Sandage v. The Studabaker Brothers Manufacturing Co.

• Decision Date: 27 September 1895
• Docket Number: 16,551
• Citation: 41 N.E. 380,142 Ind. 148
• Parties: Sandage et al. v. The Studabaker Brothers Manufacturing Company
• Court: Indiana Supreme Court

41 N.E. 380

142 Ind. 148

Sandage et al. v. The Studabaker Brothers Manufacturing Company

No. 16,551

Supreme Court of Indiana

September 27, 1895

From the St. Joseph Circuit Court.

The judgment is affirmed.

A. L Brick and C. Pickard, for appellants.

A Anderson and L. Hubbard, for appellee.

Jordan J. Howard, J. was absent and took no part in the decision of this cause.

OPINION

Jordan, J.

The only questions arising and argued by appellants in this appeal are those based upon the alleged error of the court in overruling their separate motions for a new trial. Two principal propositions are presented for our consideration by appellants' learned counsel, namely: 1st. That the decision of the court is not sustained by sufficient evidence and is also contrary to law. 2nd. That the court erred in excluding certain evidence of the appellant Joshua Sandage. Appellee by this action sought to recover a certain sum of money paid by it to appellant Sandage, in the purchase of letters patent for an improvement in steel skeins, and to enjoin him, together with his co-appellant, the Sandage Steel Skein Company, from bringing or further prosecuting suits in the courts of Cook county, in the State of Illinois, upon certain contracts in writing mentioned in the complaint and for the cancellation of these contracts.

The complaint is in two paragraphs, and the following is substantially a correct summary of the facts as alleged in this pleading: Appellants, at and long before the commencement of this action, were residents and had their domiciles at the city of South Bend, Indiana. Appellee is a corporation also having its domicile at said city, long prior to the instituting of this action, and is there engaged in the business of manufacturing wagons and carriages. On July 19, 1882, appellant Sandage was the owner of certain letters patent for an improvement of steel axle skeins, issued to him by the government of the United States. On the date mentioned he sold and transferred these letters patent to the appellee by a contract in writing, executed by him and appellee. By this contract, the latter agreed to manufacture the patented skein, and to employ Sandage as a foreman in its factory for a period of two years, at a salary of $ 1,500.00 per year, and to pay him $ 2,000.00 in cash, and one-third of the net profits arising from the manufacture of the skeins, until he should receive $ 20,000.00. Sandage agreed to also assign to the company any improvements which he might make in the patent, and in the contract he guaranteed the validity of the letters, and agreed to pay all costs and expenses in enforcing and sustaining the same, and to defend the appellee in all suits for infringements, and to pay all costs and expenses occasioned thereby.

Upon the execution of this contract and transfer of these letters to appellee, it erected buildings and provided machinery, and engaged in the making and selling of the steel skeins, and Sandage was taken into its employ for two years as per agreement. He was paid his stipulated salary, also $ 2,000.00 in cash, and in addition appellees paid him $ 7,000.00 in profits accruing up to 1886, as the consideration for the sale and assignment of the patent. On November 20, 1886, the parties executed what was termed a supplemental contract whereby they changed the original agreement by providing that Sandage, as a final and additional compensation for and in consideration of his letters patent, and any improvement he might make thereon during the life of the patent should be paid by the appellee the sum of $ 13,000, to be payable as follows, to-wit: January 1, 1888, $ 4,000.00; January 1, 1889, $ 3,000.00; January 1, 1890, $ 4,000.00; January 1, 1891, $ 2,000.00. It was further provided, in this supplemental contract, that in the event that appellee was compelled to defend its right and title to the patent, or if it should find it necessary to prosecute persons for infringements between November 26, 1886 and January 1, 1891, the date of the last payment, then, and in that event, the reasonable expenses of these suits should be paid by Sandage, to an amount not to exceed the final payment of $ 2,000.00, but in the event the appellees brought a suit and was defeated, appellants was not to be held liable for the cost of such suit. It was also stipulated that "So much of the agreement made between the Studabaker Bros. Manufacturing Company and Joshua Sandage, on the 19th day of July, 1882, as relates to the payment by the said Studabaker Bros. Manufacturing Company to the said Sandage, of moneys for and in consideration of his letters patent herein indicated, or which is in any way inconsistent with this agreement, is hereby repealed and made of no effect. The other particulars of said first agreement to continue and remain in full effect." On January 3, 1888, appellee paid Sandage $ 4,000.00, being the installment due under the supplemental agreement on the first of that month. After receiving said sum, appellant, in November, 1889, made an assignment of both the aforesaid contracts, to his co-appellant, the Sandage Steel Skein Co. The second installment of $ 3,000.00 was not paid at maturity, and the latter company, claiming to be the holder of these contracts by virtue of an assignment to them by Sandage, brought an action in the circuit court of Cook county, Illinois, upon the contract, in the name of Joshua Sandage, for its use, against appellees to recover this unpaid installment. In 1890, after the second installment of money specified in the second or supplemental contract had become due, and which appellees had refused to pay, the Sandage Steel Skein Co. commenced a second action in the same court against appellees to recover this latter installment. After the assignment of these contracts to said Steel Skein Co., and the commencement of these actions in January, 1890, appellees began a suit in the circuit court of the United States at Chicago, Illinois, against the Illinois Iron Bolt Co., for an infringement on said patent, and on January 27, 1890, served both of the appellants with notice to the effect that such an action had been commenced in that court, and that the validity of the patent would be assailed and in issue therein, and requested that said parties assist in said cause in defending the validity of the letters patent, claiming an estoppel against them by any judgment that might be rendered therein, against the validity of the patent. At the March term, 1890, of said United States Court, in said action, these letters by that court were adjudged and held to be invalid for want of novelty. Thereupon, on May 16, 1890, appellees executed and tendered to appellant, Joshua Sandage, a re-assignment of said letters, and a cancellation of said contracts, and requested him to repay to it the sum of $ 20,000.00, all of which was refused by him. A like demand for cancellation of said contracts was made upon the Sandage Steel Skein Co., which was also refused. That in addition to the two suits already commenced by said Skein Company against appellee, said company was threatening to bring other actions on these contracts, in the courts of Illinois, and attach appellee's property, situated in that State. Sandage, at the time of the sale of the patent right to the appellee, had wholly failed and neglected to comply with the requirements of sections 6054 and 6055 of the Revised Statutes of Indiana, in relation to the sale of patent rights, and sold his said patent to appellee in violation of this statute. The supreme court of Illinois having held a statute of that State in relation to patents (being one similar to the statute cited above), void on the ground that it violated the federal constitution, it is averred that the appellants have resorted to the courts of Illinois in order to escape the laws of Indiana on that subject.

It is also averred that after this action was commenced and a temporary restraining order was granted against the appellants, that they made a sale of these contracts, in suit, to a resident of Chicago, Illinois. It is also shown that the tender of a re-assignment of this patent was continued by bringing the same into court for appellants' use. These are the conspicuous facts as presented by the record in this action. A trial upon the issues joined in the lower court, resulted in a judgment to the effect that appellants be perpetually enjoined from prosecuting or commencing any suit or suits for the purpose of enforcing the contracts in question, and that the same be cancelled and delivered up to the appellee, and that appellee recover of Joshua Sandage the sum of $ 13,447.42 and costs.

One of the contentions of appellants is, that "the facts in this case, as alleged in the pleadings, and as shown by the proofs, do not make such a case as entitled the appellee to the equitable relief prayed in the petition and granted by the decree."

Upon the contrary, appellee contends that the evidence fully authorized and justified the court in finding that the appellants commenced their suit in the State of Illinois for the purpose of evading the laws of Indiana, and thereby gaining an advantage over the appellees in the forum of a sister State.

We have examined the evidence in the record and are of the opinion that it establishes the facts alleged in the complaint, and sustains the finding and judgment of the court. It is insisted by counsel for the appellants that the alleged facts in the case at bar are a complete and adequate defense at law to the actions commenced upon the contracts in controversy in the courts of Illinois. Conceding this contention, however, can it be urged, consistent with reason, that...