Tart v. Walker, 7710SC1077

• Decision Date: 07 November 1978
• Docket Number: No. 7710SC1077,7710SC1077
• Citation: 248 S.E.2d 736,38 N.C.App. 500
• Court: North Carolina Court of Appeals
• Parties: , 203 U.S.P.Q. 460 Leo H. TART v. Derl WALKER and Deryl Walker & Sons Enterprises.

Page 736

248 S.E.2d 736

38 N.C.App. 500, 203 U.S.P.Q. 460

Leo H. TART v. Derl WALKER and Deryl Walker & Sons Enterprises.

No. 7710SC1077.

Court of Appeals of North Carolina.

Nov. 7, 1978.

Huggard & Sullivan by John P. Huggard, Raleigh, for plaintiff-appellant.

William L. Powell, Jr., Goldsboro, for defendant-appellee.

ARNOLD, Judge.

Plaintiff relies on the wording of his complaint to support his contention that this is a simple breach of contract action, with jurisdiction in the state courts. The complaint states in pertinent part:

4. The plaintiff and defendant entered into a partnership agreement dated January 1, 1973. On the same date a second agreement was entered into. The second agreement granted the partnership the right to manufacture a farm implement designed and invented by the plaintiff.

5. The second agreement mentioned in paragraph No. 4 above specifically stated that should the partnership dissolve, then the right to manufacture the farm implement designed and invented by the plaintiff would revert to the plaintiff his heirs and assigns.

6. On December 21, 1974, the plaintiff and defendant entered into a dissolution agreement which was to dissolve and terminate the partnership's agreement mentioned in paragraphs numbered (4) and (5) above. This agreement specifically states that the farm implement designed and invented by the plaintiff and the right to manufacture said implement would rest with the plaintiff solely.

7. That from the 21st of December, 1974, to present, the defendant has breached his contract and continued to manufacture the farm implement designed and invented by the plaintiff much to the financial detriment of the plaintiff.

Defendant, filing his motion to dismiss, attached to it a copy of the dissolution agreement of 21 December, and he argues that paragraph 5 of that agreement mandates exclusive federal jurisdiction. That paragraph reads as follows:

5. It is also agreed that Leo H. Tart was the inventor of a harvesting machine patented under patent number 3393009, registered in the United States Patent Office, and which is now protected by patent law from infringement, and that said patent shall be the sole possession of Leo H. Tart; that Derl G. Walker will not infringe upon any valid patent right of Leo H. Tart.

From the face of the complaint it is not clear which agreement it is that plaintiff alleges has been breached. "His contract" in paragraph 7 might refer to either the formation agreement of 1 January 1973 or the dissolution agreement of 21 December 1974. However, defendant averred in his motion to dismiss that the subject matter of the complaint is breach of the dissolution agreement, and the record does not show that plaintiff has ever contradicted this assertion. Accordingly, we accept that it is the dissolution agreement which is the subject matter of this action. Paragraph No. 5 of the dissolution agreement specifically refers to "patent number 3393009" and to plaintiff's "valid patent right."

G.S. 1A-1, Rule 12(h)(3) provides that "whenever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the action." Under Rule 12(b)(1) the question of subject matter jurisdiction may be raised by motion or by responsive pleading. Defendant properly raised the question by motion in the case before us.

Title 28, § 1338(a) of the United States Code gives federal courts exclusive jurisdiction of "any civil action arising under any Act of Congress relating to patents . . . ." This exclusive federal jurisdiction is made possible by Art. I, § 8(8) of the United States Constitution. In support of his position that federal jurisdiction is not invoked, plaintiff makes two arguments. First, he contends that this action does not "arise under any act of Congress relating to patents" because the complaint does not expressly allege a patent infringement. Second, he argues that even if the complaint does raise some patent questions, a state court is the proper forum for suit on a contract concerning a patent.

We reject plaintiff's contention that it is the face of the complaint alone which determines whether there is subject matter jurisdiction. A motion to dismiss for lack of subject matter jurisdiction is not viewed in the same manner as a motion to dismiss for failure to state a claim upon which relief can be granted. In our view, matters outside the pleadings, such as the contract attached to defendant's motion in the case at bar, may be considered and weighed by the court in determining the existence of jurisdiction over the subject matter. See Wright and Miller, Federal Practice and Procedure, Volume 5, section 1350, p. 549.

The United States Supreme Court in Odell v. Farnsworth Co., 250 U.S. 501, 503, 39 S.Ct. 516, 63 L.Ed. 1111, 1113 (1919), said that "(t)o constitute a suit under the patent laws the 'Plaintiff must set up some right, title or interest under the patent laws . . . ." (emphasis added). And earlier, in Pratt v. Paris Gas Light & Coke Co., 168 U.S. 255, 259, 18 S.Ct. 62, 64, 42 L.Ed. 458, 460 (1897), the court had said that a patent case calling for federal jurisdiction arises "when the plaintiff In his opening pleading . . . sets up a right under the patent laws as grounds for a recovery." (emphasis added). The language of these cases seems clear, but we believe there is a fundamental distinction between them and the case at bar that defeats plaintiff's argument.

In these cases, as well as in the many other federal patent jurisdiction cases we have examined, the contracts sued on had...