Standard Sewing-Mach. Co. v. Leslie

JENKINS, Circuit Judge, after this statement of facts, delivered the opinion of the court. It is undoubtedly true that proof of the circumstances out.of which, the contract grew, and which surrounded its adoption, may be proven to ascertain its subject-matter and the standpoint of the parties in relation to it, where the language of the contract is obscure or doubtful; but such evidence cannot be received to vary .the contract by addition or substitution. West v. Smith, 101 U. S. 263-271; Union Stock-Yards & Transit Co. v. Western Land & Cattle Co., 18 U. S. App. 438, 453, 7 C. C. A. 660, and 59 Fed. 49. Possibly, under the doctrine of these cases, the trial court should have entertained the evidence with respect to the situation of the parties, the subject-matter of the contract, and the circumstances under which it was entered into. We need not, however,' pause to consider this question, because such evidence could not avail to a construction of the contract which would conform it to what the ..parties may. have secretly intended but failed to express, but only to explain the meaning of the words actually employed if the language used was of obscure or doubtful meaning. We find the instrument in question to be couched in plain and unambiguous language. It. is therefore the best possible evidence of the intent iand meaning of-the parties. The provisions are not antagonistic, ñor is the language obscure. There is, as we read the contract, no uncertainty whatever in respect to the object and extent of the '.engagement. We are therefore to look to the terms of the contract to ascertain the intention of the parties, and that we must find “from the entire contract, without ignoring' or forcing from .their true significance the plain and unequivocal words and expressions of other articles.” Bast v. Bank, 101 U. S. 96; Crimp v. Construction Co., 34 U. S. App. 598, 606, 18 C. C. A. 595, and 72 Fed. 366, 371. . ’ The defendant in error, the inventor of the patented improvements, manifestly desired to provide for the manufacture and sale nfi machines embodying the features of his inventions. It is mat [329] ter of common knowledge that for many years sewing’ machines of many and different modes of operation had been in use and were upon the market, so that if; was questionable whether, in the then, state of the art, improvements could be effected which could be properly classed within the domain of invention or be deemed other than mechanical equivalents. Leslie was unwilling to guaranty the validity of his patented inventions, or to protect the company against lia bility in their use should they prove to infringe upon another’s protected rights. This risk was assumed by the company, upon the condition, however, that (lie payment of royalty should cease when a competent court should declare the invalidity of the invention. It thus appears that the inventions of Leslie were not recognized to be of established merit, or to be such that a monopoly in their use was assured to the company. It was clearly, therefore, an adventure of doubtful outcome, depending in part upon the question whether a monopoly in the manufacture and sale of these inventions should be established, and therefore uncertain whether their manufacture and sale would prove remunerative. It was under these circumstances that this contract was made. We therefore naturally find that those who were to invest capital in their manufacture should seek to protect themselves, so far as possible, against the risk assumed, by providing, as is done in the sixth clause of the agreement, that all royalt ies should cease upon the date of the decree of any court of competent jurisdiction declaring the invalidity of such patent or patents, and also by providing, as is done by the eleventh clause, that the company might terminate the contract at any time upon written notion, thereupon relinquishing all interest in the patents which had been assigned to a trustee in trust for the purposes of the contract. The company was willing to assume the risk of infringement upon other patented rights until the invalidity of the patents was declared, if payment of royalty should thereupon cease, and it had also the right to terminate the contract. This eleventh clause furnished the company another protection. Although the patents might be sustained, it was still problematical whether the inventions were such as to commend themselves to popular favor, and whether the manufacture and sale of machines embodying those inventions would prove pecuniarily remunerative. The company chose to bind itself to the manufacture of the Leslie machine during the terms of the patents, but reserved to itself the right to terminate the contract at any time when it deemed it advisable so to do. By the seventh clause; the company agreed “immediately to engage in and carry on with energy the business of making and selling sewing machines during the life of t.his contract, and shall make such number of machines as to keep the supply as nearly as practicable up to the demands of the trade, and this contract shall endure during the life of the patents issued in 1882, unless sooner terminated, as hereinafter provided.” It is insisted for the plaintiff in error that this provision has reference to the making and selling of sewing machines generally, and is not limited to the man [330] ufacture of those conforming to the Leslie patent, and that the company was bound to manufacture sewing machines of different designs sufficient practically to supply the needs of the market, so that Leslie’s inventions, if they should prove popular and valuable, might find a larger market. We think this a strained and unwarranted construction of the contract. We are unable to understand that the flooding of the market with machines of different construction could be beneficial to the marketing of Leslie’s machine. Upon the contrary, it would be detrimental. Leslie was only concerned to supply the market with machines containing his own invention, not the devices of others. It was not only foreign to his purpose, but counter to his interest, to supply the market with other and competing manufactures. The limitation of the contract to the period of the life of the patent lends additional force to this construction, if any support were needed. The plain meaning of the compact is that the company should energetically pursue the manufacture of the Leslie machines so that the supply should not fall short of the demand for these machines. It does not follow, however, if there were a breach of the agreement in this respect,— which we do not understand to be charged, — that the damages arising from the breach are measured by the amount of royalty specified in the contract to be laid upon all machines made by the company. That is to say, if the company was prohibited to manufacture machines other than the Leslie machines, and violated its contract in that regard, we do not understand that the company would be liable to respond for the specified royalties upon all the machines they manufactured, because it does not follow, necessarily, that the company could have sold the Leslie machine to the extent that they might have sold machines of other character and embodying rbther inventions. We cannot, however, find in this contract any language or any intent to restrict the company to the manufacture and sale of Leslie machines. It is true the company agreed to carry on energetically the business of manufacturing Leslie machines sufficient to supply the demands of the market. That manufacture might be great or small, according to the popularity which the Leslie machines might attain, and according to their merit, as might be established by their practical use, and as the validity of the patents might be determined by the court. It is not to be assumed, in the absence of restrictive provisions, that the company bound itself to invest considerable capital in a manufacturing plant which must lie idl,e unless the Leslie machine should prove to be a valid monopoly and entitled to and obtain popular indorsement and demand. The company was indeed bound to manufacture the Leslie machine up to the demand of the market, but beyond that it was not restricted in the use of its plant. We not only do hot find in this contract any word of exclusion or prohibition in this regard, but we discover language which, to our thinking, clearly recognizes this right. Thus, in the fifth clause of the contract the royalty is laid upon each machine manufactured by .the .company “embodying the principles covered by the first party’s pat [331] ent'-; and in the eighth clause it is provided that the company shall not be obliged to make rotary shuttle sewing machines like any model that had been settled upon as a standard, but it had the right to make such changes as should seem to it expedient, provided that no such alteration should relieve the company from the payment of royalties as provided, “so long as the machine made by it involved any of the essential principles covered by the patent of the first party.” Unless, under this contract, the company could rightfully make machines other than Leslie machines, this language is meaningless. If, as ruled below, the company must pay royalties upon all machines made by it so long as the contract was operative and until it was canceled by the act of the company, the language of these two clauses fulfills no office. These provisions are, then, mere surplusage. We have no right to so regard them. We must disregard a cardinal canon of construction to expunge them or to ignore them. They are not in conflict with any other term of the contract. They must be given full effect. That, can only be done, in the absence of any words of exclusion or prohibition, by holding that the company had the right to engage in the manufacture of machines other than the Leslie machine. The provisions of the ninth clause clearly relate to a statement of the number of Leslie machines shipped, and not to those of another character, for Leslie was only interested in royalties upon machines manufactured according to his patents. We fail to perceive the force of the interpretation of the trial court that it was the duty of the company, if it chose to cease operations under the contract and the manufacture of sewing machines under the patents owned by Leslie, to first exercise its option under the eleventh clause to terminate the contract. Undoubtedly, so long as the contract continued in force, the company was bound to manufacture the Leslie machines sufficient to meet the demands of the trade in that machine, but this does not prohibit the company from the manufacture of machines under other patents or of different construction; for to hold (hat, as we have before observed, would be to fly in the face of the express language of the fifth and eighth clauses of the contract. The company could terminate the contract whenever it found the business unremuner-ative, but, the contract continuing, it must meet 1he market demand for the Leslie machine. To the objection that under such construction the company could retain the; exclusive control of the patents while refusing to supply the market demand for the Leslie machines, it may properly be answered that for such breach of the agreement the company would be answerable in damages, and if the remedy at law were inadequate equity would find a way, possibly by annulling the contract and compelling a reconveyance of the patents, to stay the threatened wrong. Courts of law, however, do not sit to relieve from improvident contracts, but to interpret and enforce the agreements which parties have themselves made. We are of opinion that the trial court erred in its exclusion of evidence which would tend to show that the machines manufactured did not involve any of the essential principles covered [332] by the Leslie patents and in its direction of a verdict. The judgment will therefore be reversed, and the cause remanded, with directions to the court below to award a new trial.