Davies v. Racer — 55 N.Y. St. Rep. 191

Majority

p. 191

Alfred Davies et al, Resp’ts, v. Herman F. Racer, App’lt.

(Supreme Court, General Term, First Department,

Filed October 13, 1893.)

Headnote

1. Covenant—Restraint of trade.

An agreement by an employe upon entering into an employment to solicit orders for custom house brokers not to engage in similar business in the same city or within fifty miles thereof, nor to interfere with his employer’s customers, for twelve months after leaving the employment is not void as in restraint of trade.

2. Same—Consideration.

The fact of such employment is a sufficient consideration to support the covenant.

3. Same—Breach.

Proof that he went into similar business within the time and territory mentioned and had solicited custom from customers of his former employer, and that some of them had ceased dealing with such employers, although they alleged that they would have ceased dealing even if they had not been so solicited, is sufficient to justify an injunction to restrain further breaches of the covenant.

p. 192

Appeal from order continuing an injunction pendente lite.

The following is the opinion at special term":

W. P. Burr, for app’lt; H. H. Whitman, for resp’ts.

I see no reason for refusing to enforce the agreement of the defendant that he would not engage in the city of Hew York, or within 50 miles thereof, either directly or indirectly, in any similar business to that carried on by the plaintiffs, nor to interfere with any of the customers, directly or indirectly, for the space of 12 months after the termination of the agreement. It is conceded that the defendant was employed by the plaintiffs as a clerk to receive, influence, and procure orders and goods from shippers in Hew York city and elsewhere, and in consequence of such employment it was apparent that the defendant would obtain knowledge of the plaintiffs’ customers, and it certainly would seem to be entirely reasonable that the defendant would agree that he would not use such knowledge in any business carried on by him for a period of 12 months alter the termination of the employment. It is not claimed that the defendant was not, at the time he made the contract, of sufficient intelligence to understand what he was doing. The contract does not appear to be at all inequitable, but is reasonable for the proper protection of the plaintiffs’ business ; and the defendant cannot escape from the obligation created by the contract by saying he was told by the resident American partner that it was a matter of form. The contract is not in general restraint of trade, but it is simply to refrain from engaging in a certain business within a certain limited area, and is clearly valid. There was a substantial consideration in the employment of the defendant in such a position that he would necessarily obtain information as to the plaintiffs’ customers; and his agreement not to so act that such information could be used against the plaintiffs for a limited period after the termination of or his retirement from business relations with the plaintiffs was directly connected with the employment and the information he would receive under it. I think the defendant violated the covenant by entering into the service and employment of a firm that was a competitor of the plaintiffs in the business which was carried on at the time the agreement was made. He certainly, “ directly or indirectly,” has engaged in a similar business. The motion must, therefore, be granted, and the defendant enjoined from engaging in any business similar to that carried on by the plaintiffs at the time of the execution of the agreement, and from interfering with the customers of the plaintiffs either directly or indirectly; with ten dollars costs of this motion, to abide the event.

There seems to be little to add to the opinion rendered in the court below, but it may be necessary to notice one or two points which have been urged upon this appeal. It appears that on the 1st of June, 1887, the plaintiffs, who are engaged in the business of forwarding agents and customhouse brokers, entered into an agreement with the defendant, whereby said firm employed the defendant, as clerk, to receive, influence, and procure orders and goods from shippers in Hew York city

p. 193

and elsewhere, and to perform other duties, in consideration of a salary therein expressed. In and by said agreement the said defendant agreed not to engage in the city of Hew York,, or within fifty miles thereof, either directly or indirectly, in a similar business to that carried on by the plaintiffs, or to interfere with any of the plaintiffs’ customers, directly or indirectly, for the space of twelve months after the expiration of the agreement. Said agreement was continued in existence until on or about the 29th of December, 1892, when the defendant voluntarily left the plaintiffs’ employment, and engaged as a clerk with a firm in Hew York doing business similar to that of the plaintiffs, and, it is alleged, interfered with the customers of the plaintiffs by systematic solicitation of their business on behalf of said firm; and that such solicitation was in open violation of defendant’s said agreement. There was evidence tending to show the existence of this state of facts. But it is urged upon the part of the appellant that there was no evidence that the plaintiffs have suffered or will suffer such great or irreparable injury as will warrant the granting of this injunction. It is undoubtedly true that the evidence in this regard is slight, but there certainly is evidence from which the conclusion might be drawn that the plaintiffs may suffer injury from the actions of the defendant. It appears beyond contradiction that he is soliciting custom from those who have been accustomed to deal with the plaintiffs, and that some of these customers have ceased dealing with the plaintiffs, although they allege they would have ceased dealing with the plaintiffs even though the defendant had not solicited the change. It is naturally difficult to establish the effect of the mental operations which have brought about the change in the action of these customers, but it is apparent that there has been a plain and willful violation upon the part of the defendant of the covenants contained in his agreement; and it requires but slight evidence of injury to justify the court in restraining such acts, it being apparent that it is impossible to calculate what may be the results of such action.

It is also urged that the covenant is in restraint of trade, and was not supported by a good consideration, and unreasonable in view of the circumstances disclosed, and therefore void. As to the agreement being in restraint of trade, it seems to be difficult to support any such proposition in view of the principles enunciated by the court of appeals in the case of Diamond Match Co. v. Roeber, 106 N. Y., 473 ; 11 St. Rep., 47 , where a very much broader contract was enforced. As to the want of consideration, the fact of the employment was sufficient consideration. It enabled the defendant to become familiar with the customers and .the trade of the plaintiffs, and they had a right to protect themselves by such a covenant against such knowledge being used to their disadvantage. As to the policy of the law being against the restraint of clerks, mechanics and apprentices from pursuing their profession or employment in any particular place, it seems to be sufficient to say that no rule laid down in

p. 194

this state has been called to our attention which in any way militates against the validity or propriety of such an agreement as forms the subject-matter of this action.

We think, therefore, thatthe order should be affirmed, with ten dollars costs and disbursements.

Follett and Parker, JJ., concur.