The New England Car-Spring Co. v. The Union India Rubber Co. THIS was an application for a provisional injunction, to restrain the infringement of Letters Patent granted to Charles Goodyear, June 15th, 1844, for what is known as "vulcanized india rubber." The New England Car-Spring Company claimed the exclusive right to make car-springs under the patent, by license from Goodyear, and the bill alleged that the defendants. were making car-springs of vulcanized india rubber without right. The defendants claimed a right to make such carsprings by license from Goodyear under the patent. On the 18th of July, 1844, Goodyear entered into an agreement with the Naugatuck India Rubber Company, by which he gave a license to that Company, to use, with a few exceptions, the whole right granted by the patent, upon certain terms. By that agreement, Goodyear covenanted not to license any other person, reserving, however, to himself, provided he should deem it for his interest to sell the exclusive right for any particular subject of manufacture under the patent, the right so to do, for a sum in gross, provided, that, before any such sale for a sum in gross, the Naugatuck Company should have the right to become the purchasers, at such stipulated price or sum in gross; and such sale was not to be made to any other person, except on the refusal or neglect of the Naugatuck Company, for sixty days after the offer should have been made to them, to become the purchasers for such sum in gross, nor then, until one-fourth of the stipulated sum in gross should be first paid or secured to the Company, to their satisfaction; and, upon such sale, the license to the Company, to the extent of the exclusive right sold, was to cease. This agreement was recorded in the Patent Office. On the 29th day of October, 1847, Goodyear, for the consideration of $5,000, sold to Charles Ely and Edward Crane the exclusive right to use his patented invention. in the making of car-springs. The transfer was in writing, and was recorded in the Patent Office January 10th, 1848. At the time of such transfer to Ely and Crane, the factory of the Naugatuck Company was at Naugatuck, in Connecticut, and all the directors, except Charles J. Gilbert, lived at Hartford, in that State. The Company had an office for the trans The New England Car-Spring Co. v. The Union India Rubber Co. action of business in the city of New York, where Charles J. Gilbert attended, he being the treasurer of the Company. On the 26th of December, 1848, Ely and Crane assigned to the New England Car Company all the right which they acquired by the conveyance from Goodyear to them, of the 29th of October, 1847; and, on the 20th of November, 1851, the last-mentioned Company assigned all such right to the plaintiffs, the New England Car-Spring Company. Both of these assignments were duly recorded in the Patent Office. On the 4th of November, 1848, the Naugatuck Company assigned all the right which they then had, by virtue of their contract with Goodyear, of the 18th of July, 1844, to the defendants, the Union India Rubber Company, they agreeing to perform. all the covenants which the Naugatuck Company were bound to perform by virtue of their agreement with Goodyear of that date. tiffs. James T. Brady and Edward N. Dickerson, for the plain William Curtis Noyes and George C. Goddard, for the defendants. INGERSOLL, J. If the contract between Goodyear and Ely and Crane was a valid contract to convey what it purported to convey, then, from and after its date, the Naugatuck Company had no right to manufacture car-springs under the patent; and, consequently, no such right was conveyed by them to the defendants. If the contract between Goodyear and Ely and Crane did not convey what it purported to convey, then the Naugatuck Company, subsequently to that contract, had the same right which they had before. And as, before such contract, they had a right to make car-springs under the patent, it would follow that the defendants would now have the same right to make such car-springs, as, on the 4th of November, 1848, they succeeded to the rights which the Naugatuck Company then had. The plaintiffs insist, that the contract between Goodyear and Ely and Crane was a valid contract, and that The New England Car-Spring Co. v. The Union India Rubber Co. it conveyed the exclusive right to make car-springs of vulcanized rubber under the patent. It is clear that Goodyear, after the contract with the Naugatuck Company, had no absolute unconditional right to convey to Ely and Crane what his contract with them purported to convey. The Naugatuck Company had rights, which were inconsistent with such absolute unconditional right. Their rights could not be affected at the mere will of Goodyear. Before their agreement with Goodyear, he could sell to whom he pleased, and for such sum as he pleased, the exclusive right to manufacture car-springs of vulcanized rubber. And, after such agreement, he could sell to any third person such exclusive right, upon any terms agreed upon, provided the Naugatuck Company assented to the same. Whatever restriction was imposed by the agreement, upon his right to sell, was so imposed for the benefit of the Naugatuck Company. They could, by their assent, remove the restriction, and, upon such assent being given, the right to sell existed, although the conditions mentioned in the agreement were not complied with. He had, also, a right to sell without the assent of the Nauga tuck Company, provided that, upon an agreement to sell for a sum in gross, the company should either refuse or neglect, for sixty days after notice given to them to become the purchasers, to avail themselves of the privilege; and, provided, also, that, upon such neglect or refusal, one-fourth of the stipulated sum or price in gross should be tendered to them. If the company assented to a sale, then these conditions need. not be complied with. If these conditions were performed, then there was no necessity to obtain the assent of the Company. In such a case, a sale would be valid, even if they should dissent. If, therefore, the Naugatuck Company assented to this sale of Goodyear to Ely and Crane, or if, before the sale, the conditions above set forth were performed, the Naugatuck Company would be divested of all right to manufacture car-springs under the patent, and the exclusive right to manufacture them would be vested in Ely and Crane. And, as the New England Car-Spring Company now have all the The New England Car-Spring Co. v. The Union India Rubber Co. right which Ely and Crane derived from Goodyear, the exclusive right would be vested in them, Two questions, therefore, are presented for determination: First. Did the Naugatuck Company assent to the contract of sale, as made by Goodyear to Ely and Crane? and, Second. Were the conditions mentioned in the contract between them and Goodyear, and which were necessary to be performed, to give him a right to sell, complied with by him, before the contract of sale to Ely and Crane was executed? If either of these questions is answered in the affirmative, then the contract of sale to Ely and Crane was a valid one, and conveyed an exclusive right to them to manufacture car-springs under the patent; and, as a consequence, the right of the Naugatuck Company, under the license of Goodyear, to manufacture such springs, ceased. The facts upon which the question of assent is to be determined, admit of little dispute. Five thousand dollars was paid by Ely and Crane for the transfer of the car-spring right to them. One thousand dollars of this sum was paid to a Mr. Dorr, as a commission for negotiating the purchase. On the 4th of November, 1847, Dorr delivered to Gilbert, the treasurer of the Naugatuck Company, for that Company, $1,000, in a draft drawn by Charles Ely on Edward Crane, for that Company's share of the purchase-money, according to that agreement of the 18th of July, 1844. The transaction was entered on the books of that Company. The draft was discounted for the benefit of that Company. It was paid at maturity. They received the money. It was appropriated to their use. They took advantage of the contract made between Goodyear and Ely and Crane. They received the consideration money paid by Ely and Crane to cancel the right which before then existed in them. They received the proceeds of the sale of their right, as made by Goodyear. They have kept those proceeds. They have never offered to return them. They never in any way repudiated the act of their treasurer, either in receiving the draft, or in procuring it to be discounted, or in applying the avails to their benefit. The money. The New England Car-Spring Co. v. The Union India Rubber Co. which Ely and Crane paid, $1,000 of which the Naugatuck Company received, was paid and received in consideration that the car-spring right should exclusively vest in Ely and Crane, and in consideration that the license to the Naugatuck Company to make car-springs should cease. The Naugatuck Company never attempted to make car-springs. The transaction in relation to this payment was entered on the books of that Company, which books were at all times open to the inspection of its directors. The books show that the " 'patent account" was credited, and "bills receivable " debited, with the draft. On the 9th of February, 1848, "bills receivable" was credited, and "cash" debited with the money received on the discount of the draft. It cannot be denied that Gilbert, the treasurer, knew for what purpose the draft was delivered to him, or that he received it for the purpose for which it was delivered. But it is claimed by the defendants, that, although this $1,000 draft was delivered to Gilbert, their treasurer, as the consideration that Ely and Crane should have the exclusive right to manufacture car-springs under the patent, and that the Naugatuck Company's right to manufacture such springs, under the license from Goodyear, should cease, and although Gilbert knew of the purpose for which the money was paid, and received it for the purpose for which it was paid, and applied it to the Company's use, yet the corporation had no knowledge of the purpose for which the draft was delivered to the treasurer, and did not know that it was the consideration paid to enable Goodyear to transfer an exclusive right to manufacture car-springs, and no notice to that effect was given to it, and, therefore, it should not be presumed to have assented. to such transfer. A corporation is an artificial being, invisible, intangible, and existing only in contemplation of law. The only mode to give notice, or to communicate knowledge, to such artificial. being, invisible and intangible, is to give such notice, and to communicate such knowledge, to some agent authorized to receive it. Corporations know nothing except through agents. |