Business Supplies Corp. of America v. Conole

41 Pa. D. & C.2d 101, 1966 Pa. Dist. & Cnty. Dec. LEXIS 166
CourtPennsylvania Court of Common Pleas, Monroe County
DecidedJanuary 11, 1966
Docketno. 244
StatusPublished

This text of 41 Pa. D. & C.2d 101 (Business Supplies Corp. of America v. Conole) is published on Counsel Stack Legal Research, covering Pennsylvania Court of Common Pleas, Monroe County primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Business Supplies Corp. of America v. Conole, 41 Pa. D. & C.2d 101, 1966 Pa. Dist. & Cnty. Dec. LEXIS 166 (Pa. Super. Ct. 1966).

Opinion

Davis, P. J.,

The instant complaint in equity involves one corporation and two individuals. Plaintiff, Business Supplies Corporation of [102]*102America, is a Massachusetts corporation qualified to do business in Pennsylvania. It is engaged in manufacturing and distributing business supplies of the type used in data processing, including tabulating cards. Plaintiff maintains general offices at Skytop, Pa., and manufacturing plants at Marietta, Ga., Holyoke, Mass, and Beltville, Md. Defendant, Richard C. Conole, was a director of plaintiff for several years prior to March 12, 1965, and also served in the capacities of either vice chairman of the board or president of the corporation, as well as vice president. His service as director was terminated on March 12, 1965, and his service as an officer of plaintiff was terminated March 13, 1965. John P. Langan is an individual who has been seeking to develop a process for manufacturing a type of aperture tabulating card adaptable to use in conjunction with microfilm. Up to the time when this complaint was filed, there had not been any contractual agreement between Langan and plaintiff corporation providing for the participation by the latter in the exploitation of the process.

The complaint avers that plaintiff, for more than one year, “has been engaged at its plant in Marietta, Georgia, in a program of research and development in collaboration with John P. Langan . . . for the development of Langan’s process to produce socalled ‘aperture’ tabulating cards, which cards can be used in conjunction with microfilm”; that it “has invested substantial amounts of time and money in support of said research, of a value in excess of $10,000”; that it “has conducted and is now [as of June 23, 1965, the date of execution of the complaint] conducting negotiations with Langan for the participation by plaintiff in the exploitation of Langan’s process for the production of aperture cards”; that defendant, during his period of service, had access to all the files and records of plaintiff corporation and was responsible for [103]*103the custody and maintenance of certain files; and, in particular, that defendant was one of the officers responsible for conducting correspondence and negotiations, and maintaining files relevant to the Langan project. Against the foregoing introductory background, the complaint sets forth two counts, the first dealing with the alleged improper retention of files and records by defendant, and the second dealing with defendant’s alleged negotiations with Langan.

In count no. 1, it is 'averred that “On or about January 8, 1965 [while Defendant was still an officer of Plaintiff Corporation], defendant directed an employee of BSC who was under his supervision and control to transport from the offices of BSC to the house occupied by defendant at Skytop, Pennsylvania two file cabinets of four drawers each; seven of said eight file drawers were stuffed with file folders and papers of a business nature and one drawer was half filled with such file folders and papers”; that, after notice to return this property to plaintiff, defendant has refused to do so; and that, although plaintiff has been unable to determine the contents of the two cabinets, it believes that they contain: the file relating to the Langan project, the file concerned with a “versitile” [sic] press in the Holyoke plant, the “General Envelope File”, containing cost data relevant to envelopes produced at the Holyoke and Beltville plants, a set of monthly performance reports for the use of plaintiff’s directors known as the “Blue Books”, and sets of weekly reports for the use of officers containing: (1) weekly sales reports, (2) weekly labor costs reports, and (3) weekly reports on paper inventory. In the prayer for relief, plaintiff has requested that the two cabinets and contents be impounded by the sheriff and that defendant be restrained from making copies of the contents and from disclosing to anyone, save counsel, any information contained therein. Apparently [104]*104through inadvertence, plaintiff has not requested return of the cabinets and their contents, but such relief, if warranted, will be available under the general request at the end of the complaint. By order of this court dated July 9, 1965, a preliminary injunction was awarded, directing the Sheriff of Monroe County to impound the two cabinets and contents and restraining defendant from making copies thereof or from disclosing to anyone, save counsel, any information contained therein.

Defendant has filed preliminary objections demurring to count no. 1. In support, counsel presents a line of reasoning which may be summarized as follows: (1) in the absence of any covenant by defendant not to compete or not to disclose corporate information, plaintiff is not entitled to a decree restraining such disclosure unless plaintiff can establish a confidential relationship between plaintiff and defendant, citing Spring Steels, Inc. v. Molloy, 400 Pa. 354 (1960); and Wexler v. Greenberg, 399 Pa. 569, 576 (1960); (2) whatever confidential relationship previously existed between the parties was brought to an end when plaintiff terminated defendant’s service as a director and as vice-chairman of the 'board, citing 3 Fletcher 'Cyclopedia, Private Corporations, §860; (3) the complaint fails to allege any wrongful act by defendant with relation to the corporate files, other than improper retention; (4) therefore, the only relief to which plaintiff is entitled is restoration of possession of the files, an objective which could be adequately attained by relegating plaintiff to an action at law for replevin.

The relation of directors and officers to a corporation is defined in the Business Corporation Law of May 5, 1933, P. L. 364, art. IV, sec. 408, 15 PS §2852-408:

“Officers and directors shall be deemed to stand in [105]*105a fiduciary relation to the corporation, and shall discharge the duties of their respective positions in good faith and with that diligence, care and skill ordinarily prudent men would exercise under similar circumstances in their personal business affairs”.

An officer whose service with a corporation has been terminated may compete with his former employer, in the absence of a restrictive covenant not to do so: Spring Steels, Inc. v. Molloy, supra. There, Peter Molloy had been vice-president of Spring Steels. On October 3, 1958, he left that company, took with him four key employes and became president of Industrial Spring Steel, Inc., which operated in competition with the former. Spring Steels brought an action in equity against Industrial Spring Steel and its five former employes, charging unfair competition and averring that the new company was using plaintiff’s customer list, making use of knowledge and skill obtained by two machinists while they had been employed by plaintiff, and operating a cutting and filing machine patterned after a similar machine used by plaintiff. The Supreme Court affirmed a decree dismissing the complaint, and Mr. Justice Musmanno quoted the language of Mr. Justice Hughes, drawn from the decision in Pittsburgh Cut Wire Company v. Sufrin, 350 Pa. 31, 35 (1944) :

“A man’s aptitude, his skill, his dexterity, his manual and mental ability, and such other subjective knowledge as he obtains while in the course of his employment, are not the property of his employer and the right to use and expand these powers remains his property unless curtailed through some restrictive covenant entered into with the employer: Williston on Contracts, sec. 1646, p. 4627”.

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Bluebook (online)
41 Pa. D. & C.2d 101, 1966 Pa. Dist. & Cnty. Dec. LEXIS 166, Counsel Stack Legal Research, https://law.counselstack.com/opinion/business-supplies-corp-of-america-v-conole-pactcomplmonroe-1966.