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Adolph Gottscho Inc. v. American Marking Corp.

Decided: May 23, 1955.

ADOLPH GOTTSCHO, INC., A CORPORATION, PLAINTIFF-RESPONDENT,
v.
AMERICAN MARKING CORPORATION, A CORPORATION, AND JOHN K. JACKSON, DEFENDANTS-APPELLANTS, AND ALFRED REINKE, ET AL., DEFENDANTS



For affirmance -- Chief Justice Vanderbilt, and Justices Oliphant, Wachenfeld, Burling, Jacobs and Brennan. For reversal -- Justice Heher. The opinion of the court was delivered by Jacobs, J.

Jacobs

[18 NJ Page 468] The plaintiff Adolph Gottscho, Inc. duly instituted its action in the Chancery Division seeking injunctive and other relief against its former employee, Jackson, and the other named defendants; its complaint alleged that Jackson had in confidence learned the plaintiff's trade secrets while in its employ and that he and the other defendants were improperly using them. After a lengthy trial Judge Speakman made complete factual and legal findings in the plaintiff's favor; they are embodied in an opinion reported at 35 N.J. Super. 333 (Ch. Div. 1954). We are satisfied that his factual findings are supported by the evidence and that his legal findings conform with the principles recently expressed in Sun Dial Corp. v. Rideout, 29 N.J. Super. 361 (App. Div. 1954), affirmed 16 N.J. 252 (1954). Accordingly,

we affirm the judgment entered below without additional comment except on two legal issues which have been stressed here by the appellants but were not involved in the Sun Dial case.

I.

The defendant John K. Jackson and the defendant Alfred Reinke, president of the defendant Gus Reinke Machinery & Tool Company, controlled the defendant American Marking Corporation. The complaint charged that the Marking Corporation was formed by Jackson and Reinke for the purpose of making and selling machines similar to the plaintiff's machines and that the Tool Company was employed to perform the machinery and assembly operations; it sought injunctive and other relief, including damages, against all of the defendants. After the case had been partially tried, an agreement dated November 17, 1952 was signed by Jackson, Reinke, the Marking Corporation and the Tool Company; it provided for Reinke's withdrawal from the Marking Corporation and for the cessation of the Tool Company's operations for the Marking Corporation as soon as pending work was completed. Thereafter, under date of June 4, 1953, the plaintiff entered into an agreement with Reinke and the Tool Company which provided, in part, that Reinke and the Tool Company would not, for a period of eight years, manufacture any marking or imprinting machines similar to the plaintiff's and that the plaintiff would discontinue its pending action "only as against Reinke and the Tool Company, and shall not claim any relief against them by way of injunction or damages in said action." A stipulation dated June 4, 1953 between the attorneys for plaintiff and the attorneys for Reinke and the Tool Company set forth that the pending "action shall be dismissed only as to the defendants Alfred Reinke and Gus Reinke Machinery and Tool Co., with prejudice, and without costs to either party." The defendants contend that this stipulation constituted a release of two of the four defendant joint tort-feasors and legally operated as a release of all of them. See Vattani v. Damiano, 9 N.J. Misc. 290 (Sup. Ct.

1931). But cf. Judson v. Peoples Bank & Trust Co. of Westfield, 17 N.J. 67, 85 (1954).

The history, purpose and limits of the doctrine that the release of one joint tort-feasor releases his co-tort-feasors have been extensively dealt with elsewhere. See McKenna v. Austin, 77 U.S. App. D.C. 228, 134 F.2d 659, 148 A.L.R. 1253 (App. D.C. 1943); Prosser, Torts (1941), 1107; Salmond, Torts (11 th ed. 1953), 90; Winfield, Torts (6 th ed. 1954), 205; Prosser, Joint Torts and Several Liability, 25 Cal. L. Rev. 413, 422 (1937); 24 So. Cal. L. Rev. 466 (1951); 18 U. of Cin. L. Rev. 378 (1949); 11 Modern L. Rev. 230 (1948). Salmond, supra, expressed the common-law rule to be that the release applies to all even though this was not the intention of the parties "the reason being that the cause of action which is one and indivisible, having been released, all persons otherwise liable thereto are consequently released." This rather metaphysical approach finds little acceptance in modern times and it is not at all surprising that recent decisions have sought to rest the doctrine on the equitable basis that there may be but a single satisfaction for a wrong and to confine it accordingly. Thus in Moss v. Cherdak, 114 N.J.L. 332, 334 (E. & A. 1935), Justice Perskie stated that the doctrine was founded on a sound principle of justice, namely, that "there can be but one satisfaction"; and in Judson v. Peoples Bank & Trust Co. of Westfield, supra, Justice Brennan similarly noted that it was rooted "in the sound and just principle that there may be but one satisfaction for a tortious wrong." In the latter case this court indicated approval of the view, which is being received throughout the states with increasing favor, that the issue of whether a separate settlement with one joint tort-feasor is made in full satisfaction or is made as a lesser compromise with the purpose of pursuing the other tort-feasors is a factual one which will properly turn on the intention of the parties. See McKenna v. Austin, supra; Bolton v. Ziegler, 111 F. Supp. 516, 523 (D.C.D. Iowa 1953); Gronquist v. Olson, 64 N.W. 2 d 159 (Minn. Sup. Ct. 1954). Dean Prosser, supra, at 1110, points out that in many jurisdictions

there has been a definite retreat from the rule of the common law that a release of one joint tort-feasor necessarily releases the others and forcefully suggests the desirable rule to be "that a plaintiff should never be compelled to surrender his cause of action against any wrongdoer unless he has intentionally done so, or unless he has received such full compensation that he is no longer entitled to maintain it." See Seavey, Cogitations on Torts, 53 (1954).

The plaintiff here sought to restrain each of the four defendants from appropriating its trade secrets and it likewise sought an accounting from each of the defendants. An injunction against and accounting by one defendant could not fully protect the plaintiff nor satisfy its claims as against the others and, under these circumstances, it may be doubted that the defendants may strictly be considered as joint tort-feasors within the common-law doctrine sought to be invoked by them. But even if they are so considered, we are satisfied that in the instant matter there never was any release within the proper application of that doctrine. See Judson v. Peoples Bank & Trust Co. of Westfield, supra; Gronquist v. Olson, supra. The stipulation dated June 4, 1953 contained no words whatever of release; it simply provided that the action shall be dismissed "only as to the defendants Alfred Reinke and Gus Reinke Marking and Tool Co." The intention of the parties seems wholly clear; the action was to be dismissed as against the two parties named but was to be continued in full force as against Jackson and the Marking Corporation. There was never satisfaction in any sense or degree of the claims for injunction and accounting which had been asserted against Jackson and the Marking Corporation. Under these circumstances Jackson and the Marking Corporation may not justly claim that they were released; on this issue the opinion in Judson v. Peoples Bank & Trust Co. of Westfield, supra, may be deemed controlling. Indeed, if it be still necessary to express the matter in traditionally artificial concepts, the stipulation may be viewed, both in terms and purpose, as a covenant not to sue rather than a general release. See Roseville Trust Co. v. Mott, 85 N.J. Eq. 297, 300

(Ch. 1915); Aljian v. Ben Schlossberg, Inc., 8 N.J. Super. 461, 466 (Law Div. 1950); ...


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