On this date in 1934, the Court of Errors and Appeals, which was then New Jersey’s highest court, decided Louis Kamm v. Flink, 113 N.J. L. 582 (E. & A. 1934). The unanimous opinion by Justice Heher, later one of the original seven members of the post-1947 Constitution Supreme Court that became our highest court, is the leading case on tortious interference in general and brokerage commissions in particular. It has been cited over 200 times, including as recently as 2019. In addition to numerous citations by New Jersey courts at all levels, the decision has been cited in more than half of the federal Circuit Courts of Appeals and by courts in more than a dozen states.
Flink was the president of a building and loan association. The association sought to sell a theater property. Plaintiff Kamm produced a buyer. Kamm was reluctant to disclose the buyer’s name,since “such customers were plaintiff’s only stock in trade.” But Flink allegedly assured him that “the customer’s name would be held in strictest confidence, and that the plaintiff would not in any way be injured” thereby. After Kamm provided the name, Flink claimed that Flink’s brother-in-law and a partner, also defendants in the case, had produced the customer, and the brokerage commission was paid to them instead of Kamm.
Kamm sued. The trial court struck the complaint as sham. On appeal, the Court of Errors and Appeals reversed.
Citing cases from other jurisdictions, as well as from England, the Court of Errors and Appeals said that “[t]he right to pursue a lawful business is a property right that the law protects against unjustifiable interference. Any act or omission which unjustifiably disturbs or impedes the enjoyment of such right constitutes its wrongful invasion, and is properly treated as tortious” (emphasis in original). This did not mean that a businessperson has a right to be “protected from competition,” but if “unlawful means” are used, the case is actionable.
The court highlighted the role of “malice” and emphasized that that word has a particular meaning in contexts such as this. “Self-enrichment or fraternal interest, and not personal ill-will, may well have been the motive. But it is malice nevertheless. While ill-will toward a person is malice in its common acceptation or popular sense, in the technical, legal sense it is the intentional doing of a wrongful act without justification or excuse.”
The court then used a phrase that has echoed ever after in these cases. “If the challenged action were taken for the indirect purpose of doing injury to appellant, or of benefiting respondents at the former’s expense, it is a wrongful act, unless done in the exercise of an equal or superior right, and therefore a malicious act, and actionable” (emphasis added). The question of “equal or superior right” is a key aspect of tortious interference cases. This is where it came from.
In sum, “[t]he justification must be ‘as broad as the act, and must cover not only the motive and the purpose, or, in other words, the object sought, but also the means used, quoting a Massachusetts case. That was not so here. “[T]he case made by appellant clearly negatives the existence of an equal or superior right. The identity of its customer was disclosed, under the seal of confidence, for the legitimate use of the loan association only, and an obligation was thereby imposed upon Flink not to make an unfair use of the information thus given. Appellant had a property interest therein which the law will protect against unjust use by one who has gained it by virtue of a confidential relation.”
That was so even though there was no formal contract for brokerage services. “[T]he obligation may, in certain circumstances be implied.” And even absent an enforceable contract, or one otherwise barred by the statute of frauds, the right recognized in this case would exist. “If a tradesman or merchant is deprived of the business of others through one’s wrongful conduct, he has a cause of action for the loss thus sustained, albeit there was no contractual relationship between him and the prospective patrons…. {And s]trangers to the agreement will not be permitted to interpose [the statute of frauds] defense.”
There was much more, and the opinion is well worth reading in full. The bottom line was that the dismissal was reversed, as the case posed questions of fact for a jury. This decision in many ways spawned New Jersey’s highly developed body of tortious interference law. It still has vitality ninety years later.