Tuthill v. Wilsey, 10098.
| Decision Date | 21 June 1950 |
| Docket Number | No. 10098.,10098. |
| Parties | TUTHILL v. WILSEY. |
| Court | U.S. Court of Appeals — Seventh Circuit |
L. B. Mann, Matthew E. Murray, Owen Fairweather, all of Chicago, Ill., Robert C. Brown, Jr., Chicago, Ill. (Seyfarth, Shaw & Fairweather, Chicago, Ill., of counsel), for appellants.
Charles B. Spangenberg, Chicago, Ill., Richard G. Finn, Chicago, Ill., for appellee.
Before KERNER, FINNEGAN, and SWAIM, Circuit Judges.
This appeal is from an order sustaining a motion to dismiss and dismissing a complaint for a declaratory judgment on the ground that it presented no justiciable case or controversy under the patent laws. Plaintiffs in the action are the Tuthill Pump Company and the executor of James Tuthill, who died in September, 1944; defendant is the executrix of Irven H. Wilsey, who died in July, 1943.
The facts which make up the background out of which the present controversy arose are to be spelled out of the pleadings and exhibits attached thereto. Wilsey was an inventor; for two years prior to 1926 he and Tuthill had been associated in developing certain of his inventions. In December, 1926, they entered into a contract contemplating the manufacture by Tuthill of pumps and pumping machinery embodying Wilsey's inventions. The contract provided for the immediate delivery by Wilsey to Tuthill of duly executed assignments of his entire interest in all inventions theretofore made by him relating to pumps and pumping machinery, and the subsequent assignment of his interest in any inventions or improvements in such pumps or machinery thereafter made by him during the life of the contract. This obligation, however, was to continue "only so long as Tuthill or his assignee shall be engaged in the business of manufacturing or selling pumps or pumping machinery invented or designed by Wilsey, and only so long as Wilsey shall receive royalties therefor as provided in Paragraph 6 of this agreement; and said obligation shall cease and determine at the end of two years from the date of this agreement if Tuthill shall fail to begin and carry on in good faith the manufacture and sale of such Wilsey pumps within the said two years." Paragraph 6 of the agreement provided for the payment by Tuthill to Wilsey during the life of the agreement of a royalty of 5% "of the factory sales price on all pumps and pumping machinery, embodying present or future inventions made by Wilsey * *" but provided further that "no royalty whatever shall be paid upon said devices until the sales thereof have reached the amount of $250,000, whereupon royalties shall begin to accrue and be payable upon such devices thereafter made or sold." Paragraph 7 provided for a monthly written report by Tuthill to Wilsey showing items sold and monies received therefor. Paragraph 11 relating to the term of the agreement provided that it should extend "to the end of the term or terms of any patent or patents which shall be granted upon any inventions, present or future, relating to pumps or pumping machinery, made by Wilsey and to be assigned to Tuthill in accordance with the provisions hereof." The contract also provided for Wilsey's employment by Tuthill for one year while the business was being organized and developed, and Wilsey agreed to advise and assist Tuthill in getting started in the manufacture of pumps and in prosecuting applications for patents covered by the contract.
After the execution of the agreement the Tuthill Pump Company was incorporated; the contract was assigned to it; and it began the manufacture of the pumps and the machinery contemplated by the contract and was still engaged in such business in July, 1948.
In November, 1943, Mrs. Wilsey filed a complaint in a state court setting up the contract and asserting the breach thereof, and asking for an accounting and judgment for royalties thereunder. According to the second amended complaint therein, action on which was still pending when this case was heard, the term of the latest patent referred to in the agreement was to expire July 28, 1948, hence the agreement which became effective upon its execution was to remain effective until July, 1948. Plaintiff asserted that although the Company had since the execution of the agreement manufactured and sold large quantities of pumps and pumping machinery embodying inventions made by Wilsey, the "factory sales price" of which amounted to millions of dollars, neither Tuthill nor the Company had ever paid any royalties or rendered any monthly reports as required by the contract. The complaint further alleged that all inventions made by Wilsey had either been formally assigned by him and formally accepted by Tuthill or the Company, or had become their property in fact and in law, and that they had built up a large and profitable business in pumps and machinery by their use.
Defendants filed successive answers, with affirmative defenses and counterclaim. They pleaded the statute of limitations; breach of the contract by Wilsey; relinquishment by him of all rights thereunder for a substantial...
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