Dunkley Co. v. Huntley Mfg. Co.

285 F. 383, 1922 U.S. Dist. LEXIS 1152
CourtDistrict Court, W.D. New York
DecidedJuly 12, 1922
StatusPublished

This text of 285 F. 383 (Dunkley Co. v. Huntley Mfg. Co.) is published on Counsel Stack Legal Research, covering District Court, W.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dunkley Co. v. Huntley Mfg. Co., 285 F. 383, 1922 U.S. Dist. LEXIS 1152 (W.D.N.Y. 1922).

Opinion

HAZED, District Judge.

Two suits in equity by the Dunkley Company against the Huntley Manufacturing Company are before me on evidence relating in the first suit to infringement by defendant of patent No. 1,256,885, issued to Melville E- Dunkley on February 19, 1918, for a cherry-pitting machine, and in the second suit to contractual violation by defendant arising from a sales contract by which defendant transferred its cherry-pitting business to the plaintiff. As these actions are between the same parties, both arising out of the same transactions, they were tried together, and are both decided in this opinion.

[384]*384The relations of the parties had their beginning in license agreements for use of the S. J. Dunkley patent, dated November 1, 1909, and February 14, 1913, respectively, by which defendant agreed to pay a royalty on sales of cherry-pitter machines of the various kinds that had been completed by the plaintiff. Pursuant to the license under a later agreement, defendant manufactured patented cherry-pitter machines and sold the same to the trade. Iff such later agreement it was stated that plaintiff had completed an improved cherry-pitting machine, which it would permit defendant to manufacture upon payment of $1,400 for expense of development of the new machines and a royalty on all sales of $200. Fifteen machines, at least, were to be manufactured by the licensee during the first three years, and -upon failure to do so plaintiff reserved the right to annul the contract and take over the patterns and drawings of the licensees at cost price. Defendant continued marketing the improved machine under its license, which was designed to meet the competition of the Foote pitting machine, then and since the year 1913 known to the trade. The Foote pitting machine had staggered cells for holding the cherries in the drum, and the improved Dunkley machine embodied a somewhat similar arrangement. Foote claimed at the time that it was an infringement of his patent.

Plaintiff did not manufacture its machines at the time, but, following the threat of infringement suits, it acquired a plant for doing so, and thereupon, pursuant to another agreement, dated February 26, 1916, bought the cherry-pitter business of the defendant for $5,186.39, which at said time was owing $1,500 for back royalties on the preexisting arrangement. In purchasing of defendant the jigs, templets, and materials on hand at cost, plaintiff credited defendant with the royalties due on all its sales. The agreement also provided for the manufacture by defendant of twelve No. 4 machines for $5,700 during the period that plaintiff’s plant was under construction. In effect, defendant surrendered its license rights to manufacture and sell the pitting machines under the earlier agreements, and transferred to plaintiff the instrumentalities for their manufacture, but it retained the exclusive right for one year (and thereafter until canceled by either party) to sell the machines that were to be manufactured by plaintiff. In consideration of the cancellation of prior contracts and licenses, defendant had the privilege of selling, not only so-called Midget No. 1 and No. 3 cherry pitters, but also the No. 4, and repair parts, on a commission basis of 20 per cent, on the sales prices to be fixed by plaintiff. The No. 4 machines were used with other equipment and were to be sold only upon first receiving the written consent of plaintiff. Defendant had the right for one year from the date of the agreement (and! thereafter until canceled by either party) to solicit from the trade the installation of cherry-handling equipment, consisting of pitting machines, stemming machines, and their attachments or combinations. It was also agreed that defendant- should deliver to plaintiff a list of purchasers and lessees of the pitter machines that had been manufactured or sold by it, and refer all inquiries of customers of such ma[385]*385chines to plaintiff. On April 12th, however, the existing contract was mutually canceled, notice of the termination being given by plaintiff.

It is claimed by plaintiff that defendant, in violation of the existing contract, did not turn over inquiries of customers or prospective buyers as had been agreed; that it broke the contract by continuing the business on its own account, and in 1917 marketed a similar cherry-pitting machine, one that is an infringement of its patent No. 1,256,885.

The relief demanded in the second action, which for convenience will be determined first, is that defendant be required to turn over to plaintiff all the business of defendant relating to cherry-pitting machines, together with inquiries of customers and prospective customers, and account for all profits since February 26, 1916, the date of the agency agreement. Defendant, in opposition, contends that the contract was first broken by plaintiff, owing to its refusal to accept orders for pitter machines which defendant had obtained, and hence the latter had the right to rescind the agency contract.

The intention of the contracting parties, as evidenced by the contract, was that each party should release the other from performance of prior licenses and agreements, and that defendant should become agent for plaintiff, with authority to sell the Midget No. 1 and No. 3 machines and repair parts, and also No. 4 on receiving written consent from plaintiff to do so. Consent in writing as to No’. 4 pitters were required, because plaintiff wished to sell them in connection with other equipment and under specific arrangement with purchasers and users. In compliance with the terms of the contract the defendant, after making the contract, negotiated sales of different types of pitting machines. Defendant had customers for small and large machines and for repair parts, and urged plaintiff to assent to sales and make deliveries of orders. But plaintiff delayed to fill orders for No. 4 pitters to the Cobb, Clark, and Case companies, and after at first consenting thereto, it later refused to do so.

The correspondence with relation to such orders for No. 4 pitters, considered in connection with the conversation had by the witness Chapman with Mr. Dunkley, wherein the latter stated “go ahead and take these orders,” which Chapman says he acted upon, constituted a waiver in my opinion as to such orders of the provision relating to obtaining consent in writing before making sales. These orders were subsequently repudiated by plaintiff, but defendant had then already agreed to deliver the machines. It may fairly be inferred from the correspondence that the repudiation of these orders was due to plaintiff’s desire to lease the No. 4 pitters at a rental, instead of selling them. By the withdrawal of consent to sell them, defendant was deprived of its commissions on the sales. Other letters in evidence, written by plaintiff to .various prospective customers of defendant, are open to the inference that its position at such time was that the defendant did not have the right to sell, or agree to sell, any of the types of machines. Following the repudiation of the Cobb, Clark, and Case orders, defendant regarded the contract as broken and terminated,' and I find that the evidence warrants the conclusion that, since plaintiff refused [386]*386to perform, the defendant was released from the conditions to which it was bound. Carlin v. Frey, 157 App. Div. 84, 141 N. Y. Supp. 580; Lovell v. St. Louis M. L. I. Co., 111 U. S. 264, 4 Sup. Ct. 390, 28 L. Ed. 423.

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Related

Lovell v. St. Louis Mutual Life Insurance
111 U.S. 264 (Supreme Court, 1884)
Carlin v. Frey
157 A.D. 84 (Appellate Division of the Supreme Court of New York, 1913)

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Bluebook (online)
285 F. 383, 1922 U.S. Dist. LEXIS 1152, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dunkley-co-v-huntley-mfg-co-nywd-1922.