Deuerling v. City Baking Co.

• Decision Date: 20 April 1928
• Docket Number: 59.
• Parties: DEUERLING v. CITY BAKING CO.
• Court: Maryland Court of Appeals

141 A. 542

155 Md. 280

DEUERLING v. CITY BAKING CO.

No. 59.

Court of Appeals of Maryland

April 20, 1928

Appeal from Circuit Court of Baltimore City; H. Arthur Stump, Judge.

"To be officially reported."

Suit by the City Baking Company against Charles A. Deuerling. From an order granting a preliminary injunction, defendant appeals. Affirmed.

Argued before BOND, C.J., and PATTISON, ADKINS, OFFUTT, DIGGES PARKE, and SLOAN, JJ.

Frank F. J. Daily and Clarence A. Tucker, both of Baltimore (Knapp Tucker & Thomas, of Baltimore, on the brief), for appellant.

P August Grill and Randolph Barton, Jr., both of Baltimore, for appellee.

DIGGES J.

The question presented on this appeal arises out of a contract of employment entered into between the appellant, as employee and the appellee, as employer. The appellee is a bakery company, now and for a long time engaged in that general business in Baltimore city, and draws business from routes extending from Baltimore city into its suburbs and elsewhere, and particularly from the territory in the neighborhood of Hickory, Dublin, Castleton, Darlington, Stafford, Conowingo, and Belair, this particular territory being a subdivision prepared for convenience by the appellee and constituting one of its sales routes. A large portion of the appellee's general business is conducted by drivers or salesmen assigned to particular routes and supplied with a list of customers or prospective customers in the assigned territory. The appellant had been an employee of the appellee since 1916 as one of its driver salesmen, and had assigned to him and traded with the customers in the territory above stated.

The contract between the parties was entered into on September 27, 1927, and, after setting forth in its preamble the business of the company and how it is conducted, provided that the employee should receive as compensation for his services and for the full compliance with the terms, conditions, and covenants of the agreement recited, 8 per cent. of the sales made by him, that the commissions above recited should be in full payment for services rendered under the contract, and compensation in advance for not soliciting or selling products similar to those sold or offered for sale by the company in any territory covered by the employee for the company during the last six months of his employment, for three months after the representative shall have left the employ of his company, of his own accord or at the demand of the company. The contract further provides that the employment thereunder should begin on the 27th day of September, 1927, and continue in force from week to week thereafter, until it is terminated by the act of either party, but such termination is not to release the employee from the terms of the agreement yet to be performed by the employee at the time of the termination of the service. It further provides that the employee agrees, by reason of his financial circumstances, the difficulty of proof of damages, the compensation to be received thereunder, and other recitals therein first contained, that in event of any breach of the terms or conditions of this agreement on his part to be performed, a decree may be passed by any equity court in which a suit is brought for such purpose, enjoining him from violating the restrictive covenants. The bill of complaint alleges that on the 15th day of December, 1927, the appellant left the service of the appellee, and entered into the employ of the Schmidt Baking Company, Inc., on or about December 19, 1927, and as such employee he is now trading with the customers of the appellee in the territory particularly described in the original contract of employment. Upon this bill a preliminary injunction was issued restraining the breach of the restrictive covenant contained in the contract. A demurrer was filed to the bill, and an appeal taken from the order granting the preliminary injunction.

We are called upon, therefore, to determine the single question of whether or not the action of the chancellor in granting the preliminary injunction was correct. The injunction restrained the appellant, his agents, servants, and employees, they and each of them, from calling upon, soliciting, trading with, or attempting to trade with, either directly or indirectly, any person, persons, company, or corporation who were the customers of the appellee in the territory set out in the bill of complaint and particularly described in the contract, for a period of 90 days from December 15, 1927. The time for which the injunction was granted will have expired before the decision in this court, and in that aspect of the case, in so far as the decision here could give injunctive relief, it could be of no benefit to either party. Upon the decision, however, does rest the question of who is liable for the costs of the appeal, and, in addition, it is to be hoped that what we may here say will be of benefit in settling questions arising under a similar state of facts.

This case is an illustration of a very numerous class of decisions which courts are asked to make which depend in large measure upon the particular facts and circumstances of each case, and for this reason, if it were possible, in our judgment it would be unwise to promulgate or declare unchangeable rules to govern all cases. Even though this be true, it is essential to keep in mind the general principles to be applied to the varying facts in each case. We have here a contract the terms of which are explicit and unambiguous, solemnly executed by the parties thereto, fully competent to make such a contract. It is a contract of hiring by which the employee agrees to perform definite, stipulated services in consideration of receiving stated compensation. By its terms it is to continue from week to week, and may be terminated by the act of either party. It provides that, in the event of its termination by either party, the employee agrees not to directly or indirectly for the period of three months after such termination solicit, sell, or attempt to sell or deliver any bakery products to any one located on the route assigned to him at any time during his last six months' employment. The purposes of the contract are equally clear and definite as its terms, and are: To provide employment for the appellant, his services for the appellee, and, at the termination of his service, to fix a period of three months, which said time the appellee is to have, to familiarize an employee substituted for the appellant with the customers along the route or routes served by the appellant during the last six months of his employment.

Restrictive covenants in contracts of employment affecting the right of the employee to accept employment with others or engage in business for himself may be divided into two classes: First, one not to accept employment with others during the term of the contract; and, second, not to engage in a similar business or accept employment with others for a similar purpose for a definite period of time after the termination of the contract. Each of these classes of covenants, whether they be against similar employment during the term of the contract, or against engaging in business for one's self or in similar employment for another for a definite time after the termination of the contract, is in a degree in restraint of trade, for it is undeniable that the right to labor or use one's skill, talents, or experience for one's own benefit, or furnish them to another for compensation, is a natural and inherent right of the individual, and is often expressed by the term "freedom of trade." In the exercise of such a right the employee has an interest, as also the general public, who are entitled to have the energy, industry, skill, and talents of all individuals freely offered upon the market, and it can be easily imagined that, by unreasonable curtailment through restrictive covenants contained in contracts of employment, the public at large might thereby be deprived of the service of individuals so essential to the progress, welfare, and happiness of mankind. It has long been recognized by courts and economists that it is just as essential that men's services be freely for sale as that property should not be allowed to be withdrawn from the market for an indefinite length of time. Both of these principles are based upon a sound public policy. Opposed to the unlimited application of this principle of freedom of trade is the equally well-recognized principle of freedom of contract, which in its essence is also natural and inherent in the individual, and which in innumerable cases the courts have recognized and enforced. And here, again, the public has a real and vital interest, because if, recognizing the right to contract, one who does contract can, without loss or penalty disregard his obligation, there would be brought about such a chaotic condition in the business, industrial, and financial world as to result in practical stagnation. It therefore seems clear, in considering the question now presented, that the rights and interests of the employer, the employee, and the public at large must be considered.

It was early recognized that a decree of specific performance against an employee under an ordinary contract of employment might result in a species of industrial servitude, which the courts would not require to be performed; and following this line of reasoning, they held, in cases in which specific performance would not be decreed, that injunctive relief in aid of specific performance would not be given. Later this rule was modified to the extent of holding that in cases where the employment necessitated that the employee have a special individual qualification, or the service was of an unusual and unique...