Crouch v. Swing MacHinery Company

468 S.W.2d 604
CourtCourt of Appeals of Texas
DecidedJune 9, 1971
Docket14933
StatusPublished
Cited by15 cases

This text of 468 S.W.2d 604 (Crouch v. Swing MacHinery Company) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Crouch v. Swing MacHinery Company, 468 S.W.2d 604 (Tex. Ct. App. 1971).

Opinion

CADENA, Justice.

Defendants, A. C. Crouch and W. L. Bedford, appeal from an order temporarily enjoining them from soliciting the customers of, or contacting the suppliers represented by their former employer, Swing Machinery Company, Inc., plaintiff below.

Plaintiff alleged that Crouch had been its office manager, while Bedford had been one of plaintiff’s salesmen. According to plaintiff’s petition:

1. As office manager, Crouch occupied a position of trust and confidence, and had access to plaintiff’s trade secrets, customer lists, mailing lists and price lists.

2. Bedford, as a salesman, had access to such information because he occupied a position of trust and confidence. At the time that he entered plaintiff’s employ, Bedford agreed that he would not engage in a business competitive with plaintiff for a period of five years after termination of his employment.

3. Both Crouch and Bedford, after terminating their employment with plaintiff by resignation, were employed by Southwest Vacu-Blast and Industrial Sales, Inc., a newly organized company which was in direct competition with plaintiff. Both Crouch and Bedford immediately began to call upon the customers and accounts of plaintiff, soliciting their business. In soliciting plaintiff’s customers, defendants made use of plaintiff’s trade secrets.

At the outset, we affirm the order below insofar as it applies to William L. Bedford. The evidence shows that at the time he entered plaintiff’s employ, Bedford signed an agreement not to engage in post-employment competition with plaintiff. Bedford has failed to present any evidence which even tends to indicate that such agreement is unreasonable, and the record discloses no reason why he should not be compelled to abide by his agreement pending trial on the merits.

Crouch never agreed not to compete with plaintiff. On the effective date of his resignation, Crouch called on plaintiff for his accrued salary. His salary was withheld until he signed an instrument stating that he had been entrusted with trade secrets, and that he agreed not to divulge them. Despite the circumstances under which the instrument was signed by Crouch, it is, perhaps, some evidence that he had, in fact, been entrusted with some trade secrets. But even if his agreement not to divulge such secrets is enforcible, it imposes on him no obligation greater than that which is imposed on him by the common law doctrine, which prohibits an ex-employee from disclosing, or using for his own benefit and to the detriment of his former employer, any confidential information obtained by virtue of his former employment. Hyde Corporation v. Huffines, 158 Tex. 566, 314 S.W.2d 763 (1958).

With reference to Crouch, we consider first the propriety of that portion of the order which prohibits him from “contacting” suppliers whom plaintiff represented in the San Antonio area. In this connection, plaintiff’s pleadings fail to allege that the identity of such suppliers is not generally known to all persons engaged in the same business as plaintiff. Plaintiff’s evidence discloses that the identity of such suppliers can be easily ascertained by any interested person merely by referring to trade journals. In fact, under the terms of plaintiff’s sales representative agreement with one supplier, plaintiff was under a duty to advertise, at its own expense, by *606 inserting at least one display listing in the classified section (yellow pages) of the telephone directories in all cities within plaintiff’s trade area which prominently displayed the name of such supplier. We find nothing in the record to indicate that such information is not of a routine nature. Such information is' nothing more than that which is necessarily known to all persons engaged in the business. Although there are cases where courts have gone to rather extreme lengths in protecting business information which represents nothing more than the normal accretion of day-today routines, 43 A.L.R.2d, Anno: Employee — Restrictive Covenant — Area, pp. 94, 168-70 (1955), we do not believe that knowledge of the ordinary routines of a business is sufficient to justify a restriction on a person’s post-employment economic mobility.

In reaching the conclusion that the temporary injunction prohibiting defendant, Crouch, from contacting the suppliers must be dissolved, we do not overlook the fact that we are reviewing the action of the trial court in granting a temporary injunction. As our Supreme Court has said, we may not reverse the decision below unless it appears that the trial court abused its discretion, and “there is no abuse of discretion in the issuance of a writ if the petition alleges a cause of action and the evidence adduced tends to sustain it.” Transport Co. of Texas v. Robertson Transports, Inc., 152 Tex. 551, 261 S.W.2d 549, 552 (1953). Admittedly, the trial court has a wide discretion in determining whether a temporary injunction shall be granted or denied. But to authorize the issuance of a temporary injunction, the applicant has the “burden of not only pleading facts which, if proved, would entitle it to a permanent injunction, but, as well, of offering evidence tending to prove its probable right thereto on final hearing and of probable injury in the interim.” Millwrights Local Union No. 2484 v. Rust Engineering Co., 433 S.W.2d 683, 686 (Tex.1968). Far from tending to show a breach of any duty by Crouch, the evidence merely shows that Crouch, after he left plaintiff’s employ, was making use of information which is necessarily known to all persons in the trade. What is known to all cannot be converted into confidential information worthy of equitable protection by merely whispering into the ear of even the most highly trusted employee.

The customer list cases stand on the periphery of that area of the law which can best be described as “the trade secret quagmire.” The confusion created by decisions concerning the use of customer lists and customer contracts by ex-employees is due to the fact that the decisions seemingly turn on arbitrary distinctions unrelated to trade practices. 1

In the absence of an express agreement restricting the post-employment activities of an employee, it is generally held that an ex-employee is free to compete with, and to solicit the customers of, his former em *607 ployer. Therefore, what is described as an “ordinary” customer list is not considered a trade secret. Texas Shop Towel v. Haire, 246 S.W.2d 482, 485 (Tex.Civ.App. —San Antonio 1952, no writ); 28 A.L.R. 3d, Anno: Customer List — As Trade Secrets — Factors, pp. 7, 18 (1969).

However, the former employer will be protected in some situations. An ex-employee will not be permitted to make use of a secret list of customers, nor of any other confidential information obtained about the customers by virtue of his former employment. This rule has been applied in a multitude of cases.

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468 S.W.2d 604, Counsel Stack Legal Research, https://law.counselstack.com/opinion/crouch-v-swing-machinery-company-texapp-1971.