whole, however, the court is convinced that it was not intended by the parties that plaintiff should have the right to cancel the contract at its pleasure. From the subject matter of the contract and the nature of the business operations of the parties it must have been contemplated that defendant would be required to make substantial investments in the tools and equipment, such as punches, required to manufacture the matrices it sold, and that the defendant would be obliged to maintain an inventory of matrices for the prompt supplying of replacements for the needs of its customers.
In an effort to avoid the obviously harsh results which would obtain if it insisted that the contract were to be construed as cancellable at a moment's notice, plaintiff suggests that the contract be construed cancellable by it only upon reasonable notice. Such reasonable notice, it contends, was afforded when it notified defendant in August of 1939 that defendant could continue operations looking toward the disposal of its stock of royalty matrices up until December 31, 1939. Plaintiff has, however, failed to meet the burden of proof upon it to establish that it was the intention of the parties that the contract be cancellable by either party upon reasonable notice. If such had been the case, it could readily have been expressed in the agreement. As was said in Rossmassler v. Spielberger, 270 Pa. 30, at page 41, 112 A. 876, at page 880: "Apart from contracts which, from their inherent nature, imply a power of revocation, it would seem that the intention of the parties to an agreement, that it should be perpetual and without limit as to duration could not be more properly expressed than by silence as to any time limit or power of revocation. Although there appears to be some authority to the contrary, the rule seems to be that, where no limitation is expressed in the agreement, neither party can terminate it without the consent of the other, unless the making of the contract itself indicates with sufficient clearness that the parties must have intended some other determination."
The absence of a provision as to termination cannot be said to indicate that either plaintiff or defendant intended the contract to be terminable at will, in view of the possible advantages to each of them in having it continue for an indefinite period. As respects the plaintiff, it was to be compensated thereunder for the defendant's use of type faces as to which plaintiff's design patents were of questionable validity (see Goudy v. Hansen, 1 Cir., 247 F. 782, certiorari denied 246 U.S. 667, 38 S. Ct. 336, 62 L. Ed. 930; American Type Founders' Co. v. Damon & Peets, C.C., 120 F. 715), and, even assuming their validity, for an indefinite period after their expiration. As respects the defendant, it was obliged to pay royalties only if it sold matrices designed and manufactured by the plaintiff, and accordingly the extent of its obligation was subject to its own control. The absence of a provision as to termination of the contract can, therefore, hardly be said to be indicative that it was the defendant's intention that the contract could be cancelled at will by either party.
As has been indicated, the authorities are of limited help in deciding cases of this type because the intention of the parties can be derived only from a consideration of the nature and subject matter of each particular contract and the circumstances existing at the time of its execution. Some support, however, for the conclusions arrived at herein may be found in cases holding that where the enjoyment of a license must necessarily be and is preceded by the expenditure of money, it is not revocable at the pleasure of the licensor. See Harris v. Brown, 202 Pa. 16, 51 A. 586, 90 Am.St.Rep. 610, and cases cited therein.
In its petition plaintiff has further prayed for incidental relief in the form of entry of a judgment in its favor for the amount of royalties due it since it has attempted termination of the contract. Since these royalties have been duly tendered by the defendant in accordance with the terms of the contract and since defendant has never challenged plaintiff's right to them thereunder, plaintiff is obviously not entitled to such relief.
Defendant has challenged the jurisdiction of this court on the ground that although there is diversity of citizenship of the parties, there is no showing that the amount in controversy is in excess of $3,000. This challenge is predicated principally on the argument that, it being admitted that the list of plaintiff's patents for faces designed by it and currently used by defendant having expired in 1935, plaintiff has failed to show that property rights of any value whatsoever are involved in this controversy. In view of the fact that sums of money far in excess of $3,000 have accrued and are accruing under the contract the continued existence of the operation of which is the subject of the controversy in this proceeding, the requisite jurisdictional amount is present and it is unnecessary to consider the extent of plaintiff's property rights apart from the contract.
I make the following
Conclusions of Law.
1. This court has jurisdiction over this case.
2. Where a contract is silent as to termination, the intention of the parties as derived from the nature and subject matter of the contract and the circumstances existing at the time of its execution determines whether it is cancellable at the instance of either party.
3. The contract between plaintiff and defendant dated December 1, 1925, is not cancellable at the will of either party, and plaintiff's attempt to declare it terminated is ineffective.
4. The contract between plaintiff and defendant dated December 1, 1925, is still in full force and effect.
Judgment is hereby entered for the defendant; costs to be paid by the plaintiff.