Professional Service Corp. v. Johnson

45 N.E.2d 191, 316 Ill. App. 431, 1942 Ill. App. LEXIS 754
CourtAppellate Court of Illinois
DecidedNovember 30, 1942
DocketGen. No. 42,191
StatusPublished
Cited by8 cases

This text of 45 N.E.2d 191 (Professional Service Corp. v. Johnson) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Professional Service Corp. v. Johnson, 45 N.E.2d 191, 316 Ill. App. 431, 1942 Ill. App. LEXIS 754 (Ill. Ct. App. 1942).

Opinion

Mr. Justice O’Connor

delivered the opinion of the court.

Plaintiff corporation, which was engaged in collecting accounts, filed its complaint in equity against defendants, who were engaged in the same business, to enjoin and restrain them from soliciting and making-collections from plaintiff’s customers. Defendants filed their answer and the cause was referred to a master in chancery to take the evidence and make up his report together with his findings and recommendations. The master took the evidence, made up his report and recommended that the complaint be dismissed for want of equity. Objections were filed to the report which were overruled and they were ordered to stand as exceptions. Certain of the exceptions were sustained, others overruled and a decree entered enjoining the defendants “from in any manner soliciting, securing or obtaining collection business from such persons, firms, partnerships or corporations who were the -active clients of the plaintiff during the year ending July 14, 1941, and from soliciting or urging the employes of the plaintiff to leave the plaintiff’s employ, and from in any way interfering with or disturbing the business of the plaintiff.” Defendants appeal.

The record discloses that plaintiff, the Professional Service Corporation located at 188"W. Randolph street, Chicago, was incorporated in 1926 under the laws of Illinois and since that time has been engaged in the business of making collections for business, industrial and professional concerns and that for the purpose of obtaining accounts for collection it maintains a force of solicitors and collectors. Sometimes as many as 35 persons were employed. The solicitors would call from time to time on hospitals, loan associations, physicians, dentists and grocery concerns and similar types of business whose unpaid accounts were solicited for the purpose of collection and for such services plaintiff would charge approximately 50 per cent of the amounts collected.

Defendant Johnson was employed by plaintiff in 1935 and from time to time was promoted and in June, 1941, he was employed as general manager and received a salary of $3,600 per year. He had full and complete charge of the business and enjoyed the complete confidence of Spencer J. Shaw who testified-: “I own the Professional Service Corporation. At the present time I am President and Treasurer.” Defendant McCoubrey was employed by plaintiff in 1935 and in June, 1941, was “Collection Manager” receiving a salary of $2,300 a year. He also was familiar with plaintiff’s business. The other defendants, Phillips and Peters, were also trusted employees of plaintiff but for a shorter period of time.

There was no agreement between any one of the four defendants and plaintiff that they would not go into a competing business for a period of time after they ceased to be employed by plaintiff. June 10,1941, and probably for some time before that date, Shaw, the president and owner of the stock of plaintiff, became suspicious that Johnson was going to leave and set up a competitive business and on that date he accused Johnson of this but Johnson denied it. However Shaw did not believe Johnson and discharged him at that time. Shortly thereafter, Johnson rented space on La Salle street and June 23, he obtained a charter for defendant, the Financial Service Corporation and set up a new collection organization. A short time thereafter, McCoubrey, Phillips and Peters also joined the new corporation.

The day after Johnson was discharged, Shaw accused defendant McCoubrey of planning to go into the collection business with Johnson which McCoubrey denied. At that time Shaw demoted McCoubrey, and three or four weeks thereafter he resigned and as stated, went with the new company and acted as its secretary.

There is no evidence that Johnson or the other defendants, at any time, prepared a list of plaintiff’s customers or took any such list with them when the new corporation was formed, or afterward. There is ■further evidence to the effect that after the new cor- ■ poration was formed and had set up a competing business, it solicited some of the plaintiff’s customers and other persons and concerns.

Plaintiff’s position, as stated by its counsel, is that “because of the nature of the business of the plaintiff and the confidential relationship between plaintiff and its employees, the names of plaintiff’s clients constitute a trade secret, entitled to the protection of a court of equity.” That “The individual defendants were employees coming within the classification of fiduciaries, who are under obligation though not expressed, yet always implied, not to use the names of plaintiff’s customers for their own advantage and to the damage of the plaintiff” and that the evidence shows that “the individual defendants, while in the employ of the plaintiff, entered into an agreement among themselves to join in organizing a collection business and to exploit the plaintiff’s clients for their own use and advantage and to the irreparable injury of the plaintiff.”

We think the evidence is to the effect that some time before Johnson was discharged he was contemplating setting up a collection agency of his own and talked to some of plaintiff’s employees on this subject. But under the law we are of opinion that defendants cannot be enjoined from organizing and carrying on a rival collection agency, nor can they be enjoined from soliciting plaintiff’s customers. American Cleaners & Dyers v. Foreman, 252 Ill. App. 122; Woolley’s Laundry, Inc. v. Silva, 304 Mass. 383, 126 A. L. R. 758.

In the Foreman case we considered this question, discussed the conflicting authorities at considerable length and we there reached the conclusion that in the absence of an express contract, equity would not enjoin an employee, after the termination of his employment, from soliciting business from the customers of his former employer where no list of names was taken and no fraud committed. We adhered to this holding in Messenger Publishing Co. v. Mokstad, 257 Ill. App. 161; Tinkoff v. Wyland, 272 Ill. App. 280, and this was followed by another division of this court in Capitol Dairy Co. v. Meyer, 293 Ill. App. 632 (Abst.).

In the Woolley’s Laundry case, 304 Mass. 383, the court considered the many authorities on the question add reached the conclusion that a proprietor of a laundry who furnished a “route man” with a list of the names and addresses of the employer’s customers was not entitled to have the “route man” enjoined from soliciting and accepting business from those customers for his own account after he had left the employment without taking away the list except by memory. The court there said (386): “There is no finding that the defendant made any misrepresentations to any of the customers or that, in soliciting them, he made use of any list that had been furnished to him. In fact, at the argument it was agreed that the defendant took no list away with him beyond what he carried in his head.

1 ‘ The question to be decided is whether the defendant is wrongfully making use of information in part originally acquired through lists furnished by his former employer but now apparently no longer needed by the defendant, inasmuch as he carries the names in his memory. If no lists were involved, we are of the opinion that the plaintiff could not prevail,” citing a number of Massachusetts cases.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Tad, Inc. v. Siebert
380 N.E.2d 963 (Appellate Court of Illinois, 1978)
ABC Trans National Transport, Inc. v. Aeronautics Forwarders, Inc.
379 N.E.2d 1228 (Appellate Court of Illinois, 1978)
Heatbath Corp. v. Ifkovits
254 N.E.2d 139 (Appellate Court of Illinois, 1969)
Bruce v. Ferrara
246 N.E.2d 874 (Appellate Court of Illinois, 1969)
Revcor, Inc. v. Fame, Inc.
228 N.E.2d 742 (Appellate Court of Illinois, 1967)
Mid-States Vending Service, Inc. v. Rosen
222 N.E.2d 99 (Appellate Court of Illinois, 1966)
Illinois Minerals Co. v. McCarty
48 N.E.2d 424 (Appellate Court of Illinois, 1943)

Cite This Page — Counsel Stack

Bluebook (online)
45 N.E.2d 191, 316 Ill. App. 431, 1942 Ill. App. LEXIS 754, Counsel Stack Legal Research, https://law.counselstack.com/opinion/professional-service-corp-v-johnson-illappct-1942.