Schrank v. Sterling Products Co.

WOOD, J. In this action plaintiff recovered a judgment in the sum of $11,117.32, the amount found to be due as minimum royalties under an agreement whereby plaintiff gave defendant a license to manufacture and sell a device useful in sand papering and polishing. This device is referred to by the parties as a “sander”.

The original owners of the patent, Drennon, Heinz and Ganahl, entered into an agreement in writing with Roscoe V. Porter and George S. Bean under date of March 18, 1933, whereby Porter and Bean were given an exclusive license to manufacture and sell the sander and Porter and Bean agreed to pay them the sum of $1.50 for each sander sold. The contract provided for the payment of attorney’s fees in ease it became necessary for the owners to commence action thereon and also provided that the licensees would pay a minimum royalty of $150 per month. It was also provided that the contract could not be assigned by the licensee without written consent of the owners and that an assignment with[109]out the consent of the owners would work a forfeiture of the contract at the option of the owners.

Under date of April 14, 1934, Porter and Bean entered into an agreement in writing with defendant, whereby Porter and Bean gave defendant an exclusive license to manufacture and sell the sander and in which it was provided that defendant would pay to Porter and Bean the sum of seventy-five cents for each sander sold by defendant and in addition the sum of $1.50 for each sander sold, the sum necessary for Porter and Bean to pay under their agreement with the owners. Both contracts, the one dated March 18, 1933, and the one dated April 14, 1,934, contain many provisions stated in detail ■ which are different in many respects, but which for the purposes of this appeal it is not necessary to discuss. References to the earlier agreement are made in the second agreement, which sets forth, “a copy of which said license agreement is attached hereto, marked Exhibit I and hereafter referred to and made a part hereof”. Plaintiff sues as the assignee of Porter and Bean.

The parts of the later agreement which bind defendant to pay royalties are found in paragraphs IX and X. Paragraph IX provides: “Sterling agrees: ...(e) To pay to Licensors, on or before the 10th day of each and every month . . . any sums on account of minimum royalties required to be paid hereunder in accordance with the provisions hereinafter contained.” Paragraph X provides: “It is Mutually agreed and Understood as Follows: (a) Should Sterling fail to pay to Licensors on August 10, 1934, a minimum royalty of one hundred dollars ($100.00) and beginning with September 10, 1934, a minimum royalty of one hundred fifty dollars ($150.00), for each and every month during the existence of this agreement, and an additional minimum royalty of four hundred fifty dollars ($450.00) for each and every quarter year, beginning with nine (9) months from the date of this agreement and continuing during the existence of this agreement, the Licensors may cancel this agreement by giving the Sterling (60) days notice in writing