The opinion of the court was delivered by: RYAN
1. The plaintiff, T. G. Cooper & Co., Inc., hereinafter called Cooper or plaintiff, is a corporation of Pennsylvania, a dealer in wax products and the like, including natural vegetable waxes such as Carnauba and Candellilla, and a maker of synthetic wax or wax substitutes such as Akusaka, a Japan wax substitute.
2. The defendant, Lucien Brice, formerly Lucien Bloch, hereinafter designated as Brice or defendant, is a naturalized citizen of the United States, a resident of New York, New York, and a chemist having knowledge of the use of vegetable waxes and vegetable wax substitutes, who is possessed of secret and original processes and formulae for the manufacture of wax products such as shoe, floor, and automobile polish, carbon paper, insulating compositions, and the like.
3. There is diversity of citizenship and the amount in controversy is more than $ 3,000 exclusive of interests and costs.
4. On January 12, 1942, Cooper and Brice entered into a Contract, Exhibit A, by the terms of which Cooper was granted the sole exclusive right, within the United States of America, of the use of Brice's original process for the improvement and refinement of vegetable waxes for the replacement of Carnauba wax, and for other purposes.
5. Under the contract, the plaintiff furnished the defendant with funds for the purchase of secret materials called Intermediates, and with raw waxes to be mingled with the Intermediates, and defendant purchased the Intermediates, mingled them with the waxes, and shipped the products back to the plaintiff, who mixed them with more wax. The final products are substitutes for Carnauba wax and are called Corumbus, in the trade.
6. The Intermediates were secret and known only to defendant.
7. The essences of the processes were secret and known only to the defendant.
8. The plaintiff had an exclusive right to use the processes and to sell the products in this country.
9. The defendant retained the right to use the processes in countries other than the United States.
10. Defendant received from plaintiff the cost of the Intermediates, certain expenses, and 6% royalty on the amount of net proceeds from sales of the products produced through the use of the process.
11. The business proceeded on this basis until 1943, when plaintiff's plant burned down and an oral modification of the written agreement was made by the parties to provide for the continuance of the business, under which the defendant, who had already established a plant of his own at 266 Williams Street, New York, New York, undertook to manufacture the wax substitutes according to his said secret processes, and plaintiff paid him, in addition to the 6% provided for by said Exhibit A, the rental for his factory and an operating charge per pound of product produced.
12. The Contract, Exhibit A, as thus orally modified, was continued in force until January 12, 1948, when it was superseded by Agreement Exhibit B, and Trust Agreement Exhibit C.
13. The oral modification of Contract Exhibit A did not include any modification of plaintiff's exclusive right to the use of the process in the United States, and did not permit the defendant to use the secret process in the United States except for Cooper, or to sell the said wax substitutes in the United States.
14. On occasion, Brice suggested to Cooper possible foreign ventures in sales of Corumbu waxes and several such transactions were successfully completed, Cooper furnishing the money for Intermediates, raw materials, and sharing in the profits, and on other occasions, Brice proposed foreign ventures which Cooper rejected as unattractive but gave Brice oral permission to proceed with on his own account.
15. Brice used his said processes to make, in the United States, Carnauba wax substitutes which he sold to Concord Export-Import Corporation of New York New York, for export for about $ 93,000. The name given by Brice to the said substitute, made for and sold to Concord, was Ceriod, but the product was substantially identical with and for the same purpose as one of the Corumbus, viz, for use in carbon paper.
16. The business prospered and Brice received about $ 75,000 in royalties between 1942 and the end of 1947, in addition to the rental of his plant and operating charges on material made for Cooper.
17. In 1946, Cooper had on hand, or had purchased in Brazil for delivery, about 100,000 pounds of Carnauba wax to be used in making the Brice substitutes. At the same time, the market became weak. They discussed the matter with Brice who stated that he could dispose of the Carnauba in foreign countries to better advantage than it could be disposed of on the American market. Brice stated that he could undertake to dispose of the Carnauba wax for the benefit of the business, and that he would complete the transactions in the Carnauba surplus without profit to himself. Brice showed plaintiff documents concerning a proposed sale in Canada, plaintiff shipped Carnauba to Brice to fill the order, and later Brice reported that he had completed this Canadian transaction and collected the money, and he paid Cooper for that lot of wax.
18. Thereafter, Brice alleged negotiations in England and France and several lots were shipped by plaintiff to defendant, allegedly disposed of by him to his foreign customers, the money collected and Cooper was paid.
19. The defendant represented to plaintiff that he knew a French purchaser who had funds currently deposited and readily available in the United States, and that such funds could be used for the purchase of plaintiff's Carnauba wax and that payment would be made in 10 days after delivery and shipping documents were presented. Each of the shipments in the 77,000 pounds ...