International Register Co. v. Recording Fare Register Co.

TOWNSEND, Circuit Judge.

The facts stated by the court in its ppinion as to the Boston Suburban Electric Companies’ contract, and abundantly supported by the record, sustain the propriety of the order for an accounting thereon.

Upon this branch of the case the court below found as follows:

“In these circumstances it appears that the New Haven Car Register Company came very close, indeed, to getting an order, but I do not think that they did exactly get it. The delays incident to the shifting of the business and-Mr, Hayes’ personality entered into the equation, and just prevented an absolute, complete,' -unequivocal order. There are, however, sufficient reasons why the defendants had no right to obtain and execute the Boston order. First, Mr. Hayes had been paid by the New Haven Car Register Company for his services in advancing the business to the stage it had reached, and it was only by making- usé of private information which had reached that company through Mr. Hayes’ efforts that he was enabled to direct the business to the uses of himself and companions. And, again, during all the time which he spent in gathering the Boston connection around his new company, he was, by his own 'admission, under contract to the New Haven Company.”

.We concur in this conclusion.

The private information, by means of which the defendant Hayes negotiated-said business, was obtained while he was in the employ of-the New Haven Company, and he actually secttred for defendants' the order and contract complained of-in March, and while he was still ¿under salary as agent of said New Haven Company. The claim that he 'was not still in its employ is asserted on the'ground that payment of his salary to April 1st was a compromise. But this does not affect the admitted fact that he was paid for his time up to April 1st, under a claim on his part, apparently well founded, that he was under a contract ■of service which did not expire until June 1st. The fact that in March 'complainant's -president,' after taking possession of the property,'re *201 fused to have further dealings’with him, did not affect his'relation, under his contract with the New Haven Company.

Said contract was not broken by the selling out of the property and business of the New Haven Company to complainant, thus leaving Hayes with nothing to do. Although doing nothing, he would, nevertheless, be entitled to his salary. This he claimed, and he finally com-' promised with the New Haven Company for $50 for the months-.

Inasmuch as he was the agent of the New Haven Company under said contract, he was under a legal obligation not to act adversely to its interests in connection with any of its business, and especially any business with which he had become connected by means of information and relations growing out of said agency. Therefore, when he dealt with the Boston Company, he was still an employe of the New Haven. Company, and his acts inured to their benefit and to that of their vendee. Therefore the contract he made and filled for himself and associates was one to which the New Haven Company was entitled, and the decree for an accounting of damages or profits is affirmed.

The decree granting a perpetual injunction, however, presents different questions. Upon the filing of the bill and affidavits, from which it appeared that such action was essential for the protection of complainant’s rights, the court granted a preliminary injunction, which ’was made permanent by the order 'now complained of. It appeared upon the hearing that some of the defendants, who were employes of the New Haven Company, on hearing that it had sold out to complainant exhibited a pernicious and inequitable activity in attempting to secure the business of, their former employer. But it is claimed that-, as there was no evidence that at the date of the filing of complainant’s bill, “there was any property rightfully belonging to the complainant in the possession or control pf the defendants, or any of them, and that, as it appeared affirmatively by the uncontradicted testimony of the defendants that no such property was in their possession or control, the prayer of complainant’s bill for an injunction restraining the defendants from the use of such property should have been denied.” An examination of the record sustains this claim. The only patterns, drawings, sketches, and other property which complainant showed had been in the possession of defendants were the so-called “Tri-City sketch” and the “Boston & Maine pattern.” But “it now appears by-Woodward’s testimony that at the time the bill was filed and the affidavits made, on which the preliminary injunction was granted, the Tri-City sketch was, in fáct, in possession of the complainant.” As to the Boston & Maine pattern, it is not shown that it came wrongfully into the possession of defendants, even if it be assumed that they originally attempted to make an inequitable use of it. It is clear that at the very time when the Woodward affidavit, on which the preliminary injunction was granted, was filed, the Boston & Maine order was being filled by complainant, and that there was no danger whatever that complainant would suffer injury from the use by defendants of that pattern 'or_ defendants’ possible attempt to obtain such order. There is no evidence that the defendants ever used their names or the name of the defendant company in such manner as to deceive the customers into *202 the belief that they were dealing with the successors to the New Haven Company.

It is not sufficient ground for an 'injunction that obedience to it will not hurt defendants. Nor is it any answer to the assignments of error by defendants that-“there is nothing in the injunction that would interfere with an honest man conducting his business unhindered by any restriction.” The mere fact of the issuance of any sort of an injunction stigmatizes the defendants as having done or threatened to do some illegal or inequitable act of such a nature as to justify such extraordinary relief, and, if cleverly advertised, may hurt the defendants in their business world.

. It does not appear that at the date of the bill any of complainant’s property was in possession of defendants, or that they were representing that they were able to fill or were attempting to fill orders therefrom, or any of complainant’s orders or contracts, or that defendants had ever deceived any of their customers by leading them to believe that they were dealing with complainant. And it appears that at the time of the final hearing there were no facts justifying any claim of any wrongful acts or intention on the part of defendants. Undoubtedly some of the defendants wrote letters which they should not have written. On the other hand, it is manifest now that complainant obtained an ex parte preliminary injunction -upon bill and affidavits which gave-the court to understand that defendants were about to make use of drawings and patterns the property of complainant, but then in defendants’ possession, when the fact was, as above shown, that before the bill was filed such property was actually in -complainant’s possession or under its control.

Under such circumstances an injunction thus obtained should not be continued, unless its continuance be essential to preserve complainant’s rights. No such necessity was apparent; after the new concern, under a name which was not misleading as to identity, went into business as a competitor of the New Haven Company’s vendee.

The order restraining defendants “from using any and all information in reference to the business of the New Haven Car Register Company, obtained while in its employ, and-which information could only have been obtained by the confidential relationship existing by such employment,” is manifestly too broad. It is not within the letter or spirit of the cases cited by complainant in its support.

So much of the decree as grants an injunction is reversed, without costs. The decree ordering an accounting is affirmed, without costs.