Associated Spring Corp. v. Roy F. Wilson & Avnet, Inc.

• Decision Date: 16 February 1976
• Docket Number: Civ. A. No. 74-958.
• Citation: 410 F. Supp. 967
• Court: U.S. District Court — District of South Carolina
• Parties: ASSOCIATED SPRING CORPORATION, Plaintiff, v. ROY F. WILSON & AVNET, INC., Defendants.

410 F. Supp. 967

ASSOCIATED SPRING CORPORATION, Plaintiff, v. ROY F. WILSON & AVNET, INC., Defendants.

Civ. A. No. 74-958.

United States District Court, D. South Carolina, Greenville Division.

February 16, 1976.

Douglas McKay, Jr., McKay, Sherrill, Walker, Townsend & Wilkins, Columbia, S. C., and N. Heyward Clarkson, III, Greenville, S. C., for plaintiff.

William W. Kehl, Wyche, Burgess, Freeman & Parham, Greenville, S. C., for defendants.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

HEMPHILL, District Judge.

Plaintiff in this action is a Delaware Corporation with its principal place of business located in Bristol, Connecticut; its Bowman Products Division (Bowman), headquartered in Cleveland, Ohio, is principally engaged in the business of selling at wholesale various automobile and truck parts and related products. Defendant Wilson, a South Carolina citizen and resident, was formerly one of a number of independent sales representatives employed by Bowman but now works in a similar capacity for one of Bowman's competitors, the Fairmount Motor Products Divisions of defendant Avnet, Inc., a New York corporation.

Bowman seeks in this action to enforce a covenant contained in its contract with Wilson which would prohibit him from soliciting sales from certain customers to whom he had sold during his employment by Bowman. Plaintiff requests that Wilson be enjoined from further violation of the covenant, that Avnet, Inc. be enjoined from participating in and benefiting from Wilson's violation of the covenant, and that actual and punitive damages be awarded against Wilson and Avnet for past violations. Defendants admit violation of the covenant but contend that the provision is unenforceable because of Bowman's own breach of the contract terms. Avnet further denies any actions on its part to induce the breach of or otherwise interfere with Wilson's contract with Bowman.

The case was heard before the court without a jury in Greenville, South Carolina on October 2 and 3, 1975, being consolidated for the purpose of trial with Civil Action No. 74-1191, Associated Spring Corp. v. John Leroy Julian, Jr., and Avnet, Inc., and upon the credible testimony and exhibits there presented, the court now publishes the following

FINDINGS OF FACT

1. On July 29, 1971 Roy F. Wilson signed a "Salesman's Agreement" with Bowman which was executed by an agent of Bowman and became effective on August 19, 1971. This contract generally authorized Wilson "to solicit orders for certain merchandise offered by the Company for sale," and it contained, among others, the following provisions which appear relevant to the issues in this action:

1. TERRITORY

The Company hereby appoints the Salesman the Company's sales representative in its Territory No. 1056-22. Said territory consists of certain specified or generally described accounts, which are hereby assigned to the Salesman, located in a defined geographical area. Said accounts are set forth or described in a certain document on file in the Company's office, called "Territory Description", bearing the Salesman's name and territory number. Said Territory Description contains also a list of or description of accounts, if any, which, although within the aforesaid geographical area, are excluded from the Salesman's territory. The accounts which are included in the Salesman's territory are hereinafter referred to as "territory". If said Territory Description shall include any general classification(s) of accounts declared to be "Open to all salesmen", the accounts within such classification(s) shall not be included in the Salesman's territory unless and until so included by supplemental agreement. The aforesaid Territory Description is now in existence and is incorporated herein by reference and is hereby made a part of this agreement to the same extent as if fully rewritten herein. A copy of said Territory Description has been delivered to the Salesman who hereby acknowledges its receipt.

2. DUTIES

. . . The Salesman agrees to devote his best efforts to the performance of his duties for the Company, to give proper time and attention to furthering the Company's business, to confine his activities to the territory assigned to him and to refrain from soliciting in or accepting orders from other territories, and to comply with all rules, regulations and instructions contained in the Sales Manual and the Official Bulletins issued by the Company. . . .

3. COMPENSATION

. . . The Salesman acknowledges that he has received a copy of the Company's Sales Manual and that he has read and understands the contents of said Sales Manual, and particularly Sections 5 and 9 pertaining to Reserve Accounts and Compensation. Both parties agree that the said Sales Manual is incorporated herein and is hereby made a part of this Agreement to the same extent as if fully rewritten herein, and that the terms and provisions of said Sections 5 and 9 are hereby agreed to.

5. CONFIDENTIAL INFORMATION

The Company will furnish certain secret customer lists and other confidential customer information of the Company, including but not limited to information regarding each customer's type of purchases, volume of business, details of previous calls and personal data regarding each individual buyer, etc. The said secret customer lists and confidential customer information shall remain the property of the Company and the Salesman agrees that he will accept and keep such information in confidence during the term hereof and thereafter, and upon termination of this agreement, for any cause, at once return all written confidential customer information to the Company, and he will thereafter, refrain from using or disclosing to third parties the contents of such secret customer lists or confidential customer information.

8. RESTRICTIVE COVENANT

The Salesman agrees that upon termination of this agreement for any reason whatsoever he will not, for a period of two (2) years thereafter, sell or attempt to sell any products of the same or similar kind as those sold by the Company, to any of the customers to whom he made one or more sales for the Company within the last two years prior to such termination. The Salesman agrees that his promise herein made so to refrain from selling or attempting to sell means that he will not, directly or indirectly, either as an individual on his own account or as a partner, employee, agent or salesman of or for any person, firm, association or corporation, or as an officer, director or stockholder of any closely-held corporation as hereinafter defined, engage in selling or attempting to sell any of said products to any of the customers hereinabove designated. This covenant shall not be deemed violated by the Salesman's engaging in the business of a manufacturer or retailer of said products, but it shall be deemed violated by any sale of said products to any of said customers by the Salesman in or for a business combining retail and wholesale sales if the wholesaling is a substantial part of such combined business. For the purposes of this covenant automobile manufacturers and their franchised new-car dealers shall not be considered to be in the business of wholesaling.

The term "closely-held corporation", as used herein, shall be any corporation in which the Salesman or his wife, child or parent owns, directly or indirectly, more than ten per cent (10%) in value of the outstanding stock, or a corporation in whose management the Salesman is an active participant.

If it should become desirable or necessary for the Company to seek compliance with this covenant by judicial proceedings, the period during which the Salesman will not sell or attempt to sell any products of the same or similar kind as those sold by the Company to any of the customers to whom he made one or more sales for the Company, shall extend to the second anniversary of the date of the judicial order requiring such compliance.

This covenant on the part of the Salesman is of the essence of this agreement; it shall be construed as independent of any other provision in this agreement, and the existence of any claim or cause of action of the Salesman against the Company, whether predicated on this agreement or otherwise, shall not constitute a defense to the enforcement by the Company of this covenant.

9. TERM

. . . During the term hereof the Salesman shall act as the Company's exclusive sales representative for the accounts assigned to the territory in the aforesaid Territory Description, provided he is diligently soliciting orders and serving accounts in the territory. . . .

10. This agreement shall be construed in accordance with the laws of the State of Ohio. There are no verbal agreements between the parties. All terms and conditions are set forth in this agreement, and in the aforesaid Territory Description and the Sales Manual, both of which are incorporated herein. This agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective personal representatives, successors and assigns.

Pursuant to the provisions contained in the section above denoted "TERRITORY," the following "Territory Description" was incorporated into Wilson's contract with Bowman:

                TERRITORY DESCRIPTION EFFECTIVE DATE 8-16-71 TERR. NO. 1056-22
                Effective date applies to geographical area and classifications indicated below
                Name R. F. Wilson    Sales No. 2227  On List Date 8-16-71
                              CLASSIFICATIONS ASSIGNED
                X NEW CAR DEALERS       X  OTHER AUTOMOTIVE    X  NON-AUTOMOTIVE
                  Ford                      Body Shop             Contractors
                  Chrysler                  General Garage        Marine
                  Chevrolet                 Service Station       Farm Equipment
                  Other G.M.                Fleets                Miscellaneous
                  All Other Dealers
                

                                       CODE TO IDENTIFY ASSIGNMENT
                X — Assigned to this territory                      T — Assigned to another territory
                Other territories involved with this

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