Town & Country House & Home Service, Inc. v. Newberry

1 Misc. 2d 294, 124 N.Y.S.2d 605, 1953 N.Y. Misc. LEXIS 1415
CourtNew York Supreme Court
DecidedJune 22, 1953
StatusPublished
Cited by1 cases

This text of 1 Misc. 2d 294 (Town & Country House & Home Service, Inc. v. Newberry) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Town & Country House & Home Service, Inc. v. Newberry, 1 Misc. 2d 294, 124 N.Y.S.2d 605, 1953 N.Y. Misc. LEXIS 1415 (N.Y. Super. Ct. 1953).

Opinion

Christ, J.

The plaintiff, a domestic corporation, seeks in this action to enjoin the defendants who are its former employees, with the exception of the defendant Bell Aire House Cleaning Service, Inc., a corporation which they formed, from engaging in and carrying on the same kind of business as the plaintiff and also from soliciting the patronage of plaintiff *s customers [296]*296and from using secrets or confidential data obtained from the ’ plaintiff while the individual defendants were so employed by it. In addition, the plaintiff also seeks an accounting for loss of profits to the plaintiff’s business and to recover back money paid as wages to the individual defendants covering the period in which plaintiff claims the individual defendants were planning their new business while still employed by the plaintiff.

The plaintiff corporation is the property of Howard Rossmoore and his wife Dorothy. They are the corporation’s only' stockholders and they devote their entire time to its activities. Rossmoore, a graduate industrial and licensed professional engineer, made a thorough study of house and home cleaning methods, developing a system for doing what was called during the trial a “ packaged ” job. Efficiency and time studies formed a basis for his techniques and the methods of actually doing the work as well as for the job layouts and accounting records. Before undertaking this type of business, Mr. and Mrs. Rossmoore explored test areas in Nassau County to determine the extent of the market for such a service as they contemplated offering to householders. It was only after careful preliminary work that the business was started and the plaintiff corporation organized.

The defendant Newbery was the plaintiff corporation’s first employee. Newbery and Howard Rossmoore were the first housecleaning team of the business. The business eventually prospered and expanded, making it necessary to take on additional employees. With this increasing work, Newbery moved forward to a supervisory position, in which capacity he had full access to all the records of the plaintiff’s business. At one time, while’ the Rossmoores were vacationing, Newbery was in charge of the business of the plaintiff corporation until the return of Mr. and Mrs. Rossmoore.

The defendants Colagrande and Bordini entered the employ of the plaintiff in March, 1950, starting as helpers and progressing subsequently to the status of team captains. The methods of cleaning were freely taught to each of the employees and the techniques, although adapted and developed by Howard Rossmoore, became thoroughly known to all of the employees by virtue of the performance of their duties in cleaning houses.

The names of the plaintiff’s customers were kept on individual cards, each of which shows the customer’s name and address and contained instructions by means of abbreviations and short symbols, concerning the work to be done on each floor of the home or in various portions of such home. This card [297]*297file was not accessible to all employees. But each day, the teams performing the honsecleaning services, were given a duplicate card with the full information about the places they were to do on that particular day. Newbery, however, had full access to the complete card file. In addition to these cards containing the names and addresses of the customers and the special instructions above mentioned, there were other cards maintained as part of the plaintiff’s records, showing the work performed, the time occupied in performance of such work and payments received for each job. In addition there were large posting boards displayed in the office on which customers’ names and some information about them were posted from time to time.

There came a time when Newbery, Colagrande and Bordini decided to start their own business. This decision was arrived at while they were still employees of the plaintiff corporation. No disclosure of the plan to set up a business of their own was made to Howard Rossmoore until about the time when the three employees were ready to separate themselves from plaintiff corporation. These three employees formed a new corporation known as Bell Aire House Cleaning Service, Inc. (hereinafter for the sake of brevity referred to as “ Bell Aire ”). After the three employees severed their connection with the plaintiff corporation, they commenced to engage in a competing business through the instrumentality of Bell Aire. In furtherance of this competitive effort, the defendants communicated with certain customers of the plaintiff and it is established that some customers which the plaintiff corporation had on its roster, came to be customers of Bell Aire. It is the contention of the plaintiff that the individual defendants and the defendant Bell Aire schemed to deprive the plaintiff of its customers by an improper use of the plaintiff’s lists of customers and the information and data concerning the techniques and methods of operation in plaintiff’s business, all of which the plaintiff claims were of a secret and confidential nature as between it and its employees. The defendants, on the other hand, contend that these customers were known not as the result of referring to the lists kept in the files of the plaintiff, but because of the personal contact had by the individual defendants with such customers in the discharge of their duties while in the plaintiff’s employ.

The principles which govern the determination of cases of this type are fairly well established. The principles which have been laid down have sought to strike a balance between two objectives each having a legitimate claim for protection by the law. It is necessary that business men and business houses [298]*298be protected in the property rights which they have built up through perseverance and industriousness. It is likewise true that public policy demands that competition shall not be stifled and that employees be not unreasonably prevented from capitalizing upon the experience and skills acquired as the result of having been in the service of an employer.

In general terms it may be said that in the absence of an express contract setting forth the rights of the parties upon termination of employment, the law will not say that customer lists fall in the category of trade secrets and accordingly spell out an implied contract on the part of the employee not to divulge or make use of such secrets after terminating his employment, unless it is shown that the identity of the customers was made known to the employee in strict confidence and could have been acquired in no other legitimate way. (Peerless Pattern Co. v. Pictorial Review Co., 147 App. Div. 715; Abdallah v. Crandall, 273 App. Div. 131; Kleinfeld v. Roburn Agencies, 270 App. Div. 509.) It is also well established that an employee may also be enjoined from soliciting customers of his former employer where he proceeds with the aid of a confidential written list taken from the employer. (Fleisig v. Kossoff, 85 N. Y. S. 2d 449.) Even where the information concerning customers was not of a confidential nature, the former employee may be enjoined from soliciting such customers if he has been guilty of fraud, misrepresentation or other unfair practices in his dealings with the customers. (People’s Coat, Apron & Towel Supply Co. v. Light, 171 App. Div. 671, affd. 224 N. Y. 727.)

With these principles in mind, we turn to their application to the facts of the instant case.

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Related

Town & Country House & Home Service, Inc. v. Newbery
1 A.D.2d 702 (Appellate Division of the Supreme Court of New York, 1955)

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Bluebook (online)
1 Misc. 2d 294, 124 N.Y.S.2d 605, 1953 N.Y. Misc. LEXIS 1415, Counsel Stack Legal Research, https://law.counselstack.com/opinion/town-country-house-home-service-inc-v-newberry-nysupct-1953.