Edwards v. Academy Publishing Corp.

Indiana Court of Appeals

Edwards v. Academy Publishing Corp.

562 N.E.2d 60, 1990 Ind. App. LEXIS 1457, 1990 WL 177556

CourtIndiana Court of Appeals

DecidedNovember 13, 1990

DocketNo. 02A03-9007-CV-276

StatusPublished

This text of 562 N.E.2d 60 (Edwards v. Academy Publishing Corp.) is published on Counsel Stack Legal Research, covering Indiana Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Edwards v. Academy Publishing Corp., 562 N.E.2d 60, 1990 Ind. App. LEXIS 1457, 1990 WL 177556 (Ind. Ct. App. 1990).

Pincite

Opinions

HOFFMAN, Presiding Judge.

Appellants Brian Edwards, Mike Merry-man, Mike Moffitt, Rodney Turner and TE. M.M. Marketing appeal a preliminary injunction in favor of Academy and Global Publishing. The facts show that Academy and (Global publish specialty newspapers and magazines concerning police and firefighters. Academy and Global pay a police or firefighter organization a flat fee for the right to use the organization's name to solicit advertising for the publications. Any fees for advertising collected after the flat fee is paid to the organization are kept by Academy and Global.¹

Edwards, Merryman, Moffitt and Turner worked for Academy until April 1990. Edwards, Merryman and Turner entered employment agreements prohibiting use of Academy's customer records following termination of employment. After Edwards, Merryman, Moffitt and Turner stopped working for Academy, they created TE. M.M., a company that competed with Academy. The trial court found that T.E.M.M. misappropriated Academy's customer records in violation of the Uniform Trade Secrets Act, IND.CODE § 24-2-3-3 (1988 Ed.), and granted the following preliminary injunction:

"Defendants [T.E.M.M.] are now therefore preliminarily enjoined from contacting in any manner any of Plaintiffs' [Academy and Global] customers who have purchased advertising in any of Plaintiffs' publications during the time period December, 1982 through April, 1990."

Appellants contend that the trial court erred in failing to consider whether Academy and Global sought equitable relief with unclean hands. At the preliminary injuncetion hearing, appellants' attorney argued that since Academy and Global used flat fee contracts they misrepresented their solicitations, committed fraud and came into court with unclean hands. The trial court responded in part:

"I don't see where the relevance of this fraud, let's assume for the sake of argument that they're defrauding thousands of innocent people. These people have sued your Defendants for an injunction. I don't see where this fraud has anything to do with their injunctive relief."

The trial court's decision not to consider whether Academy and Global defrauded the public contradicts the rules of equity:

"It is an ancient and equitable rule that, he who comes into a court of equity must come with clean, pure hands and a pure conscience, and it is also well established by the authorities that if a complainant in a court of equity claims relief against the fraud or imposition of others, he must himself be free from the same charge with reference to the same matter. If the business of such complainant is, or is sought to be, affected and injured by the misrepresentation or deceit of another, he cannot be heard in a plea that by the fraudulent rivalry of another his own fraudulent profits are destroyed or diminished. 'The exclusive privilege of deceiving or perpetrating a fraud upon the public is hardly a fit subject to be entertained in a court of equity, and cer[62]*62tainly not one that such a court can be required to aid or sanction.... ... [A)] court of equity will not lend its aid to a scheme to defraud the public." [Citations omitted.] A.N. Chamberlain Co. v. H.A. Chamberlain Co. (1909), 43 Ind.App. 213, 216-217, 86 N.E. 1025, 1026-1027.

The trial court erred in failing to consider whether Academy and Global defrauded the public by using flat fee contracts for charitable solitation. If the trial court finds that Academy and Global defrauded the public, they are not entitled to equitable relief according to the unclean hands rule.

Reversed.

GARRARD, J., concurs. SULLIVAN, J., concurs with opinion.

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HOFFMAN, Presiding Judge.

Appellants Brian Edwards, Mike Merry-man, Mike Moffitt, Rodney Turner and TE. M.M. Marketing appeal a preliminary injunction in favor of Academy and Global Publishing. The facts show that Academy and (Global publish specialty newspapers and magazines concerning police and firefighters. Academy and Global pay a police or firefighter organization a flat fee for the right to use the organization's name to solicit advertising for the publications. Any fees for advertising collected after the flat fee is paid to the organization are kept by Academy and Global.¹

Edwards, Merryman, Moffitt and Turner worked for Academy until April 1990. Edwards, Merryman and Turner entered employment agreements prohibiting use of Academy's customer records following termination of employment. After Edwards, Merryman, Moffitt and Turner stopped working for Academy, they created TE. M.M., a company that competed with Academy. The trial court found that T.E.M.M. misappropriated Academy's customer records in violation of the Uniform Trade Secrets Act, IND.CODE § 24-2-3-3 (1988 Ed.), and granted the following preliminary injunction:

"Defendants [T.E.M.M.] are now therefore preliminarily enjoined from contacting in any manner any of Plaintiffs' [Academy and Global] customers who have purchased advertising in any of Plaintiffs' publications during the time period December, 1982 through April, 1990."

Appellants contend that the trial court erred in failing to consider whether Academy and Global sought equitable relief with unclean hands. At the preliminary injuncetion hearing, appellants' attorney argued that since Academy and Global used flat fee contracts they misrepresented their solicitations, committed fraud and came into court with unclean hands. The trial court responded in part:

"I don't see where the relevance of this fraud, let's assume for the sake of argument that they're defrauding thousands of innocent people. These people have sued your Defendants for an injunction. I don't see where this fraud has anything to do with their injunctive relief."

The trial court's decision not to consider whether Academy and Global defrauded the public contradicts the rules of equity:

"It is an ancient and equitable rule that, he who comes into a court of equity must come with clean, pure hands and a pure conscience, and it is also well established by the authorities that if a complainant in a court of equity claims relief against the fraud or imposition of others, he must himself be free from the same charge with reference to the same matter. If the business of such complainant is, or is sought to be, affected and injured by the misrepresentation or deceit of another, he cannot be heard in a plea that by the fraudulent rivalry of another his own fraudulent profits are destroyed or diminished. 'The exclusive privilege of deceiving or perpetrating a fraud upon the public is hardly a fit subject to be entertained in a court of equity, and cer[62]*62tainly not one that such a court can be required to aid or sanction.... ... [A)] court of equity will not lend its aid to a scheme to defraud the public." [Citations omitted.] A.N. Chamberlain Co. v. H.A. Chamberlain Co. (1909), 43 Ind.App. 213, 216-217, 86 N.E. 1025, 1026-1027.

The trial court erred in failing to consider whether Academy and Global defrauded the public by using flat fee contracts for charitable solitation. If the trial court finds that Academy and Global defrauded the public, they are not entitled to equitable relief according to the unclean hands rule.

Reversed.

GARRARD, J., concurs. SULLIVAN, J., concurs with opinion.

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562 N.E.2d 60, 1990 Ind. App. LEXIS 1457, 1990 WL 177556, Counsel Stack Legal Research, https://law.counselstack.com/opinion/edwards-v-academy-publishing-corp-indctapp-1990.

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