General Foods Corp. v. Cryo-Maid, Inc.

• Decision Date: 05 March 1964
• Docket Number: INC,CRYO-MAI
• Citation: 41 Del.Ch. 474,198 A.2d 681
• Parties: GENERAL FOODS CORPORATION, a Delaware corporation, Plaintiff Below, Appellant, v., a Delaware corporation, Defendant Below, Appellee.
• Court: Supreme Court of Delaware

Page 681

198 A.2d 681

41 Del.Ch. 474

GENERAL FOODS CORPORATION, a Delaware corporation, Plaintiff Below, Appellant, v. CRYO-MAID, INC., a Delaware corporation, Defendant Below, Appellee.

Supreme Court of Delaware.

March 5, 1964.

Appeal from the Court of Chancery in and for New Castle county.

Arthur G. Connolly of Connolly, Bove & Lodge, Wilmington, and Albert L. Cuff and Michael J. Quillinan, White Plains, N. Y., for General Foods Corp.

William S. Potter and Hugh Corroon, of Berl, Potter & Anderson, Wilmington, and G. Gale Roberson of Harvey, Hodes & Mantyndand, Chicago, Ill., for Cyro-Maid.

TERRY, C. J., and WOLCOTT and CAREY, JJ., sitting.

WOLCOTT, Justice.

This is an appeal from an order of the Vice Chancellor staying further prosecution of the action below until further order of the court, and denying a motion to enjoin Cyro-Maid from prosecuting further an action filed by it in the State of Illinois.

This is an action for declaratory judgment to establish the rights and obligations of General Foods and Cyro-Maid under an agreement entered into between them. Briefly, the parties entered into a contract under which Cryo-Maid agreed to turn over to General Foods for commercial exploitation, after testing, an allegedly novel and secret process for the freeze-drying of certain foods and beverages. Under the agreement a period of time was allowed for the determination of whether or not the process met certain standards of performance as defined in the agreement. If those standards were met, then General Foods had an option to purchase Cryo-Maid's assets or to terminate the option by the payment of a stipulated sum.

A dispute arose between the parties which resulted in extensive negotiations in an attempt to arbitrate the dispute. When it became apparent that the dispute between the parties could be resolved solely by litigation General Foods filed this action on May 13, 1963 for declaratory judgment to establish the rights of the respective parties.

On May 15, 1963 Cryo-Maid filed an action for declaratory judgment for the same purpose in the Circuit Court of Cook County, Illinois. General Foods moved to dismiss the Illinois action. On June 3 Cryo-Maid dismissed its first Illinois action and filed at the same time a second action in Illinois for breach of the contract. In this second action it was charged that General Foods had improperly repudiated its contractual obligations after learning of Cryo-Maid's secret process and during negotiations looking to a settlement of the parties' differences had instituted the Delaware action now before us in this appeal.

Cryo-Maid in the court below moved to dismiss the complaint or, in the alternative, for a stay of further prosecution of the Delaware action in order to permit it to go forward with the pending action in Illinois. At the same time General Foods moved to enjoin Cryo-Maid from further prosecuting the Illinois action and for injunctive relief to protect its trade secrets allegedly confided to Cryo-Maid.

The Vice Chancellor denied Cryo-Maid's motion to dismiss but granted a stay of further prosecution of the Delaware action and refused to enjoin Cryo-Maid from the prosecution of the Illinois action. As a condition of this action the Vice Chancellor provided that if, after the expiration of 60 days, it appeared that the stay was operating in an inequitable manner, General Foods could move to dissolve the stay. It may be noted that the Vice Chancellor's order was entered September 30, 1963 and, hence, the 60-day period within which General Foods could not move for further relief before the Chancellor has expired.

This appeal is from an interlocutory order granting a stay and settling no substantial legal rights. To be sure, General Foods argues as a matter of law that its suit having been filed prior in time to the Illinois suit, it has a right to prosecute it to conclusion, and that to deprive it of this right in a forum of its selection is the deprivation of a substantial legal right. For reasons which will appear hereafter, however, we disagree.

This being an interlocutory appeal from an order not settling substantial rights, the function of this Court is clear. Our sole power in this respect is to review the action taken by the Vice Chancellor in order to determine whether or not his act constitutes an abuse of discretion. Consolidated Fisheries Co. v. consolidated Solubles Co., 34 Del.Ch. 60, 99 A.2d 497.

There is little doubt that under the law of this State the granting or denial of a stay by a trial court lies within the discretion of the trial court. Auerbach v. Cities Service Co., 37 Del.Ch. 381, 143 A.2d 904; Lanova Corporation v. Atlas Imperial Diesel Engine Co., 5 Terry 593, 64 A.2d 419.

When similar actions between the same parties involving the same issues are filed in separate jurisdictions the court in which either of said actions is filed may in the exercise of its discretion hold that action in abeyance to abide the outcome of the action pending in the other court. The power is inherent in every court and flows from its control over the disposition of causes on its docket. The decision is one to be made in the light of all the circumstances in order to determine the best and most economical means of determining the controversy. 1 Am.Jur.2d, Actions, § 92; 1 C.J.S. Actions § 133c(1); Annotation, 19 A.L.R.2d 317; Restatement, Conflict of Laws, § 619, comment a.

Ordinarily the action first in time will not be stayed to permit the prosecution to conclusion of a subsequent action filed in another forum. This does not, however, follow always as a hard and fast rule. The circumstances of the litigation may be such as to make it desirable to stay the first action, and to permit the subsequent action to proceed to conclusion. 1 Am.Jur.2d, Actions, §§ 94, 95; Annotation, 19 A.L.R.2d 323, § 8.

We think the foregoing statement has been recognized by the courts of this State.

In Chadwick v. Gill et al., 16 Del.Ch. 127, 141 A. 618, the Chancellor refused to stay prosecution of a complaint to adjudicate the ownership of certain shares of stock of a Delaware corporation on the ground that there was then pending in England a suit between the same parties upon the same controversy. In so ruling, however, the Chancellor recognized an exception to the rule to the effect that if special facts or circumstances indicated 'an equity of any sort' then a stay of the action in Delaware might be...