Opinion
33798.
DECIDED JANUARY 23, 1952. REHEARING DENIED FEBRUARY 28, 1952.
Complaint; from Fulton Superior Court — Judge Shaw. August 1, 1951.
Leiter Leiter, Wesley R. Asinof, William Woodruff, for plaintiff.
Smith, Kilpatrick, Cody, Rogers McClatchey, Ernest P. Rogers, for defendant.
Where the contract upon which suit was brought provided for permanent employment, beginning at a later date, of the plaintiff by the defendant or a corporation to be formed by the defendant, but where, before the employment was to begin, the defendant formed a corporation and assigned to it his interest in the contract sued upon, which corporation then entered into another contract with the plaintiff expressly providing that it superseded all previous contracts between the plaintiff and the corporation or its predecessors, the defendant was thereby released from his obligation to employ the plaintiff, and the trial judge did not err in directing the verdict for the defendant.
DECIDED JANUARY 23, 1952 — REHEARING DENIED FEBRUARY 28, 1952.
Davis J. Ajouelo brought this action against William Wilkerson for damages arising out of the breach of an employment contract entered into by the parties on June 30, 1932, and in his petition alleged, in substance, the following: The defendant is indebted to the plaintiff in the sum of $38,329.28 on said contract of June 30, 1932, a copy of which is attached to the petition as an exhibit, by the terms of which the defendant agreed to employ the plaintiff permanently at a salary of $75 per week, commencing June 1, 1933, and along about the time the parties entered into said contract, the plaintiff turned over Patent No. 1817224 to the defendant by delivering the letters patent to him. Neither the defendant nor anyone acting for him has ever paid the plaintiff $75 per week as provided by said contract, and from June 1, 1933, to December 9, 1949, when the petition was filed, 859 weeks have elapsed, whereby $64,425 has accrued to the plaintiff under said contract. During this period the plaintiff repeatedly offered himself and his inventive ideas to the defendant and demanded his salary, which the defendant refused to pay. To minimize his damages, the plaintiff worked and earned during said period $26,095.72. The plaintiff began his performance of said contract on or before June 1, 1933, and the defendant arranged for a factory to be set up to manufacture and sell the inventions patented and developed by the plaintiff, but the defendant failed to employ the plaintiff in said factory. The plaintiff requested employment on or before June 1, 1933, and continuously requested such employment thereafter, but the defendant would not employ the plaintiff and pay him the agreed wage of $75 per week, which constituted a breach of said contract.
The attached contract of June 30, 1932, recited that Ajouelo, the plaintiff, had invented a hand nailing implement, U.S. Patent No. 1817224, issued August 4, 1931, and also had pending applications for a shoe machine, serial No. 511366, applied for on January 26, 1931, and for a machine for inserting metallic fastenings, patent applied for in June, 1932. Ajouelo agreed to sell to Wilkerson, the defendant, his company or transferee or assigns, the exclusive right to manufacture and sell the patented machines, during the life of the patents, for $2500, to be paid in specified instalments, and for a royalty of $1 on each machine sold or a royalty of 10% of the difference between the cost of manufacture and the selling price of the machine. Under the contract, Wilkerson was to develop the model of the machine and to go into the business of manufacturing and selling the invention.
The contract stated, "It is further agreed between the parties that whatever company, partnership, or corporation the party of the second part [Wilkerson] may form for the purpose of manufacturing and selling said hand nailing machines or implements, shall succeed the party of the second part and exercise the rights and assume all of the obligations of the party of the second part as fixed by this contract.
"It is further agreed between the parties that the party of the second part [Wilkerson], or his successors or assigns, will give the party of the first part [Ajouelo] a permanent job in his or its plant or factory at a wage of $75.00 per week, beginning not later than June 1, 1933, and that the party of the first part will devote all of his time and attention to improving said machine or implement or to inventing and improving machines designed for use in shoe factories and repair shops, and that the party of the second part, or his successors or assigns, shall have the exclusive right to manufacture and sell any additional machine or machines which the party of the first part may invent and that said party of the second part, or his successors or assigns, will pay the party of the first part a royalty on each additional machine he may invent and have patented, of not less than 2% nor more than 4%, the amount to be fixed by special agreement at the time, on the factory sale price on each additional machine or machines which the party of the first part may develop and have patented.
". . . It is further agreed that the party of the second part [Wilkerson] will have exclusive control of the business, of manufacturing and selling said article and articles invented later; will have exclusive control of the policy or policies of the business, and the party of the second part, or his successors or assigns, will pay the salary to the party of the first part as herein agreed, and will pay the royalties to the party of the first part as herein agreed, regardless of profits or lack of profits to the party of the second part.
". . . It is further agreed that the royalties to the party of the first part shall be paid to the party of the first part during the life of the patent, or any renewal thereof, regardless of whether he continues to work for the party of the second part, his successors or assigns, and that in case of death of the party of the first part, his royalties would either go to his heirs at law or to whomever he might will or sell said royalties, and that the only effect on the business or this contract that the death of the party of the first part could or would have would be to stop his salary . . ." Ajouelo warranted his title to the patents free from liens or claims of any persons, and his right to sell the exclusive right to manufacture and sell the patented articles. The contract finally provided that it superseded two contracts previously entered into by the parties and dated April 12, 1932, and April 23, 1932.
In his answer, the defendant, Wilkerson, admitted only the jurisdictional allegation and that he had entered into the contract of June 30, 1932, with the plaintiff. Further answering, he alleged that the parties had entered into said contract in contemplation of the formation of a corporation to assume the obligations of the defendant in the contract. On August 26, 1932, the defendant procured the incorporation of the Auto-Soler Company, with the plaintiff's knowledge and approval and in accordance with the contract of June 30, 1932, and this corporation, in undertaking the defendant's rights and obligations under this contract, entered into a new contract with the plaintiff, dated November 4, 1932, a copy of which was attached to the answer as an exhibit. The defendant, although an officer of the Auto-Soler Company, is no longer a party to the contract of June 30, 1932, upon which suit is brought, for this contract has not existed since the agreement of the plaintiff with the Auto-Soler Company on November 4, 1932.
It was further alleged in the answer that the contract of June 30, 1932, was amended by a written contract entered into by the parties on or about August 22, 1932, before the incorporation of the Auto-Soler Company. After said company was incorporated, and at the first meeting of its stockholders on August 26, 1932, the contract of June 30, 1932, as modified by the contract of August 22, 1932, was assigned by the defendant to the corporation and accepted by it. The Auto-Soler Company was the successor of the defendant, acquiring his rights and the models, tools and drawings made by him prior to its incorporation, and, upon beginning business, said corporation carried on the activity of making improvements on the plaintiff's inventions in preparation for their commercial exploitation.
The contract of August, 1932, a copy of which was attached to the answer, recited that it was entered into by Ajouelo and the Auto-Soler Company to modify the contract of June 30, 1932, but it was signed by Wilkerson individually and by Ajouelo.
By the terms of the contract of November 4, 1932, entered into by the plaintiff and the Auto-Soler Company, Ajouelo sold to the company the exclusive rights to manufacture and sell the machine patented August 4, 1931, U.S. Patent No. 1817224, and the machine on which application No. 620029 for letters patent had been filed on June 29, 1932, for $50 and five shares of preferred stock in the company, and for royalties of $1 on each of the first 10,000 machines sold, 75¢ on each of the next 10,000 machines sold, and 50¢ on each of the remainder of the machines sold during the life of the patent.
It was further agreed that Ajouelo would submit to the company for acceptance any future patents or inventions he might make or develop, and the company was to have a 90-day option to either purchase or to test the invention for a 12-month period at its expense, and to purchase said inventions for a royalty of from 2% to 4% of the margin between production cost and sale price. The company was to forfeit all rights under the contract in the event of its bankruptcy or its being placed in receivership. Ajouelo warranted that he was the sole owner of the patented inventions and of the applications for patents referred to, and that he had the right to sell the exclusive right to manufacture and sell the articles. There was also a provision that "This contract and agreement is to supersede and take the place of all prior contracts and agreements entered into by and between the parties hereto or their predecessors and this contract contains the full and complete agreement between the parties." The contract was signed by Ajouelo and by the Auto-Soler Company, by its president and by its secretary, Wilkerson.
Upon the trial of the case, the plaintiff introduced the contract of June 30, 1932, and also other items of evidence, such as the patents, applications, drawings and models of the machines which were referred to in the contracts. The defendant introduced the other contracts which were attached to his answer as above set out, and also a copy of the minutes of the first meeting of the stockholders of the Auto-Soler Company, on August 26, 1932, showing that the stockholders accepted and ratified "a certain contract between Davis J. Ajouelo and Wm. Wilkerson and a proposed contract between Davis J. Ajouelo and the company." Ajouelo testified that the contract of August, 1932, was a proposal memorandum and not a contract. Both the parties testified, and the defendant also introduced the testimony of James H. Therrell, who was the president of the Auto-Soler Company for several years after its formation. Such reference to their testimony as may be necessary for the decision of this case will be hereafter made in the opinion.
The trial judge directed a verdict for the defendant, and the plaintiff moved for a new trial on the ground that the court erred in directing the verdict because the evidence submitted by the plaintiff on all issues raised by the pleadings was sufficient to require the case to be submitted to the jury without direction, and because the evidence was in conflict and raised issues of fact which could only be determined by the jury. The sole exception insisted upon here is to the judgment overruling the motion for a new trial.
The plaintiff's suit was for damages for breach of the contract between the parties dated June 30, 1932, which is referred to and set out in the foregoing statement of facts. It was undisputed that the plaintiff, Ajouelo, had offered to go to work for either Wilkerson, the defendant, or the Auto-Soler Company on June 1, 1933, and at intervals thereafter, and that neither the defendant nor his company had ever employed Ajouelo or paid him wages or salary, as provided for in the contract sued upon. It was undisputed that the defendant had formed a corporation, the Auto-Soler Company, on August 26, 1932; that he transferred and assigned to that corporation his rights under the contract or contracts with Ajouelo and received stock in the company therefor; and that the company had accepted these rights and assumed his obligations under said contract. It clearly appears from the contract sued on that it was within the contemplation of the parties thereto that such a corporation would be formed by Wilkerson to succeed to and take his place under said contract with Ajouelo. The signatures on the contracts were admitted, although the plaintiff contended that the contract of August, 1932, purporting to modify the contract of June 30, 1932, on which the suit is based, was only a proposal to be accepted by the corporation. The plaintiff's main contention is that the contract sued upon was severable into parts, one part providing for the payment of royalties and another for the employment of Ajouelo by the defendant, and that the jury would have been authorized to find, under the evidence, that the latter part of the contract had never been superseded or extinguished by any of the later contracts between Ajouelo and the company formed by the defendant. However, under the undisputed evidence in the case and by the terms of the written contracts, there was no such issue for submission to the jury.
A novation of debtors is constituted by the release of the original debtor and the substitution of a new debtor in his place. This release and substitution may be by express terms, or may be inferred from the acts of the parties or by necessary implication from a construction of the subsequent agreement. Loftis Plumbing c. Co. v. American Surety Co., 74 Ga. App. 590, 593 ( 40 S.E.2d 667), and citations. The contract of November 4, 1932, expressly provided that "This contract and agreement is to supersede and take the place of all prior contracts and agreements entered into by and between the parties hereto or their predecessors and this contract contains the full and complete agreement between the parties." In the contract sued upon, Wilkerson "or his successors or assigns" was to employ the plaintiff, and the Auto-Soler Company was the assignee and successor of the defendant, Wilkerson. Therefore, a "predecessor" of the Auto-Soler Company was its promoter, Wilkerson, and the provision above quoted was effective to extinguish his obligations under the contracts between him and the plaintiff, Ajouelo, entered into prior to the formation of the Auto-Soler Company, including his promise in the contract of June 30, 1932, to employ the plaintiff.
Wilkerson and Ajouelo both signed the contract of November 4, 1932, and although Wilkerson signed it in his capacity as secretary of the company, it is apparent that both he and Ajouelo thereby assented to the execution of the new contract by which Wilkerson was released, and the Auto-Soler Company substituted for him. See, in this connection, Acree v. Kay, 188 Ga. 783 ( 4 S.E.2d 820).
The plaintiff also contends that there were ambiguities in the contracts which created issues of fact as to the intent of the parties which should have been submitted to the jury. But the contract of June 30, 1932, as above stated, shows plainly that the plaintiff and the defendant both contemplated that the defendant was to be succeeded by a corporation to be formed by him to carry on the exploitation of the plaintiff's inventions, and the contract of November 4, 1932, between Ajouelo and the Auto-Soler Company, shows without ambiguity the intent of the parties that said contract should supersede all contracts entered into by Ajouelo and the company or its predecessor, namely, the defendant.
Since the contract sued upon, as to both its employment and royalty features, was expressly superseded by the contract of November 4, 1932, which introduced a new party and new obligations, the trial judge did not err in directing a verdict for the defendant.
Judgment affirmed. Felton and Worrill, JJ., concur.