Mitchell v. Atlas Roofing Mfg. Co., 42517

• Decision Date: 21 January 1963
• Docket Number: No. 42517,42517
• Citation: 149 So.2d 298,246 Miss. 280
• Parties: J. H. MITCHELL v. ATLAS ROOFING MANUFACTURING COMPANY et al.
• Court: Mississippi Supreme Court

Page 298

149 So.2d 298

246 Miss. 280

J. H. MITCHELL v. ATLAS ROOFING MANUFACTURING COMPANY et al.

No. 42517.

Supreme Court of Mississippi.

Jan. 21, 1963.

Satterfield, Shell, Williams & Buford, Jackson, for appellant.

Carter & Mitchell, Jackson, for appellee.

McELROY, Justice.

This is an appeal from a judgment of the Circuit Court of the First Judicial District of Hinds County, Mississippi, whereby the amended declaration of the appellant, Mitchell, was finally dismissed upon demurrer which was sustained, and refusal of plaintiff to plead further. An appeal was allowed in the order of dismissal. The question arises as to whether the declaration, as amended, states a cause of action, and the merits of the appeal depend on the allegation of the original and amended declarations.

The question may be stated as to whether the amended declarations are sufficient at law to establish that the appellees have done an actionable wrong to the appellant, in selling roofing manufactured by appellees to certain purchasers of roofing to whom appellant had previously sold roofing manufactured by appellant's prior employer, under a contract between appellant and his employers which entitled appellant to the commission on the sales made to such customers.

The declarations state that under date of the 3rd day of September, 1959, the plaintiff entered into a contract with Web-Cote Felt Paper Company, Inc. and Manufacturers Sales Company, Inc. whereby he became sales agent for the products of the corporation for a period of five years. This contract in part is as follows:

'Principal does hereby employ said Agent to commence sales work and activities for Principal on October 1, 1959. Agent shall be the non-exclusive sales representative of Principal, and shall devote a reasonable portion of time weekly to the promotion of sales of the products of Principal.

'This agreement shall be valid and binding for a period of five (5) years.

'Agent will care for all his own travel and other expenses and will be paid a commission as his sole compensation, which shall be and is fixed at 5% on net sales, after freight, made by Agent for Principal.

'Agent agrees that he will not receive any commission on sales on such existing accounts or new accounts opened by a factory representative of Principal, as may be designated on lists furnished by Principal, provided such lists be acknowledged by initial or signature of Agent.

'As to all new accounts sold by Agent he shall be entitled to the commission above provided, during the remainder of the term of this agreement, on future shipments to such accounts, no matter whether sales were made by him or otherwise.

'Agent agrees and covenants that he will not sell, promote or handle any competing line of products during the term of this agreement, and will strive to keep accounts current on payments.

'This contract shall be fully binding upon the parties, their heirs, successors and assigns, except that no other person except Agent shall be entitled or required to render sales services hereunder.'

The declaration alleges seven customers for appellant to which he sold roofing. It further alleges that during the month of December, 1960, by lease dated the 21st day of December, 1960, the said Manufacturers Sales Company and the Web-Cote Felt Paper Company, Inc., which are subsidiary companies, and the Leopard Roofing Company, Inc., the parent or holding company, leased their factory area and the machinery and equipment located in Meridian, Mississippi to the Mississippi Industries, Inc., and ceased to manufacture roofing and related materials at said location.

The Mississippi Industries, Inc. began operations at said place and thereafter manufactured and/or distributed roofing and related supplies at or from said location, and its activities in this regard were carried on through its subsidiary corporation, Atlas Roofing Manufacturing Company, Inc., the defendant, or appellees in this case. In January, 1961, in Jackson, Mississippi, the appellant went to see Warren Hood, President, Mississippi Industries, Inc., to talk with him about the contract held by complainant with said lessors, Web-Cote Felt Paper Company and Manufacturers Sales Company, and advised him of his desire to continue to work under the terms of the contract with defendants, or appellees. A copy of the contract was shown to appellees. It is alleged that they were all acting as agent of the Mississippi Industries, Inc., its parent or holding company, controlling Atlas Company; that the said Atlas in January, 1961 assumed to act, and did act, as successors in business of lessors, and did willfully, deliberately, fraudulently and deceitfully, and without authority, wrongfully assume to use the record books or information which belonged exclusively and confidentially to the lessor-corporation, and which they were not entitled to divulge to a list of customers obtained by plaintiff for them, the defendants, through such trickery and deceit; that knowledge of the accounts and business dealings of the lessor-corporation with the said customers obtained by plaintiff was secured in a wholly unauthorized and wrongful manner, and was used to the damage, detriment and great injury of plaintiff, and for the unjust and great enrichment of defendant.

Plaintiff alleges that by said acts, defendant Atlas and its parent corporation, Mississippi Industries, Inc., are guilty of fraud, deceit, conspiracy and malicious injury of the plaintiff, and thereby of unjust enrichment of themselves by their said wrongful acts; that they well knew and fully understood the tortious and illegal nature of their acts and were chargeable with the rights of complainant in this regard on and after January 19, 1961, and prior thereto; and that, by their said wrongful acts and unjust enrichment of themselves through said illegal and fraudulent taking and using of the confidential list of customers of plaintiff, they have become liable to plaintiff.

Plaintiff alleges that by and through wrongful and illegal use of the confidential list of customers by defendants, based upon sales made to their customers, defendants have realized profits from and on account thereof in excess of $4,000.

The amended declaration shows that the said contract is entitled 'Factory Agency Agreement,' and is of record in Book 169, p. 155 of the Deed Records in the Office of the Chancery Clerk of Lauderdale County, Mississippi, having been filed for record on October 19, 1959. Defendants here had actual and constructive notice of the said contract at the time complained of. After the contract was entered into, the other parties could not have revealed a list of the customers of J. H. Mitchell to competitors, or any other parties, except by or through an attempt to damage their own business and the business of J. H. Mitchell, so long as they continued in business. At the termination of their business and manufacturing activities, they were without any right, legal or equitable, to disclose a list of customers brought to them by Mitchell under the contract. As between them, the list was confidential, and could not be made known to outsiders, as prospective customers, by any of the parties to the contract. Said contract would not have been entered into or agreed upon by Mitchell except upon the basis of fair dealing and mutual rights as to the names of the customers and the mutual exclusive right of the said list of customers.

Consequently, defendants had no right to acquire, take or use the said list, either with or without permission, or consent of the said other parties to the contract, except by further consent and permission of Mitchell, which has never been given.

Plaintiff is not claiming any contractual rights against defendants, but is demanding a recovery for profits wrongfully made and realized by defendants through the pilfering or unfair and wrongful acquisition of the confidential list of customers belonging to said other parties to the above-mentioned contract. The damages or recovery sought are comparable to, or of similar nature, to damages allowed against parties who pilfer or wrongfully obtain and use trade secrets.

The opinion of the court states, in part, that:

'Early in September, 1959, plaintiff made an agreement with the two described companies, whereby he would sell the products to certain clients of his, and certain other people whom he might induce to become clients. * * *

'Sometime in the month of December, the said Web-Cote Paper Company and Manufacturers Sales Company, Inc. leased all of their equipment or factory and plant to defendants. There was some discussion at the hearing of their insolvency, but nothing in the pleadings about same.

'The contract entered into in September, 1959 between plaintiff and Web-Cote Felt Paper Company and Manufacturers Sales Company, Inc., was a written contract which did not name any party or parties as a client or clients of plaintiff, or as purchasers to whom he could make sales. It merely provided that he had a right to make these sales at a fixed commission to any clients he already had and any other clients he procured in the future. * * *

'After Web-Cote Paper Company and Manufacturers Sales Company leased all of their equipment and plants to defendant, plaintiff approached officers of the defendant-company and procured the contract and demanded settlement for the sale to a list of people claimed to be his clients and claimed by him to have been furnished by the original parties with whom he had contracted. The officers of defendant-company appeared to be ignorant of the contract or its contents and declined to make such payments.

'It is a well known fact that an agent, employee or associate of a company which comes into possession of trade secrets or formulae peculiar to the trade, essential to the manufacturer of the products involved, cannot leave the company and build up a rival organization and use...