Hirsh v. Miller

• Decision Date: 06 June 1966
• Docket Number: No. 48064,48064
• Citation: 249 La. 489,187 So.2d 709
• Court: Louisiana Supreme Court
• Parties: , 151 U.S.P.Q. 66 Earl HIRSH and A & M Pest Control Service, Inc. v. Dennis MILLER.

Page 709

187 So.2d 709

249 La. 489, 151 U.S.P.Q. 66

Earl HIRSH and A & M Pest Control Service, Inc. v. Dennis MILLER.

No. 48064.

Supreme Court of Louisiana.

June 6, 1966.

Rehearing Denied June 30, 1966.

Sehrt, Boyle & Wheeler and Edward J. Boyle, Sr., Albert B. Koorie, Harry Herman, Charles J. Rivet, New Orleans, for defendant-relator.

Baldwin, Haspel, Molony, Rainold & Meyer, Conrad Meyer, III, Jerry C. Paradis, New Orleans, for plaintiff-respondent.

McCALEB, Justice.

Earl Hirsh and A & M Pest Control Service, Inc. of Georgia, the original plaintiffs herein, brought this suit against Dennis Miller and subsequently impleaded Dennis Miller Pest Controls, Inc., seeking to enjoin both from engaging in the pest control business for a period of five years from October 3, 1963; also from soliciting plaintiffs' customers, from inducing or attempting to induce, encourage or entice any of plaintiffs' employees to leave their employ and commence work for Miller, and from using the name 'Miller' in any manner in connection with any form of pest control business. Plaintiffs' demands are based on certain written instruments attached to their petitions.

Both defendants pleaded in limine an exception of no right of action as to plaintiff, Hirsh, and no cause of action as to the other plaintiff, which will hereafter be referred to as 'Georgia Pest Service'.

The trial judge maintained the exception of no cause of action an dismissed the suit. On appeal the Court of Appeal, Fourth Circuit, sustained the exception of no right of action as to Hirsh because he had assigned his right to his co-plaintiff. However, it found that the trial judge erred in maintaining the exception of no cause of action and, accordingly, the judgment was annulled and the case remanded for further proceedings in the court below pursuant to certain instructions. See Hirsh v. Miller, La.App., 167 So.2d 539.

When the matter was remanded, a protracted trial was had on the rule nisi for a preliminary injunction. After hearing the evidence the district judge, being of the opinion that defendant, Dennis Miller, had not violated the covenants contained in the contracts sued, on, as contended by plaintiff, denied the application for a preliminary injunction. Plaintiff then appealed to the Court of Appeal, Fourth Circuit, where the judgment of the district court was again annulled ¹ as to Dennis Miller, Sr. and Dennis Miller Pest Controls, Inc. and the case was remanded with instructions to the district judge to enter a preliminary injunction in favor of Georgia Pest Controls and against these defendants retraining and prohibiting them, their employees, agents and officers from engaging in the pest control business or service in the States of Louisiana and Georgia for a period of five years commencing October 3, 1963, and from soliciting any customer or customers of plaintiff or selling any pest control service to such customers. See Hirsh v. Miller, 181 So.2d 310.

On application of defendants we granted certiorari and the case has been argued and submitted for our decision.

As stated above, plaintiffs' case against Dennis Miller is primarily predicated on the alleged violation of certain covenants contained in sale and purchase contracts executed between Hirsh and Miller and Miller's previous pest control company, A & M Pest Control Service, Inc. of Louisiana.

The present defendants, Miller and Dennis Miller Pest Controls Inc., a new corporation organized by Miller since he left the employ of plaintiff, have denied the contentions of plaintiff and have asserted various other defenses involving questions of law and fact to which we shall later advert.

The record reveals the following facts. Defendant, Dennis Miller, was engaged for many years until February 28, 1957 in conducting a pest control service business in the city of New Orleans. His enterprise was successful and during the years he conducted his operations under the trade name 'Miller the Killer'. In 1954, Miller incorporated his business under the name of A & M Pest Control Service, Inc. and, on February 21, 1957 when the basic executory agreement was made between Miller and Hirsh, who was acting for the Georgia Corporation, Miller owned 60% Of the stock in his corporation and the remaining 40% Was owned by a trust, which had been established by Miller for the benefit of his four children, the appointed trustee thereunder being Clem H. Sehrt of New Orleans. On February 21, 1957 Hirsh, Miller, individually, and Miller's corporation entered into an executory agreement of purchase and sale whereby Hirsh agreed to buy the pest control business operated by Miller's corporation for $479,000. In this same agreement, Miller individually agreed to lease to Hirsh certain real estate owned by him, which was being used for the operation of the pest control business and also agreed to execute with Hirsh or his nominee and employment contract which would include, inter alia, a covenant by Miller not to compete in a similar business against Hirsh or his successor for a period of five years. The pertinent provisions of the agreement with respect to the contemplated employment contract between Hirsh and Miller reads as follows:

'As part of the consideration hereof, * * * Miller agrees to execute an employment contract with Hirsh or his nominee. Said contract shall contain the usual and customary clauses and consist of his exclusive hiring out of his services as a public relations counsellor and salesman in the business to be conducted by Hirsh or his nominee. Said contract shall be cancellable at any time at the option of Hirsh or his nominee. Miller shall be paid the sum of Fifteen Thousand ($15,000.00) Dollars as a salary for the first year on a monthly basis * * * thereafter the salary shall increase at the rate of Two Thousand Five Hundred ($2500.00) Dollars per year. The aggregate payments contemplated for the five years, unless said employment contract is previously cancelled, is One Hundred Thousand ($100,000.00) Dollars. Said contract shall contain a covenant not to compete in a similar business, against Hirsh or his nominee, applicable for a period of five years, regardless of whether or not the employment lasts that long and even if the employment part thereof is cancelled sooner, for any reason.'

Within a week from the confection of the executory agreement, the parties entered into three separate contracts pursuant thereto. On February 28, 1957, A & M Pest Control Service, Inc. of Louisiana, represented by Miller, as president and liquidator, sold to A & M Pest Control Service, Inc. of Georgia its entire business for the total sum of $479,000.00. In this sale, the various items of tangible and intangible assets of the business were separately itemized and valued, including the trade name, and in paragraph (n), the good will of the vendor was conveyed for the price of $63,484.32. On the same day, Miller executed a lease of the business premises to Georgia Pest Service and also entered into the contemplated employment contract with Georgia Pest Service for the stipulated period of five years 'unless sooner terminated as will be provided herein'. This contract specified payment of a monthly salary to Miller of $1250.00 for the first year; a monthly salary of $1458.34 for the second year; $1666.67 for the third year; $1875.00 for the fourth year and $2083.34 for the fifth year. It contained a provision that 'The Employer reserves the right to cancel this employment agreement at any time upon the giving of fifteen (15) days notice to the Employee' and further specified:

'It is agreed between the parties hereto that upon the employee withdrawing from the employment of the Employer, either voluntarily or otherwise, he shall not within a period of five years from the date of withdrawal as an employee of the Employer engage in business in competition to the business of the Employer either as a director, stockholder, employee, agent or salesman or in any manner whatsoever, either directly or indirectly, within the State of Louisiana or State of Georgia, and should there be a violation of this covenant not to compete, the Employer may proceed in equity or at law to enjoin any violation of this provision of this employment contract.'

It is the foregoing prohibitive covenant on which plaintiffs' main cause of action depends as it is contended that Miller breached his agreement on October 3, 1963 when he left the employ of Georgia Pest Service and, a few days thereafter became engaged in the pest control business for his own account and within a short time conducted that business under the name of Dennis Miller Pest Control, Inc., a corporation in which he owned all of the stock.

In addition, plaintiff alleges that Miller has breached his agreement to transfer the good will of his former corporation, A & M Pest Control Service, Inc., by soliciting the customers of Georgia Pest Service whose accounts were acquired by plaintiff at the time of the sale.

The exception of no cause of action filed by the defendants is founded on the contention that Miller's agreement not to compete with plaintiff for a period of five years is unenforceable, being contrary to the public policy of this State as provided by Act 133 of 1934 (now R.S. 23:921) declaring all such agreements to be void.

This statute, to which two exceptions not pertinent here have been added by Act 104 of 1962, provides:

'No employer shall require or direct any employee to enter into any contract whereby the employee agrees not to engage in any competing business for himself, or as the employee of another, upon the termination of his contract of employment with such employer, and all such contracts, or provisions thereof containing such agreement shall be null and unenforceable in any court, * * *'.

Plaintiff professes that the law is not applicable to this case for the reason that Miller's obligation not to compete stemmed from the...