Westervelt v. Nat'l Paper & Supply Co.
Decision Date | 29 May 1900 |
Parties | WESTERVELT et al. v. NATIONAL PAPER & SUPPLY CO. |
Court | Indiana Supreme Court |
OPINION TEXT STARTS HERE
Appeal from circuit court, Elkhart county; C. W. Miller, Judge.
Injunction by the National Paper & Supply Company against Edmund C. Westervelt and others to restrain the divulging of a trade secret. From a judgment in favor of plaintiff, defendants appeal. Affirmed.
Andrew Anderson, for appellants. Vanfleet & Vanfleet, for appellee.
Appellee procured a judgment in the court below enjoining appellants from divulging or using a trade secret. The assignment of errors calls in question the action of the court in overruling appellants' demurrer to the complaint, and in overruling appellants' motion for a new trial.
It is alleged in the complaint, in substance: That appellee was engaged in the business of manufacturing paper bags, and appellant Taggart then had some skill and experience in the manufacture of paper bags, and had a machine partially completed for the purpose of aiding in the manufacture of such bags. That in consideration of this skill and experience, and of the ideas he professed to have, and of the fact that he had said incomplete machine, appellee in August, 1895, entered into a contract with him to work in its factory, in the manufacture of paper bags, for $12 per week. That he was to furnish his services and his incomplete machine, known as a “tubing machine,” which machine appellee was to furnish the means to complete. It was the understanding and agreement between appellee and said Taggart that his ideas and inventions and discoveries concerning said proposed machine should belong to appellee, and it was not contemplated by either party that a patent should be taken out upon anything which he might invent or discover, but that it should be kept a secret. At the time said contract was made, both parties well knew that there was no certainty that said Taggart would be able to construct a practical machine, and that he was to experiment in that direction at the cost of appellee, and appellee should furnish all things and help necessary to carry on said experiments. It was a part of said contract with said Taggart that he should make a complete machine for appellee, and for no other person; and both parties understood, by the language, that no machine embodying the ideas which said Taggart expected to put into practical form should be made by him for any other person, and his perfected ideas should not be divulged to any other person. At the time Taggart was so employed by appellee, he had no means of his own to obtain things with which to experiment, nor could he spare the time to make experiments; and he well knew that the object of appellee was to obtain a machine which would compete with those having similar machines, and to undersell those who could not obtain as good machines as those it hoped said Taggart would invent. Both parties well knew that the latter object could not be accomplished unless the ideas said Taggart might use in constructing said machine should be kept a secret, and not divulged. At the time said contract was made, tubing machines for the purpose of aiding in the manufacture of paper bags were not new. There were also machines in existence which would so fold and paste one end of a paper tube as to form a complete paper bag; and the construction of these latter machines was a secret not generally known to those engaged in the manufacture of paper bags, and not known to appellee, and those owning such machines kept their construction a secret. In the manufacture of paper bags, there are necessarily two processes, namely: First, the process of folding and pressing a continuous sheet of paper into the form of a tube or cylinder, and cutting it into suitable lengths for bags; second, the process of folding and pasting one end of said lengths together, thus forming a complete bag. Appellant Taggart at the time of his employment claimed to have ideas from which he could construct a machine that would so fold and paste one end of a paper tube as to form a paper bag, and the hope which appellee had that he would be able to carry his alleged ideas into practical operation induced appellee to employ said Taggart, as he at the time well knew that the manual labor which it was contemplated by both parties that Taggart should perform, and which he did afterwards perform, was worth no more than $6 per week, as both parties knew when the contract was made, and the extra $6 per week was agreed to be paid by appellee and to be received by him on account of his alleged ideas, and the hope that they could be carried into practical operation for the benefit of appellee. In accordance with said contract, said Taggart in August, 1895, entered into the employment of appellee at its factory in Elkhart, and begun to put his ideas into practical form; and shortly afterwards appellee, at the request of said Taggart, secured the service of appellant Lahr, a skillful draftsman, who put the ideas of said Taggart on paper, in the form of draftings and blue prints, which then became, and still are, the property of appellee; and, at the request of said Taggart, appellee employed the appellant Huston, a skillful pattern maker, who made complete and accurate wooden patterns in accordance with said draftings and blue prints, which patterns became and are the property of appellee. In order to put said ideas of Taggart into practical operation, it was necessary to employ some one to make a machine in accordance with said draftings and blue prints and wooden patterns; and appellee employed the appellant the Buescher Manufacturing Company to make a machine in accordance therewith, which said company proceeded to do, for which service appellee paid said company more than $500, which completed machine became, and still is, the property of appellee, and there are no other machines like it. By means of said last-mentioned machine, appellee was and is able to manufacture paper bags cheaper than theretofore; and without such machine appellee could not sell its paper bags on the general market, on account of the extra cost of closing the bottom of the tube by hand. Appellee is now selling more than 50,000 pounds of bags per month, and the same vary in size and weight. The number of bags of all sizes sold per month is at least half a million. On December 28, 1896, appellee agreed to pay said Taggart $15 per week until April 15, 1897, from which time appellee was to pay him $18 per week; and as a part of said contract appellee purchased of said Taggart said tubing machine for $75, to be paid October 12, 1897. On January 9, 1897, said Taggart entered into a contract with appellants Westervelt & Westervelt to enter their service for three years, and to build for them machines which would be duplicates of appellee's complete machines. Said Westervelts at the time they made said contract with Taggart knew the nature of the contract with appellee, and knew that the construction of said machine was a secret for which appellee had paid said Taggart, and that he had no right to divulge...
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