Appeal from the District Court of the United States fro the Northern District of Illinois, Eastern Division; William H. Holly, Judge.
Before EVANS, SPARKS, and MINTON, Circuit Judges.
By this action appellant sought equitable relief upon the following facts alleged in the complaint: There is diversity of citizenship, and more than $3,000 is alleged to be involved. Julian D. Block was a chemical engineer and a citizen of Illinois. He disclosed to appellant certain mechanical and chemical developments, to wit: a dye stripping process for bleaching, reclaiming and redyeing woolens, silks and other fabrics; a process for the manufacture of synthetic sugar; a process for the decaffeinization of coffee; and a process for the generation of hydrogen gas from water. The first three were patented.
Block made averbal offer to appellant that if he would secure the financing of the synthetic sugar by means of securing sale of that patent and formulas outright, or if appellant were able to secure and carry out a royalty contract, or to secure and carry out the formation of a company that would carry on the production and manufacture of the sugar, Block would turn over to appellant one-half interest in that patent and processed, and would divide equally all profits derived therefrom, or in case of the formation of a company for such purposes, Block would divide equally with appellant any stock received by Block in the company.
Appellant alleges that he accepted the verbal offer and did within the month following secure parties willing and financially able to close a deal under any one of the plans offered by Block, provided Block would furnish a chemical test or demonstration of his ability to produce synthetic sugar by his patented process. Block fixed the date for such test as of July 17, 1938, and notified appellant. When appellant came to Chicago on that date for observing the test and closing the deal, Block told him that he would neither make the test nor close the deal until he had completed his hydrogen gas development and its demonstration; that the sugar could wait, and if Block were not there, his sons could carry it on as they had full knowledge of the process and were able to make the test and demonstration.
Thereupon Block detailed to appellant his success in the development and control of his hydrogen gas. He said that he needed a demonstrating model in order to establish his ability to easily and cheaply generate and control such gas; and that he was financially unable to secure the model, or to protect his disclosures by patent. Thereupon he offered appellant one-half interest in the secrets and processes and the contemplated patents relating thereto, and also one-half interest in all profits therefrom, as a joint adventure in the production and development of the gas, if appellant would advance $5,000 as his portion of such joint adventure. Block said he would not want the entire sum at once, but only as the development progressed. He said it would be used by him for the materials in making the model, and would also cover the costs for drawings, searches, attorneys' fees and necessary expenses in securing the patents. Block further stated that he would build the model and furnish all of his secret experiments and information, but that appellant would have to see to the financing or commercializing thereof, as he was too sick to attend to such details.
Thereupon appellant accepted Block's verbal offer and pursuant thereto paid to Block on the following dates the respective amounts set forth:
September 20, 1938, $2500.
On February 14, 1939, Block had not yet taken steps to secure the patent relating to the gas, and expressed to appellant a desire that he furnish a contract that would authorize appellant to carry on negotiations, and for financing and commercialization purposes as soon as the protection of the patent applications was completed. Appellant had an attorney prepare a contract which was not satisfactory to ...