Henderson v. Ries

• Citation: 108 F. 709
• Decision Date: 07 May 1901
• Docket Number: 372.
• Parties: HENDERSON v. RIES.
• Court: U.S. Court of Appeals — Fourth Circuit

108 F. 709

HENDERSON v. RIES.

No. 372.

United States Court of Appeals, Fourth Circuit.

May 7, 1901

John N Steel and George Whitelock, for plaintiff.

John P Poe (Arthur Stuart, on the brief), for defendant.

Before GOFF and SIMONTON, Circuit Judges, and BRAWLEY, District Judge.

Before GOFF and SIMONTON, Circuit Judges, and BRAWLEY, District Judge.

SIMONTON Circuit Judge.

This case comes up on cross appeals from the circuit court of the United States for the district of Maryland. Albert H Henderson and Elias E. Ries were co-partners 'in the joint business enterprise or pursuit of utilizing, promoting, manufacturing, selling, or, in any manner that may be mutually agreed upon, using any of the inventions, improvements, letters patent, privileges, power, or authority in which they, the said partners, are joint owners. ' The co-partnership articles were dated June 11, 1888. Its duration was indefinite. Either party could dissolve it by giving notice of 60 days in writing, giving reasons for the desire to dissolve. Thereupon the co-partnership shall be dissolved 60 days after the date of said notification. After some ineffectual negotiations respecting the purchase by Ries of his partner's interest, Ries gave the notice of his intent to dissolve the co-partnership March 20, 1896. Thereupon A. H. Henderson filed his bill for an accounting between the co-partners, and a settlement of the affairs of the co-partnership. The articles of the co-partnership are set out as an exhibit to the bill. They are verbose and obscure. Out of them grows the controversy. The co-partnership property is described in the second article. All inventions, improvements, and letters patent in which the co-partners shall thereafter become joint owners shall be assigned, set over, and conveyed to the co-partnership, and thereupon shall become the sole property of the co-partnership, for its sole use, benefit, and behoof. Ries was an inventor. So the third article provides that, if he shall make or obtain any inventions, improvements, or letters patent, and both parties shall agree to become joint owners in any or all of them, Henderson shall be entitled to one undivided half interest in any or all of such inventions, improvements, and letters patent in consideration of the payment by him of all fees and expenses incurred in the preparations, prosecution, and procurement of letters patent of the United States and such foreign countries as may mutually be agreed upon, and on the further consideration of the payment by him (Henderson) of all necessary fees, annuities, taxes, and expenses for maintaining such chosen foreign letters patent legally in force for a period of not less than five years. This article also provides that Henderson could acquire an undivided half interest in any or all the inventions, improvements, and letters patent which Ries might thereafter make or obtain on payment of such consideration as they might agree upon. In the fourth article Henderson covenants to pay all expenses in maintaining and continuing the co-partnership until its earnings shall justify the joint payment of such expenses by both parties. Thus we see that Henderson binds himself to pay all fees and expenses incurred in obtaining letters patent of the United States and of foreign countries, and the necessary charges for maintaining the patents in foreign countries for at least five years, and contents himself for reimbursement by the receipt of a half interest in such patents. He then binds himself to pay the expenses of maintaining and continuing the co-partnership-- presumably clerk and office hire-- until the business warrants the payment of these by the firm. The fifth article then provides that Henderson shall advance all necessary moneys, funds, etc., for obtaining protection and insuring the promotion and development of the inventions, improvements, and letters patent of which he is the joint owner with Ries. In consideration thereof he is to be repaid and reimbursed in full for all such expenses so incurred. The means of reimbursement are to be derived and deducted from moneys or equivalent consideration received by the co-partnership. The condition of the co-partnership must be such as to warrant such repayment. In no case will he require for such repayment more than 25 per cent. of the total amount received for the use or sale of one invention, improvement, or letters patent. The sixth article deals with the same subject. This repayment shall be made either periodically or in toto, according to the amount of and to the circumstances attending the profit or sale accruing from the use or sale of any one invention, improvement, or letters patent, and that shall be mutually determined by the parties as to the particular manner in which such repayment shall be made. This is obscure. It seems, however, to apply only to the mode in which the 25 per cent. spoken of in the fifth article shall be applied. The tenth article provides that the parties shall from time to time meet, and render to each other information of what they have done in the co-partnership business. If, upon the comparison of their transactions, it appears that the co-partners have profited by the duration of the partnership, they will each to the other deliver his share of the profits; from the entire profits first deducting the repayment to Henderson incurred by him as set out in the firth and sixth articles, and dividing the remainder equally between them. The eleventh article provides how the partnership shall be dissolved, and upon such dissolution all property, inventions, improvements, letters patent, and all assets whatsoever then belonging to said co-partnership shall be equally and equitably divided between both co-partners, share and share alike, and each party shall in that event receive from the co-partnership an assignment and reconveyance of his undivided right, title, and interest therein.

The answer having been put in, and the cause coming up for a hearing, the court below held that Henderson could make no claim for repayment of moneys disbursed under the third article. The court held, however, that under the fourth fifth, and sixth articles, he could claim payment in full for all moneys paid out under them, and the case was sent to a master to take that account. The master reported that on the taking of this account there was due to Henderson by the co-partnership a balance of $7,718.52. This was confirmed by the court, and Ries was ordered to pay his share thereof as a member of the co-partnership, there being no funds as profits, the sum of $3,859.26, half the gross sum. To this decree both parties except, and have filed their assignments of error. The complainant assigns for error: (1) That the court held that Henderson could not recover for moneys paid out under the third article of the co-partnership. (...