Wear-Ever Aluminum, Inc. v. Townecraft Industries, Inc.

• Decision Date: 14 June 1962
• Docket Number: No. C--827,WEAR-EVER,C--827
• Citation: 75 N.J.Super. 135,182 A.2d 387
• Parties: ALUMINUM, INC., a corporation of the State of Delaware, Plaintiff, v. TOWNECRAFT INDUSTRIES, INC., a corporation of the State of New Jersey, Defendant.
• Court: New Jersey Superior Court

Page 135

75 N.J.Super. 135

182 A.2d 387

WEAR-EVER ALUMINUM, INC., a corporation of the State of Delaware, Plaintiff, v. TOWNECRAFT INDUSTRIES, INC., a corporation of the State of New Jersey, Defendant.

No. C--827.

Superior Court of New Jersey

Chancery Division.

June 14, 1962.

David B. Buerger, Pittsburgh, Pa., pro hac vice for plaintiff (Stryker, Tams & Dill, Newark, attorneys, William L. Dill, Jr., Newark, of counsel, Buchanan, Ingersoll, Rodewald, Kyle & Buerger, Pittsburgh, Pa., on the brief).

Carmen M. Belli, Garfield, attorney for defendant.

PASHMAN, J.S.C.

The plaintiff, Wear-Ever Aluminum, Inc., a Delaware corporation, is engaged in the business of manufacturing and selling aluminum cooking utensils, crystal, china and cutlery. The actual marketing of these various items is done by three special divisions: the Wear-Ever Division sells aluminum cooking utensils, the Cutco Division sells cutlery, and the West Moreland Sterling Silver Division sells the remainder of the plaintiff's products. The division with which we are concerned is Wear-Ever.

Wear-Ever's marketing arrangement is such that the aluminum cooking utensils which it handles are sold directly to the consumer by house-to-house salesmen known as distributors. The distributor is given a list of names from a reference program maintained by Wear-Ever and he then calls on the various housewives, shows his product, makes a sale--if successful--and secures additional references. It is upon the distributors' shoulders that the ultimate financial success of the Wear-Ever Division actually depends. The distributor being the liaison man between Wear-Ever and the consumer is as valuable an asset a the product itself.

The relationship between Wear-Ever and its distributor, while contractual, is not that of employer-employee. Rather, each distributor is an independent contractor and the company permits him, by an express contractual provision, to devote as much time as he wishes to any other business which he may have. With respect to duration, the contract provides that the contractual relationship will automatically renew 'unless prior to December 31 of any year either party notifies the other to the contrary.'

The distributor's main, and sometimes his sole, contact with Wear-Ever as an entity arises out of his relationship with an individual known as a 'dealer.' It is the dealer who takes the distributor out into the field and teaches him his trade. These lessons are supplemented by sales meetings, drill classes and daily checkups. The relationship between dealer and distributor, as testified to by John Ogden, national salesman of Wear-Ever Aluminum, Inc., is a 'very close relationship, which is maintained through (the) checkup program, and the fact that he has brought him into the business and taught him how to sell and make money.'

The dealer, like the distributor, has a contract with the plaintiff and is an independent contractor and not an employee. The dealer's job is 'to advise distributors on selling techniques in the solicitation of orders for the sale of its Wear-Ever Specialties' for a designated territory. A dealer is compensated for his work by overriding commissions on sales made by distributors within his group. Thus, the earnings of a dealer are directly proportional to the volume of sales made by the distributors under his control and direction.

The next individual in the plaintiff's organization is the district manager. His 'chief function is the location (and) development of field dealers, and to advise and work with the field dealer and dealer force.' Unlike the distributors and dealers who sign contracts and are not employees but independent contractors, the district manager has an oral agreement with the plaintiff and is a full-time employee. He usually has one or two assistant managers working under him, and the remuneration for this managerial group depends on the volume of business which the dealers and distributors are able to procure.

The necessity for the somewhat lengthy explanation of the plaintiff's selling organization arises from the nature of the plaintiff's action. Stated very simply, the plaintiff alleges that the defendant, Townecraft Industries, Inc., tortiously pirated approximately 35 members of its Quaker City Division sales force; that as a result of the defendant's interference with the plaintiff's contractual and advantageous relations with these men, the morale of distributors remaining with Wear-Ever became low and 40 more individuals terminated their employment with the plaintiff. The nature and scope of relief sought by the plaintiff, to use its own words, is to enjoin 'the defendant, its officers, employees, agents, and all other persons acting under its direction or in concert with it * * * from interfering in any manner with the employment and contractual and representative relationships between the plaintiff and its employees, distributors, and dealers who are associated and employed in the plaintiff's Quaker City Division in Philadelphia, Pennsylvania, or elsewhere.' It further seeks: (a) to enjoin the defendant from inducing or attempting to induce the plaintiff's employees and distributors from terminating their employment or contractual obligations with the plaintiff, or from inducing the cessation of solicitation of orders for the plaintiff's products; (b) an injunction enjoining the defendant from employing or continuing to employ (for a period of one year) any persons associated with the plaintiff's Quaker City Division on November 1, 1960; and (c) a declaration that all contracts for employment or representation which the defendant may have made since November 1, 1960, which resulted from the unlawful inducements (made by the defendant, its officers or employees) are void.

The conduct of the defendant and the factual picture during the material period in question, i.e., November and December 1960, were as follows: Wear-Ever's Quaker City Division was, and is, engaged in the sale of cooking utensils to consumers in Philadelphia and its surrounding suburban area. The manager of this division in November 1960 was Daniel Eisenfeld. Under him were Robert Pawson and Dexter Huffman, who were assistant managers; Bernie Solomon, James Kelly, Mel Atlin and Jerry Ferm, who were dealers and/or field dealers, and approximately 80 distributors, a little more than half of whom were actively engaged in the sale of aluminum cooking utensils.

Some years prior to November 1960 defendant, through its vice-president, Michael Nakash, a former employee of Wear-Ever, carried on a sporadic campaign in various cities throughout the United States, recruiting Wear-Ever personnel to come to work for Townecraft. The campaign consisted, in part, of telephone calls, social visits, dinners and the mailing of information about the defendant to Wear-Ever employees. In November of 1960 the campaign took on new dimensions and a concentrated effort was made to 'proselyte' Wear-Ever employees, dealers and distributors.

The key man to the success of defendant's program was Daniel Eisenfeld. Aside from the fact that he was an experienced and capable district manager, he had the trust and confidence of his sales force and was able to lead and mold them in the direction contemplated by the defendant's president, Henry Zadikoff, and vice-president, Michael Nakash. To achieve the desired end, Eisenfeld called a daytime meeting at the Cherry Hill Inn in Haddonfield, New Jersey, on November 17, 1960. Present at the meeting were Messrs. Eisenfeld, Atlin, Kelly, Huffman, Solomon, Ferm, Pawson, Zadikoff and Nakash. Relative to this occasion, I find as a fact that the sole purpose for the meeting was to convince the Wear-Ever men, other than Eisenfeld who was already, verbally, defendant's zone manager, to come to work for Townecraft. I find, further, that none of these men asked to come, but rather, Eisenfeld asked them to attend.

As a result of the Cherry Hill meeting, all of the former key men in Wear-Ever's Quaker City Division signed either dealer or regional manager contracts with the defendant, and Eisenfeld signed each contract as zone manager. That night, after the close of the meeting, the group went back to Wear-Ever's Lancaster Avenue office in Philadelphia where they were met by approximately 10 to 20 Wear-Ever distributors. These men were told of the mass exodus of the higher echelon members of the team and, being group-conscious, followed the lead of their superiors. Defendant was well prepared for the distributor change-over, as is evident from the fact that each man was issued Townecraft samples the same night. The samples had been 'conveniently' driven into Pennsylvania from defendant's plant in Ridgefield, New Jersey.

New Jersey's position with respect to the general principles to be applied in the area of interference with contractual and advantageous relations was cogently expressed by Justice Heher in the oft-cited case of Louis Kamm, Inc., v. Flink, 113 N.J.L. 582, 587--589, 175 A. 62, 66, 99 A.L.R. 1 (E. & A.1934), where he said:

"Merely to persuade a person to break his contract, may not be wrongful in law or fact. * * * But if the persuasion be used for the Indirect purpose of injuring the plaintiff, or of benefiting the defendant, at the expense of the plaintiff, it is a malicious act, which is in law and in fact a wrong act, and * * * a wrongful act, and * * * an actionable act if injury ensues from it.'

* * * While a trader may lawfully engage in the sharpest competition with those in a like business, by offering extraordinary inducements, or by representing his own goods to be better and cheaper than those of his competitors, yet when he oversteps that line and commits an act with the Malicious intent of inflicting injury upon his rival's business, his conduct is illegal, and if damage ensues from it the injured party is entitled to redress. And it does not matter whether the wrongdoer...