Opinion
Argued February 25, 1909
Decided March 16, 1909
Richard R. Martin for appellant. Charles H. Searle for respondent.
The proposition argued by the appellant is that the rescission of the contract was not warranted by the complaint and that the relief awarded by the decree was upon a theory inconsistent with that of the cause of action stated. There would be some force in the argument that the plaintiff should be held to the remedy, which he had elected to pursue, if, upon reaching the trial of the issues, the situation had not been changed by the conduct of the defendant, from what it was when the complaint was framed and served. It stated a cause of action for equitable relief, based upon violations of the contract between the parties, in that it was sought to enforce the agreements of the defendant by a judgment, which should prevent the continuance of the wrongful acts conplained of. A recovery of the royalties due was incidental to an award of the principal relief by way of injunction. At the time, according to the findings, and we are concluded, of course, by the facts as found below, the situation was that the defendant had made false reports of sales; that it ceased to make any reports; that it was selling the patented tool under a different name and without stamping upon it the dates of the patents. There had been no repudiation as yet; for in January, or February, 1904, but a few months before the suit was brought, the defendant, as controlling the plaintiff's patent rights, was agreeing with a third party for a settlement of a claim of infringement and for the future maintenance of prices on their several manufactures. The evidence upon this last trial showed that, since the commencement of the action, the defendant's acts had become aggressive as to the plaintiff's interests and amounted to a repudiation of the agreements in its contract. The defendant, availing itself of the business in staple pullers, which had been created through the exercise of its rights as licensee under the contract, ceased supplying the contract article under its own name and patent marks, when the supply on hand was exhausted, and supplied the demand of the trade by furnishing an instrument of identical device under a different name. In doing so it made use of the trade circulars, under which the contract article had been advertised. It was found to have been endeavoring to evade its agreement to pay royalties to the plaintiff. Indeed, in its answer the defendant's repudiation of the contract is plain, when it demands an affirmative judgment annulling the contract for invalidity of the patents. It was quite within the discretion of the court, therefore, having acquired jurisdiction of the parties and of the subject-matter of the action, to grant relief according to the exigencies of the case. Differing from the rule in actions on the law side of the court, which limits the judgment to the facts as they existed at the commencement of the action, when the action is in equity, relief will be administered as the nature of the case and the facts, as they exist at the close of the litigation, demand. As it was said in the opinion in Madison Avenue Baptist Church v. Oliver Street Baptist Church, ( 73 N.Y. 82, 95), it is the practice of courts of equity, "when they have once obtained jurisdiction of a case, to administer all the relief which the nature of the case and the facts demand, and to bring such relief down to the close of the litigation between the parties." ( Lynch v. Metropolitan Elev. Ry. 129 N.Y. 274, 280; Pond v. Harwood, 139 ib. 111, 120; Mott v. Oppenheimer, 135 ib. 312, 316; Sherman v. Foster, 158 ib. 587, 593.) The relief asked by the plaintiff, upon commencing the action, was obviously inadequate, when it was shown to the court that the defendant had, not merely, continued in the violations of the contract complained of, but had gone further in its wrongful acts and had seriously endangered the plaintiff's rights in the advantages to be derived from its ownership of the patents. It was what the defendant had done after the commencement of the action, which seemed to the trial court to make the injunction prayed for of no value. The only adequate relief, under the circumstances as they were disclosed by the proofs, was to terminate the contract and, thus, to cancel all rights to manufacture under the patents. The prayer for relief was no part of the plaintiff's cause of action. That was, as stated in the complaint, the violation of the defendant's agreements in the contract, in ways described, and a refusal to perform the obligations assumed. Though relief by way of rescission was not demanded, such relief was quite consistent with the case as stated in the complaint and, under the prayer for such other relief as to the court might seem just, the subsequent acts of the defendant made the more stringent relief of an annulment of the contract proper, as well as the only just remedy to be applied. The rescission decreed by the court below was within that head of equity jurisprudence, which is concerned with forfeiture and cancellation, and it is defined by the decree as meaning the termination of all rights under the contract. It was granted to prevent the injury, which was impending over the plaintiff from the acts of the defendant, and it was necessary, in order to prevent a failure of justice. In Mott v. Oppenheimer, ( supra), where the issue was as to the plaintiff's right to an injunction, restraining the defendant from using a party wall, the court refused to grant an injunction and, instead, charged the latter's premises with a lien for the payment of the value of one-half the wall. In answer to the argument of the defendant, that it was not competent to grant such relief, in view of the issue tendered, it was said that "with all the facts before the court upon a demand for its equitable intervention, it had jurisdiction to administer such equitable remedies as the merits of the case justified." (P. 316.) The trial court, having gained jurisdiction of the cause before it for one purpose, was justified in retaining it generally and in decreeing that relief which would close the controversy in all of its apparent features, at the time of the submission. ( Lynch v. Metropolitan Elev. Ry. supra.)
The argument of the appellant, that the recovery of royalties down to the time of the decision was improper, in view of a rescission being decreed, is untenable. The defendant had no right to manufacture and sell the patented device without paying to the plaintiff the stipulated compensation. It could not continue to sell the article, without rendering itself liable for the consequences under its covenant. (See Hyatt v. Ingalls, 124 N.Y. 93, and Union M'f'g Co. v. Lounsbury, 41 ib. 363.) The defendant did not surrender its license, nor did it offer to the plaintiff to do so, and it cannot be heard to complain, if the trial court determined its liability by way of royalties, up to the close of the litigation. That phase of the relief granted was quite within the jurisdiction of the court as incidental to the main relief awarded.
I advise the affirmance of the judgment.
CULLEN, Ch. J., EDWARD T. BARTLETT, HAIGHT, VANN, WILLARD BARTLETT and CHASE, JJ., concur.
Judgment affirmed, with costs.