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Silverstein v. Abco Vending Service Inc.

Decided: November 2, 1955.

NATHAN SILVERSTEIN, ET AL., ETC., PLAINTIFFS-RESPONDENTS,
v.
ABCO VENDING SERVICE, INC., ETC., ET AL., DEFENDANTS-APPELLANTS



Goldmann, Freund and Conford. The opinion of the court was delivered by Conford, J.A.D.

Conford

[37 NJSuper Page 443] Plaintiffs ("Silco" hereinafter) conduct a cigarette vending machine business. They contract for the placement of machines in such locations as taverns and restaurants. Their complaint alleges in effect that the defendant Abco Vending Service, Inc. ("Abco" hereinafter), a competitor, has been pirating their customers throughout Hudson County. Fifty of these have been joined as defendants. The complaint recites that Silco has contracts in effect with all of them, running generally for five years, some for shorter periods pursuant to which the location owners grant it exclusive rights to sell cigarettes on their premises by means of the machines for the contract period; that the agreements provide for continuous automatic renewal in the absence of specified notice to the contrary prior to the end of any contract term; that all of the location owners have entered into a maliciously motivated conspiracy with Abco to break their agreements with Silco and to replace its machines with Abco machines; that Abco has wrongfully induced them to breach their agreements with Silco by slandering it, advising them that the agreements are void and unenforceable and by offering to save them harmless against any claim by Silco if they substituted Abco machines for Silco's; and that by similar methods Abco is endeavoring to misappropriate other of Silco's contract locations. There follow recitals of Silco's large investment in developing its business and obtaining these contracts, of past and prospective substantial and irreparable injury, and a demand for judgment; (1) for specific performance of the contracts; (2) for injunction against breach of the contracts by the location owners; (3) for injunction against the furnishing or use of the Abco machines or the sale of cigarettes purveyed thereby; (4) for injunction against interference with or inducement

of breach of Silco's contracts with the other defendants by Abco; and (5) for damages against all defendants.

The complaint was verified only by pro forma affidavits made on knowledge, information and belief by one of the plaintiffs and two of his employees. It was filed August 30, 1955 and a temporary restraint was entered the same day together with an order to show cause why a preliminary injunction should not issue returnable September 12, 1955. The present appeal is from an injunction granted after hearing in the Chancery Division that day.

Abco filed an answer denying the allegations of the complaint except to the extent of admitting that its machines were placed and operated in the premises of the co-defendants and that where the plaintiffs "had abandoned" their agreement in any particular case it agreed to save the location owner harmless against any claims by plaintiffs. The co-defendants filed a separate joint answer. Some of them admitted an agreement; others denied it or contradicted the terms alleged; others put plaintiffs to their proof. They all admitted the installation of Abco machines, denied Abco had made any representations to them or induced a breach of the Silco agreement, pleaded that plaintiffs had breached or terminated the contracts (not stating in what respect) and denied the other allegations of the complaint.

No answering affidavits were filed on behalf of the location owners, the plea of their counsel, who also represented Abco, being that because of their number and the denial of a request for adjournment there was insufficient time between the date of service on them of the moving papers and the return of the application for preliminary injunction for preparation thereof. The executive officer of Abco filed an affidavit generally denying, seriatim , the particular allegations of wrongful conduct imputed to Abco in the complaint, but admitting that he induced some of the co-defendants to make contracts with him, others having come to him for contracts, and stating that from the "explanations" of the Silco contracts made to him he believed they were not valid agreements. He admits that in some cases he offered to

defend the location owner against Silco claims for breach of contract. He said: "I did not knowingly encourage or advocate the breach of a contract that I felt to be valid." (Emphasis supplied) Identical verbiage is to be found in the affidavits of several other Abco employees. Affidavits were submitted by plaintiffs at the hearing on the application for injunction showing that many of the location owners were in violation of the temporary restraint.

Silco concedes that the violations of its contracts by some of these defendants commenced as early as February and March 1955, and that the defaults by the others took place at various times in the interim; also that at various times from March 18, 1955 to August 4, 1955 it has instituted actions for damages for breach of contract against some 21 of the defendants in the Hudson County District Court or in the Hudson County Court, all of which are pending. An affidavit offered by defendants lists some 25 of the defendants against whom such actions are pending and states that in each of them Silco demands judgment for prospective damages up to the expiration date of the agreement. It was argued below that the delay in bringing the present action and the election by plaintiffs to terminate the contracts in the case of those against whom it brought actions for damages bars the right to injunction. Plaintiffs' response in the Chancery Division and here is that the "cumulative effect" of the various violations as a "tortious conspiracy" by the defendants by which plaintiffs were being "driven out of business" was not appreciated by Silco prior to the time it brought this action; also that prosecution of its district court actions was held up by order of the Hudson County District Court pending the outcome of appeals challenging the validity of its contracts, finally determined in favor of plaintiffs by the Supreme Court on June 6, 1955 in Silverstein v. Keane , 19 N.J. 1 (1955); see Silverstein v. Dohoney , 32 N.J. Super. 357 (App. Div. 1954), and Silverstein v. Keane , 35 N.J. Super. 303 (App. Div. 1954). It is to be noted, however, that suits for damages were brought against some of the present defendants subsequent to the Supreme

Court decision and that the present action was not instituted until almost three months thereafter.

The injunction under appeal was granted on the ground that the legal remedy against defendants was doubtful or inadequate; that the conduct of Abco was not only wrongful but "planned and widespread" and that the remedy was necessary to prevent a multiplicity of wrongs and lawsuits. It restrained all of the co-defendants of Abco from selling cigarettes on their premises other than through Silco's machines and enjoined Abco's maintaining its machines at the locations of any of said defendants or of any other persons having agreements with Silco.

There is nothing new about the appropriateness of the remedy of injunction to restrain acts "'destroying a complainant's business, custom, and profits.'" Ferraiuolo v. Manno , 1 N.J. 105, 108 (1948). See the collection of authorities exemplifying the application of both legal and equitable remedies for redress of wrongful interference with another's occupation or business in Longo v. Reilly , 35 N.J. Super. 405 (App. Div. 1955). One well-settled application of the doctrine is injunction to restrain an unjustified inducement of breach of contract. 43 C.J.S., Injunctions , ยง 89, p. 597; Feller v. Local 144, International, etc., Union , 121 N.J. Eq. 452 (E. & A. 1937); Schechter v. Friedman , 141 N.J. Eq. 318 (E. & A. 1948). We have no hesitancy in holding that the defendant Abco was sufficiently shown to have been aware of the Silco agreements and to have unjustifiably induced their breach in order to succeed to Silco's custom. The agreements have been held valid (supra) and Abco acted at its peril in assuming the contrary, whether or not in good faith. Its conduct trespassed the bounds of lawful competition. We are not unmindful of the insufficiency of plaintiffs' supporting affidavits, to which we have already ...


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