Schaefer v. Spence
813 S.W.2d 92, 1991 WL 119666, 1991 Mo. App. LEXIS 1068 (1991)
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Rule of Law:
Under Missouri law, the tort of conversion applies to the wrongful possession of tangible personal property or intangible rights merged in a document, but it does not extend to the appropriation of a purely intangible idea, such as a secret formula.
Facts:
- George Schaefer, a cook, developed a secret barbeque sauce recipe over a period of 30 years and took great pains to protect the secrecy of its spice blend.
- Schaefer formed a corporation, Schaefer’s Gourmet, Inc., with John and Betty Spence to produce and market the sauce.
- Schaefer contracted with a company, Spicecraft, to blend the spices on a large scale after obtaining a nondisclosure letter addressed to him personally.
- Schaefer and the Spences terminated their business relationship through a contract that granted the Spences a 90-day option to purchase the recipe for $50,000 by giving Schaefer 'written notification'.
- The Spences did not exercise the option according to its terms within the 90-day period.
- After the option period, the Spences contacted Spicecraft directly and obtained a copy of Schaefer's secret spice formula.
- The Spences attempted, but failed, to duplicate Schaefer’s sauce using the formula they obtained.
Procedural Posture:
- George Schaefer filed a lawsuit against John and Betty Spence in the trial court.
- Schaefer's petition alleged breach of contract, conversion, and fraud.
- Following a bench trial, the trial court entered a judgment in favor of the Spences, denying recovery to Schaefer.
- Schaefer, as the appellant, appealed the trial court's judgment to the Missouri Court of Appeals, the state's intermediate appellate court.
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Issue:
Is a secret spice formula a species of property susceptible to a claim of conversion when an unauthorized party obtains a copy of the formula without depriving the owner of the original information?
Opinions:
Majority - Shrum, J.
No, a secret spice formula is not property that can be the subject of a conversion claim. Conversion is an intentional exercise of dominion over a chattel that seriously interferes with another's right to control it. The law of conversion has expanded beyond purely tangible property but does not lie for the appropriation of a mere idea. In this case, the Spences obtained a copy of the formula from Spicecraft, but Schaefer retained the same information. This act did not deprive Schaefer of possession or use of his formula, which is a key element of conversion. The court concluded that other legal remedies, such as those for unfair competition, are better suited to protect intangible values like a formula from being misappropriated.
Analysis:
This decision clarifies the boundaries of the tort of conversion in Missouri, establishing that purely intangible intellectual property, like a trade secret formula, is not subject to a conversion claim. The court's reasoning reinforces the distinction between interference with possession of tangible property and the mere copying of information. This holding forces plaintiffs whose intangible ideas are misappropriated to seek remedies under other legal theories, such as trade secret law or unfair competition, which have different elements of proof. The case signals a judicial reluctance to expand traditional common law torts to cover harms for which more specific statutory or common law protections exist.
