Summary
holding that a plaintiff may not enforce every promise contained in a multipartite agreement; rather, the specific promise a plaintiff seeks to enforce must have been intended for the plaintiff's benefit
Summary of this case from In re Fontainebleau Las Vegas Contract LitigationOpinion
Argued March 24, 1897
Decided April 20, 1897
James Lansing for appellant.
George B. Wellington for respondent.
In order to decide whether the defendant violated its contract with the plaintiff, it is necessary to see precisely what it agreed to do. There were three parties to the contract, and the promises and agreements made by each were substantially as follows:
1. In consideration of the covenants and agreements passing between the plaintiff and the defendant, the former granted to the latter an exclusive and perpetual license to make, use and sell harvesting and binding machines, and machines for making bands embracing any of the inventions of Mr. Berry, whether then made or thereafter to be made, but reserved to itself the right to make, use and sell machines for making bands for purposes other than binding grain.
2. The defendant promised to pay the plaintiff a fixed royalty on every binder made and sold by it, covered by said inventions. It further agreed to pay the plaintiff $10,000 in cash at the time of signing the contract, and $10,000 more when 5,000 of said binders should have been made and sold; that it would supply the demand for harvesters and binders and make at least one machine under the direction of Mr. Berry and offer it for sale; and in case the plaintiff or Berry should disagree with the defendant as to the practicability of the machine as a market machine, that either of them might offer it for sale; that it would make as many of the same as the plaintiff or Mr. Berry should order and pay for at not exceeding a certain percentage above the cost of labor and material; that it would issue licenses to responsible parties to make and sell binders and rope-making machines embracing said inventions, and pay seventy-five per cent of the license fees to the plaintiff, provided 50,000 of such binders should have first been made and sold.
Aside from these stipulations with the plaintiff, the defendant agreed with Mr. Berry, individually, to employ him at a salary of $4,000 per year for three years in consideration of his services for that period in perfecting the machines and such other services as he could render in the way of supervision and superintendence at its factory or in the field under the direction of its officers.
3. Mr. Berry agreed to enter the service of the defendant upon the terms and conditions aforesaid, and to faithfully perform the services mentioned for the period of three years from September first, 1890. He stipulated that the license granted by the plaintiff to the defendant should embrace all letters patent, relating to said machines, then owned or thereafter to be owned by him during the life of the license, and that during the term of his employment whatever inventions he made, relating to the machines mentioned, should be used by the defendant without the payment of any royalty, and that it should have the option to purchase the same. He also promised to sign all proper papers to procure letters patent on such inventions.
The contract contains no express promise, material to the controversy, made by any one of the parties thereto, except as mentioned.
Whether the right or privilege, conferred by the promise of one party to a tripartite contract, belongs to one or both of the other contracting parties, depends upon the intention as gathered from the words used, read so far as they are ambiguous, in the light of surrounding circumstances. Every party to such a contract is bound only to the extent of the promises made by him, and any party thereto may insist upon the performance of every promise made to him or for his benefit by the party or parties who made it. The mere fact that there are three parties to the agreement does not enlarge the effect of any promise, except as it may extend the advantage to two persons, instead of one, where that is the intention. When the promise is to two jointly, a single act of performance satisfies it, but when it runs to two severally, there are two promises in fact and each must be performed. It will be observed that the stipulations in the contract before us are not all common to the three parties. While the defendant is interested in every stipulation, the interests of the others are mainly severed. The defendant covenanted with the plaintiff as to certain things, with Mr. Berry as to others, and with both as to others still. This is the form of the contract which is not ambiguous. The covenants in favor of plaintiff were supported by a consideration furnished by it only, while those in favor of Berry rest upon a consideration flowing from him only. The covenants in favor of plaintiff and Berry jointly, or jointly and severally, depend for their consideration upon the separate promise of each. The rights conferred, whether joint, or joint and several, depend on the terms of the contract. Where a several right only is conferred upon the plaintiff Mr. Berry is not interested in it, and where a several right is conferred upon Mr. Berry the plaintiff has no interest in that.
Mr. Berry, for instance, had no pecuniary interest, except indirectly, as a stockholder of the plaintiff, in the grant of licenses to the defendant under the patents owned by the plaintiff, or in the payment of royalties or of the sum in gross by the defendant to the plaintiff. Those stipulations were expressly based upon "the covenants and agreements * * * passing from each to the other of the" two corporations, and he was not a party thereto, nor, in contemplation of law, interested therein. So those relating to the employment of Mr. Berry, the nature of the services he was to perform, the source of the consideration, the compensation he was to receive and the like, are confined to him and the defendant. The plaintiff is not a party to that portion of the contract, which is introduced by these words: "It is further mutually agreed by and between said William H. Berry and the Walter A. Wood Mowing and Reaping Machine Company," thus confining it to the two named and excluding the plaintiff.
The stipulations in which the three parties were jointly, or jointly and severally, interested, were those which provide that the license granted to the defendant should cover all letters patent "now owned, or hereafter to be owned," by the plaintiff or Mr. Berry, and those which give to each the right to offer for sale and to "order and pay for" duplicates of the test machine, in case the defendant should "disagree" with either as to its practicability "as a market machine."
It will be seen from this analysis that no express promise made by the defendant to either or both of the other parties to the contract was broken. It paid the gross sum of $10,000 to the plaintiff, and instead of one test machine, it caused three to be made, but they were not marketable, and Mr. Berry, although he tried for two years with every facility that he required, failed to make a marketable machine. It offered to make as many machines as the plaintiff or Mr. Berry would order and pay for, but no order appears to have been given. After paying the entire expense of experimenting for two years, with no practical result, it refused further facilities in that regard, but still offered to permit Mr. Berry to continue at his own expense, aside from his salary which was paid for the entire period covered by the contract. He makes no claim that the defendant has failed to keep its agreement so far as he personally is concerned. There was no express agreement on the part of the defendant, with either of the other parties, to furnish Mr. Berry the means of experimenting, either during the period of the contract, or for any shorter time. Whatever agreement was made in relation to the employment of Mr. Berry, or as to the work he should do, or the object thereof, was, by the form of the agreement, confined to him personally, and as he is not a party to the action, even if there had been a violation as to him, it would be immaterial in this controversy between the other parties to the contract. Assuming that there was an implied contract between Mr. Berry and the defendant that it was to furnish him with what ever he needed in order to perfect the machines, the plaintiff can take no advantage of it, for it has no interest in stipulations, whether express or implied, made with Mr. Berry only. The language of the contract, however, does not admit of any such inference, even as to him, for he was not employed simply to perfect the machines, but to do other services in the way of supervision and superintendence under the direction of defendant's officers. The covenant relating to his employment distinctly provides for two kinds of service. He was employed "in order to perfect the harvester and binders * * * and to do such other services," by way of supervision, as he could upon the defendant's request. He agreed to "faithfully perform such service," which included both kinds. The contract, therefore, was not exclusively for experiments but for that and other kinds of service in the discretion of the defendant. If the plaintiff wished that Mr. Berry should be employed by the defendant for experimental work only and furnished by it with all facilities for effective experiments, it should have insisted upon a stipulation to that effect in its favor and for its advantage. The fact that it did not do so, and that the contract is silent upon the subject, is a complete answer to this action. Even upon the assumption that the contract contemplated the furnishing of facilities for experimenting to a reasonable extent and for the benefit of the plaintiff, no breach was shown, for it was not until after three worthless machines had been made and discarded, and two years wasted in useless experiments that the defendant, regarding the project as hopeless, refused to be to any further expense, aside from shop room and the payment of Mr. Berry's salary. The argument that the defendant showed by its conduct that it understood the contract to include the payment of the expense of experimenting, is of slight force, when considered in connection with the right expressly given to put Mr. Berry to work at perfecting the machines or rendering other services. The defendant did not agree with any one to make the machine a success, nor to continue the experiments during the life of the contract. It made no promise to the plaintiff that it would employ Mr. Berry for its benefit, and if it had refused to pay him his salary after causing one machine to be made under his direction, it is difficult to see upon what ground the plaintiff could have claimed a breach as to itself, for it was entitled to no part of his compensation. The plaintiff sues for the breach of a contract that the defendant never made, either expressly or by implication, and the direction of a verdict against it was, therefore, correct.
The judgment should be affirmed, with costs.
All concur.
Judgment affirmed.