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Art Wire & Stamping Co. v. Johnson

Decided: April 10, 1950.

ART WIRE & STAMPING COMPANY, A CORPORATION, PLAINTIFF-RESPONDENT,
v.
ERIC P. JOHNSON AND WALDEMAR JOHNSON, TRADING AS PIX MANUFACTURING COMPANY, DEFENDANTS-APPELLANTS. ART WIRE & STAMPING COMPANY, A CORPORATION, PLAINTIFF-APPELLANT, V. ERIC P. JOHNSON AND WALDEMAR JOHNSON, DEFENDANTS-RESPONDENTS



McGeehan, Colie and Eastwood. The opinion of the court was delivered by Eastwood, J.A.D.

Eastwood

Plaintiff, Art Wire & Stamping Company, appeals from the judgment of the Chancery Division, granting injunctive relief against defendants on the grounds that (1) broader relief should have been granted to prevent defendants from disclosure of its secret form of winding machines and (2) that the court erred in not directing defendants' machines destroyed. On cross-appeal, defendants contend (1) that the employment contract expired in 1940; was not thereafter renewed and the court erred in granting plaintiff's injunctive relief; (2) that plaintiff failed to sustain the burden of proof; and (3) that the court erred in enjoining defendants from building machines in the proscribed territory and in its determination that defendants had rendered services to Pix Manufacturing Company in violation of the contract.

Plaintiff, Art Wire & Stamping Company, filed its bill of complaint in the former Court of Chancery in 1947, against defendants, Eric P. Johnson and Waldemar Johnson, trading as Pix Manufacturing Company. Plaintiff sought the following

relief: (1) specific performance of an agreement made in 1934 between it and the individual defendants; (2) an injunction against defendants' use or disclosure of the principle of certain swivel winding machines, with which principle defendants became familiar during their employment by plaintiff; (3) discovery of any disclosures of the designs and principle of such machines to others; (4) a surrender to the court of the designs or machines, assembled or partially assembled, and (5) for such additional relief that might be just and equitable. Defendants' motion to strike the bill of complaint was denied. Art Wire & Stamping Co. v. Johnson , 141 N.J. Eq. 101 (Ch. 1947); affirmed, 142 Id. 723 (E. & A. 1948). Thereafter defendants filed an answer to which was annexed a copy of the agreement of August, 1934, the third paragraph of which provided:

"The parties of the second part further agree that they will not, during the term of this agreement and for five (5) years thereafter, directly or indirectly engage in the constructions of any machines, tools or dies for the production of any article now manufactured or developed during the period of this employment, nor directly or indirectly enter the employment of or render any services to any other person, partnership or corporation, engage in the business of manufacturing wire or stamped articles manufactured by the said corporation, or developed during the course of this employment, within a radius of one thousand (1,000) miles of the City of Newark, County of Essex, State of New Jersey; and that during this said term of employment and for five years thereafter they will not engage in such manufacturing business on their own account or become interested therein, directly or indirectly as individuals, partners, stockholders, directors, officers, clerks, principals, agents, employees, trustees, or in any other relations."

The separate defenses of defendants' answer allege: (1) that the 1934 contract expired in 1940; (2) that the covenant above-quoted was unreasonable as to duration and to area; (3) that the swivel winding machines were of a known and not a secret design. Prior to trial, the complaint was amended to demand that defendants disclose and account for all profits of its business, and prayed for a judgment for plaintiff's loss of profits.

After trial, judgment was entered enjoining defendants until January 27, 1950, within a radius of one thousand miles of Newark, New Jersey, from constructing any machines, tools or dies for producing fishing swivels, from entering the employment of any one so engaged and ordering them to account for profits derived from the use of swivel winding machines within the one thousand mile radius from April, 1947.

Plaintiff bases its right to broader relief upon the contention that since the contract is silent with reference to trade secrets, the court may imply such a provision. The contract defined the nature and extent of the obligations of the parties, providing, inter alia , "Whereas in the course of such employment, the parties of the second part may be assigned to duties that may give them knowledge or information of such confidential nature, or other matters relating to the manufacture and conduct of the business of the party of the first part as will in the opinion of the said corporation result, if such information were disclosed, in irreparable injury to the said corporation." The negative covenant providing for the nature and extent of the required protection follows this recital in the third paragraph of the agreement. The machine was developed and built during the defendants' employment and the life of the contract. The defendants' duties thus gave them knowledge and information of a confidential nature. The agreement so stated and forbade disclosure thereof. There is no room for the implication contended for by plaintiff. The contract covered the situation and the parties are bound thereby. Irvington Varnish, &c., Co. v. Van Norde , 138 N.J. Eq. 99 (E. & A. 1946); Ideal Laundry Co. v. Gugliemone , 107 Id. 108 (E. & A. 1930). We find no conflict between the provisions of the contract; they are in reciprocal relation. By making an express contract, the parties have set forth those terms which they deem sufficient for their protection. They cannot now claim greater rights outside of the contract.

Plaintiff contends further that the machines of the defendants should be destroyed. In view of our determination

that the contract fixes the respective rights of the parties and the protection is limited to five years, it would be unreasonable to now destroy the machines, ...


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