Anchor Alloys, Inc. v. Non-Ferrous Processing Corp., N-FERROUS

• Decision Date: 24 October 1972
• Docket Number: NON-FERROUS,N-FERROUS
• Citation: 39 A.D.2d 504,336 N.Y.S.2d 944
• Parties: , 176 U.S.P.Q. 125 ANCHOR ALLOYS, INC., Plaintiff, v.PROCESSING CORPORATION et al., Defendants.
• Court: New York Supreme Court — Appellate Division

Page 944

336 N.Y.S.2d 944

39 A.D.2d 504, 176 U.S.P.Q. 125

ANCHOR ALLOYS, INC., Plaintiff, v. NON-FERROUS PROCESSING CORPORATION et al., Defendants.

Supreme Court, Appellate Division, Second Department.

Oct. 24, 1972.

Rosoff & Rosoff, New York City (Morris Rosoff and Robert A. Katz, New York City, of counsel), for plaintiff.

Kaufman & Serota, New York City (Irving Serota, New York City, of counsel), for defendants.

Before HOPKINS, Acting P.J., and MUNDER, MARTUSCELLO, CHRIST and BENJAMIN, JJ.

MARTUSCELLO, Justice.

This is an action for a declaratory judgment upon a submission of agreed facts pursuant to CPLR 3222 to determine whether the defendants, either collectively or individually, are to be held liable for unfair competition, breach of fiduciary duty and other violations of the plaintiff's rights.

Defendant Non-Ferrous Processing Corporation (hereinafter called 'Non-Ferrous') is a New York corporation, formed on June 5, 1968. The plaintiff manufactures and sells various metals for use in various industries and is also engaged in the melting, smelting, purifying, alloying and fabricating of basic metals. Non-Ferrous is also engaged in the melting and smelting of metal and the sale of the recycled metal. Half of Non-Ferrous' melting and smelting work is done with customers who also patronize the plaintiff.

Defendant Kaufman has been in the metals business for more than 35 years. In June, 1962 he was president and sole stockholder of Roosevelt Metal Co. Inc., a New York corporation. On April 27, 1962 Roosevelt Metal agreed to sell the plaintiff its good will, fixtures, machinery, equipment and personal property. The agreement also restricted the seller from reestablishing, reopening or engaging in any business similar to the one sold within New York City for a term of five years from the date of closing. The sale was closed on June 29, 1962. Simultaneously therewith, Kaufman entered into an employment contract with the plaintiff. That agreement provided in pertinent part that if the 'agreement, or the employment hereunder, shall terminate subsequent to July 1, 1965,' Kaufman would not 'prior to July 1, 1967, directly or indirectly, sell metals to any person or firm who or which purchased metals from Roosevelt Metal Co. Inc. during the period of five (5) years immediately preceding July 1, 1965.' Kaufman was employed by the plaintiff from July, 1962 through March 22, 1968. Since July, 1968 Kaufman has been, and he presently is, an employee, officer and stockholder of Non-Ferrous.

Defendants Worth, Orol and Princenthal were partners, doing business as Rutgers Metal Co., for approximately 25 years. On April 26, 1968 Worth entered into a contract for the purchase of premises at 551 Stewart Avenue, in Brooklyn, New York. The contract was entered into by Worth in his individual name, but was for the stated benefit of himself, Orol and Princenthal. In late April, 1968, but prior to entering into this contract, Worth, Orol and Princenthal had negotiations with Kaufman concerning the opening of a business engaged in the chopping of copper and the melting and smelting of metals. On or about April 28, 1968, these four individual defendants again met and agreed to form a corporation engaged in copper chopping and the melting and smelting of metals, to be located at 551 Stewart Avenue, in Brooklyn.

On or about June 21, 1968, Worth assigned his interest in the contract of sale to the Stewart Avenue property to Non-Ferrous and Non-Ferrous then closed the contract and took title to the premises. Although the agreed statement of facts makes no reference to any other relationship between defendants Worth, Orol, Princenthal and Non-Ferrous, the plaintiff claims in its brief, and it may be inferred from the record, that Worth, Orol and Princenthal are officers and stockholders in Non-Ferrous. The first work contracted for repairs on these premises was on June 28, 1968. Non-Ferrous made its first item of purchase on November 27, 1968 and its first item of sale on December 18, 1968.

Defendant Baim was employed by Roosevelt Metal prior to June, 1962 as a plant manager. From June, 1962 through the first week of October, 1968 he was employed by the plaintiff in a similar capacity. From mid-October through November, 1968, Baim was employed by Rutgers Metal Co. Thereafter he joined Non-Ferrous as plant manager and remained there as such until August 27, 1970. From November, 1968 through January, 1969 Non-Ferrous hired three former employees of the plaintiff. All three were manual laborers and constituted 10% Of the plaintiff's labor force.

Lee Salmon, doing business as Columbia Smelting Company, had a license agreement with Roosevelt Metal. That agreement passed to the plaintiff and consequently the plaintiff used the name of Columbia Smelting. During September, 1968 Kaufman advised Salmon that he was re-entering business in the non-ferrous metal field. On October 7, 1968 Salmon exercised his reserved right to terminate his license agreement with the plaintiff. In November, 1968 Kaufman and Salmon began negotiations concerning work to be done by Non-Ferrous for Salmon. In the latter part of December, 1968 Non-Ferrous circulated an introductory letter to the trade, which included some of the plaintiff's accounts.

The plaintiff contends that the totality of conduct herein indicates that the defendants either collectively or individually are culpable of unfair competition in that (a)...