Cavanaugh Nailing MacHine Co. v. Cavanaugh

WOOD (Fred B.), J.

Plaintiff is a corporation engaged in the business of manufacturing and selling nailing machines. It brought this action against its former president and general manager to enjoin him from the conduct of a competing business upon which he has embarked, also for an accounting and for declaratory relief.

The parties are agreed upon the following facts as shown by certain allegations of the complaint which defendant by his answer has admitted:

In 1948 defendant and Dr. Warren E. Page orally agreed to work together, pooling their inventive ideas and funds in a joint venture to perfect and market nailing machines, sharing profits equally, each to own an undivided half interest in machines developed or produced, Page to furnish the funds

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required for such joint venture to the extent of his ability so to do. In 1949, defendant and Page entered into a partnership for the purpose of manufacturing and marketing nailing machines, all profits to be divided evenly between them. In 1952, defendant and Page incorporated the partnership, the corporation so formed being the plaintiff herein. Thereafter, until February 29, 1956, defendant was president and general manager of plaintiff. On or about March 7, 1956, defendant resigned as general manager of plaintiff. On or about March 14, 1956, defendant established next door to plaintiff’s principal office a business consisting of the manufacture, sale and repair of mechanical nailing machines and parts identical with the mechanical nailing machines and parts being manufactured, sold and repaired by plaintiff during the time defendant was employed by plaintiff.

The principal issue framed by the pleadings was whether the business of the joint venture, the partnership and the plaintiff corporation, embraced the production, manufacture and sale of all nailing machines, mechanical as well as magnetic, as alleged by the plaintiff, or merely one certain type of magnetic nailing machine, identified by a certain patent, as alleged by the defendant.

Another issue was whether or not the mechanical nailing machine now manufactured by the defendant constituted a trade secret of the plaintiff at the time defendant resigned as general manager, as alleged by the plaintiff and denied by the defendant.