Opinion
June, 1924.
Samuel D. Cohen, for the plaintiff.
Abraham Freedman, for the defendants Mollie and Robert Steinberg.
Alexander Holtzoff, for the defendant Ostroff.
Plaintiff conducted several shops in which he sold women's wearing apparel. His lease of the particular shop here in question expired on May 1, 1924. The business done in that shop had been highly and increasingly lucrative. During the winter of 1923-24 the plaintiff applied to his lessor, the defendant Ostroff (the lessee of the whole), for a renewal of the lease. He says he came to terms with Ostroff. I find that the negotiations had not reached that point, but that there is every reason to believe that a bargain eventually would have been struck had it not been for the faithlessness of plaintiff's sister and brother, who are the other defendants. The sister and brother were in plaintiff's employ, engaged solely to sell goods at the shop referred to. During plaintiff's absence from the city, in March, and without his knowledge, they successfully negotiated with Ostroff for a lease of the shop to the sister, the term to commence on May first, at the expiration of the lease held by plaintiff. The plaintiff brings this action to procure the relief that a court of equity customarily decrees in similar actions against disloyal trustees. The plaintiff endeavored to show that the sister and brother had been asked by plaintiff to aid him in procuring the renewal lease from Ostroff, thus seeking to turn the sister and brother into disloyal express agents. If his case were to depend upon a favorable finding upon that issue I should feel compelled to decide against him, as the evidence appears to me to be strongly against that contention. He stands in no need, however, of such a finding. It was of the essence of the duty of the sister and brother, as employees and servants of the plaintiff, to serve him faithfully in all matters that came within the scope of the service for which they were paid. A part of that duty was, quite obviously, to aid plaintiff in his endeavor to continue to carry on the business that gave them employment and which they knew to be highly profitable. Although, as against his lessor, plaintiff had no legal right to a renewal of the lease, as against all others he had that reasonable expectation of a renewal which "the law recognizes * * * as a valuable property right." Thayer v. Leggett, 229 N.Y. 152, 156. By their clandestine dealings with Ostroff, the sister and brother sought to make it impossible for plaintiff to make use of that property right, not, of course, to harm him, but to benefit themselves. Their act was in destruction of the very business they were paid to promote and advance. It is argued that as the sister and brother held merely subordinate positions that imposed no executive duties, they were not in situations that called for the sort or degree of trust and confidence upon which plaintiff must rely in order to succeed herein. I think the plain and simple answer is that they were no more at liberty to destroy the plaintiff's expectation of a renewal of his lease than they were to destroy the stockings and gloves and other articles they were employed to sell. Strangely enough, there does not appear to be any reported case in this state that touches such a situation, although the Illinois case, infra, was cited with approval in Thayer v. Leggett, supra. In Davis v. Hamlin, 108 Ill. 39, in Essex Trust Co. v. Enwright, 214 Mass. 507, and in Gower v. Andrew, 59 Cal. 119, it was held that an employee who, behind the back of his employer, took a lease of the place in which he was serving, must assign it to the employer upon the latter's demand. In the Davis case the disloyal employee was a manager. In the Essex case he was a newspaper reporter. In the Gower case he was a shipping clerk. I have no hesitancy in holding that the sister must assign the lease to plaintiff. Ostroff contends that as he was under no legal duty to give a renewal to plaintiff he was at complete liberty to deal with the sister, and that he cannot be compelled to accept plaintiff as his tenant. I am of the opinion that as he knew the sister was an employee of plaintiff, and as it must be presumed that he knew the law, he knowingly took part in her unlawful act, and is in no different situation from that of a seller who participates in the fraud of a faithless express agent by agreeing to transfer to the agent as an individual the title to a thing the agent was, to the knowledge of the seller, under the duty of purchasing for his principal. Submit findings on or before June twenty-first.
Judgment accordingly.