Caseflicks

Court of Appeals for the Second Circuit • 1946

Matarese v. Moore-McCormack Lines, Inc.

158 F.2d 631 | 170 A.L.R. 440 | 1946 U.S. App. LEXIS 3219

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Takeaway

In short, a company that knowingly takes and uses an employee’s concrete invention may owe its reasonable value even when an alleged payment agreement cannot be enforced.

Background

Matarese, a stevedore, showed his pier supervisor, Furey, models of cargo-loading devices he had invented. According to Matarese, Furey promised him a share of the resulting savings. Matarese then helped build the devices with company materials, and the defendants used them extensively, but paid him nothing beyond his wages.

Matarese sued on the alleged promise, then pursued recovery for unjust enrichment when he could not prove that Furey had authority to make that contract. A jury awarded him $90,000. The district court reduced the award to $40,000 with Matarese’s consent, entered judgment, and the defendants appealed.

Issues

Issue #1

Whether a company that knowingly uses an employee’s disclosed inventions must pay for their use when the employee cannot prove an enforceable promise to pay.

Holding

Yes. The defendants could be required to pay the reasonable value of the inventions’ use and Matarese’s services under unjust-enrichment principles.

Reasoning

Unjust enrichment applies even without a legally binding contract when one party receives a benefit that, in good conscience, it should not keep without payment. The failure to prove Furey’s authority to promise a share of savings therefore did not end Matarese’s claim.

This was not a claim based on a vague suggestion later resembling a company practice. Matarese demonstrated specific devices; Furey sought the demonstration and allegedly promised payment; and the defendants subsequently put the devices to extensive use. Those circumstances supported both Matarese’s expectation of compensation and the conclusion that the defendants received a valuable benefit from his work.

The evidence also permitted the jury to find knowing corporate use. Matarese built devices with company labor and materials, demonstrated them to pier officials, and received written production directions from Furey. Furey later held a senior operations position, and another executive regularly visited the pier while the devices were in use. Furey’s unproven authority to make the alleged contract did not prevent the company from being liable for benefits it knowingly accepted.

Issue #2

Whether the evidence supported the $40,000 award despite uncertainty about the defendants’ costs of producing the devices.

Holding

Yes. The jury could reasonably determine the value of the benefit from the evidence of substantial savings, even though the precise net amount was uncertain.

Reasoning

The proper measure was the reasonable value of the devices’ use and Matarese’s services, not the one-third share allegedly promised by Furey. Evidence that the devices reduced labor, handling, damage, and other operating costs gave the jury a basis for valuing that benefit.

Uncertainty about the amount does not defeat recovery when the fact of a substantial benefit is established. The defendants held the records that could have shown production costs more precisely but did not offer them. Given the evidence of savings across multiple piers and years, the reduced $40,000 award was not excessive.