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April 28, 1966

Thomas P. DOWD, Ben Dittenhofer, Nassau Marine, Inc., and Sound Steamship Lines, Inc., Defendants

The opinion of the court was delivered by: FRANKEL

FRANKEL, District Judge.

 Plaintiff, alleging diversity of citizenship, seeks injunctive relief and damages for alleged breach of trust and misappropriation of its excursion charter business by an employee, defendant Thomas P. Dowd, for an alleged conspiracy among Dowd and the other defendants to accomplish this misappropriation, and for defendants' alleged taking and use of confidential business information. By order to show cause, returnable March 8, 1966, plaintiff sought an injunction pendente lite. Since the controversy concerned a seasonal boat excursion business concentrated in the spring and summer of the year, and since it appeared impossible to unravel the opposing claims of the parties on their affidavits, it was determined that the case should be set down for prompt trial on the claim for a permanent injunction and damages. Accordingly, with the consent of defendants, based in part upon the expectation of a speedy final decision, plaintiff was granted a limited temporary injunction on March 14, *fn1" and the case was scheduled for trial beginning March 21, 1966.

 As sometimes happens, a trial estimated to require two days turned out to extend over eight days. At the conclusion of the evidence, pending submission of post-trial briefs and rendition of a final decision, the court granted a defense motion to vacate the injunction as to all defendants other than Dowd, who has remained subject until now to the restraints in the order of March 14, 1966 (see footnote 1, supra). On April 15, 1966, having received post-trial memoranda the day before, and having ordered further briefs by April 22, 1966, we enjoined the defendants other than Dowd, pending a final decree, from making further payments of commission or other compensation to Dowd based upon the charter business which is the subject of the controversy.

 Now, having appraised the evidence and resolved, inter alia, problems of credibility posed in several significant aspects of the testimony, we reach the following findings and conclusions.

 I. Facts

 For several years prior to 1963, defendant Dowd had been employed by excursion boat owners as a solicitor of one-day excursion charters with schools, clubs, and various other social and business organizations. The vessels for which such charters were made were equipped to accommodate as many as 2,000 or more excursioneers for riding, dancing, drinking, and general frolicking on moonlight rides or round trips between New York City and such places as Bear Mountain and Playland in Rye, New York. Dowd solicited charters in 1962 for the Wilson Line, which paid him a salary of $125 per week plus expenses. In 1963 he worked for Keansburg Steamboat Company, which paid him a commission of 10% on the gross receipts of charters he obtained for the company's excursion vessel, the City of Keansburg. In addition to these commission payments, Keansburg paid office rent and expenses connected with Dowd's soliciting and selling activities.

 Over the course of the years Dowd built something of a following among the groups and organizations interested in the kind of excursion service he handled. Social committee chairmen and similar functionaries came to rely upon him to help in the planning of their outings. At least in some instances, the testimony showed, they relied upon Dowd without giving particular heed to the name of the company owning the vessel they chartered.

 Equipped with his experience and his contacts among organizations interested in excursion charters, Dowd went in the early autumn of 1963 to Arlington, Virginia, and put a business proposal to B. B. Wills, president of plaintiff corporation. Wills had been in the recreation and excursion business for some 29 years. The plaintiff corporation, substantially owned by Wills, had formerly owned a picnic and amusement park at Tolchester Beach on the Chesapeake Bay near Baltimore, Maryland. Another of Wills's corporations, Wills Development Corporation, owned a vessel, the SS Potomac, with a capacity of about 1,850 passengers, suited for the sort of excursions in which Dowd had been dealing. Wills himself, through one or another of his corporations using the Potomac and other vessles more that, had been engaged in the excursion business in such various places as Boston, Jacksonville, Baltimore, Charleston, South Carolina, and New York.

 At his meeting with Wills in Arlington, Dowd produced a list of 30 charters he had obtained for the City of Keansburg in the 1963 season. The list showed the name of each chartering organization, the name of the person in it responsible for the charter, the date, and the destination point. Dowd proposed to Wills that they join forces; that Wills have the Potomac suitably repaired, fitted, and certificated to operate in the New York area; and that he (Dowd) be retained to obtain charters beginning with the 1964 season. Dowd whetted Wills's appetite for the venture by stressing his Keansburg list, predicting that he could obtain many or most of the 1963 Keansburg charterers for the Potomac in 1964. He proposed that Wills accept the same arrangements as those he had had with Keansburg, paying Dowd 10% of the gross charter receipts.

 Wills displayed prompt interest in Dowd's idea. However, he did not accept, but temporized vaguely about, Dowd's proposal for a 10% commission. Wills expressed his preference that Dowd serve as a full-time salaried employee, holding out hopes of shared profits if the New York venture prospered. The evidence on this subject of compensation grows dim and distant at this point. What emerges is that Wills sent Dowd back to New York authorized to start obtaining charters for the Potomac in 1964; that both Dowd and Wills were satisfied to leave temporarily uncertain the terms on which Dowd was to be paid; and that each hoped, and perhaps expected, that his version of the relationship would come to be realized in the event.

 Dowd returned to New York to begin his solicitations for charterers of the Potomac. By the end of 1963, he signed four charters for 1964. In the end he managed to procure a total of 37 charters for the Potomac in 1964. Of these, 12 had been City of Keansburg charters in 1963.

 By the close of 1963, Wills and Dowd had opened an office for the chartering enterprise in New York City. The rent and supplies were paid for by plaintiff, through Dowd. A secretary was hired, also paid by plaintiff, which, similarly, paid bills for advertising, telephone and other expenses. By February of 1964, letters passed between Wills and Dowd, along with oral discussions, had substantially crystallized their relationship. Dowd had become a salaried employee, at first paid $125 per week, later $150. Dowd continued to claim that his compensation was to have been a 10% commission, not the salary. Wills from time to time talked ambiguously about this as a possibly open question. Eventually Dowd's dissatisfactions led to the oddly executed rupture that culminated in this litigation. But Wills never agreed to pay commission, and Dowd accepted, while grumbling, the weekly salary checks (with tax withholdings and other employee-style deductions) plaintiff paid him.

 And so, with Dowd's resentments periodically expressed by letter or telephone, the parties continued through the 1965 season. Dowd's efforts were more productive for this second year, when the Potomac had a total of 66 charters in New York, grossing $142,000. Wills looked forward to still happier returns in 1966. Dowd, through the last months of 1965, encouraged these bright hopes by promising further increases in the business.

 But as the winter of 1965 approached, Dowd grew increasingly restive. Among other things, it became problematical whether the Potomac would be able to continue to accept charters for Bear Mountain. Interstate Commerce Commission authority was required for this. Plaintiff had obtained a temporary, seasonal permit for 1964 and 1965. Its application for permanent authority faced an uncertain future. In November, 1965, Dowd wrote a charter for May 29, 1966, for an excursion to Bear Mountain. On November 16 or 17, 1965, Mrs. Elware Egan, plaintiff's secretary, returned the charter to Dowd, explaining the certification problem and asking him to postpone Bear Mountain arrangements while plaintiff continued its efforts before the I.C.C. In December, 1965, an I.C.C. hearing examiner recommended denial of the Bear Mountain certificate. As this is written, plaintiff's appeal to the Commission remains pending.

 In addition to his concern over this Bear Mountain difficulty, Dowd continued to nurse resentment about not being paid on a commission basis. As he later testified on trial, he finally became "fed up" and stopped working for plaintiff on November 18, 1965. At this point, though he related it with bland frankness on the stand, his conduct became bizarre and lawless.

 Dowd neglected to mention to plaintiff or any of its principals that he had quit his job. Instead, he continued to communicate with Wills and Mrs. Egan at plaintiff's Arlington, Virginia, office, promising that the charters they were awaiting would be forthcoming very shortly. He continued to supply them with encouraging projections of expected 1966 business. He continued to take and cash his pay checks. But he attended at plaintiff's New York office only once or twice a week, and then only to pick up mail, return ...

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