General Automotive Manufacturing Co. v. Singer
120 N.W.2d 659 (1963)


PROCEDURE: Defendant employee appealed a judgment from a trial court (Wisconsin), which found defendant had breached his contract of employment with plaintiff employer by engaging in business activities directly competitive with plaintiff.

FACTS: General Automotive Manufacturing Co. (P) hired Singer (D) as the general manager of its machine shop jobbing business. Singer's (D) employment contract's terms required Singer (D) to devote his "entire time, skill, labor, and attention" to the plaintiff's business, including the solicitation of machine shop work for the plaintiff. Singer maintained a good reputation as a highly skilled machinist, which resulted in general business growth for the plaintiff. When business was slow, Singer (D) often personally financed the plaintiff's operations to enable it to continue in business. However, while working for the plaintiff, Singer (D) received potential orders that he knew General Aut motive Manufacturing Co. (P) could not fulfill due to insufficient equipment or inability to meet a competitive price. Rather than turn the orders away, Singer (D) quoted the customers a price and brokered the orders out to a suitable machine shop, keeping any difference between the quoted price and his agreed-upon price with the machine shop. Eventually, Singer (D) established his own broker business dealing in the same products as the plaintiff manufactured and sold. General Automotive (P) sued Singer (D) for breach of contract to recover the secret profits.

ISSUE:Is an employee who operates a business that competes with his or her employer, without disclosing that business to the employer, has committed a breach of fiduciary duty?


RULE:The duty of loyalty is violated by the mere failure to disclose business opportunities when there is a duty to do so

HOLDING: The Circuit Court \entered a judgment for the employer and the former employee appealed. The Supreme Court, held that former employee, who was hired to act as general manager under employment contract requiring him to devote full time to his employment, was guilty of breach of fiduciary duty toward employer in receiving certain orders which he had filled by competitors of employer at a secret profit to himself, but under circumstances judgment should be modified to reduce recovery allowed as provided by stipulation.