A.S. Rampell, Inc. v. Hyster Co.

• Decision Date: 03 July 1957
• Parties: , 144 N.E.2d 371 A. S. RAMPELL, Inc., Respondent-Appellant, v. HYSTER COMPANY et al., Appellants-Respondents.
• Court: New York Court of Appeals Court of Appeals

Page 475

165 N.Y.S.2d 475

3 N.Y.2d 369, 144 N.E.2d 371

A. S. RAMPELL, Inc., Respondent-Appellant, v. HYSTER COMPANY et al., Appellants-Respondents.

Court of Appeals of New York.

July 3, 1957.

Robert P. Weil, Adolf A. Berle, Jr., Irving Mischkind and L. Mark Scher, New York City, for appellants-respondents.

Ralph Wienshienk and Franklin Feldman, New York City, for respondent-appellant.

FROESSEL, Judge.

Plaintiff is a dealer-distributor. Defendant Hyster Company (hereinafter called Hyster) is a manufacturer of industrial and other trucks, cranes and parts. Defendant Chester was plaintiff's salesman. Defendant Shaffer was Hyster's district manager. Plaintiff and its predecessors were distributors of Hyster's products in parts of New York and New Jersey, and had enjoyed a dealer-manufacturer relationship for 15 years under written contracts permitting either party to terminate at any time. This action is brought for damages arising from allegedly wrongful acts committed by defendants leading up to and resulting in the termination of the agreement and relationship between plaintiff and Hyster.

Six causes of action are pleaded in the second amended complaint. The first, fifth and sixth causes are against Hyster, the second against Chester, the third against Shaffer, and the fourth for conspiracy against all defendants. The defendants have challenged the legal sufficiency of each cause of action. Special Term has sustained all except the conspiracy action, and as to one ground of recovery in the third cause of action. The Appellate Division, by its order, agreed with Special Term as to the first three causes of action, sustained the fourth cause of action and dismissed the fifth and sixth causes of action. From the judgment entered on the dismissal of the fifth and sixth causes of action, plaintiff appeals as of right. From the remainder of the Appellate Division order, the defendants were granted leave to appeal by that court, which certified to us four questions, namely, whether each of the first, second and fourth causes of action and the first and second grounds of recovery in the third cause of action are legally sufficient.

Reading the allegations of the complaint and each of its separate causes of action liberally, with a view to substantial justice between the parties, and mindful that 'our inquiry is as to whether' each cause of action is stated 'in some recognizable form * * * known to our law' (Civil Practice Act, § 275; Shipman v. Bennett, 2 N.Y.2d 966, 162 N.Y.S.2d 364; Morgenstern v. Cohon, 2 N.Y.2d 302, 160 N.Y.S.2d 633; Dulberg v. Mock, 1 N.Y.2d 54, 56, 150 N.Y.S.2d 180, 181; Curren v. O'Connor 304 N.Y. 515, 109 N.E.2d 605; Condon v. Associated Hosp. Service, 287 N.Y. 411, 414, 40 N.E.2d 230, 231), we agree with the Appellate Division as to the first four causes of action, but hold that the fifth and sixth causes of action are also legally sufficient.

1. The first cause of action alleges that from 1937 through 1952 plaintiff, by investment of substantial amounts of money, time and effort, had developed a sales organization and market for Hyster's products so that plaintiff was realizing a gross annual income of $800,000, until first interfered with by Hyster as hereinafter stated. Between December, 1949 and October, 1951, plaintiff hired and trained as salesmen, under written contracts of employment, defendant George Chester, Paul Shoriak and G. Richard O'Neill, and orally hired and trained Alexander Koziara as a 'parts man * * * in servicing and maintaining' Hyster's trucks, all of which employment agreements were known to Hyster.

Despite this knowledge, Hyster maliciously (1) induced Chester to 'violate, repudiate and breach' his agreement with plaintiff; (2) fomented discontent and dissension between plaintiff and the other employees above named, and (3) induced, enticed and procured these three other employees to terminate their contracts with plaintiff and to enter the employ of the Hyster Company. As a result of Hyster's acts, it was able to place itself in the position where, on August 12, 1952, it could terminate plaintiff's distributorship and appropriate to itself the good will, income and business success which plaintiff had built up over the past 15 years, without a break in salesman representation. It is conclusorily alleged that Hyster induced the breach of Chester's contract; otherwise there is no suggestion that the contracts of employment were for a definite term; hence they must be deemed terminable at will (Watson v. Gugino, 204 N.Y. 535, 541, 98 N.E. 18, 20, 39 L.R.A.,N.S., 1090; Martin v. New York Life Ins. Co., 148 N.Y. 117, 121, 42 N.E. 416, 417).

The principal issue involved in the sufficiency of the first cause of action is whether Hyster's inducement of plaintiff's employees to terminate their agreements with plaintiff was tortious. Hyster urges that since the contracts of employment were terminable at will, and it did not engage in any independently tortious conduct in such inducement, its conduct is not actionable as interference with contractual relations, and, inasmuch as it was motivated by a desire for its own pecuniary gain, it was not solely motivated by malice in its actions, and therefore its conduct is not prima facie tortious.

Plaintiff concedes that ordinarily one business man may offer the employee of another an opportunity to change his employment, but maintains that in this particular case there is such a relation of confidence between Hyster and plaintiff that inducement by Hyster of plaintiff's employees to leave plaintiff's employ and enter that of Hyster is actionable, since its real purpose was the appropriation by Hyster of plaintiff's sales organization and good will.

We have held that the requirement that there be actual malice in the inducement of a breach of contract has been abandoned (Lamb b. S. Cheney & Son, 227 N.Y. 418, 125 N.E. 817; Campbell v. Gates, 236 N.Y. 457, 141 N.E. 914), and interference with pre-contractual relations is actionable where a contract would have been entered into had it not been for the malicious conduct of a third person (Keviczky v. Lorber, 290 N.Y. 297, 306, 49 N.E.2d 146, 149, 146 A.L.R. 1410; Union Car Adv. Co. v. Collier, 263 N.Y. 386, 401, 189 N.E. 463, 469). It has also been held that in certain cases interference with at will agreements will be actiable (see Federal Waste Paper be actionable (see Federal Waste Paper 268 App.Div. 230, 234, 51 N.Y.S.2d 26, 29, affirmed 294 N.Y. 714, 61 N.E.2d 451; American League Baseball Club of New York v. Pasquel, 187 Misc. 230, 232-233, 63 N.Y.S.2d 537, 538-539; Van Wyck v. Mannino, 256 App.Div. 256, 9 N.Y.S.2d 684; see, also, 26 A.L.R.2d 1227, 1258; Prosser on Torts (2d ed.), § 106, pp. 726-727).

Defendants contend and it was the position of two of the Justices of the Appellate Division that interference with at will relationships is only actionable when it is accomplished by means which are themselves tortious, or is motivated solely by malice. The rule as stated in Coleman & Morris v. Pisciotta, 279 App.Div. 656, 107 N.Y.S.2d 715, is that the conduct would be actionable if the motive of the actor were solely to produce damage or the means used were unfair or dishonest. The requirements under this criterion were found to be satisfied by the allegations in the first cause of action by Special Term and three Justices of the Appellate Division.

In the present case we are not dealing with competition between economic equals, but rather with the destruction of a relationship between the manufacturer and the distributor, which is recognized to be that of dependency of the latter upon the former (see Brown and Conwill, Automobile Manufacturer-Dealer Legislation, 57 Co.L.Rev. 219; Statement of Governor Harriman relating to purpose of General Business Law, Consol.Laws, c. 20, § 197, 1956 McKinney's Session Laws, p. 1705). This dominance taken alone may be insufficient to show such a relation of confidence as would make the action by Hyster here actionable. Absent the relation of confidence between the parties, the complaint would not state facts sufficient to constitute a cause of action (Beardsley v. Kilmer, 236 N.Y. 80, 140 N.E. 203, 27 A.L.R. 1411; Reinforce, Inc., v. Birney, 308 N.Y. 164, 169-170, 124 N.E.2d 104, 106; Advance Music Corp. v. American Tobacco Co., 296 N.Y. 79, 70 N.E.2d 401; American Cuild of Musical Artists v. Petrillo, 286 N.Y. 226, 231, 36 N.E.2d 123, 125; Opera on Tour v. Weber, 285 N.Y. 348, 355-356, 34 N.E.2d 349, 351-352, 136 A.L.R. 267). Here, however, there are a number of provisions in the contract which indicate the existence of this relation. Pursuant to the contract submitted to the courts below, plaintiff was obliged to make its lists of prospective customers available to Hyster; to keep records of its demonstrating, canvassing and soliciting available to Hyster; to give Hyster reports on its inventory and its financial condition, or 'any other information regarding The Dealer's business which may be reasonably required by Hyster'. We therefore conclude that the complaint states a cause of action.

2. Plaintiff alleges in its second cause of action that its employee Chester, though bound by the terms of his employment to selling the with plaintiff 'to give his 'time and services exclusively to selling the products sold or distributed' by the plaintiff', committed a number of acts inconsistent with the duty of fidelity that he owed to plaintiff in that he (1) negotiated with Hyster for a dealership in competition with plaintiff; (2) defamed plaintiff to Hyster; (3) induced Shoriak, O'Neill and Koziara to terminate their employment agreements with plaintiff; (4) induced Hyster to terminate its distributorship agreement with plaintiff, and (5) aided Hyster in its plan to place itself in a favored position for the termination of plaintiff's distributorship, without a break in the sales representation, for the purpose of...