Jackes-Evans Mfg. Co. v. Christen, JACKES-EVANS

Decision Date23 February 1993
Docket NumberNo. 61410,JACKES-EVANS
Citation848 S.W.2d 553
Parties8 IER Cases 469 MANUFACTURING COMPANY, Plaintiff-Appellant Cross Respondent, v. Louis J. CHRISTEN, Jr., Defendant-Respondent Cross Appellant.
CourtMissouri Court of Appeals

Jay A. Summerville, St. Louis, for appellant.

Jonathan Isbell, Edwardsville, for respondent.

CARL R. GAERTNER, Presiding Judge.

Plaintiff and Defendant appeal from the judgment entered in the Circuit Court of the City of St. Louis in this action seeking, inter alia, to enforce a non-competition clause in an employment contract.

Defendant, Louis J. Christen, was one of six shareholders and the president of Christen, Inc., a corporation engaged in the business of manufacturing and selling barbecue and fireplace accessories. Christen, Inc., was financially troubled, so Mr. Christen decided to sell the company to pay back creditors and avoid bankruptcy. Mr. Christen entered into negotiations with Plaintiff, Jackes-Evans Manufacturing Company, a corporation engaged in the manufacture of On August 28, 1989, the parties simultaneously executed a purchase agreement and an employment contract. Jackes-Evans agreed to pay Christen, Inc. $1,247,760.00 for certain assets, including inventory, tools, machinery, equipment, patents, and designs. In addition, Jackes-Evans agreed to employ Mr. Christen as the sales and marketing manager of barbecue and fireplace accessories for a period of one year at a salary of $46,000.00 plus a commission on sales. The employment contract contained a non-competition agreement expressed as follows:

home heating equipment. Jackes-Evans wanted to expand its product line. Because Mr. Christen desired to obtain future employment and because Jackes-Evans had neither experience nor contacts in the barbecue and fireplace business, Mr. Christen's employment by Jackes-Evans became a key part of the negotiations. Eventually, the parties executed a "Memorandum of Intent" summarizing the contemplated terms of employment in connection with the sale of assets of Christen, Inc. One of the terms expressed in this Memorandum was that Mr. Christen would agree "not to engage in any business in competition with the company for a period of five years after the termination of his employment."

Commencing on the first day of the time of this agreement and continuing for a period of five years, employee agrees that he will not, in any manner, directly or indirectly, own, manage, operate, join, control, participate in or be connected as a partner, investor, advisor, consultant or otherwise with any business or business entity which is involved in the manufacture and/or sale of home barbecue equipment or fireplace accessories in either the United States or Canada.

Through Mr. Christen's efforts the sales of barbecue and fireplace accessories exceeded Jackes-Evans expectations in the first year. He was offered a new contract as marketing director with an annual salary of $60,000.00. However, because he was dissatisfied with the working conditions and relations with fellow employees and because the new contract eliminated his opportunity to earn commissions on sales, Mr. Christen refused the new position and terminated his employment with Jackes-Evans at the end of the first year.

He immediately started his own business as a sole proprietor under the name Louis J. Christen and Company, offering consulting services in developing and marketing products. He contacted many of his former suppliers and customers in the barbecue and fireplace accessory business. In the first months after he left Jackes-Evans, Mr. Christen began to establish business relationships with at least three of Jackes-Evans' competitors. He was paid $6,000.00 per month to act as an agent and representative of a Taiwanese trading company which exports barbecue equipment and fireplace accessories to dealers in the United States. He appeared at numerous trade shows and exhibitions and was instrumental in causing Jackes-Evans to lose its largest customer for barbecue and fireplace accessories.

I. INJUNCTION

In the trial court, Mr. Christen admitted he was actively competing with Jackes-Evans but insisted that he was not prohibited from selling or acting as a broker or representative so long as he did not have an ownership interest in a competing company. The trial court accepted this narrow interpretation of the contract and concluded that the language of the non-competition clause precluded only ownership or management activities, not mere employment. Accordingly, the trial court enjoined Mr. Christen from owning, managing or acting as a marketing advisor and consultant to any barbecue and fireplace accessory business, but expressly refused to enjoin him from acting as an employee for any such business.

The basis for this rather paradoxical order was the trial court's conclusion that the contract should be construed pursuant to the rule of ejusdem generis. The court expressed its opinion that because all of the prohibited activities listed in the non-competition clause related to ownership or For several reasons, the trial court erred in resorting to the principal of ejusdem generis. This rule of construction, sometimes invoked as an aid in construing ambiguous documents where the intent of the parties is not clear, is stated as follows:

management, the phrase "or otherwise" could not be construed to include employment.

[W]here general words follow particular ones, the general ones will be limited in their meaning and restricted in their operation to things of like kind and nature with those particularly specified. Payne v. Grimes Real Estate Company, 660 S.W.2d 755, 757 (Mo.App.1983), quoting Cades v. Mosberger Lumber Company, 291 S.W. 178, 179 (Mo.App.1927).

However, the rule has no application where the particular words describe variant and differing things or concepts. Id. The prohibition against participating as a partner or investor is quite different than prohibiting a connection with a competitor as an advisor or consultant. The latter concept certainly is broad enough to include an employment relationship. Thus, it was error for the trial court to hold the phrase "or otherwise" did not apply to employment.

Moreover, ascertainment of the intention of the parties in entering into the employment contract and the non-competition agreement is, of course, the cardinal principle regarding judicial interpretation. "In order to determine the intent of the parties, a court will consider the entire contract, subsidiary agreements, the relationship of the parties, the subject matter of the contract, the facts and circumstances surrounding the execution of the contract, the practical construction the parties themselves have placed upon the contract by their acts and deeds, and other external circumstances that cast light on the intent of the parties." Royal Banks of Missouri v. Fridkin, 819 S.W.2d 359, 362 (Mo. banc 1991). Viewed in the light of these factors, the evidence points unerringly to the conclusion the parties intended to prohibit Mr. Christen from engaging in any competition, regardless of the guise or form, in the barbecue equipment and fireplace accessory business. Jackes-Evans was entering a new field of commerce in which it possessed neither knowledge, experience, reputation nor contacts with suppliers and customers. Mr. Christen was hired to supply these deficiencies. It would be foolish for Jackes-Evans to purchase Mr. Christen's services for one year and then permit him to destroy what he had brought to Jackes-Evans for the benefit of its competitors. Whether Mr. Christen competed as an owner or as an employee would be of no import whatsoever...

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