Opinion
11-29-1913
HUSSONG DYEING MACH. CO. v. MORRIS.
French & Richards, of Camden, for complainant. W. Holt Apgar, of Trenton, for defendant.
Suit by the Hussong Dyeing Machine Company against William McK. Morris. Rule to show cause why preliminary injunction should not he granted. Writ allowed.
French & Richards, of Camden, for complainant.
W. Holt Apgar, of Trenton, for defendant.
LEAMING, V. C. (orally): I think there is little doubt touching the duty of the court, and I will not give the case further consideration unless counsel have in mind some authorities that they desire to cite.
It is undoubtedly true, as suggested by defendant, that the danger of irreparable injury may be said to constitute the foundation of a great part of equitable jurisdiction, and especially that part of equitable jurisdiction calling for relief by way of injunction,either pendente lite or perpetual; but it is not the sole ground of equitable jurisdiction by any means. Where, as here, a trust is involved and the suit is for the purpose of preserving for the benefit of the cestui que trust the existence of property rights which have arisen through and by reason of the trust or its breach, it is no answer to a bill seeking the enforcement or preservation of those property rights, with a view of preserving the corpus in which the rights exist, that adequate money damages might be recovered against the defendant for a breach of his trust. Trusts are enforced, and trust rights are established and preserved without reference to the possibility of a money judgment in an action for damages affording a measure of compensation for threatened injuries. I recall both of the cases which counsel has cited. One of them (Burrell v. Middleton, 72 N.J.Eq. 774, 65 Atl. 978), is a decision of my own, afterwards affirmed by the court of errors, the other an opinion written by Justice Trenchard. There is nothing, I think, in either of the cases which can justify the conclusion that in a case of this nature equity will not interfere to preserve for the cestui que trust property rights which have arisen under the trust, merely because it may be possible for the cestui que trust to recover damages of the trustee for breach of his trust.
The principle is undoubtedly permanently fixed in our system of jurisprudence that where a trustee acquires information through the medium of his trust that enables him to acquire valuable property rights that are antagonistic to the interests of the cestui que trust whom he represents, a court of equity should restrain him from reaping personal benefits from such conduct, and should also appropriate to and for the benefit of the cestui que trust any values or rights that have arisen in that manner. It was not lawfully possible for the defendant, while a director and treasurer of complainant corporation, to enter into an opposition business in his own behalf of such a nature that it would cripple or injure the corporation that he represented, and the instruments he has acquired for that purpose can be impounded for the benefit of the corporation, and the contract he has entered into to acquire property rights in those instruments can be, by a court of equity, on equitable terms, appropriated for the use of the corporation he represents.
I entertain no doubt whatever that the proper order to make in this case at this time is to grant a preliminary injunction, an injunction pendente lite, against the transfer by defendant of the interest or option right he has acquired. To that the defendant does not seem to now seriously object. The order, I think, should also include either a requirement that the defendant acquaint the complainant with the number of the patent application, so that the complainant can be apprised of the time when the patent is granted in order that its rights may then be promptly asserted, or a requirement that the defendant apprise the complainant promptly when the patent is granted so that the 30-day period during which the option must be exercised under the contract can be utilized by the complainant corporation. It is quite possible, and, indeed, probable, that before that period has arrived a final hearing in this suit will be had, and in that case the entire matter will be disposed of and the rights of the parties fully settled. In that event it may become necessary for complainant corporation to determine whether it will advance the necessary money to utilize this option in its own behalf, should it be found that it will be privileged to do so. Should the patent issue before final hearing is reached in the ordinary course, an earlier hearing can, if necessary, be had with a view of more fully examining the rights of the parties, and all the facts and circumstances surrounding the case, in order that a more intelligent adjudication can be made to answer the emergent condition which will then be presented. At present there is no emergent condition presented further than is suggested, namely, the necessity of preserving intact this option right, which matter involves no hardships to defendant.
I will at this time advise an order for an injunction pendente lite to the extent indicated; and, if the patent is granted before final hearing is reached in the ordinary course, I will grant a final hearing at once, in order that an adjudication may precede the expiration of the period named in the option. In that way the rights of all the parties will be preserved, and no one will be harmed.