Master's right of recovery for knowing and intentional interference with employment contract, injurious to him, is not dependent upon statute.

5. MASTER AND SERVANT 339-INDUCING BREACH OF CONTRACT.

Complaint, alleging that defendant, knowing that plaintiff corporation was organized to exploit name and skill of a designer who made contract for services for several years, intentionally to injure plaintiff, enticed the designer away, and persuaded her to break her contract, stated cause of action against defendant.

Appeal from Supreme Court, Appellate Division, First Department.

Suit by S. C. Posner Co., Incorporated, against Emanuel A. Jackson and E. A. Jackson, Incorporated. There was judgment on pleadings for plaintiff, and defendant appealed. The Appellate Division reversed the judgment, sustained demurrer to the complaint, and allowed 20 days to amend. On her failure to amend, the Special Term dismissed the complaint. From a judgment of the Appellate Division (170 App. Div. 972, 155 N. Y. Supp. 1140), affirming judgment of the Special Term dismissing the complaint, plaintiff appeals. Reversed, and original judgment of Special Term affirmed.

The plaintiff by its complaint alleged that: It is a corporation, and that it "was and still is engaged in the business of designing, manufacturing, and selling at wholesale ladies' gowns and wearing apparel in the borough of Manhattan, city of New York," and that the defendant E. A. Jackson, Incorporated, is a corporation "likewise engaged in the business of designing and selling at wholesale ladies' gowns and wearing apparel in the borough of Manhattan in competition with the plaintiff, and said Emanuel Jackson is the chief stockholder of said corporation and member of the board of directors and its president, and

actively engaged in the conduct and management of said business.

"Third. That heretofore Sarah C. Posner had for a number of years been engaged in the business of designing gowns and ladies' garments, and had acquired great skill and displayed great taste in making such designs, and had become so proficient as a designer that she achieved a great reputation throughout the markets where ladies' gowns and wearing apparel are sold, and her name as a designer added value to garments and secured a readier sale for them and made her services unique.

"Fourth. On information and belief, said Sarah C. Posner, on or about the 25th day of October, 1911, organized and incorporated the plaintiff corporation and thereafter, in reliance upon said Sarah C. Posner's skill and reputation as a designer, various persons were induced to subscribe to or purchase the stock of said corporation for its face value, and said Sarah C. Posner thereafter became a member of the board of directors of said corporation, and at all times hereinafter mentioned continued to be such director, and was elected president of said corporation, and thereafter and at all times hereinafter mentioned continued to be such president, and on or about the 25th day of July, 1912, the said Sarah C. Posner entered into a written agreement with the said corporation, and with a majority of the stockholders of the said corporation and others, wherein and whereby she agreed to and did enter the services of the said corporation as a designer and manager for the period of five years, from the 25th day of July, 1912, subject to the general control of the corporation, and agreed, subject to such control, to perform all such services as the said corporation should require. She also agreed to devote the whole of her time, attention, and energy to the performance of her said duties, and agreed not until the expiration of said contract, or any extended term thereof, either directly or indirectly, alone or in partnership, to be connected with or concerned in any other business or pursuit whatsoever, and that she would not until the expiration of such contract, or any extended term thereof, either directly or indirectly, engage in or become associated in the business of manufacturing or selling any kind of ladies' either as principal, agent or employé, or in garments, apparel, or other similar articles, any other relation or capacity, or as stockholder, general officer, or employé engaged in such or similar business without the consent of the plaintiff or its successor or assigns.

*

"Sixth. Thereafter said Sarah C. Posner duly entered upon the performance of the duties assumed by her under said contract, and received and accepted the salary of $75 per week. During the latter half of the year 1913 the defendant Emanuel Jackson, acting in behalf of himself and of the defendant corporation, E. A. tiff unknown, to injure the plaintiff in its busiJackson, Incorporated, and others to this plainness, wrongfully, corruptly, and maliciously, and for the purpose of enticing the said Sarah C. Posner and inducing her to break her contract with the plaintiff corporation, and of depriving it of her services and of securing such services for a competitor, and of thereby injuring this corporation, offered and agreed to give to the said Sarah C. Posner an additional and increased compensation if she would break her contract with the plaintiff and leave its employ, and, by means of said persuasions and inducements and increase of compensation offered, the said defendants enticed said Sarah C. Posner from the employ of this plaintiff, and persuaded her to break her contract with this plaintiff and to enter into a contract of employment with the defendant E. A. Jack

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

.

[1] The employé contracted to "devote the whole of her time, attention, and energy to the performance of her said duties," and that she would not "until the expiration of such contract, or any extended term thereof, either directly or indirectly, engage in or become associated in the business of manufacturing or selling any kind of ladies' garments, apparel, or other similar articles, ei

son, Incorporated, and said Sarah C. Posner thereupon, on or about the 10th day of January, 1914, did abandon and break her aforesaid contract, and in violation of the same did enter into the employ of the defendant E. A. Jackson, Incorporated, a competing business, and is at present, as plaintiff is informed and believes, in said employ, and she has utterly failed and refused to perform her contract with the plaintiff, and has wrongfully broken the same, to the great damage and injury of this plaintiff. "Seventh. That at the time the said defend-ther as principal, agent, or employé." The ants and the others who are to this plaintiff unknown, conspired to and did wrongfully entice said Sarah C. Posner from the employ of the plaintiff, and persuaded and induced her to wrongfully break her contract with this plaintiff, and it was well known to them that the plaintiff had been organized by said Sarah C. Posner; that she was one of the principal persons engaged in its management; that she had loaned to its enterprise her name; that she was then a director and the president thereof, and in the employ of the plaintiff; and that she was a party to a written contract of employment for her exclusive services for a period of years to come."

The complaint also alleged injury and damage to the extent of $25,000, and de

manded judgment for that amount.

employé's failure to perform her contract so far as appears was inexcusable. She is liable at law for the damages occasioned by her failure to perform her contract. As the services to be performed by her under the contract were special, unique, and extraordinary, if the remedy at law is inadequate, an action could have been sustained in equity to restrain her from the violation of the negative covenants to which she became McCall Co. v. Wright, 198 N. Y. 143, 91 N. bound in connection with her employment. Coal & Coke Co. v. Mitchell, 245 U. S. 229, E. 516, 31 L. R. A. (N. S.) 249; Hitchman 38 Sup. Ct. 65, 62 L. Ed.

The faithful performance of the covenants

The defendants demurred to the complaint by the employé was of vital importance to upon the ground that it does not state facts the employer. It is apparent from the allesufficient to constitute a cause of action. The plaintiff asked that the demurrer begations of the complaint that if the contract overruled, and for judgment upon the plead-tiff must necessarily result therefrom. When is not performed, serious injury to the plainings. Its motion was granted. Posner Co., the defendants induced the employé to break Inc., v. Jackson, N. Y. L. J., May 2, 1914, her contract with the plaintiff "it was well Justice Greenbaum. An appeal was taken from the judgment entered thereon to the known to them that the plaintiff had been Appellate Division, where it was reversed organized" by the employé, and “that she and the demurrer sustained, but the plain- was one of the principal persons engaged in its management, that she had loaned to its tiff was given 20 days in which to serve an enterprise her name, and she was then a diamended complaint. Posner Co., Inc., v. rector and president thereof, and in the emJackson, 166 App. Div. 920, 152 N. Y. Supp. ploy of the plaintiff, and that she was a 1105. The plaintiff failed to amend its complaint, and judgment was entered at Special party to a written contract of employment for her exclusive services for a period of Term, dismissing the same. An appeal was years to come." taken from that judgment to the Appellate Division, where it was affirmed. Posner Co., Inc., v. Jackson, 170 App. Div. 972, 155 N. Y. Supp. 1140. From the judgment of the Appel late Division an appeal is taken to this court. Edmond E. Wise, of New York City, for appellant. Julius Henry Cohen, of New York City, for respondents.

In persuading the employé to break the Contract with the plaintiff the defendant Jackson acted for himself and for the defendant corporation. He intended “to injure the plaintiff in its business," and entice such employé from the plaintiff and persuade her to break her contract with the plaintiff for the purpose of "depriving it of her services and of securing such services for a competitor and of thereby injuring this (plaintiff) corporation."

CHASE, J. (after stating the facts as above). The sufficiency of the complaint is challenged. In considering this appeal we [2, 3] It is alleged that in pursuance of a must take its allegations as true. The plain- wrongful corrupt, and malicious purpose the tiff's right to recover thereon, if at all, defendants induced the employé to abandon depends: (1) Upon its right to the employé's and break her aforesaid contract and in vioservices pursuant to the express contract|lation of the same to enter into the employ for a definite period of time; (2) the de- of the defendant E. A. Jackson, Incorporatfendants' knowledge of the contract and ed, "a competing business." Such contract of the same being valuable, important, and essential to the plaintiff in maintaining its business as the defendants' competitor; (3) the defendants' willful and malicious intent and purpose to injure the plaintiff by depriving it of such employé's services as provided in the contract.

as that described is a property right. An interference with such a property right by which it is lost to an employer is a wrong in morals, and, when without justification or excuse, may be an actionable tort for which damages can be recovered against the wrongdoer.

this case to discuss the civil liability of a person who interferes with the contract rights of another except as they are alleged in the complaint in this action. Such liability is specially dependent upon the facts found in each case, and we expressly restrict our opinion to the facts upon which it is based.

The judgment of the Appellate Division should be reversed and that of Special Term affirmed, with costs in this court and in the Appellate Division.

HISCOCK, C. J., and COLLIN, CUDDE-
BACK, HOGAN, and CRANE, JJ., concur.
MCLAUGHLIN, J., not sitting.
Judgment accordingly.

If a person knowingly and intentionally interfere with the express contract rights of an employer with his employé and the purpose and intent of such interference is to injure such employer, and it does result in his injury, an action will be sustained to recover damages therefor. Bossert v. Dhuy, 221 N. Y. 342, 117 N. E. 582; National Protective Association v. Cumming, 170 N. Y. 315, 63 N. E. 369, 58 L. R. A. 135, 88 Am. St. Rep. 648; Warschauser v. Brooklyn Furniture Co., 159 App. Div. 81, 144 N. Y. Supp. 257; Lumley v. Gye, .2 El. & Bl. 216; Quinn v. Leathem, 1901 A. C. 495; 27 Eng. Ruling Cases, 66, and note; 1 British Ruling Cases, 197, and note; Angle v. Chic., St. P., N. & O. R. Co., 151 U. S. 1, 13, 14 Sup. Ct. 240, 38 L. Ed. 55; Dr. Miles Medical Co. v. Park & Sons Co., 220 U. S. 373, 31 Sup. Ct. 376, 55 L. Ed. 502; Hitchman Coal & Coke Co. v. Mitchell, 245 U. S. 229, 252, 38 Sup. Ct. 65, 62 L. Ed. ; Eagle Glass & Mfg. Co. v. Rowe, 245 U. S. 275, 38 Sup. Ct. 80, 62 L. Ed. Lewis v. Bloebe, 202 Fed. 7, 15, 120 C. C. A. 335; Walker v. Cronin, 107 Mass. 555; Moran v. Dunphy, 177 Mass. 485, 59 N. E. 125, 52 1. PRINCIPAL AND AGENT L. R. A. 115, 83 Am. St. Rep. 289; Globe, etc., Fire Ins. Co. v. Fireman's Fund Ins. Co., 97 Miss. 148, 52 South. 454, 29 L. R. A. (N. S.) 869; Thacker Coal & Coke Co. v. Burke, 59 W. Va. 253, 53 S. E. 161, 5 L. R. A. (N. S.) 1091, 8 Ann. Cas. 885; Doremus v. Hennessy, 176 Ill. 608, 52 N. E. 924, 54 N. E. 524, 43 L. R. A. 797, 802, 68 Am. St. Rep. 203; Gore v. Condon, 87 Md. 368, 39 Atl. 1040, 40 L. R. A. 382, 67 Am. St. Rep. 352; Bixby v. Dunlap, 56 N. H. 456, 22 Am. Rep. 475; Martens v. Reilly, 109 Wis. 464, 84 N. W. 840; Rice v. Manley, 66 N. Y. 82, 23 Am. Rep. 30; Aldridge v. Stuyvesant, 1 Hall, 235; Johnson Harvester Co. v. Meinhardt, 9 Abb. (N. C.) 393; Brennan v. United Hatters, 73 N. J. Law, 729, 65 Atl. 165, 9 L. R. A. (N. S.) 254, 118 Am. St. Rep. 727, 9 Ann. Cas. 698; Flaccus v. Smith, 199 Pa. 128, 48 Atl. 894, 54 L. R. A. 640, 85 Am. St. Rep. 779.

(223 N. Y. 294) BEATTY v. GUGGENHEIM EXPLORATION CO. et al.

[4] The right of recovery is not dependent upon statute. Walker v. Cronin, supra; Hitchman Coal & Coke Co. v. Mitchell, supra.

In the case of Ashley v. Dixon, 48 N. Y. 430, 8 Am. Rep. 559, on which the respondent in part relies, the decision was in fact based upon a failure of evidence to establish the plaintiff's contention, as it stated by the court in the first two paragraphs of the opinion. The further discussion of law was quite unnecessary to the decision. The case is also to be distinguished from the case under consideration, in that it does not include the element of bad faith and willful intention to injure the plaintiff. So in the case of De Jong v. Behrman Co., 148 App. Div. 37, 131 N. Y. Supp. 1083, there was no specific allegation of purpose and intent to injure the plaintiff.

(Court of Appeals of New York. April 23, 1918.)

AGENT
TIONS.

69(1)-DUTY OF

BREACH OF CONFIDENTIAL RELA

An agent made an agreement with a third person in relation to mining interests for payment in stock for such person's services to his principal, the agent also to receive certain stock with the consent of his principal. The agent induced such person secretly to demand more stock of the principal, a portion thereof to be turned over to the agent. Held, a breach of agent's fiduciary relations, and he could not recover such stock on objection of his principal. 2. APPEAL AND ERROR 1089(1)-FINDINGS OF FACT-REVERSED BY IMPLICATION.

In view of Code Civ. Proc. § 1338, providing that when the Appellate Division reverses a determination of the trial court on questions of fact reversed by number or other adequate desfact, it shall specify the particular questions of ignation, where Appellate Division designates findings of fact reversed, other findings not designated cannot be held on appeal to the Court of Appeals to be reversed because inconsistent with findings made by such court.

3. PRINCIPAL AND AGENT 78(6)-DUTIES OF AGENT-BREACH OF FAITH-SUFFICIENCY OF EVIDENCE.

In an action by agent against a third person and his principal to recover corporate stock, evidence held sufficient to sustain finding that such agent had induced the third person to demand for services to the principal more stock than he would otherwise have asked, agent to get a share of such stock through another transaction pending between the agent and such third

person.

Crane, J., dissenting.

Appeal from Supreme Court, Appellate Division, First Department.

Action by Alfred Chester Beatty against the Guggenheim Exploration Company and Oscar B. Perry. From a judgment of the first department of the Appellate Division of the Supreme Court (167 App. Div. 864, 153 N. Y. Supp. 757), reversing a judgment for defendants and, directing a judgment for [5] It is neither necessary nor desirable in plaintiff, defendants appeal. Reversed. For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

Nathan L. Miller, of Syracuse, and Louis Marshall, of New York City, for appellants. Charles F. Brown, of New York City, for respondent.

CUDDEBACK, J. The plaintiff in this action alleged that he and the defendant Oscar B. Perry were jointly interested in a mining enterprise on Bonanza creek, in the Yukon mining district of Alaska, and that he, the plaintiff, was entitled to certain money and property which the defendant Perry withheld, and for which the action was brought to recover. The defendant Perry made no personal claim to the money and property involved in the action, but retained it because the other defendant, the Guggenheim Exploration Company, alleged that it owned such money and property, and that the plaintiff's demand was in fraud of the company's rights and in violation of a contract between the plaintiff and the company.

It appeared that in May, 1905, one Treadgold, who owned mining property and held options on other mining property on Bonanza creek in the Yukon district, sought to sell the same to the defendant company and gave the company an option thereon.

tember 2, 1905, for the defendant company that the business was not attractive on the basis offered and directed Beatty not to commit the company on that basis, believing that Treadgold would come to New York, where better terms could be made. At about that time Treadgold was in trouble with his options, and he applied to Perry for aid. Perry was unable to furnish the money required, and he applied to the plaintiff, Beatty. Beatty advanced Perry $15,000, which was expended to hold the options.

After Hammond's telegram of September 2, Perry conceived the plan to get from Treadgold certain mining claims lower down on Bonanza creek, known as claims 89-104 below discovery, and work them as a mine. These claims were not included in the Treadgold offer to the defendant company. Perry did not have the money to purchase these claims, so he asked Beatty to take a share in the enterprise. To get these claims it was necessary to have $45,000 at once, about $115,000 May 1, 1906, and later on $150,000 for equipment. The plaintiff agreed to advance to Perry $20,000 of the $45,000 immediately required, and he also agreed to advance 35/45 of the future payments, and it was agreed that Beatty should have 35/45 of the profits accruing from the venture, and should be repaid for all the moneys ad

In June, 1905, John Hays Hammond, who was the manager of the defendant company, directed the defendant Perry, a mining engineer in the employ of the company to in-vanced to Perry. vestigate Treadgold's offer. Perry went to the Yukon district, examined the property, and advised the defendant company to take over the same. Hammond then directed the plaintiff, Beatty, to go to the Yukon and further investigate Treadgold's propositions and schemes.

At the time of this agreement Beatty informed Perry of his contract with the defendant company, and that he had no right to take any personal interest in this scheme without the consent of the company, and it was agreed that if the company did not consent, the money advanced to Perry should be regarded as a loan and repaid by Perry to the plaintiff.

The plaintiff then returned to the United States, and from there sent Perry by telegraph $20,000, and Perry made a contract with Treadgold to acquire from him claims 89-104 below discovery, with the right reserved in Treadgold within a time fixed to buy back the claims at an advanced price. This contract was in writing dated Septem ber 26, 1905, and Perry sent a copy of it to the plaintiff at Denver.

The plaintiff was a mining engineer and assistant manager of the defendant company. He was engaged by the company under a contract for five years from March 1, 1903, and by his contract the plaintiff agreed to devote himself exclusively to the business of the defendant company, and not to accept, engage in or enter upon any other business or employment whatever, and not to become, either directly or indirectly, interested in or connected in any way with any business similar to that which the defendant company carried on, with certain exceptions not ma- The plaintiff then went to New York to terial here, without the written consent of report to the defendant company on the the company. By the contract the company Yukon enterprise. He gave Hammond, the reposed great confidence in the plaintiff's company's general manager, a copy of the integrity, and the agreement was very care-Perry-Treadgold contract, and also informed fully drawn to give the company the sole benefit of Beatty's unbiased judgment. Beatty was to receive a salary of $20,000 a year and in certain contingencies additional compensation.

Beatty went to the Yukon as directed by Hammond, and after an investigation he strongly advised the defendant company by telegraph to purchase the Treadgold properties. But the price asked by Treadgold was too high, and Hammond answered Sep

.

him of the arrangement he had made with Perry for a joint interest with Perry in the contract, but he did not inform Hammond of the amount of his interest. The plaintiff also gave Daniel Guggenheim, president of the company, the same information. Both Guggenheim and Hammond assented to the arrangement that the plaintiff should be interested with Perry in the Perry-Treadgold agreement, but no written consent thereto was given as provided by the plaintiff's con

tract of employment with the defendant com- think there is another ground of objection pany. which is fatal to the plaintiff's recovery. Thereafter Perry arrived in New York, That objection relates to the second agreeand Treadgold reached there about the same ment made by the plaintiff with Perry, wheretime. Negotiations between Treadgold and by the plaintiff was to have a share in the Hammond for the sale of the Yukon prop-compensation which Perry was to receive erty were reopened with the result that on from the defendant company. December 5, 1905, the defendant company acquired the property in the original contract with Treadgold, and in addition thereto claims 89-104 below discovery which were included in the Perry-Treadgold agreement. That, of course, broke up the arrangement between Perry and the plaintiff as to claims 89-104 below discovery under which the plaintiff had advanced to Perry $35,000, but before that time Perry had returned $7,700 | a larger compensation than he would otherof the sum advanced.

[1] The thirty-eighth finding of fact made by the Special Term is that Perry would have been satisfied to receive from the defendant company a much smaller compensation for his services with regard to the Treadgold properties but for the fact that the plaintiff, Beatty, was to participate in that compensation, and that it was agreed between Perry and Beatty that Perry was to ask for

wise have been willing to accept in order to Hammond then took up with Perry the give the plaintiff part of the amount and matter of the latter's compensation for his still retain sufficient for himself; and the services in Alaska. Hammond agreed on the finding is further that Perry did increase part of the defendant company to deliver to his demand accordingly. If this finding has Perry 4 per cent. of the shares of the pre- support in the evidence it shows that Beatty ferred and common stock of the company was guilty of a very serious breach of his formed to take over the Treadgold properties fiduciary relations with the defendant comand an option to take at cost 4 per cent. ad-pany which ought to prevent his recovery in ditional of such preferred and common stock, this case. and also an option on stock in another company which is not important here.

After such compensation had been agreed upon between Perry and Hammond, but before the contract was finally made, Perry and the plaintiff, Beatty, agreed that the plaintiff should have in lieu of his interests in claims 89-104 below discovery 14 per cent. out of the 4 per cent. of stock that Perry was to receive from the defendant company, and 3 per cent. out of the 4 per cent. of stock on which Perry was to have an option and 278/450 of all the profits Perry should make out of the Perry-Treadgold contract.

Perry received from the defendant company all the stock and other property that he was to get under the contract as his compensation. This action is brought by the plaintiff to recover from Perry the plaintiff's share of such compensation according to their agreement. Perry was willing to accede to the plaintiff's demand. but for the objections raised by the defendant company.

These conflicting claims of the plaintiff and the defendant company present the issues in the case. There can be no doubt that the plaintiff's agreement with Perry was a contract to engage in a business similar to that carried on by the defendants, and was in violation of his contract of employment, and, furthermore, that the plaintiff had no written consent from the defendant company to engage in such business. The plaintiff's answer to this objection is that the defendant company knew of and assented to his agreement with Perry, and thereby waived the provision that he should not make such a contract without the company's written consent.

[2] The respondent urges that this thirtyeighth finding of fact is inconsistent with the other findings of fact made by the Appellate Division in rendering its judgment of reversal, and that it should be held that this finding is reversed for such inconsistency. Section 1338 of the Code of Civil Procedure provides that when the Appellate Division reverses a determination of the trial court on questions of fact, it shall specify the particular questions of fact reversed "by number or other adequate designation." In the present case the Appellate Division did indicate by number upwards of 30 findings of fact made by the trial court which it reversed. We would be hardly justified in saying that the court reversed another finding of fact by implication as being inconsistent with the findings which it did make. This court has said that it is not inclined to extend the application of the principle that the findings of the trial court may be regarded as reversed by the Appellate Division on the ground of inconsistency. Levy v. Louvre Realty Co., 222 N. Y. 14, 118 N. E. 207; Appleton v. City of New York, 219 N. Y. 150, 114 N. E. 73.

The thirty-eighth finding of fact, if supported by the evidence, must be regarded as in full force, and the appellants are entitled to have the court take the view most favorable to it of the findings with No. 38 included.

[3] It is therefore necessary to consider whether the finding has any support in the evidence. It is undoubtedly true that Perry did make his demand on the defendant company for compensation at a larger amount than he would otherwise have been satisfied to take, because he expected to turn some

I pass this question of waiver because I part of his compensation over to Beatty.

119 N.E.-37