J. L. Cooper & Co. v. Anchor Securities Co.

• Decision Date: 26 May 1941
• Docket Number: 28230.
• Citation: 113 P.2d 845,9 Wn.2d 45
• Court: Washington Supreme Court
• Parties: J. L. COOPER & CO. v. ANCHOR SECURITIES CO. et al.

113 P.2d 845

9 Wn.2d 45

J. L. COOPER & CO. v. ANCHOR SECURITIES CO. et al.

No. 28230.

Supreme Court of Washington

May 26, 1941

Department 2.

Action by J. L. Cooper & Company against the Anchor Securities Company, T. J. Corkery, and another to restrain defendants from soliciting the renewal of insurance policies by persons who had at some previous time purchased insurance through T J. Corkery Company or T. J. Corkery, and to restrain defendants from soliciting any customers of plaintiff through information secured from expiration lists or other data obtained by T. J. Corkery while a confidential employee of plaintiff, wherein the defendant Corkery filed a cross-complaint. From a judgment dismissing plaintiff's complaint with prejudice and granting recovery to defendant Corkery on his cross-complaint, the plaintiff appeals.

Reversed and remanded.

Appeal from Superior Court, Spokane County; R. M Webster, Judge.

R. E. Lowe, of Spokane, for appellant.

Cannon, McKevitt & Fraser, of Spokane, for appellee Anchor Securities Co. and another.

Richard S. Munter, of Spokane, for appellee T. J. Corkery.

MILLARD, Justice.

June 21, 1937, J. L. Cooper & Company, a corporation engaged in real estate and insurance business in Spokane, purchased the business and good will of T. J. Corkery, a corporation which was operating an agency in Spokane for the writing of general lines of insurance. On the date of that sale T. J. Corkery owner and manager of Corkery Company, was employed in the insurance department of Cooper & Company in which employment he continued until May 10, 1939, when he became manager of the insurance department, the trade name of which is the H. S. Gimble Insurance Agency, of Anchor Securities Company.

An action was brought by J. L. Cooper & Company to restrain T. J. Corkery, the Anchor Securities Company and H. S. Gimble, who is doing business as the Gimble Insurance Agency, which is an insurance department of the Anchor Securities Company, from soliciting the renewal of insurance policies by persons who at some previous time purchased insurance through T. J. Corkery Company or T. J. Corkery; and to also restrain the defendants from soliciting any customers of plaintiff through information secured from expiration lists or other data obtained by T. J. Corkery while a confidential employee of plaintiff. The further prayer of plaintiff is that defendants be required to account for all business and moneys they may have received by reason of the wrongful solicitation of customers of the plaintiff.

The Anchor Securities Company and H. S. Gimble denied they had knowledge May 10, 1939, when they employed Corkery that plaintiff had previously purchased the good will of T. J. Corkery and of T. J. Corkery Company. They also denied that Corkery, at their instance, solicited insurance business from former customers of T. J. Corkery and T. J. Corkery Company; however, they admitted that Corkery will continue to solicit insurance business from persons who prior to May 10, 1939, purchased insurance from T. J. Corkery and T. J. Corkery Company. They further alleged that Corkery entered the employ of the Securities Company without any solicitation or knowledge on their part of the relationship previously existing between plaintiff and Corkery.

T. J. Corkery admitted that since his employment in the insurance department of the Anchor Securities Company he has solicited insurance business from persons who prior to May 10, 1939, purchased insurance from T. J. Corkery or T. J. Corkery Company. By cross-complaint Corkery sought recovery of the balance of onehalf half of the net earnings of plaintiff's insurance department claimed to be due under an agreement obligating plaintiff to pay to him from the earnings of its insurance department two hundred and fifty dollars monthly as salary and one-half of the net earnings of the insurance department. As an affirmative defense Corkery pleaded that plaintiff 'did not come into this court of equity with clean hands' because plaintiff had breached its agreement with Corkery under which the former was obligated to pay to the latter a salary of two hundred and fifty dollars monthly plus one-half of the net profit of plaintiff's insurance department.

Trial of the cause to the court resulted in findings of fact summarized as follows:

T. J. Corkery sold to T. J. Corkery Company, a corporation, January 1, 1933, the insurance business and good will of an insurance agency theretofore operated and solely owned by Corkery, who immediately upon such sale entered into the employ of T. J. Corkery Company in which employment he continued until employed by plaintiff on June 21, 1937, at which time plaintiff purchased from various insurance companies, the then owners thereof, practically all the assets of the insolvent T. J. Corkery Company including the good will of the business of Corkery Company. As part of the same transaction plaintiff entered into a contract to place Corkery in charge of its insurance department, Corkery's compensation to be two hundred and fifty dollars monthly plus one-half of the net earnings of plaintiff's insurance department to be computed and paid to Corkery at the end of each calendar year. The contract of employment was terminable by either party thereto at any time. In April, 1939, after repeated requests by Corkery therefor, plaintiff rendered a statement purporting to show the net earnings of plaintiff's insurance department from July 1, 1937, to December 31, 1938. The statement disclosed the net earnings to be less than the true net earnings which difference was due to the fact that contrary to the terms of the employment agreement plaintiff had treated the salary of two hundred and fifty dollars monthly paid to Corkery as merely a drawing account in that amount chargeable to the one-half of the net earnings of the insurance department payable under the employment agreement. Plaintiff refused, after demand made therefor, to pay Corkery the compensation he claimed was due to him under the terms of the employment agreement, by reason of which breach Corkery declared the contract terminated May 10, 1939, and entered the employment of the insurance department of Anchor Securities Company. All times since he had been in that employment, and upon the advice of legal counsel first had that he had a right to do so, Corkery has solicited insurance business from persons who at one time or another prior to May 10, 1939, purchased insurance from T. J. Corkery or from the T. J. Corkery Company. Corkery has not solicited insurance business from any persons who were customers or clients of plaintiff's insurance department prior to May 10, 1939. The employment of Corkery by the insurance department of Anchor Securities Company was entered into and carried out by all the parties thereto in good faith.

The court further found that about the time when Corkery entered the employment of the Securities Company, the latter had information as to the former employment of Corkery by plaintiff sufficient to put the Securities Company upon inquiry as to limitations upon the activities of Corkery in the insurance business imposed by the transfer of the good will of T. J. Corkery to T. J. Corkery Company. In negotiations between Corkery and Anchor Securities Company in the matter of employment of the former by the latter, the Securities Company's inquiry of Corkery whether he was encumbered in any way by reason of his former connection with plaintiff was answered in the negative. The trial court concluded that it would be inequitable for plaintiff to maintain the action set forth in its complaint and that same should be dismissed with prejudice, and that T. J. Corkery is entitled to recovery, on his cross-complaint of the balance of compensation due him on his employment contract with plaintiff in the amount of $2,571.66. Judgment was entered accordingly. Plaintiff appealed.

Counsel for appellant first contends that the weight of the evidence is against the finding that Corkery was to receive a salary plus one-half of the profits from the insurance business.

T. J. Corkery was engaged from 1917 in the insurance business in Spokane as a solicitor for other agencies until 1931, when he established his own insurance agency. January 1, 1933, Corkery and another party, who does not appear in this controversy, incorporated the T. J. Corkery Company which commenced business January 1, 1933. Corkery transferred, for some of the capital stock of that corporation, the business and good will of his insurance agency to T. J. Corkery Company which operated under the management of T. J. Corkery until its assets and good will were sold to appellant in 1937. At that time the Corkery Company, as well as T. J. Corkery, was hopelessly insolvent. It assigned practically all of its assets to certain insurance companies which were creditors of Corkery Company. Those assignees sold the assets and good will of Corkery Company to appellant for four thousand dollars plus $1,544.16 for accounts payable. At the time of the sale of the business and good will of Corkery Company to appellant, T. J. Corkery was the sole owner of Corkery Company, the business of which at the time of its sale to appellant on the basis of renewal premiums was worth, according to some of the testimony, fifteen thousand dollars.

There is competent evidence, which the trial court accepted as true, that appellant, through one of its officers, and respondent Corkery entered into an oral agreement under which upon completion of the purchase of the business of T. J Corkery Company, Corkery was to take charge of and operate the enlarged insurance department of appellant and receive therefor for from the earnings of that insurance department a...