Knowles-Zeswitz Music, Inc. v. Cara, KNOWLES-ZESWITZ

• Decision Date: 25 November 1969
• Docket Number: KNOWLES-ZESWITZ
• Citation: 260 A.2d 171
• Parties: MUSIC, INC., a Corporation of the State of Delaware, Plaintiff, v. James J. CARA, Defendant.
• Court: Court of Chancery of Delaware

Page 171

260 A.2d 171

KNOWLES-ZESWITZ MUSIC, INC., a Corporation of the State of Delaware, Plaintiff, v. James J. CARA, Defendant.

Court of Chancery of Delaware, New Castle County.

Nov. 25, 1969.

Joseph R. Biden, Jr., of Aerenson & Balick, Wilmington, for plaintiff.

Francis J. Trzuskowski, of Connolly, Bove & Lodge, Wilmington, for defendant.

MARVEL, Vice Chancellor:

According to its complaint, Knowles-Zeswitz Music, Inc. is engaged in the business of selling and leasing musical instruments and related supplies in the states of Delaware, Pennsylvania, New Jersey, and Maryland, however, the sole area from which it seeks to exclude the competitive activities of its former employee, the defendant James J. Cara, encompasses only specified schools in northern Delaware.

Plaintiff was formed in the latter part of 1964 to take over the business of Knowles Music Inc., a local Wilmington concern engaged in the business of selling and renting musical instruments to school children, the latter corporation having run into financial difficulties. The defendant Cara, who had been a salesman for Knowles Music, Inc. since November 1963, thereupon contracted with plaintiff to perform the same type of services. Plaintiff, which is an affiliate of Zeswitz, Inc. of Reading, Pennsylvania sells musical instruments and supplies through various agencies over a wide area. Until about January 21, 1969, the defendant James J. Cara continued to be employed by plaintiff as a salesman. His duties were to visit schools in the area here in issue for the purpose of selling musical instruments and supplies to school bands and orchestras by dealing with band directors, teachers and others concerned with music in school programs. However, since February 1, 1969 Mr. Cara, having left plaintiff's employ on January 21, has been employed by the Wilmington Piano Company in the same capacity, such corporation being engaged in the business of selling and renting musical instruments and supplies in the states of Delaware, Pennsylvania, New Jersey, and Maryland. Such company, which thus competes directly with plaintiff, has been dismissed as a party to this action.

Plaintiff seeks a permanent injunction banning Mr. Cara from selling or renting musical instruments to certain customers with which he dealt while employed by Knowles-Zeswitz. Plaintiff has also prayed for actual and punitive damages to which it claims to have became entitled as a result of alleged violations by the defendant Cara of a restrictive covenant hereinafter discussed, the latter having, as a representative of Wilmington Piano Company after February 1, 1969, continued to sell and rent musical instruments and related supplies to those schools for which he was plaintiff's sole representative during the last year of his employment by plaintiff.

Plaintiff bases its claim for injunctive relief on the terms of the contract of employment which was entered into between the present parties on October 3, 1964. The meaning and force of which, the parties agree, is to be governed by the law of Delaware. Paragraph 10 of such contract provides in part as follows:

'It is expressly agreed that for a period of 2 (two) years after the termination of this agreement, for any cause whatsoever, the said Cara will not directly or indirectly as employee, employer, or otherwise engage in a similar type of business as conducted by Knowles-Zeswitz within the territory limits of 100 (one hundred) miles of Wilmington, Delaware or 25 (twenty-five) miles from any school district with which relations shall have been opened during the term of this agreement or prior to this agreement by Knowles-Zeswitz or any of its affiliated companies including Zeswitz Music Center and Keyboard Studios, or which may have been planned by Cara during the term of this agreement for opening after the termination of said agreement. Nor will Cara act in the aid of the business of any rival, or competing firm, person, or corporation in the same or similar business within this area during this period; nor at any time disclose or furnish to any one, firm, or corporation other than Knowles-Zeswitz, the names, addresses, or interests of any of the customers of said Knowles-Zeswitz. In addition, it is specifically agreed that should the type of work or the remuneration received by Cara be changed by mutual agreement at any time, the remaining covenants of this agreement shall remain in full force and effect.'

As noted above, Cara was hired by plaintiff as a commission salesman of musical instruments for music students and band members at the schools in question, and it is conceded that Mr. Cara since February 1, 1969 has held a similar position with the Wilmington Piano Company, being engaged in selling and renting musical instruments and supplies to students at the same schools at which he served as plaintiff's representative. Thus, the issues to be decided are first, whether or not the covenant not to compete found in Paragraph 10 of the contract here in issue is subject to enforcement by injunction and second, the damages, if any, suffered by plaintiff as the result of defendant's breach of the covenant should it be held be enforceable.

Defendant argues: (1) that plaintiff has an adequate remedy at law; (2) that plaintiff breached the agreement by failure to treat defendant as an employee during the summer of 1965, and (3) that the terms of Paragraph 10 above are unreasonably restrictive and are, accordingly, void.

Defendant's first contention is based on a damage provision clause found in paragraph 10 of the contract. This clause provides inter alia that '* * * in the case of any default on the part of Cara in performance of any of the terms and conditions set forth in paragraph 10 * * *' that the latter will confess judgment '* * * in favor of Knowles-Zeswitz for the just sum of $5,000 * * *'.

Defendant...