D. B. Clayton and Associates v. McNaughton

• Decision Date: 06 January 1966
• Docket Number: 6 Div. 217
• Citation: 182 So.2d 890,279 Ala. 159
• Court: Alabama Supreme Court
• Parties: D. B. CLAYTON & ASSOCIATES v. William J. McNAUGHTON.

Page 890

182 So.2d 890

279 Ala. 159

D. B. CLAYTON & ASSOCIATES v. William J. McNAUGHTON.

6 Div. 217.

Supreme Court of Alabama.

Jan. 6, 1966.

Opinion Extended on Denial of Rehearing Feb. 10, 1966.

W. W. Conwell, Wingo, Bibb, Foster & Conwell, Birmingham, for appellant.

Rogers, Howard, Redden & Mills, Birmingham, for appellee.

HARWOOD, Justice.

This is an appeal from an order dissolving a temporary injunction.

On 22 February 1965, D. B. Clayton & Associates, Inc., doing business as H & R Block Company (hereinafter referred to as Block) filed a verified bill of complaint seeking a temporary injunction against William J. McNaughton (hereinafter referred to as McNaughton). On presentation of the verified bill of complaint to the Hon. J. Edgar Bowron, Presiding Judge of the 10th Judicial Circuit, the matter was set for hearing on 26 February 1965, ans it was ordered that a copy of the bill of complaint and the order setting the hearing be served upon McNaughton.

Actually, the bill of complaint and notice setting the hearing were not served upon McNaughton until 3 March 1965, some five days after the temporary injunction was granted on 26 February 1965, by Hon. T. Werth Thaggard, sitting as a special judge, in equity, and McNaughton had no notice of, and was not present, at the time the temporary injunction was granted. The order granting the temporary injunction recites that the matter was submitted to the court upon the bill of complaint and an affidavit. The temporary injunction was therefore issued ex parte, that is, without a hearing, and since a 'hearing' ordinarily is defined, in matters not associated with full trials, as a proceeding in which the parties are afforded an opportunity to adduce proof and to argue inferences from the evidence. WGOK, Inc. v. WMOZ, Inc., 275 Ala. 264, 154 So.2d 22; Fiorella v. State, 40 Ala.App. 587, 121 So.2d 875.

Thereafter, on 23 March 1965, McNaughton filed a demurrer to the complaint, a motion to dissolve the temporary injunction, and a motion to discharge the temporary injunction. Block did not file an answer to this motion but there is in the record an affidavit by David B. Clayton, which was subscribed and sworn to before W. W. Conwell, Notary Public, who is the attorney of record for Block. We assume therefore that this affidavit was filed by Block and the record shows that it was 'filed in open court on April 7, 1965.'

Thereafter, on 16 April 1965, Hon. Sam R. Shannon, Jr., sitting as Special Circuit Judge, In Equity, entered the following order:

'THIS CAUSE coming on to be heard ore tenus before the Court on respondent's motion to dissolve temporary injunction. The Court having considered the same is of the opinion that said motion is well taken, it is, therefore,

'ORDERED, ADJUDGED and DECREED by the Court that said motion is granted and that the temporary injunction heretofore issued on the 26th day of February, 1965, be and hereby is dissolved.'

The record contains no ruling by the court on the demurrer filed by McNaughton to the bill seeking a temporary injunction, nor is there any ruling on the motion to discharge.

In Sims, Alabama Chancery Practice, in Section 655, it is stated:

'If the motion is to dissolve, and there is on file a demurrer to the bill for want of equity, or exceptions to the answer, they must all be considered at the same time with the motion. But even if there is no demurrer on file, of course the Chancellor must dismiss the bill if it lacks equity.'

It would appear therefore that the better practice would have to have had a ruling both on the demurrer to the bill as filed by Block, and on the motion to dissolve temporary injunction. However, since there was no ruling on the demurrer we must base our review upon the state of the pleadings as disclosed by the record, that is, a petition for a temporary injunction, to which no answer was filed, the temporary injunction issued ex parte pursuant to the bill, the motion to dissolve, to which there was no answer, and the order dissolving the temporary injunction.

The bill filed by Block seeking the temporary injunction recites in parts pertinent to this review, the following:

'2. Complainant further avers that for several years it has operated its said business in said City of Birmingham, Alabama whereby it engages in the business of preparation of income tax returns, bookkeeping and other tax matters for its customers, and complainant has built up and established a valuable and extensive trade in the same, and that same has been acquired by the company from an outlay of considerable time, money and effort; complainant has from year to year by serving the needs of its customers built up a large number of such customers for which it prepares the annual tax returns. Further your complainant avers that it has a large number of customers for which it maintains, on a monthly basis, their books and prepares such other tax returns as required by State and Federal law. That the Complainant has developed a valuable good will for its said business in Jefferson County and Birmingham, Alabama.

'3. Complainant further avers that on, to-wit, December 28, 1963, when respondent applied for employment, he did enter into and sign a contract of employment on that date, a copy of which is attached hereto as Exhibit A and made a part hereof as if set out in full herein.

'4. Complainant further avers that respondent was furnished an established office space in which to carry out his employment contract and that the customers of H & R Block Co., the complainant herein, were referred to him for the completion of their returns, and complainant did teach and train said respondent in the operation of his said business and certain procedures to be followed; did give respondent access to information which he used in dealing with the various persons and business who were your complainant's customers. Complainant avers that he did give employment to the respondent as provided for in the said employment contract; that respondent did complete substantial training programs as provided by the complainant.

'5. Complainant further avers that on, to-wit, April 15, 1964, the said respondent ceased his employment with the complainant and thereafter on, to-wit, January 4, 1965, commenced doing business as Mac's Tax Mill and/or became employed by Mac's Tax Mill which is a similar business to that of the complainant's business. That the respondent has on numerous occasions attempted to induce prior customers of the complainant into the said business which is physically located adjacent to the North Birmingham office of the complainant in violation of the terms and conditions as set forth in Exhibit 'A'; that after being informed by various persons that they desired their return to be made by H & R Block Co., as such customers had previously been doing, the respondent sought to induce them to permit the respondent to prepare the said returns in violation of his written agreement. Complainant further avers that the said respondent engaged in the same or similar business or was employed by the said business, in violation of the aforesaid written agreement; Complainant further avers it is informed and believes, and upon such information and belief, avers the fact to be that the respondent has called upon and contacted customers or clients of complainant's said business with whom he became acquainted with or dealt with while in the employ of the complainant, that the said respondent has actually solicited business from the following customers of the complainant known to him to be such, viz.: Mrs. C. A. Myrick and Mrs. Walter C. Boutwell. Complainant further avers that unless this Honorable Court will take immediate jurisdiction of this cause and forthwith effect an order or decree restraining and enjoining the said William J. McNaughton from further violating the terms of said written agreement, complainant and its said business will suffer irreparable loss or injury in that such violations and damage will impair the good will of complainant's said business and will substantially decrease complainant's income therefrom. Complainant further avers that it is without a full, adequate and complete remedy at law in that the damages to the good will, including loss from its customers, contracts and profits arising out of the aforesaid violations of said agreement, that such are incapable of ascertainment in a court of law; and complainant is further advised that the said respondent possesses such a limited estate that respondent could not be made to answer in damages in a suit at law for the full amount of complainant's losses, that respondent's said business activities in Jefferson County and Birmingham, Alabama in competition with complainant is causing and will in the future cause irreparable injury to complainant's business and good will; such will cause complainant's customers to be diverted; that complainant has no feasible way of determining with particularity all of the specific instances in which it has and will in the future suffer injury and damage to its business.

'Complainant in all things offers to do equity and submits itself to the jurisdiction of the Court for such purposes.'

The contract of employment executed by McNaughton on 8 December 1962, which contract was attached to and made a part of the bill, provides that the employee duties shall consist of preparing accurate tax returns, etc., and performing general office services; the employment to take effect on the day the employee commences his duties after 1 January provided his training has been satisfactorily completed. The employee's compensation for his services was fixed at 20% of gross dollar income produced by the employee, with a guaranteed minimum payment of $1.25 per hour, with a bonus of 4% of said gross dollar volume payable on or before 25 April following termination of the contract.

The employment contract also contains the following...