Julius Hyman & Co. v. Velsicol Corp., 16084

Decision Date28 May 1951
Docket NumberNo. 16084,16084
Citation123 Colo. 563,233 P.2d 977
PartiesJULIUS HYMAN & CO. et al. v. VELSICOL CORP.
CourtColorado Supreme Court

Raymond F. Adams, New York City, Irving Hale, Jr., and Donald S. Stubbs, Denver, for plaintiffs in error except Abe Danish.

Louis E. Gelt, Sidney H. Grossmar and Percy S. Morris, all of Denver, for plaintiff in error, Abe Danish.

Adams, Forward & McLean, New York City, Lewis, Grant, Newton, Davis & Henry, Denver, of counsel, for plaintiffs in error.

Floyd E. Thompson, Clyde E. Shorey, Chicago, Ill., John R. Coen, Denver (Poppenhusen, Johnston, Thompson & Raymond and Follansbee, Shorey & Schupp, all of Chicago, Ill., of counsel), for defendant in error.

ALTER, Justice.

Velsicol Corporation, organized under the laws of Illinois, brought an action against Julius Hyman & Company, a Delaware corporation, authorized to and conducting its business in the State of Colorado, Julius Hyman, individually and as president and director of Julius Hyman & Company; Robert Silber, individually and as secretary and director of Julius Hyman & Company; Harriet Sims Hyman, individually and as treasurer and director of Julius Hyman & Company; James A. Bailey, Sidney Bartlett, Charles A. Beckwith, Daniel E. Bonnell, Charles C. Compton, Nick D'Amore, Abe Danish, Edward Despres, Henry Dudlak, Ernest Freireich, Gerald B. Griffin, Beatrice Page Howerton, Lloyd Joshel, Clyde W. Kearns, Rex E. Lidov, Laverne Martin, William E. McCauley, Thomas McKenna, Roy J. Miller, John Montgomery, Carmen Nelson, Steve Pocsik, Howard Resenbaum, Yuji Tajima, Anne C. Tovey, Kenneth M. Watson, James F. White, Fritz Wolf and Simon Zevin, to obtain an injunction against defendants, and each thereof, enjoining and restraining them from manufacturing and selling certain insecticides and from disclosing to others the formulas, processes and products used in the manufacture of said insecticides; further requiring defendants to account to plaintiff for gains and profits resulting from the manufacture and sale of certain insecticides; for damages to plaintiff resulting from unfair competition in the sale of certain insecticides, and by wrongful use of plaintiff's trade secrets, trade marks and names. Upon trial judgment was entered in favor of plaintiff and against defendants; the latter bring the cause here for review by writ of error.

We will herein refer to the litigants as plaintiff and defendants as they appeared in the trial court, or by name.

In the injunctive feature of this action, there is involved the right of defendants to manufacture and sell certain insecticides discovered and invented in plaintiff's research and experimental laboratories by the individual defendants, or some of them, while all of the individual defendants, it is alleged, were under a contractual and fiduciary relationship with plaintiff requiring secrecy during their employment and thereafter, and under contractual obligation to assign to plaintiff any discovery or invention while so employed. The inventions and discoveries here involved are embraced in applications for United States Letters Patent Serial Nos. 581172, 607078, 639416, 643759, 648204 and 648205. Said applications Nos. 581172 and 639416 have been duly assigned to plaintiff, while applications 607078, 643759, 648204 and 648205 are on file in the United State patent office in the name of defendant Julius Hyman as the inventor, who has refused to assign the same to plaintiff, conceding, however, plaintiff's 'shopright' to manufacture and sell the same. All the products embraced under these patent applications necessarily used in the manufacture of an insecticide variously known as Velsicol, Velsicol 1068 and Octa Klor, and commercially referred to as chlordane.

At the conclusion of the trial, judgment of dismissal was entered in favor of defendants Clyde W. Kearns, Kenneth M. Watson, Charles C. Compton, James A. Bailey, Sidney Bartlett, Laverne Martin, John Montgomery, Carmen Nelson, Beatrice Page Howerton, Anne C. Tovey, Gerald B. Griffin, Harriet Sims Hyman, and Lloyd Joehel. On the injunctive feature of the case, the court's judgment and decree was in favor of plaintiff.

The recore consists of nine volumes, comprising more than 6,000 folios, with more than one hundred exhibits, many of which are lengthy, detailed and complicated financial and statistical reports. It is obvious that a detailed resume of the evidence would unduly lengthen this opinion.

Except as specifically otherwise noted, the record discloses the following undisputed facts: In the latter part of 1930, Dr. Hyman, a highly educated chemist, approached Joseph Regenstein and F. P. Schneider to interest them in financing a research and experimental laboratory for the exploitation and development of two patents and processes discovered and invented by him. These two products and processes resulted from the use of certain polymers, by-products of petroleum, which came to Hyman's attention while employed as a chemist in the oil industry. Joseph Regenstein and F. P. Schneider became interested in financing the development and exploitation of Hyman's patents, and it was agreed between the three persons named that the patents should be assigned to a corporation to be organized, with a capitalization of two hundred shares of the par value of $100 each. Pursuant to this agreement, in January, 1931, the Varnoil Corporation, the name of which was subsequently changed to Velsicol Corporation, was organized under the laws of the State of Illinois. The Transo Envelope Company, in which Joseph Regenstein was a principal stockholder, and F. P. Schneider also was a stockholder, subscribed for, and to it there was issued a certificate for seventy-eight shares of stock; the Arvey Corporation, in which Joseph Regenstein also was the principal stockholder, subscribed for a certificate for seventy-eight shares and the same was issued to it; Julius Hyman subscribed for and received a certificate for forty shares, representing the agreed value of his two patents which were assigned to the corporation; Joseph Regenstein, F. P. Schneider, Henry Degginiger and Sidney J. Blum each subscribed for and received certificates for one share.

The objects and purposes for which the Varnoil Corporation was organized, as disclosed by its Certificate of Incorporation, were, inter alia:

'To manufacture, produce, invent, export, import, develop, use, buy, sell and generally deal in and with, at wholesale and/or retail, as principal, agent, broker, and/or jobber, oils, paints, pigments, varnishes, dyes, coloring matter, acids, solvents and chemicals of all kinds.

* * *

* * *

'To apply for, secure, obtain, register, purchase, create, lease or otherwise acqure and to hold, use, own, operate and introduce, and to sell, assign, lease on royalty or otherwise dispose of, any letters patent, patent rights, patent applications, licenses or grants in respect to letters patent or patent applications, inventions, improvements, processes, formulas, trade marks and trade names, copyrights, labels and designs, issued by, used in connection with or secured under, letters patent of the United States, or any foreign country, or otherwise, and to use, exercise, develop, grant licenses and territorial rights in respect of, sell, or otherwise turn to account any such patents, applications, licenses, processes, formulas and inventions or the like, or any such trade-marks, trade names, copyrights, labels, designs, property or rights, including the good will of any thereof, and to supervise or otherwise exercise such control over its said licensees and the business conducted by them, as may be agreed upon in its contracts with such licensees for the protection of its rights in said patents or other property and rights, and to secure to it the payment of agreed royalties or other considerations; and to manufacture, buy, sell, or deal in any article produced as the result or through the use of, any such inventions, processes, or the like or under any such patent, or any articles of any description used, or suitable to be used in connection therewith.'

Julius Hyman was elected vice-president and director of the corporation, and from its organization until his resignation on September 13, 1946, had sole and exclusive charge and control of its experimental and research laboratory and its manufacturing facilities. It was he who employed chemists and other technical employees, and also he determined the projects to which they should devote their time and attention. In the inception the research and experimental work of the corporation was conducted in a building of the Arvey Corporation with three employees other than Hyman, two of whom were chemists. Each of these employees was required to execute an employment agreement, not only with Varnoil but also with Transo Envelope Company covering the operations and secret processes used. The first of these employment agreements with Varnoil specified 'inventions, improvements, discoveries, formulas or processes relating to oils, paints, varnishes or any of the ingredients or products thereof or relating to the manufacture or production' thereof and that the corporation should be the sole and absolute owner of the same; they further provided for secrecy thereof. The first employment agreement, as well as two modifications thereof, subsequently used by the corporation, provided for secrecy as to all processes, inventions and formulas made known to the employee by the company or any of its officers or employees or which were learned by him while employed by the company, and that no disclosure thereof should be made except by written authorization of the president of the company.

The second form of employment agreement concerned the discovery, development and invention of processes, formulas and methods relating to hydrocarbons and the ingredients and products...

To continue reading

Request your trial
39 cases
  • USM Corp. v. Marson Fastener Corp.
    • United States
    • United States State Supreme Judicial Court of Massachusetts Supreme Court
    • June 28, 1984
    ...Glass Co. of N. Am. v. Pittsburgh Plate Glass Co., 38 F.Supp. 639, 643 (D.Del.1941) (patent infringement); Hyman & Co. v. Velsicol Corp., 123 Colo. 563, 630, 233 P.2d 977, cert. denied, 342 U.S. 870, 72 S.Ct. 113, 96 L.Ed. 654 (1951) (patent infringement).The distinction between innocent an......
  • Hyde Corp. v. Huffines
    • United States
    • Texas Supreme Court
    • March 12, 1958
    ...Corp., 99 F.Supp. 907, 913 (D.C.D.Del.1951); McKinzie v. Cline, 197 Or. 184, 252 P.2d 564, 569 (1953); Julius Hyman & Co. v. Velsicol Corp., 123 Colo. 563, 233 P.2d 977, 999 (1951), certiorari denied 342 U.S. 870, 72 S.Ct. 113, 96 L.Ed. 654 (1951). But cf. Conmar Products Corp. v. Universal......
  • TA Pelsue Co. v. Grand Enterprises, Inc., Civ. A. No. 89-S-1645.
    • United States
    • U.S. District Court — District of Colorado
    • June 25, 1991
    ...(D.Colo.1984); Jet Courier, 771 P.2d at 502. Liability for civil conspiracy is joint and several. Julius Hyman & Co. v. Velsicol Corp., 123 Colo. 563, 618, 233 P.2d 977, 1005-06 (1951), cert. denied, 342 U.S. 870, 72 S.Ct. 113, 96 L.Ed. 654 (1951), reh. denied, 342 U.S. 895, 72 S.Ct. 199, 9......
  • Treasure Salvors, Inc. v. UNIDENTIFIED WRECKED, ETC.
    • United States
    • U.S. District Court — Southern District of Florida
    • August 21, 1978
    ...the Supreme Court of Colorado enjoined further use of the inventions finding the agreement to assign valid. Julius Hyman & Co. v. Velsicol Corp., 123 Colo. 563, 233 P.2d 977 (1951); cert. denied 342 U.S. 870, 72 S.Ct. 113, 96 L.Ed. 654 (1951). Later Hyman sued Regenstein for damages for los......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT