51 N.Y.S. 93 | N.Y. App. Div. | 1898
Lead Opinion
The appellant is' a domestic corporation organized for the purpose of making mica pulp, flour paste, gums and like articles which are extensively used in the manufacture of wall paper and other business of that kind. It is alleged in.the complaint that on the 14th day of September, 1895, one Delery was the sole owner of a manufacturing business of that kind which was carried on in the city of New York. The' plant was worth but- little, the value ■of the business, consisting almost entirely in the secret processes for making the different articles in which Delery dealt. These secret processes, although owned by Delery, were known only to the defendant, who was at that time Delery’s manager. At the time'above mentioned the defendant approached the president of the plaintiff and endeavored to. induce him to biiy the business carried on by Delery. It was agreed between the plaintiff and the deféndant that, if the plaintiff would purchase the business from Delery and carry- it on, and would engage the defendant as its agent at a salary of twentydive dollars a week and give the defendant an interest in
For a second cause of action it was alleged that, as a part of the same contract, the defendant agreed that any improvements which he made in the process of manufacture while he was in the employ of the plaintiff as its agent, and any secret processes he might discover, should belong to the plaintiff, and that he would not disclose them to any other person; but that he had disclosed them or was about to disclose them to the corporation which he had organized to compete with the plaintiff’s ‘business.
For a third cause of action it was alleged that it was agreed that the defendant would not disclose any secrets or secret process which he should learn from the plaintiff’s other. employees while he was so engaged as plaintiff’s agent. It is further alleged that the plaintiff had in its employ certain persons who discovered other secret processes and improvements in the processes used by’ the plaintiff in its business; that these were disclosed to the defendant to enable him to carry on the business, but that the defendant after leaving the plaintiff had disclosed or threatened to disclose these processes to the competitor of the plaintiff in whose employ he had entered.. Upon the trial the defendant was not called upon to give evidence, but the complaint was dismissed at the close of the
The contract was established by the testimony of the general manager of the plaintiff, who stated in substance that the defendant, being in the employ .of Delery, came to the witness and asked him tb purchase Delery’s business, giving the reasons .why he desired him to do so. After some negotiation with Delery, the general manager told the defendant that they were about to close a bargain with Delery for the purchase of the business, but that they would •be practically powerless to carry on the business because none of them knew anything about it, unless the defendant would stay with them and show them tire business, and it waá agreed between 'the witness and the defendant that if plaintiff bought the business from Delery and employed him as manager and paid him twenty-five dollars a week as a salary, he would show them all the formulae and would not go out and start another business or disclose those secrets to anybody else. The defendant said also in the same conversation, by way of further inducement to the purchase of the property, that there were other things which he thought he could make and which he would make for the benefit of the business. This is a concise statement of the agreement in that behalf which was sworn to by the general manager of the plaintiff. It is not denied that after that agreement was made and in reliance upon it, the plaintiff bought the business of Delery, entered upon it, hired the defendant as its agent at a salary of twenty-five dollars a week, which was regularly paid to him so long as he saw fit to stay in the plaintiff’s employ.
It is objected by the defendant that there was no consideration for his entering into this contract, because there was no agreement on the part of the plaintiff to employ him for any particular time, or,, indeed, to employ him at all, but that the plaintiff was at liberty to discharge him whenever it saw fit. To this objection there are two sufficient answers, each one of which is based upon an elementary rule of the law of contracts. In the first place it is conceded by the evidence that the plaintiff was induced to enter into this bargain by
In the second, place it appears without dispute that, although the plaintiff did not agree to keep the defendant in its employ for any particular time, yet it did employ him and pay him the agreed salary and kept him there until he saw fit to leave, and the performance of the condition supplied the lack of a previous obligation, if there was one. The thing which the defendant expected to get, in addition to the plaintiff’s purchase, was employment. That, it is conceded, he did get, and kept just so long as he desired. Although there might have been no obligation on the plaintiff to keep him for any particular time, yet, co long as it did keep him and was willing to keep him, and paid the salary which it had agreed to pay him, it performed its part of the contract and he was bound to perform his. (Miller v. McKenzie, 95 N. Y. 575; Beckwith v. Brackett, 97 id. 52.)
But it is said that the plaintiff did not give to the defendant the interest in the profits which it had agreed. The answer to this is two-fold. In the first place it did not appear that any profits had been made, and in the second place it was quite clear from the testimony .that the defendant did not base his leaving the employ of the plaintiff and his threatened disclosure of these processes to the other corporation upon any such ground, so far as the evidence showed. The reasons which he had for leaving the plaintiff’s employ were not based upon any complaint that its contract with him had been violated.' So far as the contract, therefore, is concerned, it is quite clear that it was a valid contract; that the plain
It is said by the defendant, however, that there was no evidence that he had violated his contract. It is proved that the defendant had left the employ of the plaintiff; had organized another corporation for the purpose of competition with the plaintiff, and which, did compete with the plaintiff, and that he had refused to furnish to-the plaintiff the secret processes which were within his knowledge while he was in Delery’s employ, so that after he had left the . employment of the plaintiff, it was not able to carry on the business in competition with the new corporation with which he was engaged: All these facts were made to appear from the testimony, and there is no doubt that, upon the 'case as it was finally presented to the court at the trial, there had been on the part of Braendly a violation of his contract to the serious injury of the plaintiff in its business.
There.is no doubt that so much of the contract as provided that the defendant would disclose, to the plaintiff the secret processes used in the manufacture of its goods, and would not disclose those-secrets to anybody else, nor use them in the business of any other-person, was valid and could be enforced. (Jarvis v. Peck, 10. Paige, 118 ; Alcock v. Giberton, 5 Duer, 76.) .
It is said that the court cannot compel the disclosure of these-secret processes. In one sense that may be very true, but, as a step-towards compelling the defendant to perform that part of its agreement, it certainly has the power to restrain him from disclosing-those processes to anybody else, and tó punish him if' he violates an. injunction imposing that restraint. It may do this not only in performance of the contract by which he agreed not to disclose these-secrets, but also, in the absence' of that negative stipulation, by way of compelling him to perform the contract which he made to disclose those processes to the plaintiff. (Lumley v. Wagner, 1 DeG., M. & G. 604; Catt v. Tourle, L. R. [4 Ch. App.] 654; Peabody v. Norfolk, 98 Mass. 452.) As to the power of the court, therefore,, there can be no question. Neither is there, as we apprehend, any doubt that the plaintiff made a case entitling it to some portion, at-least, of the relief which it demanded. These trade secrets were-the most valuable portion of the business which the plaintiffs bought..
While it appears in this case that the processes were owned by Delery, and the defendant did not acquire them during the time he was in the employ of the plaintiff, yet, as they belonged to Delery, as between Delery and the defendant they were secret processes, and the
With regard to the processes discovered by employees .of the plaintiff and disclosed- to Braendly, while he was in their employ, to enable him to prosecute his work, the case is still stronger, and it is brought precisely within the rules laid down in the two cases above cited: As to all these secret processes then, upon the case made by the plaintiff, it was clearly-entitled to a judgment restraining the defendant from violating his contract by their disclosure, and it was error to refuse such a judgment to it.
We have not considered whether the plaintiff is entitled to an injunction restraining the defendant from entering into the employ of this competitor corporation. This judgment must .be reversed without regard to that question. The question of the validity of that portion of the contract, and whether upon the whole the plaintiff is entitled to a specific performance of it if it is valid, is one which need not be decided until the defendant’s Version of the case shall have been made to appear, and then,, upon the whole case as presented to it, the court will be in a situation to decide whether that portion of the contract should be enforced or how far its enforcement is necessary to the complete protection of the business which this defendant induced the plaintiff to invest its money in.
The judgment should be reversed and a new trial ordered, costs to appellant to abide event.
Yan Brunt, P. J., and McLaughlin, J., conauiTed; Barrett and Ingraham, JJ., dissented.
Dissenting Opinion
The complaint alleges three causes of action: First, that the plaintiff, a domestic corporation, on and before the 14th of September, 1895, purchased from one Delery a certain manufacturing business, conducted in the city of New. York, which business consisted of a lease of the premises, 502-504 West Forty-fifth street, some old machinery and some secret processes for manufacturing products described in the complaint; that said secret processes were owned by the said Delery, but were not known to him, but were known to the defendant, and were the .most valuable part of the business so owned by the said Delery; that on the 14th day of September, 1895, it was mutually agreed between plaintiff and defendant that if plaintiff would purchase the said business from said Delery and would agree to engage the defendant as its agent at a salary of twenty-five dollars per week, and to give to the defendant an interest in the profits of said business, said defendant would work as the agent of the plaintiff, would disclose and show to the said plaintiff all the secret ¡processes which the plaintiff was about to purchase from the-said Delery, would agree not to communicate the said processes to anybody else, and would agree not to manufacture the articles from said processes himself should lie thereafter leave plaintiff’s ■employ, nor to engage in the same line of business; that plaintiff purchased said business from said Delery, engaged the defendant at a salary of twenty-five dollars per week, gave to said defendant an interest in the profits of its business and performed all parts of its said agreement by it to be performed; but that the said defendant, although duly requested, has failed and refused to disclose and show to the said plaintiff the various secret processes, has failed to perform his part of the said agreement, and has, without just cause or reason, left the employ of the plaintiff, has started a factory for the purpose of manufacturing the said articles from the said processes above herein mentioned, and has notified the plaintiff that he intends to manufacture the same and to stay in that-line, .of business ; that the said defendant has organized.said business- about five blocks distant from that of the plaintiff. , k
For a second cause of action plaintiff alleges that it was mutually agreed between plaintiff and defendant that defendant should work as an agent of plaintiff to improve the secret processes which plain
For a third cause of action it is alleged that it was mutually agreed between plaintiff and defendant that, in consideration of and for plaintiff’s engaging defendant as above stated, the defendant would agree not to disclose any secrets or secret processes, or other ■information relating to the business of the plaintiff, which said defendant should learn from other employees of the plaintiff, while said defendant was in the plaintiff’s employ; that while in the employ of the' plaintiff said defendant learned certain secret processes described, and that the defendant, has left the plaintiff’s employ, has organized a corporation, and is about to start the manufacture of various articles now manufactured by plaintiff, as in the first and second causes of action alleged; and the plaintiff demands judgment restraining the defendant from disclosing to any. person or persons information concerning the manufacture of the articles mentioned in the complaint, or disclosing to any person or persons any information concerning the improvements in the processes .which said defendant discovered while in the plaintiff’s employ, and from manufacturing any of the articles, described in the complaint, or aiding in the manufacture of the same.
The general manager of the plaintiff corporation, who purchased the business from Delery, testified that before he made the purchase he had a conversation with the defendant, who stated to him that he was acquainted with the secret processes employed in the conduct
It is.quite clear that this contract was unilateral. It imposed no obligation upon the plaintiff to do anything. Eor it the defendant received no consideration. The defendant was at the mercy of the plaintiff, and could be dismissed at any moment. The condition ■ upon which the obligation of the defendant arose was, that if the plaintiff would employ him by some valid contract of employment, at a salary of twenty-five dollars a week, and would give him an interest in the profits of the business, the defendant would work as agent of the plaintiff in the management of the business. It is not alleged that plaintiff offered to make any such contract with the defendant. - He was simply continued in the employ - of the plaintiff and paid a salary while so employed; and it expressly appears from the testimony of the plaintiff’s manager that
I think, therefore, that the whole evidence clearly shows that there was no- contract binding upon the defendant which the plaintiff was entitled to enforce, and that there was no evidence to show that the defendant was either about to or had violated any duty which he owed to the plaintiff or that entitled the plaintiff to any relief.
For these reasons I think the complaint was properly dismissed and that the judgment should be affirmed, with costs.
Barrett, J., concurred.
Dissenting Opinion
I concur with Mr. Justice Ingraham in this case. The question presented to us is not whether the contract was enforcible at law. Such cases as Miller v. McKenzie (95 N. Y. 575) and Beckwith v. Brackett (97 id. 52) have, therefore, no application.
It is undoubtedly good law that a promise to pay, given by A. to B., ill consideration of future services to be rendered by the latter, becomes valid and binding upon the rendition by B. of the services, in reliance upon A.’s promise. But how could such a contract be specifically enforced in equity ? It seems to me that any discussion of the doctrine of consideration in this aspect, or in its relation to an action for damages for breach of the contract, only tends to obscure the real question. That is, whether the contract here is such that it can be specifically enforced. Upon this question the acts of the parties under it are of but little moment. Equity looks at the terms of the contract itself, not at its sequences or results. In my judgment this contract cannot be specifically enforced ; not because of anything the plaintiff did under it, but because of what it had the power to do. Equity cannot aid the plaintiff, because the contract permitted it to discharge the defendant at its pleasure, and because its agreement to give him an interest in the profits was hopelessly indefinite. It would be a new doctrine of equity that a contract which fails to define with precision the legal obligation of one of the parties, can be specifically enforced because, under it, that party acted fairly and did the best he could in view of subse
Ingraham,, J., concurred.,
Judgment reversed, new trial ordered, costs to appellant to abide event.