Tode v. Gross

• Decision Date: 06 October 1891
• Parties: TODE et al. v. GROSS.
• Court: New York Court of Appeals Court of Appeals

127 N.Y. 480

28 N.E. 469

TODE et al.

v.GROSS.

Court of Appeals of New York,

Second Division.

Oct. 6, 1891.

Appeal by defendant from a judgment of the general term of the supreme court in the second judicial department, affirming a judgment entered upon the decision of the court after a trial without a jury. Affirmed.

Action for breach of covenant to recover the sum of $5,000 as stipulated damages. On the 15th of October, 1884, the defendant owned a cheese factory situate in the town of Monroe, Orange county, comprising two parcels of land, with the buildings thereon, and a quantity of fixtures, machinery, and tools connected therewith. For some time prior, with the assistance of her husband, Conrad Gross, her brother-in-law, August Gross, and her father, John Hoffman, she had been engaged in the business of manufacturing cheeses at said factory known as ‘Fromage de Brie,’ ‘Fromage d'Isigny,’ and ‘Neufchatel.’ Such cheeses were made by a secret process known only to herself and her said agents. On the day last named, she entered into a sealed agreement with the plaintiffs, whereby she agreed to sell and transfer to them the said factory and all its belongings, together with the ‘good-will, custom, trademarks, and names used in and belonging to the said business,’ for the sum of $25,000, to be paid and secured March 1, 1885, when possession was to be given. Said instrument contained a covenant on her part that she would ‘communicate after the first day of March, 1885, or cause to be communicated, to’ said plaintiffs, ‘by Conrad Gross, John Hoffman, and August Gross, or one or other of them, the secret of the manufacture of the cheeses known as ‘Fromage de Brie,’ ‘Neufchatel,’ and ‘D'Isigny,’ and the recipe therefor, and for each of them, and will instruct or cause to be instructed them, and each of them, in the manufacture thereof. And that she and the said Conrad Gross, John Hoffman, and August Gross will refrain from communicating the secret recipe and instructions for the manufacture of said cheeses, or either of them, to any and all persons other than the above-named parties of the second part, [plaintiffs,] and will also, after the first day of April, 1885, refrain from engaging in the business of making, manufacturing, or vending of said cheeses, or either of them, and from the use of the trade-marks or names, or either of them, hereby agreed to be transferred in connection with said cheeses, or either of them, or with any similar product, under the penalty of five thousand dollars, which is hereby named as stipulated damages to be paid by the party of the first part, [defendant,] or her heirs, executors, administrators, or assigns, in case of a violation by the party of the first part [defendant] of this covenant, of this contract, or any part thereof, within five years from the date hereof.' She further covenanted that she herself, as well as ‘said Conrad Gross, John Hoffman, and August Gross, during and up to and until the first day of May, 1885, shall continue and remain in said county of Orange, and from time to time, and at all reasonable times during said period, by herself, or by said Conrad Gross, John Hoffman, and August Gross, whenever so requested by the said parties of the second part, [plaintiffs,] impart to them, or either of them, the secret of making such cheeses, and each of them, and instruct them, and each of them, in the process of munufacturing the same, and each of them, as fully as she or the said Conrad Gross, John Hoffman, or August Gross, or either of them, are informed concerning the same.’ Both parties appear to have duly kept and performed the agreement, except that, as the trial court found, ‘subsequently to the 1st day of May, 1885, Conrad Gross, the husband of defendant, went to New York city, and engaged in the business of selling ‘foreign and domestic fruits, and all kinds of cheese and sausages, &c.,’ * * * and while so engaged * * * sold and personally delivered from his place of business to one John Wassung three boxes of cheese marked and named ‘Fromage d'Isigny,’ and having substantially the same trade-marks thereon as that sold by defendant to plaintiffs, and having stamped thereon the name ‘Fromage d'Isigny,’ and that said cheese so sold by him to said Wassung was a similar product to that formerly manufactured by defendant.' Also, that ‘said August Gross, the brother-in-law of defendant, subsequent to the 1st day of May, 1885, engaged in the business of retailing fancy groceries in the city of New York, and in and during the fall of 1887, and prior to the commencement of this action, kept for sale at his place of business in New York city boxes of cheese marked or stamped ‘Fromage d'Isigny.” The court further found that the cheese so sold by Conrad Gross under the name of ‘Fromage d'Isigny,’ as well as that kept for sale by August Gross marked ‘Fromage d'Isigny,’ ‘was never sold by plaintiffs, nor made or manufactured by them, or either of them, but that the same was a similar product.’ The court found as conclusions of law that said agreement was a reasonable one, and was founded upon a good and sufficient consideration; that said sale by Conrad and said keeping for sale by August Gross was a direct violation of the covenant in question; that the restriction imposed was no more than the interests of the parties required, and that it was not in restraint of trade or against public policy. Judgment was ordered for the plaintiffs for the sum of $5,000 as stipulated damages.

John Fennel, for appellant.

Henry A. Bacon, for respondents.

VANN, J., ( after stating the facts.)

The business carried on by the defendant was founded on a secret process known only to herself and her agents. She had the right to continue the business, and by...