Wrentham Co. v. Cann
| Decision Date | 05 April 1963 |
| Citation | 345 Mass. 737,189 N.E.2d 559 |
| Parties | The WRENTHAM COMPANY v. Irving CANN. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Joseph G. Crane, Boston, for plaintiff.
Edgar L. Kelley, Boston, for defendant.
Before WILKINS, C. J., and SPALDING, WHITTEMORE, KIRK and REARDON, JJ.
The plaintiff (Wrentham) seeks to enforce the restrictive covenant in a contract of employment executed on July 15, 1958, against a former employee, the defendant Cann. Cann contests the enforability of the covenant and, by way of counterclaim, asks that Wrentham be ordered to pay him $250.94 for unpaid salary, commissions and disbursements, and that an accounting be had to determine the value of certain shares of stock now held by him in Wrentham.
The case was referred to a master on the limited issue of the enforceability of the covenant not to compete. The report cotained subsidiary and general findings. Wrentham made several objections. After the filing of the report, the objections, treated as exceptions, were sustained, save one. Thereupon the report as modified by the sustained exceptions was confirmed by interlocutory decree. Neither party appealed from the decree confirming the modified report.
We state the significant subsidiary facts found by the master. Wrentham is a Connecticut corporation engaged in business as a manufacturers' representative and mill agent in the sale of plumbing and heating supplies, electrical appliances and similar items to industrial wholesalers in New England and the State of New York. It operates through a group of eight salesmen or district representatives who are in direct contact with its customers. As part of its procedure it keeps records of its customers, their discount entitlement, and credit standing. One of the duties of the salesmen was to keep up to date certain buying manuals prepared by Wrentham and given to the buyers in the various firms it dealt with.
In April, 1956, Cann, then twenty-three years old, and without experience in the particular business, entered Wrentham's employ at its home office in Connecticut at a salary of $60 a week. He underwent a course of training and early in 1957 became a district representative in eastern Massachusetts (which he shared with other representatives) and part of New Hampshire. Later, Vermont and the 'Tri-Cities' area 1 in eastern New York were added. He called on the customers whose names were given to him and, like other district representatives, promoted good will, solicited new accounts, and assigned discounts. Cann's compensation was based upon a pay incentive plan.
On July 15, 1958, Wrentham and Cann executed a written contract of employment in Connecticut. Among its provisions were the following: Wrentham agreed to employ Cann; Cann's salary was to be fixed by agreement; all written data of Wrentham used by Cann in connection with his employment was to remain its property and to be returned to it upon demand; either party could terminate the contract upon thirty days' notice; Cann would not directly or indirectly or with anyone else for a period of five years after termination solicit customers of Wrentham or the account of any principal or supplier of Wrentham or represent any principal represented by Wrentham 'provided they were customers, principals, suppliers or accounts * * * represented or serviced by' Wrentham at any time during Cann's employment by Wrentham; Cann would not during the agreement or at any time, communicate the secrets of Wrentham's business or the names of customers, principals, suppliers or other parties dealt with by Wrentham; Cann would devote his full time and effort to Wrentham's business so long as he was in its employ. Upon the execution of the contract, Cann was to receive fifteen shares of class B common stock in Wrentham as a bonus. On each anniversary date he was to receive fifteen additional shares. The class B common stock had a par value of 10 a share. If Cann remained continuously in Wrentham's employ under the terms of the contract through July 15, 1963, Cann would have the option to convert this stock to a like number of class A stock in Wrentham.
Cann's weekly earnings rose from $60 to $170 in 1960; the yearly volume of business produced by him rose from $200,000 in 1957 to $624,000 in 1960.
Differences between Cann and the management developed in 1959 which led eventually in April, 1961, to an agreement to sever the relationship. Specifically on December 15, 1959, Cann had protested to one Finkel, the founder and general manager of Wrentham, that the restrictive covenant was too onerous and that he would be better off to quit then and suffer the restraints of the agreement rather than wait until he was older. Finkel in reply stated 'that he would never stop anyone from making a living and cited instances of former employees under a similar contract presently working in the same industry without let * * *.' Cann remained in Wrentham's employ until April 6, 1961. Shortly before leaving, Cann took with him a list of accounts, both present and prospective, which was the property of Wrentham.
Since April 10, 1961, Cann has called on persons, some of whom he called on while in the employ of Wrentham and whose names were furnished to him by Wrentham, in eastern Massachusetts, and occasionally in Vermont and New Hampshire. He is selling for principals and suppliers who were not principals and suppliers of Wrentham.
The general findings of the master, unaffected by the sustained exceptions, and additional subsidiary findings, so far as relevant, are: 'Cann's duties with Wrentham were important but not confidential; Wrentham's system of merchandising was not confidentially imparted to Cann; the discussion of December 15, 1959 did not result in a binding waiver by Wrentham of the restrictive covenant of the contract of employment (the master particularly found that there was 'a feeling on the part of Cann that Finkel would not elect to enforce this provision'); the list taken by Cann, although...
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