Caine & Estes Ins. Agency, Inc. v. Watts, 21759

• Decision Date: 19 July 1982
• Docket Number: No. 21759,21759
• Citation: 278 S.C. 207,293 S.E.2d 859
• Court: South Carolina Supreme Court
• Parties: CAINE & ESTES INSURANCE AGENCY, INC., Respondent, v. J. B. WATTS, individually, and J. B. Watts Company, Inc., Appellants.

Page 859

293 S.E.2d 859

278 S.C. 207

CAINE & ESTES INSURANCE AGENCY, INC., Respondent, v. J. B. WATTS, individually, and J. B. Watts Company, Inc., Appellants.

No. 21759.

Supreme Court of South Carolina.

July 19, 1982.

John A. Hagins, Jr., of Horton, Drawdy, Hagins, Ward & Johnson, Greenville, for appellants.

Paul J. Foster, Jr., of Foster & Richardson, Greenville, for respondent.

NESS, Justice:

Appellant Watts appeals the order of the trial court upholding the validity of an employment agreement between the parties and ordering its specific performance. Watts asserts the non-competing clause contained in the agreement renders it invalid. We disagree and affirm.

While employed with respondent Caine & Estes Insurance Company in Greenville, South Carolina, Watts executed two agreements with the Company.

First, an employment agreement with a non-competing clause, dated August 1974; and second, an agreement for the sale of stock and to preserve good will, dated August 1978.

Subsequently, Watts resigned from the Caine & Estes Agency to go into business for himself. However, due to the existence of the August 1974 employment contract, Watts contacted Caine & Estes in November 1978 and negotiated a third agreement allowing Watts to compete with respondent's agency, in violation of the two prior agreements. This final agreement required Watts to pay respondent for a period of three years, fifty percent of any commissions received from the sale of insurance to any person who was a Caine & Estes customer at the time Watts resigned.

Watts did not make a payment for the first year and Caine & Estes instituted this action for an accounting and judgment pursuant to the November 1978 agreement.

This case is analogous to our decision in Standard Register Company v. Kerrigan, 238 S.C. 54, 119 S.E.2d 533 (1961). There we held a covenant restricting an employee from selling to the accounts or in the territory handled for the employer for two years after leaving the employer was not contrary to public policy and enforceable. We also recognized the necessity for an employer to protect himself where the nature of the employment brings the employee in personal contact with the customers of the employer. Id. 119 S.E.2d at 540.

The present case involves the insurance business where customer relations is an essential working asset the agency possesses. The nature of appellant's employment exposed him not only to clients personally, but also to confidential information and files of the agency. Thus, here respondent served a legitimate public policy by protecting his business interests.

Appellant asserts, however, the November 1978 agreement is invalid under our decision in Almers v. South Carolina National Bank of Charleston, 265 S.C. 48, 217 S.E.2d 135 (1975), in that it fails to contain reasonable time and geographic limitations, and is unduly harsh as to appellant's economic status. Almers, supra, 217 S.E.2d at 139. We disagree.

The agreement does not restrict appellant from selling insurance at all, the only restriction is that for three years, if he sells to a client of respondent, he...