Glucol Mfg. Co. v. Schulist

• Decision Date: 06 June 1927
• Docket Number: No. 16.,16.
• Parties: GLUCOL MFG. CO. v. SCHULIST.
• Court: Michigan Supreme Court

239 Mich. 70

214 N.W. 152

GLUCOL MFG. CO.

v.SCHULIST.

No. 16.

Supreme Court of Michigan.

June 6, 1927.

Appeal from Circuit Court, Wayne County, in Chancery; Parm C. Gilbert, Judge.

Suit by the Glucol Manufacturing Company against Joseph Schulist. Decree for plaintiff, and defendant appeals. Affirmed.

Argued before the Entire Bench.Adelbert H. Lindley, of Detroit (Stevenson, Butzel, Eaman & Long, of Detroit, of counsel), for appellant.

Frank J. Hester, of Detroit, for appellee.

SNOW, J.

The plaintiff is an Ohio corporation engaged in manufacturing and selling adhesives, with factory located in Cleveland. Jacob Schulist is its president and is a brother of Joseph Schulist, the defendant. The defendant for about 8 years worked for the plaintiff in its factory. He entered its employ in 1917 as a laborer, and quit in 1925 as its superintendent. He came to Detroit and proceeded to acquire and equip a factory similar to plaintiff's, to be used for the same purpose, viz., the preparation and manufacture of different kinds of pastes used by the public for countless purposes.

These pastes are made from a mixture of various ingredients, with dextrine products, for the most part, used as a base. The recipe or formula for them is worked out by the manufacturer through experiments and expert assistance of chemists, augmented by the experience gained from continued association with the product. What would be a good paste for sticking together certain objects might be useless in other cases. Hence the necessity for many different kinds of formulae for their making.

In its bill of complaint the plaintiff alleges that it has a large number of these prescriptions which it uses in the preparation of its paste products; that they are valuable property, and have been accumulated through years of experiment and at a great cost; that they are not subject to patent, and are therefore trade secrets, zealously guarded so that competitors may not get hold of and duplicate them. But the defendant, through his years of service with plaintiff company, necessarily learned and became familiar with them, and knew how to make pastes with their use. In fact, it appears that on another occasion he secretly copied some of them, left plaintiff's employ, and contemplated starting a competitive factory, but was hired back at an increased salary, and then agreed with plaintiff never to disclose or use the secrets contained in the formulae.

The bill further charges that he violated this agreement and is now about to open his factory, make paste from the formulae which he knows thoroughly, and thereby injure plaintiff in its property rights in them. An injunction was prayed, issues framed, and the case came on for trial, and after a somewhat extended hearing, the court permanently restrained the defendant from using or divulging to others the contents of formulae belonging to plaintiff and from selling any of its products unless actually and in good faith produced without their aid. Defendant appeals.

The testimony is voluminous and conflicting but from its careful reading we are convinced that, while formulae for making pastes are legion, forming a part of almost every household, and may be had for the asking from manufacturers of paste ingredients, still there is much of a scientific character in their composition. This constrains us to hold that, if, in its manufacture on a large scale, one invents or discovers a process for making a paste, he acquires in such discovery a certain property right which courts of equity in certain cases should protect. Here the court is asked to protect such a discovery against one who has acquired knowledge of it because of his fiduciary relations with the owner. Defendant was in plaintiff's employ and necessarily learned it from the nature and character of such employment, and he agreed to keep it sacred. That there was no such agreement on his part is his claim, but there is proof which the chancellor, after seeing and hearing the witnesses, found, as a matter of fact, established it, and we are not disposed to find otherwise.

In Thum Co. v. Tloczynski, 114 Mich. 149, 72 N. W. 140,38 L. R. A. 200, 68 Am. St. Rep. 469, this court passed upon a similar state of facts, granting injunctive relief against an employee from breaking his contract not to use or disclose information imparted to him in the course of his employment in manufacturing sticky fly paper. This was before the enactment of Act No. 329, P. A. 1905, § 1, which provides that:

‘All agreements and contracts by which any person, copartnership or corporation promises or agrees not to engage in any avocation, employment, pursuit, trade, profession or business, whether reasonable or unreasonable, partial or general, limited or unlimited, are hereby declared to be against public policy and illegal and void.’

But we agree with the trial court that this statute has no application in the instant case. The reason is obvious. Defendant did not agree not to engage in a...