Singer was employed by General Automotive Manufacturing Company (GAMC) as its general manager from 1953 until 1959. He had worked in the machine-shop field for more than thirty years and enjoyed a fine reputation in machine-shop circles.
GAMC was a small concern with only five employees and a low credit rating. Singer attracted a large volume of business to GAMC and was invaluable in bolstering the company’s credit rating. At times, when collections were slow, Singer paid the customer’s bill to GAMC and waited for his own reimbursement until the customer remitted. Also, when work was slack, Singer would finance the manufacture of unordered parts and wait for recoupment until the stockpiled parts were sold. Some parts were never sold, and Singer personally absorbed the loss on them.
While working for GAMC, Singer set up his own sideline operation, in which he acted as a machinist–consultant. As orders came in to GAMC through him, Singer would decide that some of them required equipment GAMC lacked or that GAMC could not do the job at a competitive price. For such orders, Singer would give the customer a price, then deal with another machine shop to do the work at a lower price, and pocket the difference. Singer conducted his operation without notifying GAMC of the orders that it (through Singer) did not accept.
Contending that Singer’s sideline business was in direct competition with its business, GAMC sued Singer for breach of fiduciary duty. What result? What were Singer’s duties to GAMC as its agent? Was Singer’s operation of a sideline business ethical? Would it have been ethical had he disclosed it to his GAMC superiors? [General Automotive Manufacturing Co. v. Singer, 120 N.W.2d 659 (Wis. 1963).]