The O. Hommel Co. INC. v. Fink., ( No. 7083

• Decision Date: 18 December 1934
• Docket Number: ( No. 7705),( No. 7083
• Citation: 115 W.Va. 686
• Parties: The O. Hommel Co., Inc. v. Paul J. Fink et al.
• Court: West Virginia Supreme Court

115 W.Va. 686

The O. Hommel Co., Inc.

v.Paul J. Fink et al.

(Nos. 7083, 7705)

Supreme Court of Appeals of West Virginia.

Submitted November 13, 1934.

Decided December18, 1934.

Contracts

A contractual covenant between employer and employee, restricting the employee from engaging in business similar to that of the employer within a designated time and territory after the employment should cease, will be enforced if the restriction is reasonably necessary for the protection of the employer and does not impose undue hardship on the employee.

Appeal from Circuit Court, Ohio County.

Suit by the 0. Hommel Company, Incorporated, against Paul J. Fink and another. From a decree dissolving temporary injunction and from a decree dismissing the bill, plaintiff appeals.

Reversed and entered.

McCamic & Clarke, Weil, Christy & Weil, Jay T. McCamic and Wesley R. Tinker, Jr., for appellant. Handlan, Garden & Matthews, for appellees.

Hatcher, Judge:

This suit involves a contractural covenant restricting an employee from engaging in business similar to that of the employer within a designated time and territory after the employment should cease.

The plaintiff, as employer, seeks herein to enforce the covenant against the defendants, its former employees. A temporary injunction herein was dissolved before the cause was fully matured. An appeal, No. 7083, followed the dissolution. The suit then progressed to final hearing in the circuit court, and the bill was dismissed. Another appeal, No. 7705, followed the dismissal. The two appeals are now heard together.

The plaintiff is a Pennsylvania corporation, and imports, manufactures and sells bronze powders, china and glass colors (known as ceramic colors), ceramic chemicals and supplies (gold, silver and platinum preparations) for decorating ceramic wares, such as dinnerware, floor and wall tile, art pottery, bricks and terra cotta. Plaintiff has only five competitors in the United States. It and its predecessors have been in this business for many years, during which time it has dealt with several thousand customers in the United States. Such dealings were for the most part regarded by plaintiff as confidential. It now does a gross business of from $800,000 to $1,000, 000 annually. Matching or producing the color desired by the customer is sometimes a very difficult matter. To facilitate its business in this respect, it has gathered valuable data on clays (over one thousand of them alone) and on where, throughout the world, the rarer colors may be procured. It also maintains a chemical laboratory with a force of eight to ten skilled chemists, for the purpose of experimenting in the production and matching of colors. Those experiments number many thousand, and have consumed from a few hours to as long as fifteen years, in one instance. In another case, three thousand experiments failed to duplicate a color. Plaintiff makes contacts with its customers mainly through its salesmen. They are continuously schooled and instructed in the chemical composition and the chemical effects of the ingredients entering into the various color groups which might interest the customer. They are expected to secure from him in connection with a sample of the color desired, his manufacturing processes, which the plaintiff must know, in order to produce the particular color. Salesmen are occasionally admitted into the laboratory during the experiments. The information imparted to the salesman by plaintiff, the information obtained by them from the customers, and the formulas worked out by plaintiff in its laboratory are all regarded by it as confidential. Its business is confined mainly to two provinces in Canada and to the following states: Massachusetts, Rhode Island, Connecticut, New York, New Jersey, Pennsylvania, Maryland, West Virginia, Ohio, Indiana, Illinois, Missouri, Kentucky, Tennessee, Michigan, Wisconsin and Minnesota.

Upon entering the employment of plaintiff, each defendant signed a contract, agreeing that in consideration of the employment, he would not divulge during the term of his employment or afterwards, "any trade secrets, formulas, receipts or processes", learned in connection with the business, and would not for a period of three years after the employment terminated, engage directly or indirectly in business similar to that of plaintiff, within Canada or that portion of the United States east of the Mississippi River. Neither of defendants had engaged in this business before. One had been a school teacher and the other a salesman of embalmers' supplies. One worked for plaintiff about one year, and the...