House of Tools & Engineering, Inc. v. Price

• Court: Missouri Court of Appeals
• Writing for the Court: CLEMENS
• Citation: House of Tools & Engineering, Inc. v. Price, 504 S.W.2d 157 (Mo. App. 1973)
• Decision Date: 18 December 1973
• Docket Number: No. 34991,34991
• Parties: HOUSE OF TOOLS AND ENGINEERING, INC., Appellant, v. Walter K. PRICE III, Respondent. . Louis District, Division Two

Page 157

504 S.W.2d 157

HOUSE OF TOOLS AND ENGINEERING, INC., Appellant, v. Walter K. PRICE III, Respondent.

No. 34991.

Missouri Court of Appeals, St. Louis District, Division Two.

Dec. 18, 1973.

Voorhees & Summers, Matthew M. McCarthy, St. Louis, for appellant.

Sullivan & Watkins, Clayton, for respondent.

CLEMENS, Acting Presiding Judge.

Plaintiff corporation sued to enjoin defendant, its former employee, from competing with plaintiff in violation of defendant's post-employment covenant. The trial court denied relief and plaintiff appeals. We reverse and remand.

Plaintiff distributes pneumatic and hydraulic tools in parts of Missouri and Illinois and therein is distributor for the Cleco line of pneumatic tools. Only five or six other companies manufacture pneumatic tools, the largest of which is Chicago Pneumatic Tool Company, defendant's present employer.

On November 1, 1967 plaintiff employed defendant as a salesman. At that time defendant signed a 'Restrictive Covenant Agreement,' agreeing that for three years after employment by plaintiff he would not engage in competitive business within the Missouri-Illinois territory.

Defendant continued as plaintiff's salesman for four years. While so employed defendant sold tools carried by plaintiff, including pneumatic tools in the Cleco line. Plaintiff sent defendant to training schools and gave him on-the-job training; provided defendant names of customers, contacts in each plant, sales records and sales analyses of all customers and other salesmen's information of those customers in his territory.

Soon after being discharged by plaintiff, a competitor, the Chicago Pneumatic Tool Company, employed defendant to sell pneumatic tools in the same area he covered while selling for plaintiff. Defendant began calling on the same customers he had served while selling for plaintiff.

At the close of evidence, the trial court denied plaintiff's petition for injunction. Plaintiff appealed, raising two issues: (1) Whether the restrictive covenant is enforceable as a valid restraint of trade and (2) whether it is ambiguous and therefore unenforceable.

Post-employment restrictions have been considered in many Missouri cases. They are generally considered to be in restraint of trade but a valid means of protecting employers if certain requirements are met. An early case of such a restriction was City Ice & Fuel Co. v. Snell, 57 S.W.2d 440 (Mo.App.1933) wherein defendant-employee agreed that for one year following termination of employment he would not sell, solicit or deliver ice, coal or fuel oil in the area. The trial court refused to enjoin defendant but the appellate court reversed, holding the contract valid. The court held such restrictions are valid if limited as to time, place and purpose and are not void for 'want of mutuality, are not against public policy, and are not void on the ground of restraint of trade.' An employer has a protectible and proprietary right in his 'stock of customers' and in their good will. Mills v. Murray, 472 S.W.2d 6, l.c. 11 (Mo.App.1971). See Prentice v. Rowe, 324 S.W.2d 457 (Mo.App.1959) and American Pamcor, Inc. v. Klote, 438 S.W.2d 287 (Mo.App.1969).

Here, the restrictive covenant was limited as to time and place. Defendant agreed he would not compete for three years in the geographical area he serviced for plaintiff. The issue here is the requirement that the restriction be reasonable and necessary for the protection of the employer. The question of reasonableness of a restraint requires 'a thorough consideration of surrounding circumstances, including the subject matter of the contract, the purpose to be served, the situation of the parties, the extent of the restraint, and the specialization of the business.' Harrington, Inc. v. Frick, 428 S.W.2d 945 (Mo.App.1968). Although a covenant not to compete is not favorably regarded, the question of reasonableness is one of law according to the subject matter of the covenant and the existing circumstances. Mills v. Murray, supra.

Defendant...