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Muenzer v. W.f. & John Barnes Co.

MARCH 2, 1956.




Appeal from the Circuit Court of Winnebago county; the Hon. WILLIAM R. DUSHER, Judge, presiding. Affirmed.


Rehearing denied April 19, 1956.

Ferdinand F. Muenzer, the plaintiff, brought this suit against the defendants W.F. & John Barnes Co., a corporation, hereinafter called "Barnes Co."; Lindsay Light and Chemical Company, a corporation, hereinafter called "Lindsay Co."; S. Becker Treat (an employee at one time of the Barnes Co.), hereinafter called "Treat"; William W. Barton (President of the Barnes Co.), hereinafter called "Barton"; and Barton Chemical Company, a corporation, hereinafter called "Barton Co."

The complaint, as amended, contained six counts. The plaintiff alleged that he had been engaged by Barnes Co. to develop a powder for the polishing of optical lenses, on the oral agreement that any discoveries would belong to him. He sought relief on various theories, all of which are fundamentally based on the claims that he later did discover a secret formula for a polishing powder known as "Barnesite," and that it belonged to him pursuant to the alleged oral agreement.

The plaintiff asked for an accounting from Barnes Co. and Lindsay Co. and a judgment for the profits made from the manufacture of Barnesite by these companies and a judgment against Treat, Barton, and Barton Co. for the wrongful disclosure of the formula and for the profits made by those individuals and Barton Co. through their wrongful conduct and that of their agents in allegedly fraudulently obtaining the formula and selling it.

Answers containing general denials were filed by the several defendants except as to certain allegations with reference to the background and qualifications of the plaintiff as an expert in the field of chemistry, to which they plead lack of knowledge. The affirmative defenses of the Statute of Limitations and laches were also pleaded.

The case was heard by the Trial Judge without a jury; at the close of the plaintiff's evidence, the court, on motion, found the defendant Lindsay Co. and the individual defendants Barton and Treat not guilty. At the close of all the evidence, the court entered judgment in favor of the defendants Barnes Co. and Barton Co. From those orders and judgment this appeal is taken.

The plaintiff's theory is (1) that liability existed because of an oral contract between the plaintiff and Barnes Co. that the formula for the polishing powder, when developed, would become and remain the property of the plaintiff; (2) a confidential relationship existed between the plaintiff and Barnes Co., Barton, Treat and Barton Co.; (3) when a confidential relationship is shown, the burden of proof shifts from the plaintiff to the defendants to show a course of fair dealing; and (4) Lindsay Co. had notice of the claim of the plaintiff to the formula before it began to manufacture "Barnesite" and is liable for profits it made in manufacturing Barnesite.

The position of the defendants Barnes Co., Barton, Treat and Barton Co. is that, under the circumstances here, the plaintiff, as an employee hired by Barnes Co. to develop a polishing powder formula, is required to prove ownership in himself of the formula by some specific agreement, in order to recover, and that in the absence of such an agreement the same belongs to the employer, not the employee. The defendant Lindsay Co. contended the plaintiff had no right of action against it for the additional reason, inter alia, that the Lindsay Co. acquired knowledge of the formula honestly and prior to notice of the plaintiff's claim of ownership.

The record is quite voluminous and no good purpose would be served by setting out or attempting to summarize all the evidence in detail. Suffice it to say, referring to and summarizing the principal significant portions thereof, that the plaintiff came to this country in 1929 from Germany where he had been employed as a chemist. In 1938, he and the defendants, Barton and Treat, planned to form a company to manufacture inks on Ravenswood Street in Chicago, the plaintiff having the formulae for the inks, but this plan was dropped on account of the country's entry into World War II after Pearl Harbor in December, 1941.

A review of the testimony shows that prior to 1941 the U.S. Army had asked the Barnes Co. to develop a grinding and polishing machine, the principle of which had been brought from Europe. Such a machine was designed by a Mr. Desenberg but there was need for a polishing compound. The defendant Treat, at Barton's request, asked the plaintiff if he would do the research work on a polishing powder and the plaintiff said he would.

Barton, according to the plaintiff, met with him and had a conversation about the polishing powder project for an hour or two in the Dearborn Station in Chicago, early in 1942, at which time Barton told him that if nothing came of the research work on the polishing powder, that would be alright, the plaintiff would owe nothing to Barton or Barnes Co., and that during the research work on the powder, the plaintiff could not work alone but would be placed on the Barnes Co. payroll and would receive $400 per month, with the understanding that whatever, if anything, was developed in the way of a polishing powder would, when the war was over, belong to the plaintiff; that Barton's primary interest in this project was to further the war effort by supplying that much needed powder to the Government. Barton testified he had no recollection of such a meeting.

Barton testified the first conversation was between Treat, Barton and the plaintiff in February, 1942, prior to the development of the polishing powder formula, at which time Barton outlined the work the plaintiff (as well as Treat) was to do for Barnes Co. and said that "he and Mr. Treat would be employees of Barnes and, as such, such work as they completed would naturally belong to Barnes," to which, Barton said, the plaintiff agreed. A second conversation, Barton says, took place sometime later during the spring at the Ravenswood plant. At this time Treat, Barton, as well as the plaintiff, and Stanton K. Smith, an employee of Barnes Co., were present. Barton testified that he said, in the plaintiff's presence, that "whatever he, Muenzer, had in mind in the polishing field would belong to Barnes." Treat corroborated the first conversation and Treat and Smith corroborated the second conversation. At those conversations, as related by the defendants' witnesses, the plaintiff was evidently assured that he retained ownership of the prior ink formulae, and Barnes Co. made no claim to that matter. The plaintiff, in substance, denies those conversations.

The plaintiff's employment by the Barnes Co. was solely to develop a polishing powder or compound, — that much at least seems to be agreed, regardless of such differences as there are relative to the other ...

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