Golden State & Miners' Iron Works v. Angell

California Supreme Court Jun 29, 1891 No. No. 13208Published

Before: McFarland

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Holding. The court held that the plaintiff corporation was the equitable owner of the patents because the defendant held them in trust for the plaintiff pursuant to a valid contract, and the defendant's creditors had no claim to the inchoate rights or the resulting patents.

Issues

Whether there was sufficient evidence of a contract between the defendant and the plaintiff regarding the ownership of the patents.
Whether the defendant's inchoate right to apply for patents was subject to the claims of his creditors.
Whether the contract for the patents was supported by sufficient consideration.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The court finds’ that no assignment of the patents was made by Angell to plaintiff, but that he held the same in trust for plaintiff.”

“we think that the court below was right in holding that one half of the patents thus procured was, in justice and equity, the property of plaintiff.”

Synopsis

Patent Right — Improvement by Superintendent — Title oe Corporation — Execution — Supplementary Proceedings — Enforcement of Trust against Receiver.—Where one who was superintendent, director, and stockholder of a manufacturing corporation agreed, on behalf of the corporation, with an owner of swamp-land to make the latter a dredging-machine, with certain improvements which the superintendent had in mind, and which he thought would be valuable, and that if the purchaser would pay for building the machine, and try it, and if it proved a success that the corporation and purchaser would each have one half-interest in any patent that could be obtained for the improvements, and the corporation and purchaser, in pursuance of the agreement, paid in equal shares the entire expense of procuring patents, which were taken in the name of the superintendent, who claimed no interest therein on his own account, there is sufficient proof of a contract between the superintendent and the corporation by which the latter was to own one half of the patents obtained, and it can enforce an assignment of one half interest therein against a receiver appointed at the instance of execution creditors of the superintendent, to whom he was compelled to assign that interest upon proceedings supplementary to execution.

Ed. — Contract to Secure Patents — Consideration — Sharing Expenses. — The paying by the corporation of half the expense of procuring the patents is a “prejudice suffered,” within the meaning of section 1605 of the Civil Code, and is a sufficient consideration for the contract, by which the inventor agreed to give a one-half interest in the patents to be procured to the corporation for paying part of the expenses of procuring them.

Id. —Rights of Corporation—Objection of Creditors of Superintendent— Consideration — Resolution of Directors — Certainty and Fairness of Contract. — In an action by the corporation against a receiver of the inventor, who was appointed by the court, in proceedings supplementary to execution, at the instance of judgment creditors of the inventor, and to whom was assigned the patents to be sold in satisfaction of the judgment, to have it decreed that the corporation owned an undivided half of the letters patent, that the judgment creditors of the inventor be enjoined from proceeding further against the same, and that the receiver be ordered to assign a one-half interest in the letters patent to the corporation, the judgment creditors, who were also parties defendant, cannot object that there was no consideration for the contract between the corporation and the inventor, by which the former was to own one half of the patents, nor can they object that no formal action was taken on the matter by the board of directors of the corporation, nor that the contract was about property that was uncertain and not m esse, and that it was unfair and unjust.

McFarland, J. In July, 1880, the defendant A. F. Collins obtained a money judgment against the defendant Horace B. Angell and one Cyrus Palmer, and in September of that year an execution which had issued on the judgment was returned wholly unsatisfied. In May, 1884, the said Collins and the defendant Elizabeth A. Bisdon, to whom an interest in the judgment had been assigned, instituted proceedings supplementary to execution against said Angell, which resulted in an order of the superior court, made May 23, 1884, commanding him to assign to one Forbes, a receiver appointed for that purpose, all the right, title, and interest which he, the said Angell, had in four letters patent for improvements in dredging-machines, to be sold in satisfaction of said judgment. A further order was made, permitting all persons or corporations claiming an interest in said letters patent to commence and prosecute any action against said receiver, to determine and enforce such interest. Whereupon the plaintiff herein, a corporation, commenced this present action, averring in its complaint that it is the real owner of one undivided half of said letters patent, and praying that it be decreed to be such owner; that said defendants Collins and Bisdon be enjoined from proceeding further against the same; that said receiver be ordered to make an assignment of the same to plaintiff; and for other relief, etc. The court rendered judgment for plaintiff, substantially as prayed for; and from the judgment, and an order denying a new" trial, the defendants Collins and Bisdon appeal.

The main history of the case, as shown by the findings and evidence, is briefly this: In May, 1880, the plaintiff was, and for mány years before then had been, engaged in manufacturing various kinds of machines, and the defendant Angell was then its superintendent, [651]and was also a director and owner of stock in the corporation. Williams & Bixler were then owners of large bodies of swamp-land which they were endeavoring to reclaim, and protect by levees; and a large break having occurred about that time on the line of their works, one of their employees was told by said Angell that he thought his company (plaintiff here) could construct a dredging-machine, with certain improvements, by which levees could be constructed more cheaply than by any other method. Afterwards, interviews were had upon the subject between Angell and General Williams, of the firm of Williams & Bixler. At Williams’s request, Angell sketched out on paper his proposed improvements, and set the draughtsman of the plaintiff to work on a drawing. When the drawing was finished, Williams was somewhat pleased with it; but when an estimate of the cost was made, he thought it would cost too much for an experiment. Williams & Bixler were to advance the money to pay for the construction of the machine. Angell then stated to him that he thought “there were some valuable patentable improvements there that might be worth something, and in case there should be, that in consideration he would put the money in to build the machine and try it, that he would be entitled to one half and the Golden State and Miners’ Iron Works the other half of such improvements, whatever there was that could be secured by patent.” On his return to the iron-works of plaintiff he told Palmer, the president of the company, the statement he had made to Williams, and Palmer said it was “ perfectly satisfactory.” This report was made by Angell, as superintendent, to Palmer, as president of plaintiff. After considering the matter a day or two, Williams & Bixler gave Angell an order employing plaintiff to go on and complete the machine according to the drawings. The machine was built by plaintiff, for which Williams &

Golden State & Miners' Iron Works v. Angell

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