Miller v. Chicago Portrait Co.

• Decision Date: 09 May 1917
• Docket Number: (No. 5909.)
• Citation: 195 S.W. 619
• Parties: MILLER v. CHICAGO PORTRAIT CO.
• Court: Texas Court of Appeals

195 S.W. 619

MILLER v. CHICAGO PORTRAIT CO.

(No. 5909.)

Court of Civil Appeals of Texas. San Antonio.

May 9, 1917.

Rehearing Denied June 6, 1917.

Appeal from District Court, Bexar County; S. G. Tayloe, Judge.

Suit by the Chicago Portrait Company against C. I. Miller. From a decree for plaintiff, defendant appeals. Reversed and remanded.

J. F. Carl, P. H. Swearingen, Jr., and Geo. G. Clifton, all of San Antonio, for appellant. John T. Evans, of Chicago, Ill., and Norton & Brown, of San Antonio, for appellee.

FLY, C. J.

This is a suit by appellee to restrain appellant from engaging in the same business in which appellee is engaged or in a competing business in the state of Texas for a period of one year from January 16, 1917. The business of appellee is that of enlarging photographs into portraits finished in oil, crayon, and pastel, and in selling frames and other merchandise in connection with said business. It was alleged that appellee, on or about January 1, 1916, entered into a contract with appellant whereby the latter agreed to perform certain stipulated duties, and continued to perform such duties until January 16, 1917, and engaged in the same business in competition with appellee in violation of his agreement as follows:

"Second party agrees, as a special consideration for the obligation assumed by first party herein and the commissions to be paid to him under this agreement, that he will not for a period of one year from the date of the termination of his employment hereunder, without the written consent of first party so to do, (a) engage in the same business as that conducted by him for first party or engage in any competing business in the territory or any parts thereof in which second party was employed for the year last preceding the termination of his employment hereunder; (b) employ directly or indirectly, or aid, assist, encourage, advise or direct any other person, firm or corporation in employing in any territory or business for said period of one year immediately succeeding the termination of his employment hereunder any person or persons at any time employed by first party, unless such party shall have been out of the employ of the first party for six months; (c) knowingly, intentionally or willfully aid, assist encourage, advise or direct, directly or indirectly, any person or persons who may be employed by first party for the year next succeeding the termination of the second party's employment hereunder, to quit or abandon such employment by the company during said period, for the purpose of entering into any other business or employment whatever."

The court, upon a hearing, granted a temporary writ of injunction as prayed for.

It was agreed that the contract was duly executed by the parties, and that it had been breached by appellant as to the stipulations in the paragraph hereinbefore copied, and that he is insolvent.

The only questions to be solved in this case are as to whether a contract not to enter into the same business for a year as that in which appellant was engaged is valid and binding, and, if so, if the provision for liquidated damages for a breach does not take the case out of the jurisdiction of a court of equity, and thus prevent the issuance of a writ of injunction.

The authorities seem to establish beyond question that where a contract is made not to engage in a rival business in a certain locality and provision is made for the payment of a stipulated sum on a breach, such amount is treated as stipulated damages, rather than as a penalty. However, the weight of authority seems to be that, although liquidated damages are provided for in such contracts, such provision does not oust equity jurisdiction unless it appears from the contract that it was the intention of the parties thereto that the damages should be the only remedy, and that no equitable remedy was contemplated. Wilkinson v. Colley, 164 Pa. 35, 30 Atl. 286, 26 L. R. A. 114; Harris v. Theus, 149 Ala. 133, 43 South. 131, 10 L. R. A. (N. S.) 204, 123 Am. St. Rep. 17; Ropes v. Upton, 125 Mass. 258; Diamond Match Co. v. Roeber, 106 N. Y. 473, 13 N. E. 419, 60 Am. St. Rep. 464; McCurry v. Gibson, 108 Ala. 451, 18 South. 806, 54 Am. St. Rep. 177; Heinz v. Roberts, 135 Iowa, 748, 110 N. W. 1035.

But as said by the New York Court of Appeals in the cited case of Diamond Match Co. v. Roeber:

"It is, of course, competent for parties to a covenant to agree that a fixed sum shall be paid in case of a breach by the party in default, and that this should be the exclusive remedy. * * * It is a question of intention, to be deduced from the whole instrument and the circumstances; and if it appear that the performance of the covenant was intended, and not merely the payment of damages in case of a breach, the covenant will be enforced."

In the case of Wills v. Forester, 140 Mo. App. 321, ...