Conforming Matrix Corp. v. Faber

• Citation: 104 Ohio App. 8,146 N.E.2d 447
• Parties: , 4 O.O.2d 62 CONFORMING MATRIX CORP., Appellant, v. FABER, Appellee. *
• Decision Date: 18 March 1957
• Court: United States Court of Appeals (Ohio)

Page 8

104 Ohio App. 8

146 N.E.2d 447, 4 O.O.2d 62

CONFORMING MATRIX CORP., Appellant, v. FABER, Appellee. ^*

Court of Appeals of Ohio, Lucas County.

March 18, 1957.

Syllabus by the Court

1. A contract between an employer and an employee containing restrictive covenants whereby the latter agrees he will not engage directly or indirectly for himself, or in any capacity as a representative or employee of others, in any business which is in competition with the business of the employer in some 19 states, including Ohio, and in Ontario, Canada, during his employment, and for a period of five years thereafter, is not ipso facto unenforcible as against public policy and void ab initio.

2. A contract between an employer and an employee, whereby the employee as a part of his employment undertakes not to enter into a competing business for a period of five years after leaving the employer's business is sustained if it is no wider than reasonably necessary for the protection of the employer's business and does not impose undue hardship on the employee, where the contract does not otherwise restrict the practice of the employee's profession of engineer generally, due regard being had to the interests of the public. This is so whether based upon the divisibility of the terms of the contract or upon partial equitable relief on undisputed evidence as to a breach within a part of a limited and defined area.

3. A contract between employer and employee, by the terms of which the employee covenants not to disclose or reveal to any person, firm or corporation any of the confidential information of a somewhat unique design of production and manufacture or of trade secrets of the employer and not to engage directly or indirectly for himself, or in any business which is, in competition with the business of the employer in a certain defined area in the United States, including Ohio, and in Ontario, Canada, is breached by a showing that the special knowledge, experience and skill gained by the employee in his confidential relationship while working for the employer as chief engineer and plant superintendent having charge of design, production and manufacture of the machine sold by employer, and with access to customer, cost, price, correspondence and advertising files of the employer and through dealing with employer's customers, was used by the employee within a few months after leaving his employment in designing and selling for a new employer in an adjoining county in Ohio, to a former customer of the original employer located in Ohio, spray painting machines and mats substantially incorporating designs and techniques of original employer.

4. A court in an equity case has jurisdiction to consider damages in connection with equitable relief.

Boggs, Boggs & Boggs, Toledo, for appellant.

Cobourn, Yager, Notnagel, Smith & Beck, Toledo, for appellee.

SMITH, Judge.

This appeal is on questions of law and fact from a judgment of the Court of Common Pleas denying equitable relief to plaintiff upon a claim for breach of a contract between plaintiff, an employer, and defendant, an employee, containing restrictive covenants, whereby plaintiff seeks to enjoin defendant from engaging directly or indirectly for himself or in any capacity as a representative or employee of others in any business which is in competition with the business of plaintiff in some 19 states, including Ohio, and in Ontario, Canada, during his employment and for a period of five years thereafter, and also from disclosing or revealing to any person, firm or corporation any of the confidential information of design, production and manufacture or of trade secrets of plaintiff. The parties are referred to herein as they appeared in the trial court, the plaintiff, appellant herein, as plaintiff, and the defendant, appellee herein, as defendant.

The undisputed evidence discloses that the plaintiff, a corporation located in Toledo, Ohio, employed some 35 employees and, since 1939, has been engaged in the business of designing, manufacturing and selling semiautomatic and fully automatic spray-painting machines, spray-painting masks, shields and stencils and spray-painting tools, fixtures and equipment, except for a period of three years, from 1942 to 1945, because of war priorities on materials. Some component parts of such equipment were purchased and others were obtained from subcontractors. The process of designing and manufacturing such machines and equipment adapted to special requirements of customers is somewhat unique, and the products are sold principally to automotive, appliance and toy industries and used for decorative purposes and display advertising.

Plaintiff's business is in a comparatively new field, requiring advertising in trade journals and magazines and extensive effort and expense in finding customers and meeting their particular requirements, distributing circulars to prospective customers and exhibiting products at trade shows. There were some six competing businesses located in the states of Ohio, New York, Michigan, Illinois and Pennsylvania.

The undisputed evidence discloses further that plaintiff sold its product and had customers in the states of Ohio, Michigan, Illinois, Massachusetts, Indiana, New York, New Jersey, Connecticut, Wisconsin, Pennsylvania, Maryland, Kentucky, Virginia, Rhode Island, Delaware, West Virginia and other states, and in Ontario, Canada; that defendant was employed by plaintiff on September 6, 1951, as plant superintendent and chief engineer; and that on May 15, 1953, defendant signed the employment agreement with plaintiff, which was revised upon suggestions of defendant before signing. The defendant voluntarily left the employment of plaintiff about December 29, 1954, and shortly thereafter became an employee of The Rold-Rite Metal Products Company of Genoa, Ohio, which company at the time was not engaged in business competitive with the plaintiff.

The defendant is a graduate engineer of Ohio Northern University and received a master's degree from Columbia University, and is an experienced mechanical engineer. Prior to his employment by plaintiff, defendant worked at his profession as an engineer in responsible positions in other companies as an inspector of jigs, tools and dies for the production of aircraft propellers and component parts of aircraft, and for a manufacturer of war bombs and a manufacturer of dental equipment, designing special...