Standard Oil Co. v. Landmark Farm Bureau Cooperative , 52 Ohio App. 2d 225 ( 1976 )

This is an appeal by defendant-appellant (hereinafter referred to as Landmark) from the judgment of the Court of Common Pleas dated February 18, 1976, permanently enjoining Landmark until September 26, 1976, from servicing with petroleum products any person formerly served by Ronald Cook, while under contract with the Standard Oil Company.

The judgment and decree appealed from, states as follows:

"Judgment and Decree

"This case came on to be heard upon the complaint of the plaintiff, the answers of defendants Franklin Landmark, Inc., Ronald Cook, Jo Ann Cook, Dan Cook and Dave Cook and the evidence. At the conclusion of the evidence, all parties having rested, the court required all the parties to submit proposed findings of fact and conclusions of law and they did so.

"Upon the evidence, the court made the following findings of fact and conclusions of law:

"Findings of Fact

"I. Plaintiff The Standard Oil Company, hereinafter called Sohio, is a corporation duly organized and existing under and by virtue of the laws of the State of Ohio having its principal place of business in Cleveland, Ohio.

"II. Defendant Franklin Landmark, Inc., hereinafter called Landmark, is a nonprofit corporation duly organized and existing under and by virtue of the laws of the State of Ohio having its principal place of business in Hilliard, Ohio.

"III. Sohio is engaged in the business of selling and distributing petroleum products in the State of Ohio, using the name Sohio to identify its products.

"IV. Landmark is engaged in the business of selling and distributing petroleum products and was the biggest competitor of Sohio in the area served by Defendant Ronald Cook.

"V. On June 30, 1975 Defendant Ronald Cook entered into a contract with Sohio which designated Ronald Cook as Distributor and identified his primary area of responsibility as a certain part of the southeastern corner of Franklin County. Said contract provided, among other things, as follows:

"(a) ``Distributor hereby agrees to act in said capacity in such area and in such other areas adjacent thereto as he shall elect and agrees diligently to promote the sale of the Company's products which are stocked at the bulk plant designated by the Company for such areas.'

"(b) ``15. Covenant not to Compete. For a period of one (1) year from the date of termination of this Agreement, regardless of how arising, the Distributor, in consideration of the Company's goodwill in the above-mentioned primary area of responsibility which has resulted from the quality of its products, its customer service, its advertising and other factors, shall not, within said area and with respect to the motor fuels, oils and other products of the Company sold and marketed by the Distributor hereunder, directly or indirectly, either on the Distributor's behalf or on behalf of any other party or in association with any other party, solicit, divert, take away or attempt to solicit, divert or take away any of the customers with whom the Distributor shall have dealt while acting as Distributor hereunder or any of the custom, business or patronage of the Company, or interfere with any dealings or transactions, actual or prospective, between the Company, on the one hand, and any of its customers and patrons, on the other; provided, however, that if the Distributor has been a Distributor for a total period of less than six (6) months under this Agreement or under this Agreement and a similar preceding agreement with the Company on the date of termination of this Agreement, the provisions of this paragraph shall not apply.'

"(c) ``13. Termination.

"``Either party may cancel this Agreement without cause by giving not less than thirty (30) days' prior written notice to the other. In addition, the Company may cancel this Agreement by written notice to Distributor at any time should Distributor fail to perform in any material respect the obligations which are required to be performed by him hereunder.'

"VI. Before June 30, 1975 Ronald Cook for many years has been distributing petroleum products for Sohio in said area under similar preceding agreements.

"VII. During the months of June, July and August of 1975 Ronald Cook:

"(a) Approached Marathon Oil Co. and proposed to sell it his petroleum business, to-wit: the goodwill and customer contact advantage gained while he was under contract with Sohio during 27 years and suggested to that company that he was in a position to transfer to it the customers which he had served for Sohio.

"(b) Approached Landmark on or about August 17, 1975 and offered to sell his petroleum business to Landmark, proposing to transfer to Landmark the goodwill and customer contacts which he had gained while under contract with Sohio with a view to transferring to Landmark the customers for petroleum products which he had serviced for Sohio during many years at a price of $25,000.

"(c) During the period of July, August and September the number of gallons of petroleum products which he sold and delivered for Sohio in his territory diminished as follows:

1973 1974 1975 July 30,722 July 37,759 July 18,776 Aug. 42,592 Aug. 27,633 Aug. 16,800 Sept. 33,190 Sept. 45,344 Sept. 6,906

"VIII. On September 25, 1975 Sohio mailed to Ronald Cook a notice of cancellation of said contract for cause, to be effective September 26, 1975 and said letter was delivered to Ronald Cook on September 26, 1975.

"IX. Ronald Cook on September 29, 1975 sent a letter dated September 24, 1975 to the 600 customers which he had serviced for Sohio under his contract of June 30, 1975 and under previous contracts, wherein he tried to persuade said customers to cease doing business with Sohio and to transfer their business to Landmark. Enclosed in said letters were brochures of the Landmark burner service setting forth the terms and conditions under which Landmark would furnish that service.

"X. Defendant Dan Cook had delivered Sohio petroleum products for his father, Ronald Cook, to the Sohio customers served by Ronald Cook under the contracts described in paragraphs V and VI, for four years.

"XI. Dan Cook was present at the conference described in paragraph VII (b) above, wherein Ronald Cook tried to sell his business and proposed to transfer the Sohio customers to Landmark. Landmark rejected that offer but on August 19, 1975 hired Dan Cook to be Landmark's driver in the territory in Franklin County in which Dan Cook had serviced the Sohio customers for Ronald Cook while Dan Cook was employed by Ronald Cook.

"XII. At the time Landmark employed Dan Cook as its driver in said territory, Landmark furnished no more than four (4) customers to Dan Cook to be serviced by him in said area. At said time Landmark already had other drivers servicing Landmark's customers in the area assigned by Landmark to Dan Cook.

"XIII. The contract entered into between Landmark and Dan Cook provided that he was to be paid 1 cent a gallon for deliveries and 1 1/2 cents a gallon additional for new customers which he obtained for Landmark. Landmark expected and hoped that Dan Cook would secure for Landmark the customers of Sohio which Dan Cook had serviced for Sohio while in the employ of his father, Ronald Cook. Landmark never employed any other driver salesman on such terms.

"XIV. Dan Cook was in the employ of Landmark as a truck driver and salesman delivering petroleum products of Landmark from August 19, 1975 to October 10, 1975 when he was temporarily laid off because he became incapacitated in an automobile accident.

"XV. One of Dan Cook's duties for Landmark in said work for Landmark was to get Landmark new customers.

"XVI. On September 29, 1975 Dan Cook obtained from the office of Landmark 600 copies of Landmark's advertising brochures respecting their burner service. Dan Cook delivered those 600 brochures to his father, Ronald Cook, knowing that Ronald Cook intended to send those 600 brochures to all the Sohio customers which Ronald Cook had serviced for Sohio under his contract with Sohio with the letter described in paragraph IX above.

"XVII. Dan Cook during the time of August 19 to October 10, 1975 while in the employ of Landmark, secured from the office of his father, Ronald Cook, information on the records of Ronald Cook which Ronald Cook had been furnished by Sohio, which data included names, addresses, credit information, the tank size of the customer and what was known as the "K" factor, being a factor from which it could be computed when the customer would next need a fill of heating oil. Important parts of this information were placed by Dan Cook on the invoices used by him with respect to Landmark's products and was used by Dan Cook in his work for Landmark.

"XVIII. 186 out of 504 current customers of Sohio, which had been served by Ronald Cook as Sohio's distributor during the year 1975, transferred their accounts from Sohio to Landmark during the time Dan Cook was working for Landmark as Landmark's distributor. Including the 186 customers referred to above, Dan Cook served 221 customers for Landmark.

"Conclusions of Law

"A. During the months of July, August and September of 1975, Ronald Cook breached his contract of June 30, 1975 with Sohio and Sohio was justified in cancelling said contract on September 26, 1975 for cause.

"B. Ronald Cook violated clause 15 of his contract of June 30, 1975 in which he had agreed not to compete with Sohio for a period of one year after the termination of his contract for any reason. Said clause was reasonable.

"C. Dan Cook was acting for Landmark within the scope of his employment of securing and servicing customers for Landmark, in assisting his father, Ronald Cook, to send out Landmark brochures to the customers which Ronald Cook had served for Sohio with the letter asking those customers to transfer their business from Sohio to Landmark. Said action was wrongful.

"D. Dan Cook was acting within the scope of his employment for Landmark in securing information from Ronald Cook's files which had been furnished by Sohio to Ronald Cook for use in his work for Sohio and used that information in obtaining and servicing for Landmark customers which his father, Ronald Cook, had serviced for Sohio under the contract between Ronald Cook and Sohio. Said action was wrongful.

"E. The information referred to in paragraph D above was confidential information belonging to Sohio and was furnished by Sohio to Ronald Cook solely for the purpose of servicing said customers for Sohio.

"F. As a result of the act set forth in paragraphs B, C and D above, Sohio has been and is being and will continue to be irreparably damaged and Sohio has no adequate remedy at law.

"G. In order to prevent said irreparable damage referred to in paragraph F above, Ronald Cook must be permanently enjoined and restrained for a period of one year expiring September 26, 1976 from directly or indirectly transferring or attempting to transfer Sohio customers formerly served by Ronald Cook to Landmark or any other competitor of Sohio, and from persuading or attempting to persuade any persons whom he served with petroleum products while under contract with Sohio to transfer their accounts to Landmark or any other competitor of Sohio and to make purchases of their petroleum product needs from any one other than Sohio, and Landmark must be permanently restrained and enjoined for a period of one year expiring September 26, 1976 from servicing with petroleum products any persons who had formerly been serviced by Ronald Cook while under contract with Sohio.

"H. That Dan Cook must be permanently restrained and enjoined from using information which he obtained from the records of his father, Ronald Cook, respecting the customers which Ronald Cook had served for Sohio.

"I. That Sohio recover from Ronald Cook, Dan Cook and Landmark its costs herein.

"The court coming now to enter its judgment and decree upon said findings, which set forth the reasons for the issuance of this decree.

"It is hereby ordered, adjudged and decreed that Ronald Cook be, and he is hereby permanently enjoined and restrained until September 26, 1976, from directly or indirectly transferring or attempting to transfer customers of the The Standard Oil Company, formerly served by Ronald Cook, to Franklin Landmark, Inc. or to any other competitor of The Standard Oil Company and from persuading or attempting to persuade any persons, whom Ronald Cook served with petroleum products while under contract with The Standard Oil Company, to transfer their accounts to Franklin Landmark, Inc. or any other competitor of The Standard Oil Company and to make their purchases of their petroleum product needs from anyone other than The Standard Oil Company.

"It is further ordered, adjudged and decreed that Franklin Landmark, Inc. be, and it is hereby, permanently enjoined and restrained until September 26, 1976, from servicing with petroleum products any persons who had formerly been served by Ronald Cook while under contract with The Standard Oil Company. Franklin Landmark, Inc., however, may service any such persons who had become for all their petroleum products customers of Franklin Landmark, Inc. before August 17, 1975. Where persons who were customers of The Standard Oil Company for one type of petroleum product and customers of Franklin Landmark, Inc. for another type of petroleum product before August 17, 1975, Franklin Landmark, Inc. may continue to service such persons with the type of petroleum product furnished them by Franklin Landmark, Inc. before August 17, 1975.

"It is further ordered, adjudged and decreed that Dan Cook, be, and he is hereby, permanently enjoined and restrained from using the records of Ronald Cook respecting the customers which Ronald Cook had served for The Standard Oil Company or any data which he had copied from said records.

"It is further ordered, adjudged and decreed that The Standard Oil Company recover from Ronald Cook, Dan Cook and Franklin Landmark, Inc. its costs herein.

"The preliminary injunction heretofore issued on November 3, 1975, is dissolved with respect to defendants Jo Ann Cook and Dave Cook, and with respect to Ronald Cook, Dan Cook and Franklin Landmark, Inc. is modified to conform to this decree. * * *"

Landmark's first assignment of error states:

"The trial court erred by issuing a permanent injunction against appellant when appellant was not a party to the contract between the appellee and Ronald Cook and had not committed any acts of unfair competition."

Landmark does not seem to seriously question the findings of fact made by the trial court. The main issue seems to concern the law which should be applied to these facts. While some of the acts of Landmark were not wrongful, others clearly were acts of unfair competition against the plaintiff. Certainly the using of the mailing list in the possession of Ronald Cook, which was restricted for the use of plaintiff and not plaintiff's competitor, was an act of unfair competition. Also, the use of the computer information including "K" factor by defendant through its agent Dan Cook was an act of unfair competition. It is stated in Fremont Oil Co. v. Marathon Oil Co. (1963), 92 Ohio Law Abs. 76, headnote six, that where a route supervisor and several tank truck drivers jointly planned to leave the employ of a petroleum jobber without notice and accept employment with a competitor; retained route lists and delivered these and other confidential information to the competitor; and before changing employment solicited customers to transfer business with them to the intended employer, a temporary restraining order was properly granted against the employees and their new employer four days after the change of employment, to prevent the further solicitation of customers of the former employer. In this case, Dan Cook was acting in the scope of his employment for Landmark in assisting his father, Ronald Cook, a former employee of plaintiff, to send out Landmark's brochures to plaintiff's customers seeking to have them transfer their business to Landmark. Dan Cook also was acting within the scope of his employment for Landmark in securing information from his father Ronald Cook's files, which had been furnished by Landmark to Ronald Cook, which assisted Landmark and Dan Cook in obtaining and servicing plaintiff's customers for Landmark.

The court in Fremont, supra, at page 86, quoted from an earlier case, as follows:

"``We are demanding honesty of method and integrity of purpose in our industrial life. Misrepresentation and fraud elicit public condemnation. One who seeks to gain the confidence of the people must offer as a foundation for such confidence, the merit of his own product and the honesty of his own methods.'"

The first assignment of error is overruled. The second assignment of error claims:

"The trial court erred by issuing against appellant a permanent injunction that inhibits lawful competition by appellant and grants to the Standard Oil Company an unlawful monopoly."

Undoubtedly, any injunction issued by a court restraining acts of unfair competition has the effect of causing some lessening of competition during the period of the injunction. However, courts have not felt inhibited in the issuance of such injunctions where the restraints limiting acts of unfair competition are reasonable. An example is Raimonde v. VanVlerah (1975), 42 Ohio St.2d 21, where the court held that a covenant not to compete will be enforced against an employee to the extent necessary to protect the employer's interests. InFremont, supra, the court held that where a route supervisor and several tank truck drivers jointly planned to leave the employ of a petroleum jobber without notice and accept employment with a competitor, route lists prepared by the driver at the direction of his employer, including information as to the location of each customer; the capacity and location of each customer's tank; and where keys could be located, with sufficient detail to permit a replacement driver to serve the customers without other assistance, is the property of the employer. The court held that injunctive relief is properly extended to prevent the solicitation by the employees and their new employer of plaintiff's customers for a period of approximately eight months from the change of employment, which the court found reasonable. We find that the injunction issued herein is proper and not over broad. The trial court in the granting of the remedy to the plaintiff attempted to eliminate the effects of the unfair practices of Landmark. The trial court properly found monetary damages not to be sufficient and that there was a need for injunctive relief in order to put the plaintiff back in the position which it occupied prior to the acts of unfair competition by Landmark. Landmark's assignment of error is overruled.

The third assignment of error maintains:

"Assuming arguendo that appellant should be enjoined, the trial court erred in granting an excessively broad and sweeping injunction against the appellant."

This assignment is overruled for the same reasons set forth in our ruling upon the second assignment of error, and for the additional reasons that the injunction restraining Landmark is as specific as can be feasibly drawn under the circumstances, in that the defendant should know from the order of the trial court what it was prohibited from doing. We find nothing improper about the injunction in that it was made for a limited time only as was the injunction in Fremont. Defendant's third assignment of error is overruled.

The fourth assignment of error reads:

"The trial court erred by receiving in evidence the depositions of defendants without deciding objections made by defendants during the depositions and without affording defendants the opportunity to make at the trial additional objections respecting the depositions."

Although it is certainly better practice that depositions be read into evidence in order that a party opposing the admission of the deposition into evidence may have an opportunity to have the court rule on specific objections, defendant has not pointed out how it has been prejudiced thereby, or that the trial court abused its discretion. Inasmuch as the trial was to the court, without the intervention of a jury, it undoubtedly was more practical for the court to examine the depositions at its own convenience. In the absence of any citation of testimony that should have been excluded in the deposition, we find no abuse of discretion on the part of the trial court nor prejudicial error and, therefore, overrule defendant's fourth assignment of error.

Defendant's fifth assignment of error states:

"The trial court erred by issuing a preliminary injunction against appellant without a hearing."

The preliminary injunction issued November 3, 1975, recites:

"This cause came on to be heard upon the motion of the plaintiff for a preliminary injunction, the notice of the hearing having been served upon all of the defendants. Counsel for all of the defendants were present at the hearing. * * *"

The court assumes that the procedures recited in the order of the trial court were true and that the proceedings were regularly held in accordance with the Civil Rules. Therefore, in the absence of proper evidence to the contrary, the mere assertion in appellant's brief is insufficient to sustain this assignment of error. In any event, we find that the issue raised in this assignment is moot. Defendant's fifth assignment of error is overruled, and the judgment is affirmed.

Judgment affirmed.

McCORMAC, J., concurs.

WHITESIDE, J., concurs in part and dissents in part.