Opinion
09-29-1909
FERRY-HAIXOCK CO. v. ZIPFEL.
William Reed Howe, Hervey F. Carr, and Mr. Bull, for complainant. Philip J. Schotland, for defendant.
Bill by the Ferry-Hallock Company against John Zipfel, Jr., for an account. Decree for an account advised.
William Reed Howe, Hervey F. Carr, and Mr. Bull, for complainant. Philip J. Schotland, for defendant.
EMERY, V. C. This is a bill for an account and decree under an agreement dated February 1, 1905, for royalties to be paid under a license for using a machine for making rings, the patents for which machine were owned, or were claimed to be owned, by complainant. The use of the machine, the manufacture of the articles under it, and the nonpayment of royalties are admitted. The defense set up by the original answer was that the agreement was entered into under fraudulent representations of fact as to the ownership of the patent. No evidence has been offered to sustain this defense. By a supplemental answer and cross-bill the defense was set up that previous to the making of the contract with complainant, and on July 30, 1898, defendant made a contract with a firm called "Hallock & Co." for the use of this same machine, which contract contained a clause by which Hallock & Co. agreed, at its cost, to defend Zipfel in any action for infringement which might be brought against him by the Clark Box Company of Danbury, Conn., on account of any infringement which might be claimed to arise between the rings manufactured on these machines and patents owned by said Clark Box Company. Subsequent to this Hallock & Co. contract, a firm called "Ferry & Clark" sued other parties than defendant, using the Hallock & Co. machines, for infringement of their patents, and were successful in establishing this claim. Defendant knew of this action and its results, and subsequently paid Ferry & Clark a royalty for the use of the Hallock machine. The Ferry-Hallock Company was formed to combine the two conflicting interests, and took over the Ferry-Clark and the Hallock patents.
The agreement now in question was made after this combination, and defendant now claims that the Ferry-Hallock Company took over not only the patents and other property of the Hallock Company, but also the contract in question, and by his supplemental answer and cross-bill claims that the fact of this ownership of the contract was fraudulently suppressed by the complainant, and that such fraudulent suppression is a defense to the action for royalties and ground for rescinding the contract by cross-bill. It is claimed that the legal result of becoming assignee of the Hallock contract of 1898 is to make the complainant liable to perform Hallock & Co.'s contract to defend the use of the machine, and to bar the recovery of royalties under defendant's contract with the Ferry-Hallock Company. There was no formal or written assignment of the Hallock & Co. contract of 1898 to the complainant company, nor is there sufficient evidence of any such assignment. Whether, if such assignment were proved, it follows that, on an assignment of the right to the royalties under the contract, the assignee becomes personally liable for the performance of the contract of indemnity, in the absence of an express contract, is not only doubtful, but the authorities seem to be against the proposition; but, independent of these questions, my view expressed at the hearing was that the Ferry-Hallock Company, claiming under both conflicting titles, had the right, as against the defendant operating under the Hallock patent, to sue him for infringing the Ferry-Clark patents, unless he elected to take from complainant a license which included rights under both patents, and that when defendant elected to take this license, getting thereby a right to use the machine in question under the Ferry-Clark as well as the Hallock patent, he became bound to pay the royalty stipulated for by his license. If, after making this agreement for license, which includes a right against the Ferry-Clark patents, he has any right of action at all against Hallock & Co., or the complainant company as their assignee, under the agreement for protection in the contract of 1898, against suit to be brought by the Clark Box Company (not the Ferry-Clark Company, it will be observed), he must be left to his action against them for damages on that agreement. The claim is not such a clear offsetor counterclaim against his express agreement for royalties with the complainant as to be a defense to their recovery. Defendant was, at the hearing, given time to submit a brief upon this point, if desired; but none has been sent in, and, on further consideration, I adhere to the view then expressed.
A decree for account will be advised and will be settled, if not agreed on by the parties.