Portland Iron Works v. Willett

Opinion by Mr. Commissioner Slater. 1. The sufficiency of the complaint was not challenged by demurrer, but it is now contended for the first time that it fails to state a cause of suit, for the reason that it alleges no consideration for the alleged express agreement on the part of the defendant that all improvements made by him while in jilaintiff’s employ should become and be its exclusive property. In the absence of a demurrer, all intendments must be taken in favor of the sufficiency of the pleading: Fowler v. Phoenix Ins. Co. 35 Or. 559 (57 Pac. 421) ; West v. Eley, 39 Or. 461 (65 Pac. 798); Walker v. Harold, 44 Or. 205 (74 Pac. 705). The com — 250 — plaint, after stating the time and object of the employment, alleges: “It was stipulated that the defendant should be paid by the plaintiff for his said services at the rate of $150 per month for the time he was in the employ of the plaintiff; and that defendant in consideration thereof did promise and agree to design such machinery as might he required of him, and to give plaintiff the benefit of the best of his knowledge, skill and experience.” Immediately following this language, but in a separate paragraph, is the following: “That in and by said contract it was furthermore, in consideration of the employment of said defendant by plaintiff as aforesaid, expressly stipulated that any and all improvements which defendant might conceive and design, * * should become and be the exclusive property of the plaintiff.” It is contended that the effect of the latter allegation is that the employment, and not the salary to be paid, is the alleged sole consideration for the succeeding alleged agreement as to the ownership of the improvements, and that it is not a sufficient consideration. But, however it may be as to the latter contention, it cannot be fairly concluded from the language quoted that the pleader intended to allege the latter as a separate and distinct agreement from the former, for his language clearly imports that the stipulation as to the ownership of improvements is a part of the contract of employment, and it must necessarily follow that the salary therein agreed to- be paid is alleged as the consideration for the agreement as to the ownership of improvements made. 2, To entitle it to the relief demanded herein, plaintiff relies upon an alleged express - contract that all improvements which defendant might conceive and design relating to bandmills, carriages, feeds, rolls and edgers, while in its employ, should become and be its exclusive property, and that H might r.f ’ts option and expense patent the same, and that the defendant expressly agreed to make such applications for patents on any of such improvejnents as plaintiff might elect to have patented and assign the same over to plaintiff. It seems to be conceded by all — 251 — ihe decisions, and we think by the defendant herein, that when there is a special service of inventing under a special employment to invent for a consideration, the employer becomes the owner of the servant’s invention; and the same result follows where, in a contract of general employment of inventive skill, there is an express agreement that the employer is to be the owner of any invention or improvement: Annin v. Wren, 44 Hun, 352; Solomons v. United States, 137 U. S. 342 (11 Sup. Ct. 88: 34 L. Ed. 667); Pressed Steel Car Co. v. Hansen, 137 Fed. 403 (71 C. C. A. 207: 2 L. R. A., N. S., 1172). 3. But to warrant a decree for specific performance, such contract must be clearly and unequivocally proven, and its terms as to subject-matter, consideration and all other essentials, must be specific and unambiguous: Pressed Steel Car Co. v. Hansen, 137 Fed. 403 (2 L. R. A., N. S., 1172: 71 C. C. A. 207). Plaintiff claims that the alleged contract is included in the correspondence which passed between it and the defendant immediately prior to his arrival in Portland and his entry into its service, and particularly in its letter of July 11, 1904, and defendant’s answer of July 12, 1904; while defendant insists (1) that said letters amount to nothing more than negotiations for a contract, and do not in fact constitute the contract; (2) that by his letter of July 12, he expressly reserved for future negotiation the question of the ownership of such improvements; (3) that by the terms of plaintiff’s letter of July 11, it was to be the owner only “of drawings, patterns and designs of machinery,” made by defendant while in its employ, and not of the invention and letters patent that might be procured thereon, attributing to the word “design,” the technical meaning as used in the patent laws of the United States; and (4) that whatever contract was made therein was to continue for the term of one year only from and after July 19, 1904, and that the said improvements were not completed until after the expiration of said term. We shall consider these respective issues in their order. 4. Parties may and often do enter into a contract by communicating through the post office, and as soon as a definite offer — 252 — is thus made and accepted there is a binding contract. Whether or not the correspondence shows an agreement is alwaj's a question of construction (9 Cyc. 293), and in case the correspondence consists of a series of letters resulting in a definite offer on the one side, and an acceptance on the other, they must all be construed together to ascertain the intention of the parties. The' correspondence between these parties was initiated by defendant, and consists of a series of six letters in all, the most important •of which are the fourth, plaintiff’s letter of July 11, 1904, and the fifth, defendant’s answer of July 12, 1904. Defendant opens the correspondence on July 5, by saying: “I would be pleased to hear from you in regard to matter of building a bandmill and other sawmill specialties, and would be glad to have you make me an offer as to what salary you would be willing to give me to go to work for you and design a band-mill and such other machinery as you ma3r deem advisable, draw mill plans and sell machinery on the road as circumstances might require. I believe I can satisf3r you.” On July 8, plaintiff answers: “We want a man in the capacity you mention, but you are comparatively a stranger to us, and we do not know whether you would fill the bill or not. What salary do you want to work for us a few months, or long- enough for us to determine the value of your services, and agree or disagree on the subject? Are you a machine draughtsman, or do you make mill plans only, and we suppose in either event you have drawings you have made in the past which we should like to inspect previous to entering into any agreement? Let us hear from you and oblige.” July 10, defendant replied, submitting blue prints of drawings of sawmill machinery previously designed b3r him, concerning which he says: “I may add that all of the machines I have designed are now in successful operation,” and also saying: “I think I should have $1,800 per year to start with, and I am satisfied that we could agree upon a future salary after we become better acquainted, and you have an opportunity to see the results of mv work.” — 253 — On July 11, plaintiff writes as follows: “Replying'to vour favor of the 10th, we have decided to accept your proposal, with the understanding that should we find it necessary to discontinue the arrangement, your services are to be paid for on a basis of $150 per month for the time you are in our employ. Another matter which has not been mentioned up to the present time, and should be fully understood in advance, is the matter of ownership of any drawings, patterns or designs of machinery made by you while in our employ, and it must be understood in advance that such are our property. We should like to have you come as soon as possible, as there are a number of deals coming up at the present time which it would be well for you to come in touch with.” To this defendant replies, July 12: “Yours of the 11th received. I will say in regard to drawings, patterns, etc., of machinery which I may make while in your service, same will certainly be considered as belonging to you as a part of the consideration of my salary. I always like' to retain a blue print of my drawings, but never dispose of same or turn them over to any other parties for gain or otherwise. In the event of my inventing a machine on original lines which is a success, both practically and financially,. the usual practice is to assign an undivided half interest to the employer and the inventor to retain the other half, provided a patent is taken out. I have designed a great many machines and improvements, but have never applied for any patents as yet, and do not know that I ever will. I do not know of any machine which 1 would want to patent unless it might be a ‘Pacific Coast Log Turner/ and this is in the air as yet. Any improvement which I may make in bandmills, carriages, feeds, rolls, edgers, etc., while in your employ, you are welcome to, and if you wish a patent on them, you pay for same, and I will assign it to you. These matters we can arrange in a personal interview. Regarding time of continuation of our contract, would suggest that a proviso be made that either party thereto has the privilege of terminating same upon 30 days’ notice. I will endeavor to come to Portland next Saturday or Sunday, and be ready to go to work Monday morning.” This correspondence certainly shows a definite offer on the one side to render certain services for a specified price, and an explicit acceptance on the other. It is conceded by defendant — 254 — tliat he went to work for plaintiff at its shop in Portland on July 19, 1904, and he does not testify that there was any other contract than that shown by these letters; in fact, he does testify that there were no further negotiations between them prior to his beginning work. Hence the controversy in this respect relates to the ascertainment of the scope of the contract, rather than to the existence of a contract. 5. Impliedly surrendering his first contention, however, and thereby admitting that these letters contain the contract, counsel for defendant urges that defendant expressly reserved for future negotiation the question of the ownership of any improvements Which he might make in bandmills, carriages, feeds, rolls, edgers, etc., when he said in his letter of July 12, that “ these matters we can arrange in a personal interview.” We do not think this language,' when taken in connection with the contract, is susceptible of such a forced construction. Plaintiff, by its letter of the 11th, accepted defendant's previous offer, but with a proviso to the effect that it should be the owner of any drawings, patterns and designs of machinery made by defendant while in its employ. . This proviso amounts to a counter offer and called for an acceptance or rejection by defendant. He expressly accepted in terms the said counter offer and proceeds to explain in detail what he understands is meant thereby. He expressly assents that “any improvements which I may make in bandmills, carriages, feeds, rolls, edgers, etc., while in your employ, you are welcome to.” There could be, therefore, nothing respecting that matter left to be arranged thereafter in a personal interview. A party to a contract cannot in the same breath agree to a thing, and also withhold it for future negotiations. But, in the same connection, defendant says to plaintiff, “If you wish a patent,,on them, you pay for the same, and I will assign it to you,” and immediately follows the expression relied upon. It is more reasonable to say that defendant thereby referred to the manner and means of procuring patents and plaintiff evidently so understood it. “When the terms of an agreement have been intended in a different sense by the parties to it, that sense is to prevail, — 255 — against either party, in which he supposed the other understood it; and when different constructions of a provision are otherwise equally proper, that is to be taken which is most favorable to the party in whose favor the provision was made”: B. & C. Comp. § 712; Pendleton v. Saunders, 19 Or. 9 (24 Pac. 506). This conclusion is also sustained by the subsequent acts of the parties. Defendant, according to his own testimony, went to work without further negotiations on these matters, and in the early part of the year 1905, he suggested to Mr. Clark, plaintiff’s president and superintendent, that the lower guide to a band-mill which he had designed was patentable. While, on the other hand, Clark testified that when defendant came to work, he and defendant in a conversation between them referred to the matter of drawing up a future agreement, but it was decided by them that what had been outlined in their letters covered all the contract which was necessary, and for that reason no formal contract was drawn up. 6. Defendant also urges in his answer and in his testimony that all he agreed to in said letters was that plaintiff should be the owner of all drawings, patterns and desighs made by him, and, in his brief, his counsel urges that the word “design” was never intended by either party in the correspondence to cover the invention of a “new and useful art, machine, * * or any new and useful improvement thereof” — quoting from Section 4886, Rev. Stat. U. S. (5 Fed. Stat. Ann. 421: U. S. Comp. St. 1901, p. 3382), relating to patents — but that the word “design” as used in the United States patent laws refers to “ornamental design” for an article of manufacture. “The terms of a writing are presumed to have been used in their primary and general acceptation, but evidence is nevertheless admissible that they have a technical, local or otherwise peculiar signification, and were so used and understood in the particular instance, in which case the agreement shall be construed accordingly”: B. & C. Comp. § 709. No evidence was offered by defendant, tending to show that the word “design” was used by plaintiff and himself when writing said letters in the technical sense now attributed to the — 256 — word by him, nor that- he so understood it, but there is ample evidence in defendant’s letters of July 10 and 12, that he then understood and interpreted the word “design” as equivalent to “devise” or “invent.” In the former letter he says: “I may add that all of the machines I have designed are now in successful operation,” evidently using- the word with reference to the utility of the machines and-not to their ornamentation. It was in answer to this letter that plaintiff said: “Another matter which has not been mentioned up to the present time, -and should be fully understood in advance, is the matter of ownership of any drawings, patterns or designs of machinery made by you while in our employ, and it must be understood that such are our property.” Now, how did defendant understand and interpret this counter proposition from plaintiff? Why, by drawing a distinction between inventing a machine on “original lines,” in which event, the practice was, he says, to assign an undivided one-half interest to the employer and the inventor retain the other half, and inventing “improvements” in bandmills, carriages, feeds, rolls, edgers, etc., whicli latter were to belong to plaintiff. Moreover, defendant does not claim that he was employed to make ornamental designs of machinery or that he did that kind of work, but he did understand that he was employed to devise and invent useful improvements, and he in fact did that kind of work. In that sense the parties used the word “design” in their letters, and they must be construed accordingly. 7. The last contention of defendant to be noticed is that the contract of employment was to last but one year, and terminated in July, 1905, before any of the improved machines were completed, and that after that time "he worked under a new contract; but this contention has less to commend it than those already noticed. The employment was expressly for an indefinite period, terminable by either party on thirty days’ notice. So long as defendant continued to work without giving such notice, and accepted the agreed pay of $150 per month, he was bound by all the terms of the original contract. No such notice, was given prior to the middle of January, 1906, just before — 257 — defendant qnit plaintiff’s service. There is some evidence on the part of defendant tending to show that an effort was made by him some time after July, 1905, to procure a new and different contract with plaintiff, but the negotiations to that end never culminated in a contract. 8. It i.^ admitted by the defendant that the alleged improvements and inventions were made and completed, and the said applications for patents were made by the defendant, before he quit the service of plaintiff. His application for patent on the “cant hook dog” is dated August 14, 1905, having serial number 274,156; on the “gang edger,” January 4, 1906, serial number 64,222; and on the “power set works;” February 30, 1905. The drawings and specifications of each of said inventions attached to the complaint are admitted to be true and correct descriptions thereof, and it is also admitted that they are patentable. The record further shows that defendant has been to some expense in making said applications, but the amount thereof is not disclosed. Having determined that by the express contract of the parties such inventions were to be the property of plaintiff, and the contract being explicit and free from ambiguity, and based on a sufficient consideration, and the subject-matter of the suit being definitely ascertained and described, defendant is in equity bound to assign the same over to plaintiff. 9. The decree of the lower court should therefore be reversed, and a decree entered requiring the defendant to assign and transfer to plaintiff the said three inventions upon the payment by plaintiff to defendant of the latter's expenses incurred in making said applications and procuring patents, to be hereafter ascertained by the lower court, with a perpetual injunction against assignment thereof by defendant to any other person. Reversed.