Appendix — Clark v. Barlow

24

APPENDIX “A”

OPINION OF THE UNITED STATES DISTRICT

COURT FOR THE DISTRICT OF COLUMBIA.

8278 C. A.

The gravamen of the plaintiffs charges is that the de-

fendant committed fraud in obtaining a release from the

plaintiff by giving false testimony in the New York cases

and concealing any rights that the defendant might have

acquired under the reassignment to himself from the Mar-

lin-Rockwell Corporation. I do not find any false state-

ments in the testimony of the defendant in the New York

cases. The release was executed in a suit in which the

plaintiff claimed an accounting and in which the defendant

denied facts which might have established a confidential

relationship between the parties. The release was a set-

tlement of all claims of the plaintiff against the defendant

in order to end the litigation. The plaintiff has delayed

for many years any attempt to make the claims that he

now puts forth. When he heard that the defendant had

made a claim against the Government he wrote to the

defendant “How about splitting up some of this claim with

your old partner.” This was not a claim as of right but

a mere request.

Both parties have moved for summary judgment. The

motion of the plaintiff will be overruled; that of the de-

fendant sustained.

BAILEY

J.

25

APPENDIX “B”

FINDINGS OF FACT AND CONCLUSIONS OF LAW

OF THE UNITED STATES DISTRICT COURT FOR

THE DISTRICT OF COLUMBIA.

IN THE DISTRICT COURT OF THE UNITED STATES

FOR THE DISTRICT OF COLUMBIA

JOHN F. CLARK, Plaintiff,

Vv.

LESTER P. BARLOW, ET AL., Defendants.

Civil Action No. 8278

FINDINGS OF FACT AND CONCLUSIONS OF LAW.

This action having been heard by the Court upon the

motion of the plaintiff for summary judgment and the

motion of the defendant, Lester P. Barlow, for summary

judgment, the Court hereby makes the following findings

of fact and conclusions of law.

Findings of Fact.

1. Plaintiff and defendant Barlow signed an agreement

dated October 22, 1915. A copy of this agreement is at-

tached to the First Amended Complaint as Exhibit “A”.

2. On October 25, 1916, and again on May 6, 1918, the

defendant Barlow advised the plaintiff that he denied that

said contract of October 22, 1915, related to, or was in-

tended to relate to, any of the bombs, applications for

patents thereon, or patents thereon which are the subject

matter of the case at bar and for the infringement of which

the Congress of the United States awarded the defendant

Barlow, by Private Act of September 6, 1940, the sum of

$592,719.21.

3. On January 29, 1918, defendant Barlow entered into

26

a contract with Marlin-Rockwell Corporation, a New York

corporation, by which he assigned and transferred his en-

tire interest in the bombs, the invention thereof, and the

application for patents thereon, and thereafter the patents

upon said bombs were issued to said corporation. In-

cluded in these patents were the patents for the infringe-

ment of which the said Act of Congress directed the pay-

ment to the defendant Barlow the said sum of $592,719.21.

A copy of said contract is attached to the affidavit of de-

fendant Barlow verified September 20, 1940, and filed

herein.

4. Marlin-Rockwell Corporation filed no suits for in-

fringement of said patents and defendant Barlow filed no

suits in the name of Marlin-Rockwell for infringement

of said patents.

5. The plaintiff acquired full knowledge of the said con-

tract between the defendant Barlow and Marlin-Rockwell

Corporation some time prior to the year 1921.

6. Defendant Barlow instituted two actions, one in the

Supreme Court of New York County, State of New York,

and the other in the United States District Court for the

Southern District of New York, on October 18, 1918, and

April 25, 1921, respectively, against Marlin-Rockwell Cor-

poration to compel said corporation to account to and pay

to him amounts of money which had become due to him

from said corporation under the said contract between

him and it of January 29, 1918.

7. The plaintiff Clark was interpleaded as a party de-

fendant in each of said actions referred to in Paragraph

6 and appeared and filed a counterclaim in each of said

actions wherein he claimed that pursuant to the said con-

tract of October 22, 1915, referred to in Paragraph 1

hereof, he was entitled to a one-half share in the inventions

and patents and in income and royalties therefrom which

were transferred to Marlin-Rockwell Corporation by the

defendant Barlow by the said contract of J anuary 29,

27

1918. In his said counterclaim the plaintiff claimed an

accounting for all royalties and income from said patents

then due or which thereafter might become due from any

source. The defendant Barlow in said actions denied that

the plaintiff had any interest of any kind, character or

description in the said patents and denied his right to any

accounting.

8. In his counterclaim in said actions the plaintiff

made the following allegations:

“XVI. Upon information and belief, that the said

defendant John F. Clark has duly demanded of the

plaintiff that he assign to him a one-half interest in

and to said bomb and improvements thereon, ther

with a one-half interest in all patents, and rights in

applications for patents upon the said bomb and im-

provements thereon and a one-half interest in all and

any moneys received and to be received as royalties

or otherwise, from the sale, manufacture or use of

said bomb or improvements thereupon; but that the

plaintiff has refused and still refuses to assign to the

said defendant John F. Clark, a one-half interest as

aforesaid, or any interest whatsoever.

* * * * *

“4, That he is entitled to a one-half interest in and

to all moneys received or to be received by the plaintiff

from the Marlin-Rockwell Corporation, or from any

other source whatsoever, as royalties or otherwise for

the sale, manufacture and use of the said bomb and

improvements thereon.”

9. The bombs, inventions, and patents thereon, which

were the subject matter of said actions, include the same

bombs for the infringement of the patents thereon the

Congress of the United States, by the said Act, directed

the payment to the defendant Barlow of the said sum

of $592,719.21.

10. The action in the said State Court of New York was

tried in February, 1921, and the said Federal Court action

was tried in January, 1924.

28

11. During the pendency of the said New York Federal

and State court actions plaintiff and defendant Barlow,

through their respective counsel, entered into an agree-

ment to settle all disputes and claims existing between

them in consideration of the payment by the defendant

Barlow to the plaintiff of $12,000.00. To carry out this

agreement the following stipulation was signed on Decem-

ber 8, 1924, by counsel for plaintiff and defendant Barlow,

and filed in said actions:

“IT IS HEREBY STIPULATED, that the de-

fendant, John F. Clark, settles all claims against

Lester P. Barlow, by the payment to him or his at-

torneys by Barlow in the sum of $12,000. Said Clark

hereby releases the balance of said funds, and further

covenants and agrees to execute and deliver to Lester

P. Barlow a general release of all claims and causes

of action whatsoever. Upon payment of said money,

said Clark through his attorney will sign a consent

to discontinue the above actions without costs to any

arty as against the others. The sum of $12,000 to

fe paid upon the delivery of the general release by

the defendant, Clark.”

12. As a further condition to the agreement referred

to in Paragraph 11, plaintiff, on December 26, 1924, exe-

cuted and delivered to defendant a general release in words

and figures as follows:

“TO ALL TO WHOM THESE PRESENTS

SHALL COME or may concern, greeting; know ye,

That John F. Clark, of the City of Los Angeles,

County of Los Angeles, and State of California, for

and in consideration of the sum of Twelve Thousand

Dollars lawful money of the United States of America,

to me in hand paid by Lester P. Barlow, the receipt

whereof is hereby acknowledged, have remised, re-

leased and forever discharged and by these Presents

do for myself heirs, executors and administrators,

remise, release and forever discharge the said Lester

P. Barlow, his heirs, executors and administrators,

of all and from all, and all manner of action and ac-

29

tions, cause and causes of actions, suits, debts, dues,

sums of money, accounts, reckonings, bonds, bills, spec-

ialties, covenants, contracts, controversies, - agree-

ments, promises, variances, trespasses, damages,

judgments, extents, executions, claims and demands

whatsoever in law or in equity, which against him,

I, John F. Clark, ever had, now have or which my

heirs, executors or administrators, hereafter can, shall

or may have for, upon or by reason of any matter,

cause, or thing whatsoever from the beginning of the

world to the day of the date of these presents.

IN WITNESS WHEREOF, I have hereunto set

my hand and seal the 26th day of December, nineteen

hundred and twenty-four.

Sealed and Delivered in (Signed) John F. Clark

the Presence of

Witness:

(Signed) W. R. Law

STATE OF CALIFORNIA

COUNTY OF LOS ANGELES. | ss:

On the 26th day of December, nineteen hundred

and twenty-four before me came John F. Clark, to

me known to be John F. Clark, the individual who

described in, and who executed, the foregoing instru-

ment, and acknowledged that he did execute the same.

(Signed) W. R. Law

My Commission ex- Notary Public

pires Nov. 2, 1925. In and for the County of

Los Angeles, State of California”

13. Plaintiff received the $12,000.00 consideration for

the aforesaid settlement.

14. On August 3, 1923, because Marlin-Rockwell Cor-

poration became financially embarrassed, and in receiver-

ship defendant Barlow, in settlement of all claims which

he might have against Marlin-Rockwell Corporation by

reason of his said contract with it, including claims for a

large amount of money payable yearly by the corporation,

30

received from Marlin-Rockwell Corporation an assign-

ment of all claims of any kind, character or description

which the corporation might have against the United States

of America or any other Government, partnership, cor-

poration or individual for use or infringement of the pat-

ents involved in the case at bar, as well as numerous other

patents. On August 9, 1923, Marlin-Rockwell Corpora-

tion assigned to the defendant Barlow a large number of

domestic and foreign patents, including those herein in-

volved. This assignment of August 9, 1923, was not filed

in the United States Patent Office until November 8, 1927,

more than four years after its delivery to defendant Bar-

low. No explanation is made by defendant Barlow for

withholding this document from the records of the United

States Patent Office. The claims thus assigned to the de-

fendant Barlow on August 3, 1923, included the claim for

which the money involved in the case at bar was appro-

priated by the Congress by the Act of September 6, 1940.

15. In the trial of the New York State case, defendant

Barlow was cross-examined by attorneys for plaintiff

Clark to ascertain from what other sources, if any, other

than the Marlin-Rockwell Corporation, patent royalties

were due, during which cross-examination the following

questions were asked and Barlow made the following

answers:

1 “Q. Have te received anything for your depth

bombs

A. Nothing.

2 Q. Have you received anything for any aerial bombs

from the Government?

A. No.

3 Q. No royalties?

A. I waived my royalties to the Secretary of War—

I wrote him a letter.

4. Q. Did you ever get patents on any of these ar-

ticles?

A. Yes.

31

5. Q. Do you own the patents now?

A. Yes, they are here.

6. Q. Do own patents in any foreign countries

now

A. No.”

16. No allegation was made herein and no evidence of-

fered that said testimony of the defendant Barlow was

false. Said testimony was not false.

17. At the time the defendant Barlow testified as afore-

said in the State court action, plaintiff had full and com-

plete knowledge of the contract of January 29, 1918, be-

tween the defendant Barlow and Marlin-Rockwell Cor-

poration. Plaintiff offered the said contract in evidence

in said State court action and it was received in evidence

therein.

18. At the time said testimony was given defendant

Barlow had received from the Marlin-Rockwell Corpora-

tion portions of royalties paid by the United States to

the Marlin-Rockwell Corporation and the suits then in

litigation were amongst other matters with respect to

sums due to Barlow arising out of royalties paid to the

Marlin-Rockwell Corporation by the United States. Bar-

low’s cross-examination by counsel for Clark was to ascer-

tain from what sources other than Marlin-Rockwell Cor-

poration, royalties were due.

19. When defendant Barlow testified he owned patents

obtained from the United States Government, he did not

own the patents involved in this suit, which patents were

owned by Marlin-Rockwell Corporation. In the letter

Barlow wrote to Assistant Secretary of War Crowell,

quoted below, proposing to waive future royalties upon

request, he also stated that bombs being manufactured for

the United States Government were being manufactured

under his patent.

20. At the same time defendant Barlow testified, he did

not own any patents in foreign countries, although at that

EBLE RET OLLI OP ALND CLLR DDENG. SIAL EEE ON BNE SOIDIE ay

32

time the Marlin-Rockwell Corporation owned six patents

in Great Britain and five patents in each of the following

countries, to-wit, France, Italy, Belgium and Canada, is-

sued on Barlow inventions, and twelve patents in the

United States issued on Barlow inventions.

21. The aforesaid testimony of the defendant Barlow

was not intended to and did not in any way deceive or

mislead the plaintiff.

22. On September 22, 1918, the defendant Barlow had

written to the Secretary of War of the United States as

follows:

“Washington, D. C., September 22, 1918.

Hon. Benedict Crowell,

Acting Secretary of War, Washington, D. C.

My Dear Mr. Crowell: I have recently returned

from France. While there I witnessed the field tests

of aerial bombs, among which were the Barlow bombs.

In France I was amazed at the wonderful progress

that has been made in practically all branches of the

service. I believe that any person or persons who

have been in France recently and who has had the

opportunity to see the Americans at work, feel that

seemingly impossible tasks are now being accom-

plished.

I believe that our aircraft program is far behind

= oe our aircraft bombing program is in a terrible

plight.

I shall make vigorous efforts and do my part in

getting the bombing program going smoothly as soon

as possible. There are hundreds of thousands of bombs

finished or being finished in this country which are

built or being built under my patent. If there are

any legal Government forms necessary for me to sign

in waiving my rights to any future royalty which

might become due me through future bomb contracts,

I shall be pleased to sign them on request from the

War Department. I am willing to make the above

financial sacrifice as proof that my future activities,

33

insofar as our bombing program is concerned, are

not inspired by mercenary motives.

Very truly yours,

BARLOW.”

23. At the time said testimony was given defendant

Barlow had not released and relinquished all rights to

royalties from the United States Government. Barlow

offered by letter, if requested by the War Department, to

waive all his rights to royalties on future contracts made

with the United States Government. Said letter was de-

livered personally to the Assistant Secretary of War Cro-

well, then Acting Secretary of War, and the offer was

refused by him. While defendant Barlow knew of the

rejection of said proposal, plaintiff Clark and his attorneys

knew nothing of said letter or the rejection.

24. Plaintiff knew that sales of bombs were to be made

by Marlin-Rockwell Corporation to the United States

Government.

25. The plaintiff delayed for many years any attempt

to make the claims put forth in this suit. He knew of the

defendant Barlow’s claim against the United States some

time prior to October 11, 1937, and on that date wrote to

the defendant: “How about splitting up some of this claim

with your old partner’.

26. The release executed by the plaintiff on December

26, 1924, referred to in Paragraph 12 hereof, was not

induced or procured by any fraud committed by the de-

fendant Barlow or any other person, and was a settlement

of all claims of the plaintiff against the defendant in order

to end the litigation in the New York State court and the

District Court of the United States for the Southern Dis-

trict of New York.

Conclusions of Law.

1. The release executed by the plaintiff on December

WILE HAR I, ALOE HR PAE GLE AME LLB E RELL BS. Sia ME hs itera:

34

26, 1924, released the defendant Barlow from all claims

of any kind, character or description which the plaintiff

might have against him and discharged him of all obliga-

tions of any kind, character or description which he might

owe to the plaintiff, including the obligations of any ex-

isting contract.

2. The contract of January 29, 1918, between defendant

Barlow and Marlin-Rockwell Corporation by its terms

contemplated the manufacture and sale of bombs made

pursuant to defendant Barlow’s patents to the Govern-

ment of the United States.

3. In the said actions in New York the plaintiff herein

as the basis for his counterclaim and claim for accounting

necessarily asserted the existence of a fiduciary relation-

ship between himself and the defendant Barlow. When

the plaintiff Clark accepted $12,000.00 in settlement of

those suits he abandoned his claim that a fiduciary rela-

tionship existed and is estopped from re-asserting that

claim for the purpose of seeking to set aside the settlement

and release. The abandonment of the claim that a fidu-

ciary relationship existed, the establishment of which would

have justified an accounting, was the consideration for

the $12,000.00 paid by the defendant Barlow to the plain-

tiff herein.

4. The plaintiff Clark is not entitled to equitable relief

because he was not diligent in the assertion of his claim.

5. The assignment by Marlin-Rockwell Corporation to

the defendant Barlow on August 3, 1923, and referred to

in Paragraph 14 hereof, was null and void as a claim

against the United States by reason of the provisions of

Section 3477 of the Revised Statutes of the United States

(U.S. Code, Title 31, Section 203).

6. Defendant Barlow had no claim against the United

States of America by reason of the assignment to him of

the claims of Marlin-Rockwell Corporation against the

United States for the infringements of the patents referred

35

to herein until the enactment of the Act of March 3, 1927,

44 Stat. Part 3, p. 1844.

7. The motion for summary judgment filed by the plain-

tiff should be overruled.

8. The motion for summary judgment filed by the de-

fendant Barlow should be granted.

[SIGNED] JENNINGS BAILEY,

Justice.

Service of a copy of the foregoing revised findings of

fact and conclusions of law acknowledged this 22nd day

of January, 1941.

[SIGNED] HARRY B. HAwEs,

[SIGNED] CARL L. RISTINE.

36

APPENDIX “C”

OPINION OF THE UNITED STATES COURT OF

APPEALS FOR THE DISTRICT OF COLUMBIA

UNITED STATES COURT OF APPEALS FOR THE

DISTRICT OF COLUMBIA

No. 7831

JOHN F. CLARK, Appellant

V.

LESTER P. BARLOW, et al

Appeal from the District Court of the United States for

the District of Columbia

Decided August 18, 1941

Carl L. Ristine, of Washington, D. C., for appellant.

Joseph R. McCuen, of Washington, D. C., for appellee

Barlow.

Edward M. Curran, United States Attorney, and William

S. Tarver, Assistant United States Attorney, both of Wash-

ington, D. C., for appellees Morgenthau and Julian.

Before GRONER, Chief Justice, and MILLER and VINSON,

Associate Justices

MILLER, Associate Justice: In 1915 appellant, a lawyer,

and appellee, an inventor, entered into a contract con-

cerning an aerial torpedo bomb “and patents or any im-

provements or additions . . . to said bomb or patents as

well as... moneys... received from the sale of said bomb

or as royalty” therefor. Subsequently appellee abandoned

his original application for a patent and denied that any

effective contract still existed between himself and appel-

lant. However, he continued his experiments with aerial

bombs; and as the years went by he continued in disagree-

ment with appellant as to whether the 1915 contract cov-

37

ered his new discoveries; appellant contending that the

bombs, applications for patents and patents which are the

subject of the present suit were improvements upon and

additions to the original bomb; appellee contending that

they were not.

In January, 1918, appellee entered into a contract by

which he assigned the bombs, patents and applications for

patents, here involved, to Marlin-Rockwell Corporation.

Thereafter, in October, 1918, and in April, 1921, appellee

instituted two actions in New York; one in the State Su-

preme Court of New York and the other in the United

States District Court for the Southern District of New

York; against Marlin-Rockwell Corporation, for account-

ings and for money due under the contract of January,

1918. Appellant was interpleaded as a party defendant in

each of the two actions; he appeared and filed a counter-

claim in each; alleging that under the 1915 contract he

was entitled to a one-half share in the inventions and

patents which had been transferred to the Marlin-Rockwell

Corporation, and in income and royalties therefrom; and

claiming an accounting for all royalties and income there-

from then due, or which thereafter might become due from

any source. The action in the New York state court was

tried in February, 1921, and the federal court action in

January, 1924, but both were still pending when, on De-

cember 8, 1924, appellant signed the following stipulation

which was thereupon filed in both actions:

IT Is HEREBY STIPULATED, that the defendant, John

F. Clark, settles all claims against Lester P. Barlow,

by the payment to him or his attorneys by Barlow in

the sum of $12,000. Said Clark hereby releases the

balance of said funds, and further covenants and

agrees to execute and deliver to Lester P. Barlow a

general release of all claims and causes of action what-

soever. Upon payment of said money, said Clark

through his attorney will sign a consent to discontinue

the above actions without costs to any party as against

38

the others. The sum of $12,000 to be paid upon the

delivery of the general release by the defendant, Clark.

Pursuant to the terms of the stipulation, appellant received

the specified $12,000 and executed the following release:

“To ALL WHOM THESE PRESENTS SHALL COME or

may concern, greeting; know ye, That John F. Clark,

of the City of Los Angeles, County of Los Angeles,

and State of California, for and in consideration of

the sum of Twelve Thousand Dollars lawful money

of the United States of America, to me in hand paid

by Lester P. Barlow, the receipt whereof is hereby

acknowledged, have remised, released and forever dis-

charged and by these Presents do for myself heirs,

executors and administrators, remise, release and for-

ever discharge the said Lester P. Barlow, his heirs,

executors and administrators, of all and from all,

and all manner of action and actions, cause and causes

of actions, suits, debts, dues, sums of money, accounts,

reckonings, bonds, bills, specialties, covenants, con-

tracts, controversies, agreements, promises, variances,

trespasses, damages, judgments, extents, executions,

claims and demands whatsoever in law or in equity,

which against him, I, John F. Clark, ever had, now

have or which my heirs, executors or administrators,

hereafter can, shall or may have for, upon or by rea-

son of any matter, cause, or thing whatsoever from

the beginning of the world to the day of the date of

these presents. .. .

In the meantime, in 1923, the Marlin-Rockwell Corpor-

ation had become financially embarrassed and had gone

into receivership. In August of that year it had assigned

to appellee—in settlement of all claims which he might

have against it—a large number of foreign and domestic

patents including those here involved, together with all

claims which it might have against the United States of

America or any other government, partnership, corpora-

tion or individual, for use or infringement of the patents

involved in the present case, as well as numerous other

39

patents. The assignment from Marlin-Rockwell Corpora-

tion, so far as it concerned claims against the United

States, fell within the prohibition of the federal statute *

and hence was invalid. However, in 1927, Congress con-

ferred jurisdiction on the Court of Claims of the United

States to determine the amount due on the claim here

involved ;* and, after that determination had been made,’

Congress, on September 6, 1940, awarded to appellee

$592,719.21.°

Relying upon his contract of 1915, and for the purpose

of enforcing an equitable lien in this award, appellant,

thereafter, sued appellee, together with the Secretary of

the Treasury and the Treasurer of the United States, in

the District Court of the United States for the District of

Columbia. The two officials answered; alleged that they

had no interest in the controversy, except as stakeholders;

and asked the court to instruct them as to the disposition

which should be made of the fund. Both appellant and

appellee moved for a summary judgment. The trial court

denied appellant’s motion and granted that of appellee.

Several issues which were presented to the trial court

are renewed on this appeal. The most important of these

concerns the effect of the stipulation and release executed

by appellant in 1924. He now contends that they were

void, and hence ineffective to bind him because, he says,

they were procured by false and fraudulent representa-

tions, and by concealment of facts which appellee was

under a fiduciary duty to disclose. The following facts,

found by the trial court, lend color to appellant’s conten-

tion: (1) Although the reassignment from Marlin-Rock-

well Corporation to appellee was made on August 3, 1923,

more than a year prior to the filing of the stipulation and

——-

*R. S. § 3477, 31 U. S.C. A. § 208.

* Act of March 3, 1927, 44 Stat. (Part 3) 1844.

* Barlow v. United States, 87 C. Cls. 287. See also, 82 id., at 360.

‘Private Law No. 555, 76th Cong., 3d Sess. (1940).

40

release executed by appellant, it was not filed in the United

States Patent Office until November 8, 1927, more than

four years after its execution and delivery, and approxi-

mately three years after the appellant’s release was exe-

cuted; (2) in the trial of the action in the New York state

court in 1921, appellee, on cross-examination, testified as

set out in the margin,” but, apparently contrary to appel-

lee’s answer as then given, (3) he had received from

Marlin-Rockwell Corporation portions of royalties paid

by the United States, (4) he did not own the patents in-

volved in this suit, (5) although appellee wrote a letter

to the Acting Secretary of War in which he offered, on

request, to waive any royalties which might become due

to him through future contracts, the offer was refused by

the Acting Secretary of War, and at the time of his

cross-examination appellee had not released or relinquished

all rights to royalties from the United States Government;

(6) while appellee know of the rejection of his proposal

to waive, neither appellant nor his attorneys knew any-

thing about the letter or its rejection.

However, the court also found that (1) the cross-exam-

ination of appellee, during which the answers noted were

given, was for the purpose of ascertaining from what

sources, if any, other than the Marlin-Rockwell Corpora-

tion, patent royalties were due; (2) appellant had, at the

time of the cross-examination full and complete knowledge

So“

Q. Have you received anything for your depth bombs?

“A. Nothing.

“Q. Have you received anything for any aerial bombs from the

Government?

“A. No.

“Q. No royalties? ;

a I waived my royalties to the Secretary of War—I wrote him

a letter.

“Q. Did you ever get patents on any of these articles?

“A. Yes.

“Q. Do you own the patents now?

“A. Yes, they are here.

“Q. Do you own patents in any foreign countries now?

“A. ee

41

of the 1918 contract between appellee and Marlin-Rockwell

Corporation and he, himself, introduced it into evidence at

the same trial as that at which the cross-examination

occurred; (3) appellant knew that sales of bombs were to

be made by Marlin-Rockwell Corporation to the United

States Government; (4) appellant also knew, at the time

the testimony of appellee was given, that appellee had re-

ceived from Marlin-Rockwell Corporation portions of roy-

alties paid by the United States to Marlin-Rockwell, be-

cause the suits then in litigation—and to which appellant

was a party—involved, among other matters, sums due

to appellee arising out of royalties paid to Marlin-Rockwell

Corporation by the United States; (5) although appellee

did not own the patents, they were owned by Marlin-Rock-

well Corporation, by virtue of the 1918 contract, of which

appellant was fully informed; (6) the testimony of ap-

pellee was not intended to and did not deceive or misleac|

appellant.

These latter findings clearly dispose of appellant’s con-

tention that appellee made false or fraudulent represen-

tations to him. There remains, however, his contention

that appellee concealed facts which he was under a fiduciary

duty to disclose; particularly as concerns (1) his failure,

for one year prior to and three years after appellant’s

rélease was executed, to file the assignment from Marlin-

Rockwell Corporation in the United States Patent Office;

and (2) his failure to testify, on cross-examination, that

his offer to waive royalties had been rejected by the Acting

Secretary of War. There are several answers to this con-

tention. In the first place, whatever fiduciary relationship

there may have been, as a result of the contract of 1915,

clearly no such relationship existed either at the time of

the trial in 1921, or at the time of the reassignment of

1923. The trial court found that in 1916, and again in

1918, appellee advised appellant that the 1915 contract did

not relate to and was not intended to relate to “any of

42

the bombs, applications for patents thereon, or patents

thereon which are the subject matter of the case at bar,”

This alone was sufficient to put appellant on notice that if

he thought he had any rights he should take steps to pro-

tect them and that appellee had repudiated any previously

existing fiduciary relation."

In the second place, as the trial court found, appellee,

in 1918, assigned to Marlin-Rockwell Corporation his en.

tire interest in the bombs, the invention thereof, and the

application for patents thereon, and thereafter the patents

upon the bombs were issued to that Corporation. Of this

assignment appellant was fully informed prior to the year

1921. Also, in 1918, and again in 1921, when appellee

commenced actions against Marlin-Rockwell Corporation,

appellant was interpleaded as a party defendant—adverse

to appellee; in his counter-claim in each action appellant

claimed a one-half share in the inventions, patents, income

and royalties; and appellee, in each of the two actions, de-

nied that appellant had any interest of any kind, character

or description. It was after all this had occurred that the

first alleged concealment took place. At that time, on

trial in the New York state court, appellant and appellee

were adversary parties; each was represented by counsel;

the issues between them had been defined by pleadings in

which the very existence of facts out of which any fiduciary

relationship might have grown, were denied. Yet, appel-

lant relies upon answers then given by appellee under

cross-examination to show concealment upon which he, as

one occupying a fiduciary relationship, is entitled to rely,

Again, appellee’s answers on cross-examination fail to

show concealment, in any event. Anyone who is familiar

with courtroom practice is well aware of the rapid-fire

manner in which cross-examination takes place. At the

* Cleaveland vy. Richardson, 132 U. S. 318; Mallory v. Leach, 35 Vt.

156, 166, 82 Am. Dec. 625, 628; Banner v. Rosser, 96 Va. 238, 246, 31

S. E. 67, 70. Cf. Ferguson v. Lowery, 54 Ala. 510, 25 Am. Rep. 718.

43

New York trial, appellee was asked whether he had re-

ceived anything for aerial bombs from the Government.

Appellant’s counsel, in asking the question, well knew that

Marlin-Rockwell had received something, and that appellee

had received a portion thereof. He and appellant both

understood, therefore, that appellee’s answer excepted pay-

ments made to Marlin-Rockwell Corporation. It was then

that appellee volunteered the statement: “I waived my

royalties to the Secretary of War... I wrote him a letter.”

The conclusion is inescapable that appellant knew this

statement also excepted payments made to Marlin-Rockwell

Corporation by the Government, which payments had been

in part distributed to appellee and which constituted the

very substance of the trial then under way. Moreover,

appellee’s statement, thus volunteered, even as it related

to other royalties on future contracts, far from constitut-

ing concealment, was, instead, a revelation of information.

It amounted to an invitation to inquire further as to the

nature and contents of the letter. But appellant’s counsel

did not accept the invitation. He, not appellee, was in

control of the examination, and he chose to go forward

to another subject: “Did you ever get patents on any of

these articles?”

So far as concerns the reassignment, and appellee’s fail-

ure to file it in the United States Patent Office, it will be

remembered that this occurred in 1928, approximately two

years after the trial of the action in the New York state

court, in which appellee and appellant appeared as adver-

sary parties, and five or six years after appellee had ad-

vised appellant of his adverse position concerning the 1915

contract. There is no basis here, therefore, upon which

to urge concealment of facts which appellee was duty

bound to reveal. Appellee consistently maintained his

position from 1916 on, that appellant had no interest in

the inventions here involved; he denied, on several occa-

sions, that the 1915 contract was still operative; he put

44

appellant on notice, in a variety of ways, that his position

was adverse to that of appellant; he left no basis upon

which appellant could assume or rely upon the continu.

ance of a fiduciary relationship." “One cannot close his

eyes to the obvious and then claim to be deceived.” * Appel-

lant, by his letters to appellee, as well as by joining issue

with him on at least two occasions, in the actions of 1918 }

and 1921, indicated his recognition of the changed re

lationship.

One who relies upon fraud, misrepresentation, or con-

cealment, must sufficiently allege and prove it.’ In the

present case there is no basis upon which such a defense

can be maintained. Consequently, appellant is bound by

his stipulation and release. That release, in turn, is com-

prehensive and inclusive. The law favors the settlement

of litigation and the compromise of disputed claims.** If

such a release, made under the circumstances of the pres

ent case, could be repudiated, there would be no end to

litigation."* It is not necessary for us to consider the

other points urged by appellant.

Affirmed.

* Andrus v. St. Louis Smelting and Refining Co., 130 U. S. 643, 647:

“The law does not afford relief to one who suffers by not using the

ordinary means of information, whether his neglect be attributable to

indifference or credulity; nor will industrious activity in other diree

tions, to the neglect of such means, be of any avail.”

* Del Rio v. Ulen Contracting Corp., 5 Cir., 94 F. (2d) 701, 703.

® Lalone v. United States, 164 U. S. ca 257; Public Motor Service,

Ine. v. Standard Oil Co., 69 App. D. . 809, 91, 99 F. (2d) 124, 126;

Security Investment Co. v. Garrett, 3 P= pp. D .C. 69, 76; Hanitable Life

Assur. Soc. v. Johnson, 6 Cir., 81 F. (2d) 543, 547. :

1° Williams v. First Nat. Bank, 216 U. S. 582, 595; St. Louis Mining&

Milling Co. v. Montana Mining Co., 171 U. S. 650, 656; McMahon y,

Matthews, 48 App. D. C. 303, 309: “The law encourages the compro

mise of disputes and looks with favor on all roper efforts in that

direction.” ; ; Mille v. Pyrites Co., Inc., 4 Cir., 71 (24) 804, 810, cert.

denied, 293 U. S. 604. See Tulsa City Lines, Inc., v. Mains, 10 Be

107 F. (2d) sv 380. iS

11 Cf. Hennessy v. Bacon, 187 U. S. 78, 85; The Katie M. Hi

E.D. Pa., 98 F. 995, 996; Randall v. Port Huron, St. C. & M. C.

215 Mich. 413, 423, i84 N N. W. 485, 4388

eee,