The doctrine that he who comes into equity must come in with clean hands does not recognize mere imputations of guilt based upon technical theories of agency. For unclean hands, knowledge must exist on the part of the principal of the facts upon which the charge of unconscionable conduct is based, and in the case of a corporation those facts must be brought home to the persons exercising general control over its affairs.
A membership corporation sought an injunction from the District Court of New York against a stock corporation to restrain it from appropriating the news the membership corporation obtained. The membership corporation alleged that it required relief that enjoined the stock corporation from exchanging consideration with the membership corporation's employees for the membership corporation's unpublished news.
Should an injunction be granted?
The Court held that it was not necessary to suppose that such a system was known by the stock corporation's officers because it was sufficient that the system existed and the acts were frequent and continuous. It further concluded that the appropriation, whether or not performed contrary to the directions of the stock corporation's officers, was committed by persons who acted for it within the general scope of their employment. The Court likewise indicated that the stock corporation's defense was inadequate and found that it was significant that the individuals who allegedly secured the membership corporation's news did not furnish affidavits to the contrary. Lastly, the Court found that the stock corporation had no right to obtain news from the members of the membership corporation. Accordingly, the court issued an injunction against the stock corporation's appropriation of news obtained by the membership corporation.