Fast v. Austin

Thomas, J., delivered the opinion of the Court. This suit was brought on the common counts, and on a special count alleging, that the defendant “engaged the plaintiff to open and conduct negotiations with the Poole Engineering and Machine Company, a corporation located at Wood-berry, Baltimore City, in the State of Maryland, for the manufacture of a mechanical device * * * known as a ‘turbo gear,’ the said defendant agreeing with the plaintiff to pay him for his services in such behalf exerted; that the plaintiff therefupon opened and entered! into negotiations with the Poole Engineering and Machine Company and that by reason of the skill and fidelity with which he opened and conducted said negotiations * * * said defendant was enabled to make and did make an agreement or agreements with the said Poole Engineering and Machine Company, * * * under the terms of which agreement or agreements the Poole Engineering and Machine Company manufactures the said mechanical device, or ‘turbo gear,’ and pays the said defendant large sums of money by way of salary and in royalties;” notwithstanding which the defendant refused to compensate the plaintiff, and he claims $5,000.00. There was filed with the declaration the following account: ⁵ “Baltimore, Md., August 29th, 1917. “Gustav Fast, Esq., “To Sidney B. Austin, Dr. “To services rendered as per declaration attached, being 10< on $50,000......................$5,000. “Received payment.” The defendant filed the general issue .plea., and the trial resulted in a verdict and judgment for the plaintiff for $5,000.00. The present appeal is from that judgment, and the record contains sixteen exceptions to rulings of the Court below on the evidence and one to the action of the Court on the prayers.

The defendant, who in 1913 was employed by the Crown Cork & Seal Company “as inventor and development engineer,” invented a machine known as the ‘turbo gear,’ and upon the completion, in that year, of his first machine, he was introduced by his patent attorney, Mr. Howard, to ME Ralph Robinson as one who would likely he interested in forming a company to manufacture and sell the machine. Certain gentlemen to whom Mr. Robinson referred the matter, and who examined the machine, were not favorably impressed with its “commercial possibilities,” and the defendant was later informed hv Mr. Howard that Mr. Robinson would not be interested in it any further. He did not see Mr. Robinson again until two years later, in 1915. In the meantime ho had built his second machine, which in his judgment was an improvement on the first and “an absolute success.” He then left the employ of the Crown Cork & S'eal Company and made his headquarters at the office of the Universal M a,chine Company, in the Industrial Building, trading under the name of the “Turbo Gear Company.” Having spent $5,000.00 of his savings in developing the machine, he found it necessary to get in touch with, some one to raise capital, and recalling his acquaintance with Mr. Robinson he went to see him again.

The plaintiff testified that he is a mechanical engineer, and that in May, 1915, he was introduced to ME Fast, the defendant, by Mr. Robinson in his office; that Mr. Robinson told ⁶ him that Mr. Fast was endeavoring to get financial aid in putting his turbo gear on the market and had come to him for assistance. He, plaintiff, was “brought into it to assist in” that. He went over Mr. Fast’s patent applications, and finding them unsatisfactory, he went fi> Washington with him and introduced him to patent attorneys there with whom ht had had dealings for many years and had them take the matter up with the view of securing satisfactory and broad patents, which was accomplished. In order to present the thing properly to financial people it was necessary to have thé patents in shape and also to have thorough and satisfactory tests miáde of the apparatus..

He got permission to have the tests made at the Bureau of Standards in Washington, but in the meantime Mr. Fast, through some friend in the Gas Company, arranged to have the tests made there. He worked with Mr. Fast on these tests, and made a supplementary report, the report of the Gas Company not being full enough to answer their purpose. They got all the reports, patent papers and reports from the patent attorneys on the “patentability of the idea,” and got them together in form for proper presentation to financial people. As he understood it, Mr. Robinson was in the miatter “merely as a consulting matter,” and had “one friend whom he wished to see in regard to financing the matter,” but aside from that he left the question of taking the matter up with moneyed people entirely with him.

During June, July and August Mir. Fast made his headquarters in his office, and they worked together and made several attempts to reach different people without success. While Mr. Fast was in his offibe he wanted certain drawings, etc., prepared and was not able to finance them. He, plaintiff, did not feel that he was able to pay a draftsman, so he turned Mr. Fast over to Mr. Harman, who had at one time been in his employ' and who was still in his office, but not in his employ, and "told Mr. Fast he could make! whatever arrangement he wished with Mr. Harman, and Mr. Harman did several weeks work on the drawings., for which, he understood, he had never been páid.

The drawing materials ⁷ belonged to him, the plaintiff, and were supplied by him with the understanding that they were to be paid for when Mr. Fast was in a position to do so. “During all this time they were making these efforts to finance this thing it was clearly understood that when we succeeded in doing so I was to share-in some way in the proceeds; it was not possible to make any definite arrangement because we did uot know what sort of a financial plan would be put over; finally after attempting to interest several people-Mr. Harman in my office suggested to me that he take the matter up- — -Mr. Harman had been in my employ for some time on a salary, but just at that time the war knocked out a couple of good contracts I had in the office and having very little to do Mr. Harman was working for me and was being paid by me for what work was actually -done by him for me with the privilege of bringing work into the office himself with the understanding that of the w’o-rk which was brought in we would each take our — in other words we had an understanding between us in'lie-u of the fact I was not paying him a salary at that time he was to draw a salary for what he actually did and any business brought into the office by him was to be equally divided between us after the expenses and certain rates for his time and myself had been settled.” He directed Mr. Harman to take the matter up with certain parties whom he had suggested, among them Mr. C. W. Harvey, and as a result Mr. Harvey came to his office and went over the matter with him, and was a day or so later introduced to Mr. Fast by Mr. Harman and negotiations were started. During the period of about four months that Mr. Fast was working in his office it was understood they were working together and the question of compensation was mentioned, but no definite compensation could be decided upon until it was known what kind of a financial proposition could be worked out. In the latter part of November, 1915, he gave up his office, or left it and went into the employ of the Poole Engineering and Machine Company. Mr. Hobinson’s relations with the matter ceased very shortly after he introduced the plaintiff to Mr. Fast, except that there was a sort ⁸ of understanding that when it came to the question of incorporating the company “and so on” he was to handle the legal matters.

Shortly after he entered the employ of the Poole Company he learned that Mr. Fast and Mr. Harvey had concluded their arrangements and were starting their work, and at that timé, sometime in the winter of 1915-16, he took up with Mr. Fast the question of his part in the affair, “and where I came into it,” and Mr. Fast stated that he had not turned his patents over to the corporation and consequently had not received anything for them and was unable at that time to make any settlement but would do so when the affairs were straightened out. He saw Mr. Fast a number of times during the next three months, and “practically the same conversation was repeated.” About a year later, about October, 1916, while he was employed by the Poole Engineering Company, Mr. Fast called him up and told him he wished to make a contract with the Poole Engineering Company to manufacture their gears. He took the matter up with Mr. Shoemaker, Vice-President of the Poole Engineering Company, and went into the matter with him, and explained to him what it was, its value and the value of the patents, and “introduced Mr. Fast to him and negotiations were started.” After he heard later that the Poole Engineering Company had refused to consider a contract “on a manufacturing proposition,” and that negotiations on a royalty basis had been started, he asked Mr. Fast to meet him downtown, and he then “endeavored to impress on him” that he was not acting in that matter as an employee of the Poole Engineering Company, but considered it merely as a culmination of the work he had been doing in the matter for nearly two years, and that he would expect his compensation out of it. Mr. Fast assured him that he need have no worry about the matter, and that he would immediately get in touch with Mr. Harvey, who was interested with him in it at that time, and would agree on some definite amount of compensation.

In March, 1917, he got Mr. Robinson, his attorney, to write to Mr. Fast asking him to come ⁹ to some agreement in the matter. Mr. Fast did not reply to the letter, hut he saw him in the lunchroom of the Poole Engineering Company one day, and Mr. Fast told him ho had “received a letter” and that he would get in communication with Mr. Harvey as soon as possible and arrange tire matter. After Mr. Harvey became interested in the. turbo gear he and Mr. Fast had different parts of the machine built at various places around town — were “trying to get it going under their own scheme,” he understood — and the Poole Engineering Company did some of the work for them. The bill filed with the declaration was made up by his counsel upon the best information attainable at that time as to wbat “Mr. Fast’s interest in this matter was/’ but since then be had gotten information that made him feel that the figure mentioned was too small, and that Mr. Fast was in receipt of more than $50,000.00.

He had been informed that the contract with the Poole Engineering Company guaranteed him a royalty of $15,000.00 a year, with a possibility of much larger receipts, and that Mr. Fast was also employed by the Poole Engineering Company at a salary of $6,000.00 a year. On cross-examination the plaintiff stated that the bill for $5,000.00 attached to the declaration was predicated upon the amount he understood Mr. Fast was receiving from the Poole Engineering Company, and that his whole claim was based on the contract of Mr. East and Mr. Harvey with the Poole Engineering Company “as the final culmination of all the work he had done.” He had never rendered Mr. Fast an itemized bill or any bill, but had attempted a number of times without success to get together with him. He never rendered any bill for opinions he gave in regard to patents and for services he rendered in connection with the patent attorney, but his services in connection with the test of the machine by the Has Company and the report he made were worth about $500.00, and his services in handling the patent in connection with the patent attorneys were worth from $300.00 to $400.00. “The main work,” the main basis for his claim for services at that time “is the test- reports and the general report on gear construction and the letter addressed ¹⁰ to Mr. Hamburger, and the fact that I' was working there consulting with Mr. Fast and working with him all the time; there was no question of a bill or of an exact amount on that; it was understood when the time came to incorporate the company I would be interested in it or compensated in some wiay to be agreed upon between us. * * * I had that understanding with Mr. Fast.” He recalled a conversation at the time Mr. Robinson sent- for him to meet Mr. Fast, in which Mr. Robinson suggested that his compensation would be a position with the company, but that was not all of it; the plan then was to form a small company, in which he was to receive a position and one-eighth of the stock of the company; “that was the understanding at that time, but that matter was never carried out.” In addition to the items of $700.00 or $800'.00 for work on patents, reports and Hamburger letter, the $4,200.00 or $4,300.00 based on the contract with the Poole Engineering Company, he thought he was entitled to $2,500.00 or $3,000.00 for the introduction of Mr. Fast to Mr. Harvey, On the percentage basis, the introduction of Mr. Fast to the Poole Engineering Company is worth $7,500.00. At the time Mr. Fast asked him to come to see him in regard to the Poole Engineering Company building the machines for them he was not promised any compensation for anything he might do in connection with the Poole Engineering Company, nor was he promised anything at the time he introduced Mr. Fast to Mr. Shoemaker, Vice-President of that company.

When he went to see his attorney about taking up' his claim in this case against Mr. Fast his claim was not based solely upon the contract of Mr. Fast and Mr. Harvey with the Poole Engineering Company, but “was based upon” his “entire connection with the matter, covering a period of one and a half to- two years.” Mr, Harman, who was called as a witness by the plaintiff, testified that he was a mechanical draftsman, and that at the time Mr. Austin met Mr. Fast he was not in the employ of Mr. Austin; that work had become slack, and that he began to look around some for himself, and that he had an understanding with Mr. Austin that they would share the profits ¹¹ in any work that he brought in. He further testified that he had no written agreement with Mr. Fast in regard to the work he did for him while he (witness) was in Mr. Austin’s office, but that he and Mr. Fast had an understanding — “I suppose it was just the ordinary agreement” — that he would do the work for Mr. Fast, and that. Mr. Fast would give him something — a position in the company — when the company was organized. Mr. Austin did not introduce Mr. Harvey to Mr. Fast.

Mr. Austin and another gentleman, a friend of Mr. Fast, had been endeavoring during the summer to secure capital to build a plant and carry on the work of manufacturing the- turbo gears. He had some friends he thought might be interested in it, so he borrowed all the data Mr. Austin had, and went to see two people before he saw Mr. Harvey; that he left the data with Mr. Harvey and arranged with him to meet him a day or so later, after he had an opportunity to examine the data, and be introduced to Mr. Fast, and that he introduced him to Mr. Fast in August or September of 1915 at the office of the Universal Machine Company in the Industrial Building. Mr. Harvey, a witness for the plaintiff, testified that he and Mr. Fast and some other associates undertook to organize a Turbo Gear Company to take over Mr. F'ast’s patents. Hambleton & Company were interested until Mr. Hambleton and he and Mr. Fast had a disagreement, when Mr. Hambleton dropped ont, and he, witness, “took over the liabilities of the company.” The company never acquired the patents.

Mr. Fast owns the patents and he assigned to him a twenty-five per cent, interest in the patents and a ten per cent. Interest to his, witness’, brother, and he, his brother and Mr. Fast are the qnly participants in the fruits of the contract made with the Poole Engineering and Machine Company. Mr. Austin had nothing- to- do with his meeting Mr. Fast. After Mr. Hambleton withdrew from the proposition they realized that they had to “turn out” the machines in greater quantities to keep down the cost of production; they had to- turn out about sixty gears.

They had a conference with Mr. Uelligan and Mi\ Karr at the Safe Deposit Company, and they advised ¹² them not to try to raise capital at that time to put up a factory, hut to go to different machine companies to get a contract with them to make the machines, about two hundred at a time, and that accounts for their taking up with the Poole Engineering and Machine Company the question of the company manufacturing some gears for them. They went to a Philadelphia concern and also to see Bartlett & Hayward, and as he did- not know anyone at the Poole Engineering and Machine Company, Mr. Fast went out there. Bartlett & Hayward said they were too busy with munition contracts, and they never got any definite answer from the¡ Philadelphia concern. He went out to the Poole Engineering and Machine Company with Mr, Fast the third time he went to see -them, and took up with Mr. Brady and Mr. Shoemaker the proposition of that company making- two hundred machines for them.

They said that they would not consider it in that way, but that the company would manufacture the machines on a royalty basis. During these conferences with the Poole Engineering and Machine Company, the only time he ever saw Mr. Austin was on one occasion when he was passing! through one of the outer offices on his way into Mr. Shoemaker’s office, and he never heard of any commission to be paid by Mr. Fast or anybody else to Mr. Austin. Mr. Shoemaker, Vice-President of the Poole Engineering and Machine Company, another witness for the plaintiff, testified that Mr. Austin introduced him to Mr. Fast in his, Mr. Shoemaker’s, office,, at Woodberry, in order that Mr. Fast might discuss with him the proposition of the- company manufacturing the turbo gear for the Turbo Gear Company, and that the result of the introduction was that the Poole Engineering and Machine Company declined to manufacture the gear for the Turbo Gear Company. Later he took up with his associates in-New York the question of the potential possibilities of the device, and the directors of his company also discussed the question of buying the patents, and the question of obtaining a license to manufacture, use and sell the machines. - The negotiations took about four months, and finally resulted in the contract between the Poole Engineer ¹³ ing and Machine Company and Mr. Fast, on the 16th of January, 1917, licensing the Poole Engineering and Machine Company to manufacture the gear as sole manufacturer of it and the sole users and distributors in the United States and Canada for a period of five years.

Witness did not want to disclose the terms of the contract, but said that the minimum royalty was fifteen thousand dollars. About three months later the Poole Engineering and Machine Company employed Mr. Fast at a salary of $6,000.00 a year, but the contract of employment was distinct from the other contract, and was “terminable each year by either side.” Mr. Austin had nothing to do with the making of the royalty contract between the Poole Engineering and Machine Company and Mr. Fast, and was not present during any of the negotiations looking to the consummation of the contract. He understood that Mr. Austin had some interest in the Turbo Gear Company, whether as stockholder or not he did not know, and was not interested. Mr. Fast owned the patents and had not assigned them to the Turbo Gear Company, and hence the negotiations and contract were with him, but that he did not know or hear that Mr. Austin was going to claim a commission for introducing Mr. Fast to him.

Whether the Poole Engineering and Machine Company would have permitted Mr. Austin to collect a commission from someone it was doing business with would have depended largely on circumstances. It was not discussed at the time, and he was not prepared to say whether the company would have permitted him to do so or not. They had in special cases permitted salaried employees to get a commission on devices, but not as a general rule; the company was opposed to it. Mr. Robinson, a witness for the plaintiff, testified that at the time he brought Mr. Fast and Mr. Austin together in his office in May, 1915, and they were discussing the formation of a company for the purpose of getting the turbo gear on the market, he made a memorandum of a scheme of division of the stock of such company, and that according to that scheme Mr. Fast was to receive 13/24 of the stock, the capitalists who ¹⁴ put up the money were to have 8/24, and Mr. Austin was to receive 3/24.

The defendant testified that when he went to see Mr. Robinson in the Spring of 1915 he seemed to be very much interested,-and said he had a friend, Mr. Austin, who was a very capable engineer, and that he would like him to come into the proposition, and if they succeeded in forming a company and financing the proposition he would like him to give Mr. Austin a position with the company; that he agreed to do that, and that Mr. Robinson then telephoned Mr. Austin to come up to his office. He and Mr. Austin went to work, as advised by Mr. Robinson, to get tests made and to get information in regard to the validity, infringements, etc., of the patents, and it was understood that all the work they would do together was for the purpose of collecting data to give to Mr. Robinson so as to enable him to promote the company. They talked the thing over about compensation, and it was distinctly understood that Mr. Austin should get a, position with the company, and no other arrangement was made. Mr. Austin wanted to raise $5,000.00 himself to take stock in the company, but later found that he could not raise the money.

He had his office at the Universal Machine Company, but