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In re an Agreement

Decided: January 30, 1951.

IN THE MATTER OF AN AGREEMENT DATED JULY 17, 1942, BETWEEN GEORGE LAUBENSTEIN AND OTHERS RELATING TO CERTAIN FORMULAE AND PROCESSES


Stein, J.s.c.

Stein

Plaintiffs Walter C. Garrigan and George Klink pray declaratory judgment respecting the rights and liabilities of the persons interested in an agreement dated July 17, 1942, between George Laubenstein and others relating to certain formulae and processes.

The parties to the agreement were formerly stockholders in the Finishing Service, Inc., a corporation now dissolved which was the owner of certain formulae and processes for the plating of metals. Upon dissolution of the corporation ownership of the formulae became vested in the parties thereto.

On July 17, 1942, George Laubenstein, George Klink and Allen B. Underhill individually and as agents for the remaining owners of the formulae entered into a written agreement with J.E. Mergott Co., in and by which the J.E. Mergott Co. was granted the right to use the formulae and processes in their business and in return agreed to pay for the use thereof a sum based on the quantities of materials used in the preparation and application of the formulae every month. The minimum payment was to be $1,200 per month. The money was to be deposited with the National State Bank of Newark, New

Jersey, and by it disbursed to the persons and in the proportions as set forth in the agreement.

The agreement further provided that the parties of the first part thereto (Laubenstein, et al.) were to purchase at Mergott Company's expense all material required for making the solutions in accordance with the formulae; that they were to make the solutions and service the same to fulfill the requirements of the business of the J.E. Mergott Co. and to comply fully with the terms of the agreement. Although the agreement is silent as to which of the parties were to perform the enumerated services, it appears that Laubenstein and Klink, the inventors of the formulae, performed these services during the existence of the agreement.

On June 15, 1944, by agreement of the parties, Walter C. Garrigan was substituted for Allen B. Underhill who had died.

In January, 1950, the J.E. Mergott Co. sold its frame business to the Fedders-Quigan Corporation. On January 4, 1950, Laubenstein, Klink and Garrigan in their own behalf and purportedly in behalf of the remaining owners, entered into an agreement with Fedders-Quigan Corporation granting to it the right to use the formulae and processes upon payment to them of the sum of $1,200 per month. The agreement also provided for instructing employees of Fedders-Quigan Corporation in the compounding of the formulae, the use thereof and the servicing of the same, which services were rendered by Laubenstein and Klink although the agreement was likewise silent as to which of the parties was to perform them. The moneys due and to become due under this agreement were to be paid to Laubenstein, Klink and Garrigan.

On May 25, 1950, Garrigan and Klink notified all of the owners of the formulae by letter of the sale by J.E. Mergott Co. to Fedders-Quigan Corporation of its handbag frame business and of the new agreement with Fedders-Quigan Corporation. The letter also stated that Laubenstein and Klink under the new agreement were required to supervise the purchase of materials, prepare the solution and supervise their

use; that Laubenstein and Klink requested payment of $600 per month for such services required to be rendered by them under the agreement; that only one-half of the amount received from Fedders-Quigan Corporation would therefore be distributed pending the approval of the remaining owners of the payment requested by them. All of the owners excepting the counterclaimants herein approved. The counterclaimants threaten suit.

In addition to a declaratory judgment, the plaintiffs seek instructions of the court as to the disposition of the claims of Laubenstein and Klink for their services and to fix the reasonable value thereof. Three of ...


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