Opinion
01-17-1907
TAYLOR IRON & STEEL CO. v. NICHOLS et al.
John R. Hardin and R. V. Lindabury, for complainant. Collins & Corbin, John B. Goode, and Edward H. Fallows, for defendants.
Suit by the Taylor Iron & Steel Company against Wesley G. Nichols and others. Heard on bill for an injunction. Decree awarded.
See 61 Atl. 946.
John R. Hardin and R. V. Lindabury, for complainant. Collins & Corbin, John B. Goode, and Edward H. Fallows, for defendants.
BERGEN, V. C. The complainant is the owner of a plant at High Bridge, N. J., where it is engaged in the manufacture of steel. The prominent feature of complainant's business, and that in which it appears to have been very successful, is the manufacture of manganese steel, a material of unusual hardness and toughness, which, together with other qualities it possesses, renders it a valuable agent where resistance to wear is required. The discovery of the method to be generally followed in the manufacture of this steel was made by R. A. Hadfield, of Sheffield, England, who had issued to him patents there, and in the United States, protecting the use of his discovery from infringements, and the complainant in 1892, commenced to manufacture this steel at High Bridge under a license from the patentee, he sending from England to High Bridge a skilled workman, who remained there about nine months instructing the complainant's officers and superintendents in its manufacture. Since that time, the complainant alleges that it has, through experience and by experiment, introduced new methods in the manufacture of the article, which were not known to the patentee, nor disclosed in his patents, by which it has grealy improved the excellence of the steel, and that these new methods and processes are secrets of its trade which it hassuccessfully preserved as such, and which it has not communicated to any but trusted employés, under an express or implied promise not to reveal them. The principal patents expired in 1902, so that since that date the basic principle of the manufacture of this steel, has been open to adoption by any one choosing to use it, but the complainant insists that the methods and processes discovered by it, which have been kept secret, are necessary to give to the product the high commercial value, which it has attained since it has been manufactured according to their secret processes. In 1896, and before most of these alleged secret processes had been discovered, the defendant Nichols was employed by the complainant as an assistant superintendent, and during his service was taught by the company most of its discoveries. At the time of his employment, Nichols entered into the following written agreement. "To the Taylor Iron & Steel Co., and R. A. Hadfield: In consideration of the said Taylor Iron & Steel Co., allowing me to inspect its steel works on the R. A. Hadfield system at High Bridge, N. J., giving me information in relation to the R. A. Hadfield system, I promise and give my word of honor, that I will not before January 1st, 1902, make known to any person whomsoever, except the officials of the said Taylor Iron & Steel Co., any information, which I shall receive at the said works, nor any information or knowledge which I may obtain from said inspection, nor will I adopt or use, except on behalf of the said company, all or any part of any process or system or any mixture or combination of mixtures, in use at the said works, whether what I shall see or be informed or learn may be novel or not. And that if I shall act contrary to my promise, then and in each case I will pay to each of you the sum of £2,500 as liquidated damages, and not by way of penalty. Provided always that notwithstanding anything herein contained, I shall be at liberty to do any work which does not reate to steel castings of any kind, or Manganese steel or other steel, covered by the said it. A. Hadfield patents. Wesley G. Nichols Witness: J. M. Sherrerd." This written promise limited the term of secrecy to the rear 1902, at which date the Hadfield patents then in force, and under which the complainant was licensed, expired, and plainly shows that it was intended to protect the patentee against disclosure of such processes and methods as he might communicate to the complainant, for it relates only to the "Hadield system," and does not include discoveries by the complainant of such methods and rocesses as its experience and experiment light thereafter disclose, those were not within the scope of this promise, for all secret methods and processes so discovered were the property of the complainant and not of the patentee; such discoveries made by the complainant and used by it to more perfectly work out the results expected under the patent were in the nature of Improvements, and, if the complainant chose to take the chances of preserving them as trade secrets, rather than seek the protection of a patent for the improvement, such secrets became its property, and the confidential relation existing between Nichols and his employer was such as to raise an Implied promise that he would not disclose such of them as he learned, or was taught while in complainant's employ. Even if it was the duty of complainant, under its agreement with Hadfield, to disclose such discoveries in confidence in him, that did not change the obligation of Nichols to preserve such additional methods as secrets of the complainant. Nichols remained in the employ of the complainant until July 31, 1905, when he left them to enter the employment of the American Brake Shoe & Foundry Company, one of the defendants here. This corporation had a foundry at Chicago Heights, near the city of Chicago; and some time in the summer of 1904 began, under the direction of Mr. Totter, its superintendent, experiments looking to the manufacture of manganese steel, under the formula disclosed in the Hadfield patents, and Mr. Potter testified that he had so far succeeded as to be able to produce a commercial product, but the evidence satisfied me that he had not been able to produce an article which met the requirements demanded of this special product, as satisfactorily as that of the complainant, for it appears that, up to the time of the trial of this cause, the complainant was furnishing 95 per cent. of the total amount, used in this country, of certain special articles for which the use of manganese steel is particularly desirable. Mr. Potter, by his testimony, demonstrates that he is a person of intelligence, and of great ability in the manufacture of steel, and while he testifies that he was able to produce manganese steel of a good quality as the result of his experience at Chicago Heights, it appears that, for some reason, he was not able to produce the quality of steel manufactured at High Bridge, necessary for special uses, nor did the amount sold by the company indicate that it was able to satisfy the trade needing that quality of steel that he had done so.
Mr. E. J. Snow, one of the officers of the defendant corporation, testifies that, in March, 1905, he went to High Bridge to visit a Mr. Estes, who was in the employ of the complainant company, and took with him a letter of Introduction to Mr. Chrystie, who was in charge of the complainant's foundry. The letter was from an old friend of Mr. Chrystie, and sought permission for Mr. Snow to visit the complainant's works at High Bridge. Mr. Snow was kindly received, but told by Mr. Chrystie that they permitted no one to enter the foundry where the manganese steel was being made, but gave him permission to visit all other parts of the works. With this permission, Mr. Snow, in company with Mr. Estes, visited all partsof the works except the foundry, and after they had concluded their visit, the defendant Nichols, who was at work in the foundry, was sent for by Mr. Estes. Mr. Snow testifies that he had never before seen, or even heard of Nichols; that when he went to High Bridge, he had no knowledge that there was any such person living and yet in his interview with Nichols, which he testifies did not last more than 10 minutes, he made him a very liberal offer to leave the complainant and enter the employ of his company. Precisely what this offer was the evidence does not settle, some of the witnesses testify that Nichols said he was offered $7,000 a year, and a bonus of $10,000 in stock of the company, while Mr. Snow says that he offered him only $5,000 a year, which was $2,000 more than they were then paying Mr. Potter, and just double the amount the complainant was paying Nichols. The admitted offer is sufficiently large to justify the conclusion that something more than the ordinary service of a superintendent was expected. Mr. Potter, who was only commanding a salary of $3,000, is undoubtedly a person of much greater learning and ability in steel making than Nichols, who, so far as this case shows, had no scientific education, and was only a workman of more intelligence than is usually found among people of that class, being bright, alert, and able to pick up the different branches of the business, and to receive and retain instruction in the line of work, with which he was familiar, with greater aptitude than the ordinary class of workmen, and the offer made by Mr. Snow to this man within 10 minutes after he had first seen him. and of whose capacity he had no knowledge, leads me to the conclusion, that he was not seeking an ordinary superintendent, but rather a person familiar with the methods and processes in use at High Bridge, which he could take to Chicago Heights with him, and there teach the workmen of the defendant corporation, the special methods and processes used at High Bridge, in order that the defendant might be able to produce the same character of material as that made at High Bridge, and thus facilitate competition, and, notwithstanding the denial by Mr. Snow of such intention, the proper inference to be drawn from the evidence is that Potter had failed at Chicago Heights in producing a steel similar in character and quality to that made at High Bridge, and the only way to enable defendant to compete with the complainant was to secure some one from High Bridge who was in possession of the knowledge of the methods and processes in use there, of sufficient intelligence to communicate what he knew, and that the primary object of Mr. Snow in going to High Bridge was, if possible, to secure such a person. The defendant Nichols, after consulting with Mr. Brinton, declined the offer, whereupon the complainant and Nichols entered into a written contract by the terms of which he agreed to remain with the complainant, for the term of five years, at a salary of $4,500, $3,000 of it to be paid to him annually, and $1,500 at the termination of the agreement, if he should live so long; and in the event of his death prior thereto, so much of the sum reserved as might then have accrued should be paid to his representatives. Another clause of the agreement provided: "(2) The said Wesley G. Nichols agrees that he will devote his entire time, skill, labor and attention during the term of his agreement, to the service of the Taylor Iron & Steel Company, and that he will at all times faithfully perform the duties that may be assigned to him by the management of the said Taylor Iron & Steel Company, to the best of his skill and ability for the compensation aforesaid, and that he will not at any time, directly or indirectly, during the term of this agreement or afterwards, divulge to any person, firm, or corporation, except to the Taylor Iron & Steel Company, and its officers, any information of any nature now known to him, or hereafter acquired by him during the term of this agreement, relating to or regarding any processes of steel making or moulding, or treating steel, that may have been, is now, or may be hereafter, during the term of this agreement, used in the works of the Taylor Iron & Steel Company, and that he will at all times, hold inviolate, the treatment, processes and secrets known to, or used by him, in the works of the said Taylor Iron & Steel Company." By the terms of this agreement, Nichols was to devote his entire time during its existence to the service of the complainant, and was not during the term of his agreement, or afterwards, to divulge, except to the complainant, any information then known to him, or thereafter acquired by him during the term of the agreement, relating to the processes of making steel, that might have been, or might thereafter be used by the complainant, and also that he would at all times hold inviolate the treatment processes and secrets known to, or used by him, In the works of the complainant, until the expiration of the agreement.
The defendants assail this agreement, insisting that it is void, as contrary to public policy, because, as they claim, it restricts the defendant Nichols, for an unlimited time, from divulging, except to the complainant, all information of any nature known to him, regarding any process of steel making in use at the complainant's works, when it is admitted that some of the processes in use there are in general use in all steel foundries, and were known to Nichols before he entered the employment of the complainant, and they argue that, if the contract should be strictly enforced, Nichols would be deprived of the means of making a livelihood through the use of knowledge which he had acquired before the complainant employed him, and which related to well-known methods of steel manufacture. That the parties to this agreement intended to limit its application to processesin use by the complainant which were not known to the defendant Nichols until they were disclosed to him by the complainant or to others is clearly manifested. Contracts should be construed so as to sustain them "if such construction does no violence to their language, and the subject of the contracts is to be considered, and their terms are to be construed in reference thereto." Trenton Pottery Co. v. Oliphant, 58 N. J. Eq. 507-517, 43 Atl. 723, 46 L. R. A. 255, 78 Am. St. Rep. 612. The portion of the contract objected to does not restrain the defendant Nichols from following his chosen avocation; he only contracts not to divulge any information then known to, or to be thereafter acquired by, him, during the term of his agreement, relating to the making of steel used by the complainant, and to hold inviolate the treatment, processes, and secrets known to, or used by him in the works of the complainant, and my construction of this contract is that Nichols agreed not to divulge any of the treatments, processes, and secrets which he had learned or might thereafter acquire, during his service with the complainant. Still, if it be admitted that the covenant treated two subject-matters, one relating to information known to the defendant Nichols before he entered the service of the complainant, and another that he would hold inviolate complainant's secrets, the covenant would be separable, and so much of it requiring Nichols to preserve inviolate the treatment, processes, and secrets of the complainant, would be enforceable even if part was void for the reasons urged by the defendants. Under either view it is a valid contract made by Nichols to keep secret the processes of the complainant. The defendants also urge that the contract ought not to be upheld because it was signed by Nichols without full knowledge of its contents, and under circumstances which justify him in now insisting that he signed it through a mistake, and under a misapprehension of its effects, and that, in equity, he ought not now to be held to a performance of its conditions. It is sufficient to say, on this branch of the case, that, after the contract was signed, Nichols had it in his possession for some days when, he testifies, he took it to Mr. Brinton, his superior officer and personal friend, and complained of its terms, and that he was not aware of the extent to which he had bound himself. It is not disputed that at this time he fully understood the extent of the obligations he had assumed, yet, notwithstanding this, he retained the contract, worked under it some months, accepted the increased compensation which it gave him, and made no further complaint until after he had left the service of the complainant. If the contract did not fully express his understanding of the agreement, it was his duty to rescind it promptly after discovering his mistake, and he cannot be allowed to accept the benefits which the contract conferred, with full knowledge of the obligations he had assumed on his part, and now, when he finds it convenient to be rid of it, set up the defense that he was mistaken as to its effect when he entered into it if he chose to accept its benefits, as he did, he is estopped from setting up the defense which he now interposes. My conclusion on this branch of the case is that the defendant Nichols entered into a contract to serve the complainant for five years from March, 1905, and that he agreed that he would not divulge any of the secret processes relating to the manufacture of steel as practiced by the complainant, which he had acquired by instruction or observation, during the time he was in the service of the complainant, whether acquired before or after the making of the contract, and that he should be compelled to observe his pledge of secrecy.
After the making of this contract, and until the 31st day of July following, a period of over four months, Nichols remained with the complainant, and on the latter date he resigned his position for the avowed purpose of entering the service of the American Brake Shoe & Foundry Company, the other defendant in this cause. Previous to the date of his resignation, Nichols had been in consultation with the officers of the defendant corporation. He had exhibited to them his contract with the complainant, which they had submitted to counsel, who advised Nichols that he could commit a breach of his contract with the complainant, without fear of injunctive restraint, and that the utmost liability he subjected himself to, if he pursued such a course, would be a suit for damages. The negotiations between Nichols and the defendant corporation resulted in an agreement between them, that they would take him into their service at a salary of approximately $6,000 a year, if, after a visit to their works at Chicago Heights, he was satisfied to go to Chicago, and act as superintendent of that plant, whereupon Nichols went to Chicago Heights, and examined the works, but before taking charge he was enjoined by the order of a court of the state of Illinois, from further visits to the plant, and from divulging complainant's secrets; subsequent to this, the bill of complaint in this cause was filed, and upon the hearing of an order to show cause, allowed thereon, a preliminary injunction was allowed by this court, restraining the defendant corporation from employing Nichols, and also enjoining Nichols from divulging the trade secrets of the complainant Taylor Iron & Steel Co. v. Nichols et al. (N. J. Ch.) 61 Atl. 946. The cause is now to be disposed of on final hearing on pleadings and proofs.
The first important question to be determined is, has the complainant shown that it has secret methods and processes, important to its interest in the conduct of its business. of such a character as to entitle it to the aid of a court of equity in preventing adisclosure of them, by one of these defendants having knowledge of them to any one, and particularly to the other defendant seeking that knowledge for the purpose of applying it in competition with the complainant's business? Some of the complainant's witnesses, after describing the ordinary methods of producing what is commercially known as "Manganese Steel," testified that certain other methods and processes were used at complainant's works, known only to complainant and its trusted servants, one of whom was the defendant Nichols, which were not known to the public, and were held as secrets belonging exclusively to the complainant, the use of which produced a character of steel practically beyond successful competition for use where material, which will resist the effects of abrasion as far as possible, is required. A disclosure of the secrets was sought by the defendant, by the cross-examination of complainant's witnesses, and on refusal by the witnesses to answer because, as claimed, it would disclose the secrets of the complainant, objection being interposed by complainant's counsel, all questions having for their object the disclosure of such secrets were overruled, and testimony tending to the same result was excluded when it was sought to have the defendant Nichols describe the methods and processes claimed by the complainant to be secrets which he had learned while in the employ of the complainant. The exclusion of this evidence, while lacking the support of any reported case in this state, is not without authority elsewhere, and, so far as I have been able to ascertain, has not been condemned by our courts. The object of this suit is the preservation of complainant's property, and one of the means to accomplish that result, is the restraining of the defendant Nichols from divulging complainant's secrets, which are property, to any one, and especially to the defendant corporation, an intended competitor of the complainant in a line of goods in the manufacture of which these secrets are in the highest degree valuable, and a necessary aid. To me it seems destructive of complainant's rights, if the very secrets which it is seeking to preserve, are to be disclosed, under compulsion, in the presence of the party most interested in obtaining the knowledge, because the character of the business, the impossibility of discovery by analysis of the methods used, added to the ordinary secrecy observed by all manufacturers of goods of this class, would render almost hopeless the discovery of infringement should the defendant take advantage of Information thus acquired. It is admitted that the defendant corporation, seeking to employ the defendant Nichols, has not yet obtained complainant's secrets, and one of the principal objects of this proceeding is to prevent it from doing so, a futile effort, if its officers, representing it as parties, may sit by and hear in detail what it is intended, if the complainant shall make a case, they are not entitled to know. As was well said by Judge Colt in Moxie Nerve-Food Company v. Beach et al. (C. C.) 35 Fed. 465, 466: "If those questions must be answered, every manufacturer will be at the mercy of any one who desires to extort from him an account of his processes, for an attempt to restrain an infringer would result in the disclosure of all that makes the invention valuable." In Stokes Bros. Mfg. Co. v. Heller et al. (C. C.) 56 Fed. 297, an application was made to the court for an order allowing the complainant to inspect the machinery of the defendant, and their processes for manufacturing rasps and files, in the making of which it was charged they were infringing complainant's patents, in order, manifestly, to enable the complainant to furnish evidence that the methods and processes of the defendant were those covered by complainant's letters patent. Judge Green denied the application, upon the ground that to compel defendant to submit their machinery to the inspection of their rivals, and to disclose to them the process by which for so many years, they had made their business successful, would be unjust and inequitable. If it be admitted that the defendants sought to be restrained have already acquired complainant's secrets, it might be possible to try the cause "en camera" and restrict the extent to which the evidence should be printed for the use of the parties and the court, with the hope that the knowledge of the secret processes would be confined to those already in possession of them. My own view is that the attempt seldom meets with unqualified success, but I am quite satisfied that, where the defendant has not obtained the secret knowledge, and the effort is to prevent him from doing it, the complainant's refusal to disclose such secrets, in support of his case, should be respected, for it rests with him to satisfy the court that he has a secret A very instructive case on this subject is that of Eastman v. Reichenback (Sup.) 20 N. Y. Sup. 110, which was subsequently affirmed on the opinion of Judge Adams in the court below. The complete record of this case shows that witnesses were not compelled to disclose the secrets sought to be preserved. The solving of the question, whether the complainant here has such a secret as equity will assist it in preserving, is not, of course, as easy as if the secrets were disclosed, and it was shown that they were not known to, or used by others, still, if complainant has, without disclosing them, satisfied the court that it has secrets of value, which it uses in its trade, and they have been imparted to, or obtained by, its servant, under a contract express or implied not to divulge them, the complainant will be entitled to relief. It is a question simply of sufficiency of evidence.
Witnesses were produced by the complainant who were persons skilled in steel making, among them being Henry M. Howe,Professor of Metallurgy of Columbia University, all of whom had personal knowledge of the methods and processes in use at complainant's works, and also a general knowledge of those used in other steel foundries, which were not deemed secrets of the trade in the respective foundries. These witnesses declare that the complainant has in use at its works, methods and processes in the. manufacture of manganese steel not known to, or used by, others, and are the secret property of complainant, discovered by it through years of experiment The witnesses Mr. Brinton and Dr. Howe testify that these secrets relate to the initial mixture; the method of treatment in the cupola, and during transference from cupola to converter; to the regulating of the temperature while in the converter, and to the determining of when the process is complete; to the making of patterns, and the treatment after the molten steel has been cast into moulds, both as to the temperature at which the casting shall be removed from the moulds to the annealing furnace, and at what heat they are to be taken from the latter furnace. If these witnesses are to be believed, the complainant has methods and processes for the production of finished manganese steel, known only to the complainant, and the use of which results in a product not matched by any other manganese steel on the market, for uniformity in hardness and toughness, qualities which have commanded for the complainant substantially the entire market of the United States, where such qualities are needed, particularly for crusher jaws on stone crushers and lips on mining buckets, where great resistance against wearing is necessary. The defendant Nichols, as a witness, denied that the methods and processes in use at High Bridge by the complainant were secrets, but it is apparent that this statement must be taken with some modification, for, when he went to that place, he had no knowledge whatever regarding the manufacture of manganese steel. All his training had related to the making of ordinary steel, and all he knew about the making of manganese steel was taught to him by the complainant at High Bridge. He remained with them there nine years, and until he sought to take employment with the defendant corporation. Nor is there any evidence that he had the opportunity to learn or know what methods were in use in other foundries, so that what he learned from day to day at High Bridge was an ordinary incident of his occupation, and the constant increase of knowledge, and the improvements which he admits they were making in the manufacture of this special steel may not have impressed him as a matter to be kept secret, although he admits a constant improvement in the quality of complainant's products, and that "the natural tendency would be to develop something better each day, as we were endeavoring all the time." It is not without significance that Nichols in 1905, after he had been with the complainant for many years, entered into a contract by the terms of which, among other things, he agreed that he would "at all times hold inviolate the treatment, processes and secrets known to, or used by him in the works of" the complainant. It is difficult to understand why this defendant would enter into a solemn obligation in writing, to keep inviolate the secrets of his employer if there were no secret in existence. The inference to be drawn from the testimony of Nichols is that, by experiment and constant effort to improve their products, the complainant had discovered methods and processes of value in the manufacture of manganese steel, not in use elsewhere, or known to others, which tended to produce a higher grade of that article than was manufactured by any other steel maker, results which the defendant corporation, with the advantage of the use of the Hadfield patents, which had expired, was not able to reach, for its officer, Mr. Snow, during his first interview with Mr. Nichols, told him that they were having trouble in making manganese steel at Chicago Heights. In further support of the complainant's claim that, in addition to the information contained in the Hadfield patents, they had discovered improvements in the processes, treatments, and methods in the manufacture of manganese steel, containing the nonabrasive qualities which made it a valuable material for "crusher jaws" and "bucket lips," now known to other manufacturers of those articles, is the fact that they produce an article so superior to all others that they have practically a monopoly of the trade in this country, and it is impossible to believe that, if these secrets were well known, they would not be applied and used by others, and particularly by the defendant corporation, which is endeavoring to secure a portion of this particular trade. That the defendant company do make manganese steel, after the formula described in the Hadfield patents, is not disputed, but that they lack something which the complainant possesses, necessary to produce the same grade of article, is reasonably established by the testimony, not the least significant portion of which is that they have taken so much pains and trouble to secure from the foundry of the complainant a workman who, to say the least, they have reason to believe has a knowledge of the methods! used by the complainant. It is perfectly clear, from all this evidence, that the complainant has some secret special knowledge which the defendant corporation is so anxious to obtain, that its officers were willing to advise Nichols to commit a breach of his written agreement.
I am satisfied that the complainant is possessed of methods and processes which produce an improved character of manganese steel; that such methods and processes have been kept secret in the ordinary acceptationof the term relating to trade secrets; that they were communicated to Nichols in trust and confidence; and that he has no right to violate his agreement; and should be restrained from divulging them to any one.
The remaining question is, ought this defendant corporation be restrained from employing the defendant Nichols? This question was considered and passed upon when the preliminary injunction was allowed, and nothing has been developed on final hearing which leads me to any different conclusion than the one then reached, the reasons for which I expressed in Taylor Iron & Steel Company v. Nichols et al., supra. The evidence on final hearing, in my judgment, has only intended to intensify the inequitable position occupied by the defendant corporation. It now appears that that corporation notwithstanding the skill and efforts of their very able superintendent, Mr. Potter, was not able to reach satisfactory results; that Mr. Snow, one of the officers of the defendant corporation, with the aid of a friendly letter to the complainant, succeeded in entering the complainant's works, and while there tempted Nichols to leave the complainant by an offer which he was unable ultimately to resist. That Mr. Snow went to High Bridge primarily to visit Mr. Estes, I do not believe; the condition of affairs at Chicago Heights demanded some one who could manufacture steel of a grade to compete with the complainant; there was no better place to look for the necessary party than at High Bridge, and he admits that he was anxious to visit complainant's plant "to gain any Information that I could pick up as to general practices in the shop." At that interview he offered Mr. Nichols an annual salary, according to his own story, of $5,000, double that being paid to him by the complainant, and $2,000 a year more than they were then paying Mr. Potter, who, as I have said, was greatly the superior in learning and intelligence of Mr. Nichols, and also a steel maker of more than ordinary capacity. A few months later, and after Nichols had made his written contract with the complainant in March, 1905. the defendant corporation again entered into negotiations with him, and with full knowledge of his contract with the complainant were ready to employ him. They assert their offer was not to be effective until he had dissolved his relations with the complainant, hut this was a mere pretense, because manifestly they expected him to do so, and advised him that he might do so without fear of restraint. It also appears that the officers of the complainant called upon the officers of the defendant corporation and protested against the conduct they were pursuing, and in every possible way endeavoring to induce them to desist from their efforts to entice Nichols from them, and, when the complainant became satisfied that the defendant corporation intended to take Nichols from them, the preliminary injunction was applied for and allowed in this cause, since which time Nichols has not, so far as it appears, visited the works at Chicago Heights, although he has since that time been supported with money furnished by the defendant company The statement made by Nichols on this subject is that he has borrowed the money from the American Brake Shoe & Foundry Company, but that this is a genuine loan. I am unwilling to credit. On the contrary, I am satisfied that the money has been advanced to him for the purpose of keeping him in a position to enter its service, if the result of this litigation be such as to permit it. Whatever may be the truth on this subject, it does appear that Nicholas remained in Chicago for a long time, first boarding at a hotel, afterwards living with his family at another place, and that shortly after the injunction was issued, a person by the name of Leonard, who had formerly worked at High Bridge, and was known to Nichols, left his place of employment in Newark, and went to Chicago; that he was there employed by the defendant corporation ostensibly as inspector of castings, but practically, as I find the fact to be, as a messenger between Nichols and the foundry at Chicago Heights. He and Nichols met frequently, and in such manner as to avoid, as far as possible, the disclosure of the fact that they did meet. Leonard had some knowledge of the way business was conducted at High Bridge, and I have no doubt that it was the expectation of the defendant to acquire from Nichols, through Leonard, sufficient knowledge of complainant's methods to aid them in successfully making steel of the standard produced at High Bridge. That the employment of Leonard was not in good faith, or intended to be permanent, is sufficiently shown by the fact that, when it was ascertained that the litigation was likely to be prolonged, Leonard left Chicago and returned to his work in Newark. Leonard, as a witness, was a lamentable failure, and not the slightest reliance can be placed upon any of his statements, which are in conflict with those of other witnesses. The bringing of Leonard to Chicago under the circumstances disclosed is strongly indicative of an intention on the part of the defendant corporation to obtain complainant's secrets, and their failure is perhaps due to their inability to use the formulas without a personal demonstration, which Nichols could, and Leonard could not, give.
But one reasonable conclusion can be drawn from these acts of the defendant corporation, and that is a determination to secure the services of Nichols, and, through him, knowledge of complainant's secrets, by tempting him to violate his agreement to remain with the complainant, for without his aid, and a disclosure of complainant's secrets, it could not hope to successfully compete with the complainant. What should a courtof equity do under all these circumstances? There can he no doubt, it seems to me, that to permit the defendant corporation to employ Nichols, notwithstanding he may be enjoined from disclosing complainant's secret methods and processes, would afford it an easy opportunity to obtain from Nichols, in spite of the injunction against him, the knowledge which they seek, and which could be so used as to make discovery very difficult, if not impossible. The persistent effort to obtain the services of Nichols, whose only special qualification is his knowledge of the complainant's secrets, warrants the court in preventing, as far as possible, the success of this attempt to induce a trusted servant to commit a breach of confidence by the disclosure of complainant's secrets. If the defendant corporation suffers any injury in being denied the right to employ Nichols in work that does not require a disclosure of complainant's secrets, it is an injury resulting from an inequitable attempt to injure the complainant, and, if a defendant, by its own conduct, can put itself in such a position as to lose the advantage of future independent experiments, as was held in Stone v. Grasselli Chemical Co., 65 N. J. Eq. 756-762, 55 Atl. 736, 63 L. R. A. 344, 103 Am. St. Rep. 794, a defendant may, in my opinion, be denied the right to take into its employment for any purpose, one whom the court is satisfied has been enticed to leave his master under-such conditions as to Justify the conclusion that the ulterior purpose of the employment, is to acquire the trade secrets of his master. We have here a servant possessed of his master's secrets, which he is bound not to divulge, and another seeking him for the purpose of employing him where those secrets may be put to use to the injury of his master. The servant can only be restrained from divulging, for the power to enforce the specific performance of his agreement to remain with his master is not possessed by the court, but equity ought not to stop short of giving full relief, and that, in this case, can only be certainly done by restraining the defendant corporation from employing the seduced servant during the term of his contract with the master whose property he has in charge, and thus render its transfer troublesome, if not impossible.
There will be a decree for an injunction restraining Nichols from divulging to any one the secret methods and processes used in the manufacture of manganese steel, by the complainant, which he acquired, or were taught to him by the complainant, and restraining the defendant, the American Brake Shoe & Foundry Company, from disclosing, or making use of any such secrets, that may have been communicated to it by the defendant Nichols, and from employing Nichols during the unexpired term of his contract with the complainant