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Duane Jones Co., Inc. v. Burke

New York Court of Appeals
117 N.E. 2d 237 (1954)


Facts

In 1942, Duane Jones formed an advertising agency, Duane Jones Company, Inc. (DJCI) (plaintiff), which grew to $9,000,000 in gross billing. In 1951, DJCI lost $6,500,000 in billings, and three executives left DJCI. Several of DJCI’s officers and directors attributed the losses and departures to Duane’s misbehavior. Several DJCI officers and directors, including Scheideler, Beck, Werner and Hayes (defendants), called a meeting to buy out Duane from DJCI. The proposed sale never happened. Scheideler, Becker, and Werner incorporated a new advertising company while they were still officers and directors at DJCI. After opening the new advertising company, Scheideler, Becker, and Werner resigned from DJCI. The new advertising agency hired 71 of DJCI’s 132 employees, including DJCI’s president, vice president, secretary, and treasurer, and also took many of DJCI’s clients. DJCI sued the officers and directors who had left, and won a jury verdict in trial court based on a finding that the defendants had breached their duty of loyalty to DJCI. The officers and directors appealed.

Rule of Law

Issue

Holding and Reasoning (Lewis, C.J.)

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