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PREIS v. EVERSHARP

July 23, 1957

Carl G. PREIS, Plaintiff,
v.
EVERSHARP, Inc., Defendant.



The opinion of the court was delivered by: RAYFIEL

RAYFIEL, District Judge.

The plaintiff, a former president of the defendant, sues to recover the sum of $39,930.56 which he claims is due him pursuant to an employment contract. The defendant alleges that the contract upon which the plaintiff relies is invalid for several reasons hereinafter stated, and, by way of counterclaim, seeks to compel the plaintiff to assign to it his interest in an application for letters patent on a new injector razor being manufactured by it.

 The facts, briefly, are these: From 1906 to 1950, when he retired, the plaintiff was in the employ of American Can Company, being Vice President, in charge of engineering, from 1944 to 1950. On July 27, 1944 he became a director of the defendant, a well-known manufacturer and distributor of mechanical pens and pencils, injector razors and blades. While a Director of the defendant, he served also as a momber of its Executive Committee, and, after that Committee had been abolished, as a member of its Finance Committee. On February 6, 1952 the plaintiff was elected President of the defendant at a salary of $50,000 per year. There was no formal written contract between the parties.

 Prior to his becoming President, the defendant's patent on the injector razor, which it had been manufacturing, had expired, and, because of the poor quality of the blades, their sales volume had declined, resulting in the loss of a substantial part of its blade market to competitors, particularly to the Pal Blade Company. Both the razors and the blades were manufactured for the defendant by American Chain and Cable Company of Bridgeport, Connecticut.

 After his election as President, the plaintiff established and successfully carried out a program to improve the quality of the razor blades. Later in 1952, he conferred with various employees of the defendant with a view toward developing a new injector razor which would correct some of the defects in the old one, the patent on which had expired. The chief defect lay in the inability to open the head of the razor to permit the cleaning of the blade, thereby preventing its clogging with soap. The plaintiff caused several models to be prepared, in which the heads could be opened, but they proved undesirable because the cleaning of blades would require manual handling, thereby creating a hazard to the user. The plaintiff then suggested to one Kuhnl, an inventor employed by American Chain and Cable Company, who had invented the original injector razor, that the blade could be held in pace by two pins, which would permit the head to be opened and allow the blade to float on the pins and thus be cleaned without the necessity of removal. Kuhnl experimented with this idea and finally, in March, 1953, developed a working model which accomplished this result. The application for the patent named both the plaintiff and Kuhnl as the inventors. However, Kuhnl had an agreement with his employer, American Chain and Cable Company, which provided that all inventions made by him on the razor would become the property of the defendant. Accordingly, he assigned his interest therein to the defendant.

 The plaintiff then sought and obtained from the defendant's Board of Directors authorization to expend the sum of $550,000 to tool up in preparation for the manufacture of the new razor, the actual cost of which was about $100,000 in excess of that amount. Then, early in 1954, the new razor was placed on the market, and was extensively advertised on a national scale by the defendant.

 On August 23, 1954 a meeting of the defendant's Board of Directors was held at which the plaintiff submitted his resignation as President. The minutes of that meeting disclose that a resolution was unanimously adopted by the Board, wherein the defendant agreed to pay to the plaintiff "as severance, the equivalent of his present salary for the remainder of this calendar year ($16,666.67), plus $25,000 payable in equal monthly instalments ($1736.11) over a period of twenty-four months (beginning September 1, 1954); * * *. It was understood that Mr. Preis was to be available for consultation with the new President (Mr. Fred J. Young) but that the severance payments were to be made even though he (Mr. Preis) became incapacitated so that he could not perform any consultative services or should die." (matter in parentheses added) (plaintiff's Exhibit 1.)

 The total amount to be paid to the plaintiff under the said resolution was $41,666.67. Only one payment of $1,736.11 was made thereunder. The evidence disclosed that after the plaintiff's resignation as President, demand was made upon him to assign his interest in the said patent application to the defendant. He refused, and the defendant discontinued further payments under the resolution. The plaintiff then commenced this action to recover the balance of $39,930.56.

 I shall first consider the defenses interposed by the defendant. They are as follows: 1. That the agreement sued under herein is void since it was not to be performed within one year, and there was no adequate note or memorandum thereof in writing, signed by the party to be charged thereby, or its agents. (Sec. 31, Sub. 1. New York Personal Property Law, McKinney's Consol.Laws, c. 41.)

 2. That since the said agreement was not to be performed within oen year, such note or memorandum thereof as there was was insufficient, inasmuch as it did not contain all of the substantial or material terms of the contract. (Sec. 31 of the New York Personal Property Law, McKinney's Consol.Laws, c. 41.)

 3. That there was no consideration for the agreement.

 4. That the agreement was ambiguous and vague, and, therefore, void.

 5. That the plaintiff's refusal to assign the patent application constituted a breach of his fiduciary duty to the defendant and that, therefore, he forfeited his right to receive payment thereunder.

 I find no merit in any of those defenses. The minutes of the meeting of August 23, 1954, signed by the Secretary of the defendant, are clear and unequivocal, and the agreement constituted thereby does not come within the Statute of Frauds. (Section 31 of the New York Personal Property Law, McKinney's Consol.Laws, c. 41.) In the case of Argus Co. v. Mayor, etc., of City of Albany, 55 N.Y. 495, at page 501, similar to the case at bar, the New York Court of Appeals said, "* * * and the minutes of the days doings of the body, being signed by the clerk thereof, there is a subscription of the note or memorandum made by the party, by its agent duly authorized. This is a satisfactory compliance with the statute. It meets the purpose and intention of the law, by providing an enduring and unchanging evidence of the agreement; and it meets its letter, for there is some note or memorandum of it in ...


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