C. F. Simmons Medicine Co. v. Simmons

81 F. 163, 1897 U.S. App. LEXIS 2629
U.S. Circuit Court for the District of Eastern Arkansas·Decided May 24, 1897·Published·Cited by 8 cases

Opinion

WILLIAMS, District Judge

(after stating the facts as above). The able arguments of counsel on both sides, and the elaborate briefs filed by them, have been of invaluable assistance to the court in determining this cause. The pleadings of both parties are commendable for their clearness and brevity, and the authorities bearing on the points involved, furnished by counsel, have greatly aided the comí;, and lightened its labor.

The bill seeks relief upon two main grounds: First, complainants rely upon the contract; and. second, upon the general rules of equity courts governing cases of this kind in the absence of any contract Bo far as the contract is concerned, complainants complain that the defendant has violated it in the following particulars: First, in making a liver medicine which he calls “Bimmons’ Liver Compound,” and selling it in competition with plaintiffs'' liver medicine, using plaintiffs’ secret process for that purpose; second, in making use of the knowledge imparted to him, in trust and confidence, in the manufacturing and compounding of the said medicine; third, in making and selling a liver medicine, using- his name thereon, within the territory prohibited by the contract.

As to the invalidity of the contract, in its being.in restraint of trade, the various decisions of the supreme court of the United Btates are conclusive that, such a contract, entered into under the circumstances under which this contrail: was made, is not void as being in restraint of trade. As was remarked in Gibbs v. Consolidated Gas Co., 130 U. S. 396, 9 Sup. Ct. 553:

“The decision in Mitchel v. Reynolds, 1 P. Wms. 181, is the foundation of the rule in relation to the validity of contracts in restraint of trade: but. as it was made under a condition of tilings and a state of society different from chose which now prevail, tlie rule laid down is not regarded as inflexible, anil has been considerably modified. Public welfare is first considered, and if if be not, involved, and the restraint upon one party is not greater than the, protection (o the oilier requires, the contract may be sustained. The question is whether, under (he particular circumstances of the case, and the nature of the particular conn-act, as involved in it, the contract is or- is not unreasonable. Oakes v. Water Co., 143 N. Y. 430, 38 N. E. 461; Match Co. v. Roeber, 106 [166] N. Y. 473, 13 N. E. 419; Central Transp. Co. v. Pullman’s Palace-Car Co., 139 U. S. 24, 11 Sup. Ct. 478; Peabody v. Norfolk, 98 Mass. 452.”

The chief contention over the contract is as to the understanding of the contracting parties at the time of its execution and ratification. The defendant claims that, when he signed it, his understanding, to use his own words, was:

“That Ms brother asked Mm If he would sign the contract that he would not make any of the medicine, and would not give the secrets of the medicine away. I told him I would sign a.contract of that kind. A few days after that he told me he had a contract ready, and read it to me just about as I have stated it here; that I would neither make any of the medicines made by the Simmons Medicine Company, nor sell nor give away their formulae to anybody, and I signed it thinking it was the contract.”

There is therefore no room for doubt as to the first two subjects of the contract. Both the contracting parties understood it thus far. But having entered the service of complainants, and having had imparted to him their secrets, defendant was, in equity and good conscience, obliged to preserve them as sacredly as his own, and this as well without a contract as with it. The leading English case on that subject, and which has been universally followed by the courts of this country, including the supreme court of the United States, is Morison v. Moat, 9 Hare, 241. In that case, Vice Chancellor Turner, in delivering his opinion, said, among other things:

“Upon the whole, therefore, I am of the opinion that the plaintiffs have made out their case for an injunction. I think, however, the injunction cannot go to the extent which is asked for by the notice of motion. It should, I think, go to the extent of restraining the defendant from selling, under the title or designation of ‘Morrison’s Universal MedicMe,’ or ‘Morrison’s Vegetable Universal Medicine,’ any medicine made or manufactured by him; jivoceeding, to this extent, not upon the mere use of the name, but because this is clearly the mode in which defendant is availing himself of the breach of favor and contract; and, upon the authorities, I think it should also go to the extent of restraining the defendant from making or compounding any medicines according to the secret, and from in any manner using the secret of compounding the medicine.”

And in another part of this decision it is said:

“There is no doubt whatever that where a party who has a secret in trade employs persons under contract, express or implied, or under duty, express or implied, those persons cannot gain knowledge of that secret, and set it up against their employer.”

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C. F. Simmons Medicine Co. v. Simmons, 81 F. 163, 1897 U.S. App. LEXIS 2629 (circtedar 1897).

81 F. 163 (C. F. Simmons Medicine Co. v. Simmons) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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