Electric Secret Service Co. v. Gill-Alexander Electric Manufacturing Co.

Barclay, J. This is a suit in equity to enforce specific performance of certain agreements for the transfer of rights to patents for an invention. The petition also seeks to cancel prior transfers of such rights, already made by some of the defendants, and seeks 'to enjoin any further transfers of the interests to which plaintiffs assert title. The plaintiffs are the Electric Secret Service Company, John T. Bussell, James M. Chaney, Alfred W. Jones, Edward L. Martin and Benjamin F. Jones. The defendants are the Gill-Alexander Electric Manufacturing Company, Edwin B. Gill, Jr., Bobert Gillham, M. O. Gillham, and William W. Alexander. The pleadings need not be given. The positions taken by the several parties to the controversy will sufficiently appear otherwise. The finding and decree of the learned judge who heard the cause on the circuit furnish a general outline of the litigation, to which we shall add such further particulars as we may consider worthy of mention in developing the grounds for the conclusion reached here. — 153 — We shall not enter into the testimony in detail; hut shall content ourselves with stating our deductions from it, together with the rules of law which seem applicable. In 1884, Edwin R. Gill, Jr., then about eighteen years of age, a workman in his father’s tinshop at Pleasant Hill, Missouri, invented a certain mechanism applicable to telegraph or telephone lines, which was afterwards patented as an ‘ ‘Automatic Electric Signal-Controlling Apparatus.” Being, at the outset, without adequate means to perfect his discovery or to introduce it, Gill made a series of contracts with various persons in order to secure such means. Those contracts form the groundwork of this suit. TJnder them, plaintiffs claim title to one half the patent rights granted to Gill, the inventor, and his assigns. The defendants deny that claim. The principal defense, which the trial court sustained, is that plaintiffs do not show such a performance of the agreements on their part, as would warrant a court of equity to grant the relief they invoke. The substance of these agreements appears in the finding of the trial judge. It is evident that the written contract on March 15, 1887, has the most vital bearing on the issue of the present suit. The parties to it were Gill and Jones. The former agreed to a number of stipulations, concerning the transfer of his interest in the patent device, and the giving of his efforts and time to its perfection, etc. The party of the second part, Mr. Jones (through whom the plaintiffs claim the right to specific performance), entered into the following agreements, by the terms of the writing referred to, viz: “The said party of the second part hereby employs the said party of the first part for the purposes and for — 154 — the objects hereinbefore named and agrees to pay him $50 per month in advance, commencing from the date of this contract, his board and lodging, wherever he may be, acting under or awaiting the instructions of the said party of the second part, and his railroad and traveling expenses to and from all points to which he may be directed to go, and back to Kansas City, should his employment cease; as a further consideration for doing all that the party of the first part agrees herein to do, the said party of the second part agrees and binds himself in case a stock company is formed for the purpose of manufacturing, operating or selling the “Automatic Electric Signal-Controlling Apparatus,” to cause to be issued to the party of the first part fifty shares of the capital stock of any such company so formed, fully paid up and non-assessable, and of the par value of $100 a share, all to be done without any cost whatever to the said party of the first part; but should the said party of the second part not form any such company, but on the contrary sell the said patent device to an individual or number of them, or to any corporation for a' sum' of money or its equivalent amounting to over $25,000, then in that case the said party of the second part hereby agrees and binds himself to pay or cause to be paid to the party of the first part, his heirs or assigns, ten per cent, of all sums over said $25,000 in lieu of the stock above referred to, until such percentage shall equal the sum of $5,000, it being understood that the percentage to be so paid shall not exceed the sum of $5,000. * * * Should’the party of the second part succeed in forming a stock company and fail to issue or cause to be issued the said fifty shares of stock as herein provided to the said party of the first part, then in that case the party of the second part hereby agrees and binds himself to pay to the party of the first part the sum of $5,000in lieu thereof. — 155 — This contract, so far as the consideration is concerned, has nothing whatever to do with any others the said Gill has heretofore made with one James M. Chaney, and the $5,000 to be paid to Gill by'the said Jones is no part of the $5,000 the said James M. Chaney is to pay to the said Gill under his-contract with him, dated October 25, 1886, but the time of employment in this contract is limited to the term of ten months named in said contract between the said Gill and James M. Chaney and expires with that contract unless sooner forfeited by the party of the second part, he finding it impossible to utilize said machine by said sale or the formation of said company as herein anticipated.”- From the facts found by the learned circuit judge, touching the organization by Jones and his associates of the Western Electric Lock Company, and the subser quent dealings with Gill, it is clear that the agreements above quoted were not performed. The principal facts on which that conclusion rests are substantially undisputed. Gill appears to have been entirely willing and ready to convey his patents to the Missouri corporation organized by Mr. Jones; but Gill firmly insisted on the payment to him of the stock and money stipulated to be paid, as declared by the foregoing agreement. Gill-had the undoubted right to demand the performance of those conditions. The subsequent negotiations do not, in mur opinion, amount to a waiver of his right to require performance of the conditions on which the transfer of his interest in the patent was contingent. The law applicable to such a case is not seriously in dispute. 1. Though no question has been raised by counsel, it is proper for the court to satisfy itself of its power or — 156 — jurisdiction to act upon any given state of facts that may be presented for its cognizance. Though contracts for the sale of rights under patents may affect only personal property, we have no doubt that equity may properly take jurisdiction of them in such a proceeding as this; and, on a sufficient showing, decree specific performance. The principal footing of such jurisdiction is the obvious inadequacy of the redress which an ordinary action at law for damages would afford, as applied to such property, in event of refusal to comply with an agreement for its sale. Rights acquired under letters patent for inventions are of such peculiar nature that they are justly considered proper subject-matter for suits for specific performance. Corbin v. Tracy (1867), 34 Conn. 325; Binney v. Annan (1871), 107 Mass. 94. 2. Strict and literal performance of all the conditions of a contract is not invariably an essential prerequisite to a decree for specific performance. Equity looks at the substance of transactions, and regards the spirit of an obligation rather than its mere form. So ail that is generally demanded in equity is a substantial compliance with the agreement, sought to be specifically enforced, on the part of him who asks the aid of equity to give it effect. But where the facts show that the plaintiff has wholly failed to meet the substantial terms of the very agreement on which he relies, he can not complain if a court of equity leaves him where he has placed himself. He can not be allowed to seize the benefits of an agreement when he has discarded its burdens. This is a plain rule of fairness, that has become a maxim in this branch of the law. An obligation worthy of exact enforcement in a court of equity should possess at least that complete — 157 — ness which mutuality creates. If one. party has cast it aside, he can not justly be permitted to use the court of equity to vitalize the obligation as a coercive force to control the conduct of the other party to the agreement. After a careful review of the facts of the case in hand we are satisfied that the findings of the learned trial judge are correct in all material respects. We affirm the judgment. Black, C. J., and Brace and Macearlane, JJ., concur.