Kinley v. Alexander

• Decision Date: 30 November 1955
• Citation: 290 P.2d 287,137 Cal.App.2d 382
• Parties: Myron M. KINLEY, Plaintiff and Respondent, v. Ford I. ALEXANDER, Defendant and Appellant. Civ. 20754.
• Court: California Court of Appeals Court of Appeals

Page 287

290 P.2d 287

137 Cal.App.2d 382

Myron M. KINLEY, Plaintiff and Respondent, v. Ford I. ALEXANDER, Defendant and Appellant.

Civ. 20754.

District Court of Appeal, Second District, Division 2, California.

Nov. 30, 1955.

As Modified on Denial of Rehearing Dec. 23, 1955

Pines & Walsh, Adele Walsh and Harry A. Pines, Los Angeles, for appellant.

Landon Morris, Los Angeles for respondent.

McCOMB, Acting Presiding Justice.

From a judgment decreeing that (a) plaintiff was the owner of a right to participate in certain patent license royalties; (b) defendant holds title to such royalty interest in trust for plaintiff; (c) plaintiff was entitled to recover the sum of $196,263.96 from defendant for accrued royalties; and (d) plaintiff was entitled to one half of the royalties thereafter accruing on such patent rights, defendant appeals.

Facts: ^* On December 15, 1942, United States Patent No. 2,305,261 was issued to plaintiff covering the method of removing sections of pipe which became stuck in an oil well. This is referred to as the 'back-off' patent. About September 9, 1946, plaintiff learned that defendant was successfully using a similar back-off method in California and wrote him to notify him of the existence of the back-off patent. Up to this time plaintiff had made no successful use of his discovery and had been unable to persuade the oil industry in the midcontinent area to use it.

Following negotiations between plaintiff and defendant, on September 9, 1946, they entered into an agreement by which plaintiff assigned the legal title to the patent and the invention to defendant upon the understanding that defendant would exploit and develop its use for their joint benefit and would pay plaintiff one half the royalty proceeds from the use of the patent, excluding revenues from its use in the states of California, Oregon and Washington.

Defendant violated the obligations imposed upon him by the agreement by secretly and fraudulently acquiring plaintiff's interest in the patent. This was accomplished in the following manner:

Commencing shortly after the agreement of September 9, 1946, was entered into, defendant falsely represented to plaintiff on numerous occasions that he believed the patent was weak and unenforceable. Plaintiff had reason to believe that the McCullough Tool Company was infringing upon the patent, and several times told defendant of his suspicions. Defendant replied that he would not proceed against the company unless plaintiff supplied him with evidence of its infringement. At these very times defendant not only knew this company was infringing the patent, but he was actually assisting it in its unlicensed use of the patent.

During this period of time, defendant attempted to buy out plaintiff's interest in the patent for himself, but plaintiff refused to sell to defendant, telling him that if the patent was good enough for defendant it was good enough for him. Realizing he could not acquire plaintiff's interest in the patent directly from plaintiff, defendant finally told plaintiff that he himself was going to sell out and had a buyer, to wit, the Houston Oil Field Material Company, hereinafter referred to as 'Homco', which would buy each of their interests for the same sum, that is, $50,000. Plaintiff told defendant that if he were selling out and they were both receiving the same price, namely $50,000 each for their respective interests in the patent, he would sell.

The fact was that in the negotiations between Homco and defendant, concerning which plaintiff knew nothing, the least amount for which defendant had offered to sell his one-half interest was the sum of $450,000. At the meeting in which defendant told plaintiff he was willing to sell to Homco, he offered to act as plaintiff's agent in negotiating and consummating a sale of plaintiff's interest to Homco, and specifically instructed plaintiff to stay away from Homco and not enter into negotiations with it. Plaintiff agreed to this and in fact stayed away, believing defendant was acting as his agent.

Plaintiff, believing defendant was selling his interest in the patent to Homco, upon defendant's instructions, gave an option to said company to purchase his interest in the patent for a total of $50,000. Thereafter, plaintiff assigned the same to Homco, still believing defendant also was selling his interest to the company for the same amount. Knowing that plaintiff had given his option to Homco in the belief that defendant was also selling his interest in the patent to that company for the same amount, defendant entered into an agreement with Homco, which he concealed from plaintiff, by which he agreed to grant Homco a license to use the patent for a royalty of 10% of their charges for its use, with a minimum annual royalty of $20,000, provided that as a condition precedent to his granting the license, Homco would exercise plaintiff's option to purchase plaintiff's interest in the patent and then assign it to defendant.

This transaction was consummated without the knowledge of plaintiff with the result that defendant not only did not sell his patent to Homco in accordance with his representation to plaintiff, but retained it and also acquired plaintiff's interest therein for nothing, thereby securing for himself alone all the benefits of the license agreement with Homco.

On October 21, 1947, defendant entered into a so-called 'Commission Agreement' with the Ford Alexander Corporation, which was in fact a disguised agreement for the payment of additional royalties to defendant for the use of the patent. Defendant concealed the existence of this agreement from plaintiff, and concealed the extra royalty he received thereunder, by cutting off the accounting sheets which he submitted to plaintiff those parts which disclosed payment to him of such extra royalties.

Defendant's Contentions

First: There is not any substantial evidence to sustain the trial court's material findings of fact.

This contention is devoid of merit. In his brief, defendant has set forth only the evidence favorable to his contentions and has utterly disregarded conflicting evidence which supports the findings in favor of plaintiff.

It is not the province of a reviewing court to present by way of opinion a detailed argument on the sufficiency of the evidence to support a judgment, where, as here, it appears that the question is one of resolving a conflict in the evidence, and determining which witnesses are to be believed or disbelieved. Mr. Justice Vallee, in Overton v. Vita-Food Corp., 94 Cal.App.2d 367, 370, 210 P.2d 757, 759 (hearing denied by the Supreme Court), apropos of this rule, pertinently said:

'Andre Gide once observed: 'Everything has been said already; but as no one listens, we must always begin again.' With rhythmic regularity it is necessary for us to say that where the findings are attacked for insufficiency of the evidence, our power begins and ends with a determination as to whether there is any substantial evidence to support them; that we have no power to judge of the effect or value of the evidence, to weigh the evidence, to consider the credibility of the witnesses, or to resolve conflicts in the evidence or in the reasonable inferences that may be drawn therefrom. No one seems to listen.' (See Murphy v. Ablow, 123 Cal.App.2d 853, 858[1b], et seq., 268 P.2d 80 (hearing denied by the Supreme Court); Marson v. Rand, 107 Cal.App.2d 466, 468, 237 P.2d 18 (hearing denied by the Supreme Court); see also numerous cases cited in 6 West's Calif. Digest (1951) Appeal and Error, k989, p. 606.)

We have examined the record and are of the opinion there was substantial evidence which, when considered with such inferences as the trial court may have reasonably drawn therefrom, sustains each and every material finding of fact upon which the judgment in favor of plaintiff was necessarily predicated. A detailed recital of the evidence supporting the findings in favor of plaintiff would serve no useful purpose. (Thatch v. Livingston, 13 Cal.App.2d 202, 203, 56 P.2d 549.)

Second: The trial court erred in finding against defendant's affirmative defenses.

This contention is devoid of merit.

A. The first affirmative defense was that plaintiff was guilty of laches in prosecuting his action.

This proposition is erroneous. The fraud against plaintiff was consummated in May of 1949. The present action was instituted on December 27, 1951, approximately 2 years and 7 months after the actual commission of the fraud. Thus it is apparent the action was brought within the three year period provided by the statute of limitations (Sec. 338, subd. 4, Code Civ.Proc.) Defendant's claim that since plaintiff had filed a previous action and dismissed it without prejudice before he instituted the present action, plaintiff was barred from filing the instant case is untenable. The mere filing of an action and dismissing it without prejudice is not a bar to the filing of a subsequent action, within the statutory period, predicated upon the same cause of action.

B. The second affirmative defense alleged by defendant was that he and Homco were joint tort-feasors.

The trial court found against this contention, which finding the record discloses was sustained by substantial evidence. The fact is there was an entire absence of evidence in the record to support a contrary finding.

C. The third to sixth, inclusive, affirmative defenses are predicated upon the theory that a settlement of the differences between the parties had been made by plaintiff's cashing on June 20, 1949, a check from defendant for $2,901.80.

Clearly the cashing of this check did not constitute a bar to the present action, nor does it sustain defendant's contentions, because the check was given by defendant to plaintiff for unpaid royalties due him, and, as later appears, this occurred before plaintiff discovered the fraud. This is fully demonstrated and borne out by the following...