Excelsior Laundry Co. v. Diehl

• Decision Date: 08 January 1927
• Docket Number: No. 2917.,2917.
• Citation: 252 P. 991,32 N.M. 169
• Parties: EXCELSIOR LAUNDRY CO.v.DIEHL et al.
• Court: New Mexico Supreme Court

32 N.M. 169

252 P. 991

EXCELSIOR LAUNDRY CO.

v.DIEHL et al.

No. 2917.

Supreme Court of New Mexico.

Jan 8, 1927.

Syllabus by the Court.

An employee who solicits business and delivers work for a laundry may, upon ceasing his employment, become the employee of another laundryman, in competition with his former employer, and solicit business from the customers from whom he had received laundry work, where he leaves with his former employer all lists of the customers, and where there is no contract prohibiting him from soliciting the patronage of such customers.

Appeal from District Court, Bernalillo County; Hickey, Judge.

Suit by the Excelsior Laundry Company against J. O. Diehl and another for an injunction. From a judgment for plaintiff, defendants appeal. Reversed and remanded, with leave to entertain an application for a modified injunction.

An employee who solicits business and delivers work for a laundry may, upon ceasing his employment, become the employee of another laundryman, in competition with his former employer, and solicit business from the customers from whom he had received laundry work, where he leaves with his former employer all lists of the customers, and where there is no contract prohibiting him from soliciting the patronage of such customers.

E. W. Dobson, of Albuquerque, for appellants.

Marron & Wood, of Albuquerque, for appellee.

BICKLEY, J.

This is an appeal from a judgment granting an injunction, enjoining the defendant J. O. Diehl from soliciting or causing or procuring to be solicited the patronage or laundry work from any of the persons who were customers of the plaintiff prior to the 19th day of February, 1923, along a certain route or district, and from soliciting or requesting, directly or indirectly, or causing to be solicited or requested the customers or patrons of the plaintiff in said district to discontinue their business with the plaintiff, or to transfer their business to the defendant or any other party; and defendant Imperial Laundry Company was enjoined from using in any manner the information acquired by the defendant J. O. Diehl concerning the trade secrets of the plaintiff, or from making use of the same. The plaintiff operated a laundry in the city of Albuquerque and had employed the defendant Diehl to work a laundry route for him in that city. That had been done by soliciting customers for the plaintiff by receiving from those customers work to be done in the plaintiff's laundry, and by delivering that work after it had been done. For several years the plaintiff had prepared and kept a list of its patrons and customers, the particular kind and class of work supplied, and the day and hour of the week when it was to be called for, which list, it is claimed by the plaintiff, was a business and trade secret of the plaintiff, communicated only to such of its agents and employees as needed to use the same in connection with the business, and that this list constituted one of the important and valuable assets of the plaintiff's business; that, for the purpose of enabling the defendant Diehl to perform his duties, the plaintiff revealed and communicated to him the contents of this list so far as the list related to his district; that, from the use of the list and the performance of the duties which the plaintiff employed the defendant Diehl to render, the defendant necessarily had acquired knowledge of the valuable trade information and practices of the plaintiff, its customers, and needs and class of work, times of collection, etc. The defendant Diehl became ill and was compelled to remain at home and was unable to perform his duties as driver and solicitor, and shortly thereafter was discharged from the service of plaintiff for reasons satisfactory to it. The defendant Diehl afterwards secured employment from the defendant Imperial Laundry Company similar to that which he had rendered to the plaintiff company. The defendant Diehl proceeded at once to visit the same customers and patrons of the plaintiff that he had served as agent and representative of the plaintiff, soliciting them to give up their patronage of the plaintiff and transfer it to himself and the defendant Imperial Laundry Company. The court found also:

“XIII. That in the course of such efforts he went to several of the patrons whom he had formerly served an hour or two in advance of the time when he had been accustomed to collect from them upon behalf of the plaintiff, asked them for their laundry and received the same without informing them of the change in his employment, or telling them that he had ceased to be employed by the plaintiff, and took and was permitted by some of such patrons to take the laundry under the impression and belief that he was still employed by the plaintiff and collecting for it.”

There is no finding by the court that the defendant Diehl ever carried away with him any written list of the plaintiff's customers, and no finding that said defendant ever made any copies of any written lists of plaintiff's customers. Whatever knowledge of plaintiff's customers defendant made use of, so far as the record shows, was from memory.

Appellee states:

“This case presents but a single question, the right of the employer to equitable protection against unconscionable use by a competitor, who has employed a discharged servant of the former, of private and confidential information necessarily intrusted to the servant for the performance of his duties.”

There was no contract between the plaintiff and the defendant Diehl stipulating that he should not, at the cessation of his employment by the plaintiff, engage in a similar business for himself or another.

The law is in confusion regarding the right of an employee to quit his employment and engage in business for himself, or enter the employment of another, in competition with his former employer, and solicit business from the customers of the latter where knowledge of those customers has been obtained by the employee during the course of his employment, and there is no contract prohibiting the employee from engaging in such business, taking such employment, or soliciting such customers. Appellees in their brief state that the authority on which the court below acted was the case of Empire Steam Laundry Co. v. Lozier, 165 Cal. 95, 130 P. 1180, Ann. Cas. 1914C, 628, 44 L. R. A. (N. S.) 1159, and the New York cases therein referred to, and also the case of Grand Union Tea Co. v. Dodds, 164 Mich. 50, 128 N. W. 1090, 31 L. R. A. (N. S.) 260. We think the Grand Union Tea Company Case is distinguishable from the case at bar. In that case the employee was inhibited by injunction from using the list of customers which had been given to the employee or using a copy surreptitiously obtained by the employee for the benefit of a competitor, and required the employee to furnish the employer with the lists which he had withheld upon the discontinuance of his employment. Mr. Justice Hooker, who wrote the opinion in that case, said:

“We are of the opinion, however, that he cannot be restrained from selling his commodities for himself of for any employer, in any part of the city, or to any person, so long as he does not use any property belonging to the complainant, or copies thereof that were surreptitiously made.”

The facts of the Grand Union Tea Company Case are summarized in Ice Delivery Co. of Spokane v. Davis, 137 Wash. 649, 243 P. 842, as follows:

“It was a case wherein the driver of a delivery wagon used cards or order blanks and obtained orders for cash sales of goods to be delivered a week later. The names and addresses of the purchasers were written on the cards. For some months the driver contemplated a change of employment and, some days before ceasing work for the plaintiff, he agreed with his new employer to bring the former patrons of his route with him, and agreed to continue to solicit them thereafter. During the last week he told the customers of his plan, and obtained their patronage for his new employer. He immediately commenced work for the new employer and, before turning over his cards to his old employer, on leaving him, he erased all names of customers from the cards and canceled others by not putting them on the cards. He continued thereafter to work on the some route and solicit for his new employer.”

It cannot be denied, however, that the case of Empire Steam Laundry Co. v. Lozier, supra, and subsequent cases from the same court following that one seem to hold, under the same or similar facts here involved, that the employee may be enjoined as herein attempted. The holding...