McGuire v. Hutchison

• Citation: 210 S.W.2d 521,240 Mo.App. 504
• Parties: John S. McGuire, Appellant, v. Frank C. Hutchison, et al., Respondents
• Decision Date: 01 March 1948
• Court: Kansas Court of Appeals

210 S.W.2d 521

240 Mo.App. 504

John S. McGuire, Appellant, v. Frank C. Hutchison, et al., Respondents

Court of Appeals of Missouri, Kansas City

March 1, 1948

Appeal from Circuit Court of Jackson County; Hon. John R. James Judge.

Affirmed.

Edmund H. McVey, William E. Kemp and J. R. Clagett for appellant.

(1) The agreement dated August 1, 1942, between C. Earl Hovey designated therein as "Trustee" and John S. McGuire and Frank C. Hutchison, designated therein as "Beneficiaries" and the supplemental agreement dated August 3, 1942, were terminated by the agreement between plaintiff McGuire and defendant Hutchison of July 8 1943, and the Court erred in not so holding. Hoskins v. Ryan, 71 N. Y. Equity 575; Black's Law Dictionary; Weekly v. Weekly, 27 S.E. 591, 150 A. L. R. 693; Bouvier's Law Dictionary, Vol. 2, p. 1614. (2) The Court erred in holding that the agreement of August 1, 1942, between C. Earl Hovey, designated therein as "Trustee" and John S. McGuire and Frank C. Hutchison, designated therein as "Beneficiaries" is not by its terms, implications or operation of law an agreement of partnership. (3) The Circuit Court of Missouri has jurisdiction to decide the issues here presented, in that the issues in this case are to be determined by the rules of general law and not by the patent laws of the United States. 40 Am. Jur., Secs. 169, 170, p. 652; St. Louis Street Flushing Machine Co. et al. v. Sanitary Street Flushing Machine Co., 161 F. 725; Pratt v. Paris Gas Light and Coke Co., 168 U.S. 255, 18 S.Ct. 62, 42 L.Ed. 459; International H. H. Co. v. Carradine Hat Co., 17 F.Supp. 79; United States v. Masonite Corp., 316 U.S. 265, 62 S.Ct. 1070, 86 L.Ed. 1461; McDuffee et al. v. Hestonville M. & F. Railway Co. et al., 162 F. 36; Crown Die and Tool Co. v. Nye Tool and Machine Works, 261 U.S. 24, 67 L.Ed. 516. (4) The agreement in controversy must be interpreted in the light of Kansas law and under Kansas law the agreement created a partnership. Liebing v. Mutual Life Ins. Co. of New York, 276 Mo. 118, S.W. 230; 17 C. J. S. 342, Sec. 12 (d); Weber Engine Co. v. Alter, 120 Kan. 557, 245 P. 148, 46 A. L. R. 158; Brookville Elec. Co. v. Utilities Ins. Co., 142 S.W. 2d 803; 17 C. J. S. 814, Sec. 356; Carey Co. v. Maryland Casualty Co., 206 N.W. 803, 47 A. L. R. 495; Harris v. U. S. M. Oil Co., 110 Kan. 532, 204 P. 754; Home Lumber Co. v. Hopkins, 107 Kan. 153, 190 P. 601, 10 A.L.R. 885; Linn v. Houston, 123 Kan. 409, 255 P. 1105. (5) Under general and Missouri law, the agreement created a partnership. Bogert on Trusts and Trustees, Sec. 294; Darling v. Buddy, 318 Mo. 784, 1 S.W. 2d 163; Betts v. Hackathorn, 159 Ark. 621; Ing v. Liberty Natl. Bank, 216 Ky. 467, 287 S.W. 961; Otoe County Natl. Bank v. Delaney, 88 F.2d 238; Bank of America v. Scully, 92 F.2d 97; Schumann-Heink v. Folson, 328 Ill. 321, 159 N.E. 250, 58 A.L.R. 490; Williams v. Milton, 215 Mass. 1, 102 N.E. 355; Goldwater v. Otman, 210 Cal. 408, 292 P. 624; Dunn on Business Trusts, Sec. 140 and subsequent; Annotation 156 A. L. R. 22 31 A. L. R. (l. c.) 857; Flint v. Codman, 247 Mass. 463, 142 N.E. 256. (6) Acts of defendant Hutchison subsequent to the execution of the agreements of August 1st and 3rd, 1942 and changed conditions resulting therefrom make the purposes of the partnership impossible of fulfillment, and the partnership should be dissolved and the property distributed to the respective beneficial owners. Laclede Power Co. v. Stillwell, 71 S.W. 380, 97 Mo.App. 258. (7) The Court erred in finding that the plaintiff McGuire is indebted to the defendant Hovey in the sum of $ 825 under the agreement of August 1, 1942, and in rendering judgment against McGuire in favor of Hovey in that amount. 65 C. J. 917, Sec. 816; Annotation 117 A. L. R. 1154 and subsequent; Estey et al. v. Commerce Trust Company, 333 Mo. 977, 64 S.W. 2d 608. (8) An oral promise such as alleged cannot be enforced. 10 M. R. S. 555; Lingenfelder v. Wainwright, 103 Mo. 578.

Nelson E. Johnson for respondents, Frank C. Hutchison and C. Earl Hovey, trustee.

(1) The agreement of August 1, 1942, created a valid trust and cannot be canceled without the consent of all of the parties thereto prior to the time specified for its termination by the provisions thereof. The trust agreement of August 1, 1942, is not governed by the law of the state of Kansas. Drake v. Hall, 220 F. 905; Walker on Patents, 16th Ed., Vol. I, page 419, § 341; Crown Die & Tool Co. v. Nye Tool and Machine Works, 261 U.S. 24, 67 L. ed. 516; Talbott v. Quaker State Oil Ref. Co. 104 F.2d 967; McDuffee v. Hestonville M. & F. Pass. Ry. Co., 162 F. 36; Atherton Machine Co. v. Atwood Morrison, 102 F. 949; Scudder v. Union National Bank, 91 U.S. 406, 23 L. ed. 245; Am. Surety Co. v. Independent School District, 53 F.2d 178; Rozelle v. Farmers Bank, 141 Mo. 36, 39 S.W. 274; Ruhe v. Buck, 124 Mo. 178, 27 S.W. 412, Ellis v. Eagle Picher Lead & Zinc Co., 116 Kan. 144, 225 P. 1072; Sikes v. Citizens National Bank of Des Moines, 78 Kan. 688, 98 P. 206; 11 Am. Jur. 397, § 116-117. (2) The agreement of August 1, 1942, between John S. McGuire, Frank C. Hutchison and C. Earl Hovey, Trustee, created a valid trust. McDuffee v. Hestonville M. & F. Pass. Ry. Co., 162 F. 36; McDuffee v. Hestonville Ry. Co., 223 U.S. 719; Shaller v. Mississippi Valley Trust Co., 319 Mo. 128, 3 S.W. 2d 726; National Bank of Commerce v. Francis, 296 Mo. 169, 246 S.W. 326. (3) The trust agreement of August 1, 1942, was not terminated by the agreement between appellant and respondent, Frank C. Hutchison, of date July 8, 1943, because the agreement of July 8, 1943, specifically excepted the Trust Agreement of August 1, 1942, from its provisions. Bouvier's Law Dictionary, Vol. II, page 1642, Vol. III, p. 2960; Black's Law Dictionary, page 1558, page 996; Hampton v. N.C. Pulp Co., 223 N.C. 525, 27 S.E.2d 538; U. S. F. & G. Co. v. Borough Bank, 146 N.Y.S. 870, 161 A.D. 479; Weekly v. Weekly, 27 S.E. 2d 591; In Re Wynn's Estate, 311 Ill.App. 190, 35 N.E.2d 701. (4) because all of the parties to the trust agreement of August 1, 1942, did not enter into the agreement of July 8, 1943. 17 C. J. S., p. 880 § 389; 12 Am. Jur., page 1011, § 431; Class, etc. Mfg. Co. v. McCord, 65 Mo.App. 507; Porter v. Johnson, 232 Mo.App. 1150, 1155, 115 S.W. 2d 529; Chicago, B. & Q. Ry. Co. v. Nebraska, 170 U.S. 57, 42 L. ed. 948; J. L. Metz Furniture Co. v. Lumber Co., 298 F. 91; O'Neal v. Bainbridge, 94 Kan. 518, 146 P. 1165; Mark v. Stewart Haviland Co., 226 Mass. 35, 115 N.E. 42; Letres v. Washington Co-op Chick Assn., 8 Wash.2d 64, 111 P.2d 494; Webb v. Moran, 186 Okla. 140, 96 P.2d 311; Ehrman v. Rosenthal, 117 Cal. 491, 49 P. 460. (5) Respondent Frank C. Hutchison has not breached the trust agreement of August 1, 1942. The appellant is estopped to attack the validity of the trust agreement. Runnells v. Laswell, 219 S.W. 980; Hartman v. C. B. & Q. Ry. Co., 192 Mo.App. 271, 182 S.W. 148; Rhodus v. Gateley, 234 Mo. 397, 147 S.W. 2d 631; Lawson v. Cunningham, 275 Mo. 128, 204 S.W. 1100; Hector v. Mann, 225 Mo. 223, 124 S.W. 1109; Siefner v. Weller, 171 S.W. 2d 617. (6) Appellant is not in court with "clean hands" and is not entitled to relief in equity. 30 C. J. S. § 98, p. 491; Abernathy v. Hampe, 53 S.W. 2d 1090, 1094; City of Milwaukee v. Activated Sludge, 69 F.2d 577; Atlantic Works v. Brady, 107 U.S. 192, 27 L. ed. 438; O'Reiley v. Morse, 15 How. 62, 14 L. ed. 601; Union Paper Collar Co. v. Van Dusen, 23 Wal. 530, 23 L. ed. 128; Agawam Woolen Co. v. Jordan, 7 Wall. 583, 19 L. ed. 177; Stierlan v. Teschemacher, 64 S.W. 2d 647; Creamer v. Bivert, 214 Mo. 473, 113 S.W. 1118; McGuire v. Hutchison (Mo.), 201 S.W. 2d 322. (7) The agreement of August 1st, 1942, between John S. McGuire, Frank C. Hutchison and C. Earl Hovey, trustee, created a valid trust and not a partnership. McDuffee v. Hestonville M. & F. Pass Ry. Co., 162 F. 36; McDuffee v. Hestonville Ry. Co., 223 U.S. 719; National Bank of Commerce v. Francis, 296 Mo. 169, 192; 246 S.W. 326; Van Hoose v. Smith 198 S.W. 2d 23; Darling v. Buddy, 318 Mo. 784, 1 S.W. 2d 163; Sutton v. Schaff, 104 Kan. 282, 178 P. 418; Wade v. Hornaday, 92 Kan. 293, 140 P. 870; Grantham v. Conner, 97 Kan. 150, 154 P. 246; Prasse v. Prasse, 77 S.W. 2d 1001; 40 Am. Jur., p. 152, § 39; p. 154, § 41.

Sperry, C. Boyer, C., concurs.

OPINION

This is a suit in equity. Plaintiff, John S. McGuire seeks to have the business relationship existing between himself and defendant, Frank C. Hutchison, defined and terminated, and their respective rights in and to certain letters patent, the legal title to which had been assigned to defendant, Hovey, as trustee, partitioned. Defendant Fairfax Engineering Company was the licensee of said patents. The trial court found for defendants on plaintiff's petition, holding that the assignments to Hovey constituted a valid and binding trust, and rendered separate money judgments for defendant Hovey on his counterclaim as against both McGuire and Hutchison, in the amounts, respectively, of $ 825, and $ 425. From this judgment plaintiff appealed to the Supreme Court. That court has transferred the cause to us on jurisdictional grounds, 201 S.W. 2d 332.

The evidence discloses that McGuire is a university graduate having majored in science, and that Hutchison is a graduate of Massachusetts Institute of Technology; that they became acquainted about 1934 and developed a mutual respect and friendship; that, in 1939 McGuire conceived a patentable idea and device for the repairing of pipelines without interruption of service; that he confided in Hutchison, who lent substantial assistance in developing and perfecting the device, which was patented by McGuire under No. 334739; that, during 1940, Hutchison conceived a patentable idea and apparatus for...