Murray v. Edes Mfg. Co.

• Decision Date: 25 June 1941
• Citation: 50 U.S.P.Q. 395,35 N.E.2d 203,309 Mass. 395
• Parties: JOHN J. MURRAY v. EDES MANUFACTURING COMPANY.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

309 Mass. 395

35 N.E.2d 203, 50 U.S.P.Q. 395

JOHN J. MURRAY v. EDES MANUFACTURING COMPANY.

Supreme Judicial Court of Massachusetts, Plymouth.

June 25, 1941

April 7, 1941.

Present: FIELD, C.

J., QUA, DOLAN & COX, JJ.

Contract Construction, Termination.

Construing together provisions of a contract respecting payment of advances and royalties to the plaintiff, in substance that, if the defendant should fail to make payments to the plaintiff as specified, the

"contract shall become null and void," and that "if this agreement is declared null and void because of the breach of any of its provisions" the defendant "shall be under no further liability under this agreement except" as to "royalties due and owing at the time of the termination," the defendant could not take advantage of his own default in making a required payment as the basis of a contention that the contract thereby had been terminated.

CONTRACT. Writ in the Third District Court of Plymouth dated August 23, 1938.

The claim in the declaration was for $1,500 and interest. The case was heard by Sullivan, J.

A. W. Wunderly, for the plaintiff. G. W. Arbuckle, for the defendant, submitted a brief.

COX, J. The plaintiff appealed from the order of the Appellate Division for the Southern District dismissing the report of the trial judge, who gave certain requests of the defendant for rulings of law, and found for it.

Facts not in dispute are that the parties entered into a written contract that was drawn by the plaintiff's attorney, by the terms of which, subject to provisions more fully set out hereinafter, the defendant was required to pay the plaintiff $1,500 on the first days of January and July in each year during the life of the contract. The plaintiff's action is to recover the payment that was not made on July 1, 1938. On June 17, 1938, the defendant notified the plaintiff in writing that, under the provisions of paragraph 11 of the contract, it "terminates said agreement effective thirty days from . . . receipt of this notice. Without altering or affecting the foregoing notice, . . . it is agreeable to us to terminate the contract on July 1, 1938, if you will indicate to us that this date is agreeable to you." At some time after July 1, 1938, the plaintiff went to the defendant's place of business and there "viewed the conduct of the defendant in drawing off and disposing of the solution previously used by the defendant in the manufacture of plates contemplated in the original contract."

The contract, dated October 24, 1936, recites that the plaintiff has perfected a process for providing a film of metal on the back of printing plates and has applied for letters patent, and that the defendant desires to obtain a license to manufacture plates using this process and to sell them. The contract licenses the defendant for this purpose, and calls for initial payments by the defendant to the plaintiff of $2,500. Provision is made whereby the defendant is to credit the plaintiff with royalties at a specified percentage of amounts received from sales from the day that plates manufactured under the process are offered for sale. The defendant agrees "subject to other modifying provisions in this agreement," to continue to pay royalties, and the plaintiff agrees that the contract will remain in full force during the life of the letters patent or any subsequent patents. By paragraph 11, the defendant reserves the right to terminate the agreement on thirty days' notice in writing to the plaintiff. The provisions of the contract, as to the construction of which the parties are at a difference, are as follows: "12. It is further agreed that the said Corporation [defendant] shall pay to the said Murray [plaintiff] as an advance against royalties, the sum of Fifteen Hundred ($1500.00) Dollars on the first day of January and on the first day of July in each calendar year; this advance payment to be on a cumulative basis, that is to say, the said Murray shall receive in any event, the sum of Three Thousand ($3000.00) Dollars per year as a minimum royalty, but in the event the amount advanced shall exceed the amount of royalties due in any year, then the royalties in excess of the advance payment in the following year or years, shall be charged against the excess of the advance payment in the previous year or years. 13. The said Edes Company [defendant] shall make an accounting to, and pay to the said Murray the royalty payments semi-annually on the fifteenth (15th) day of August in each year for the royalties accrued during the first six months of the calendar year, and on the fifteenth (15th) day of February in the following year for the royalties accrued during the last six months of the calendar year. 14. It is agreed that if the said Corporation shall fail to pay to the said Murray as royalties and advance payments as provided for under this agreement in paragraphs twelve and thirteen (12 and 13), semi-annually and in full at the end of each yearly period, then this contract shall become null and void and the right to manufacture shall automatically revert to the said Murray, his successors and assigns, without process of law, and the right and license granted under this agreement and letters patent and application therefor shall cease and determine. . . . 17. It is further understood and agreed that if the Corporation shall fail to manufacture and dispose of plates using said process as hereinbefore provided, or shall fail to pay to the said Murray, his successors and assigns, the royalties hereinbefore provided, this agreement shall become null and void, and all rights granted herein shall automatically revert to the said Murray, his successors and assigns, without process of law, and the license granted under this agreement and Letters Patent shall cease and determine. It is further understood and agreed, that if this agreement is declared null and void because of the breach of any of its provisions, that the Corporation shall be under no further liability under this agreement except to account for and to pay to the said Murray the royalties due and owing at the time of the termination of this agreement."

It is apparent that the real question for decision involves the construction of the contract, and especially of the four paragraphs just quoted. The trial judge found that the notice of termination by the defendant was received by the plaintiff on June 18, 1938, and that, before the expiration of the thirty days' notice, the defendant failed to meet the payment of $1,500 due the plaintiff on July 1, 1938, and that all prior $1,500 payments had been made. He then stated as follows: "Thus I find the breach, by nonpayment of the July 1, 1938, payment constituted a termination of the contract according to paragraph 14 of said contract and operated as a termination, before the time arrived, when the written notice of [sic] the plaintiff by the defendant would have become effective to terminate the contract. I further find that according to paragraph 17 of said contract it was understood between the parties thereto that in the event of a breach of any of the provisions of the contract the defendant corporation should not be liable under the contract for anything except to account for and pay to the plaintiff the royalties due and owing at the time of the termination of the contract. There was no evidence before me of any accounting or that any money was due on royalties."

The judge ruled, as requested by the plaintiff, that the contract was in full force and effect on July 1, 1938, and, as requested by the defendant, that under the provisions of paragraph 14 of the agreement, the contract became null and void on July 1, 1938 when the defendant failed to pay the plaintiff, as an advance against royalties, $1,500 as provided in paragraph 12; that under the provisions of paragraph 17 of the agreement, the contract became null and void on July 1, 1938, when the defendant failed to pay the plaintiff the said $1,500; and that under the...