Harrigan v. Smith. The bill is filed for the specific performance of an agreement for the assignment of a three-sixteenths interest in certain inventions of defendant, for which letters-patent have been granted to him, and for the recovery of a like interest in the profits. arising from their manufacture and sale, and for an account of the profits in the business of the manufacture and sale of the patented articles under the patents. The patents issued to defendant were two in number, one dated January 15th, 1889, the other January 21st, 1890. The alleged agreement for assignment was an oral one, and the final agreement, changing in some respects the original agreement, was made, as alleged in the bill and as appears by the complainant's evidence, in the spring of 1891, and included a right to a three-sixteenths interest in the patents then obtained by Smith and in future improvements. Harrison had already paid Smith $400 upon the original agreement made in 1888, and in 1891 the assignment was drawn and tendered to Smith for execution, by directions of complainant, who also offered to pay the additional price. The defendant, according to complainant's statement, while promising to execute the assignment, delayed or neglected to do so, and when complainant, not later than 1891, applied to him to execute the assignment he refused to do so. Smith's statement is that he refused from the first. Smith, after the alleged agreement and after this refusal, continued the manufacture and sale of the patented articles at his own risk and account, built up a business of considerable extent, and complainant made no further application or demand on Smith until the filing of the present bill on January 16th, 1896, after Smith had concluded negotiations for a sale of the patents and business. Complainant now prays an assignment of a three-sixteenths interest of the patents and a like share of the profits. Smith admits in his answer an agreement to convey to complainant an interest in the first patent granted, which agreement was made in December, 1888, pending the application for that patent, but denies that this agreement covered, or was intended to cover, any patent except the one then pending, or that it covered any agreement to share the profits of the manufacture, and denies any agreement either then Harrigan v. Smith. or subsequently to convey any interest in the subsequent patent. The first patent is claimed to have been impracticable and to have been practically useless, and has been abandoned, and the entire manufacture and sale of defendant's business is now carried on under the second and subsequent patents. Upon the question of the existence and terms of the agreement, I am inclined to think upon the whole evidence that the complainant's claim as to the terms of the agreement, so far as relates to the assignment of the patents, is made out and that the agreement to assign did include the subsequent patent. But without deciding this point I reach the conclusion that complainant is not entitled to specific performance in this case, even if the agreement alleged is satisfactorily made out by the evidence. The right of complainant to specific performance is barred by his delay in applying for a specific performance of the contract. Complainant had notice in 1891 that defendant refused to perform the contract alleged to have been made, and if he desired to compel specific performance of the contract complainant was then bound to apply for it without delay, and the delay in filing bill until 1896 is fatal. Ketcham v. Owen, 10 Dick. Ch. Rep. 344, and cases cited; Merritt v. Brown, 6 C. E. Gr. 401. The rule against delay is specially applicable where the subject-matter of the contract is of a speculative and fluctuating value (Mills v. Haywood, 6 Ch. Div. 196), or is a patent (New York Paper Bag Co. v. Union Paper Bag Co., 32 Fed. Rep. 783). And if in addition the complainant under the agreement claims, as he does here, a right to share in the profits of the subsequent manufacture, this must be either as partner or joint owner, and under a relation making him liable for the losses and expenses, there is an additional reason for the promptest assertion of his claim to specific performance and status of partner or joint owner. Complainant's counsel contend that by payment. of a portion of the purchase-money in December, 1888, the defendant became in equity trustee for the complainant in all the patents thereafter issued, and that the statutes of limitations do not apply to the case, because it was an executed and not an executory trust. But the contract between the parties was clearly Harrigan v. Smith. of an executory character and contemplated the future execution of a conveyance. The interest of the complainant, therefore, was an executory interest as distinguished from an executed trust, and the case is to be governed by the equitable rules relating to specific performance rather than those relating to executed interests or trusts. The rule against delay is more peremptory on the application for specific performance than in the case of executed trusts. The cases cited by the complainant's counsel, where specific performance of an agreement to convey was decreed after long delay, appear on examination to be cases where the complainant seeking performance had been put into actual possession of the property agreed to be conveyed upon the making of the agreement, and supposed no further assurance was necessary. New Barbadoes Co. v. Vreeland, 3 Gr. Ch. 157, 161 (Chancellor Pennington, 1842). A proposal or statement which was made by Smith to complainant after his refusal in 1891 to convey to complainant is relied on as explaining and overcoming the delay. Smith, as he himself testifies, told Harrigan, who had complained to him that he was hard up for money, that he could probably get him some money for his interest. This was after July, 1891, when Smith left the aqueduct board. Before this time Smith had refused to convey an interest in all the patents, but he had not refused to convey to Harrigan an interest in the first patent, nor had such assignment been asked; and at that time Smith, according to his own admission, had received $400 from complainant on account of an interest in the first patent. Under these circumstances and in view of Smith's previous claim that complainant was not entitled to any interest in the second patent or in the business, the offer or proposal cannot, in my judgment, be considered such a recognition of complainant's rights to a conveyance of all the patents and to a share in the profits then and afterwards to be made as to justify complainant's delay in asserting these rights. Upon the ground, therefore, of delay in applying for the specific performance of the contract, relief must be denied. Subsequent to the filing of the answer the defendant conveyed Harrigan v. Smith. to a company in which he is a stockholder and officer the patents in question, and the deed of conveyance was offered in evidence at the hearing. Defendant claimed that the complainant's suit for specific performance thereby became ineffective and that no decree for specific performance could be made against Smith. But the assignment in this case expressly provided that it should not in any wise include the claims, rights and interest, if any, of the complainant in the patents, the sale being expressly subject to such claims, which, however, was not admitted. Smith's assignment does not convey complainant's interest, and the rule requiring purchasers pendente lite to be made parties where their conveyance of the legal estate is required, stated in the textbooks (1 Dan. Ch. Pr. 281; Story Eq. Pl. § 351), does not apply; and inasmuch as the bill also prays for the assignment or the establishment of an interest in the profits of the business and an accounting, the claim of complainant is one to be considered and determined on the case against defendant and without requiring the assignee pendente lite or defendant to be made a party. Mr. Frank E. Bradner, for the appellant. Mr. Robert H. McCarter, for the respondent. The opinion of the court was delivered by COLLINS, J. The complainant failed to establish the final contract alleged, or any contract at all as to improvements on the defendant's original invention or as to participation, as partner or otherwise, in defendant's profits. The only contract proved was with reference to the invention on which the defendant had applied for a patent on November 2d, 1887, and for which letters numbered 396,177 were issued January 15th, 1889. This contract was oral, and, according to the testimony of all concerned, must have been made near the beginning of the year 1888. Its effect was to give to the complainant a three-sixteenths interest in the in Harrigan v. Smith. vention and in the expected patent, for a consideration of $750. The exact tenor of the contract is hard to gather from the testimony, but, in the light of a receipt afterwards given by defendant, I think that it was an absolute contract of purchase in præsenti. This receipt was given on December 6th, 1888, and reads as follows: "NEWARK, N. J., December 6th, 1888. "Received from Ellen McLane and William Harrigan, five hundred and twenty-five dollars, on account of fifteen hundred dollars, for three-eighths (3) interest in patent tapping apparatus. "ANTHONY P. SMITH." I think that this paper indicates that by the contract the purchasers became immediately entitled to their respective interests in the invention, conceded to have been several and not joint, and that the seller became immediately entitled to the purchase price. An inchoate right in a patentable invention is a subject of lawful sale, and a sale of such a right carries with it a corresponding interest in the patent when letters are afterwards issued. Clum v. Brewer, 2 Curt. C. C. 506; approved, Hendrie v. Sayles, 98 U. S. 546. In Clum v. Brewer it was said by Mr. Justice Curtis that if the purchaser does not get the legal title, a jus in re, he certainly does get an equitable title, a jus ad rem, and can use or license others to use the invention, and can at any time demand a formal assignment of his interest in the patent. In the case that was then before the court, the written contract provided, in terms, for an assignment of the purchased interest, when the patent should issue; but even without such an agreement an obligation to assign is necessarily implied in a sale of an interest in such an invention. It makes little difference whether we consider the contract between the parties to this cause as one of purchase, or as one for purchase, for the defendant admits an agreement to assign on payment of the purchase price. Specific performance of an oral contract to assign an interest in letters-patent when issued will be compelled. Such a contract is neither within the statute of frauds nor within section 4898 of the United States revised |