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June 15, 1965

Eugene A. MAGID

The opinion of the court was delivered by: WOOD

This is an action for a permanent injunction to determine whether the plaintiff, a family-owned corporation, has an ownership interest in the inventions or discoveries of the defendant, a member of the family, and a former employee of the plaintiff corporation.

On January 26, 1965, we granted the plaintiff's motion for a preliminary injunction conditioned upon the payment of $ 1,500.00 per month to the defendant until a final hearing. *fn1" The plaintiff declined to pay this sum, *fn2" consequently the injunction was never utilized. A final hearing was held from March 15 through March 18, 1965, and the parties were given additional time to submit suggested findings of fact and conclusions of law with an argument held on June 7, 1965.

 In limine, it is important to a clear understanding of this case to describe the kindred relationship of the various parties involved. It is manifest from the record that ties of blood dominated the daily operations of the plaintiff company.

 David B. Magid (D. B. Magid) is the father of the defendant, Eugene A. Magid. From 1955 to March 15, 1961, D. B. Magid was the principal and only shareholder of the plaintiff corporation. Eugene A. Magid was President of Wellington Print Works, Inc., (Wellington) from 1955 until March 15, 1961, and D. B. Magid was Secretary-Treasurer during this period.

 On March 15, 1961, D. B. Magid became President of Wellington; Eugene was appointed Treasurer, and a younger brother, Robert P. Magid, became Secretary. This arrangement continued until March 21, 1962.

 From 1955 until March 15, 1961, D. B. Magid owned 60% Of the voting stock of Hartford Textile Corporation, (Hartford) also a family-owned company. The remaining 40% Of the voting stock was evenly distributed among Eugene A. Magid, Robert P. Magid, Sidney H. Magid, and Rhoda Feldman, all children of D. B. Magid. During this period, Robert P. Magid was President of Hartford and Eugene A. Magid, Vice President, and Sidney H. Magid, Secretary-Treasurer.

 Hartford is engaged in the business of converting textiles. It purchases raw materials in web form from a mill and forwards such materials to Wellington for processing. This processing consists of printing, embossing and laminating materials, such as plastic, on a service basis for Hartford. Following this operation Hartford markets and promotes the finished products.

 On March 15, 1961, D. B. Magid entered into an agreement with his son, Robert P. Magid, whereby D. B. Magid sold 97 1/2% Of his shares in Wellington to Robert along with most of his shares in Hartford Textile Corporation, so that by January 2, 1962, Robert P. Magid was in control of both corporations. This transfer was not announced to other members of the family until June, 1962, and such transactions have precipitated another action in New York by members of the Magid family.

 Wellington had been acquired by D. B. Magid in 1949, and he sent the defendnat, Eugene A. Magid, to Wellington to be his 'eyes' to protect the family's interests. As previously stated, Eugene was President until 1961 with no definitely defined duties except to sign checks, audit purchase orders and settle labor disputes. On March 15, 1961, he was informed by a telephone call from a bank that his title had been changed from President to Treasurer. *fn3"

 While employed at Wellington Eugene A. Magid apparently accounted to no one except his father. He set his own hours, and no one restricted his activities in the plant. Although Eugene was not a technically trained person he began to experiment with techniques for superimposing patterns on particular materials, and also, the laminating of the materials themselves.

 During the year 1962, he began to devote considerable time to these experiments. Eugene submitted samples or 'patches' of his work to his brother Robert and M. Danson, sales manager of Hartford. He also prepared diagrams of his inventions which reflected Wellington's machines. He also used Wellington's equipment and personnel to conduct his experiments which interrupted the normal assembly line production of the company. *fn4" The time that he spent in these endeavors was not confined to the daylight hours alone, and he frequently ran samples on the machines during the two later shifts at the Wellington plant. *fn5"

 Initially, no one showed much interest in his samples until it became apparent that Eugene exhibited a natural talent in his inventive work. In fact, D. B. Magid expressed irritation when he was questioned by a son-in-law as to why Eugene was working such long hours. He said that if Eugene would stop playing around with the machines and do the work that he was supposed to perform, he could go home at a decent hour.

 Hundreds of samples produced by Eugene were sent to the sales manager of Hartford and many of the new patterns produced by Eugene were sold. Of these numerous samples five particular discoveries which are the subject matter of this suit created great interest in Robert P. Magid. These five inventions had been submitted to Wellington's patent attorney for an opinion as to their patentability. He ...

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