Gloucester Isinglass & Glue Co. v. Russia Cement Co.

12 L.R.A. 563, 27 N.E. 1005, 154 Mass. 92, 1891 Mass. LEXIS 64
CourtMassachusetts Supreme Judicial Court
DecidedJune 25, 1891
StatusPublished
Cited by29 cases

This text of 12 L.R.A. 563 (Gloucester Isinglass & Glue Co. v. Russia Cement Co.) is published on Counsel Stack Legal Research, covering Massachusetts Supreme Judicial Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Gloucester Isinglass & Glue Co. v. Russia Cement Co., 12 L.R.A. 563, 27 N.E. 1005, 154 Mass. 92, 1891 Mass. LEXIS 64 (Mass. 1891).

Opinion

Knowlton, J.

The plaintiff and the defendant corporations, which had been engaged in litigation with each other as to the alleged infringement of a patent owned by the plaintiff, supposing the validity of the patent fully established, and believing that they would be able practically to control the profitable manufacture of fish glue, entered into a contract with each other by which the defendant was to pay a certain sum for damages, and one half of the costs of the suits, and was to be allowed the use of the patent. Each party was to conduct its own establishment, and they were to unite in the purchase of fish skins, an article of which the supply was limited and from which the fish glue is manufactured, so that there should be no competition between them. The "plaintiff was to fix the price of all skins purchased, and the parties were to have certain places assigned to them by two persons named, of which they were respectively to have the product. From the proprietors of certain other places mentioned the defendant was to have the entire product, and to allow the plaintiff to receive from it one third thereof, and the two parties were to divide equally between them the skins which might be obtained from new producers. They were both to sell the glue at the same price, to be agreed upon from time to time, and the contract contained other stipulations the effect of which was to prevent competition between them. The contract was made in February, 1884. After they had conducted the business in this manner until early in 1887, it became evident to both that the patent was invalid, although no formal judgment was rendered declaring it so. Thereupon, Brooks, the manager of the defendant company, made a large number of what are known as the long term contracts, for the purchase of all skins to be produced until the year 1900, with nearly all the producers of fish skins known to the parties. The plaintiff received its share of these skins, and no difficulty arose between the two' companies until early in July, 1890, when the defendant notified the producers of skins by whom the plaintiff had been supplied up to that time not to deliver it any more skins, and also notified the plaintiff of its abandonment of the contract. Until then the parties had gone along under the contract as modified by mutual [94]*94consent, and no intimation had been given the plaintiff of any intention to abandon it. The object of the bill is to compel the defendant to permit the plaintiff to obtain directly from the producers, or through the defendant, what it deems its share of the fish skins. The defendant rests its defence on several grounds. It contends that the contract as originally made was void as contrary to public policy; that it cannot be enforced, because, the patent being invalid, there was no sufficient consideration for it; that, if it is binding, the plaintiff has a complete and adequate remedy at law; that, if the plaintiff is entitled to any relief at all, it should be compelled to take its proportion of the waste received by the defendant under the long term contracts with third parties; and finally, that, if the plaintiff had a right to specific performance of the contract, it has lost it, by reason of its own conduct, and the conduct of the defendant to which it has assented since the original contract was made.

The original purpose of the contract was to regulate the business of manufacturing a product under what was supposed to be a new invention, on which letters patent of the United States had been issued, whereby an article then nearly worthless might be converted into an article of large value. The use to which the fish skins were put under this invention gave them their market value. The plaintiff and the defendant sought to unite with each other in the purchase of the raw material, so' that they might not be tempted to overbid each other and thus to raise it to an unreasonable price, and also to agree on the price at which the manufactured article should be sold, so that they might be secure in a reasonable profit. Even if they hoped for gain by their joint exertions, or by the possession of a patent as to the value of which they were subsequently disappointed, their contract had no relation to an article of prime necessity, or to staple commodities ordinarily bought and sold in the market, but to a particular article, of which both were manufacturers under the same process, and to an article used in the manufacture which was of little value for any other use. That the agreement was not obnoxious to the objection made by the defendant is shown by the case of Central Shade Roller Co. v. Cushman, 143 Mass. 353.

The next inquiry is whether the contract is incapable of en[95]*95forcement for want of consideration. If there were no consideration for it but a transfer of an interest in a void patent, it would be invalid. Nash v. Lull, 102 Mass. 60. Harlow v. Putnam, 124 Mass. 553. The parties had been engaged in extended litigation involving several suits. As between them and for that litigation the validity of the patent had been established by a decision of the Circuit Court of the United States; and a judgment for damages in favor of the plaintiff against the defendant was about to be rendered. An important part of the consideration of the contract was a compromise and adjustment of the controversy which had taken form in the suits then pending, and a liquidation of the damages which the plaintiff was about to recover under the decision of the court. Moreover, the parties were competitors in business, and for mutual advantage they entered into mutual covenants as to the mode of conducting their business, and the covenants of each in that particular were a consideration for the covenants of the other. Before the invalidity of the patent was discovered, they had performed the contract in part, and what each had done in the management of its business was a part of the consideration for what remained to be done by the other. The belief that the patent was valid was one of the causes of making their agreement, but it was not the consideration of it in any sense in which it can be separated from the other objects and promises which formed a part of the consideration. Both, parties are disappointed in regard to a fact upon which they supposed they could rely, but the contract cannot therefore be avoided, so far as it is executory, when so many other elements entered into it, and when the parties have for a long time been deriving advantage from it, not only in their dealings with each other, but with the public.

If it should be held that the right to use the patent formed so large a part of the consideration for the defendant’s undertaking that, after the discovery of the mistake of the parties in this particular, a court of equity would decline to decree specific performance against the defendant if it had seasonably sought to avoid the contract on the ground of mistake, there are reasons why such a defence should not avail the defendant in this case. After both parties knew that the patent was void, the defendant still chose to avail itself of the benefits of the contract, [96]*96and to go on under it. There had been no adjudication that the patent was invalid, and the existence of the patent and of the arrangement under which the plaintiff and the defendant were acting was probably somewhat advantageous to the parties long after they discovered that the patent would not protect them if put to the test of litigation.

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Cite This Page — Counsel Stack

Bluebook (online)
12 L.R.A. 563, 27 N.E. 1005, 154 Mass. 92, 1891 Mass. LEXIS 64, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gloucester-isinglass-glue-co-v-russia-cement-co-mass-1891.