In re Phelan

• Citation: 274 N.W. 411,225 Wis. 314
• Parties: In re PHELAN.
• Decision Date: 21 June 1937
• Court: United States State Supreme Court of Wisconsin

225 Wis. 314

274 N.W. 411

In re PHELAN.

Supreme Court of Wisconsin.

June 21, 1937.

Petition for a writ of prohibition to restrain further proceedings in a certain action recently commenced in the circuit court for Rock county in which John D. Clancy is plaintiff and Louis A. M. Phelan is defendant, on the ground that a similar action involving the same controversy and the same parties is pending and at issue in the federal court for the Northern district of Illinois, Eastern division. Petition granted and writ allowed.

On May 11, 1937, Louis A. M. Phelan, filed his petition in this court asking leave to commence an original action for a writ of prohibition restraining the circuit court for Rock county from conducting further proceedings in an action there pending against him. Upon the filing of said petition it was ordered, that pending a hearing thereon, on May 25, 1937, all proceedings in said action be stayed and that notice of such hearing be duly given.

So many of the facts stated in the petition as are necessary to an understanding of this controversy will be summarized. On or about March 2, 1937, an action was commenced in the circuit court for Rock county by John D. Clancy, a resident of the city of Chicago, against Louis A. M. Phelan, hereafter called the petitioner or defendant, a resident of Beloit, by the service of a summons upon him. Attached to the summons was a notice and affidavit for a discovery examination to enable the plaintiff to frame a complaint, pursuant to the provisions of section 326.12. A subpoena was also served upon the petitioner requiring him to appear at the time and place mentioned in the notice, to submit to an adverse examination, and commanding him to bring and have with him for the purpose of said examination “any and all books and papers and documents and records which may be in your possession or under your control relating to the various transactions mentioned and set forth in the affidavit attached to the notice of examination in this matter.” Prior to the commencement of the action in this state, the said Clancy, as plaintiff, had duly commenced an action against the petitioner as defendant, in the circuit court of Cook county, Ill., which action involves the same controversy as is clearly shown by the complaint filed in the Illinois action, a copy of which is attached to the petition. The Illinois action was duly removed to the federal court for the Northern district of Illinois, Eastern division. A motion to remand it to the state court was denied. An answer was filed and served. That action is still pending in said federal court and the trial thereof is set for June 21, 1937, on motion of the petitioner, the defendant therein. In the complaint filed in the Illinois action it is in substance alleged: That the plaintiff became acquainted with the defendant in the year 1909, at which time the defendant was engaged in the invention of a certain mercury switch commonly called an electric motorless flasher; that the defendant was seriously hampered in perfecting said invention because of a lack of adequate funds and at that time said invention was imperfect and required a great many improvements to make it of commercial value; that it was agreed by and between the plaintiff and the defendant that the former should aid the latter financially in developing said invention and that in return for such aid the plaintiff should have an interest therein; that pursuant to this agreement plaintiff rendered valuable assistance financially and otherwise in improving said invention; that the plaintiff advanced large sums of money for the purchase of necessary materials with which to experiment in improving said invention and at great expense obtained the service and advice of various experts; that the plaintiff also expended large sums of money for the support of the defendant and his family; that, at the request of the defendant, the plaintiff expended large sums of money for the perfection of said invention and himself discovered defects in said invention, which with the aid of skilled mechanics, retained at his expense, were remedied; that said invention was developed from an imperfect invention of little or no value into an invention of tremendous commercial possibilities; that the development of said invention was made possible through the spending of a great deal of plaintiff's time and the expenditure of large sums of money which the plaintiff contributed from his own resources and from borrowed money; that at all of the times mentioned it was agreed between the plaintiff and the defendant that the former should have an interest in said invention and in any and all improvements that might ultimately be developed; that on August 19, 1915, the defendant, by an instrument in writing, assigned to the plaintiff a 34 per cent. interest in said invention in consideration of the moneys advanced by him and the services rendered by him; that on or about September 27, 1915, an application for letters patent for said invention was filed with the proper governmental authorities; that on and before March 1, 1916, the plaintiff was the owner of a 34 per cent. interest in said invention and still is the owner thereof; that a patent of said invention was allowed on or about October 22, 1918; that the defendant fraudulently concealed from the plaintiff all knowledge of the success of said invention from which the defendant had received largs sums of money; and that on December 4, 1929, the plaintiff demanded that the defendant account to him for his share of the proceeds of said invention. There are other allegations in the complaint, which assert numerous and continuous absences of the defendant from the state of Illinois. The plaintiff prayed for an accounting and that the defendant be ordered by decree to pay to the plaintiff all sums which, upon accounting, may be found due to the plaintiff and for other specific and general relief.

The petition further shows that interrogatories have been served and filed in that action by the plaintiff Clancy, which interrogatories embrace the same subject-matter, upon which discovery is sought in the examination noticed in the Wisconsin action. A copy of the interrogatories filed in the federal court and served upon the said Phelan is attached to the petition. The interrogatories are seventy-seven in number and inquire as to a certain invention or device, the improvements thereof, other inventions similar to it, the perfection and marketing thereof, and the profits received, from about the year 1909 down to the present time. Upon the hearing before this court, the petitioner filed a verified copy of the interrogatories and the answers made thereto by the petitioner.

In the affidavit for discovery served upon the petitioner it is stated “that the general nature and object of the action is the recovery from defendant of such sum or sums of money as he owes plaintiff by reason of the sale and transfer to plaintiff of a thirty-four per cent interest in and to a certain invention and commercial product or appliance known and generally described as an electric motorless flasher and also known as a mercury switch, and from the manufacture and sale of which and the patents covering and embodying the same, said defendant realized large amounts of money of which amounts plaintiff owned thirty-four per cent and which said amounts defendant has failed to pay or turn over to plaintiff or account for the same and for which amounts defendant is indebted to the plaintiff.” Twelve different points upon which discovery is sought are listed in the affidavit. Though framed somewhat differently from the interrogatories in the Illinois action, the information sought from the petitioner on the discovery examination is practically the same. The petition further alleges that on April 16, 1937, the petitioner duly moved the circuit court for Rock county for an order limiting and suppressing said examination and also staying said action and all proceedings therein pending said action in the federal court; that the said examination, if permitted to proceed, will occupy a large number of days; that said examination would entail great expense and loss to the petitioner, compel him to litigate in both the Wisconsin court and the federal court at the same time, answer interrogatories in both courts and require the petitioner at great length and expense to go into detail as to the proceeds received by him from the numerous inventions owned by him. The petition also shows that the circuit judge refused to limit the scope of the examination and refused to modify the broad commands of the subpoena. At the hearing before this court it was stipulated by counsel for the...