Good v. . Daland , 121 N.Y. 1 ( 1890 )

Peckham, J.

Although, perhaps, Daland was not a necessary party defendant to this action upon the agreement stated in the complaint, yet we think he was a proper party. As trustee for the various companies represented in the agreement, it was by that instrument made his duty to bring an action against any defaulting member, and to use all diligence in prosecuting it.

The plaintiff claims that the corporation defendant was a defaulting member and that it was the duty of Daland to prosecute it, but that he, upon request to bring an action for that purpose, refused so to do.

■ If the corporation defendant were in fact, as described in the agreement, a defaulting member, it was the' duty of Daland to bring suit against it, and his refusal was a breach of that duty and of his agreement.

It is true the agreement provided that in case Dalánd failed to bring such suit, the plaintiff might at his election -bring it in Daland’s name and at his expense. But the plaintiff was not confined to bringing an. action in Daland’s name. He could bring it in his own name and join Daland as defendant, and charge him with costs because of this breach of duty. In. this light there is no misjoinder of causes of action.

Ho cause of action is stated against Daland for damages in consequence of his failure to bring suit to collect the percentage due from the corporation defendant, when requested by the plaintiff.

The damages which the plaintiff had sustained by such failure cannot be ascertained from any allegation in the coin-plaint, nor can it be said as matter of law, arising from the facts stated, that plaintiff sustained any damage. As there are not facts enough alleged upon which a good cause of action against Daland could be predicated on the ground of his failure to prosecute, it cannot be urged that two causes of action have been improperly united.

As other grounds for sustaining the demurrer, the defendants say that the unincorporated association, of which the corporation defendant is alleged to be a member, is- a partnership and the agreement alleged is ultra vires the corporation. It is' also stated that the agreement is void as in-restraint' of trade and as tending to create a monopoly. .The complaint gives no information of the. character of the association known as The United States- Cordage Manufacturing Association of the City of Hew York.

There is nothing in that pleading which shows that the association is a partnership, and no inference to that effect can be drawn from the allegations which are therein set forth. All that can be learned from the complaint is that certain corporations have, for some purpose which is undiscov ered, associated themselves in some way together under a certain name. This is no allegation, either of partnership or indeed of any illegal action whatever. The agreement which is there set up is one which each member of the association authorized the individual defendant to make as trustee for the association, with the plaintiff. That agreement shows no partnership, but is an agreement that each member of the association will pay the plaintiff a certain price on each pound of manilla and sisal fibres worked by such member and offered for sale.

No member is responsible for anything but its own work, and its liability is based entirely upon the amount worked and offered for sale by itself. There is no community of profits or of losses provided for in the agreement, and no one member has any right to speak for or to bind any other member in regal’d to the subject-matter of the agreement. We can see nothing of a partnership nature set forth in the complaint.

The last objection urged, viz.: that the contract set forth in the complaint is in restraint of trade, cannot be supported.

It appears from the complaint that the plaintiff had invented and patented certain machinery and parts thereof for dressing fibres, spinning yarns and making twines and cordage from manilla and sisal fibres, for which he had obtained letters-patent from the United States. He agreed with the defendant Daland, as trustee for and representing the association already referred to, that he would in North and South America confine the sale and use of all his methods and machinery then or thereafter to be invented and patented, to the members of the association, who, on their part, covenanted through Daland to pay plaintiff a certain sum on all manilla and sisal fibres worked by them into cords, twine or rope, and offered for sale and use in the United States and sold or delivered during the time they should have the sole and exclusive use of the machinery above mentioned, provided they were fully protected in such use by the plaintiff.

It is true the members of the association do not agree to themselves use this machinery at all, nor do they agree as to any special amount of twine or rope which shall by each or all of them, be offered for sale, and the practical result is to take the machinery out of use, unless these members themselves use or permit others to use it.

This is a peculiarity of a patented article. The owner does not possess his patent upon the condition that he shall make or vend the article patented or allow others to do so for a fair- and reasonable compensation. When he has once secured his patent, he may, if he choose, remain absolutely quiet, and not only neglect and refuse to make the patented article, but he may likewise refuse to permit any one else to do so on any terms. If the patent be a valuable one, self interest may be relied upon as a strong enough motive to induce the owner either to take himself, or to permit others to take some steps toward introducing his invention into use. How far it will go depends upon the owner, and his right to decide that question is not in the least circumscribed by the interests of the public in obtaining such machinery or invention, or a right to its use. He may keep such right himself, or make the machinery, or manufacture the patented article alone, or he may permit others to share such right with him, or he may allow them an exclusive right and retain none himself. It all follows from and is founded upon the absolute and exclusive right which the owner of the patent has in the article patented.

Having such right, he must plainly be permitted to sell to another the right itself, or to agree with him that he will permit none other than such person to use it. That person need not agree to make the patented article, or to sell it. It is a question solely for the parties interested. This right is necessary in order that the owner of the. patent shall have the largest measure of protection under it.

Considerations which might obtain, if the agreement were in regard to other articles, cannot be of any weight in the decision of a question arising upon an agreement as to patented articles. If an owner of a patent should choose to refuse to manufacture the article covered by his patent, could any one else claim such right % His simple neglect or refusal to manufacture would stand as a conclusive reason why it was not manufactured. An owner might sometimes make more money by not manufacturing than by doing so, but of that question he is the sole and absolute judge.

There is nothing in this agreement which can be regarded as illegal within the principles above stated, which are not in the least new or unknown. The plaintiff probably thought his inventions would prove sufficiently remunerative to him, if he sold the exclusive right to use them to the members of this association, even though they did not themselves agree to use the same in the process of the manufacture of cord or twine. His compensation was measured by the amount of cord and twine worked, sold and delivered by these members, 'and whether they should use his inventions, or keep them unemployed, was not thereafter a question of interest to him so long as the agreement remained in force.

We think the demurrers were not well taken.

The judgment overruling them should be affirmed, with costs, with leave to answer on payment of costs.

All concur.

Judgment affirmed.