Jenkins v. King

Decision Date26 February 1946
Docket Number28174.
Citation65 N.E.2d 121,224 Ind. 164
PartiesJENKINS et al. v. KING.
CourtIndiana Supreme Court

Appeal from Wayne Circuit Court; Gustave H Hoelscher, Judge.

Denver C. Harlan and Clarence M. Brown, both of Richmond, for appellants.

Kane Blain & Hollowell, of Indianapolis, and Gardner, Jessup Harrington & Haworth, of Richmond, for appellee.


Appellants brought this action to enjoin appellee from violating an alleged negative covenant contained in a written contract between appellants and appellee. Appellee's general demurrer to the complaint was sustained by the court below appellants refused to plead further and judgment was rendered for appellee, from which appellants appeal, assigning as error the sustaining of the demurrer.

In determining the correctness or lack of correctness of the court's ruling on the demurrer we are governed by the rule that, for the purposes of the demurrer, all facts well pleaded are taken as true. The substance of the averments in appellants' complaint is that at the time of the execution of the contract appellants had and owned an established general insurance agency in the city of Richmond, Wayne County, Indiana, where they solicited and wrote all kinds of insurance, and kept a complete list of policyholders, monthly expirations, and names and addresses of insurance prospects.

That they entered into a written contract of employment with appellee on November 22, 1939, for a period of two years commencing January 1, 1940, 'a copy of which contract is filed herewith, made a part hereof, and marked Exhibit A; that pursuant to said contract and under the terms and conditions thereof said defendant did so enter the employ of the plaintiffs and remained therein continuously until the first day of December, 1943 without change or modification of said contract or the conditions of his employment or compensation as provided in said contract.' The duties of appellee are then averred.

It is then averred that appellee left appellants' employ on December 1, 1943, and immediately entered in the general insurance business in Richmond, Wayne County, Indiana, and has continuously since engaged in such business. That thereby he violated and continues to violate the negative covenant contained in the written contract, to the irreparable injury of the appellants.

The written contract (Exhibit 'A') made a part of the complaint, as the foundation of the action, omitting signatures is as follows:

'This Agreement made by and between Atwood L. Jenkins and Alfred Will Jenkins, doing business as Jenkins Bros. in the City of Richmond, Indiana, hereinafter referred to as First Parties, and Lowell M. King of Indianapolis, Indiana, hereinafter referred to as Second Party:----

'Witnesseth: That said Second Party hereby agrees to associate himself with said First Parties exclusively for a period of two years, commencing January 1, 1940. Said First Parties own and are engaged in the business of operating a general insurance agency in said City of Richmond, and in such business and the office thereof, said Second Party shall perform such duties in connection with selling insurance, adjusting claims, delivering policies, collecting premiums, and like services as shall be done to the best interest of said First Parties.

'Said Second Party agrees to give all his working time to the duties hereunder, and to conform to the rules, regulations and practices of said First Parties, and during his association, or thereafter, he shall not disclose to others any fact concerning the business of said First Parties.

'As a part of the consideration of his employment the said Second Party agrees that in case he should leave the services of said First Parties, he will not, for a period of five years thereafter, engage directly or indirectly on his own account, or in connection with others, in the business of soliciting or writing insurance of any kind in Wayne County, Indiana.

'As remuneration for the services of said Second Party as above set out, said First Parties agree to pay to said Second Party the sum of Two Thousand Five Hundred Dollars ($2500.00) per annum, payable in twelve equal monthly payments during the two year period of this agreement, at the end of which period a new agreement shall be made by the parties hereto.

'It is further understood and agreed that should either or both of the parties, consistuting the First Parties of this contract, desire to dispose of their interests in the said Jenkins Bros. Agency, either in whole or in part, the party of the Second Part shall have the first option to purchase at lease one-half of that portion of the agency that is being offered for sale.

'It being understood, however, that the above does not apply to the entry into the business, of either or both, of the sons of the First Parties hereto.

'It is further understood and agreed that this contract may be modified at any time upon the mutual agreement of all parties hereto.

'Witness our hands this 22nd day of November, 1939.'

A contract of employment containing a negative covenant that is in restraint of trade is not favored in law, but may be enforced in equity for the purpose of protecting the employer's trade secrets. An employer may bind an employee lawfully, by contract, not to divulge knowledge secured from his employment under the contract to a competitor, or to use such knowledge in a business of his own in competition with his employer, for a reasonable time after the termination of the employment contract. 36 Am.Jur., Monopolies, Combinations, etc., § 78, p. 554. Grand Union Tea Company v. Walker, 1935, 208 Ind. 245, 195 N.E. 277, 98 A.L.R. 958; Harrison v. Glucose Sugar Refining Company, 7 Cir., 1902, 116 F. 304, 58 L.R.A. 915; Clark Paper & Mfg. Co. v. Stenacher, 1919, 108 Misc. 399, 177 N.Y.S. 614, affirmed 193 A.D. 924, 184 N.Y.S. 914; Annotation, 20 A.L.R. 864; Sherman v. Pfefferkorn, 1922, 241 Mass. 468, 135 N.E. 568.

The serious question presented in this case is whether or not the contract involved, by its terms, binds the appellee not to engage in a competing business in Wayne County, Indiana, for a period of five years after the termination of the contract; or for a period of five years only if he should leave the services of appellants during the two year term provided by the contract.

It is fundamental that one who executes a contract of a certain character is bound by its terms, even though he meant something different and thought the words conveyed his meaning. A court must give effect to the meaning and intention of the parties as expressed in the language of their contract, in the absence of anything to show legal impediment to prevent their entering into any contract they see fit or their expressing it in the language of their own choice. Where there is no right to the reformation of a written contract, the rights of the parties must be determined according to the writing.

In the absence of an ambiguity it is not within the function of the judiciary to look outside of the instrument to get at the intention of the parties. Their sole duty is to find out what was meant by the language of the instrument. In other words, the object to be attained in interpreting a contract is to ascertain the meaning and intent of the parties as expressed in the language used. 12 Am.Jur., Contracts, § 20, p. 517, and §§ 226 and 227, p. 745 et seq.; Western & Southern Life Ins. Co. v. Vale, 1937, 213 Ind. 601, 611, 12 N.E.2d 350; Walb Construction Co. v. Chipman, 1931, 202 Ind. 434, 441, 175 N.E. 132. See also, Evans v. Consumer's Gas Trust Company, Ind.Sup.1891, 29 N.E. 398, 31 L.R.A. 673; Continental Insurance Company v. Vanlue, 1890, 126 Ind. 410, 416, 26 N.E. 119, 10 L.R.A. 843.

The written contract of employment sued upon herein was for a two year period beginning on January 1, 1940 and ending January 1, 1942. It does not appear that a new written or other express contract was entered into by the parties at the end of the term or thereafter. Was this contract extended by implication after its termination, by reason of appellee continuing to work for appellants at the same salary and the same kind of work?

There can be no doubt that: 'If a tenant for a year or for a number of years holds over after the expiration of his term by efflux of time, the landlord, at his option, and against the will or intention of the tenant, may hold the latter liable as a tenant for another year.' Akron Milling Co. v. Leiter, 1914, 57 Ind.App. 394, 405, 107 N.E. 99 103. However, this rule is influenced by §§ 3-1615 and 3-1616, Burns' 1933 and by a consideration of the nature of tenancy contracts. On this proposition, we can see no analogy between such contracts and a contract for personal service, such as that created by the written contract in the instant case, in which no element of tenancy is involved. We do not think the statutory law of 'tenancies from year to year', or 'tenancies from month to month', in any event, should be made the law controlling in personal service employment contracts, or in services following the termination of such contracts by efflux of time, when no tenancy is involved. In Akron Milling Co. v. Leiter, supra, appellee had a written contract with appellant to work for one year at certain specified work, and at an agreed price. He continued to work for almost six months after the termination of his written contract. The court held, in substance, that by implication he was working under a new contract, for a like period of time, and for a like consideration. However, the court was careful to state at page 406 of 57 Ind.App., at page 104 of 107 N.E.: 'It will be observed that in the contract under consideration, both the time of employment is fixed as...

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