Case Name: George Kremer, Appellant, v. William Kremer and Others, Respondents
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1927-12-02
Citations: 221 A.D. 747
Docket Number: 
Parties: George Kremer, Appellant, v. William Kremer and Others, Respondents.
Judges: 
Reporter: Appellate Division Reports
Volume: 221
Pages: 747–750

Head Matter:
George Kremer, Appellant, v. William Kremer and Others, Respondents.
First Department,
December 2, 1927.
John Godfrey Saxe of counsel [Pfeiffer & Crames, attorneys], for the appellant.
Samuel A. Berger of counsel [Carl F. Helm and George I. Gross with him on the brief; Samuel A. Berger and Carl F. Helm, attorneys], for the respondents.

Opinion:
Finch, J.
The question presented by this appeal is the right of the plaintiff to an injunction pendente lite, restraining one whose interest in a business the plaintiff purchased, from using lists of the customers and other confidential information contained in the business files, which said defendant copied while occupying the confidential relation of a partner in the business; also restraining the defendants from enticing away the employees of the business and from so holding out themselves in a competitive business as to convey the impression that the defendants are conducting a branch of the former business. The plaintiff is entitled to the relief demanded.
The facts, in so far as necessary to show the grounds for the decision, briefly are as follows: The plaintiff has been engaged for twenty years in a hair dressing business, which occupies three entire floors, employs sixty to seventy operators, and has a gross business of from $80,000 to $100,000 annually. During his twenty years in business he has had more than 100,000 customers. On July 15,1924, the plaintiff made an agreement with his two nephews, William Kremer, thirty-two years of age, and Joseph Kremer, twenty-three years of age, and with his son, George, Jr., and two other young men, -for their continued employment in his establishment, pursuant to which William was to receive $100 a week and Joseph $40 a week, subject to increases and with a share of the profits. On December 7, 1926, the plaintiff made a substitute agreement, whereby he sold his business to Joseph and his son George, Jr., to take effect January 1, 1927, selling each a half interest for $20,000. The payments to be made were $10,000 upon the execution of the agreements, which were paid, and the balance to be paid in September, 1927 and 1928. The latter payments were not made as Joseph, on April 21, 1927., came to the plaintiff and asked to be relieved from his agreement to purchase, and on April 29, 1927, William and Joseph announced that they were going out for themselves. On May 12, 1927, the plaintiff purchased back Joseph's one-half interest in the business by giving him a check for the balance due him. Joseph completed the cancellation of the purchase of his one-half interest by executing to the plaintiff a general release. They parted in a friendly spirit and the plaintiff had no objection to William and Joseph using their own name of " Kremer Bros."
The plaintiff, in connection with his business, had maintained two complete card systems. One of these card systems consisted of the names and addresses of 10,000 customers; the second consisted of 8,000 index cards containing, in addition to the names and addresses of the customers, the treatment that the customers were receiving and the name of the operator and the date of the .treatment. The defendants copied these cards and now have the copies under lock and key in their establishment in the basement of their building, and have proceeded to circularize 9,000 of the customers and to use the cards. The plaintiff annexes to his moving affidavits a list of no less than 926 customers who actually came to his establishment and told him that they had received such circulars. Apparently also these defendants are seeking to obtain business by telling these prospective customers that the plaintiff has moved to their address.
The only defense urged on behalf of these defendants is that Joseph was a partner in the business for a short time, namely, from January 1 to April 30, or May 12, 1926, that is, the time between the date when he purchased a half interest in the business and the date when he released to the plaintiff whatever rights he had under the said agreement of purchase which he failed to complete. The defendants urge that Joseph bought the good will from the plaintiff and did not sell it back to the plaintiff when he released his interest to the plaintiff pursuant to his request to be relieved from his agreement of purchase. The mere statement of this proposition carries its own refutation. Joseph asked to be relieved from his purchase, and hence the resale, without express reservation, carried back to the plaintiff whatever he had sold. So complete did the parties make the relinquishment, that they obtained from Joseph, when he was relieved from his contract, a general release. Proceeding upon this false premise that Joseph, by going half way through with his agreement of purchase and then canceling the same, thus obtained a good will which he did not give back, the defendants proceed to argue that the parties were in the situation of two partners who separate, in which case the courts have held that each partner has a right to endeavor to obtain the patronage of the old customers. In such a case, however, neither partner has sold to the other the business. The case at bar is distinctly not such a case. The courts have clearly held that where one partner' sells out to the other, the partner selling out will not be permitted to detract from what he has sold by soliciting the old customers. Such is the case of Von Bremen v. MacMonnies (200 N. Y. 41). If this is true as to partners selling out, it is likewise true where one vendor sells a business to another. In other words, if nothing is said as to the good will, it is held that it goes along with the business. (Steinfeld v. National Shirt Waist Co., 99 App. Div. 286; Merry v. Hoopes, 111 N. Y. 415; Menendez v. Holt, 128 U. S. 514.) The plaintiff, therefore, is entitled to the relief which he seeks.
The defendants raise for the first time upon this appeal that there is a defect of parties plaintiff in that George Kremer, Jr.,, who upon this record appears as a partner of the plaintiff and owner of one-half of the business, is not joined as a party to the action. In an action of this nature where the plaintiff is merely seeking to protect the joint property for the benefit not of himself individually but on behalf of the partnership, the defendants have waived this defect by not urging it at Special Term. (Civ. Prac. Act, § 278.) In Porter v. Lane Construction Corporation (212 App. Div. 528, 531) Mr. Justice Crouch for a unanimous court said: " If the partial assignee sues without bringing in the others, there is a defect of parties. If the debtor, for whose benefit alone the rule against splitting exists, desires to object, and thus protect himself, he may move under section 278 of the Civil Practice Act. If he omits to do so, he waives the defect and again consents to the action by the partial assignee alone. (Dickinson v. Tysen, 125 App. Div. 735, 737; Carvill v. Mirror Films, Inc., 178 id. 644; affd., 226 N. Y. 683.) "
It follows that the order appealed from should be reversed, with ten dollars costs and disbursements, and the motion granted, with ten dollars costs.
Dowling, P. J., Merrell, McAvoy and Proskauer, JJ., concur.
Order reversed, with ten dollars costs and disbursements, and motion granted, with ten dollars costs. Settle order on notice.