Valley Iron Works Manufacturing Co. v. Goodrick

The following opinion was filed April 25,1899:

Maeshall, J.

The complaint states, with reasonable clearness, facts constituting a good cause of action for specific performance of an implied contract, securing to the plaintiff corporation the right to manufacture at its factory, and sell in the market, machines embodying defendant’s invention for screening pulp and paper stock; also facts entitling plaintiff to specific performance of an express contract securing to such corporation not only such right to manufacture and sell machines, but the patents issued, or that may be issued, for the invention. Respondent’s counsel suggest insufficiency of the complaint as one of the reasons for dissolving the injunction, and, in support of that, point out matters that might possibly be worthy of consideration on a motion to make more definite and certain, but not in testing the sufficiency of the complaint on demurrer or motion to grant or dissolve a temporary injunction.

Our attention is called to the fact that the language relating to the express contract relied upon, is that the corporation incurred several thousand dollars of expense in aid of defendant’s discovery and the invention of his machine, and the construction of machines embodying such invention, with the understanding and agreement between the polities that the right to manufacture and sell such machines and the right to the patents that might be granted thereon should be its property, without stating who are the parties referred to, or definitely wfiat the agreement was, or where it was made, or who represented the corporation in making it. The meaning of the word “ parties,” when viewed in the light of the context, is easily discovered. The only parties mentioned in the alleged transactions are the corporation and defendant, the parties to the action when the complaint was drawn. “ Parties,” in the allegation, refers to the inventor, G-ood/riek, and his employer at the time the invention is said to have occurred, with as much certainty as if it were *441 alleged that the understanding and agreement was made between plaintiff corporation and defendant Goodrich. There is no difficulty in inferring from the allegations that the corporation and defendant made an agreement to the effect that if the former would contribute the use of its factory and the necessary material and labor to aid the latter in his investigations and experiments in the construction of his machine, it should have as compensation therefor the ownership of the results, both as to the right to manufacture and sell such machines, and the patents issued on the invention. True, as indicated, the allegations as to the agreement are-not so definite and certain as to be free from all criticism, but criticism cannot reasonably go further than mere uncertainty, subject to be reached by a motion, seasonably made. The allegation that the discovery was made by defendant and his machine invented and constructed while he was in the employ of the corporation, and by the use, with its consent, of its time, material, labor, and machinery, and that machines were thereafter constructed at such factory with defendant’s aid and consent, some of which were put in operation by plaintiff corporation and some sold to other-parties, makes a showing entitling the corporation to the right, by implied contract, to manufacture at its factory and sell such machines. That is sufficient to support the complaint, in connection with the allegations to the effect that defendant refused to recognize the corporation as having any such right. The allegations that defendant, after some-two years of time, while working for the corporation at an expense to it of several thousand dollars, produced his invention, and that he entered upon the undertaking i-n that regard, and the corporation incurred the expense indicated,, on the faith of an understanding and agreement between the parties that the result should be the property of the corporation, make a showing entitling such corporation to substantially the relief prayed for in the complaint. The- *442 particular time when the agreement was made, or who represented the corporation in making it, or the particular place where the contract was made, were not necessary facts to be pleaded. Applying the rule that all reasonable intend-ments and presumptions are to make for the support of a pleading, and that if the language used will reasonably permit a construction that will sustain the pleading, having in view the evident purpose of the pleader, it should be adopted, •there is no difficulty in reaching a conclusion that a cause of action is stated in the complaint entitling plaintiff to a decree of specific performance. Kliefoth v. N. W. I. Co. 98 Wis. 495 ; Miller v. Bayer, 94 Wis. 123 . It is a well-established rule that an action in equity will lie to enforce specific performance of a contract to convey title to a patent, or the right to manufacture and sell machines embodying the invention; also that if a person, while in the employ of another, discover a patentable machine, and with the knowledge, consent, and assistance, and by the use of the time of such other, perfect the invention, and such other by consent of such person, in advance of any application for a patent on the invention, construct and use or sell machines embodying the invention, that will constitute an implied contract that such person shall have the right to manufacture such machines at its then existing factory and sell them upon the market, and such contract may be enforced by a court of equity. Fuller & Johnson Mfg. Co. v. Bartlett, 68 Wis. 73 .

The cause of action for equitable relief being complete, and it being alleged that defendant is insolvent and that he will transfer to third persons property rights in his invention to the irreparable injury of plaintiff, unless restrained of his liberty in that regard during the pendency of the litigation, an interlocutory injunction to effect such restraint was properly granted.

The question is presented, Was the injunction properly dissolved on application of defendant based on an answer *443 denying unequivocally all of the allegations upon which the equitable relief sought depends, supported by affidavits to the same effect, such affidavits being opposed by affidavits on the part of plaintiff corroborating the case made by the complaint and alleging facts sufficient to show authority to bring the action; also showing that if plaintiffs’ case be sustained upon the trial the decree will be rendered worthless by the conduct of defendant in the meantime, if free to dispose of the subject of the action, there being nothing to show that restraint of his liberty will work any serious harm to lxim, and no harm but such as can adequately be guarded against by a bond on the part of plaintiff ? That was the situation that confronted the trial judge, and he met it by unconditionally dissolving the injunction, notwithstanding plaintiff gave a bond in the sum of $1,000 to save defendant harmless from any wrongful effects of the injunction in case the court should finally decide that he was not required to respond to the demand of the complaint.

The learned counsel for respondent, in justification of the order appealed from, invokes the rule that, where all the material allegations upon which the equities of the case rest are fully met and denied without evasion or equivocation by the answer and affidavits, the injunction will be dissolved. High, Injunction, § 1505. That rule is stated by this and other courts without qualification, so that, without familiarity with the scope and purpose of the powers of a court of equity, there is danger of too great reliance being placed upon it. This court has often applied the rule and said that it was one “of general application. Walker v. Backus H. Co. 91 Wis. 160 ; Tiede v. Schneidt, 99 Wis. 201 . Language is also often used consistent only with the theory that, in order to warrant the continuance of an injunction pendente lite, where all the alleged equities of the complaint are denied by the answer, plaintiff’s right to the ultimate relief sought must be established. Warsaw W. W. Co. v. Warsaw, 4 App. Div. *444 509 . That goes no further than that, as a general rule, where all the material allegations of the complaint are specifically denied, and they do not show clearly, in connection with the supporting affidavits, that plaintiff is entitled to the relief sought if his allegations are in accordance with the truth, the temporary injunction will be denied. The rule does not go so far as to compel the plaintiff to try his case on affidavits and the court to decide the issues in advance of a trial on the merits, in order to maintain an order preserving the subject of the action and protecting the plaintiff from probable injury from the conduct of his adversary in advance of a final decree. If such were the case, it would be very easy to paralyze the arm of equity and destroy its power to effect justice in a multitude of cases. Notwithstanding the denial by the defendant of all the equities of the bill, there still remains, generally, the probability that plaintiff may ultimately be entitled to the relief prayed for. Just where the truth lies cannot be' told till a trial of the case on the merits, hence the necessity of a power to preserve the status quo pending the litigation, if that be necessary to make the final decree effective to do justice between the parties. It is more accurate and less liable to mislead, to state the rule, in regard to dissolving a temporary injunction on the coming in of an answer, with this qualification, which is universally recognized in judicial administration: notwithstanding the direct conflict between the adversary parties as to the facts upon which the right to the equitable relief prayed for is sought, it is still within the discretionary power of the court, by a temporary injunction, to preserve the status quo between the parties pending the final decree, if that be necessary in order to make such decree effective or to save the person claiming relief from irreparable injury by the conduct of his adversary pending the litigation. The whole subject of granting or refusing interlocutory injunctions rests in the sound discretion of the court. A mere *445 denial of all the equities of the bill does not under all circumstances take from the court its discretionary power to grant or continue a temporary injunction; neither does a case, showing that plaintiff, if he recover, may suffer irreparable loss and the very object of the suit be defeated in the absence of a temporary injunction, entirely deprive the court of all discretionary power to deny such injunction. But there is some limit to judicial discretion in such cases, both in denying and dissolving injunctions, which, if passed, becomes mere arbitrary judicial will regardless of that wisdom essential to the judicial function, in order to render equity power the effective instrument of justice that it is supposed and designed to be.

On principle and authority, where there is a clear case made by the complaint for equitable relief, supported by affidavits,— notwithstanding a direct conflict between such complaint and affidavits and the answer and affidavits .on the part of the defendant, if it be reasonably probable that plaintiff may finally recover, and on account of the insolvency of the defendant or some other cause the object of the action, notwithstanding the final decree in plaintiff’s favor, may probably be defeated or he be made to suffer irreparable injury if defendant be left unqualifiedly at liberty to deal with the subject of the action pending the litigation,— it is not only within the discretionary power of the court to make some reasonable provision against such a contingency, but on a proper application in that regard it is the judicial duty of the presiding judge to do so. Just what provision should be made must necessarily be governed by the particular facts and circumstances of each case, but to refuse to act at all in such a situation, when action is requested, is in effect to decide the litigation against the plaintiff in advance of a trial. Our judicial system has no such weakness as to lead to that result, though certainly it would be otherwise if it were the unqualified rule, even that the court has the discretionary *446 .power to refuse to preserve, by temporary injunction, the status quo between parties pending the entry of a final decree determining their rights.

Obviously, the court should act with care in such cases. The inconvenience to parties, and sometimes to those not directly parties, to the cause, must be considered. Sometimes restraint upon a defendant may cause to him great inconvenience and damage in case he recover finally, and the refusal of such restraint very little inconvenience or damage to the plaintiff in case of his recovery, and vice versa. In some circumstances it maybe found consistent with judicial wisdom to grant a restraining order upon plaintiff’s giving such bond to protect the defendant as may appear necessary in any reasonable view of the case; in others to refuse such order on defendant’s giving adequate security to protect plaintiff, in view of any probable future situation as to him, down to and inclusive of the final decree. No power of the court is more necessary to the proper and efficient administration of justice, and none more easily abused or dangerous if not exercised with judgment, than the power of injunction. It should never be exercised in any case where the liberty of a person is thereby liable to be interfered with in a serious manner and to his irreparable injury, except with thoughtfulness and judgment as to the probabilities in that regard, and upon such notice and terms as may reasonably be required to protect both parties against ultimate wrongful injury or damage.

Applying the foregoing to this case, it is quite clear that the granting of the order appealed from, dissolving the temporary injunction, was error, and that it must be reversed. The learned trial court evidently gave too great weight ter the rule that, where all the equities of the bill are denied, a temporary injunction should be dissolved. The qualification of that rule, that, notwithstanding the conflict between complaint and answer, the injunction m lirwme should be *447 retained or some other adequate provision made by way of security where it is clear that such a course is necessary to protect the plaintiff from serious loss in case of the establishment of his cause of action on the trial, was either not. comprehended or overlooked. To retain the temporary restraining order, or require security as terms of dissolving the injunction, is only to preserve the property forming the-subject of the action vn statu quo and prevent substantial damage to any one whatever, may be the final outcome. The refusal to do it in this case might inflict irreparable loss upon the plaintiff corporation and render the litigation useless. As before indicated, the existence of the power to grant temporary injunctive relief is for the very purpose of avoiding such a danger. The exercise of the power in a case clearly calling for it is as necessary as the existence of the power itself, therefore judicial discretion in such a case can act in but one direction without abuse. As said, in substance, by Circuit Judge SaNboeN, in Newton v. Levis, 79 Fed. Rep. 715, though the granting or withholding of a preliminary injunction rests in the sound judicial discretion of the court, if by reason of the refusal to issue the injunction, the final decree, if it should be in favor of the plaintiff, will be utterly nugatory, and he left remediless for his injury, there is no question as to the duty of the chancellor to issue it, or in some proper way to guard against such a result. It. is so recognized by courts generally in their administration, but accompanied so often by language to the effect that when all the equities of the bill are denied the temporary injunction will be dissolved, as to carry the idea that the-court has no discretionary power to do otherwise.

By the Bourt.— The order appealed from is reversed.

A motion for a rehearing was denied June 22,1899.