Dick v. Ireland

Opinion,

Me. Justice Mitchell :

Notwithstanding the report of a master, confirmed by the court below, in appellees” favor, we are of opinion that clear fundamental error, participated in by the master and the court, as well as the counsel, runs through the whole of the appellees’ case.

The appellants, in May, 1876, accepted a license from appellees for the manufacture of drilling jars and jar fillings under a certain patent. The agreement was in writing; that is, it was a printed form, filled in as to names, dates, etc., in writing, and with the addition in writing, on the margin, of the following stipulation: “ It is agreed by the parties of the first part that the parties of the second part [licensees] can cancel this license by giving thirty days’ notice in writing, and pajdng all dues.” It is undisputed that this clause was written by the agent of the licensors before the execution of the agreement by the licensees, and his authority to make such agreement is not seriously questioned, as, in view of the acceptance of the contract by his principals, and the collection of royalties under it for more than two years and a half, it could not well be.

This portion of the instrument, being a special manuscript addition to a printed form, is presumed to have been separately and particularly considered by the parties, and to express their exact agreement upon the subject. It is therefore entitled to especial weight: Grandin v. Insurance Co., 107 Pa. 36.

Both parties acted under the license agreement until December 19,187 8, when the licensees, under the written clause above quoted, sent a notice to the licensors in the following terms: “We wish to cancel our license concerning the manufacture of drilling jars, bearing date of May 16, 1876, as per contract. You will please return our bond to us, and we will return the license to you by return mail.”

This notice is the hinge of the whole case. After having given it, the licensees (appellants) ceased to make jars under the patent, and to furnish accounts or pay royalties, except for those made during the thirty days between the notice and the termination of the license. They continued, however, to make jars of other kinds; and, more than six years later, the complainants filed the present bill for an account and royalty on all the jars made during the interval, whether under their patent or not. The learned master held that this notice “ do’es not declare a rescission or cancellation of the said license by the defendants. It merely expresses a wish to cancel, and a willingness on part of the defendants to return the license to plaintiffs upon receipt of their bond.” We are entirely unable to concur in this construction. The learned master has given too much weight to the courtesies of modern business correspondence. “ We wish to cancel ” imports nothing in the nature of a request for consent, or deference to the views of the other party. It announces, though in civil phrase, the intention of the writer to exercise his right reserved to him, “ as per contract,” and it does so with a certain appropriateness of language, as, under the agreement, the rescission is not immediate, but is to take effect at the expiration of thirty days. Again, the, subsequent phrase, “ you will please return our bond,” is not a request as the master views it. “ You will return our bond,” would certainly be an order, not a request, and there is no difference between the two, except in politeness of phraseology. It is entirely clear that this letter was an absolute and complete rescission of the agreement.

Why then was it not effective ? The master holds that “ the duration of the agreement.....was coincident with that of the patent, unless the term thereof was sooner terminated by the mutual act and consent of the plaintiffs and defendants.” Such a construction is totally inadmissible. It is repugnant, not only to the clear and express words of the contract, but to its very nature and purpose. It may be doubted if any business man in the state is so ignorant of law as not to know that the parties to a contract may rescind it at any time by mutual act and consent, and if there be such a man, he is hardly the one whom a corporation dealing in patent licenses would intrust with a lot of blank contracts, to go around the country and bring in unwilling manufacturers, in the way that the evidence discloses in this case. One of the clauses in the agreement is that in case of licensees’ default, in making the statements and payments provided for, the license should “be forfeited at the option of the parties of the first part.” Did the experienced agent who wrote the special agreement think that that forfeiture also was to be by mutual act and consent ? This whole theory of the necessity of mutual consent to the exercise of a privilege plainly reserved to one party, is too much at variance with the very object and inducements of the privilege, to be worthy of serious consideration.

Complainants, probably feeling the untenability of their case upon any of the grounds so far discussed, amended their bill, and set up that the written clause as to rescission was incomplete, and the words, “and stop making the jars thereafter,” were accidentally and inadvertently omitted at the end. “ Stop making the jars.” What jars ? Plainly the patent jars covered by the license. Had the respondents gone on making such jars after the rescission, such a provision would have given complainants a liquidated measure of damages for such infringement of their patent rights. But as respondents admittedly ceased making such jars, and the complainants’ claim is based entirely on the making of other jars, of what possible use can the amendment be in the present suit ? This point seems so perfectly obvious that I have been led to examine the original amendment, as sworn to and filed, to see if there was any misprint in the paper-books. But there is not. The record shows the amendment as above quoted.

This really makes further discussion superfluous. But as the master and counsel have treated the amendment as if it were “ stop making jars ” generally, it may be worth while to add a few words on the evidence to justify such an alteration of the contract. That it was a material alteration is beyond question. If the master and the court below were right, it was material enough to support a decree for nearly $10,000 against the appellants. Being a material alteration of a written contract, how does it stand in respect to evidence ? It is denied in the sworn answer, and therefore must be established by the clear testimony of two witnesses or strong corroborating circumstances. It has neither. It comes into this suit more than a year after the bill was filed, and more than ten years after the alleged mistake was made. It comes in on the unsupported testimony of one interested witness, whose evidence is so lacking in precision of language that, while he four or five times rehearses the story in relation to the licensees’ question as to their possible desire “ to quit business,” or “ quit manufacturing jars,” he nowhere uses the words “ stop making,” in which he finally incorporated the amendment, to say nothing of his introduction therein of the word “ the,” which absolutely nullified any possible benefit to be derived from it. This is verbal criticism to be sure, but it shows the indistinctness of the witness’s memory, and the entire absence of any form of words agreed on by the parties as parts of the contract. In regard to corroborating circumstances, the case is equally lame. No possible inducement for such an agreement on the part of the licensees has been shown. They were making other jars before the license, and of course could make them again after its expiration or rescission. What were they to gain by such a stipulation ? And the evidence is undisputed that the written clause was added at their instance. I have not referred to the contradiction by Artman, or to the competency of the licensees themselves by reason of the death of one of the licensors. It is unnecessary. The whole story is so inherently improbable that, if it were before a jury on the same evidence, it would require a well-seasoned and rather hardy advocate to ask twelve men to believe it. Before a chancellor, it has not a foot to stand on.

Lastly ; it is said that the respondents could not effectively rescind, because they failed to keep the condition that they should keep and exhibit their books, etc., and pay all dues. We do not find any evidence of such breach. It is admitted that they paid the royalty on all the patent jars they made, and the only refusal to exhibit their books that we find in the evidence is when complainants’ agent, Sterrett, was at Petrolia, a month or so after the notice of rescission; and, as his request to inspect the books was accompanied by the unwarranted demand that they should also “ quit making jars,” the respondents were fully justified in refusing it.

As there was a clear rescission of the agreement, no account was due by appellants at all. But it may be well to say that, even if the complainants had been entitled to an account on their own view of the case, there was no evidence on which this decree could stand. The agreement provided that during its continuance the licensees would hot make any other kind of jars, but the royalty on the patented jars was not stipulated damages for the breach of that covenant, and there is no evidence at all in the case that it was a proper measure of such damages.

The decree is reversed, and the bill dismissed, with costs.