A.L. Williams & Associates v. Faircloth
| Decision Date | 05 December 1989 |
| Docket Number | No. 46930,46930 |
| Parties | A.L. WILLIAMS & ASSOC. et al. v. FAIRCLOTH. |
| Court | Georgia Supreme Court |
Nicholas P. Chilivis, Gary G. Grinder, John K. Larkins, Jr., Stanton & Grindler, Stanton J. Shapiro, Kenneth G. Levin, Atlanta, for A.L. Williams & Associates, Inc., et al.
Irwin W. Stolz, Jr., Seaton D. Purdom, Gambrell, Clarke, Anderson & Stolz, Atlanta, for Norman Tee Faircloth.
A.L. Williams & Associates, Inc. markets life insurance policies of Massachusetts Indemnity and Life Insurance Company. Williams appointed Faircloth as agent for the insurance company. Under two other contracts, Faircloth held the offices of regional vice-president and senior vice-president of Williams. In 1982, Williams notified Faircloth that it was exercising its right, as provided to Williams by Faircloth's agency contract with the insurance company, to require that the insurance company terminate Faircloth as agent. At the same time, it notified Faircloth that it was terminating the other two contracts under which Faircloth was employed with Williams.
Faircloth filed against Williams and the insurance company a complaint in several counts, including: breach of contract; tortious interference with contract; and fraudulent termination of contract. The Court of Appeals affirmed the trial court's rulings on several motions for summary judgment. A.L. Williams & Associates, Inc. v. Faircloth, 190 Ga.App. 872, 380 S.E.2d 471 (1989). We granted Williams' petition for certiorari.
1. (a) The trial court granted Faircloth's motion for partial summary judgment on the issue of the enforceability of certain covenants not to compete, holding that they were overbroad and void. Williams contends that, despite any invalidity of the covenants, they authorize the elimination of Faircloth's entitlement to renewal commissions, as provided by the express terms of the contracts. The trial court rejected that contention, holding, notwithstanding such provision, that Faircloth's entitlement to renewal commissions was not forfeited by his violation of the invalid covenants. The Court of Appeals affirmed.
(b) The settled public policy of this state is that forfeitures are not favored. "While forfeitures are not unlawful, the law does not favor them, and all ambiguities in a contract are to be resolved against their existence." Equitable Loan & Security Co. v. Waring, 117 Ga. 599(8), 44 S.E. 320 (1903). It would be paradoxical to strike down a covenant as invalid, and at the same time uphold a forfeiture that is conditioned upon a violation of that very covenant. Hence, a forfeiture provision that is conditioned expressly upon an invalid covenant must be invalid in se. Any earlier propositions of law to the contrary are disapproved. 1 The trial court did not err.
2. (a) Faircloth alleged that Williams induced the insurance company to terminate his agency agreement with the insurance company, and that this amounted to tortious interference with the contractual relations between Faircloth and the insurance company. The trial court denied Williams' motion for summary judgment on this claim, and the Court of Appeals affirmed. 2
(b) The agency agreement between Faircloth and the insurance company provided:
This Agreement may be terminated, with or without cause, by either the Company or the Agent effective immediately upon the mailing of written notice of such termination. Agent [Faircloth] agrees that General Agent [Williams], who is not a party to this Agreement, has the express right to notify the Company to terminate this Agreement.
(c) As general agent, Williams was empowered expressly by Faircloth to bring about the termination of the agency agreement. For that reason, Williams' action pursuant to that authority cannot be "interference" of any kind, tortious or otherwise.
"It is generally held that no liability for procuring a breach of contract exists where the breach is caused by the exercise of an absolute right--that is, an act which a man has a definite legal right to do without any qualification." [Cits.] [Schaeffer v. King, 223 Ga. 468, 470, 155 S.E.2d 815 (1967).]
Having bestowed a power upon Williams, Faircloth will not be heard to complain of its exercise by Williams. The trial court should have granted Williams' motion for summary judgment as to this claim.
3. (a) In count one of his complaint, Faircloth alleged that the termination was a breach of contract. In count three, he alleged that Williams and the insurance company acted fraudulently in terminating his contracts. The trial court denied Williams' motion for summary judgment as to counts three and the Court of Appeals affirmed.
(b) Under the agency agreement and under the regional vice-president agreement, Faircloth's employment was terminable at will. Under the senior vice-president agreement, Faircloth's employment could be terminated by agreement of the parties, or "for cause." 3
(c) Georgia International Life Insurance Company v. Huckabee, 175 Ga.App. 343, 346-7, 333 S.E.2d 618 (1985). The agency agreement and the regional vice-president contract, being terminable at will, are terminable for any reason, or for no reason. 4
(d) "Any breach of contract must arise from the contract, and does not give rise to an action for tort, whether or not such breach was negligent or wilful." Hudson v. Venture Industries, 147 Ga.App. 31, 33(2), 248 S.E.2d 9 (1978). The allegations of count three cannot serve to convert a claim in contract into a discrete claim in tort. They add nothing of substance to the breach of contract claim of count one, and are mere surplusage to it. See Murphy v. American Civil Liberties Union of Georgia, 258 Ga. 637(4), 373 S.E.2d 364 (1988) (...
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