Case ID: ad_46/html/0233-01.html
Source: Caselaw Access Project
Author: {"author": "Willard Bartlett, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Herman D. Roosen, Respondent, v. John P. Carlson and Philip Ruxton, Appellants.
    
      Injunction to prevent a party from rendering services involving the use of secret formulas — the rights of a third pa/rty, the owner of the formulas, considered—an agreement for the organization of a corporation and for services construed.
    
    An action to enjoin a party from disclosing formulas for the m'anufacture of inks- and from working in the manufacture thereof, on his own account or for any other person, on the ground that he had contracted to render special, unique and extraordinary services to the plaintiff, and had refused to carry out his. agreement, must be decided somewhat with reference to the rights of a former employer of both the other parties to the action, who is joined therein as defendant, where such third person claims to own the secret formulas, and the injunction asked for would oblige him to disclose them to some new workman in case his co-defendant should be restrained from rendering further services to him in the premises.
    In such a case, evidence that such third party was the owner of the formulas in question is competent.
    An agreement, in reference to the organization of a corporation and the emplovinent of a party contributing to its capital to superintend the manufacture of ink by the use of secret formulas, construed, with a view to determining: whether it was a joint agreement to participate in the formation of a corporation or an employment of one party thereto by the other.
    Appeal by the defendants, J ohn P. Carlson and another, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Kings on the 20th day of April, 1899, upon the decision of the court rendered after a trial at the Kings County Special Term.
    
      Duncan Edwards, for the appellants.
    
      James G. Church, for the respondent.
   Willard Bartlett, J.:

The judgment in this action permanently enjoins the defendant John P. Carlson from disclosing to any person any of the formulas now possessed by him for the manufacture of inks or dyes, and also from working in the manufacture of inks and dyes either on his own account or for the defendant Philip Ruxton, and any other person. It. also commands the deféndant Carlson to place all of the written formulas known to him in a safe deposit box of the.Brooklyn Trust Company, and awards to the plaintiff costs against both the defendants. •

The doctrine upon which this injunction, rests is that where a person has contracted to render special, unique and extraordinary services to another, but refuses'-to carry out his agreement, equity will-restrain him from rendering such services to anybody else:

The contract which the defendant Carlson has refused to perform was made with the plaintiff in the-autumii.of 1898, when.both parties, were in the employ of the defendant Buxton, who was an ink manufacturer, the plaintiff as a salesman and the defendant Carlson as a mixer of inks. .The instrument begins by reciting the intention of the parties to form an ink- manufacturing corporation, to which the plaintiff is to contribute eighty per cent of. the capital and. the defendant Carlson twenty-per cent,'in addition to-which the defendant Carlson is to render services to such corporation in the manufacture of 'inks and colors in accordance with certain secret formulas known only to him: , The- plaintiff agrees to organize the eor■poration, promises to assign the contract to. it, and covenants .that the corporation will perform his engagements' thereunder. The plaintiff further.agrees to employ, the defendant Carlson for three years from December 3, ,1896, as superintendent of the ink manufacturing business-at a compensation of forty dollars a week,' and that upon the formation of the proposed corporation lie will sign a ■contract to- act as its president and salesman for three years at the same compensation. On the other hand, the defendant Carlson undertakes to assume charge, of the business as practical superintendent and manager, devoting to it all his time and attention and using therein Whenever needed such secret formulas- as may be ■necessary and proper to' make the- required inks. Further provisions relate .to the deposit of the formulas for safe-keeping and the disposition thereof at the termination of the agreement.

The present suit was' originally instituted against the defendant Carlson alone, by reason of his refusal to fulfill this contract on his part. In justification of such refusal he denied that he.had acquired any secret "formulas or possessed any high degree of skill in the manufacture of inks, and averred that the plaintiff had procured the execution of the instrument by misrepresentation and fraud. Philip Ruxton, the former employer of both, was subsequently brought in as a defendant. (See Strobridge Lithographing Co. v. Crane, 12 N. Y. Supp. 834.) He interposed an answer.averring in substance that the plaintiff, while employed as his salesman, plotted to entice the defendant Carlson from his service as an ink mixer and foreman, so as to start a rival ink manufacturing business and obtain therein the use of the secret formulas known to the defendant Carlson, none of which were the property of the latter, but all of which belonged to the defendant Ruxton.

The learned trial judge, has decided in favor of the plaintiff, without, however, expressly passing upon the claim of the defendant Ruxton to the ownership of the secret formulas used by the defendant Carlson. The direction in the decision is that judgment be entered against thé latter as prayed for in the complaint. . If this direction had been followed the decree would award to the plaintiff the sum of $10,000 damages against the defendant Carlson, in addition to the equitable relief granted; but the terms of the decision in this respect are evidently broader than the learned judge intended.

The rule of equity which the. plaintiff has invoked successfully in the case at bar is thus stated by a distinguished author: “ Where one person agrees to render personal services to another, which require and presuppose a special knowledge, skill and ability in the employé, so that in case of a default the same services could not easily be obtained from others, although the affirmative specific performance of the contract is beyond the power of the court, its performance will be negatively enforced by enjoining its breach.” (Pomeroy on Spec. Perf. [2d ed.] § 24.) Thus, an opera singer, who has agreed to sing only for a particular manager, cannot he compelled to sing for him, but she can be prevented from singing for any one else during the term covered by her contract. In such cases the injunction is a substitute for the decree of specific performance, and it should not be-granted where a decree for specific performance would be refused. In determining whether a contract shall be specifically enforced, or whether the injured party shall be relegated to his action at law, it is proper to consider the rights of third persons who are. not parties to the agreement, and to withhold the equitable remedy if it will operate upon such persons unjustly. So, in passing upon the question here, whether the plaintiff should have the injunctive relief which lié sought against the defendant Carlson, the effect of the desired injunction upon the rights of the defendant Ruxton was a material matter for consideration. If the defendant Buxton really -owned the secret .formulas, and no one. else had any right to them, as he alleged in his answer, he ought not to be compelled to disclose these formulas to some new workman other than Carlson; '-The injunction against Carlson, however, would oblige Buxton to do this, if - he desired to continue the business Avithout actually mixing inks himself. Hence, the propriety of awarding the plaintiff equitable, rather than legal, relief depended largely upon the relation of the defendant Buxton to the secret formulas. The learned court, however, would-not allow Buxton to give evidence tending' to prove the ownership which he' had set up in his answer. I think that the exception to the ruling on this subject should lead-to a reversal of the judgment. In a suit of this kind, the fullest light should be thrown upon the equities of the various parties; and it is'not difficult- to perceive that a more complete inquiry in the present case might have resulted in ■ remitting "the plaintiff to his remedy at law.

Thus far in the discussion I have proceeded upon the assumption that the contract in question contemplated the rendition of personal services by the defendant Carlson to, the plaintiff; but I doubt very much whether that assumption is correct. I am rather inclined to regard the instrument as a joint agreement to participate in the formation of a corporation into whose employment both parties were.to enter and remain at a stipulated compensation for a period of three years. The plaintiff Avas not to be the employer of the defendant Carlson any more than the defendant Carlson was to be the employer of the plaintiff, -after the corporation was organized. The corporation was to be the employer of both. The evidence strongly indicates that the contract was designed to carry out a plan on the part of the plaintiff, in which he induced the defendant Carlson to participate, to supplant the defendant Buxton in the ink business; and that after Carlson came to appreciate the - true nature of the scheme he abandoned it, and concluded to remain with Buxton. But however this may be, on the record as it stands and in view of the exclusion of evidence in support of Buxton’s claim of owners ship, the equities of the plaintiff are not sufficiently clear to entitle him to the judgment which has been rendered in his favor.

All concurred.

- Judgment reversed and new trial granted, costs to abide the final award of costs.