepted and carried out, by the proper offers of this company, and that upon the amendment of the charter pay over to Mr. Foreman $ 100,000.00 in common stock for these patents and patent applications. This motion was unanimously carried."

Thereafter on March 1, 1916, Foreman duly assigned to the complainant not only the two patents referred to in his letter of January 25, 1915, to-wit, the patents for improvements in bottle carrying crates, numbered respectively 915,581 and 1,050,823, and another patent No. 1,151,538 for improvements in bottle washing, rinsing and sterilizing machines (application for this patent being the serial No. 547,034 mentioned in said letter of January 25, 1915), but also in addition an application for patent for certain improvements in bottle washing, rinsing and sterilizing machines, U. S. Serial No. 29,802, for which patent No. 1,256,482 was subsequently issued. On the same day the complainant issued to Foreman its common capital stock of the par value of one hundred thousand dollars, being one-half of the total authorized capital of the complainant, it having amended its certificate of incorporation by increasing its total authorized capital stock to $ 200,000.

On May 10, 1917, Foreman assigned to the complainant all his right, title and interest in and to four other inventions for improvements in bottle crates and in and to any letters patent of the United States which might be given therefor, for which said inventions he had made four several applications. The numbers of the same are not material, and so are omitted.

The record discloses that one of these applications was divided and a new application with a new serial number filed by Foreman on October 7, 1918, and a patent thereon issued to him on January 7, 1919, which patent was duly assigned by Foreman to the complainant on February 21, 1919; and two other patents based on applications so assigned on May 10, 1917, were issued direct to the complainant as assignee. As to whether any further patents were issued upon the remaining applications referred to in the May, 1917, assignment, the record is silent.

At the time of all the assignments of patents and applications for patents above described, Foreman was not only a substantial stockholder of the complainant, but he was as well its president and a director. In March, 1918, he pledged seven hundred shares of his stock as collateral to a loan and later the same was lost to him. Just when he lost control of his stock, does not appear. He continued, however, to act as president of the corporation until December, 1919, and as director until December, 1920. Since then he has had no official connection with the complainant.

On March 30, 1920, while he was still a director of the complainant corporation, Foreman filed an application for a United States patent for "certain improvements in bottle crates," serial No. 369,841, which application was in July following, assigned by him to the defendant, Milk Dealers' Crate Corporation. On February 8, 1921, United States patent No. 1,368,221 was duly issued on said application to Milk Dealers' Crate Corporation. This is the patent involved in the pending suit. The bill charges and the answer admits, that Milk Dealers' Crate Corporation has been manufacturing bottle carrying crates containing improvements covered by said patent, and has granted licenses to others so to do.

Milk Dealers' Crate Corporation was organized in 1920 at the instance of Foreman. In consideration of the issuance to him of five thousand shares of its common stock and twenty-five hundred shares of its founders' stock of no par value, he assigned to it two applications for patents, one of them being the one on which the patent in suit was issued. Foreman since the organization of the defendant corporation has been a member of its board of directors and its president. It is stipulated between the parties that whatever knowledge Foreman had of the contract entered into between himself and the complainant on January 25, 1915, the defendant, Milk Dealers' Crate Corporation, also had at the time of the assignment to it of the patent in suit.

The bill prays that the complainant may be decreed to be the true equitable owner of said Letters Patent of the United States, No. 1,368,221, and of the invention and improvements to bottle carrying crates therein mentioned and described; that the Milk Dealers' Crate Corporation be ordered by the decree of the court to assign the same to the complainant; and to account to the complainant for all profits and royalties received by it under said patent and to pay to the complainant the amount found to be due under such an accounting.

The cause was heard on bill, answer, written interrogatories and replies thereto, and oral testimony adduced before the Chancellor.

Herbert H. Nicholson, of the firm of Ward, Gray & Neary, for the complainant.

John R. Nicholson, for the defendants.

OPINION

THE CHANCELLOR

The complainant's case is, that the patent in controversy constitutes an improvement upon the two patents assigned to it by Foreman on March 1, 1916, and that, by the terms of the contract between it and Foreman, entered into on January 25 1915, such improvement is in equity its property.

The stipulation of the parties, entered into through their solicitors, removes from the case any question of countervailing equity in the defendant, Milk Dealers' Crate Corporation, as an innocent purchaser for value without notice.

As the case is presented, there are two main questions to be passed upon. They are, first, did the contract between Foreman and the complainant obligate Foreman to assign all improvements he might subsequently make in bottle carrying crates; and if so, second, is the patent in controversy such an improvement?

First. The contract is evidenced by writing. It consists of an offer by Foreman and an acceptance by the complainant. While the parties agree as to the extent of Foreman's offer, they are in disagreement as to the extent of the complainant's acceptance. It is, of course, elementary that where a contract is sought to be made in the form of an offer and an acceptance, there is no meeting of minds unless the acceptance is of the identical thing offered. If the acceptance be not co-extensive with the offer, then before the offerer can be said to have become bound, he must have indicated in turn his assent to the modified acceptance. There is no controversy between the parties over these elementary principles. Their difference of view turns upon whether, or not, the resolution of the complainant corporation, adopted in response to Foreman's proposal, did as a matter of law accept the offer exactly as made.

The defendants contend that it did not. In making this contention, they take the view that Foreman's offer embraced two distinct things, viz.: (a) Two patents and one application for patent, then in existence, and (b) an agreement to assign all interest in any future improvements which he might subsequently make; and that the resolution of acceptance went only as to (a)....