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In reference to the patent: US 1,095,168 A

My great-grandfather received royalties in the amount of 5/375 interest from this patent, even though his name appears no where in the documentation. Does this mean he contributed in some way to the invention of the device?

He was actually a very successful building contractor his whole life; but he also farmed and owned some stock in a few different companies. As far as I can tell, he was not otherwise connected in a business sense with the persons or the company listed as the inventors of the device patented. Although I am sure he did know the Shriners. He was not in any other way, that I can tell, associated with the undertaker occupation.

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No. Ownership is largely independent of inventorship, as patents can be sold, traded, and gifted just like any other form of property.

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