Goldsmith v. Koopman

• Decision Date: 02 August 1905
• Docket Number: 7,176.,7,175
• Citation: 140 F. 616
• Parties: GOLDSMITH v. KOOPMAN et al. REIZENSTEIN v. SAME.
• Court: U.S. District Court — Southern District of New York

140 F. 616

GOLDSMITH v. KOOPMAN et al.

REIZENSTEIN v. SAME.

Nos. 7,175, 7,176.

United States Circuit Court, S.D. New York.

August 2, 1905

Eugene Treadwell, Isaac Hassler, and Harrison B. Weil, for complainants.

Herman Aaron, Francis T. Homer, and Henry M. Brigham, for defendant Koopman.

Luther Shafer, for defendants Upton's executors.

PLATT District Judge.

These are similar suits, brought by the respective complainants against their partners, to set aside a transfer of complainant's interest on the ground of fraud, to declare each complainant to be the owner of a one-fourth interest in the joint enterprise and in the profits growing out of it, and to require the defendants to pay over such share or interest, if the same be ascertainable, or to order an accounting if it be not. The defendant Koopman denies that any transfer was made to him, denies any fraudulent representations or concealment of pertinent facts which induced the transfer, and claims that the complainants are limited in recovery, or cannot recover at all, by reason of an alleged license agreement made by the copartnership long prior to the transfer which it is sought to set aside. The answer of the executors of the deceased partner, Charles S Upton, admits his -death and their appointment, but denies any knowledge or information by said defendants of or concerning other allegations in the bill contained.

It is possible to treat both cases together, and what shall be said herefrom will be understood to contain some of the reasons for the action which will follow.

Complainant Goldsmith in 1890 obtained letters patent for a pocket savings bank in the United States, England, and continental countries. Pending the applications, he assigned to complainant Reizenstein an undivided one-half interest in the foreign patents, and licensed the Magic Introduction Company to manufacture and sell banks under the United States patent. Defendant Upton was president of the Magic Introduction Company, and defendant Koopman was treasurer and manager. Henry M. Brigham was a patent lawyer in New York of some experience. When the United States patent issued, Mr. Brigham thought its claims too narrow, and prepared a model bank, to avoid infringement, applying for a patent thereon November 26, 1890. This was transferred to the Magic Introduction Company. Goldsmith was forced on that account to reduce his royalties, and the patent was then transferred to him. Brigham, at the same time, obtained his interest in the foreign patents by threats of patenting his United States patent abroad and using it in competition. Koopman also got a one-fourth interest in the foreign business by promising active assistance and co-operation in marketing the goods abroad. On January 20, 1891, therefore, an agreement was made between Goldsmith, Reizenstein, Koopman, and Henry M Brigham, pooling the foreign patents, and fixing the interests at one undivided fourth each, including all future inventions. Goldsmith, to avoid foreign complications like those domestic already incurred, applied through English solicitors, selected by Koopman, and obtained on March 31 1891, a second English patent, with more specific claims. In the meantime, capital was essential, and an agreement was entered into April 11, 1891. Goldsmith, Reizenstein, and Koopman kept their original one-fourth each, but Brigham's fourth was divided; Henry M. Brigham taking one-eighth, and Charles S. Upton and John H. Brigham each one-sixteenth, and $2,000 was subscribed, each contributing according to his interest, the profits and losses to be in the same ratio. The purpose of the copartnership was to manufacture and sell, and to license others to manufacture and sell, the inventions in the foreign countries. John H Brigham was to visit London in the interest of the copartnership, at a fixed salary to continue for one year. A few days later, Willard s. Upton, a brother of Charles S. Upton, was employed as a salesman, to help John H. Brigham in the foreign markets with the patented device. Henry M. Brigham prepared all the papers. Reizenstein, Willard S. Upton, and John H. Brigham, on April 14, 1891, went to Europe together in the interests of the copartnership. Charles S. Upton, as president of the Rochester Lamp Company, had come to know in a business way Wright & Butler of Birmingham and John G. Rollins & Co. of London. John H. Brigham knew them, because he had been acting as salesman for the Rochester Lamp Company, but nothing was known of these firms by either Goldsmith or Reizenstein. On arrival in England, John H. Brigham, who was vice president of the Rochester Lamp Company, immediately began negotiations with Wright & Butler and Rollins & Co., representing himself to them as having the sole right to sell, and license others to sell, Goldsmith's invention. He did not tell Reizenstein what he was doing, and concealed entirely from him the progress of the negotiations during all the time Reizenstein remained abroad. He also told Reizenstein that nothing could be done in the way of business for the copartnership, until at length Reizenstein lost heart and went home, completely discouraged. On May 6th, however, affairs between John H. Brigham and Wright & Butler had culminated in an agreement in which John Harris Brigham poses as the sole licensee under the English patents, and undertakes to license Wright & Butler to sell the banks at a specified royalty. Brigham and Upton also began negotiations with Rollins & Co. On May 22d a further agreement with Wright & Butler, in which John Harris Brigham still poses as sole licensee, was entered into. Both of these agreements and the negotiations with Rollins & Co. were concealed from Reizenstein. On May 5, 1891, John H. Brigham got from Reizenstein, who was ignorant of the above doings, but hopeful of the future, his own signature to an agreement making the said Brigham the sole licensee. In the latter part of May, Reizenstein and John H. Brigham returned home, reaching here early in June, 1891. A conference of the partners followed. Charles S. Upton had signed, and Goldsmith was asked to sign. He was not told about the transactions with Wright & Butler and Rollins & Co. The plan suggested was urged as the only means of continuing efforts abroad, and Goldsmith at last signed, but Koopman refused to sign, and complainants went back to Philadelphia, believing that the license agreement with John H. Brigham was of no value, since it must be signed by all the parties. After they had gone, Koopman and Henry M. Brigham refused to sign, unless they could have the same shares under the John H. Brigham license as under the existing pool, to wit, one-fourth to Koopman and one-eighth to Henry M. Brigham. Finally, they agreed to unite all the interest held by them in the patents under the copartnership agreement, and all the interest which would vest in John H....