Clark Paper & Mfg. Co. v. Stenacher

• Decision Date: 13 July 1923
• Citation: 140 N.E. 708,236 N.Y. 312
• Court: New York Court of Appeals Court of Appeals
• Parties: CLARK PAPER & MFG. CO. v. STENACHER.

236 N.Y. 312

140 N.E. 708

CLARK PAPER & MFG. CO.

v.STENACHER.

Court of Appeals of New York.

July 13, 1923.

Suit by the Clark Paper & Manufacturing Company against Edward D. Stenacher. From a judgment of the Appellate Division (193 App. Div. 924,184 N. Y. Supp. 914) affirming a judgment of the Special Term (108 Misc. Rep. 399,177 N. Y. Supp. 614) for plaintiff, defendant appeals.

Judgments reversed, and complaint dismissed.Appeal from Supreme Court, Appellate Division, Fourth Department.

McKelvey & Stenacher, of Saratoga Springs (George H. Stenacher, of Saratoga Springs, of counsel), for appellant.

Remington & Remington, of Rochester (Thomas H. Remington, of Rochester, of counsel), for respondent.

CRANE, J.

The plaintiff has procured a judgment restraining and enjoining the defendant from continuing in the employ of the George Irish Paper Company, and from entering into the employ of any competitor of the plaintiff in the state of New York for a period of eight years, and further from disclosing any information as to the plaintiff's methods, customers, or other affairs. This judgment has been affirmed by a divided court.

The plaintiff is a New York corporation, engaged in the city of Rochester in the manufacture of paste and flour and in the sale of wrapping paper and paper specialties. It does not manufacture the paper which it sells. The defendant is a young man who entered the employ of the plaintiff in November of 1914 as a salesman or drummer for this paper trade. He sold wrapping paper of a kind known as Clarkraft. He stayed until the 23d day of April, 1917, when he left to enter the employ of one of the plaintiff's competitors, located in Buffalo, known as the George Irish Paper Company. At the time the defendant commenced work for the plaintiff he executed an alleged agreement, the basis of this action, which is here given in full.

‘Effective January 1, 1915.

‘This agreement, made this 14th day of November, 1914, between E. D. Stenacher, of Rochester, N. Y., party of the first part, and the Clark Paper & Mfg. Co., of the city of Rochester, N. Y., a domestic corporation, party of the second part, witnesseth as follows:

‘Whereas, the party of the first part is about to enter into the employment of the party of the second part:

‘Now, therefore, the party of the first part does hereby agree to enter into the employment of the party of the second part, for a period of time, to be mutually agreed upon between them, upon the following terms and conditions:

‘It is further understood and agreed, as a part of this agreement and in consideration therefor, that the party of the first part will not directly or indirectly furnish or divulge the names of any customers of the party of the second part or of any prospective customers of the party of the second part or of any persons who have heretofore traded and dealt with the party of the second part, nor will he at any time in the future disclose or furnish to any other person, firm or corporation, the methods of conducting the business of the party of the second part or the manner in which the party of the second part packs its goods, nor will he furnish to any person, firm or corporation, a description of any of the methods of obtaining business or of packing goods or of advertising the same, or of obtaining customers therefor or the manner or process of manufacture of any of the articles made by the party of the second part, or of the processes which enter into the manufacture of the same, or disclose to any person, firm or corporation any information obtained by the party of the first part, during the course of said employment, and that the party of the first part will not after working hours, or at any other time or place, engage in conversation with other employees of the party of the second part, concerning the articles manufactured by the party of the second part or any of the processes by or through which, the same are made, and, further, that the party of the first part will not, for a period of eight years, from the expiration of this contract of employment or during the term thereof, enter the employ of any competitor or of any person, firm or corporation handling or manufacturing the same line of goods as the party of the second part, in the state of New York.

‘It is further provided, that the party of the first part will not at any time referred to in this agreement or at any future time, disclose any of the processes used by the party of the second part in the manufacture of any of the articles manufactured or sold by it, no matter from whom or in what manner the party of the first part may have acquired such information.

‘In witness whereof the party of the first part has hereunto set his hand and seal, and the party of the second part has caused this instrument to be signed by its vice president, and its corporate seal to be hereunto affixed the day and year above mentioned.

‘E. D. Stenacher. [L. S.]

‘[Seal.] Clark Paper & Mfg. Co.,

‘By H. B. Clark, V. P. [L. S.]’

This action was brought to restrain the defendant from violating this agreement, and it has resulted in the judgment above stated.

[1] The alleged contract is not complete; one very material element has been omitted. The defendant agreed to enter into the employment of the Clark Paper & Manufacturing Company for a period of time to be mutually agreed upon between them. No time was ever fixed; it remained indefinite. The contract was therefore incomplete; it was an agreement to agree upon a period of employment. Sun Printing & Publishing Ass'n v. Remington Paper & Power Co., 235 N. Y. 338, 139 N. E. 470. That the time to be fixed by subsequent agreement was material is apparent from that portion of the instrument which is sought to be enforced against the employee. That provides that the defendant, being the party of the first part, will not for a period of eight years from the expiration of this contract of employment, or during the term thereof, enter the employ of any competitor. The date of the expiration of the contract was not fixed, nor was the length of time during which it was to operate agreed upon. From what date were the eight years, therefore, to commence to run? The parties contemplated, as stated in this writing, that a period of time would be fixed by agreement, and that during the eight years from the expiration of that period the defendant would be bound by his contract not to enter the employ of a competitor. The plaintiff has, therefore, in effect obtained specific performance of a contract which has not been made. It has enjoined the defendant from working during a period which could have been made definite, but which was not. The relief obtained is in the nature of specific performance. Gossard Co. v. Crosby, 132 Iowa, 155, 109 N. W. 483,6 L. R. A. (N. S.) 1115.

The plaintiff claims that the contract terminated when the defendant left its employ. The difficulty is, however, that the plaintiff bases its claim for equitable relief upon a specific contract, and not upon rights growing out of a general employment at the will of the parties. The agreement which the parties intended to make has never been made. For this reason, if for no other, the plaintiff was not entitled to the judgment which it has obtained.

[2] An employee may be prevented under his negative covenant from revealing trade secrets even where the term of employment is at will, and has not been fixed for a definite period. McCall Co. v. Wright, 198 N. Y. 143, 91 N. E. 516,31 L. R. A. (N. S.) 249. The complaint here is upon an alleged contract not only to refrain from revealing secrets, but to keep out of like work for eight years. The judgment follows the complaint. The contract alleged must be proved to obtain such a drastic remedy.

[3] There was nothing peculiar in the nature of the work undertaken for the plaintiff by the defendant. He was engaged to sell wrapping paper. The customers were drummed up from Dun and Bradstreet's books. There was apparently no customer in Rochester using wrapping paper who was not known to be a possible customer to every one of the plaintiff's competitors. There was no secret list of customers or information regarding them which the defendant could reveal to a competitor as in...