Western Maryland Dairy, Inc. v. Chenowith

• Decision Date: 13 January 1942
• Docket Number: 53.
• Citation: 23 A.2d 660,180 Md. 236
• Parties: WESTERN MARYLAND DAIRY, Inc., v. CHENOWITH et al.
• Court: Maryland Court of Appeals

23 A.2d 660

180 Md. 236

WESTERN MARYLAND DAIRY, Inc., v. CHENOWITH et al.

No. 53.

Court of Appeals of Maryland

January 13, 1942

Appeal from Circuit Court No. 2 of Baltimore City; Rowland K. Adams Judge.

Suit for an injunction by Western Maryland Dairy, Inc., against Lawrence Chenowith and another, trading as Meadowbrook Dairy. From a decree dismissing bill of complaint, plaintiff appeals.

Reversed and remanded.

Morris Rosenberg and George L. Clarke, both of Baltimore (Tydings Sauerwein, Levy & Archer and Allan Sauerwein, all of Baltimore, on the brief), for appellant.

James J. Lindsay, of Baltimore, for appellees.

Before BOND, C.J., and SLOAN, JOHNSON, DELAPLAINE, COLLINS FORSYTHE, and MARBURY, JJ.

DELAPLAINE Judge.

Western Maryland Dairy, Inc., a distributor of milk and other products in Baltimore, filed a bill of complaint against Lawrence Chenowith and also Charles J. Chenowith, trading as the Meadowbrook Dairy, his agents, servants and employees, to enjoin them from soliciting orders for dairy products from, or selling, serving or delivering, either directly or indirectly, dairy products to, any of its customers contrary to a collective labor agreement between the complainant and Local Union No. 937, Milk and Ice Cream Drivers and Dairy Employees. The union, consisting of about 700 employees of the corporation, had agreed that no employee, on leaving its employ, would 'solicit, serve or sell, directly or indirectly,' milk or dairy products during the period of six months thereafter to any customers whom he had served during any part of one year next preceding the termination of his employment. The Chancellor granted a temporary injunction, but after the hearing dissolved the injunction and dismissed the bill.

In the early days of the trade unions and brotherhoods in America, some courts were unwilling to enforce their agreements; but in recent years the courts have manifested a growing appreciation of their value in securing harmonious relations between employer and employee. It is now held in Maryland and by the great weight of authority that employees have the right to organize a union and to select their agents to bargain collectively with their employer with the object of promoting the welfare of the members; and if their collective agreement has been acquiesced in by a particular employee and it is not contrary to public policy, it is valid and enforceable at law or in equity. International Pocketbook Workers' Union v. Orlove, 158 Md. 496, 501, 148 A. 826; Shinsky v. O'Neil, 232 Mass. 99, 121 N.E. 790; Christiansen v. Local 680 of Milk Drivers and Dairy Employees of New Jersey, 126 N.J.Eq. 508, 10 A.2d 168. Thus it has been held in Massachusetts that where an agreement between a dairy company and a labor union prohibited any employee from selling dairy products to his former customers during a period of 90 days after cessation of his employment, the agreement was binding upon any member of the union who worked under the agreement. Whiting Milk Companies v. Grondin, 282 Mass. 41, 184 N.E. 379. It has likewise been decided in Illinois that one who had driven a milk truck for a dairy company could be enjoined from soliciting his former customers within a period of two years after his discharge from the company, where such solicitation contravened an agreement between the company and his labor union. Western-United Dairy Co. v. Nash, 293 Ill.App. 162, 12 N.E.2d 47. Of course, an agreement to refrain from engaging in competitive work during a specified period subsequent to the termination of employment will ordinarily not be enforced in equity, if unnecessary for the employer's protection and an unreasonable restriction upon trade and employment. Dyar Sales & Machinery Co. v. Bleiler, 106 Vt. 425, 175 A. 27. But the law is settled in Maryland that a covenant by an employee that he will not solicit customers of the employer for the space of one year after termination of his employment is valid and enforceable in equity, because the contract is only in partial restraint of the particular trade or employment and the restraint is confined within limits which are no larger than may be reasonably required for the protection of the employer. Tolman Laundry v. Walker, 171 Md. 7, 187 A. 836. If equity could not restrain an attempted breach of agreement between employer and labor union, the system of collective bargaining would be demoralized, for the remedy at law would often be inadequate. Gregg v. Starks, 188 Ky. 834, 224 S.W. 459. At the hearing of this case Lawrence Chenowith said he had served on union committees, and also admitted: 'I knew about the covenant in the contract about not soliciting customers on the route that I served, if I left.' Since he had been an active member of the union and was familiar with and acquiesced in the terms of the agreement, and it did not impose unreasonable restraint, we must hold that the covenant was binding upon him.

The question remains for our consideration whether the complainant was entitled to injunctive relief under the facts and circumstances of the case. It appears from the evidence that in 1939 Charles J. Chenowith, after working for the complainant for many years, started in business for himself, and Harry F. Meyer, who also had been an employee of the complainant, went to work for him. It further appears that on December 3, 1940, Lawrence Chenowith, who had been a salesman in the Harford Road section for many years, and was serving 254 customers on this route, left the employ of the complainant. Prior to that day he told a number of his customers that he intended to leave its employ. Although he denied at first that he had told any of them that he was going to work for his brother, he finally admitted: 'I don't know how many I told that I was leaving. * * * I don't know how I determined to whom to tell, to which customers to tell that to. I just picked some customers at random. * * * I did tell some few peopel that were very familiar with me, yes, that I was going with my brother at Meadowbrook.' Within two days 23 of his customers had stopped their orders. Whthin two weeks 73 customers had discontinued. By the time of the hearing the total had reached 94. According to the records of the company, the loss of customers on a milk route when a driver leaves is generally less than 1%, and never more than 10%, whereas the loss on this route had already exceeded 35%. It was contended by the complainant that while Lawrence knew that the union agreement forbade him to solicit his old customers, he and his brother had concocted a scheme to evade the covenant. It appears that Lawrence decided to take Meyer's route in the York Road section in the hope of avoiding the appearance of breach of covenant, while Meyer took Lawrence's old route.

A number of instances of breach of covenant were produced by the complainant. One of the customers on Ailsa Avenue admitted on the witness stand that Lawrence Chenowith had asked her to buy milk from him. She testified: 'Well, I think he mentioned something of the fact, yes, he said he was going with his brother, and asked me if I would go and try the milk, * * * and I did try it.' It was then shown that Lawrence was seen in a Meadowbrook milk truck on Ailsa Avenue about 4 o'clock in the morning of December 8. It was claimed by Charles J. Chenowith that the order of the new customer had been 'turned in' by Meyer, and that the only reason why Lawrence was riding in the milk truck was to point out to Meyer where to deliver the milk. However, this is a clear instance of violation of the agreement that within the time specified no employee would 'solicit, serve or sell, directly or indirectly.' Among the other witnesses were Hugh M. Ward and Raymond Little, route foremen, who took Chenowith's successor over the route and introduced him to the customers on December 3. After they came out of the house of a customer on Southern Avenue, Lawrence Chenowith entered the house and conferred with the customer for some minutes. He gave the following version of the incident 'Well, she was my customer. I had a right to. I was employed by the Dairy. She might want to buy something. * * * It was my duty....