Summary
In Hackett v. A.L. J.J. Reynolds Co., 30 Misc. Rep. 733, [62 N.Y. Supp. 1076], it was held that the knowledge acquired by the canvassing agent of a grocery company of the names and addresses of its customers is knowledge against the misuse of which equity will protect as being in the nature of a trade secret, the court there saying: "This knowledge was in the nature of a trade secret and was imparted to the plaintiff at the time he was employed by defendant, solely to enable him to profitably and intelligently attend to the business of the defendant."
Summary of this case from Empire Steam Laundry v. LozierOpinion
March, 1900.
Glover, Sweezy Glover, for appellant.
Wm. E. Cook, for respondent.
This action was brought by the plaintiff to recover the sum of $200, being the amount deposited by him with the defendant, upon entering its employ, as security on his part for the faithful performance of the terms and conditions of two written contracts, for the alleged breach of which the defendant had refused to refund the amount aforesaid, so deposited by the plaintiff.
Each of said contracts contained the following clause: "That he (meaning the plaintiff) would not, within the period of six months after his employment by said company shall cease, directly or indirectly, engage in business in the city of New York, or at any point within a radius of ten miles from the city or county of New York, in competition with said company, either on his own account or as servant or employee of others." The contracts further provided that, in case of a violation by the plaintiff of those conditions, the amount aforesaid, so deposited, should be forfeited and adjudged to be liquidated damages and become the absolute property of the defendant. At the time the contracts were executed, the defendant was engaged in business as a wholesale dealer in butter, cheese and groceries, its sales being made, mainly, through the medium of salesmen, driving over established routes and supplying grocers doing business along the line of such routes. The plaintiff entered into the employ of the defendant in June, 1894, and continued to act as salesman, over the routes designated and among the customers supplied by the defendant, until September, 1898, when he was discharged, for what reason does not appear.
On the day following his discharge, he entered into the employ of a firm, the members of which were former employees of the defendant, by whom he was furnished with a horse and wagon, and with goods similar in character to those previously sold by him for the defendant, and, until the time of the trial of this action, he was engaged in daily driving over the same routes and endeavoring to sell goods to the same customers to whom he had sold while in the employ of the defendant; and he testified, upon the trial, that he had succeeded in retaining a portion of the trade that had previously been directed to and enjoyed by the defendant. It was also undisputed that the defendant had suffered material damages by reason of the sales so made by the plaintiff, contrary to the provisions of the contracts made by him. The plaintiff had a judgment in the trial court for the amount of his deposits, from which judgment the defendant appeals.
The respondent seeks to uphold the judgment, thus obtained, solely upon the ground that the provisions of the contracts made by the plaintiff are harsh, unreasonable and in restraint of trade, and therefore not enforcible. That position is untenable. The plaintiff voluntarily executed the contracts, with full knowledge of their conditions, and makes no claim that he was imposed upon in any way. As a condition of his employment, the defendant required that the plaintiff should agree to refrain from interfering with its business for a limited time and within a limited space, after he should leave the defendant's employ, and provided for the amount of damages that might result from a breach of such agreement. The value of the defendant's business consisted, not merely of the property invested and the goods sold by it, but as well, in the knowledge of the location of its routes and the names of the customers to whom it was accustomed to make sales. This knowledge was in the nature of a trade secret and was imparted to the plaintiff at the time he was employed by the defendant, solely to enable him to profitably and intelligently attend to the business of the defendant. It was an essential condition of his engagement that he should not make use of such information, to the detriment of the defendant, for the space of six months and within the limits of ten miles of the county of New York, under the penalty of the forfeiture of the amount of his deposits. These terms and conditions were not harsh and unreasonable, and the courts have frequently held that contracts containing provisions of a similar character and import violate no rule of public policy. Stanley v. Pollard, 5 Misc. 490-492; A.L. J.J. Reynolds Co. v. Dreyer, 12 id. 368; Davies v. Racer, 25 N.Y.S. 293; Tode v. Gross, 127 N.Y. 480; Diamond Match Co. v. Roeber, 106 id. 473.
As a new trial must therefore be ordered herein, the other reasons urged by the appellant as grounds for a reversal of the judgment need not be considered.
MacLEAN and LEVENTRITT, JJ., concur.
Judgment reversed and new trial ordered, with costs to appellant to abide event.