Sanborn v. Commissioner of Internal Revenue

The petition in this case presented a cause of action at law in two counts within the federal jurisdiction because of diverse citizenship of the parties. In the first count the plaintiff alleged that he had invented a certain toy movie theater for which he had a patent pending during the summer of 1934 and that during that summer he entered into negotiations with defendant to sell the use of the invention to the defendant; that defendant stated it was interested in utilizing plaintiffs idea on the basis of paying plaintiff a royalty on each toy theater used; that at defendants request plaintiff disclosed all the details of his invention to defendant, and the defendant thereupon utilized the plaintiffs idea and invention and produced and distributed one million of said toy theaters and became thereby indebted to plaintiff for a reasonable royalty, figured at $12,500.