Contour Chair Lounge Co. v. Aljean Furniture Mfg. Co.

Decision Date19 April 1966
Docket NumberNo. 32158,32158
Citation403 S.W.2d 922
PartiesCONTOUR CHAIR LOUNGE COMPANY, Inc., a Corporation and Contour Sales, Inc., a Corporation, Plaintiffs-Respondents, v. ALJEAN FURNITURE MANUFACTURING COMPANY, a Corporation, Joseph F. Laskowitz, Henry Koerner, Althea Koerner, and William Neiner, Defendants-Appellants.
CourtMissouri Court of Appeals

Suelthaus & Krueger, Louis M. Kohn, St. Louis, for defendants-appellants.

Dubail, Judge & Kilker, William C. Maier, St. Louis, for plaintiffs-respondents.

DOERNER, Commissioner.

Defendants appeal from a judgment and decree enjoining them from competing with plaintiffs, in violation of a contract containing a covenant not to compete executed only by defendant Joseph F. Laskowitz.

Laskowitz is the designer and inventor of a distinctive type of chair with a movable one-piece top, shaped to fit the body, which moves in an arc on a stationary base. He caused the plaintiff Contour Chair Lounge Company, Inc., to be incorporated in 1947 to manufacture the chair, and the co-plaintiff Contour Sales, Inc., to be formed to sell the same, and was president of the former company and vice-president of the latter. Six design patents on the chair were granted to Laskowitz by the Commissioner of Patents, the principal one of which was No. 157,269, issued on February 14, 1950, for a term of 14 years. Laskowitz granted plaintiff Contour Chair Lounge Company, Inc. the exclusive right to manufacture and sell the contour-type chair, in return for royalties to be paid to him. The evidence indicates that Laskowitz was an officer of the plaintiff companies until 1955, when, presumably, he sold his stock in them. Thereafter he continued to receive royalties from plaintiff Contour Chair, and for the five years preceding December 17, 1958 was paid $66,804.50.

On that day, December 17, 1958, Laskowitz and plaintiff Contour Chair entered into a written agreement whereby Laskowitz sold and assigned his patents to Contour Chair in return for the sum of $180,000. The basic patent was then due to expire in slightly more than 5 years, on February 14, 1964. As part of the consideration Laskowitz agreed that for a period of 10 years from December 17, 1958, he would not:

'(a) Engage in or enter into, directly or indirectly, any business, enterprise or undertaking in competition with the First Party or the Contour Sales, Inc., a Missouri corporation, or any franchise or other dealer thereof; except as to conventional living room furniture, chairs convertible from a sitting to a redlining position, bed room suites, or kitchen, dinette or dining room furniture.

'(b) Directly or indirectly enter into, finance, invest in, or otherwise engage in any manufacture, development, research, sales or other business activity in the United States, its possessions or Canada relating to or involving furniture or any other product or component of a product of the same general nature as those produced or sold by or for First Party; except as to conventional living room furniture, chairs convertible from a sitting to a reclining position, bed room suites, or kitchen, dinette or dining room furniture.

'(c) Sell, license, or otherwise transfer any mechanical or design patent now owned by or hereafter obtained by Second Party covering furniture or any other product or component of a product of the same general nature as those produced or sold by or for First Party; except as to conventional living room furniture, chairs convertible from a sitting to a reclining position, bed room suites, or kitchen, dinette or dining room furniture.

'(d) Use, attempt to use, directly or indirectly the names 'Contour', 'Contour Chair', 'Contour Chair Lounge', or any similar names in any form or relationship. In this connection Second Party acknowledges full title and ownership of said names to be in First Party.'

On November 6, 1958, shortly before the execution of the foregoing agreement, Laskowitz and defendants Henry Koerner and William Neiner, his sons-in-law, executed articles of incorporation for defendant Aljean Furniture Manufacturing Company, the certificate for which was issued by the Secretary of State the following day. Laskowitz subscribed for 3 shares and Koerner and Neiner for 1 each, all at $100 per share. Laskowitz was elected president, Neiner vice-president, and Koerner secretary-treasurer, and the three composed the board of directors. Shortly thereafter, on December 11, 1958, pursuant to the board's action, Laskowitz sold $10,000 worth of machinery, equipment and raw materials to defendant Aljean Furniture in exchange for 100 shares of the company's stock. Within a short time he also loaned Aljean Furniture $13,943.11 in cash, and on October 19, 1959, this indebtedness was evidenced by a promissory note for that sum executed by Neiner as vice-president on behalf of the Aljean Furniture, payable on demand. Laskowitz, in addition, owns the real estate occupied by Aljean Furniture, and the evidence indicates that little, if any, rent was paid or an obligation therefor recognized prior to 1964.

According to the minute book of defendant Aljean, introduced in evidence, Laskowitz tendered his written resignation as the president and a director of that company, dated March 22, 1963. On or about the same day Laskowitz transferred 51 1/2 of his 103 shares in Aljean to his daughter, Althea Koerner, and her husband, Henry Koerner, jointly; and his remaining 51 1/2 shares jointly, to his other daughter, Jeanne Neiner, and her husband, William Neiner. He also assigned his note from Aljean Furniture to his daughters, jointly. On the following day, according to the minute book, the board of directors of Aljean Furniture accepted Laskowitz's resignations and elected Henry Koerner president, William Neiner secretary, and Althea Koerner a director.

As stated, the principal design patent issued to Laskowitz and assigned by him to plaintiff Contour Chair, under which plaintiffs made and sold their contour chair, expired on February 14, 1964. Shortly thereafter, and as early as March 11, 1964, defendant Aljean Furniture began to advertise and offer for sale a contour-type chair, under the name 'Conforming' or 'Conform' chair. There can be no dispute about the fact that to all appearances the two chairs are substantially alike. Both Laskowitz and Koerner readily admitted that to the average person the Conform Chair of Aljean Furniture would appear similar to the plaintiffs' Contour chair. The only marked difference, not apparent to the eye, to judge from the photographs introduced in evidence, is that the mechanism in the Conform Chair of Aljean Furniture operates on a belt and duckle device whereas plaintiffs' Contour Chair operates on a ratchet system. According to the transcript, plaintiffs filed their original petition herein on January 2, 1964, prior to the expiration of the design patent. It is not included in the record before us, but in the amended petition on which the case was tried, filed on June 8, 1964, plaintiffs alleged that Laskowitz entered into a conspiracy with Henry Koerner, Althea Koerner and William Neiner to breach Laskowitz's contract of December 17, 1958 with plaintiff Contour Chair; and that the defendants, to accomplish said consiracy, had organized Aljean Furniture Manufacturing Company for the purpose of having it engage in the activity prohibited of Laskowitz by his agreement; that the individual defendants had caused Aljean Furniture, and had themselves, engaged in the research, development, manufacture and sale of a product similar to plaintiffs' product, in violation of the agreement made by Laskowitz; that defendants' chair was advertised and offered for sale under the name 'Conform Lounge Chair,' which was so similar to the name of plaintiffs' chair, 'Contour Lounge Chair,' that it was calculated to and would deceive, mislead and confuse the public and plaintiffs' customers; that unless defendants were restrained plaintiff would suffer permanent damage to their business; and that the amount of such damage could not be determined, and plaintiffs had no adequate remedy at law. Plaintiffs prayed for both a temporary and permanent injunction restraining defendants from engaging in the activities described.

The trial court granted plaintiffs temporary injunction, and thereafter a permanent one. In its findings of fact and conclusions of law the trial court found, in effect, that Laskowitz had entered into the contract of December 17, 1958 with plaintiff Contour Chair containing the covenant not to compete for a period of 10 yeas; that defendants Aljean Furniture, Henry Koerner, Althea Koerner and William Neiner knew of the restrictive covenant; that they nevertheless conspired with Laskowitz and with each other to violate the covenant, or acted as his agent in doing so; that both before and after the transfer by Laskowitz of his stock in Aljean Furniture the defendants had engaged in the research, development, manufacture and sale of a chair that is similar to the distinctive chair manufactured by plaintiff Contour Chair; that they had used the name 'Conforming Chair' for their chair, which name was similar to and calculated to deceive the public and plaintiffs' customers, and to induce the erroneous belief that the defendant's chair is the same as plaintiffs'; that for carrying out their conspiracy with Laskowitz or performing the acts for him the defendant Aljean Furniture and the individual defendants became and were jointly and severally responsible and liable for the breach and violation of said contract; and that plaintiffs were without an adequate remedy at law. By its judgment and decree the court enjoined all of the defendants, their agents, employees, and all persons acting in concert with them from manufacturing, selling or offering for sale the Aljean Furniture...

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