National Sewing-Mach Co. v. Willcox & Gibbs Sewing-Mach Co.

• Decision Date: 13 May 1896
• Citation: 74 F. 557
• Parties: NATIONAL SEWING-MACH. CO. v. WILLCOX & GIBBS SEWING-MACH. CO.
• Court: U.S. Court of Appeals — Third Circuit

74 F. 557

NATIONAL SEWING-MACH. CO. v. WILLCOX & GIBBS SEWING-MACH. CO.

United States Court of Appeals, Third Circuit.

May 13, 1896

Frank P. Prichard and John G. Johnson, for plaintiff in error.

A. H Wintersteen and George Tucker Bispham, for defendant in error.

Before ACHESON, Circuit Judge, and WALES and GREEN, District Judges.

GREEN District Judge.

This was an action brought by the plaintiff in error, the National Sewing-Machine Company, against the Willcox & Gibbs Sewing-Machine Company, the defendant, to recover the sum of $27,000 or thereabouts, which, it was alleged, had become due upon a certain contract executed by the respective parties bearing date January 8, 1884, fixing and regulating the payment to the plaintiff of certain royalties or rentals dependent upon and arising from the sale or lease by the defendant of a class or pattern of sewing machines which was protected by letters patent of the United States, owned by the plaintiff. By this contract, it was chiefly agreed by the defendant to pay to the plaintiff, by way of royalty, a sum equal to 40 per cent. of the receipts arising from the sales or leases of the sewing machines in question. So far as this part of the contract is concerned, there appears to have been no default in a strict compliance with its covenant by the defendant company. But, among other things, the contract contained a proviso which is in these words:

'And provided, further, and it is hereby distinctly understood and agreed, that if the said parties of the second part shall sell or lease, or cause to be sold or leased, for use, or shall cause to be used, in any foreign country, any trimming and overseaming machines at rates of royalty or rental less than those charged for the use of like machines in this country, then the royalty rate to be paid by said parties of the second part to said parties of the first part shall be forty-five per cent., in lieu of forty per cent., as hereinabove provided.'

And it is this proviso which has given rise to the controversy between these parties; for it appears from the record that in 1894 the defendant company determined to seek a market for the sewing machines in question in foreign countries, and for reasons which were to it satisfactory, began to sell and to lease them at a rate or rental lower than it charged in the home market. This was not done in any secret or underhand manner, but as a matter of right. The defendant promptly made known to the plaintiff what it was doing in this respect; and because it had in this way entered a foreign market, and because it was there selling and leasing sewing machines at a rate lower than in the home market, it offered to account to the plaintiff for royalties at the increased rate of 45 per cent., as was stipulated in the proviso, quoted. This proposal was not satisfactory, however, to the plaintiff, nor in accord with its construction of the contract; the insistment of the plaintiff being that the proviso clause which measured the rate of royalty in the happening of the contingency stated was retroactive in its effect; that it was intended to, and did, operate from the very commencement of the agreement of which it was part of the circumstances arose which gave it operative effect; and that the defendant was indebted to it for the difference between 40 per cent. and 45 per cent. royalty upon every sale or lease made by the defendant since the contract was entered into.

This controversy centered about the 'then' as used in the proviso. By the plaintiff it was contended that the word 'then' was merely a conjunction, in connection with the contingency before stated, signifying 'in that case,' and as it was thus clearly a word of condition and not an adverb of time, it followed that the increased royalty provided for upon the happening of the contingency was...