Shaw v. E. I. DuPont De Nemours & Co., s. 66

• Docket Nº: Nos. 66
• Citation: 204 A.2d 159, 124 Vt. 304
• Case Date: October 06, 1964
• Court: United States State Supreme Court of Vermont

Page 159

204 A.2d 159 124 Vt. 304, 143 U.S.P.Q. 169 Gilbert SHAW, Polymers, Inc.
v.
E. I. DuPONT DE NEMOURS & CO. Nos. 66, 67. Supreme Court of Vermont. Oct. 6, 1964.

Page 160

Conley & Foote, Middlebury, for both plaintiffs.

Granville M. Pine and John A. Diaz, New York City, on the brief for plaintiff Shaw.

Black & Plante, White River Jct., Raffaele M. Terino, White River Jct., on the brief for defendant.

Before HOLDEN, C. J., and SHANGRAW, BARNEY, SMITH and SYLVESTER, JJ.

HOLDEN, Chief Justice.

This action is contract is based on a patent license agreement between the plaintiff Gilbert Shaw and the defendant. The licensing contract contained, among other things, a promise designed to protect the plaintiff Polymers, Inc. under a license previously issued to that corporation by the plaintiff Shaw. It is with this aspect of the defendant's undertaking that we are principally concerned.

The defendant challenged the plaintiffs' complaint in this respect contending that it fails to state a cause of action. The question was [124 Vt. 305] raised in a motion to dismiss heard by the court before trial. In response to the motion, the trial court dismissed the complaint as to the plaintiff Shaw but retained the cause in behalf of Polymers, Inc. Shaw appealed from the order dismissing his complaint. In a cross-appeal under 12 V.S.A. § 2428, the defendant has procured certification of the failure of the court to dismiss the action of Polymers.

The complaint alleges that the plaintiff Shaw is the sole owner of U. S. Patent No. 2,637,893 which expires May 12, 1970. Sometime prior to June 1955 Shaw granted a sole and exclusive license to the plaintiff Polymers to make, vend and sell under this patent, filaments having a cross-sectional dimension greater than 5 mils. This license was in full force and effect at the time the present action was instituted.

After the Polymers license was granted, Shaw issued a license to the defendant on June 25, 1955, authorizing that licensee to manufacture, use and sell filaments having a maximum cross-sectional dimension of less than 5 mils. The complaint tells us that this was a paid-up royalty-free license granted under the same patent as the Shaw license but for a smaller dimension. The protection for the benefit of Polymers was introduced by way of a promise on the part of the defendant that it would not make filaments of greater dimension than 5 mils. It is alleged that the plaintiff Shaw has performed all the conditions of this agreement but the defendant has violated its agreement by making and selling flaments under the patent which have a greater cross-sectional dimension than 5 mils, thus exceeding its license. Joining in a common complaint, the plaintiffs seek to recover damages arising from this alleged breach of the license agreement.

The narrow question presented by Shaw's appeal is his right as a promisee to participate in the present controversy. The defendant's promise was extended to this plaintiff alone. The consideration for the defendant's undertaking moved from Shaw to the defendant. As promisee his right to maintain this action has been firmly established in the common law. Powers v. New England Fire Insurance Co., 69 Vt. 494, 495, 38 A. 148. His standing is not destroyed by the fact that Polymers, a stranger to the contract, may have such an interest that it will be entitled to the proceeds of any judgment which might be recovered. The beneficiary's interest

Page 161

can be protected in the final judgment both at law and in equity. And [124 Vt. 306] there is sufficient protection for the promisor since satisfaction by him, in whole or in part, of his obligation to the promisee, will relieve him to that extent from subsequent payment to the beneficiary. Powers v. New England Fire Insurance Co., supra, 69 Vt. 496, 38 A. 148; 2 Williston, Contracts, § 392 (3rd Ed.). Shaw had adequate standing to enforce the defendant's undertaking. His complaint was erroneously dismissed.

The error was not cured by concessions made at the time of hearing. At that time court and counsel correctly treated the defendant's motion to dismiss as in the nature of a demurrer. Price v. Rowell,...