Court Opinion

ID: 5746114
Source: CourtListenerOpinion
Date Created: 2022-01-12 16:49:40.653969+00
Date Added: 2024-06-11T08:41:09.725255
License: Public Domain

McNally, J. (dissenting).
In an fiction for an injunction plaintiff appeals from the dismissal of the complaint after trial. Defendants rested at the close of plaintiff’s case.
Plaintiff and Faultless Fuel Oil Co., Inc., and its principals, on March 6, 1961 entered into an option agreement} for the purchase of properties of Faultless including: “All No. 2 and No. 4‘Oil accounts served by Seller [Faultless] at the date of closing. * * * all such business with these accounts including any and all contracts it may have governing the same.” The agreement also provided: “ Consummation of the sale hereunder shall be effected by proper bills of sale, assignments and such oiher instruments and papers as may be necessary to effect the same by law”. Faultless also agreed to notify its; customers of the sale and urge them to do business with the plaintiff. Ini addition, Faultless agreed to refrain from competing with plaintiff. The president of Faultless agreed to co-operate with and assist plaintiff in retaining: said accounts and plaintiff agreed to compensate him therefor. The option agreement expressed the formula by wjhieh the purchase price was to be determined as follows: “ The purchase price for the sale of all said accounts shall be determined by multiplying the total gallonage of No. 2 and No. 4 Oil sold to Seller’s customers for the twelve-month period ending March 31, 1961 by $.055, from which result there shall be deducted 20% thereof and which, as hereinafter provided, shall be paid to Jacob H. Bernstein for his services.” The latter was president of Faultless.
On September 23, 1947 Faultless and defendant Trenck entered into an arrangement whereby Trenck, the ownejr of a truck equipped with a tank of the capacity of 1,920 gallons, agreed to deliver oil for Faultless at the rate of one cent per gallon. Said agreement provided:
*901“ 8. At the termination of this contract for any reason whatsoever, the second party [Trenck] hereby agrees not to divulge the customers of the first party [Faultless] to any person or firm nor to make use of same himself and also agrees not to solicit any of the customers of the first party.
“ 9. This contract may be assigned by either of the parties hereto.”
The sale from Faultless to plaintiff in accordance with the option agreement of March 6, 1961 was consummated during May, 1961. This included the acquisition by plaintiff of the outstanding shares of stock of Faultless.
Prior to August, 1961 the individual defendants, including Trenck, organized the corporate defendant Q. N. S. Fuel Oil Corp. Defendants thereafter solicited and sold fuel oil to the accounts to which Trenck had made oil deliveries for and in behalf of Faultless and which accounts had been sold by it to plaintiff.
On this record it is clear that the defendants solicited and sold to said accounts as a result of the knowledge of such accounts acquired by Trenck in the course of his deliveries for Faultless under the 1947 agreement and that the defendants prior to said solicitation and sales had knowledge of the said agreement.
On November 17, 1961 Faultless, at the request of plaintiff, assigned to it the agreement between Faultless and Trenck dated September 13, 1947. Said assignment recites it is made as of May 1, 1961 and includes “ any and all rights of action, choses in action, or causes of action and obligations arising from said agreement dated September 13, 1947 ”.
The sale by Faultless to the plaintiff in the circumstances carried with it the good will incident to the oil business of Faultless and its rights under the agreement with Trenck dated September 23, 1947, which was intended to preserve and protect the good will of Faultless against invasion by Trenck. (Boon v. Moss, 70 N. Y. 465, 473; see 65 A. L. R. 2d 504.) The assignment of November 17, 1961 merely confirmed the legal effect of the sale.
Apart from the agreement the confidential employment of Trenck, insofar as it required disclosure to Trenck of the accounts of Faultless, gave rise to the obligation of Trenck not to exploit such knowledge to the detriment of Faultless. The same obligation is present even if, as argued by defendants, Trenck was an employee of Faultless rather than an independent contractor. (Witkop & Holmes Co. v. Boyce, 61 Misc. 126, 130, 131, affd. 131 App. Div. 922; People’s Coat, Apron & Towel Supply Co. v. Light, 171 App. Div. 671, 673, affd. 224 N. Y. 727.) Here involved are unadvertised customers of Faultless who became known to Trenck only because they were revealed to him by Faultless to enable him to make oil deliveries. The relation consequent on which Trenck acquired knowledge of the customers of Faultless gave rise to the implied covenant not to use such information to the detriment of Faultless. (Kleinfeld v. Roburn Agencies, 270 App. Div. 509, 511; see, also, Bates Chevrolet Corp. v. Haven Chevrolet, 13 A D 2d 27.)
Moreover, the contract of September 23, 1947 includes a covenant on the part of Trenck not to disclose or solicit customers of Faultless. The covenant is valid and enforeible at least to the extent of affording protection against unfair competition. (Interstate Tea Co. v. Alt, 271 N. Y. 76; Bates Chevrolet Corp. v. Hamen Chevrolet, supra.)
The defendants other than Trenck solicited with knowledge of the 1947 agreement and also should be enjoined. (Markowitz v. Tabakin, 250 App. Div. 768; Monroe Coverall Serv. v. Bosner, 283 App. Div. 451; People’s Coat, Apron & Towel Supply Co. v. Light, supra; Bates Chevrolet Corp. v. Haven Chevrolet, supra.)
The judgment should be reversed and an injunction granted restraining defendants from soliciting or dealing with customers of the plaintiff formerly *902of Faultless to whom deliveries of bil previously were made by defendant Trenek for and in behalf of Faultless.
Botein, P. J., Breitel and Stevens, JJ., concur in Per Curiam opinion; McNally, J., dissents in opinion in which Eager, J., concurs.
Judgment affirmed on the law and the facts, for failure of proof, with costs to respondents.