Stein v. Morris

91 S.E. 177, 120 Va. 390, 1917 Va. LEXIS 119
CourtSupreme Court of Virginia
DecidedJanuary 11, 1917
StatusPublished
Cited by5 cases

This text of 91 S.E. 177 (Stein v. Morris) is published on Counsel Stack Legal Research, covering Supreme Court of Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Stein v. Morris, 91 S.E. 177, 120 Va. 390, 1917 Va. LEXIS 119 (Va. 1917).

Opinion

Harrison, P.,

delivered the opinion of the court.

This bill in equity was filed by the appellant, David Stein, asking for an accounting and praying for an injunction to restrain the appellees, Arthur J. Morris, the Fidelity Corporation of America, and the Industrial Finance Corporation, from appropriating or using the plan of banking known in this record as the “Morris Plan of Industrial Banking,” of which the complainant claims to be the owner.

It appears from the record that in March, 1910, A. J. Morris, one of the appellees, together with several associates, organized in the city of Norfolk the Fidelity Savings and Trust Company, Inc., which began in May, 1910, to conduct the business of a loan and savings company for the accommodation of people of small means who could not get accommodation from the ordinary commercial banks. This corporation prospered to such an extent that by the end of the first year the financial soundness of the principle on which it operated was demonstrated, and other similar institutions were established in different parts of the country. In the summer of 1912 it was found that an extensive development of this system of banking would require a larger capital, and the Fidelity Corporation of America was thereupon organized with an authorized capital of $300,000. To this company Morris and his associates con[392]*392veyed all of their rights in the business theretofore conducted by them of organizing such institutions. These industrial banks grew so rapidly that in July, 1914, Morris and his associates organized in the city of New York the Industrial Finance Corporation with a capital stock of $1,500,000, to which the Fidelity Corporation of America transferred all of its assets of every character, together with the good will of the business which it had theretofore conducted of organizing banks on the plan which had then become known as the “Morris Plan of Industrial Banks.” The record shows that at the time of the institution of this suit these industrial banks Had been established in many localities throughout the United States.

In addition to the capital invested in the Industrial Finance Corporation, approximately $7,000,000 has been invested in the capital of the numerous operating banks that have been established by that corporation. It is this business that the appellant, five years after the movement began, seeks to restrain and call to account, upon the ground that he is the originator of the instalment plan of industrial savings and loan banking, and that the use of his idea by the appellees is wrongful and prejudicial to his rights.

It appears that in April, 1901, appellant and a number of associates organized in Newport News, Virginia, a corporation known as the “Merchants and Mechanics Savings Association,” for the purpose of prosecuting the business of savings and loans in the city of Newport News. The claim alleged is that this institution and a certain table and letter filed with the Pill constitutes an unique plan of lending to poor people money, returnable in weekly instalments and reinvesting these weekly instalments, which is owned exclusively by the appellant, and that the same idea has been adopted by the appellees in their plan of establishing industrial banks.

[393]*393It is, we think, clear from the evidence that the respec tive plans of banking under consideration are not substantially similar, but are fundamentally different. The two plans are clearly differentiated by experts showing.that one is operated upon a mutual basis, the members or borrowers subscribing to the capital stock and participating in the profits and losses; while the other is operated upon a fixed capital, the stockholders being the managers and proprietors of the banking institution, and the borrowers and savers not participating in the profits arid losses. The appellant contends that the letter and table filed with his bill show that his plan is substantially the same as the “Morris plan.” This contention cannot-be sustained. The wording of the letter plainly conveys the idea that the plan was mutual in its character. This interpretation of the letter is sustained by the by-laws of the “Merchants and Mechanics Savings Association,” which admittedly embody appellant’s whole scheme and plan of banking. The table merely shows a simple calculation of profits to be derived from a given sum in accordance with the “Stein plan,” the theory being that the periodical payments and interest would be immediately re-loaned on similar terms.

The evidence of those who united with the appellant, Stein, in organizing the Merchants and Mechanics Savings Association of Newport News, which he claims to be the sole and complete embodiment of his system, is overwhelmingly to the effect that the scheme was not original but was an old one which had been in operation in Europe for many years, and that- Stein acquired his knowledge of the system in Europe from whence he emigrated to America in 1892. The witness, Rosenbaum, who was an active officer of the Newport News corporation, says he never heard of any scheme of proprietorship from the organization of the company in 1901 until about 1914. This testimony of Stein’s own witness, who was in a position to know, would alone seem to be sufficient to show that the present claim of in[394]*394vention and property was conceived after Stein had seen the unusual growth and prosperity of the “Morris plan.”

If, however, appellant had originated the scheme or idea of banking of which he claims to be the owner, he could not have a property right in such a method or idea for conducting business without any physical means or devices for carrying it out. In other words, he could not put such an idea into operation without it at once escaping his own grasp and becoming the property of mankind. Bristol v. E. L. A. Society, 52 Hun. 161, 5 N. Y. Supp. 131; Burrell v. Chown (C. C.), 69 Fed. 993; Bristol v. E. L. A. Society, 132 N. Y. 264, 30 N. E. 506, 28 Am. St. Rep. 568; Hamilton Mfg. Co. v. Tubbs (D. C.), 216 Fed. 401.

In Bristol v. E. L. A. Society, 52 Hun. 161, 5 N. Y. Supp. 131, supra, it is said: “It is difficult to conceive how a claim to a mere idea or scheme, unconnected with particular physical devices for carrying out that idea, can be made the subject matter of property. So long as the originator of the naked idea, whether, germinating under the laws of metaphysics, it be regarded as Platonic or Cartesian in its make-up, keeps it to himself, it is his exclusive property, but it ceases to be his own when he permits it to pass from him.” As further said in the case cited, such ideas in their relation to property, belong to the claimant as long as he keeps them. But if he permits them to go he cannot follow them.

In Hamilton Mfg. Co. v. Tubbs, supra, it is said: “Where an idea or trade secret or system cannot be sold or negotiated or used without a disclosure, it would seem proper that some contract should guard ' or regulate the disclosure; otherwise, it must follow the law of ideas and become the acquisition of whoever receives it.”

In the case of Haskins v. Ryan, 71 N. J. Eq. 575, 64 Atl. 436, a leading authority on the subject, the court, in a luminous discussion of this subject, says: “The means of carrying out the plan, of giving effect to the idea, lay, therefore, [395]*395beyond his control.

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Bluebook (online)
91 S.E. 177, 120 Va. 390, 1917 Va. LEXIS 119, Counsel Stack Legal Research, https://law.counselstack.com/opinion/stein-v-morris-va-1917.