General Automotive Manufacturing Co. v. Singe

120 N.W.2d 659 (1963)

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Nature of the Case

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Facts

General Automotive (P) was a corporation engaged in the machine shop business with about five employees. Louis Galvan controlled P and was its secretary. Singer (D) is a machinist consultant and manufacturer's rep. D worked in the machine shop field for over thirty years. None of D's employees possessed D's special skills, and D was also known to be qualified at estimating the costs of machine shop products and knew the competitive prices that such products could be sold. D was employed by P as the general manager of D. P agreed to pay D a fixed monthly salary and 3% of the gross sales. D, in turn, promised to devote his entire skill, labor, and attention to the employment and not to engage in any other business or vocation or a permanent nature during his employment. D was also not to disclose the term of his employment and to keep the business and affairs of P in confidence. During his employment, P alleged that D got business for his own account and thus violated his duty of loyalty. P sued D to account for the secret profits. D in fact assisted P in many ways not called for in his contract. D paid customer bills to P to help with the cash flow and even financed work on standard parts when other business was not present in the shop. D even absorbed loses for parts that were never sold. Because of D's reputation and the large amount of business that he was attracting parts of that business could not be performed by P. D took that business and did not inform P and had other machine shops perform the work. D was thus a broker for his own profit. D even started his own business as a manufacturer's agent and consultant for brokered orders. P won a verdict of $64,088.08. D appealed.