Why Corporation v. Super Ironer Corporation

• Decision Date: 03 June 1942
• Docket Number: No. 9007.,9007.
• Citation: 128 F.2d 539
• Parties: WHY CORPORATION v. SUPER IRONER CORPORATION.
• Court: U.S. Court of Appeals — Sixth Circuit

128 F.2d 539 (1942)

WHY CORPORATION v. SUPER IRONER CORPORATION.

No. 9007.

Circuit Court of Appeals, Sixth Circuit.

June 3, 1942.

Clarence B. Des Jardins, of Cincinnati, Ohio (Robert E. Woodhams, of Kalamazoo, Mich., and Church & Church, of Washington D. C., on the brief), for appellant.

George L. Wilkinson, of Chicago, Ill. (Eugene M. Giles, of Chicago, Ill., and Wm. Cyrus Rice, of Grand Rapids, Mich., on the brief), for the appellee.

Before HICKS, HAMILTON, and MARTIN, Circuit Judges.

MARTIN, Circuit Judge.

Appellant, claiming ownership of Patent No. 1,624,698, brought an infringement suit against appellee. The validity of the patent and the manufacture and sale by appellee of machines embodying the invention were admitted; but, defensively, appellee asserted its own title to the patent. The district court sustained the defense and dismissed appellant's action on the merits. While laches was also set up and upheld, that issue, though properly adjudged in the district court for the aid of the reviewing court, is immaterial here, should it be determined that the legal title to the patent was correctly held to have vested in appellee prior to an assignment of the patent to one through whom appellant claimed title.

The patentee, by instrument dated October 24, 1927, assigned to his father, T. J. Watts, title to the patent. This assignment was recorded in the United States Patent Office on July 6, 1937. By an unrecorded, but duly acknowledged, instrument dated November 1, 1928, the patentee's father, signing as Timothy J. Watts, assigned the patent to Watts Laundry Machinery Company, a corporation of which the father was president and controlling stockholder.

By instrument dated and acknowledged April 10, 1929, Watts Laundry Machinery Company reassigned the patent to T. J. Watts, who was still president and owner of the controlling stock interest in the assignor corporation. This reassignment was not authorized by the directors of the Watts Laundry Machinery Company and was not recorded in the Patent Office. The instrument was signed in behalf of the corporation by T. J. Watts as president and by his daughter as secretary, both of whom acknowledged the reassignment "as their free act and deed for the purposes set forth therein." The recital that "we are the sole owner of said patent and of all rights under the same" was unusual language to be used in a conveyance by a corporation.

During 1928, T. J. Watts, without authority, had withdrawn from the corporate funds $40,000 in excess of his salary and expenses. Upon his assignment of the patent to the corporation, he removed from the records the item of $40,000, added that amount to $5,000 previously paid him by the company for an earlier patent, and listed "Patents $45,000.00" in the financial statements of the company. The district court found no support for his claim that he had delivered to the company $40,000 of notes to cover his improper withdrawals, or for any other purpose.

On March 30, 1929, minority stockholders received from an audit report their first information that T. J. Watts had assigned the patent to the company in liquidation of the amount improperly withdrawn by him. In the latter part of April, 1929, Watts made a contract with the minority stockholders to purchase their stock. He made a part payment in cash, but did not fulfill the terms of his contract. Later in the year, he sold a sufficient portion of his stock to lose controlling interest in the company. He was dropped from the board of directors and, on February 28, 1930, was superseded in the presidency.

On April 7, 1931, the Watts Laundry Machinery Company executed a duly acknowledged bill of sale, granting and conveying to appellee, Super Ironer Corporation, for a consideration of $200, the receipt whereof was acknowledged, Patent No. 1,624,698, and other patents. The instrument recited that "the Certificates representing said Patents have been lost or mislaid, and in the event that said Certificates are found, the same will be duly assigned and transferred to the second party." This assignment was executed under seal of the Watts Laundry Machinery Company, was authorized by the corporation's directors, and complied with formal requisites. It was not recorded in the United States Patent Office until June 30, 1938. The date of recordation of this assignment, however, preceded the assignment on September 16, 1938, by T. J. Watts of his right, title and interest in the patent in controversy to Harry Koplin, who, on September 24, 1938, recorded his assignment in the Patent Office.

On February 9, 1939, Harry Koplin assigned his title to the patent to David Koplin, who, in turn, recorded his assignment on February 13, 1939. On December 5, 1939, David Koplin assigned his right, title and interest in the patent to appellant, Why Corporation, which recorded its assignment in the United States Patent Office on December 9, 1939.

For its title to the patent in suit, appellant relies upon the assignment from the patentee...