Town & Country House & Home Service, Inc. v. Newbery
Court of Appeals of New York
147 N.E.2d 724 (1958)
Town & Country House & Home Service, Inc. (T&C) (plaintiff) was a house cleaning business run by Mr. Rossmore. Mrs. Rossmore, wife of T&C’s president, built the company’s customer base by randomly calling residents in a certain section of town that she determined might contain likely prospects. Selling T&C’s service was very difficult. Mrs. Rossmore typically made hundreds of calls to gain a small number of prospects. After interested prospects were contacted, Mrs. Rossmore would make appointments to visit them personally to close the sales and determine the prices they would be charged. Newbery and some associates (Newbery et al.) (defendants) worked for T&C for nearly three years. After terminating their employment with T&C, Newbery et al. formed their own house cleaning company which directly competed with their former employer. Newbery et al. built their customer base by soliciting T&C’s customers. After discovering that Newbery et al. solicited its customers, T&C sued Newbery et al., alleging that Newbery et al. had engaged in unfair competition. In its complaint, T&C contended that its business was “unique, personal and confidential” and that Newbery et al. breached their confidential relationship with T&C by appropriating its trade secrets, i.e., T&C’s customer information, for competitive purposes. The trial court dismissed T&C’s complaint, holding that there was nothing secret or confidential about T&C’s business, and that T&C did not represent to Newbery et al. that its customer information was confidential. The appellate division reversed the trial court’s decision, finding that Newbery et al., while working for T&C, conspired to quit T&C, form their own business and appropriate T&C’s customers for their own gain. The Appellate Division held that Newbery & Assoc.’s actions constituted a violation of the fiduciary obligations they owed to T&C as employees, and thus T&C was entitled to relief.
Rule of Law
Holding and Reasoning (Van Voorhis, J.)