Blue v. Hazel-Atlas Glass Co.

117 S.E. 612, 93 W. Va. 717, 1923 W. Va. LEXIS 106

• Court: West Virginia Supreme Court
• Decided: May 8, 1923
• Status: Published

Opinion

MEREDITH, JufiGE:

Plaintiff filed his amended and" supplemental bill against Hazel-Atlas Glass Company, a corporation, J. C. Brady as its president and in his own right, for discovery and an accounting for certain royalties alleged to be owing plaintiff by the company, due him under certain patent rights, and for a decree against the company for the amount found due on final accounting. The court sustained a demurrer to the bill, interposed on behalf of J. C. Brady individually, and dismissed it as to him in that capacity. The demurrer of Hazel-Atlas Glass Company was overruled. The company then moved the court to strike from the bill as immaterial paragraphs, I, II, III, IY, Y, YI, and IX, except the averment in paragraph II that J. C. Brady is president of the defendant company, and except the last sentence of paragraph Y and the last two sentences of paragraph YI, to which plaintiff objected, but. the .court sustained the motion and.struck out each, of the portions covered by the motion.’ The questions arising on the rulings of the court, on the joint application of the parties, are certified here for review.

Under the second paragraph, sec. 1, chap. 135, Code, what are the questions certified that we can consider ?

First, the court sustained the demurrer of J-. C. Brady individually and dismissed the hill as to him in that capacity. That was a final order in that respect and cánnot be considered here except by appeal in the regular way. Heater v. Lloyd, 85 W. Va. 570, 102 S. E. 228.

Second, the court sustained the company's motion to strike out certain paragraphs and parts of certain other paragraphs and entered an order striking them from the bill. This in effect was the same- as if the <jourt had sustained defendant's demurrer to those particular portions of the bill and dismissed it as to those parts;.but the matters referred to in those particular portions do not set up any independent claim for equitable relief. If they have any place or perform any office in the bill at all it is because of their bearing upon the single demand for relief and do not finally dispose of that demand; hence the order striking out the particular parts of the bill is not final nor is it appealable; the ruling of the circuit court in that' respect, therefore, can be considered here on certificate. Gulland v. Gulland, 81 W. Va. 487, 94 S. E. 943.

Third, the sufficiency of the bill upon demurrer, of course, can be considered.

The bill by paragraphs in substance states:

I. That defendant, Hazel-Atlas Glass Company, was organized in 1902 or 1903 as a result of and for the purpose of combining four other corporations, to-wit, the Wheeling Hinge Company, which was ' originally engaged in making hinges but at the time of the merger, was chiefly engaged in making metal caps for glass jars; the Hazel Glass Company, which was engaged in making glassware chiefly for preserver goods and pickle bottles; the Republic Glass Company, which was engaged in making glass tumblers; and the Atlas Glass Company, whose chief business was that of making fruit jars; that the latter company was organized by Charles E. Blue and other named persons, and when it was organized plaintiff was the owner of a number of patente for glass-making machines, and in consideration of the transfer of said patents as well as the improvements thereon which plaintiff might from time to time invent, discover or make, plaintiff was to l’eceive one-fifth of the capital stock of the Atlas Glass Company, and should the capital stock be increased he was to receive enough additional stock so that at all times he would be the owner of one-fifth of the capital stock of that company outstanding.

This paragraph was struck from the bill.

II. That about 1902 or 1903 the four companies were consolidated under the name of Hazel-Atlas Glass Company by transferring the assets of each company to Hazel-Atlas Glass Company for its stock'based on the appraised values of the assets of the four merged companies; that the four companies then distributed among their stockholders the stock so received so that all the stockholders of the four merged companies became stockholders in the Hazel-Atlas Glass Company; that plaintiff received as his share of stock 300 shares from the Atlas Glass Company and 100 shares from the Republic Glass Company; that Charles M. Brady was the first president of the Hazel-Atlas Glass Company and a director thereof for many years; W. S. Brady'was its first vice president and a director thereof for many years; and J. C. Brady was its first secretary and treasurer and a ■ director thereof and is now a director and also its president.

The court struck out all of this paragraph except - the statement relative to J. C. Brady being the company’s president.

III. That plaintiff while quite young began working in a glass company of which Charles M. Brady was president, and since that time he has been closely associated with Charles M. Brady, W. S. Brady and J. C. Brady in business; that the companies in which he was interested with the Bradys were chiefly the Hazel Glass Company, Atla-s Glass Company and the Republic Glass Company, and as to them he relied upon the business judgment and ability of the Bradys; that he assigned .outright to Atlas Glass Company several valuable patents for glass-making machines and licensed to Hazel Glass Company the use of his important patents for gdass-makiug machines; that in. all his dealings with said Bradys; involving the right to use his patents, he reposed trust1 and-confidence in the Bradys and did not deal with them at arm's-length.

IV. That on December 27, 1900, plaintiff, with Louis F. Blue and Arthur G. Hubbard, made a contract with Hazel Glass Company which was to continue another contract between them for a time and finally superseded it on January 1, 1901, the new contract being filed as Exhibit No. 1. The hew contract provided under section 1 thereof that Hazel Glass Company would pay plaintiff and his associates certain royalties according to the sizes for certain articles of glassware which it was then manufacturing under patents controlled by -them and .that the minimum royalties under that section would be at least $6,000 per year; that plaintiff was the patentee of patents and Louis Y. Blue and A- G. Hubbard were assignees of interests in two- of them; that Hazel Glass Company paid the royalties as provided'until that company was merged into Hazel-Atlas Glass Company, when Hazel-Atlas Glass Company acquired the contract as part of Hazel Glass Company’s assets; that defendant company paid royalties under section. 1 of the contract until patents described therein expired, which was in 1914; that the contract was assigned to defendant company and for a long time it has exercised the right of Hazel Glass Company thereunder ; that the last named company has been dissolved.

This paragraph was also struck from the bill.

V. That section 2 of the .contract .provides that if the first parties, plaintiff and his associates, succeed in manufacturing for Hazel Glass Company an automatic feeding machine which will require no more than one skilled and one unskilled laborer to operate and if it be accepted in writing by Hazel Glass Company it will pay additional royalties as provided in section 2, and will otherwise comply with its covenants in that section. These covenants, not. pleaded other than as just stated, require the company.to pay an ad-, ditional royalty of 2c'per gross on articles up to and-mr eluding 16 ounces capacity and 5c per gross on articles over and above- 16 ounces capacity and 5c per gross on arti-eles over and above 16 ounces capacity, with a guaranteed minimum, royalty of $6,000 annually under section 2, the minimum provision, however, not to go into effect until the second year of working the machine. It is alleged that section 3 of the contract provides that if the first parties should manufacture for Hazel Glass Company an automatic machine for making glassware that will require not more than one unskilled laborer to operate and if it be accepted by the company in writing it agreed to pay the royalty specified in section 3 and to keep the covenants therein contained. These covenants, which wrere not otherwise pleaded than as stated provide that if such machine be manufactured and accepted by Hazel Glass Company it will pay the first parties a royalty of 4e per gross-on all articles up to and including 16 ounces capacity, a royalty of 10c per gross on all articles over and above 16 ounces capacity, and that it would guarantee a minimum royalty for any year for articles manufactured under section 3 of $20,000; provided, however, that these royalties and minimum guarantee should take the place and be in lieu of the royalties and guarantee provided under section 1 and 2, and provded further that the company shall have accepted in writing and have had in operation at least seven of these machines for -a period of one year before the minimum guarantee of $20,000 should be effective, and provided also that the minimum guarantee of $20,000 per year should continue for a period of five years, after which period the minimum guarantee, might be discontinued or continued at the company’s option. This paragraph of the bill also alleges that plaintiff has manufactured a machine that fulfils all the requirements of sections 2 and 3 of the contract, has had it patented as hereinafter stated and the machines have been tried and accepted and are being used by Hazel-Atlas Glass Company.

All of this paragraph was struck out except the statement that plaintiff had manufactured a machine that met the requirements of sections 2 and 3, had obtained a patent therefor and defendant had tried, accepted, used and is now using it.

YI. That when the contract was executed plaintiff had. roughly conceived the idea of a devices or a machine that would answer the requirements of section 2 and 3 of the contract, and shortly thereafter he set about to invent and produce such machine or machines. On March 26, 1903,' he filed his application with the United States patent office for a patent for a machine which substantially answered such requirements and was issued a patent therefor on January 9, 1906. A copy of the patent is purported to be exhibited with the bill as Exhibit No. 2, though it was not with the papers sent here.

The first averment of this paragraph was struck out.

YII. to XI. These paragraphs contain averments to the effect that in 1903 plaintiff had manufactured a machine for the manufacture of glassware which was turned over to defendant, Hazel-Atlas Glas Company, as assignee of the contract; that that company tried and tested the machine and found it was commercially practicable and fulfilled the requirements of the contract; that this is the machine covered by patent plaintiff’s Exhibit No. 2; that in 1907 one Brooke obtained a patent for severing a continuous flowing stream of glass, without disclosing any practical means in the patent which severed the stream; as plaintiff- recollects the Brooke patent was issued after plaintiff -had applied for his patent; to prevent questions of infringment arising plaintiff obtained an option of purchasing the Brooke patent, which' fact was made known to defendant company. It was then tentatively agreed between plaintiff and defendant company that if he would release his option defendant would secure a license to úse the Brooke patent. About this time defendant began negotiations for modification of the royalties provided under the contract, reducing the royalties in stated amounts, but the agreement was never executed, though plaintiff is only claiming the lesser royalty as provided by the modification; that plaintiff performed his tentative agreement and did not purchase the Brooke patent but released his option thereon; defendant obtained a license from the owner to use the Brooke patent and that -it afterwards used plaintiff’s machine for making glassware, has continued to use it and is still using it; that it then and there became a licensee under plaintiff’s patent and is liable on its covenants in the contract, for royalties; that plaintiff does not know how many of plaintiff’s machines it has used or is now using; that -he ■does not know and cannot ascertain how much of said glassware defendant has manufactured by the use of plaintiff’s machines nor the relative sizes of the ware so manufactured; that a discovery thereof is indispensable to the plaintiff to afford him relief in this suit or any suit or action for recovery of the royalties owing him! Plaintiff avers in paragraph IX that Louis V. Blue and A. G. Hubbard have no interest in his patent or the machine and device covered thereby nor in the royalties owing to Mm, but this averment was struck out by the court. The bill closes with a prayer for discovery from the defendant showing the date the defendant company began to use his machines, the amount and sizes of the ware manufactured by the use of the machines up to and including the year 1921 and the places where the machine or machines were used, and for a decree for the royalties which may be found due.

We will now take up the two questions certified which can be considered.

First. Was the court’s ruling correct in striking out the various portions of the bill referred to? At first we were disposed to hold that we could not consider this question because the matters have already been struck out. But as the relief sought is not wholly dependent upon the matter struck out the order is not final nor appealable; the question arises upon the face of the bill, and therefore comes within the terms of sec. 1, chap. 135, Code, providing for the certification of such questions for review. If the matters struck out were so material as to deprive plaintiff of his right to a relief we could not review the action of the court thereon upon certificate. These parts of the bill were struck out because impertinent, that is, because of their immateriality in the view' of the trial court. Some of them, so far as we' cdn now' see, may be immaterial; the statements of fact are loosely drawn. Plaintiff takes many words in coming to the' point, but we cannot say that all- the statements struck out'-'have’Uio real'bearing on the ease. It seems to us-that particularly paragraph IV, which exhibits the contract and states that defendant has exercised under it the rights of the Hazel Glass Company, is germane to the purposes of the bill. While plaintiff’s contract was not made with defendant, yet defendant, according to the bill, took an assignment of the Hazel Glass Company’s rights • and assumed its liabilities under the contract. As we interpret the bill it is based for the most part upon this contract. By striking out paragraph IV the court struck out the part exhibiting the contract. Were it not for other parts of the bill, not struck out, which refer to it, the contract could not now be considered at all. This well illustrates the danger of striking out matter because of impertinence, and for that reason the courts are slow to strike out impertinent matter. As was said in Dodd v. Wilkinson, 42 N. J. Eq. 647:

“The court, in cases of impertinence, ought, before expunging the matter alleged to be impertinent, to be especially clear that it is such as ought to be struck out of the record, for this reason: that the error on the one side is irremediable, on the other, not. If the court strikes it out of the record it is gone, and the party may have no opportunity of placing it 'there again; whereas, if it is left oh the record, and is prolix or oppressive, the court, at the hearing of the cause, has power to set the matter right in point of costs.”

We think that statement has peculiar application here. The court cannot, in advance of the hearing, always tell whether matter is pertinent or not. While the court has undoubted right to strike from a bill matter which it deem impertinent or scandalous, yet the adjudged cases show that this right is rarely exercised. We are of opinion that in this case the matters referred to should have been left in the bill; it is difficult to sift the impertinent from the pertinent. Of course the plaintiff will not be permitted to pry into the business of the defendant as to matters in which plaintiff has no interest; but it is better to await final hearing rather than in any way to prejudice the plaintiff’s rights by striking out matters which his counsel evidently considered pertinent and material, otherwise the matters would not have been pleaded. In our view of the case, paragraph IV is pertinent, and also paragraph IX, as that paragraph discloses why Louis V. Blue and Arthur G. Hubbard are not made parties, a proper-statement and also a necessary one, if the suit is based on the contract to which they were parties. We can not see the pertinence or materiality of some of the other averments, but we can see no harm to defendant by permitting them also to remain in the bill. The bill advises the defendant of plaintiff’s claim; the matters that have no bearing on the issues need not be answered. The court has full control of the question of costs and if unnecessary costs are caused by reason of immaterial averments in the bill, the court should/ unhesitatingly require plaintiff to pay them.

We are disposed to hold that the. order striking out the various parts is erroneous, rather than to undertake a further separation of the' material from the immaterial. To hold otherwise might do plaintiff an injustice which we can not foresee, and we do not think it will prejudice the defendant.

Second. Is the bill sufficient? It is not a bill for discovery only, but it also asks for relief. We think the bill sufficiently states a ease. As was said in Dudley v. Niswander, 65 W. Va. 461, 64 S. E. 745, “Equity has jurisdiction of a bill seeking to substitute an equitable for a legal forum when there is a prayer for discovery and there are averments showing the indispensibility thereof.” See also: Prewett v. Bank, 66 W. Va. 184, 66 S. E. 231; Thompson v. Whitaker Iron Co., 23 S. E. 795; Rees v. Emmon Coal Mining C., 88 W. Va. 4, 106 S. E. 247. The bill shows that defendant has been and is now using the machine patented by him in its business of making glassware; but when it began using the machines, or how long it has been using them, or how many, or where, he avers he does not know; nor does he know the sizes of the various kinds of ware that have been made by the use of the machines, nor the various quantities made. All this knowledge is peculiarly within defendant’s possession, and plaintiff alleges that a discovery is in-dispensible to his relief. Presumably, it has carefully kept its documents and accounts and can readily furnish the information. Nor do we think- the hill demurrable because of laches. We do not know when defendant began using the machines, whether fifteen years or five years ago. Besides, the contract appears to be a continuing one. There is nothing on the face of the bill to indicate that there has been any loss of evidence by reason of the delay in bringing suit or that defendant has been prejudiced thereby.

We are therefore of opinion to reverse the ruling of the circuit court in striking out the several portions of plaintiff’s bill and to affirm its action in overruling the defendant company’s demurrer to the bill.

Reversed in part; affirmed in part.