Summary
In Golden Cruller Co. v. Manasher, supra, Vice-Chancellor Bentley held that the rule of Stone v. Grasselli extended to any information obtained by an employe in a confidential manner, and that there was no distinction between trade secrets respecting secret formulae or designs and other confidential trade information.
Summary of this case from Maas & Waldstein Co. v. WalkerOpinion
No. 54/539.
12-20-1923
GOLDEN CRULLER & DOUGHNUT CO., Inc. v. MANASHER et al.
Daniel D. Loeb, of Jersey City (Harry Lane, of Jersey City, of counsel), for complainant. Fredman & Fredman, of Jersey City, for defendants.
Bill by the Golden Cruller & Doughnut Company, Inc., against Solomon Manasher and another, to enjoin breach of contract. Injunction granted.
Daniel D. Loeb, of Jersey City (Harry Lane, of Jersey City, of counsel), for complainant.
Fredman & Fredman, of Jersey City, for defendants.
BENTLE, V. C. This is a bill to enjoin a breach of contract filed by an employer against two former employees.
The defendants are, or were, employees of the complainant, one being engaged in selling and delivering its products to its customers, while the other was employed in the plant of the company, whereby each of them learned much of the company's business, its methods, and the names of addresses of its customers. One of the defendants, Manasher, entered into a written engagement upon being employed wherein, among other things, he agreed:
"Not to take the agency for or sell crullers or doughnuts, pastry, bread, etc., that may be furnished me by any other baker, without first obtaining the written consent of the said party of the first part; and that I will do all in my power to build up and extend the deliveries of this route; also not sell or turn over the list of customers on my route to any other party, without first obtaining the written consent of said Golden Cruller & Doughnut Company."
The bill then alleges that, in anticipation of opening up a competing business with that of the complainants, Manasher has taken
advantage of his knowledge of the customers that he supplied, gone to the latter, and tried to prevail upon them to discontinue patronizing the complainant's business, and to purchase from the defendants instead, while both of the defendants have attempted to entice other employees of the complainant away from its service and into their own.
Upon the filing of the bill making the foregoing allegations, an order to show cause was made with ad interim restraint to prevent the defendants from carrying out the acts above outlined. On the return thereof, it is argued with regard to the defendant Cennon that he has never been served, and knows nothing about this proceeding. If that be so, of course he cannot be bound by what has not been brought to his attention. But there is sufficient proof before me to make it appear that he has been served, and what I shall say with regard to Manasher applies equally to him.
Counsel representing the defendants argues that there is a distinction between the present case and one where a trade secret is involved, such as a secret formula of manufacture, or secretly designed machinery, or something of that sort. I know of no such distinction, and I think that, clearly, any information obtained by an employee in a confidential manner is equally as sacred as such secrets I have just referred to. It is said in High on Injunctions (pages 26 and 27):
"The disclosure of secrets which have come to one's knowledge during the course of confidential employment will be restrained by injunction. * * * And in such case it is unnecessary that there should be an express covenant upon the part of the defendant not to disclose the secrets of plaintiff's business if such an agreement may fairly be implied from the circumstances of the case and the relation of the parties." Stone v. Grasselli Chem. Co., 65 N. J. Eq. 756, 55 Atl. 736, 63 L. R. A. 344, 103 Am. St. Rep. 794; Taylor, etc., v. Nichols, 73 N. J. Eq. 684, 69 Atl. 186, 24 Li R. A. (N. S.) 933, 133 Am. St. Rep. 753.
It seems to me that this is a typical or a classical instance for the intervention of this court by its right.
Counsel has also directed my attention to the cases of Mandeville v. Harman, 42 N. J. Eq. 185, 7 Atl. 37; Sternberg v. O'Brien, 48 N. J. Eq. 370, 22 Atl. 348; and Cosmos Dyeing & Printing Works v. Calderini et al., 91 N. J. Eq. 378, 111 Atl. 517. These apply to the entirely distinct question of an unreasonable contract in restraint of trade. They all contemplate contracts where the employee is deprived of the right of making a livelihood under any and all circumstances; whereas, the instant case deals with the effort to prevent an employee, not from entering into a competing business, but utilizing in that business the valuable list of customersthat the employer by his efforts and the expenditure of his capital has succeeded in getting together.
Were this a court of law, there might be some force to the argument that the allegations of the bill cannot be superimposed upon the conditions of the agreement that the defendant signed. But such an argument is not received in this court with any favor, and is never decisive, unless the strict legal rights of the defendant overcome the equity of the complainant's position.
It would be difficult for the defendants to preserve composure of their respective countenances were they to pretend that their agreement contemplated that, while they should not disclose the methods and customers of their employer to any other competitor, they might with perfect propriety appropriate to their own use, as competitors, the same information. The very statement of the fact carries with it its own answer. For what purpose, as a reasonable man, did the defendant Manasher think he was required to keep secret and employ only for the complainant's benefit the list of customers that was intrusted to him?
Nor is there any merit to the argument drawn from the case of the Citizens' Coach Co. v. Camden Horse Railroad Co., 29 N. J. Eq. 299, and Kearny v. Bayonne, 92 N. J. Eq. 627, 114 Atl. 550, namely, that a temporary injunction should not be granted when the right of the complainant depends upon an unsettled question of law. In this case the only question involved is whether or not men shall be held to fair dealing and a compliance with the valid contracts that they make.
I will advise an injunctive order.