McGushin v. Arnold

THE COURT. Respondent Arnold is the inventor and patentee of a lubricator. In 1934 Arnold entered into an [272]agreement with plaintiff and appellant McGushin, wherein it was provided, among other things, that the appellant should pay to respondent a stipulated royalty on each article manufactured and sold, payments to be made on the 10th day of each calendar month, and that appellant should keep accurate accounts and render a full statement to respondent on or before the 10th day of each calendar month for the preceding calendar month showing all goods manufactured and sold under said license. Any improvements in the patent were to become the property of Respondent, and if royalties or any part thereof should at any time be in arrears beyond the thirty days after the same shall become due, or if appellant should default in performing any of the conditions contained in the agreement, respondent could rescind the agreement.

Differences arose between the parties to this agreement, and an action was brought by plaintiff against defendant, alleging the execution of the agreement, and that in reliance thereon plaintiff expended large sums of money for the construction, promotion and sales of said lubricator. It was also alleged plaintiff constituted defendant his agent for the manufacture and sale of said lubricators for a limited period, and under that agreement defendant manufactured and sold certain lubricators, the exact amount of which was unknown to plaintiff, but alleged that it exceeded the sum of $1500. It is also alleged that defendant refused to make any accounting to plaintiff for the lubricators manufactured and sold.

It is also alleged in a separate cause of action that by reason of the premises plaintiff had been unable to continue the manufacture and sale of said lubricators, and had been deprived of profits therefrom. It is also alleged that plaintiff was damaged in the sum of $25,000 for the loss of business reputation.

An answer was interposed, denying the allegations of this complaint, and by way of cross-complaint, defendant alleged that plaintiff became and still was indebted to him in a specified amount in excess of $1,000 for royalty payments arising out of the sale of the lubricators by plaintiff under the agreement entered into in June, 1934.

It is also alleged in a separate cross-complaint that plaintiff became and still is indebted to defendant in a specified sum in excess of $300 for moneys paid out for the use and benefit of the plaintiff at his special instance and request in