Sizer v. . Ray

Andrews, Ch. J. Bay & Marvin, by the instrument of August 1,1870, executed by them to the plaintiff, on the sale by the latter to his copartners, of his interest in the Buffalo Steam Gauge Company, consisting of Bay, Sizer & Marvin, agreed “ to assume any and all debts owing by what is known as the Buffalo Steam Gauge Company, and to pay the same as they mature without any unnecessary delay.” The plaintiff seeks, in this action, to recover the sum which he has been compelled to pay by the judgment in the suit of one Allen j against Ray & Sizer, for royalties, under their contract with Allen of November 7, 1868, on steam gauges manufactured and sold by Ray & Marvin subsequent to August i, 1870. By the Allen contract, Ray & Sizer, in consideration of the grant by Allen, *225 of the exclusive right to manufacture gauges under his patent, covenanted that they would manufacture gauges in sufficient quantities to satisfy the marketable demand, and pay a specified royalty to Allen. The copartnership of Ray, Sizer & Marvin was formed May 2,1870, and it was provided in the copartnership articles, that all rights to use inventions for steam gauges, which were secured to any of the parties, might be used by the firm. The plaintiff claims, that by force of the assumption clause in the agreement of August 1, 1870, all liabilities, which might at any time arise or be enforced against Ray & Sizer, under the Allen contract, were assumed by Ray, Sizer & Marvin, and that the liability for royalties for gauges, manufactured by Ray & Marvin subsequent to August 1, 1870, upon which the judgment was recovered, was a debt of Ray, Sizer & Marvin, within that agreement. It is contended by the defendant, on the other hand, that the assumption by Ray & Marvin, did not cover the contingent liability of Ray & Sizer, under their agreement with Allen, but embraced only money demands arising upon contract, owing by the Buffalo Steam Gauge Company, and existing at the date of the agreement; that such claims only, were debts within the meaning of the contract, and that the contingent liability under the Allen contract, which might never ripen into a recoverable claim, was not within the purview of the instrument of assumption. We are inclined to concur in the view that the plaintiff had no right of action under the agreement of August 1, 1870, on two grounds: first, because the liability on which the recovery against Ray & Sizer was had, did not then exist, and was not a debt within that agreement; and second, because if it was a debt, it was not one of the debts of Ray, Sizer & Marvin. Assuming, as we think is clear, that by the partnership agreement of Ray, Sizer & Marvin, that firm became entitled to use the Allen patent, it did not impose upon the firm, in the absence of a special covenant, the burden of the Allen contract, beyond an obligation to pay the specified royalties, on gauges which should be manufactured by the firm. It did not *226 cast upon the firm of Ray, Sizer & Marvin, as between Allen and the firm, or as between the firm, and Ray & Sizer, an obligation to manufacture the gauges, or to supply the marketable demand, or to pay royalties on gauges which might be manufactured by other persons. If the plaintiff’s action rested solely upon that agreement, the nonsuit was properly granted, but the plaintiff was entitled to have the nonsuit set aside, if upon any ground consistent with the case made by the pleadings and evidence, the case should have been submitted to the jury. We think the evidence tended to establish a claim in favor of the plaintiff, against the firm of Ray & Marvin, wholly independent of the written agreement. The right to manufacture under the Allen contract, as has been said, was vested in the firm of Ray, Sizer & Marvin, upon the organization of that firm, by the articles of copartnership, and this right passed to Ray & Marvin, on the purchase of Sizer’s interest, as part of the assets of Ray, Sizer & Marvin, subject, however, to the obligation to pay the royalties on the gauges they might subsequently manufacture under the contract. The liability of Ray & Sizer, to Allen, was not, however, affected by this transfer. They would be jointly liable to Allen, for royalties on gauges manufactured and sold, whether manufactured by them on joint account, or individually, or by Ray & Marvin. The plaintiff, having transferred his interest under the Allen contract, to Ray & Marvin, occupied as to them the position of surety, for any liability for royalties on gauges which might thereafter be manufactured by the new firm. The new firm could not manufacture under the Allen contract, and cast upon Sizer the burden of paying the royalties. When, therefore, the plaintiff was compelled to pay royalties on gauges manufactured and sold by Ray & Marvin, he was entitled to be reimbursed by the firm. This cause of action was within the pleadings and evidence, and does not rest upon the agreement of August 1, 1870, but upon distinct and independent equities, arising subsequent to the sale. The equity of the plaintiff to indemnity, does not *227 depend upon the fact, whether Bay & Marvin, realized a profit on the gauges manufactured. The provision in the Allen contract, that Bay & Sizer should manufacture gauges in quantities sufficient to supply the marketable demand, cannot be construed to require them to manufacture at a loss, or to sell them below the cost of manufacture, and it was not incumbent upon the plaintiff to show, that Bay & Marvin realized a profit from the business. The fact that Bay & Marvin claimed to manufacture in hostility to, and not under the patent, did not relieve the defendant from liability to the plaintiff. The judgment in the suit of Allen, against Bay & Sizer, conclusively establishes, as against Bay, that the gauges were manufactured under the patent. It is not denied that the gauges manufactured were the same articles described in the Allen patents, and the validity of these patents, is not now questioned. It is no answer to the plaintiff’s claim for indemnity, that Bay & Marvin treated the patent as void. They cannot be permitted to say, as against him, that they did not manufacture under the Allen patents. Having acquired the right to the use, by the purchase of the plaintiff’s interest, what they did, must be deemed to have been done in subordination to Allen’s rights, and not in hostility to them. The fact that Ray & Marvin, denied the validity of the patents, would have constituted no defense to Ray & Sizer, in the Allen suit, and is not a defense to Ray & Marvin in this action. The plaintiff is not precluded from claiming that there was evidence tending to establish a cause of action independently of the agreement of August 1, 1870. The nonsuit was therefore improperly granted. The order granting a new trial should be affirmed, and judgment absolute ordered for the plaintiff, on the stipulation. All concur, except Miller, J., absent. Order affirmed, and judgment accordingly.