Ultra-Life Laboratories v. Eames

• Decision Date: 09 May 1949
• Parties: Ultra-Life Laboratories, Inc., Respondent, v. L. W. Eames, Appellant
• Court: Kansas Court of Appeals

221 S.W.2d 224

240 Mo.App. 851

Ultra-Life Laboratories, Inc., Respondent, v. L. W. Eames, Appellant

Court of Appeals of Missouri, Kansas City

May 9, 1949

Delivered

Appeal from Circuit Court of Henry County; Hon. Dimmitt Hoffman Special Judge.

Affirmed.

Haysler A. Poague, Barkley M. Brock and Poague, Poague & Brock for appellant.

Internal culling of poultry is not a trade secret but is a skill. Northwest Side Lumber Co. v. Lewis, Layton, 239 Ill.App. 82; Kaumagraph Co. v. Stamograph Co., 355 N.Y. 1, 138 N.E. 485; Club Aluminum Co. v. Young, et al., 160 N.E. 804; 29 A. L. R. 1339; Carver v Harr, 27 A.2d 895, 132 N.J.Eq. 207. A trade secret as to some particular fact known to defendant would not justify the court in enjoining defendant from teaching internal culling but only from teaching that particular secret fact. Black's Law Dictionary, Third Addition, page 1745; Victor Chemical Works v. Ilif, 299 Ill. 532; Garver v. Harr (ibid.); Briggs v. Butler, 47 N.E.2d 812, 71 Ohio App. 48; Gates McDonald Co. v. McQuilkin, 34 N.E.2d 443; Clark Paper and Mfg. Co. v. Stenacher, 236 N.Y. 312; Samuel Stores Inc. v. Abrams, 94 Conn 248. Numerous persons have for many years used internal culling of poultry and it is of general knowledge in the poultry industry. Brunson v. Reinberger & Collier, 203 S.W. 269, 134 Ark. 211; Sach v. Cluett Peabody & Co., Inc., 31 N.Y.S.2d 718, 177 Misc. 695; Godefroy Mfg. Co. v. Lady Lennox Co., 134 S.W. 2d 140; Parks & Sons Co. v. Hartman, 153 F. 24, 82 C. C. A. 158, 12 L. R. A. N. S. 135; Chadwich v. Covell, 23 N.E. 1068, 151 Mass. 190. The disclosure of a secret destroys it. Southwest Specialties Co. v. Eastman, 130 Kansas 443, 286 P. 225. The contract is void and against public policy under the laws of Illinois. Hursen v. Gavin, 162 Ill. 377, 44 N.E. 735; Lanzet v. Sefton Mfg. Co., 184 Ill. 326, 56 N.E. 393; Union Strawboard Co. v. Bonfield, 193 Ill. 420, 61 N.E. 1038; Parish v. Schwartz, et al., 176 N.E. 757, 78 A. L. R. 1032; Kling Bros. Engineering Works v. Whiting, 51 N.E. 757, 78 A. L. R. 1032; Victor Chemical Works v. Iliff, 299 Ill. 532. Estoppel does not apply where a contract is void because of public policy. 13 Corpus Juris Secundum, Contracts, 453(c); 17 Corpus Juris Secundum, Sec. 278, Estoppel, p. 668, subsection (c); Durke v. People ex rel. Askrin, 155 Ill. 354, 40 N.E. 626; Lyons v. Schanbacker, 316 Ill. 569, 147 N.E. 440; Marks v. Pope, 289 Ill.App. 558, 7 N.E.2d 481; United Vacuum Sweeper Co. v. Groth, 210 Ill.App. 358; Pitch v. Continental C. Nat. Bank, 305 Ill. 265, 137 N.E. 198, 25 A. L. R. 164. Estoppel by contract does not apply because there is nothing in the contract which says that internal culling of poultry is a trade secret. 31 Corpus Juris Secundum, Estoppel, 58 and 77. If the parties did use the word "trade secret" in reference to internal culling that would be an assumption of law and such cannot be the basis of estoppel. 17 Corpus Juris Secundum, Estoppel, 79. To create an estoppel the party must have relied on the representation of the other; must not have had knowledge of the true facts; and must have changed his position in reliance thereon to his detriment. 31 Corpus Juris Secundum Estoppel, 71, 71b, 72; Sugel, Cooper & Co. v. Colby, 52 N.E. 917; Vail v. Northwestern Mutual Life Ins. Co., 192 Ill. 567. The contract of 1940 is inequitable and should not be enforced as against the defendant. Chemical Works v. Iliff, 299 Ill. 532. Defendant cannot be deprived of the right to use his own name unless the contract specifically provides for it. Morgan v. Schuyler, 79 N.Y. 490, 35 Am. Rep. 543; Ranft v. Reimers, 65 N.E. 720, 60 L. R. A. 291. The contract of June 10, 1940, tends to create a monopoly and is absolutely void under the common law and under the Illinois statute. Illinois Revised Statutes, 1945, Chap. 35-569; Williston on Contracts, Secs. 1653-1658.

George H. Miller and Harold G. Baker for respondent.

The Eames method of the internal culling of poultry was and is a trade secret. Sandling v. Johnson, 141 F.2d 660; Chicago Board of Trade v. Christie Grain & Stock Co., 198 U.S. 236, 25 S.Ct. 637; Larx Co. v Nicol, 28 N.W.2d 705; International News Service Co. v. Associated Press, 248 U.S. 215, 39 S.Ct. 68; F. W. Dodge Co. v. Construction Information Co., 183 Mass. 62, 66 N.E. 204; Pressed Steel Car Co. v. Standard Steel Car Co., 210 Pa. 464, 60 A. 4; Abernathy v. Hutchinson, 3 L. J. (O. S.) 209; Vulcan Detinning Co. v. Assman, 173 N.Y.S. 334; Simmons Hardware Co. v. Waibel, 1 S.D. 448, 47 N.W. 814; Macbeth-Evans Glass Co. v. Schnelbach, 239 Pa. 76, 86 A. 688; Mycalex Corp. v. Pemco Corp., 64 F.Supp. 420, aff'd 159 F.2d 907; Restatement of Torts, American Law Institute, Section 757 (b), p. 5; Story, Equity Jurisprudence (1853 Edition), Sec. 932; 1 Callman, Unfair Competition and Trademarks, Sec. 52, p. 658; 83 Corpus Juris 239. The Eames method of internal culling of poultry was, and at all times has remained, a trade secret. Independent actions and discoveries, developed the same or similar methods. Fairchild Engine & Airplane Corp. v. Cox, 50 N.Y.S.2d 643; Radium Remedy Co. v. Weiss, 173 Minn. 342, 217 N.W. 339; Vulcan Detinning Co. v. American Can Co., 72 N.J.Eq. 387, 67 A. 342; American Law Institute, Restatement of the Law of Torts, Section 757 (b), pp. 5, 6; 1 Callman, Unfair Competition and Trademarks, 1945 Edition, Section 53.3 (e), p. 672; Ellis, Patent Assignments and Licenses (Second Edition, Including Trade Secrets), Section 7, page 13; Section 12, page 20. Eames and Ultra-Life taught the same to a limited number of persons who bound themselves never to teach said method. International News Service v. Associated Press, 248 U.S. 215, 39 S.Ct. 68; Chicago Board of Trade v. Christie Grain & Stock Co., 198 U.S. 236, 25 S.Ct. 637; Abernathy v. Hutchinson, 3 Law Journal, Old Series, 209; Peabody v. Norfolk, 98 Mass. 452, 96 Am. Dec. 664; F. W. Dodge Co. v. Construction Information Co., 183 Mass. 62, 66 N.E. 204; Cincinnati Bell Foundry Co. v. Dodds, 19 Weekly Law Bulletin (Ohio) 84, 10 Ohio Dec. 184; Hammer v. Barnes, 26 How. Pr. (N. Y.) 174; Ellis, Patent Assignments and Licenses (Second Edition, Including Trade Secrets), Section 7, p. 13; Section 12, p. 20; 1 Callman, Unfair Competition and Trademarks, 1945 Edition, Section 53.3 (d), p. 672. There was a disclosure in the course of the trial. Peabody v. Norfolk, 98 Mass. 452, 96 Am. Dec. 664; Stone v. Goss, 65 N.J.Eq. 756, 55 A. 736, 63 A. L. R. 344; 1 Callman, Unfair Competition and Trademarks, 1945 Edition, Section 53.3 (c), p. 670; Section 58, p. 712; Section 58.2, p. 714. Appellant is estopped to deny that the Eames method and process of internal culling (Eamesway) is a trade secret, for: Eames treated, termed, and referred to it as such in his representations, writings, and statements prior to and after June 10, 1940, and termed it such in the Agreement of that date. Germo Mfg. Co. v. Combs, 209 Mo.App. 651, 240 S.W. 872; S. Jarvis Adams Co. v. Knapp, 121 F. 34; Tower Mfg. Co. v. Monsanto Chemical Works, 20 F.2d 386; Flexmir, Inc., v. Herman et al., N.J.Eq. , 40 A.2d 799; 1 Callman, Unfair Competition and Trademarks, Section 53.3, p. 666. Eames knowingly allowed Ultra-Life to expend large sums of money for creating public interest in his method and process, for attracting students, for providing facilities for the school, and for advertising both before and after June 10, 1940. Management and Investment Co. v. Zmunt, 59 F.2d 663; C. & A. R. R. Co. v. Langer, 288 Ill. 16, 123 N.E. 61; Milligan v. Miller, 253 Ill. 511, 97 N.E. 1054; Mayer v. McCracken, 245 Ill. 551, 92 N.E. 355; Rodemeier v. Brown, 169 Ill. 347, 48 N.E. 468; 31 C. J. S. 314; 3 Pomeroy's Equity Jurisprudence, Sec. 804, page 189. Eames, for seven years, interpreted the contract of June 10, 1940, as having conveyed the trade secrets and the school to Ultra-Life. Old Colony Trust Co. v. Omaha, 230 U.S. 100, 33 S.Ct. 967; Thomson v. Thomson, 156 F.2d 581; Aronson v. K. Arakelian, Inc., 154 F.2d 231; Sachs v. Ohio National Life Insurance Company, 148 F.2d 128, (Cert. Den. 66 S.Ct. 92); Bausch & Lomb Optical Co. v. Wahlgren, 1 F.Supp. 799, affd. 66 F.2d 660, Cert. Den. 292 U.S. 639, 54 S.Ct. 774; Department of Revenue v. Jennison-Wright Corp., 393 Ill. 401, 66 N. E. Second 395; Abingdon Bank and Trust Company v. Bulkey, 390 Ill. 582, 62 N. E. Second 447; Pioneer Ins. Co. v. Alliance Ins. Co., 374 Ill. 576, 30 N. E. Second 66; Lehmann v. Revell, 354 Ill. 262, 188 N.E. 531; Ogden v. Stevens, 241 Ill. 556, 89 N.E. 741. Sale of the trade secret by Eames and Gates and their covenant not to teach, disclose or sell the trade secrets, except to Ultra-Life, evidenced by the agreement of June 10, 1940, is valid and is not in restraint of trade. Harrison v. Glucose Sugar Refining Co., 116 F. 304; Wark v. Ervin Press Corp. 48 F.2d 152; Victor Chemical Works v. Iliff, 299 Ill. 532, 132 N.E. 806; Larx Co. v. Nicol, 28 N.W.2d 705; Chicago Board of Trade v. Christie Grain & Stock Co., 198 U.S. 236, 25 S.Ct. 637; Central Transportation Company v. Pullman Palace Car Co., 139 U.S. 24, 11 S.Ct. 478; The Coca Cola Bottling Co. v. The Coca Cola Co., 269 F. 796; S. Jarvis Adams Co. v. Knapp, 121 F. 34; C. F. Simmons Medicine Co. v. Simmons, 81 F. 163; Tode v. Gross, 127 N.Y. 480, 28 N.E. 469; Jarvis v. Peck, 10 Paige Ch. 118; Bryson v. Whitehead, 1 Sin. & Stu. 74, 37 Eng. Reprint 29; Ammunition Co. v. Nordenfeldt, L. R. 1 Ch. Div. 630; Morse Twist Drill & Machine Co. v. Morse, 103 Mass. 72, 4 Am. Rep. 513; Peabody v. Norfolk, 98 Mass. 452, 96 Am. Dec. 664; Pomeroy Ink Co. v. Pomeroy, 77 N.J.Eq. 293, 78 A. 698; Grand Rapids Wood Finishing Co. v. Hatt, 152 Mich. 132, 115 N.W. 714; 5 Williston on Contracts (Rev. Ed.), p. 4625; 1 Callman, Unfair Competition and Trademarks, 1945 Edition,...