Sherman v. Pfefferkorn

• Decision Date: 08 June 1922
• Citation: 135 N.E. 568,241 Mass. 468
• Parties: SHERMAN v. PFEFFERKORN et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

241 Mass. 468

135 N.E. 568

SHERMAN

v.PFEFFERKORN et al.

Supreme Judicial Court of Massachusetts, Norfolk.

June 8, 1922.

Appeal from Superior Court, Norfolk County.

Suit by Arthur F. Sherman against Walter E. Pfefferkorn and others for an injunction restraining Pfefferkorn, a former employee of plaintiff, from violating his contract with plaintiff, and restraining the other defendants from employing him, etc. From a decree for plaintiff, defendants appeal. Modified and affirmed.Harper & Burhoe and Frank E. Knowles, all of Boston, for appellants.

E. Mark Sullivan, Geo. E. Richardson, and Leslie J. Gilbride, all of Boston, for appellee.

JENNEY, J.

The plaintiff is now and since June, 1917, has been the owner of a laundry with a place of business in Weymouth and laundry routes in that town and in Hingham and Braintree. Walter E. Pfefferkorn, one of the defendants, has always lived in Weymouth and has a large acquaintance in these towns.

In the latter part of 1918, the duties of Pfefferkorn under his employment by the plaintiff were changed and his work thereafter was the collection and delivery of laundry over definite routes. No written lists of customers were given him, but the names and addresses were committed to memory from information supplied him by the plaintiff or were acquired by his own experience. In most instances, customers on his route placed their laundry outside their doors for collection by the driver.

On August 7, 1917, while he was working for the plaintiff, he executed a contract of employment as laundry solicitor, collector, and deliveryman; the term of employment was at the will of the parties.

The material terms of the contract are:

‘5. That he will keep secret and not divulge to any person, firm, or corporation, except by express order of his employer, the names, addresses, or any information concerning any customers of the said employer during said employment and for three years thereafter.

‘6. That he will not do, suffer, or consent to any act or thing prejudicial or injurious to the business or good will of said employer during said employment and for three years thereafter.

‘7. That said employee will not directly or indirectly, either as principal, agent, or servant, for the term of three years, after any termination of said employment, enter or engage in any branch of the laundry business in the following territory, without the written consent and approval of said employer:

‘Towns of Weymouth, Hingham, Braintree.

‘8. That he will not allow any person or persons to accompany him while traversing the routes to which he is assigned, without the express permission of said employer. * * *

‘11. That he hereby consents that an order, either permanent or temporary, may be made in any suit in equity, brought for the purpose of enjoining him from violating any of the provisions of this agreement or in any other action at law which, by advice of counsel, said employer may take to enforce his rights under this contract.’

[1][2] The instrument was not void for lack of consideration. Reasonably construed, it contained a promise by the plaintiff thereafter to employ the defendant and by the defendant to work for the plaintiff. Nor was it open to just criticism as failing in mutuality. The plaintiff's right to discharge the defendant, and the latter's privilege of termination were on equal footing. The contract was not indefinite as to the nature or extent of the services or as to the place of performance. No question is made but that the amount to be paid was fixed by separate agreement. The provision as to the consequence of its termination by the defendant did not affect its initial validity as to consideration or mutuality. Harper v. Hassard, 113 Mass. 187;Preston v. American Linen Co., 119 Mass. 400;Carning v. Carr, 167 Mass. 544, 46 N. E. 117,35 L. R. A. 512, 57 Am. St. Rep. 488;Daniell v. Boston & Maine Railroad, 184 Mass. 337, 343, 68 N. E. 337. See Williston on Contracts, § 140.

On November 17, 1919, Pfefferkorn was discharged for justifiable cause. In the April following, he became one of the incorporators of the South Shore Laundry, Inc., hereinafter designated as the South Shore Company, and was for some time one of its directors. He owns one share of its stock, and has an arrangement whereby he and one Tredenick may become the owners of one-half of the stock of the company upon payment of certain moneys; but that payment has not yet been made. He has given to the South Shore Company information acquired by him while working for the plaintiff concerning the names and addresses of the plaintiff's customers, and as a result some customers have been lost to the plaintiff. Although his employment by that company has not been upon the exact routes upon which he worked for the plaintiff, he either has solicited business from substantially all the people on the plaintiff's routes or has been concerned in such solicitation. Many of these customers went to the South Shore Company because of their friendly acquaintance with him.

The plaintiff does not claim that he is entitled, under paragraph 11, to any broader relief than that warranted by the terms of the contract. The questions involved wholly relate to the validity and enforcement in equity of paragraphs numbered 5, 6, and 7. The suit is here upon the defendants' appeal.

[3] It long has been settled that contracts restraining freedom of employment can be enforced only when they are reasonable and not wider than is necessary for the protection to which the employer is entitled and when not injurious to the public interest. Taylor v. Blanchard, 13 Allen, 370, 90 Am. Dec. 203; Anchor Electric Co. v. Hawkes, 171 Mass. 101, 106, 50 N. E. 509, 41 L. R. A. 189, 68 Am. St. Rep. 403; New York Bank Note Co. v. Kidder Press Manuf. Co., 192 Mass. 391, 403, 78 N. E. 463;Foss v. Roby, 195 Mass. 292, 298, 81 N. E. 199,10 L. R. A. (N. S.) 1200,11 Ann. Cas. 571;Gibbs v. Consolidated Gas Co., 130 U. S. 396, 9 Sup. Ct. 553, 32 L. Ed. 979;United States v. Delaware, Lackawanna & Western Railroad, 238 U. S. 516, 533, 35 Sup. Ct. 873, 59 L. Ed. 1438.

As stated by Lord Macnaghten in Nordenfeldt v. Maxim Nordenfeldt Guns & Ammunition Co., [1894] A. C. 535, 565:

‘The public have an interest in every person's carrying on his trade freely: so has the individual. All interference with individual liberty of action in trading, and all restraints of trade of themselves, if there is nothing more, are contrary to public policy, and therefore void. That is the general rule. But there are exceptions: restraints of trade and interference with individual liberty of action may be justified by the special circumstances of a particular case. It is a sufficient justification, and indeed it is the only justification, if the restriction is reasonable-reasonable, that is, in reference to the interest of the parties concerned and reasonable in reference to the interest of the public, so framed and so guarded as to afford adequate protection to the party in whose favour it is imposed, while at the same time it is in no way injurious to the public. That, I think, is the fair result of all the authorities.’

This rule is in accord with our cases. It must be applied with reference to conditions existing at the time in the particular business concerned. A similar principle applies to contracts for the sale of an existing business, and the seller is not permitted to impair or to destroy the good will sold by him either where he has expressly contracted not to do so or where such an undertaking is implied. Dwight v. Hamilton, 113 Mass. 175;Gamewell Fire Alarm Telegraph Co. v. Crane, 160 Mass. 50, 35 N. E. 98, 22 L. R. A. 673, 39 Am. St. Rep. 458; Anchor Electric Co. v. Hawkes, supra; United Shoe Machinery Co. v. Kimball, 193 Mass. 351, 79 N. E. 790;Old Corner Book Store v. Upham, 194 Mass. 101, 80 N. E. 228,120 Am. St. Rep. 532;Marshall Engine Co. v. New Marshall Engine Co., 203 Mass. 410, 89 N. E. 548. Obviously, a greater measure of relief is ordinarily required in such cases than in those involved in a contract of employment for a limited purpose and one not so broad as the business to which it relates. Considerations closely analogous prevent the disclosure by employees of secret processes, or their use of information obtained in an employment where such use amounts to a breach of duty. American Stay Co. v. Delaney, 211 Mass. 229, 97 N. E. 911, Ann. Cas. 1913B, 509;Essex Trust Co. v. Enwright, 214 Mass. 507, 102 N. E. 441,47 L. R. A. (N. S.) 567;Aronson v. Orlov, 228 Mass. 1, 116 N. E. 951;Wireless Specialty Apparatus Co. v. Mica Condensing Co., 239 Mass. 158, 131 N. E. 307, 16 A. L. R. 1170.

[4][6] Considering the nature of the business and the conditions now existing, the contract here considered was reasonable in limitations as to time and space. It clearly follows that...