Lyndon v. Wagner Electric Mfg. Co.

Decision Date19 July 1920
Docket NumberNo. 21135.,21135.
Citation285 Mo. 77,225 S.W. 711
PartiesLYNDON v. WAGNER ELECTRIC MFG. CO.
CourtMissouri Supreme Court

Appeal from St. Louis Circuit Court; Karl Kimmel, Judge.

Action by Lamar Lyndon against Wagner Electric Manufacturing Company. Judgment for plaintiff on directed verdict, and defendant appeals. Affirmed.

This suit was instituted by the plaintiff in the circuit court of the city of St. Louis against the defendant, to recover seven installments of $1,500 each, alleged to be due him as royalties under a lease or license dated March 2, 1912, executed by the plaintiff to defendant.

The trial resulted in a judgment for the plaintiff for the amounts sued for, plus interest, which amounted to $1,529.50 each. After moving unsuccessfully for a new trial, the defendant appealed the cause to this court.

The facts of the case are substantially as follows:

The plaintiff was an electrical engineer of high standing in his profession, and as such was connected with the Edison Electric Company of New York, and the defendant was a Missouri corporation organized and existing under the laws of this state, and was engaged in the manufacture and sale of electric motor appliances in the city of St. Louis. The plaintiff was the sole inventor and patentee of a certain system of propulsion and battery charging of electric vehicles, covered by United States patent issued to him dated March 20, 1912, and numbered 815,360.

On March 2, 1912, the patentee, the plaintiff, and defendant entered into the following contract or license, whereby the former authorized the latter to manufacture and sell the said device:

"[Formal facts omitted.]

"`This agreement made this 2d day of March, 1912, by and between Mr. Lamar Lyndon, a resident of New York City, party of the first part, hereinafter called "Lyndon," and the Wagner Electric Manufacturing Company, a corporation of Missouri, with principal offices in the city of St. Louis, Missouri, party of the second part, hereinafter called the "Company,"

"`Witnesseth, whereas, said Lyndon is the inventor and owner of United States letters patent No. 815,360, of March 20, 1906, referring to system of propulsion and battery charging of electric vehicles; and whereas, the Company desires to undertake the manufacture of the system involved in said patent: Now, therefore, in consideration of the agreements hereinafter set forth, and the sum of $1.00 paid by the Company to said Lyndon, receipt of which is hereby acknowledged, the parties agree as follows:

"`(1) The said Lyndon agrees that the Company may elect between the privilege of purchase outright of the said patent or operating thereunder as an exclusive licensee on the following terms:

"`(a) Purchase Outright.—Within one year from the date that the Company offers for commercial sale an electric machine combining the functions of a driving motor for a vehicle and a convertor for charging the battery of said vehicle from the alternating current source of supply, the Company may acquire full ownership and title to said patent upon the payments of twelve thousand dollars ($12,000). If the Company does not exercise this privilege within said period of one year, the privilege of purchase shall continue indefinitely during the life of the said patent subject to the stipulation that $2,000.00 shall be added to the purchase price for each period of six months thereafter or fraction thereof until the total price of purchase shall have attained the total sum of $24,000.00, at which sum of $24,000.00 the price shall continue during the life of the patent. It is especially agreed that the purchase price shall be reduced by the amount of any sums paid to said Lyndon in royalties or otherwise.

"'(b) Royalties.—It is agreed that the Company is manufacturing at this time three standard sizes of direct current motors for driving electric vehicles, rated at 12, 14, and 16, respectively. Should the Company not elect to purchase outright, as provided in clause "a" above, it may operate as an exclusive licensee under said patent hereinbefore referred to on the basis of a royalty of $4, $5, and $6 per machine, respectively, for machines built under said patent and delivering as motors an output equivalent to the said 12, 14, and 16 frames. If the Company shall develop additional sizes of equipment, it is agreed that a royalty per machine shall be arrived at for each machine fairly in proportion to the royalties stipulated for the frames mentioned in this paragraph.

"(2) It is agreed that the Company shall have an interval of approximately 30 days to investigate the validity of said patent 815,360. At the end of that time the Company shall pay Lyndon the cash sum of $750.00. It is the spirit of this paragraph that the Company will immediately and diligently make the investigation herein described, and if it does not receive it within the period of time described an extension of 10 days is hereby agreed to. At the end of seven months from the date of this agreement, the Company shall pay an additional cash sum of $1,000.00; both of said sums of $750 and $1,000.00, respectively, are paid irrespective of commercial development and in the nature of a cash sum in consideration of this contract.

"`(3) It is mutually agreed that the Company shall not pay a minimum royalty during the first two years of this contract, but that for the third year under this agreement, assuming that the Company elects to operate under the exclusive licensed provisions in this contract, and for each year thereafter, the Company shall pay a minimum royalty of $3,000 per year. Said royalty to be paid in advance, half in January and the balance in July of each year, respectively.

"`(4) Should the Company elect to operate on the royalty plan, it is agreed that any royalties over and above the minimums provided for in paragraph 4 shall be paid to the said Lyndon semiannually, as soon as the Company can reasonably make up accounts therefor. It is understood and agreed that accountings, either for minimums or for royalties in excess of minimums, shall be made, and the sums due the said Lyndon paid within 30 days from the time stipulated in this agreement.

"`(5) It is the spirit and intent of this contract that the said patent 815,360 is controlling in the art for the purposes covered by the claims thereof. If it should prove, in the course of time and the operations under this agreement, that said patent is not controlling, then the Wagner Company may apply for a readjustment of the purchase price figures and royalties hereinbefore stipulated. And it is agreed that such purchase price and royalties shall be prorated to a proper measure of the protection secured by the patents. If there should be any difference between the parties hereto in respect to proper rerating, the question shall be arbitrated in the usual manner.

"`(6) The Wagner Company undertakes to assume the cost of any patent litigation arising in connection with said patent. The said Lyndon agrees to co-operate with the Company in any litigation, offensive or defensive, in which the Company may become involved. There is nothing, however, in this contract which obligates the Company to engage in patent litigation unless it so elects.

"`(7) Improvements on the Patent.—if the said Lyndon agrees to deliver to the Company by assignment in improvements he may make upon said patent 815,360 during the life of said principal patent. The Company, however, agrees to pay all costs of taking out United States letters patent of said improvements. The said Lyndon agrees that with respect to improvement patents provided for under this agreement, that the Company may also have the right to said improvements in territory under control of the United States, as the Philippine Islands, etc., the Company assuming to pay the costs of securing protection in such territory.

"`(8) If, at the expiration of two years from the date of this agreement, the Company desires to terminate the agreement, all rights conveyed hereunder to the Company by Lyndon are to revert to Lyndon, and the Company hereby agrees to make such reassignment of said rights and patents; and further to furnish to said Lyndon a complete set of such drawings and designs as have been made by the Company for the construction of machine under said patent No. 815,360.

"`In witness whereof the parties hereto have fixed their names this 2d clay of March, 1912. "By paragraph 3 of the foregoing contract it was provided that after two years from its date, if the Wagner Electric Manufacturing Company elected to operate under the exclusive license provisions of the contract, it should pay to Lyndon a minimum royalty of 3,000.00 per year, payable in semiannual installments in January and July of each year. By this suit plaintiff seeks to recover seven such semiannual installments alleged to have fallen due, commencing January 1, 1914, up to and including January 1, 1917, aggregating $10,500.00.

"Plaintiff, to sustain the issues on his part, introduced in evidence the contract above set out. He next introduced in evidence an assignment to the defendant of the patent referred to in the contract, which assignment concluded with the following paragraph: `This assignment is, however, made subject to the terms and conditions of the agreements made and entered into between me, my heirs and assigns, and the said Wagner Electric Manufacturing Company, its successors and assigns. Date March 2, 1912, and April 12, 1912.'

"Plaintiff himself was the sole witness in his behalf. Upon the subject of whether or not the Wagner Electric Manufacturing Company had availed itself of the right given it by the contract to elect to purchase or to elect to operate as a licensee, plaintiff himself testified:

"`Mr. Kingsland (continuing): Q. Did the company avail itself of the privilege of purchasing the patent outright, or did ...

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