Ferry-Hallock Co. v. Progressive Paper Box Co.

Full title: FERRY-HALLOCK CO. v. PROGRESSIVE PAPER BOX CO. et al.

Court: COURT OF CHANCERY OF NEW JERSEY

Date published: May 19, 1909

76 N.J. Eq. 1 (Ch. Div. 1909)

76 N.J. Eq. 1

Opinion

05-19-1909

FERRY-HALLOCK CO. v. PROGRESSIVE PAPER BOX CO. et al.

Mr. Howe and Mr. Bull, for complainant. P. J. Schotland, for defendants.

EMERY. V. C.

Suit by the Ferry-Hallock Company against the Progressive Paper Box Company and others. Heard on bill, answer, cross-bill, and replication. Decree for complainant.

Mr. Howe and Mr. Bull, for complainant.

P. J. Schotland, for defendants.

EMERY. V. C. At the hearing I gave orally my views to some extent on the rights of the parties, reserving final determination for briefs on the following points: (1) Whether in the Ferry-Waring Company suit, referred to at the hearing, it had been expressly decided that the complainant's patents, or any of them, covered "stays," as well as "rings"; and (2) whether complainant's representation or claim at the time of procuring the license that "stays" were covered by its patents, made to defendant under the circumstances proved, was such a representation of fact on which defendants were entitled to rely in making the contract that defendants, on proving its falsity, were discharged from the obligation to pay royalty under the contract, and were entitled to rescind the contract. Briefs have been submitted on these points; and, on further consideration of the cause, I add the following brief statement to the views expressed at the hearing:

The opinion of Judge Lacombe in the Ferry-Waring Company suit does not expressly decide the issue now raised as to the distinction between "stays" and "rings" under the Ferry patents, nor was that issue precisely raised. It is not therefore conclusive on the question and its bearing on this question is therefore to be considered only in connection with the evidence given at the hearing upon this subject.

As to the second question, further consideration confirms my impressions, indicated at the hearing, that under the circumstances proved complainant's representation or claim that the "stays" in question were covered by its patents was bona fide and honestly made, and was a representation or claim which, in bargaining with defendants as to a license, it committed no fraud in making, and that the defendants, being at that time actually claiming and acting on an adverse title—being the same title which they now set up and seek to establish by evidence—were not entitled to act on this representation or claim of title made by complainant as the assertion of a fact, the falsity of which, subsequently proved, would entitle them to repudiate the contract on this ground. No authorities have been referred to establishing that representations of this character, made under these circumstances, are representationsof fact on which defendant had then the right to rely, but might subsequently disprove, when it so elected, by disputing the license. The general principle is that the licensee, to the extent that he continues to use the license, is estopped from denying the licensor's title. Clark v. Adie (No. 2) 2 L. R. p. 423, App. Cases (1877); Jones v. Burnham, 67 Me. 93, 24 Am. Rep. 10 (1877); Kinsman v. Parkhurst, 18 How. 289, 15 L. Ed. 385. This applies the same principle which estops a tenant from denying the landlord's title to the laud occupied under the lease, and is an estoppel implied by law, even in the absence of an express estoppel, such as was made by the agreement here. If the defendants have the right, for fraud or otherwise, to repudiate the license, thus making themselves liable to suit as infringers, the repudiation in such case must be total and of all the privileges granted. They cannot at the same time claim under and against the agreement. In the present case, the agreement granted the right to use the Hallock machines for rings, and fixed the royalties for both rings and stays on a basis which did not depend on the actual making of either stays or rings, and these entire royalties are due, under the agreement, if the defendants use any of the privileges conferred by the license, and do not expressly repudiate them all. Defendants admit the use of these privileges for making rings, and offer to account for these, but the accounting can be only according to the express agreement, and not otherwise, so long as any privilege under it is used.

I will advise decree for accounting under the agreement, to be settled on notice, if necessary, and that the cross-bill be dismissed.