1910 MEASURES LIMITED v. MEASURES. A director appointed by the articles of association only has no JOYCE J. claim if the company comes to an end by being wound up, and directors' fees are not apportionable. The articles are not the contract, but only contain the terms of service: Swabey v. Port BROTHERS, Darwin Gold Mining Co. (1), referred to in Isaacs' Case (2), approved in Salisbury-Jones and Dale's Case. (3) A director cannot get damages for the determination of his office under the articles, because it is implied that he shall be director only so long as there is the office of director to be filled. In this agreement there is a recital that the defendant had become a director fourteen days before, and that shews that he was to be regarded as director under the articles and was to remain such. The winding-up order put an end to the office, and there is nothing to warrant the extension and application of the doctrine of repudiation in General Billposting Co. v. Atkinson (4) to this case. An implied obligation that the company will not go into liquidation cannot be read into this contract: Rhodes v. Forwood (5); Turner v. Goldsmith (6), referring to Cowasjee Nanabhoy v. Lallbhoy Vullubhoy (7); Hamlyn & Co. v. Wood & Co. (8) On the winding-up order being made the director's office ceases, and the terminus of the service is then established: Taylor v. Caldwell. (9) The appointment of a receiver and manager in the debentureholders' action did not constitute a breach of the contract of service; the service and remuneration continued down to the time of liquidation: In re South Western of Venezuela (Barquisimeto) Ry. Co. (10) In re Dale and Plant, Ld. (11) was a case where damages were allowed to a director for loss of salary, but he was a managing director appointed for his special knowledge. We submit that on the form of the covenant there can be no question of invalidity: Vernon v. Hallam. (12) The onus of shewing that is on the defendant. (1) (1889) 1 Megone, 385. (2) [1892] 2 Ch. 138. (3) [1894] 3 Ch. 356. (4) [1909] A. O. 118. (3) (1876) 1 App. Cas. 256. (6) 1891] 1 Q. B. 544. (7) (1876) L. R. 3 Ind. Ap. 200. JOYCE J. 1910 MEASURES v. MEASURES. On the second point we submit that the defendant was not entitled to make such use of confidential information obtained by him as he has done. Hughes, K.C., and P. F. Wheeler, for the defendant. The plaintiff company must perform its own obligation under the agreement before it can proceed to enforce the defendant's. The consideration for the restrictive covenant was the employment of the defendant for seven years, and that was his reason for entering into the covenant. His obligation lasts only so long as the company lasts: Telegraph Despatch and Intelligence Co. v. McLean. (1) This is a stronger case than General Billposting Co. v. Atkinson (2), because here the term of service was for seven years certain, whereas in that case it could be determined on twelve months' notice. This is an agreement of service and the defendant is a servant only. A compulsory winding-up order or the appointment by the Court of a receiver and manager in a debenture-holders' action operates as a dismissal of the servants-Midland Counties District Bank v. Attwood (3); Reid v. Explosives Co. (4)—and determines the defendant's employment: Brace v. Calder (5); Chapman's Case (6); McDowall's Case. (7) In this case there are two interdependent contracts—one that the company will employ the defendant for seven years certain and for a possible further period of seven years; the other, that the defendant, if so employed, will not on the determination of the contract carry on business in the manner specified. In such a case readiness to perform his own part of the contract is a condition precedent to the right of either contractor to sue: see notes to Cutter v. Powell. (8) The plaintiffs cannot obtain an injunction without performing their part of the contract, and they cannot recover damages without averring and proving their readiness to perform. Rhodes v. Forwood (9), Turner v. Goldsmith (10), and Hamlyn (1) (1873) L. R. 8 Ch. 658. (2) [1909] A. C. 118. (3) [1905] 1 Ch. 357. (4) (1887) 19 Q. B. D. 264. (6) (1866) L. R. 1 Eq. 346. (7) (1886) 32 Ch. D. 366. (8) (1795) 2 Sm. L. C., 11th ed. pp. 9 et seq. (9) 1 App. Cas. 256. (10) [1891] 1 Q. B. 544. & Co. v. Wood & Co. (1) are not applicable. We do not say JOYCE J. 1910 BROTHERS, v. MEASURES. that the company must carry on its business, but we say that if it does not carry it on it cannot enforce the restrictive covenant MEASURES against the defendant. [They referred also to Gosling v. Gaskell (2); Madrid Bank v. Bayley (3); 'Société Générale du Commerce et de l'Industrie en France v. Johann Maria Farina & Co. (4); Mersey Steel and Iron Co. v. Naylor, Benzon & Co. (5); Addis v. Gramophone Co., Ld. (6); In re Dale and Plant, Ld. (7); and the Companies (Consolidation) Act, 1908 (8 Edw. 7, c. 69), s. 186.] Younger, K.C., in reply. There has been no breach of the agreement by the company. The agreement has come to an end in its natural course, and there is no ground for saying that the covenant is not binding on the defendant. It is said that the principle of General Billposting Co. v. Atkinson (8) is applicable howsoever the agreement came to an end, but in that case there was a deliberate repudiation of the contract by the company. There is here no definite contract to employ the defendant for seven years, but only so long as the company shall exist. There is no authority for the proposition that when the employment comes to an end by reason of a winding-up order being made the defendant's covenant ceases to be binding upon him. [He also referred to Merryweather v. Moore (9) and Lamb v. Evans (10) upon the question of the defendant's right to make use of the lists obtained by him in the course of his employment, and to In re South Western of Venezuela (Barquisimeto) Ry. Co. (11) and Proctor v. Sargent. (12)] Cur. adv. vult. Jan. 28. JOYCE J. The claim of the plaintiffs in this case is of a twofold nature. They ask, first, for an injunction to restrain the defendant from acting as manager or agent and so on for any (1) [1891] 2 Q. B. 488. (2) [1897] A. C. 575. (3) (1866) L. R. 2 Q. B. 37. (4) [1904] 1 K. B. 794, 797. (5) (1884) 9 App. Cas. 434. (6) [1909] A. C. 488. (7) 43 Ch. D. 255. (9) [1892] 2 Ch. 518. 1910 LIMITED JOYCE J. other person than the plaintiff company; and, secondly, for an order upon the defendant to deliver up all lists of the names MEASURES and addresses of the plaintiffs' customers copied or extracted by BROTHERS, or at the instance of the defendant from the books of the plaintiff company; and an injunction to restrain the defendant from making use of any information obtained by him from any such lists or copies thereof or extracts therefrom. Then, in addition to that, they ask for damages and costs. v. MEASURES. With regard to the second claim I cannot say that I feel any difficulty. It is admitted that what the defendant did was this: being a director, and there being a provision in the agreement of service that he should have a salary of 1000l. a year for seven years, before any winding-up, or before any appointment of a manager or receiver, he in June, 1909, directed a clerk of the company to make out a list of the customers. Later in the same month he appears to have got this list from the secretary, and to have borrowed it and had a copy made for his own private use. When I say private use I mean for his own purposes quite apart from any business of the company. He had that copy made with a view to using it if and when he should be in a position or should think fit to compete in business with the company. Then, later on, after the winding-up order, and of course after the appointment of the receiver, he appears to have sent out circulars soliciting custom from the customers whose names were in the list. No complaint is made, nor any relief asked by the claim in this action, with respect to the statements in that circular. But he stated in the circular that there had been an order made by the High Court for the compulsory winding-up of the company and that he had set up in business for himself and was prepared to deal with all inquiries and orders in connection with the work which had been carried on by the late company. With that, however, I have nothing to do now. The real question now is about the defendant having taken a copy of this list for his own purposes. Notwithstanding the very strenuous argument addressed to me by the defendant's counsel, having been referred to the case of Merryweather v. Moore (1), with which I entirely agree, and also (1) [1892] 2 Ch. 318. JOYCE J. 1910 BROTHERS v. MEASURES. to the judgments of Lindley, Bowen, and Kay L.JJ. in Lamb v. Evans (1), and of Lord Esher M.R. and Kay and Smith L.JJ. in Robb v. Green (2), I have no hesitation in holding that the MEASURES defendant in what he did was guilty of a gross breach of duty towards the plaintiff company. I hold that no man who is in the employment of another is entitled to use or even take a copy, for his own private purposes, of any document of his employer which comes to his hands or to which he has access in the course of his employment. Consequently I hold that the plaintiffs are entitled to relief in respect of that matter. I am of opinion that not only was a person in the position I have mentioned not entitled to make such a list or make a copy of any document, but he should be ordered to give up any such document or any copies that he has made from it. There is a difficulty, perhaps, about restraining him from using the information, but that I will mention later. So much for that part of the case. Then the first part of the claim is to enforce against the defendant the terms of the special agreement of July 14, 1903. That is for an injunction to restrain the defendant from doing that which by the fifth clause of that agreement he agreed not to do. [His Lordship referred to the clause, and continued.] Now in the case of General Billposting Co. v. Atkinson the facts are stated in the report in [1908] 1 Ch. 537. In that case there was a manager of the company who was entitled, under his agreement of service with the company, to twelve months' notice. He was dismissed for some reason or another, and he brought an action for wrongful dismissal and recovered damages. Then, there being a clause in the agreement restricting his right to trade after the termination of his service with the company, this action of General Billposting Co. v. Atkinson (3) was instituted for the purpose of enforcing that restriction against him. In the head-note to the report in the House of Lords (4) it is thus stated: "Employers agreed with their manager that he should hold office subject to termination at twelve months' notice by either party and with a restriction on his right to trade after its termination. The employers having wrongfully dismissed (1) [1893] 1 Ch. 218. (3) [1908] 1 Ch. 537. (4) [1909] A. C. 118. |