Career Placement of White Plains, Inc. v. Vaus

• Decision Date: 22 February 1974
• Citation: 354 N.Y.S.2d 764,77 Misc.2d 788
• Parties: CAREER PLACEMENT OF WHITE PLAINS, INC., Plaintiff, v. Steven VAUS and T. J. Harbrowe Associates, Inc., Defendants.
• Court: New York Supreme Court

Page 764

354 N.Y.S.2d 764

77 Misc.2d 788

CAREER PLACEMENT OF WHITE PLAINS, INC., Plaintiff, v. Steven VAUS and T. J. Harbrowe Associates, Inc., Defendants.

Supreme Court, Westchester County.

Feb. 22, 1974.

Arthur H. Grae, White Plains, for plaintiff.

Tachna & Krassner, White Plains, for defendants.

JOSEPH F. GAGLIARDI, Justice.

In an action for a permanent injunction and damages plaintiff moves for an order granting a preliminary injunction. By order to show cause dated January 30, 1974 the defendants were temporarily enjoined from soliciting plaintiff's customers. On the argument of this matter I continued the restraining order pending disposition of the within motion.

Plaintiff is a domestic corporation located in the City of White Plains, Westchester County and does business in this County as an employment agency. Defendant Vaus is a former employee of plaintiff and is now associated with defendant T. J. Harbrowe Associates, Inc. The corporate defendant is engaged in the same business as plaintiff and is also located in the City of White Plains.

On January 15, 1973 plaintiff and the individual defendant executed a contract of employment. At the time of execution defendant Vaus was approximately twenty years and ten months old. The contract states that Vaus is employed as a 'Placement Counselor' with duties to be determined by plaintiff and is to be paid a weekly wage as a draw against commissions which he may earn. The contract, which consists of four typewritten pages, was signed by defendant Vaus on each page. The instrument further provides that the term of employment shall be for three years. Paragraph four contains a restrictive covenant which forms the nexus of this suit. It is there provided:

'Both parties to this Agreement recognize that the knowledge, training, and information gained concerning the Company list of employer-employee contacts and customers, advertising and interviewing techniques, manuals, systems and forms, constitute the most vital part of the COMPANY'S business and are by their very nature, trade secrets and confidential knowledge gained only through employment herein; and that services are to be rendered under this Agreement by the EMPLOYEE are special, unique, and shall be gained only through special training and instruction by the COMPANY. Therefore, upon termination of his/her employment, whether termination of the Agreement, by wrongful discharge or otherwise, EMPLOYEE shall not directly or indirectly, within Westchester County of the State of New York (said area comprises the business territory of the Company) enter into or engage in the same or similar occupation with a permanent or temporary employment service or any similar business, or perform any services, either as an individual, partner, joint venture, employee, agent, for any person, corporation, or partnership for a period of one (1) year after date of termination of his/her employment hereunder; and further shall never disclose or use the COMPANY'S list of employer-employee contacts and customer, advertising and interviewing techniques, manuals, systems and forms, all of which constitute the COMPANY'S trade secrets and confidential knowledge or such other information gained through employment hereunder. The EMPLOYEE further covenants and agrees that he will not solicit the trade or patronage of any customer or client of the Employer in the County of Westchester, in the State of New York during said period of one (1) year for himself/herself or for any firm engaged in the same or similar business to that of the Employer.'

Said paragraph also provides for an injunction against the employee for violation of its provisions and for liquidated damages in the amount of Two-Hundred and Fifty Dollars per business day, not to exceed Twenty-Five Thousand Dollars. The contract further provides that either party may terminate the contract on sufficient prior notice (not relevant here) and that both parties waive their right to a jury trial concerning matters 'in any way connected with this contract'.

On January 16, 1974 defendant Vaus and plaintiff terminated their relationship. Vaus thereupon was employed by the corporate defendant in virtually the same capacity as he previously held with plaintiff. Plaintiff claims that during Vaus' one year relationship with it he 'became a super star performer' and acquired confidential information that he is now using on behalf of the corporate defendant. Plaintiff contends that it specially trained Vaus and entrusted certain exclusive corporate clientele to him. This clientele, it is asserted, is maintained in a confidential list 'which constitutes one of the most valuable secrets of the plaintiff's business' and represents a large expense in terms of advertising and developing leads regarding key employers. Defendant Vaus was entrusted with four key accounts--Procter and Gamble, Inc., Liberty Mutual Insurance Company, Wohl Shoes and Friendly Ice Cream. Plaintiff submitted an affidavit by the Personnel Recruiter of Friendly Ice Cream in which he states that on January 23, 1974 he was solicited by telephone by Mr. Vaus on behalf of the corporate defendant but refused to do business with him. Plaintiff also avers, on information and belief, that customer lists of major employer clients are missing and are possessed by Mr. Vaus. Additionally, plaintiff states that it had hired Vaus as assistant manager in a supervisory capacity.

Defendant Vaus urges that the restrictive covenant is not enforceable because he repudiated the contract. He also contends that the covenant is illegal and against public policy. Vaus states that he does not possess any confidential list and his special training supplied by plaintiff 'consisted of learning how to use the yellow pages of the Westchester Telephone Book'. To enforce the covenant, Vaus argues, would be to deprive him of his right to earn a living. He asserts that his services were not unique and that others in plaintiff's employ are capable of performing the work previously assigned to him. Furthermore, Vaus states that the Personnel Director of Friendly Ice Cream told him that he was no longer in charge of personnel in Westchester County and gave him the names of those persons who were.

The corporate defendant avers it had no knowledge of the restrictive covenant when it hired Vaus. It contends that in the employment service industry there are no confidential lists and the major employers plaintiff refers to do not use plaintiff's services exclusively. Both defendants cross-move for dismissal and related relief.

Defendant Vaus in a first affirmative defense and on this motion raises his lack of capacity to be bound by the restrictive covenant. The Court shall pass on this issue first.

At common law and by statute a minor is a person who has not yet reached twenty-one years of age (Sternlieb v. Normandie Nat. Sec. Corp., 263 N.Y. 245, 188 N.E. 726; Domestic Relations Law § 2). Contracts executed by infants are voidable at their election (Sternlieb v. Normandie Nat. Sec. Corp., Supra; 2 Williston on Contracts § 226 (3rd ed.)). Upon reaching majority the infant 'must disaffirm within a reasonable time after becoming of age or his silence will be considered a ratification' (Sternlieb v. Normandie Nat. Sec. Corp., Supra at p. 248, 188 N.E. at p. 727). In other words, where a contract has been executed disaffirmance on the ground of infancy must occur within a reasonable time after attaining the age of twenty-one and ratification depends on the facts of the particular case (28 N.Y.Jur., Infants, §§ 28, 52; 7 Encyclopedia N.Y. Laws (Contracts) §§ 2203--05, 2208; Ann. 5 A.L.R.2d 7 'Infants Contracts-Failure to Disaffirm').

By various statutes this state has sought to equalize economic relationships between infants and adults in certain business transactions (see e.g. General Obligations Law § 3--101 (eighteen year olds are bound by reasonable and provident business contracts concerning the 'business in which the infant was engaged'); ^* Education Law § 281 (sixteen year olds liable on education loans); Insurance Law § 145 (fifteen year olds bound on purchase of life insurance); Insurance Law § 145--a (eighteen year olds bound on purchase of accident and health insurance); former Personnel Property Law § 83 (infant liable for necessaries furnished him) (now Uniform Commercial Code § 1--103)). The purpose of the diverse legislation is to permit infants to conduct certain essential business transactions while assuring those with whom they have such transactions that infancy will not be a defense or ground for repudiation of the contractual obligations. Additionally, it has been held that an infant may appoint an agent (Casey v. Kastel, 237 N.Y. 305, 142 N.E. 671; Mtr. of Goodchild, 160 Misc. 738, 753, 290 N.Y.S. 683, 698) and discharge or hire his own counsel (Mtr. of Anonymous v. Anonymous, 70 Misc.2d 584, 333 N.Y.S.2d 897; Griston v. Stousland, 186 Misc. 201, 60 N.Y.S.2d 118 (App.Term, 1st Dept.)).

Plaintiff argues that Vaus ratified the contract by his continued acceptance of wages and employment for approximately ten months after attaining his majority. This position has merit and the Court would be inclined to rule as a matter of law that the contract was ratified through Vaus' inaction prior to January 15, 1974. However, the Court prefers to rest its determination on this issue on another ground: that an infant who executes and performs under a contract containing a restrictive covenant is bound by the latter clause whether or not the contract is ratified and is otherwise binding (Mutual Milk and Cream Co. v. Prigge, 112 App.Div. 652, 98 N.Y.S. 458; Ann. 17 A.L.R. 863 'Infants-Covenant Not To Compete'). The rationale of this rule as expressed in Prigge, supra, is that infants would not be employed in businesses having trade secrets and their ilk unless employers were permitted to bind infants to restrictive covenants as security for...