Kinney v. Scarbrough Co.

• Decision Date: 11 April 1912
• Citation: 74 S.E. 772,138 Ga. 77
• Parties: KINNEY v. SCARBROUGH CO.
• Court: Georgia Supreme Court

74 S.E. 772

138 Ga. 77

KINNEY v. SCARBROUGH CO.

Supreme Court of Georgia

April 11, 1912

Syllabus by the Court.

Where a selling agent of a company engaged in the manufacture and sale of maps, who had as his territory a certain state except a few counties thereof, contracted that he would not "without the consent of the company in writing, within six months after the termination of this contract, directly or indirectly, or in any capacity, whether upon his own account or in connection with any other person or persons as salesman or agent of any character, for any other person company, or corporation, engage in any business of a character similar to that conducted by the company, which might in any manner be injurious to its interests," such a contract, without territorial limitation, was in general restraint of trade, and not enforceable.

If a salesman and local manager in a state for a nonresident corporation, by virtue of his position, became familiar with the business of the company and its customers, and took orders for the delivery of maps by such company, and if he subsequently, during the term for which he had contracted to serve such company, broke his contract with it, entered the service of another rival company in the same territory failed to deliver to his former employer orders taken for its maps, and, being insolvent, intended to deliver maps of the second company on such orders, he could be enjoined from so doing.

If such an employé, after having broken his contract of employment, and being insolvent, was seeking to induce other employés of his former employer to breach their contracts of employment and to enter with him upon the service of the other company, he could be enjoined from so doing.

Direction is given that the injunction be modified in accordance with this decision.

Error from Superior Court, Fulton County; J. T. Pendleton, Judge.

Action by the Scarbrough Company against C. L. Kinney. Judgment for plaintiff, and defendant brings error. Affirmed in part and reversed in part, with directions.

The Scarbrough Company, a corporation of the state of Maine, filed an equitable petition against C. L. Kinney, alleging in substance as follows: The defendant is indebted to the plaintiff in the sum of $727.96 on an itemized bill. He was employed by the plaintiff as salesman and local manager for the sale of maps, under a written contract, for a territory to be assigned to him. On or about January 1, 1911, the plaintiff assigned to him the territory of the state of Georgia, except nine counties thereof, which were attached to the Alabama territory, with the consent of the defendant. The contract contained the following clause: "It is further expressly agreed by and between the parties hereto that, inasmuch as the company must, in the nature of the case, instruct the salesman as to its particular system and method of doing business, and communicate facts to him in confidence, said salesman shall not, without the consent of the company in writing, within six months after the termination of this contract, directly or indirectly, or in any capacity, whether upon his own account or in connection with any other person or persons as salesman or agent of any character for any other person, company, or corporation, engage in any business of a character similar to that conducted by the company, which might in any manner be injurious to its interests." Under the terms of the contract, as amended by the agreement of the parties, the defendant was obligated to continue in the service of the plaintiff for at least one year from October 28, 1910. In order to equip the defendant for the discharge of his duties as salesman and manager for the plaintiff, it was necessary to impart to him information as to the confidential details of the plaintiff's business, which he expressly agreed to keep in confidence, and the possession of such information by the defendant in the service of a competing concern making and selling maps renders it impossible for the defendant to comply with his obligation to keep such information confidential. On February 13, 1911, the defendant wrote to the plaintiff, stating that he had 175 orders in Atlanta, and that thereafter he would report weekly. At the time this letter was written the defendant was either negotiating with a rival map company having its principal office in Atlanta to enter its employment, or had already agreed to enter its employment. The defendant had not complied with his duties as to sending in reports, etc., and plaintiff's treasurer determined to make a personal visit to Atlanta to investigate the situation. On February 18th the defendant wrote to the treasurer, advising him not to come, that he had quit selling the plaintiff's maps, and it would be useless for the treasurer to make the trip. The treasurer, nevertheless, went to Atlanta, and advised the defendant of the irreparable injury that would follow to the plaintiff if the defendant insisted on taking employment with a rival or competitor, and endeavored to induce the defendant not to do so, but to continue in the service of the plaintiff. The defendant declined to do so, and entered the service of the rival company as an agent. The defendant failed and refused to report to the plaintiff the names and addresses of the persons from whom he secured the 175 orders. Such orders were procured by the defendant while actually in the service of the plaintiff. Upon information and belief the plaintiff charges that the defendant intends to fill such orders with the maps of the Hudgins Company, the rival company with which he has taken service, instead of furnishing the plaintiff with information with which it can fill such orders. New maps based on the census of 1910 will probably be delivered very shortly, and it is necessary to enjoin the defendant from delivering the maps of the Hudgins Company upon the orders taken for the plaintiff. The defendant is constantly endeavoring to "buy off" the salesmen and other agents and representatives of plaintiff in the territory of Georgia, and to induce them to breach their contracts with the plaintiff. The prayers were that the plaintiff have judgment for the amount of its account against the defendant; that the defendant be enjoined from delivering any maps of the Hudgins Company on any orders taken by the defendant while in the employment of the plaintiff; that the defendant be enjoined from taking orders or engaging in the map business with the Hudgins Company or with any other company making and selling maps in the territory of the state of Georgia, for a period of at least six months from the legal termination of the contract between the parties; that the defendant be enjoined from persuading or endeavoring to persuade the agents and salesmen of the plaintiff from leaving its service, or from in any wise interfering with plaintiff's field officers or organization for the conduct of its business, and for process and general relief. By amendment it was alleged that on May 16th the defendant filed his petition in voluntary bankruptcy, and was duly adjudged a voluntary bankrupt. It was also alleged that the plaintiff was engaged in the business of selling maps throughout the United States and Canada, with offices also in London and Paris.

The defendant denied breaking his contract, or that he had taken orders for the plaintiff which he intended to fill with maps of the Hudgins Company. He alleged that on or about December 20, 1910, he ceased to work for the plaintiff, and since that date has not worked for them or taken orders for them; that about February 23d the treasurer of the plaintiff expressly agreed with defendant that the contract set out by the plaintiff was no longer binding upon either party, and expressly relieved the defendant of all responsibility or obligation under it;...