Franco v. Stein Steel & Supply Co., 26126

• Citation: 227 Ga. 92,179 S.E.2d 88
• Decision Date: 12 November 1970
• Docket Number: No. 26126,26126
• Parties: A. M. FRANCO v. STEIN STEEL & SUPPLY COMPANY.
• Court: Supreme Court of Georgia

Page 88

179 S.E.2d 88

227 Ga. 92

A. M. FRANCO v. STEIN STEEL & SUPPLY COMPANY.

No. 26126.

Supreme Court of Georgia.

Nov. 12, 1970.

Rehearing Denied Dec. 17, 1970.

Syllabus by the Court

1. The allegations in the petition were sufficient to charge the defendant as an officer and agent of the Stein Corporation with operating within the scope of his agency for his own benefit and to the injury and damage of his principal. It was not error to overrule the motion to dismiss the complaint.

2. The temporary restraining order of July 2, 1970, was issued on the allegations verified by the President of Stein and his supporting affidavit which were sufficient to justify the issuance of a temporary injunction and the appointment of a special auditor.

3. Though in some particulars the evidence is in conflict, we cannot say that the trial judge abused his discretion in granting an interlocutory injunction or continuing the appointment of a 'special auditor' (temporary receiver).

Saul Blau, Charlie Franco, Atlanta, for appellant.

William R. King, Atlanta, for appellee.

ALMAND, Chief Justice.

This appeal is from orders (a) refusing an oral motion to dismiss an equitable petition, (b) granting an interlocutory injunction, and (c) appointing an auditor.

The appellee, Stein Steel & Supply Co., a corporation engaged in the design, fabrication and sale of structural steel, brought its equitable petition against A. M. Franco. It was alleged that Franco, a registered professional engineer in the State of Georgia and other States had been employed by Stein since 1961 as an engineer. It was alleged that: 'Plaintiff has recently learned that defendant, for some time-the length of which plaintiff does not know-has been personally billing and receiving payment from plaintiff's customers and potential customers for the services for which defendant is employed by plaintiff to perform for such customers.

'On information and belief, Plaintiff alleges that defendant has not included an appropriate apportionment of his salary and expenses in connection with his duties on behalf of plaintiff in the total prices of the contracts he has entered into, binding plaintiff to furnish structural steel items, and as a result plaintiff has been unable to recover the value of the services performed by defendant from the customers with whom defendant has been dealing on behalf of plaintiff.

'While receiving compensation from plaintiff, using the materials supplied by plaintiff, during trips at plaintiff's expense by virtue of his relationship as an agent and officer of plaintiff, defendant has been dealing within the scope of agency for his own benefit to the detriment of plaintiff.

'As a result of the manner in which defendant performed his duties for plaintiff and of defendant's position of trust and confidence, defendant has possession of plans, drawings, design calculations, work papers, negotiated proposals, estimates, worn sheets, lists of plaintiff's customers, correspondence and other business records and documents, all in varying stages of development and completion, many of which are plaintiff's trade secrets and are the only copies or records of such matters. All of these items are products of defendant's efforts an an officer and employee of plaintiff and are therefore plaintiff's property.

'Plaintiff fears that defendant will secrete, destroy, dispose of or divert to his own use plaintiff's business records and documents in the possession of defendant or others known to him unless restrained from doing so by this court. Unless such business records and documents are delivered to plaintiff or placed in the possession of the court, plaintiff will suffer irreparable harm and injury.'

The prayers of the petition were (a) to restrain and enjoin Franco from diverting to his own use or divulging to anyone other than a representative of the plaintiff, any plans, drawings and other described articles or destroying such articles; (b) for an accounting to determine the profits obtained by defendant in breach of his duty as agent and officer of Stein; (c) for the appointment of a 'special auditor' to take possession of documents and business records, the property of Stein, now in possession of Franco; (d) for judgment in the amount of secret profits, and (e) for other just and proper relief.

On presentation of the complaint to the court, it (a) granted a temporary restraining order, conditioned upon the plaintiff making a bond in the sum of $1,000.00, and (b) on the supporting affidavit of Milton O. Stein, president of the petitioner, the court appointed William H. Cate as a special auditor to take possession of certain documents, etc., in the possession, custody or control of the defendant.

The defendant by answer and cross bill, admitted that he was a registered professional engineer and during the course of his employment by the plaintiff his duties had increased in importance so that at the present time he held the position of chief engineer and director of fabrication and is also a senior vice-president of the plaintiff. He denied the allegation that he was an employee of the plaintiff, that he has been operating as A. M. Franco Engineers for over 12 years, and that his relation with Stein had been that of consulting engineer. He denied that he had any of the documents, papers, etc., set out in the petition that belonged to Stein, or that he had in his possession any trade secrets of the plaintiff, or that he had destroyed any business records of Stein. By cross bill he prayed that the petition be dismissed, and he be awarded punitive damages in a named sum and attorneys fees.

After hearing evidence and argument, the court (a) overruled a ...