Peck v. Shell Oil Co.

142 F.2d 141, 61 U.S.P.Q. (BNA) 260, 1944 U.S. App. LEXIS 3280
CourtCourt of Appeals for the Ninth Circuit
DecidedApril 15, 1944
DocketNo. 10280
StatusPublished
Cited by13 cases

This text of 142 F.2d 141 (Peck v. Shell Oil Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Peck v. Shell Oil Co., 142 F.2d 141, 61 U.S.P.Q. (BNA) 260, 1944 U.S. App. LEXIS 3280 (9th Cir. 1944).

Opinion

STEPHENS, Circuit Judge.

In an action upon a contract, brought in the District Court on the ground of diversity of citizenship of the parties, judgment was entered for defendants. Plaintiffs appeal.

On April 8, 1938, plaintiff-appellants, Peck and Ruddle, entered into a “license agreement” with Shell Oil Company, predecessor of appellant Shell Oil Company, Incorporated. (Both companies are hereinafter referred to as Shell.) Therein Peck and Ruddle warranted that they owned all rights “to a new and useful core binding composition hereinafter referred to as ‘Core-Min-Oil/ consisting of two components, a secret solution and asphalt emulsion, and to new compositions for other foundry uses such as core covering.” They warranted further ■ that “Core-Min-Oil” was fully described in three specified patent applications. They then granted to Shell “an exclusive license to make, use or sell” the product covered by the patent applications “and other inventions in so far as they relate to compositions for foundry use owned or controlled by Peck or Ruddle.” A provision was included that “Shell Oil shall diligently attempt to sell Core-Min-Oil and other compositions for foundry use as covered by said patent applications or later patents.” In a paragraph detailing a scale for payments Shell agreed to pay royalties “on all their sales of Core-Min-Oil and other compositions for foundry use.”

The contract was to remain in force until the expiration of the last of appellants’ patents covering Core-Min-Oil. However, Shell was given six months from a specified date to investigate the patent situation with respect to Ruddle’s oil; should it be found unsatisfactory, Shell could terminate the agreement. Shell could also terminate after five years from the date of the contract by a thirty-day notice in writing to Peck and Ruddle.

Core-Min-Oil was defined in the agreement to mean “the core binding composition containing asphalt emulsion coming •within the claims of any pending application or issued patent owned or controlled exclusively by Peck and Ruddle.”

Extensive investigations into Ruddle and other core oils were conducted by Shell engineers over a long period of time. A few tests were made even before the contract was signed, but not until after the signing did Ruddle disclose the formula of his “secret solution.” Sodium silicate, sodium fluo-silicate and aluminum sulphate were the ingredients. Finally, by a letter of July 26, 1939, Shell notified appellants of the impossibility of developing a commercial product in accordance with the Ruddle patent and of its election to cancel the agreement of April 8 on the ground of failure of consideration. On March 8, 1940, Shell wrote them of its election to terminate under the five-year termination provision. (Shell’s letter of March 8 served as notice of termination pursuant to the paragraph providing for termination at any time after five years from the date of the agreement, i.e., April 8, 1938; therefore, although the parties do not discuss the point, the contract was not enforceable after April 8, 1943, a date subsequent to the judgment of the district court herein.)

Appellants, residents of California, alleging that over $3,000 was involved in the [143]*143matter, brought suit in the federal District Court against Shell Oil Company, Incorporated, of Virginia and Shell Development Company of Delaware. They prayed for a decree compelling specific performance of the contract, awarding damages in a sum designated only as exceeding $100,000, and ordering an accounting of royalties due. The District Court held in favor of defendant-appellees. The court found that the parties had entered into a license agreement under certain patent applications relating to a sodium silicate core oil, that Shell had diligently tried to perform all the conditions of the agreement, that the core oil licensed to Shell was a practical failure, unmarketable, and valueless, that there was no evidence of any damage, actual or possible, resulting from Shell’s cancellation of the agreement, and that there was no confidential disclosure to defendant corporations regarding the use of asphalt emulsion in a core oil. As conclusions of law the court determined that the license agreement was unenforceable because of failure of consideration, that it was impossible of performance, that its cancellation by Shell was justified, and that no confidential relationship existed between the parties and none was violated.

In their brief under the heading “Statement of Points on Appeal” appellants claim as error: (1-9) the making of findings and conclusions in favor of appellees; (10-19) the failure to find and to render judgment in favor of appellants; (20) the awarding of costs to appellees; (21) the showing of prejudice against appellants, with a list of pages in the typewritten trial transcript (not the printed transcript herein) where statements showing the alleged prejudice appear; (22-39) rulings of the court as to the admission of evidence.

It should be noted at the outset that appellants have completely failed to comply with rule 20(d)1 of the rules of this court in that no numbered specifications of error are included in their brief. They merely refer to a page in the printed transcript where their statement of points on appeal (filed in accordance with our rule 19) appears. Such a reference does not satisfy rule 20(d). Also completely ignored is the requirement that the grounds of an objection urged at the trial to the admission or rejection of evidence together with the substance of the evidence should be quoted when error in such admission or rejection is claimed. The statement of points in the transcript includes none of the detail specified.

With respect to many of the “points” stated by appellants no argument or discussion is presented in their opening brief. Therefore, those “points” are deemed abandoned and need not be considered herein. Moore v. Tremelling, 9 Cir., 100 F.2d 39, 43; Paramount Productions, Inc. v. Smith, 9 Cir., 91 F.2d 863, 866; Liquid Veneer Corporation v. Smuckler, 9 Cir., 90 F.2d 196, 206; Forno v. Coyle, 9 Cir., 75 F.2d 692, 695.

In the principal argument of appellants it is attempted to refute the finding of the District Court that the core oil licensed to Shell was a practical failure, useless and worthless. A detailed review of the evidence is offered in support of the contention. Equally complete is appellees’ response. The evidence shows that Shell had never before manufactured or sold core oils. It was interested in appellants’ oil as a possible outlet for its asphalt products. It knew before it signed the agreement in suit that Core-Min-Oil needed further development to prepare it for the market, and one of its engineers had proved that Ruddle’s formula was useful only if cores were dried in ovens where the gases of combustion were eliminated. Thereafter, the contract was signed, and experimentation was conducted on a large scale by technicians of Shell and of Shell Development Company, also an appellee. They tried to perfect Ruddle’s sodium silicate core oil. In addition, they tested other combinations of various oils seeking a marketable core oil. Even after the can[144]*144cellation notice of July 26, 1939, was sent to appellants, the research was continued.

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142 F.2d 141, 61 U.S.P.Q. (BNA) 260, 1944 U.S. App. LEXIS 3280, Counsel Stack Legal Research, https://law.counselstack.com/opinion/peck-v-shell-oil-co-ca9-1944.