Summary
In Peerless PatternCo. v. Pictorial Review Co., 147 App. Div. 715, [132 N.Y. Supp. 37], injunctive relief restraining the manager of a rival firm from soliciting or filling orders from plaintiff's customers was expressly denied. The court remarked: "All that clearly appears is that he undertook to use in his new employment the knowledge he had acquired in the old.
Summary of this case from New Method Laundry Co. v. John W. MacCannOpinion
December 1, 1911.
Hugh H. Ritterbusch, for the appellant.
Noah A. Stancliffe, for the respondent.
This is an appeal from an order granting an injunction pendente lite restraining the defendant from interfering with plaintiff's business. The plaintiff and the defendant, The Pictorial Review Company, are both engaged in the business of selling paper patterns. The rivalry between them is evidently very keen, and the business seems to be conducted by both upon substantially the same lines. The method is to employ travelers who solicit contracts from storekeepers throughout the country. Plaintiff's contracts provide for the periodical shipment of patterns at an agreed price, with appropriate provision for the return and replacement of those which the merchant has been unable to sell. The contracts are made for fixed periods, with the privilege to either party to cancel on thirty days' notice. Plaintiff keeps a card catalogue of the parties with whom it has contracts, together with certain particulars concerning the contents of each contract.
Prior to March, 1911, defendant Dunigan was in plaintiff's employ as sales manager, and in this capacity naturally acquired knowledge of plaintiff's business, including the matters shown by the aforesaid card catalogue. There is a dispute as to whether or not this card catalogue was kept as a secret and confidential record. Plaintiff avers that it was. Dunigan says that it was not but was always open to the clerks and employees. In March, 1911, Dunigan left plaintiff's employ and entered the employ of the defendant Pictorial Review Company, by whom he was employed as a traveler. It does not appear that said review company did anything to induce Dunigan to leave plaintiff's employ, but as soon as he had entered into the employ of the review company a vigorous effort was made to divert plaintiff's trade to defendant. One of the means employed to this end was an attempt to induce those with whom plaintiff had contracts to break or cancel such contracts. In pursuance of this attempt there was sent to a number of plaintiff's customers a letter signed by Dunigan, but in the name of the defendant review company and upon its letter heads, advising those to whom it was addressed at once to cancel the contracts with plaintiff and to enter into a contract with the defendant review company. These letters evidenced a knowledge of the contracts with plaintiff which could only have been obtained by Dunigan while in plaintiff's employ. It is also in evidence, but denied by Dunigan, that in his efforts to induce plaintiff's customers to break their contracts he made unfounded statements respecting the impending insolvency of plaintiff, and offered to defend the customer in any action that plaintiff might bring. The first clause of the order appealed from restrains the defendant and its officers, agents and employees "from interfering with the trade, custom and good will of the plaintiff's business, and from making use of the knowledge or information gained from or contained in plaintiff's original compilation or collection of names and addresses of the merchants with whom plaintiff has contracts for the sale and distribution of the patterns and publications manufactured and sold by plaintiff." We do not think that the case made by the motion papers is sufficiently strong to warrant an injunction pendente lite to the extent above quoted. What the evidence on the trial may develop, we cannot say. But as the matter comes before us, it does not clearly appear that defendant is making use of information acquired by Dunigan in confidence while in plaintiff's employ. It is not charged that he made out or copied any lists of customers. All that clearly appears is that he undertook to use in his new employment the knowledge he had acquired in the old. This, if it involves no breach of confidence, is not unlawful, for equity has no power to compel a man who changes employers to wipe clean the slate of his memory.
The second clause of the order restrains the defendant, its officers, agents and employees, "from canvassing, soliciting, accepting or filling orders for goods similar in kind to those manufactured, distributed or sold by the plaintiff, from the persons, firms or corporations with whom plaintiff on March 7th, 1911, had contracts for the distribution or sale of its patterns and publications, and from canvassing, soliciting or accepting contracts from, or making contracts with any such person, firm or corporation prior to the time when plaintiff's several contracts with such persons, firms, or corporations, shall by their terms terminate." This is entirely too broad. There is no such relation between plaintiff and defendant as to render it unlawful or inequitable for the defendant review company to enter into competition with plaintiff, even for the business of those who had formerly been plaintiff's customers, providing such competition is fairly and legally conducted.
The third clause of the order appealed from restrains the defendant, its officers, agents and employees: "From endeavoring to induce or inducing by personal solicitation, by circular or by other letters or writings, or by promises or agreements to indemnify the said persons, firms or corporations against loss or liability or otherwise, the persons, firms or corporations with whom the plaintiff on March 7th, 1911, had contracts for the sale or distribution of its patterns and publications, to discontinue in whole or in part the purchase, display or sale of plaintiff's patterns and publications, and from endeavoring to induce or inducing said persons, firms or corporations to sell or distribute either directly or indirectly patterns and publications or either of them made by any person, firm or corporation other than plaintiff." The evidence shows that all of plaintiff's contracts contained an optional thirty days' cancellation clause. If any merchant who had been a customer holding a contract on March 7, 1911, should without fraudulent or unfair inducement by defendant, voluntarily cancel his contract with plaintiff, defendant would have an undoubted right thereafter to enter into a contract with him. What the defendant may not do, and this the evidence tends to show it has done in some cases, is to seek, by false statements and unfair means, to induce plaintiff's customers to break or cancel their contracts. ( Rice v. Manley, 66 N.Y. 82; American Law Book Co. v. Thompson Co., 41 Misc. Rep. 396.) If defendant, by the use of fraudulent or illegal means, has induced, or shall hereafter induce, plaintiff's customers to break their contracts which but for defendant's interference they would have continued, plaintiff has a remedy by an action for damages. In such a case the basis for injunctive relief would be the inadequacy of the equitable remedy. We find nothing in the papers now before us to indicate that full indemnity may not be recovered at law. Of course it may appear differently upon the trial of the action, but dealing solely with the facts now presented we are of opinion that the plaintiff does not establish a case which justifies the court in exercising its discretionary power to issue an injunction pendente lite.
It follows that the order appealed from granting an injunction must be reversed, with ten dollars costs and disbursements, and the motion denied, with ten dollars costs, and the appeal from the order denying the motion to resettle dismissed.
INGRAHAM, P.J., LAUGHLIN, MILLER and DOWLING, JJ., concurred.
Order granting injunction reversed, with ten dollars costs and disbursements, and motion denied, with ten dollars costs, appeal from order denying motion to resettle dismissed.