Apron & Linen Serv. Inc. v. Krzywulak
| Decision Date | 20 January 1948 |
| Docket Number | 147/359. |
| Parties | PILGRIM COAT, APRON & LINEN SERVICE, Inc., v. KRZYWULAK et al. |
| Court | New Jersey Court of Chancery |
OPINION TEXT STARTS HERE
Suit in equity by the Pilgrim Coat, Apron and Linen Service, Incorporated, against Raymond Krzywulak and others to enjoin violation of a covenant in an employment contract against serving plaintiff's customers after termination of named defendant's employment by complainant.
Decree for complainant.
Syllabus by the Court.
1. Neither mordern public policy nor the judicial decisions of recent years have proscribed contracts in restraint of trade between employer and employee where the restraint is reasonably necessary for the protection of the business of the employer and not unreasonably restrictive in point of time or territory upon the normal rights of the employee.
2. The primary factors to be considered in testing the validity and efficacy of such a covenant are whether the covenant ancillary to the contract has a greater amplitude than reasonably required to afford a fair protection in favor of the employer or whether it is unreasonably restrictive of the rights and opportunities of the employee, or whether it is prejudicial to the public interests.
3. Courts of equity will protect an employer against a breach of a written agreement, founded upon a good consideration, and reasonable in its terms, made by an employee, not to engage with a rival after the termination of the employment, where the services of the employee have been of such a character that he gained knowledge of his employer's business methods and secrets, the disclosure of which to a rival would result in irreparable injury to the employer, and where it further appears that the purpose of the subsequent employment resulting in the breach, was to obtain the benefit of those secrets, and that there is imminent danger that through such subsequent employment such secrets would be disclosed.
4. In the circumstances disclosed by the stipulation, it is not apparent that the covenant in question is so manifestly unreasonable and oppressive in point of its duration as to render it invalid and thus liberate the covenantor from its restraints.
M. Lester Lynch, of Jersey City, for complainant.
George Pellettieri, of Trenton, for defendant Krzywulak.
James S. Kline, of Trenton, for defendant City, etc., Service.
JAYNE, Vice Chancellor.
Neither modern public policy nor the judicial decisions of recent years have proscribed contracts in restraint of trade between employer and employee where the restraint is reasonably necessary for the protection of the business of the employer and not unreasonably restrictive in point of time or territory upon the normal rights of the employee. Silbros, Inc., v. Solomon, 139 N.J.Eq. 528, 52 A.2d 534, and cases therein collated.
The primary factors to be considered in testing the validity and efficacy of such a convenant are whether the covenant ancillary to the contract has a greater amplitude than reasonably required to afford a fair protection in favor of the employer or whether it is unreasonably restrictive of the rights and opportunities of the employee, or whether it is prejudicial to the public interests. Original New York Furriers Co. v. Williams, 133 N.J.Eq. 524, 33 A.2d 292.
On December 28, 1937, the defendant Krzywulak executed a contract of employment with the complainant which embodies the following covenant of present pertinency:
The employment terminated on March 22, 1946, and the defendant thereupon ignored and disobeyed the obligations of the covenant, hence the prosecution of this cause by the complainant for an injunctive decree.
The cause is submitted to me by means of a stipulation which confirms the truth of certain specified factual allegations of the bill of complaint and projects for decision particularly the reasonableness of the duration of the period of the restraint imposed by the covenant.
The reports are alive with cases implicating the propriety and fitness of covenants in restraint of trade and perhaps they are the more profuse because, while covenants restrictive of future employment in contracts between employer and employee are not viewed with the same indulgence as those between a vendor and a vendee of a business and its good will, the same rule of reasonableness is applicable to both classes of covenants. A. Fink & Sons v. Goldberg, 101 N.J.Eq. 644, ...
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