Hughes Tool Company v. Fawcett Publications, Inc.

297 A.2d 428, 1972 Del. Ch. LEXIS 139
Court of Chancery of Delaware·Decided October 26, 1972·Published·Cited by 25 cases

Opinion

MARVEL, Vice Chancellor:

For a period of approximately thirty-two years prior to 1957 the defendant Noah Dietrich was first an employee and later a director and the executive vice-president of Hughes Tool Company, one of the plaintiffs in the above consolidated action. In such latter positions of trust and confidence Mr. Dietrich became a close personal associate of and a financial adviser to Howard R. Hughes, the sole stockholder of Hughes Tool Company, who apparently came to lean heavily on Mr. Dietrich for aid and counsel in the handling of his personal and business problems. Eventually, there was a falling out between the two men, and in 1957 Dietrich left the employ of Hughes Tool Company, thereafter suing both Hughes and Hughes Tool Company. However, in 1959, Dietrich and the defendants in such action agreed to settle, and as a result Mr. Dietrich entered into two contracts, both dated August 1, 1959, 1 one with Mr. Hughes, under the terms of which Hughes agreed to assist Mr. Dietrich in obtaining an unsecured loan, Dietrich for his part agreeing not to disclose any confidential information about Hughes and his corporations, and the other with Hughes Tool Company in which Dietrich promised to make himself available to such company as a consultant for a period of seven years in return for a payment to him of a fixed sum. In the agreement with Hughes Dietrich acknowledged that a disclosure by him of confidential information about Hughes and his corporation would result in irreparable harm to Hughes and Hughes Tool Company and that the latter, in addition to any other remedies they might elect to assert, should have the right to seek the enjoining of further breaches.

In other words the agreement with Howard R. Hughes contained a covenant which specifically provided that Dietrich was not to disclose any information of any nature about the life and affairs of Hughes, the Hughes Tool Company, or of any of its affiliates, Mr. Dietrich having covenanted not to use for his own benefit or to permit the disclosure to others of any information of any nature, acquired or seemingly acquired as a result of his employment by or confidential relationship with Mr. Hughes, Hughes Tool Company, or any corporate affiliate, of any biographical or historical book, article, or other type of writing with respect to the life or affairs of Howard Hughes, or the history and affairs of Hughes Tool Company. Mr. Dietrich further agreed to surrender to Hughes, his attorneys or agents, any manuscripts or other documentation of any or all of the material above alluded to.

*431 The Hughes Tool Company agreement, on the other hand, merely provided, as noted above, that Dietrich should make himself available to such corporation as a consultant for a period of seven years, in return for which he was to be paid the total sum of $694,000 by Hughes Tool Company in periodic installments.

Notwithstanding the restrictive covenant in the Hughes agreement, Dietrich has written and caused to be published an account of his personal and business association with Hughes, which book, a copy of which has been placed in the record, relates intimate and at times derogatory details of Hughes’ private and business life to which Dietrich was allegedly privy. Such book has been published by Fawcett Publications, Inc., the defendant in the second complaint in the above consolidated action, under the title “Howard, The Amazing Mr. Hughes”.

Following such publication, the plaintiffs Hughes Tool Company and Rosemont Enterprises, Inc. (the latter having been made the assignee in 1965 of exclusive rights to exploit Hughes’ name, likeness or any account of his life or personality) brought these actions, claiming that their rights under the agreements referred to above had been infringed by actions of the defendants Dietrich and Fawcett Publications, Inc. Defendants have moved to dismiss such complaints and this is the Court’s opinion on such motions.

In pressing their motions to dismiss the complaints herein, defendants point out first of all that the restrictive covenant alluded to above which purportedly binds Mr. Dietrich not to disclose information concerning Mr. Hughes’ personal and business affairs is contained solely in the Hughes agreement with Dietrich. They accordingly argue that Hughes is an indispensable party to this consolidated action and must be joined before these actions may proceed further. They further contend that Hughes Tool Company is neither a party to nor a third party beneficiary of the Hughes agreement and further that Rosemont Enterprises, Inc. is not an as-signee in any manner of any right of enforcement of such agreement. Thus, it is argued, neither of the present plaintiffs has standing to enforce the terms of the Dietrich agreement not to disclose biographical information concerning Hughes. Defendants go on to argue that, in any event, the form of restrictive covenant here in issue is invalid as constituting an unreasonable restraint on Dietrich’s right of free speech and thus is violative of the first amendment to the Constitution of the United States.

It is a fundamental principle governing the conduct of litigation in this Court that it has no jurisdiction of a cause of action as to which the party seeking relief has an adequate remedy at law, 10 Del.C. § 342, and see In re Markel, Del. Supr., 254 A.2d 236. Furthermore, the question as to whether or not equitable jurisdiction exists is to be determined by an examination of the allegations of the complaint viewed in light of what the plaintiff really seeks to gain by bringing his cause of action, Diebold v. Commercial Credit, Del.Supr., 267 A.2d 586. Plaintiffs argue, however, that the holding in the cited case was that this Court’s determination as to whether or not it has jurisdiction of an asserted claim is controlled by an examination of the prayers of the complaint. They contend that because the relief which they pray for appears to be clearly equitable in nature, this Court must necessarily exercise its allegedly established jurisdiction over the present actions. I am of the opinion, however, that the ruling in the cited case does not purport to alter the established rule that the prayers of a complaint do not rigidly control this Court’s inquiry into what it is that a plaintiff really seeks in filing a complaint and that this Court should, when required, go behind a facade of prayers in order to determine whether the relief sought is in fact equitable or *432 legal. 2 See also Jefferson Chemical Co. v. Mobay Chemical Co., Del.Ch., 253 A.2d 512, and Highlights for Children, Inc. v. Crown, 41 Del.Ch. 244, 193 A.2d 205.

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Hughes Tool Company v. Fawcett Publications, Inc., 297 A.2d 428, 1972 Del. Ch. LEXIS 139 (Del. Ct. App. 1972).

297 A.2d 428 (Hughes Tool Company v. Fawcett Publications, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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