Southern California Disinfecting Co. v. Lomkin

• Decision Date: 01 August 1960
• Citation: 183 Cal.App.2d 431,7 Cal.Rptr. 43
• Court: California Court of Appeals Court of Appeals
• Parties: SOUTHERN CALIFORNIA DISINFECTING CO., a corporation, Plaintiff and Respondent, v. George LOMKIN, Richard A. Munnecke, individually and doing business as Calar Chemical Company, Defendants and Appellants. Civ. 24364.

Page 43

7 Cal.Rptr. 43

183 Cal.App.2d 431

SOUTHERN CALIFORNIA DISINFECTING CO., a corporation, Plaintiff and Respondent, v. George LOMKIN, Richard A. Munnecke, individually and doing business as Calar Chemical Company, Defendants and Appellants.

Civ. 24364.

District Court of Appeal, Second District, Division 1, California.

Aug. 1, 1960.

Berkowitz & Rhodes, Meyer Berkowitz, Beverly Hills, for appellant, George Lomkin.

Roland Maxwell, Paul H. Marston, Richard W. Olson, Pasadena, for appellants, Calar Chemical Co. and Richard A. Munnecke.

Paul R. Hutchinson, Los Angeles, for respondent, Southern California Disinfecting Co.

FOURT, Justice.

This is an appeal from a joint and several money judgment in favor of the plaintiff and against the defendant Lomkin, who was a former employee of the plaintiff, and against Richard A. Munnecke and defendant corporation, Calar Chemical Company, the present employers of Lomkin for, among other things, unfair solicitation of customers and unfair competition.

The court made extensive findings based upon substantial evidence or the inferences which might be drawn from such evidence. A resume follows.

The plaintiff at the time of the bringing of the action was a California corporation. The defendant, Munnecke, was the president of Calar Chemical Company, a California corporation, hereinafter referred to as Calar and he acted for Calar in the transactions in question. The plaintiff was engaged in the sanitary maintenance supply business, had a large warehouse and kept on hand a large stock of supplies which were sold in the business by plaintiff to its customers throughout parts of Southern California. The customers were principally schools, hospitals, hotels, apartment houses and motels, cafes, garages, military camps, amusement parks and establishments which maintain rest rooms for the use of the public or their own personnel.

The plaintiff's business was started in 1912 and for years was operated by an individual. In 1946 the business was transferred to a California corporation which bore the same name as plaintiff and which corporation operated the business until about January of 1954 when that corporation was dissolved and the assets were transferred to a partnership. The business was operated by the partnership until about February of 1957 when plaintiff company was incorporated and all of the assets were transferred to it, including the good will of plaintiff's predecessors, the trade lists and customer lists. The plaintiff is now the sole owner and operator of the business. There has been built up by plaintiff and its predecessors a large and profitable business and a valuable good will based upon, among other things, customer lists consisting of regular customers who regularly purchase products of plaintiff and have done so for many years and who, but for the interference of the defendants, would have continued to purchase the products of the plaintiff. Not all of the plaintiff's customers purchased plaintiff's products exclusively; a number purchased some products from plaintiff's competitors depending upon prices and conditions existing at the particular time the customer was solicited or upon the customer's particular needs. However, some of the plaintiff's customers purchased substantially all of their needed products from the plaintiff.

The plaintiff's list of about 3,000 customers is kept alphabetically in its office where one card is assigned to each customer. It was the practice to maintain on the cards information with reference to its business relations with such customers. Some of the cards contained the customer's name, address and telephone number, the name of the person in charge of making purchases for the customer, the name of the janitor, custodian, superintendent or other person responsible for the maintenance of the particular premises and the kind of merchandise used. In some of the cases the financial condition of the customer and his reputation for paying his bills was noted on the cards. In addition to the card system there were separate folders for many of the customers which contained records of invoices and correspondence between plaintiff and such customers.

The business of plaintiff is divided into routes or territories and one salesman is assigned to each route. In addition to the records heretofore mentioned, the plaintiff had a route book for each route containing the names and information concerning each customer in the route which was furnished to each salesman and which books were to be kept up and maintained by the salesman for the use of the plaintiff. In addition to the other information, the route book provided space or pages for each customer wherein there was to be set forth the information as to whom should be seen for the purpose of obtaining orders, the day of the week, day of the month or other time when the customer should be called upon, the nature, amount and dates of purchases made by the customer in the past and other information of value to the plaintiff acquired by the salesman in the course of serving the customer. It was the duty of each salesman to maintain the route book for the route assigned to him in such manner that in the absence of the regular salesman any other representative of the plaintiff could take the book and call upon the plaintiff's customers and conduct the business without loss or inconvenience to the plaintiff.

All of the information in the records and lists was secret and confidential and could not be acquired legitimately in any way other than by years of experience and the expenditure of large amounts of money. Plaintiff's salesmen were orally instructed that the information was confidential and valuable and that it was not to be disclosed to anyone else and was to be kept in trust solely for the use and benefit of plaintiff.

On about January 23, 1951 the plaintiff's then existing predecessor employed the defendant, George Lomkin, as a salesman, assigned him to a route and furnished him with the information contained in the records. Lomkin continued to work for plaintiff's predecessors and for plaintiff. In July, 1955 Lomkin was promoted to the position of sales manager in charge of all sales of the business as well as sales in the territory assigned to him. On April 19, 1957 plaintiff turned over to Lomkin one of its route books with the spaces or pages for the information about each customer. At that time Lomkin agreed in writing as a part of his continued employment to return the route book to plaintiff complete and in reasonably useful condition at the time of the termination of his employment. Lomkin was instructed to keep up the book and place therein valuable and confidential information with reference to plaintiff's customers and the route assigned to him and Lomkin thereafter did so. In May of 1957 Lomkin was promoted to the position of supervisor where he supervised the sales in all of the sale routes in addition to his own. While in the capacity of sales manager and supervisor Lomkin had access to all of the information on plaintiff's records and route books and became acquainted with a great number of the large and most valued customers of plaintiff and all of the confidential information with reference to such customers. In October 1957 Lomkin was demoted from supervisor to salesman and his services were then confined to the route assigned to him.

When Lomkin was a salesman he was instructed to call on the customers on the dates and at the times as indicated on the respective cards and to become personally acquainted with the purchasing managers, persons in charge of maintenance and others at the places of business of the customers and to become familiar with the needs of the customers, the prices paid by them for merchandise, their record of payments, of charges made and generally to give his full time and efforts to serving the best interests of plaintiff with reference to its relations with the customers in the route and to build up good will and profits of the plaintiff's business all in consideration of the money paid by plaintiff to Lomkin.

On about March 1, 1958 Lomkin and Munnecke, acting for and on behalf of defendant, Calar, entered into a conspiracy to defraud the plaintiff of its trade lists and the business of its customers. The defendants were to get cards and advertising printed forthwith showing Lomkin as being associated with defendant, Calar. Lomkin was to continue in the employ of plaintiff under the guise of working for the plaintiff and call upon plaintiff's customers as a faithful employee when in truth and in fact he was to give to the plaintiff's best customers the cards and advertising showing Lomkin's association with Calar and to solicit the patronage of plaintiff's said customers for the defendants; it was planned that Lomkin would, whenever possible, take orders from the customers and instead of sending such orders to the plaintiff would send them to Calar to be filled; that after he had solicited the business of the good customers of plaintiff known to him, while being paid by the plaintiff as a supposed loyal employee, he would quit the employ of plaintiff and go into business with the defendants in competition with plaintiff and regularly thereafter call upon plaintiff's customers and solicit their patronage in the name of Calar; that he would take with him upon his termination of employment by plaintiff the sheets from the route book containing the information about the customers in the route where he was working so that he could have the valuable, confidential information therein contained and thereby be in a position to solicit and hold the plaintiff's customers and at the same time by withholding the sheets from the route book interfere with plaintiff's ability to operate the route successfully.

Pursuant to the conspiracy the defendants furnished to Lomkin cards containing his name as a representative of Calar which cards...