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RICE RESEARCHERS, INC. AND FIDELITY & DEPOSIT COMPANY OF MARYLAND v. RICHARD B. HITER

SEPTEMBER 02, 1987

RICE RESEARCHERS, INC. AND FIDELITY & DEPOSIT COMPANY OF MARYLAND
v.
RICHARD B. HITER, LOYD H. CANADY, ARTHUR HUGHES WILLIAMS AND BARTON WILLIAMS



BEFORE WALKER, C.J.; ROBERTSON AND ANDERSON, JJ.

ROBERTSON, JUSTICE, FOR THE COURT:

I.

Today's appeal involves us in a charge of stealing rice. The alleged thief is not an ordinary thief, but a renowned and respected pioneer in the development of high quality and highly successful rice strands, who left his employer's service and was then accused of taking with him that which was not his.

 The Chancery Court granted the employer preliminary injunctive relief. In the end the Court held there was no theft at all. As the questions presented on this appeal are largely ones of fact, we decline to disturb that which was done below. We affirm.

 II.

 A.

 On September 10, 1984, Rice Researchers Inc. (hereafter "RRI"), a California corporation, filed in the Chancery Court of the First Judicial District of Bolivar County, Mississippi, an application for a Temporary Restraining Order, Preliminary Injunction, Permanent Injunction, and Appointment of Receiver. Named as Defendants were two Bolivar County farmers, Richard B. Hiter (hereafter "Hiter") and Loyd H. Canady (hereafter "Canady"). RRI alleged that Hiter and Canady, acting in concert with RRI's former research director, Arthur Hughes Williams (hereafter "Williams"), had wrongfully misappropriated and were then growing proprietary varieties of rice owned by RRI, including

 Kokuho Rose, a high quality strain of rice produced through costly genetic research. RRI sought to enjoin Hiter and Canady from harvesting, transferring and otherwise exploiting and profiting from Kokuho Rose rice and other rice then being grown in certain rice fields located east of Benoit, Mississippi.

 On the next day, September 11, 1984, the Chancery Court issued a Temporary Restraining Order enjoining Defendants Hiter and Canady from harvesting, marketing, transferring, removing or in any manner handling or continuing rice farming operations with respect to Kokuho Rose rice and other experimental varieties of rice growing upon certain rice fields east of Benoit. The Court set September 19, 1984, as the date for a hearing on RRI's application for a preliminary injunction and an appointment of a receiver.

 On September 20, 1984, the Chancery Court issued the preliminary injunction requested by RRI and set the cause for hearing on the merits. Thereafter, RRI filed an amended complaint and amended application for permanent injunction, bringing in as additional parties RRI's former research director, Arthur Hughes Williams, and his son, Barton Grant Williams (hereafter "Barton"). Subsequently on January 9, 1985, the hearing on the merits began.

 On March 12, 1985, the Chancery Court released Findings of Fact and Conclusions of Law holding in favor of the Defendants, Hiter, Canady and the Williamses. Following a hearing to determine damages, the Court entered its Final Judgment dated March 27, 1985. In its Final Judgment, the Court ratified its original Findings of Fact and Conclusions of Law and incorporated them into the Final Judgment with only minor modifications. However, the Court denied RRI's motion to amend the original Findings of Fact and Conclusions of Law.

 In its Final Judgment, the Court dismissed RRI's complaint as amended, with prejudice; dissolved the temporary restraining order and preliminary injunction; permanently enjoined RRI and its officers, agents, servants, employees and attorneys and others in active concert with them having actual notice of the Judgment from prosecuting any claim within the ambit of the complaint in that cause against Williams, Barton or any others acting in concert with them; and took under advisement the amount of damages suffered by the Defendants and the amount of attorneys fees and expenses to be allowed. Thereafter, the Court issued an order awarding the Defendants damages and denying stay pending appeal. *fn1

 B.

 Beneath the plethora of facts and testimony, charges and

 countercharges, this lawsuit boils down to a rather simple dispute. Rice Researchers, Inc. (RRI) claims that Arthur Hughes Williams stole protected varieties of rice seed from RRI and later planted these on the E. M. Barry Place near Benoit, Mississippi, planning to sell rice harvested from such planting. Williams, on the other hand, admits planting seed rice on the Barry Place but says he did not steal it. Williams contends that such rice was obtained via hand-harvesting another rice field and rice abandoned by RRI upon the closing of its research operation in Mississippi at the end of 1982. The Chancery Court found for Williams, and RRI appeals. Because this simple suit should not be dispatched so simply, we will review the facts in more detail.

 RRI is a California corporation engaged in the business of conducting research and developing various types of strains of rice. Arthur Hughes Williams is a renowned rice breeder, having developed a highly successful, high quality rice known as Kokuho Rose rice. When Williams originally developed Kokuho Rose, he and Koda Farms owned it. In January, 1968, Williams transferred to RRI all of his right, title and interest in Kokuho Rose together with other proprietary information and research. In October, 1968, RRI entered into a joint venture agreement with Pacific International Rice Mills, Inc. (hereafter PIRMI) and Nomura and Company (hereafter Nomura) for the orderly production and marketing of Kokuho Rose. RRI was responsible for seed varieties production and maintenance, PIRMI was responsible for production and Nomura was responsible for marketing.

 In November, 1968, Williams entered into an employment agreement with RRI, and in June, 1973, RRI and Williams executed a second employment agreement. In both employment agreements Williams agreed to refrain from disclosing to third persons any matters affecting or relating to the business of RRI. Further, the employment agreements provided that all ideas, improvements or other developments conceived by Williams within the scope of RRI's business were the exclusive property of RRI.

 In August, 1973, PIRMI and Nomura each bought fifty percent of RRI. Williams continued to work under essentially the same employment agreement as he did prior to the sale.

 In October, 1978, PIRMI, Nomura and RRI entered into a second joint venture agreement with all terms essentially the same as in the first, although at this time RRI was completely owned by PIRMI and Nomura. Koda Farms, however, continued to own the trademark "Kokuho Rose" as a result of the previous agreement between Koda Farms and Williams. Koda Farms had

 given Nomura exclusive rights to use the Kokuho trademark in the marketing, distribution and sale of Kokuho Rose rice.

 In 1980, RRI established a research station on a 149.5 acre tract leased from Dahomey Plantation near Benoit, Mississippi. RRI planned to carry out research activities in conjunction with its previously established research station in California. Williams agreed to move from RRI's research station in California, where he served as Research Director, to the newly established research station in Mississippi, where he continued to serve as Research Director. Williams was assisted by Dr. Lorenzo Pope, a plant breeder with RRI since 1975, in coordinating the research efforts between the California and Mississippi research stations.

 Williams served as Research Director of the Mississippi facility until the end of 1982. On December 17, 1982, as a result of his disagreement with the corporate decision to sell PIRMI to Comet Rice Mills, Williams resigned effective December 31, 1982. Dr. Lorenzo Pope was named Williams' successor as Research Director at the Mississippi facility.

 Only after Williams severed his relationship with RRI did the seeds so planted germinate into the present controversy. *fn2 RRI's version of the story is that Williams, acting in concert with Hiter and Canady, the two Bolivar County rice farmers, grew protected varieties of rice on the E. M. Barry place in 1984. Specifically, RRI alleges that Williams grew Kokuho Rose rice and a particular strain of rice designated by the number 75-30-1. RRI alleges that these strains of rice were protected varieties owned by RRI and that Williams stole and planted them.

 RRI points to several instances of testimony in evidence which it contends support its version of the story. Specifically, RRI alleges that before his termination with the company, Williams contacted Japan Foods Corporation proposing to enter into a joint venture with that company to produce, sell and market Kokuho Rose varieties of rice to be grown by Williams in Mississippi. RRI also points to the testimony of Carlton Bruce and Ren Fairbanks, both contract growers for RRI, alleging that Williams contacted them in May, 1983, requesting that they ship him Kokuho Rose rice seed. RRI also points to the testimony of Buddy Stanford, a rice farmer in Bolivar County, asserting that Williams held a meeting in which he sought growers for a medium-grain rice, specifically Kokuho Rose. RRI refers to Williams' field nursery book and increase notes made during the 1983 growing season, contending that these documents indicate that Williams grew Kokuho Rose and other proprietary varieties on the Barry Place in 1984.

 RRI also refers to testimony indicating that Williams stored rice seed in a local storage facility in Bolivar County in 1983. And, finally, RRI alleged that in May, 1983, Williams and his son, Barton, made a trip to California where they stole Kokuho Rose seed from a farm operated by the Church of Latter Day Saints (L.D.S.), a contract grower for RRI.

 Dr. Lorenzo Pope was RRI's main witness at both the hearing on the preliminary injunction and the hearing on the merits. RRI called several other witnesses to buttress the above charges and to prove additional facts. RRI attempted through several witnesses to disprove Williams' claim that the source of part of the rice planted on the Barry tract was hand-harvested rice from a nearby field. RRI also sought to establish that Kokuho Rose was indeed a proprietary variety of rice, and not just a brand name.

 Williams denies that he stole any proprietary strains of rice or anything else that belonged to RRI. He insists that the rice grown on the Barry Place in 1984 was hand-harvested from a nearby field and obtained from rice abandoned by RRI when RRI closed its research facility in Mississippi, and that the evidence and testimony in the record abundantly establish these facts. Specifically, Williams testified that no Kukuho Rose or 75-30-1 variety of rice was planted on the Barry Place in 1984. He testified that he did plant Kokuho Rose and 75-30-1 varieties for experimental purposes in 1983, but he planted none in 1984 as he had destroyed all that was planted in 1983. Williams pointed to the testimony of co-defendants Richard Hiter and his son, Barton, as supporting his contention that rice planted on the Barry tract consisted of part of hand-harvested rice and rice abandoned by RRI. Williams testified that he was in Africa during the planting season of 1984 and did not plant any rice. He acknowledges, however, that he assisted Hiter and Canady in planting the Barry tract by providing a planting plan to Canady and providing rice for them.

 Williams admits other facts charged by RRI but offers exonerating explanations. Specifically, Williams admitted calling Carlton Bruce and Ren Fairbanks and asking about Kokuho Rose rice but said that he made the calls because a friend of his was interested in obtaining Kokuho Rose. Williams did contact officials of Japan Foods Corporation but denied asking them about the possibility of a joint venture involving Kokuho Rose. He met with Delta farmers about growing medium-grain rice but never mentioned Kokuho Rose. As to the field nursery book and ...


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