213 Wis. 150 | Wis. | 1933
Lead Opinion
The following opinions were filed October 10, 1933 :
The sole question in this case is whether the agreement between the defendants and the Badger Wire & Iron Works constitutes them employees, or whether they are in fact operating, conducting, or promoting as principals and enterprisers a competitor to plaintiff. It is the contention of the plaintiff that they are in fact promoting, as principals, competition against the plaintiff in violation of the contract and injunction; that in fact they have invested property in the Badger Wire & Iron Works, and own an interest in it, and that they are not bona fide employees.
While the matter is not free from difficulty, it is our conclusion that the trial court’s disposition was correct. The injunction required, rather than forbade, the dissolution of the Wisconsin Company, and the disposition of its assets by sale was a necessary and usual incident of the dissolution. The sale did not constitute an investment in the Badger Company in any forbidden sense, even though credit was given for the purchase price, for that transaction, unless colorable, created merely a relation of creditor and debtor between defendants and the Badger Company. It appears that the physical assets were sold for no more than their worth as such, and no attempt was made to include in the sale the good will of the Wisconsin Company.
Reliance is had by plaintiff upon certain statements in the decision of this court upon a former appeal. There it was defendants’ contention that the agreement was unrea
It remains to be considered whether the conduct of the defendants and their, dealings with the Badger Company, taken as a whole, indicate that defendants have used the cloak of an apparent or colorable sale and employment to accomplish an evasion of their contractual duties. Upon the former appeal it was held that the fact that defendants had so organized as to enable them to become employees of the corporation of which they were the organizers and principal stockholders, did not prevent a court from disregarding the corporate veil and treating the defendants as principals in a competing business. It is here claimed that some such principle should be applied with the same result. We fail to see how this can be done. The Badger Company has been a going concern since 1916, and a competitor of the General Bronze Company during that time, although concededly it was not an important competitor in the field
Probably the strongest contention that may be made on behalf of the plaintiff is that the Badger Company was not an important competitor in bronze, and that its activity therein was promoted by defendants. There is evidence in the record, however, from which the trial court had a right to conclude that the Badger Company, for some time prior to the contracts in question, had contemplated the expansion of their business so that they might become equipped to cover the whole field of ornamental metal, and thus be able to fabricate, rather than sublet, such contracts as they obtained for large pieces of ornamental bronze. There is further evidence that these negotiations were initiated by the Badger Company with a view to acquiring both the equip
One feature of this case apparently was overlooked by the trial court. So far as the record shows, the defendants were in contempt for conducting business as the Wisconsin Company, in violation of the injunction, between the period when the injunction went into force and effect and the dissolution of the Wisconsin Company. This branch of the controversy appears not to have been considered in the lower court, and it seems to be assumed that plaintiff’s damages for these activities were all that were involved. In form, at least, the order appears to have closed the matter: We think the question of whether or not .the defendants were in contempt for failure to obey the injunction is one which should not escape consideration by the trial court, since it involves something more than the mere interest of the parties in the subject matter of the litigation. From this it follows that in so far as the order completely exonerates' defendants from contempt, it should be sufficiently modified to permit the court to pass upon this question, and that in all other respects the order should be affirmed.
By the Court. — The order of the circuit court is modified, as indicated in the opinion, and as so modified is affirmed, and cause remanded for further proceedings according to law.
Dissenting Opinion
(dissenting). The facts are sufficiently stated in the opinion of the court. The proceeding is to punish
The order of the trial court appealed from is that the “proceedings be dismissed as to the Badger Company and that this company recover their costs.” It also provides that the matter of costs as between the plaintiff and the individual defendants “be held open pending the determination of this (the trial) court on the question of damages.” Both these provisions are, in my opinion, erroneous. The plaintiff is entitled to costs, and also to have a fine imposed, against all the defendants, independent of the inquiry as to damages by reason of the violation of the injunctional judgment. It is not apparent how the plaintiff can prove any actual damages by reason of the violations complained of. Presumably it will not be able to prove that it would have procured the orders filled by the defendants had the defendants not procured and filled them. If the plaintiff cannot make this proof and for this reason does not elect to have its damages assessed within the period fixed by the order, the Badger Company will go “scot free” and the individual defendants
I am also of opinion that the matters complained of by the plaintiff constitute a violation of the contract between the plaintiff and the individual defendants. If the defendants are permitted to continue business in competition with the plaintiff they will be doing precisely what was permanently enjoined by the original judgment. The Badger Company was no' competitor of the plaintiff before it took over the, assets of the Wisconsin Art Bronze Company and the services of the three individual defendants. The individual defendants could not, by proceeding in combination as individuals, or by forming a new corporation, have done what they are doing. They actually created a competitor as effectively as they could have done by forming a new corporation or forming a partnership. They should not be permitted to do indirectly what they could not do directly. The three individual defendants have concocted a scheme whereby, by combining their individual efforts and talents, they are able to enter directly into competition with the plaintiff. Together they have all the skill, talent, special knowledge, and particular business experience to make a previously noncompetitive concern an actual competitor of the plaintiff. As to the ornamental bronze business done by the Badger Company, they are the company and the whole of it. The fundamental purpose of the original contract was to prevent such competition by the individual defendants as they jointly created and are jointly carrying on. While that contract permitted them individually to enter the service of competitors it did not expressly or by intendment permit them to combine to do so, and by their combined efforts create a new and active and formidable competitor. That each of several individuals has the independent and separate right to do a thing, does not warrant their combining to do it or
• It is stated in the original opinion that the Wisconsin Art Bronze & Iron Company did not transfer its good will to the Badger Company. It did not do so in express terms, but it did do so in fact. By the transfer of the unfinished orders, by the taking over of the individual defendants who created and in themselves embodied whatever of good will the Wisconsin Art Bronze & Iron Company possessed, and by advertising the taking over of the individual defendants, the Badger Company acquired and reaped the full benefit of all of the “good will” of the Wisconsin Art Bronze & Iron Company. To say that that good will was not assigned in express terms is to substitute shadow for substance.
To permit the defendants to proceed in competition with the plaintiff is to render absolutely nugatory the original judgment, to frustrate the court in its effort to protect the plaintiff’s rights, and to flout and hold in utter contempt the judgments of the circuit court and of this court. For the reasons stated the order of the circuit court should in my opinion be reversed with directions to enter an in junctional order as prayed.
I am authorized to state that Mr. Justice Owen concurs in this opinion.
A motion for a rehearing was denied, with $25 costs, on December 5, 1933.