Spry v. Chicago Railway Equipment Co.

19 N.E.2d 122, 298 Ill. App. 471, 1939 Ill. App. LEXIS 687
CourtAppellate Court of Illinois
DecidedFebruary 1, 1939
DocketGen. No. 39,796
StatusPublished
Cited by2 cases

This text of 19 N.E.2d 122 (Spry v. Chicago Railway Equipment Co.) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Spry v. Chicago Railway Equipment Co., 19 N.E.2d 122, 298 Ill. App. 471, 1939 Ill. App. LEXIS 687 (Ill. Ct. App. 1939).

Opinion

Mr. Justice Hebel

delivered the opinion of the court.

The defendant appeals from a judgment entered by the court for $5,025.69, which was entered in a proceeding instituted by the plaintiff to recover certain sums claimed to be due under a contract. The defendant filed its answer, admitting part of the sums claimed to be due, and denying liability as to the remainder. After partial judgment had been entered and satisfied, the plaintiffs filed their motion for a summary judgr ment. The court heard the motion on the pleadings, affidavits and other papers submitted by the parties and rendered judgment against the defendant, from which the defendant appeals.

The plaintiff’s complaint sets up a contract, dated December 30-, 1929, between the plaintiffs and the defendant, which recites that the plaintiffs were assignees of certain letters patent for improvements in railway car door construction, and the defendant was desirous of obtaining the right to manufacture and sell the inventions and improvements covered thereby. The invention covered by these letters patent was a certain ball-bearing car door hanger. In the contract the defendant is granted the exclusive right to make, manufacture and sell the articles covered by the patent. It agrees to pay $3,-000 to the plaintiffs within 10 days after the agreement is executed, and further agrees to pay quarterly a royalty of 50 cents per car set for each set sold. A minimum royalty of $1,500 per year is provided, the payment of any deficiency in the minimum royalty to be made 60 days after the close of each calendar year.

Section eight of the contract provides that the plaintiffs shall pay one-half of the cost of defending either of the parties to the contract, or such other parties as shall be sued in any suits for patent infringement arising out of or incidental to the practice and use by the defendant of the inventions covered by the agreement, and permits the defendant in its discretion to institute infringement suits. It further permits the defendant to retain one-half of the royalties payable to the plaintiffs to defray the expenses of litigation.

The complaint further states that $3,000 was duly paid upon the execution of the contract, and also royalties for the years 1930 and 1931. The plaintiffs claim as due and unpaid $1,500 for each of the years 1932, 1933, 1934 and 1935, and asked judgment for the aggregate amount of said sums, with interest thereon from the dates the respective sums became due.

The defendant filed its answer, admitting the contract and that payments had been made as set forth in the complaint. It admitted that $1,766.79 was due the plaintiffs under their contract with the defendant, and stated that this sum had been tendered to them by it. It disclaimed liability for the further sum of $4,233.21, demanded by the plaintiffs, this sum having-been retained by the defendant pursuant to section 8 of the contract sued upon, wherein the plaintiffs had agreed “to pay one-half the cost of defending either of the parties hereto, or such other parties as shall be sued in any suits for patent infringements arising- out of or incidental to the practice and use by the party of the second part of the inventions covered by this agreement. . . .” The defendant further alleges that a certain suit in equity for patent infringement entitled, “Camel Company v. Chicago Bail way Equipment Company, ’ ’ instituted in the District Court of the United States, was a suit within the purview of said section of the contract; that it had expended $8,466.41 in defense of the suit, and under the terms of the contract, had retained the balance of royalties earned under plaintiffs ’ contract with the defendant, in the sum of $4,233.21 as plaintiffs’ contribution to the expense of defending- the infringement suit.

The defendant in this action contends that in construing the contract sued upon the court will determine the intent of the parties from the terms of the instrument when read in connection with the facts and circumstances surrounding the parties at the time of its execution. In particular, it must construe section 8 of the contract and determine what suits are included within the scope of its language, and in order that we may have this section properly before us, it will be well to quote it literally.

‘ ‘ Eighth: The parties of the first part agree to pay one-half the cost of defending either of the parties hereto, or such other parties as shall be sued in any suits for patent infringements, arising out of or incident to the practice and use by the party of the second part of the inventions covered by this agreement, and also agree, in the discretion of the party of the second part, to pay one-half the cost of prosecuting suits or actions against any person or persons who may infringe or jeopardize said letters patent, or any of them, or any improvements thereof, as covered by this agreement. It is understood that the party of the second part may retain, for such litigation purposes, one-half of the royalties due after the institution of any such suit, and that the party of the first part shall not be liable for litigation expenses in excess of the amount so retained. In the event of purchase option being exercised in accordance with paragraph eleventh hereof, any such fund which shall have accrued to be released.”

The answer of the plaintiff to this contention is that the contract in question is clear and unambiguous and does not require construction. Under the contract plaintiffs agreed to pay one-half the cost of defending any patent infringement suits that might be brought against the defendant for using the door hanger, the invention involved. The Camel Company sued the defendant for an alleged infringement of a movable door jamb — a device having nothing to do with a door hanger. Consequently, the defendant had no right to charge the plaintiffs with one-half of those defense costs. The defendant’s affidavit of merits and the supporting affidavits fail to show a sufficiently good and bona fide defense on the merits to entitle the defendant to defend the action.

Plaintiff also calls attention to the fact that the contract between the plaintiffs and the defendant, signed on December 30, 1929, and providing for plaintiffs to pay one-half the costs of infringement suits “arising” from the defendant’s use of the door hanger, did not cover or include the Camel Company suit filed on March 27, 1929, some 9 months prior thereto.

The language that is pointed to as being ambiguous and uncertain is: “arising out of or incident to the practice and use by the party of the second part of the inventions covered by this agreement. ’ ’ In the discussion of whether the above quoted words are ambiguous and uncertain, it is necessary to consider the nature of the contract involved in the litigation. The contract was entered into between the parties in order that the defendant might obtain the exclusive right to manufacture and sell for commercial uses the inventions set forth and described in the letters patent issued by the United States and the Canadian Grovernment, and the defendant is given the exclusive right by the plaintiffs to manufacture, sell and dispose of the articles covered by said inventions and the patents described in the contract.

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Cite This Page — Counsel Stack

Bluebook (online)
19 N.E.2d 122, 298 Ill. App. 471, 1939 Ill. App. LEXIS 687, Counsel Stack Legal Research, https://law.counselstack.com/opinion/spry-v-chicago-railway-equipment-co-illappct-1939.