American Window Cleaning Co. of Springfield v. Cohen

• Decision Date: 17 November 1961
• Citation: 178 N.E.2d 5,343 Mass. 195
• Parties: AMERICAN WINDOW CLEANING COMPANY OF SPRINGFIELD, Mass. v. Louis COHEN and another.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 5

178 N.E.2d 5

343 Mass. 195

AMERICAN WINDOW CLEANING COMPANY OF SPRINGFIELD, Mass. v. Louis COHEN and another.

Supreme Judicial Court of Massachusetts, Hampden.

Argued Sept. 27, 1961.

Decided Nov. 17, 1961.

Irving M. Cohen, Springfield, for plaintiff.

Robert D. Moran, Springfield, for defendants.

Before WILKINS, C. J., and SPALDING, WHITTEMORE, CUTTER and KIRK, JJ.

WHITTEMORE, Justice.

The defendants ask us to reverse the final decree of the Superior Court which adjudged that certain competitive conduct by the defendant Cohen was unlawful and that the defendants are liable in damages. There was no injunctive relief. At issue is the extent to which a former corporate officer and employee, in the absence of an agreement not to compete, may solicit the corporation's customers and use information acquired while associated with it.

We summarize facts from the master's report. Cohen was voted out of office, as president and a director, and discharged as manager of the window cleaning portion of the plaintiff's business, at a stockholders' meeting on July 7, 1959. Cohen's brother-in-law, Edward L. Simonoff, had been treasurer and a director. Their mother-in-law, Stella Radner, was the third director. The 100 shares of stock had been held: thirty-eight shares by the mother-in-law; thirty-one shares by Simonoff's wife, Lillian; and thirty-one shares by Cohen or his wife, Eunice. Simonoff managed the maintenance portion of the plaintiff's business. Differences had arisen between the brothers-in-law over the management of the corporation; Cohen had separated from his wife and the ownership of the thirty-one shares was in dispute. Contentious or abortive corporate meetings were held from time to time in the first six months of 1959; Cohen in presiding at some meetings acted 'unwisely and improperly.' By agreements dated July 7, 1959, the mother-in-law and Eunice Cohen (Eunice claiming and purporting to sell thirty-one shares) agreed to sell stock to the Simonoffs. Weekly instalment payments due under one of these contracts were thereafter made directly by the corporation. There was no evidence of a note or a contract for repayment of these weekly amounts and they were not intended as a charge against Simonoff's weekly compensation. 'This amounted to a purchase of sufficient shares of stock of the plaintiff by * * * Lillian Simonoff to give her control, financed by the corporation in a manner not fully determinable from the evidence, without the consent of the defendant Cohen.'

Cohen said at a meeting of July 17 that he intended to go into business, would solicit the plaintiff's customers in Springfield, and would try to hire the plaintiff's employees. The plaintiff, under Cohen's supervision, had kept on ledger cards a record of regular customers which contained their names, the dates of service, the name of the employee who did the work, the time required, the type of work, and the charge.

'It was * * * an advantage to any person rendering window cleaning service and making estimates therefor to know prices which had been charged, the frequency of service, and to have had experience in the amount of cleaning to be done for each customer in order to give satisfaction. It was helpful with certain stores to know how often window displays were changed, how often window signs were changed, the degree of window care, and whether to clean glass doors. The purpose was to satisfy the customer. This knowledge the defendant Cohen had from his association with the plaintiff.'

Cohen, discharged as of July 11, formed the defendant corporation and through it began no compete on July 20. The defendant corporation acquired some fifty-one former regular customers of the plaintiff (for which the damages, if recoverable, were $413.13) and secured the business of some of its irregular customers, that is, those for whom service was performed less often than monthly, or only when requested. The plaintiff in the prior forty or fifty years of its window cleaning business had been successful in retaining the bulk of its customers, notwithstanding considerable competition. It was a business which could not be conducted surreptitiously. 'It was comparatively easy to discover the customers of any particular window cleaning concern. * * * The plaintiff failed to establish that * * * Cohen took any records or copies of records of the plaintiff.' In a required summary of evidence, subsequent to the report, the master stated that there was evidence that Cohen, before leaving, had copies some of the plaintiff's records but that there was no evidence from which he could draw a conclusion as to the information copied 'nor that it was other than information which he already had or had supplied as manager of the window cleaning department of the business.' 'Cohen did know the customers * * * and the prices charged, as well as the type and frequency of work done * * *. The plaintiff [except in the one case hereafter discussed] did not establish the extent to which * * * Cohen * * * was assisted in obtaining work by the knowledge which he had gained * * * except as to names of customers and prices charged.' Two employees of the plaintiff became employees of the defendant corporation.

Cohen, before leaving the plaintiff's employ, had, for the plaintiff, submitted a bid to Gilbert & Barker Manufacturing Company, an irregular customer for whom the plaintiff had done work when requested two or three times in the preceding five years. He had also subsequently prepared for the plaintiff a revised bid which Simonoff had submitted after Cohen's discharge. Cohen on July 13 solicited the business for the defendant corporation, and was shown by the customer a copy of the plaintiff's figures 'for his use in preparing his own bid.' The defendant corporation then submitted a bid for $2,380. This was $5 less than the plaintiff's bid and the defendant corporation obtained the employment.

The master concluded that the plaintiff had failed to show the use of any confidential information by Cohen in his competition with the plaintiff; Cohen had violated no trust or confidence and consequently neither Cohen nor the defendant corporation had acted improperly in their competition; Cohen had not acted improperly in soliciting employees of the plaintiff, nor taken advantage of confidential information in so doing. The master also stated his conclusion that the plaintiff did not come into court with clean hands.

The judge on the subsidiary findings ruled that the plaintiff 'did not come into court with unclean hands,' and that 'the conduct of * * * Cohen two days after his lawful discharge * * * was for purposes of advancing his own interests and that of the new corporation * * * and that * * * Cohen procured by improper means information about the plaintiff's business.' The final decree awarded damages for the loss of the Gilbert & Barker contract and, in subparagraph 2, for interference with regular customers.

It is established that a discharged employee, without the use of a list belonging to his former employer, may solicit the latter's customers. Padover v. Axelson, 268 Mass. 148, 167 N.E. 301; May v. Angoff, 272 Mass. 317, 320, 172 N.E. 220; Woolley's Laundry, Inc. v. Silva, 304 Mass. 383, 389, 23 N.E.2d 899, 902, 126 A.L.R. 752, and cases cited. '[N]o general and invariable rule can be laid down * * * the question turns upon whether in a given case the list was confidential, and, if so, whether that fact should be submerged in the interests of free competition.' Ibid.

There is no basis in the findings or evidence for a conclusion that the defendants used confidential information in soliciting the plaintiff's regular customers. Remembered information as to the plaintiff's prices, the frequency of service, and the specific needs and business habits of particular customers was not confidential....