Kellogg v. Western Electric Manufacturing Co. , 168 Ill. 240 ( 1897 )

Mr. Justice Carter

delivered the opinion of the court:

As stated by counsel for appellant, the purpose of the bill of complaint in this case “is to hold the defendants (appellees) as trustees, and liable to account as such for the profits of certain patent property invented and formerly owned by the complainant, and conveyed, as it is alleged, under such circumstances as to make the defendants liable to an accounting.”

If the facts stated in the bill, and, so far as they are well pleaded, admitted by the demurrer, show that the Western Electric Manufacturing Company took the legal title to the patented invention in controversy in trust for the benefit of the complainant, then the court erred in sustaining the demurrer, unless it appears by the bill that when it was filed appellant’s rights were barred by laches. The terms of the assignment are nowhere set out in the bill, and it is not claimed there was any express trust. Neither is it alleged that the company obtained said assignment of appellant’s invention by fraud, artifice or deceit. The circumstances alleged in the bill relating to the unauthorized withdrawal b;r the attorney of appellant’s claim to the invention and the insertion of it in Scribner’s apjalication, occurred after the assignment was executed and delivered, and it is not pretended that appellant was in any manner induced by appellees to make the assignment. It is alleged in the bill that the attorney, who was the attorney of both parties, prepared the assignment and that appellant signed it and gave it back to the company, expecting to receive reasonable compensation for said patents from the company for the same,— that is to say, he expected and understood that he was selling his invention to the company for its reasonable value, and not that' he was placing the legal title thereto in the company in trust for him. It is further alleged that his understanding in this respect was induced from the fact that the company had determined upon the policy of obtaining control of all telephone patents within its power, in order to build up a large and successful business, and had instructed him to purchase all such patents which, in the opinion of the managing officers, would probably prove advantageous to that end. It thus appears that appellant knew the company’s policy was to purchase such inventions,—not to take them in trust for the inventors and account for the profits; and it was this knowledge, rather than an;r promise of the company, which it is alleged induced in him the expectation or understanding that he would receive reasonable compensation for the said property. The most that can be said, in view of the allegations of the bill, is, that the company became the purchaser of the invention under an implied promise to pay appellant therefor whatever its reasonable value then was. There was nothing in his relations to the company which would have prevented him from selling the invention to it by express contract, fairly made, for what it was reasonably worth, and from the circumstances of the transfer we are unable to see that anything more than such a sale can be implied. If appellant’s right to recover in an action of assumpsit is barred by the Statute of Limitations, it is, so far as appears by the bill, his own fault. The company simply did nothing but accept the transfer and make use of the invention, without making any recompense. It may well be that a gift was not intended or contemplated by either party,— indeed, it is so alleged in the bill; but a trust enforcible in equity cannot be implied simply because the company neglected to make payment, for what it had purchased, until, by the inaction of both the buyer and seller, the right to recover the purchase price has become barred at law. It does not alter the case that neither party had, at the time of the transfer, any adequate conception of the great value of the invention or what its development and future use would prove its value to be. There is nothing in the bill which amounts to an allegation that there was any agreement, express or implied, between appellant and the company that appellant should wait until the usefulness and value of his invention in the art of telephony could be more adequately determined, and that he would be compensated out of the profits which should be received by the company from its use. Such matters might well have been embraced in a contract, but were not. It may be, as alleged in the bill, that appellant “deemed that it would be best for him to rely upon the understanding that he should receive reasonable compensation for his patent, and allow time to determine what such reasonable compensation should be,” but he could not, by resting upon the mere silence of the company and by waiting until his right to recover at law had been barred by the statute, create a trust relation between himself and the company, and recover vast sums or profits derived by the company from the use of the invention in lieu of what its value was when the sale was made. Had he, in carrying out the policy adopted by the company, bought for it such an invention from a third person, upon a promise, express or implied, to pay a reasonable compensation therefor, mere lapse of time and non-payment, coupled with the difficulty of ascertaining at the time of the sale such reasonable compensation because of the infancy of the art of telephoning, would not, in the absence of other circumstances giving rise to equitable rights, convert the relation of buyer and seller into one of trustee and cestui que trust,—and it is not easy to see how he stood in any better position in this respect as a seller than a third person would have occupied. The company owed no duty to him except to pay him, and there is therefore no ground upon which to base a constructive trust. He was charged with a duty to the company to purchase for it such inventions, and had he purchased them and taken title to himself he might well have been charged as trustee holding for the company; but the converse of this would not be true, for the company owed no duty to him in such a matter other than to pay as a purchaser.

The bill alleges that the assignment was made in 1881, under circumstances which we hold amounted to a sale for a reasonable price, and it then alleges that in 1891 appellant “withdrew his offer of sale.” The bill does not allege that there had been any offer of sale to the company, nor any sale upon condition, giving appellant, after the lapse of ten years and after the discovery that the invention was of immense value, the right to withdraw such offer or to rescind the sale and recover his property, and the profits derived from its use, because of the failure to perform the condition. Nor' does the bill ask for a re-assignment of the patented invention, but seeks only to hold the appellees as his trustees, after they or their licensees have, in connection with other appliances in the art of telephony and in the prosecution of their great enterprise, for more than a decade created for the invention an earning power of large value, and accountable to him for the profits arising from its use. To so decree would, under the allegations of the bill, be inequitable, however inequitable it may seem for appellees to refuse to pay appellant reasonable compensation for the valuable property which they obtained from him.

The judgment of the Appellate Court is affirmed.

Judgment affirmed.