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Consolidated Fisheries Co. v. Consolidated Solubles Co.

Supreme Court of Delaware

August 19, 1953

CONSOLIDATED FISHERIES CO. et al.
v.
CONSOLIDATED SOLUBLES CO. et al.

Motion under Supreme Court rule 22(2) to review and vacate an order of Court of Chancery in and for Sussex County, staying an injunction pending an appeal. The Supreme Court, Southerland, C. J., held that where trial court found that defendants had breached contract with plaintiffs, that continued violation would result in irreparable injury to business and good will of plaintiffs, that plaintiffs' remedy at law was inadequate, and that defendants would not be seriously injured by the grant of temporary injunction, plaintiffs were entitled to temporary injunctive relief, and stay of injunction was erroneously granted.

Stay of injunction vacated.

Where trial court found that defendants had breached contract with plaintiffs, that continued breach would result in irreparable injury to business and good will of plaintiffs, that plaintiff's remedy at law was inadequate, and that defendants would not be seriously injured by the grant of temporary injunction, plaintiffs were entitled to temporary injunctive relief and stay of injunction pending appeal was erroneously granted.

Page 254

[34 Del.Ch. 25] Samuel R. Russell (of Tunnell & Tunnell), Georgetown, in support of the motion.

John Van Brunt, Jr. (of Killoran & Van Brunt), Wilmington, opposed.

SOUTHERLAND, C. J. and WOLCOTT, J., sitting.

SOUTHERLAND, Chief Justice.

A complaint for an accounting and for injunctive relief is pending in the court below. The dispute has arisen out of a contract dated April 6, 1951, between the Solubles Company (plaintiff) and the Fisheries Company (defendant) for the erection and operation of a plant for the processing of a product known as ‘ stickwater’ . The plant was erected on the premises of the Fisheries Company but is the property of the Solubles Company. The contract appears to be one of joint adventure. It provides that the defendant shall operate the plant and shall be paid by the plaintiff for the cost of such operation. Defendant is to sell the product for the account and in the name of plaintiff. This latter provision had not been carried out in practice. Net profits are to be shared in a specified ratio.

After the accounting issues had been heard, plaintiff moved for a preliminary injunction restraining defendant from selling the product and dealing with the proceeds of sales otherwise than is provided in the contract. The Vice Chancellor heard the motion and on July 7 filed a memorandum opinion sustaining the right to injunctive relief. A motion for re-argument was denied on July 17 and the injunctive [34 Del.Ch. 26] order was entered July 21. Thereupon defendant appealed and moved in the court below for a stay. On July 27, 1953, the Vice Chancellor granted the stay upon certain conditions. Plaintiff then moved in this Court to review and vacate the stay order. The motion was heard by the Chief Justice and Associate Justice Wolcott and the stay order was vacated. This opinion states the reasons for the action.

The injunction granted by the court below restrains defendant from selling the product produced in the plant other than as the agent for and in the name of plaintiff, and from applying the receipts from the sales other than to the bank account of plaintiff. This is in accordance with the contract provisions. The continued effect of the order is conditioned upon performance by plaintiff of its contract obligation to reimburse defendant for the cost of operating the plant. Security in the sum of $25,000 is required.

The Vice Chancellor's memorandum opinions disclosed that the conclusions of law and findings of fact upon which his decision was based were in effect as follows:

1. The validity of the contract was not disputed, and the acts of the Fisheries Company constituted a continuing breach of that contract and the violation by an agent of its duty to its principal.

2. The continued violation of the contract would result in irreparable injury to the business and good will of the Solubles Company, the remedy at law being inadequate.

Page 255

3. No serious injury to the Fisheries Company would flow from the granting of the ...


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