103 N.J. Eq. 240 | N.J. Ct. of Ch. | 1926
In this cause, pursuant to decree of this court (affirmed,
The complainant's exceptions are as follows:
1 and 2. Amount allowed defendant by master for account of organization expenses, $1,608.67.
3 and 4. Amount allowed defendant by master for agents' equipment, $2,132.53.
5 and 6. Amount allowed defendant by master on account of agents' advances, $2,268.35.
(The above amounts were included by the firm of accountants in the statement of "net income in suspense," but deducted therefrom by the master.)
7 and 8. Allowance for depreciation on machinery, $1,587.26.
9 and 10. Allowance for depreciation on furniture and equipment, $104.26.
11 and 12. Allowance for maintenance and repairs, $2,230.30.
13 and 14. Allowance for fire insurance premiums, $210.50.
15 and 16. Allowance for advertising, $5,170.04.
17 and 18. Allowance for taxes, $664.87.
(These items represent amounts deducted from income by the accountants before setting up the net income in suspense.)
The defendants' exceptions are as follows:
1. Failure of master to allow a deduction from profits for *243 obsolescence and depreciation in addition to amount set up by accountants.
2. The finding of the master that the amount of depreciation set up by accountants included apparatus and machinery discarded on account of obsolescence.
3. The failure of the master to allow a deduction of $8,035.66 for organization expenses.
4. The failure of the master to allow an additional deduction of $1,334.12 on account of agents' equipment.
5. The refusal of the master to allow a credit of $15,441.17 for depreciation on patents.
6. The refusal of the master to allow a credit of $1,720.95 for general patent expenses.
7. The refusal of the master to allow $16,073.09 for expenses of this litigation.
8. The refusal of the master to allow $12,527.40 for expenses of litigation in United States courts.
9. The refusal of the master to allow a credit of $1,097.40 expenses of litigation in New York.
10. The refusal of the master to allow a credit of $792 as expenses of officials of the corporate defendant.
11. Refusal to allow a credit of $232.02 expenses for Canadian patents.
12. Relates to items of $1,587.26 and $104.26 covered by complainant's exceptions and which I understand were deducted by the accountants before setting up the "net income in suspense."
13. Relates to the allowance of net profits as found by the master, defendants claiming that no profits should have been found.
I will consider these various exceptions in the order stated: but this inquiry should be approached with the thought in mind that all doubts should be resolved against a fraud-doer. The court of errors and appeals has found that the defendants "filched" the secret information which resulted in the patents on "Type M grating." The Standard Dictionary definition of "filch" is "to steal, especially slyly." The acts of the defendant which have been condemned were not innocent. *244
The defendants had notice of the complainant's rights from the very inception of their nefarious plan and should be held accountable for all profits on the "Type M grating" from the very beginning. Vulcan Detinning Co. v. American Can Co.,
The fallacy of the argument in support of exception number 7 is indicated when we consider that included in this item of expense is a counsel fee of $5,500 which this court ordered the defendants to pay to the complainant's counsel. To allow this exception would be to compel the complainant to pay what the court has said the defendants should pay. No argument ought to be necessary to show that the defendant ought not to be charged with the expenses of resisting its lawful claim. An allowance of the items comprising these four exceptions would practically eliminate all profits for which the defendants have been directed to account and the sustaining of these exceptions would be, in effect, compelling the complainant to pay for litigation in support of an unlawful conspiracy against it. With respect to exception number 8, this was a criminal action in New York with which the defendant company had no connection whatever, and it is now conceded by defendant that this exception cannot be sustained. Exception number 10 is in the same class as numbers 7 and 8. These four exceptions will, therefore, be overruled.
The result is, therefore, that to the profits of $29,119.33 found by the master, should be added the following amounts: *252
Organization expenses ...................................... $1,608.67 Agents' equipment .......................................... 2,132.53 Agents' advances ........................................... 2,268.35 Reserve for depreciation on machinery, c. ................. 1,587.26 Reserve for depreciation on furniture and equipment ........ 104.26 Fire insurance ............................................. 210.00 Taxes ...................................................... 664.00 _________ $8,575.07This sum, added to the amount of the profit found by the master, makes a total of $37,694.40 profits for which the defendants must account to the complainants.
I will advise a decree in accordance with these conclusions.