Dunfey Realty Co. v. Enwright

• Decision Date: 04 February 1958
• Parties: DUNFEY REALTY CO., Inc. v. George J. ENWRIGHT.
• Court: New Hampshire Supreme Court

Page 80

138 A.2d 80

101 N.H. 195

DUNFEY REALTY CO., Inc. v. George J. ENWRIGHT.

Supreme Court of New Hampshire.

Argued Oct. 1, 1957.

Decided Dec. 18, 1957.

Rehearing Denied Feb. 4, 1958.

William W. Treat, Hampton, Warren A. Seavey, Laconia, and Richard P. Dunfey, Exeter, for plaintiff.

Perkins & Holland and Robert B. Donovan, Exeter, for defendant.

WHEELER, Justice.

It is the defendant's contention that the restrictive covenant not to compete protects no legitimate business interests of the plaintiff and imposes undue hardship upon him and was executed without consideration.

The Trial Court found among other things that the parties entered into an employment contract freely and with full understanding of the terms thereof and for adequate and sufficient consideration, but refused to find that the limitations as to time and area were reasonable. In response to a request filed by the plaintiff, he found that such a contract would be enforced 'as to any part of that district that is reasonably necessary for the protection of the good will of business of the employer there established,' but ruled that it would be inequitable under all the circumstances to continue the injunction.

Our court on a number of occasions has observed that the law does not look with favor upon contracts in restraint of trade or competition (Eastern Express Co. v. Meserve, 60 N.H. 198) and that they are not to be extended by construction beyond the fair import of the language contained therein. Bowers v. Whittle, 63 N.H. 147; Saddlery Hardware Mfg. Co. v. Hillsborough Mills, 68 N.H. 216, 44 A. 300. However, if the 'limitations on defendant's freedom of action' are reasonable, they will not be held void, but competition will be restrained if it is reasonable to do so. Spaulding v. Mayo, 81 N.H. 85, 86, 122 A. 899. Such contracts not only inure to the benefit of the employer but to the employee as well, in that the latter may, by giving a restrictive covenant, be able to place himself in a more advantageous position economically. Under a reasonable contract the employer is entitled to be protected against an employee using trade secrets and personal influence with customers which he has gained in such employment. See 76 U.Pa.L.Rev. 244.

Numerous authorities in other jurisdictions have been cited by able counsel in their briefs to sustain their positions here. A detailed analysis of these authorities is not deemed necessary, since they all 'boil down' to the general proposition that 'The conclusion reached * * * is that the validity of the agreement depends upon the reasonableness of the restraint as applied to the particular circumstances of each case * * *.' Bancroft v. Union Embossing Company, 72 N.H. 402, 406, 57 A. 97, 100, 64 L.R.A. 298; New England Tree Expert Co. v. Russell, 306 Mass. 504, 28 A.2d 997; Roy v. Bolduc, 140 Me. 103, 34 A.2d 479, 149 A.L.R. 630. See annotations 41 A.L.R.2d 15; 43 A.L.R.2d 94.

The Court found that the plaintiff failed to establish the presence of any trade or business secrets or that the defendant had any confidential knowledge which he could or did use to the detriment of plaintiff. The evidence did not compel a contrary finding.

The plaintiff in its brief agrees that Enwright 'did not use or disclose trade secrets' but argues that he acquired certain confidential information about plaintiff's methods and procedures. These methods and procedures in general consisted of pre-appraisals prior to financing through a federal agency; acquiring a familiarity with certain F. H. A. and V. A. forms and general access to customers' listings and other methods of financing.

There are some twenty real estate agents in the Hampton area, and many of them are using these methods. The Dunfey methods were not unknown to Fred Shaake, who had access to the office files and forms before he purchased the Dunfey interests in Rockingham Investment Company. This company shared office space with the plaintiff and the files of both were kept in the same drawer.

The plaintiff must show more than that its methods and procedures were not known to the general public. It must establish that such secrets were exclusively its own and not general secrets of the trade. Arthur Murray Dance Studios v. Witter, Ohio Com.Pl., 105 N.E.2d 685. Moreover, the plaintiff's undertaking was that he would not 'divulge' confidential information, and there was no evidence that he did.

The Trial Court found that defendant did not actively engage in soliciting customers of the plaintiff, and the plaintiff does not dispute the fact that he did not go out specifically to deal with former dustomers. The most that can be said of his activities is that when he heard of a prospective sale or saw a sign on a building, whether bearing the plaintiff's or some other agent's name, he would solicit a listing, using similar methods employed by the plaintiff and standard in the business. An employer '* * * has no right to...