A. Fink & Sons, Inc. v. Goldberg

• Decision Date: 28 November 1927
• Docket Number: No. 64/359.,64/359.
• Citation: 139 A. 408
• Parties: A. FINK & SONS, Inc. v. GOLDBERG.
• Court: New Jersey Court of Chancery

139 A. 408

A. FINK & SONS, Inc.

v. GOLDBERG.

No. 64/359.

Court of Chancery of New Jersey.

Nov. 28, 1927.

(Syllabus by the Court.)

Suit by A. Fink & Sons, Inc., against Edward Goldberg for an injunction. Decree for complainant.

Osborne, Cornish & Scheck, of Newark, for complainant.

Dalrymple & Campbell, of Newark, for defendant.

BERRY, Vice Chancellor. The complainant is a Delaware corporation and a dealer in meat and pork products, and is the successor of a New Jersey corporation of the same name and composed of practically the same stockholders and officers. The New Jersey company had been engaged in this business for a period of over 25 years, and had built up a large and valuable trade in certain counties of this state. The defendant was employed by the New Jersey corporation as a driver of one of its delivery trucks over a certain route in the county of Hudson already established, and a list of customers on this route was delivered to him. It was his duty to deliver orders to these and other customers solicited by him on this route, and to make collections from them. The contract of employment was in writing, and provided for employment until terminated by either party upon specified notice. It contained the following covenant:

"The employee agrees to work for the employer in the capacity mentioned, and to devote his entire time and best effort to his employment, under the direction of the employer, its officers and agents, and further agrees that, in case his employment is terminated for any cause, he will not, thereafter, for a period of one year after leaving the said employment, solicit orders from any of the customers of the employer for meat products such as are manufactured and sold by the employer, for himself, or as an employee of any other person or persons, corporation or corporations, within the counties of Hudson, Bergen, Passaic, Essex, Morris, Union or Middlesex, state of New Jersey, and that he will not engage in the business of manufacturing and selling meat products such as are manufactured and sold by the employer in any capacity, for himself, or others, either natural or artificial persons, within the said period of one year, and within the counties mentioned above."

After the employment had continued for a period of about eleven weeks it was terminated by the employer. The defendant immediately sought and obtained employment in a similar capacity with a competitor of his former employer, and proceeded to solicit and deliver orders to customers on the identical route formerly served by him. This bill seeks an injunction to prevent the defendant from violating the above-recited covenant. That the conduct of the defendant is in violation of his covenant is not disputed, but it is contended on his behalf that the covenant is invalid, because in restraint of trade, and therefore unenforceable; that his employment was terminated without cause; and that the benefit of the covenant does not inure to the complainant, because not made assignable by the terms of the contract. Defendant also contends that the covenant is not assignable, because it is a part of a contract for personal service, and that assignments of such contracts are prohibited by the Thirteenth Amendment to the federal Constitution.

Subsequent to the breach of the covenant, the complainant purchased all the assets and business of the New Jersey corporation, and has since continued it in its entirety. The benefit of this covenant is claimed by complainant as an incident of the business purchased by it, although not specifically assigned.

Modern judicial decisions have supported contracts in restraint of trade between employer and employee where the restraint is reasonably necessary for the protection of the employer's business, and not unreasonably restrictive upon the rights of the employee, providing the public welfare is not involved. American Ice Co. v. Lynch, 74 N. J. Eq. 298, 70 A. 138; Owl Laundry Co. v. Banks, 83 N. J. Eq. 230, 89 A. 1055; Sternberg v. O'Brien, 48 N. J. Eq. 370, 22 A. 348; Mandeville v. Harman, 42 N. J. Eq. 185, 7 A. 37; Sarco Co. of New Jersey v. Gulliver (N. J. Ch.) 129 A. 399. In a note to Taylor Iron & Steel Co. v. Nichols (N. J.) 24 L. R. A. (N. S.) 937, will be found a collection of cases where contracts restrictive of future employment, by solicitors of business and commercial travelers, have been held reasonable and valid. Tested by a comparison with the cases there cited, the instant covenant is not unreasonable.

The words "for any cause" contained in the covenant do not prevent the termination of the employment by either party without cause being assigned; as here used the words mean for whatever reason."

While covenants restrictive of future employment in contracts between...