National Consultants, Inc. v. Burt

• Citation: 366 S.E.2d 344,186 Ga.App. 27
• Decision Date: 08 February 1988
• Docket Number: 75813,Nos. 75812,s. 75812
• Parties: NATIONAL CONSULTANTS, INC. v. BURT et al. BURT v. NATIONAL CONSULTANTS, INC.
• Court: United States Court of Appeals (Georgia)

Page 344

366 S.E.2d 344

186 Ga.App. 27

NATIONAL CONSULTANTS, INC. v. BURT et al.

BURT v. NATIONAL CONSULTANTS, INC.

Nos. 75812, 75813.

Court of Appeals of Georgia.

Feb. 8, 1988.

Rehearing Denied Feb. 24, 1988.

Certiorari Granted April 28, 1988.

Thomas J. Browning, Marietta, Jerry A. Landers, Jr., Atlanta, for appellant.

George W. Carreker, Marietta, for appellees.

BIRDSONG, Chief Judge.

Appellees/plaintiffs (hereinafter called Burt and/or Evans) each brought actions against the appellant/defendant, National Consultants, Inc. (hereinafter called National), arising out of an alleged breach of contract between the parties; Burt and Evans were seeking damages for nonpayment of renewal commissions. The cases originally were filed as separate actions in the superior court. After filing its answer, National amended its answer to add a counterclaim for those commissions paid to Burt and Evans, which National alleges were wrongfully claimed by Burt and Evans because they were in breach of their contract with National. The two cases were consolidated and were tried before a jury. The jury returned a verdict in favor of Burt and against National in the amount of $27,000, and in favor of Evans and against National in the amount of $48,816. National filed a motion for a new trial in both cases, and Burt filed her motion for judgment notwithstanding the verdict and motion for new trial. The trial judge denied all of these motions (and had previously denied Burt's motion for a directed verdict made at the close of the evidence). National has appealed asserting three enumerated errors, including the failure of the trial judge to grant its motion for a new trial. Burt then filed a cross-appeal alleging that the court erred in failing to grant her motion for a new trial and in failing to grant her motion for judgment notwithstanding the verdict. Held:

Case No. 75813 (The Cross-Appeal)

1. The order of the trial judge denying National's motion for new trial and Burt's motion for judgment notwithstanding the verdict was filed on July 7, 1987. This order was later amended, on October 12, 1987, to reflect that Burt's motion for a new trial was also denied, as this fact had been omitted, apparently due to inadvertence, from the original order. National filed its appeal to the order on July 10, 1987, and mailed Burt notice thereof on July 16, 1987. Burt filed her cross-appeal on August 17, 1987, and twice amended it.

OCGA § 5-6-38(a) pertinently provides that "appellee may institute cross appeal by filing notice thereof within 15 days from service of the notice of appeal by the appellant." OCGA § 5-6-32(a) states that "[s]ervice of any ... notice may be perfected either before or after filing with the clerk ... and when service is made by mail it shall be deemed to be perfected as of the day deposited in the mail." Further, OCGA § 9-11-6(e) provides that "[w]henever a party has the right or is required to do some act or take some proceedings within a prescribed period after the service of a notice ... other than process, upon him, and the notice ... is served upon him by mail, three days shall be added to the prescribed period." Construing these statutory rules in the manner most favorable to Burt, and further considering that the record before us reflects no time extension for the filing of this cross-appeal within the meaning of OCGA § 5-6-39(a)(2), we find that the cross-appeal was not timely filed. The cross-appeal therefore is dismissed and will not be considered by this court. OCGA § 5-6-48(b)(1).

Case No. 75812 (The Main Appeal)

2. Appellant/National's first enumerated error is that the trial court erred in striking the typewritten portion of the General Agent's contracts (the two addendums) which were admitted at trial as exhibits of the plaintiff/appellees.

Plaintiff/appellees, Burt and Evans, were originally employed with National pursuant to an agent's contract commonly referred to as a Career Shop Contract. Pursuant to the terms of the Career Shop Contracts, each agent was to receive, as a commission, 40 percent of the original premium paid on each policy of insurance sold. After the first year premium was paid, they also would receive ten percent of any renewal premiums paid on each policy. Managers in addition were entitled to a five percent "override" of his team's business. Appellees were guaranteed to receive these renewal commissions for as many years following termination of their employment with National as equalled their years of employment with the company. Thus, under this particular contract, if an agent worked for the company for five years, the agent would be guaranteed receipt of his or her commission from renewal premiums for five years. The Career Shop Contract makes no express reference to and contains no express restriction of agents working for another insurance company, although this apparently was the company policy of National. In August 1983, both appellees signed agency contracts with another company, as they believed their employment with National was in jeopardy. In November 1983, both appellees signed new agent contracts with National. These printed contracts, known as General Agents Special Vested Commission Contracts, contained a typewritten addendum thereto which provides as follows: "It is understood that [Burt/Evans] will receive renewals under her Career Shop Contract for [five years as to Burt] [six years as to Evans] or as long as she does not represent any other insurance company other than United American and must produce thirteen (13) applications per quarter, and does not take any other employment, and does not do anything that is detrimental to National Consultants." (Emphasis supplied.) In March 1984, Evans was fired from National, and on March 30, 1984, Burt resigned. Both appellees thereafter made demands for their commissions, but to no avail.

National maintains that appellees grew concerned with their position at National and with certain company policies during the time of their Career Shop contracts. Noting this concern, National asserts that it offered both ladies an opportunity to enter a General Agent's contract. Appellees maintain that, although they each signed a General Agent's contract and shortly thereafter an addendum, the addendum was signed by Evans, who felt compelled to sign it, and by Burt while she was upset. The evidence is in conflict as to whether the addendums were physically attached to the General Agent's contracts. The addendums were not prepared by an attorney. Appellee Evans testified that in response to her question concerning the scope of the typewritten addendum she was first informed that she could do no volunteer work but then was told she could do volunteer work but could not work any place else. Each addendum was substantially similar and on its face modifies paragraph 17 of the General Agent's contracts. Paragraph 17 pertinently provided that "any commissions or renewal commissions due or to become due the agent under any previous contracts or agreements shall not be affected hereby."

At the conclusion of the evidence, the trial judge ruled that the addendum in each of the appellees' General Agent's contract is illegal, as it is in restraint of trade and contrary to Georgia law. The court concluded that as the addendum is contrary to law it therefore did not raise "a contract issue that can be presented as a factual dispute to a jury," and further that "the [appellees] as a matter of law were not in breach [of contract] at the time of the execution of the contract, because the [addendum's] provisions that [National] urges they were in breach of [are] contrary to law." Subsequently, the trial judge stated that "the addendum is not adjusted as to time, as to place, as to territory, and that it totally prohibits either of these women from seeking any further employment ... [a]nd that it is conjunctive, not disjunctive."

The Georgia Constitution declares that any contract or agreement which "may have the effect of or which is intended to have the effect of defeating or lessening competition" is unlawful and void. Ga. Const. 1983, Art. III, Sec. VI, Par. V. Further, OCGA § 13-8-2 in part provides that: "(a) A contract which is against the policy of the law cannot be enforced. Contracts deemed contrary to public policy include but are not limited to ... (2) Contracts in general restraint of trade...." (Emphasis supplied.)

It is well settled contract law that the parties thereto are free to contract about any subject matter, on any terms, unless prohibited by constitutional law, statutory law, or public policy. See Petroziello v. U.S. Leasing Corp., 176 Ga.App. 858, 860, 338 S.E.2d 63. However, under the facts of this case, if the addendums are determined even to be in partial restraint of trade they could not meet the "rule of reason" (test of reasonableness) to which this court referred in Club Properties v. Atlanta Offices-Perimeter, 180 Ga.App. 352(3), 348 S.E.2d 919, particularly as the addendums are not reasonably limited either as to the scope of territorial applicability (the restrictions appear to be enforceable worldwide), or as to the nature of the proscribed activities (all conceivable forms of other employment are restricted). See generally McNeal Group v. Restivo, 252 Ga. 112, 311 S.E.2d 831 (restrictive covenant invalid which in effect prohibited employee from work for any competitor in any capacity); Ward v. Process Control Corp., 247 Ga. 583, 277 S.E.2d 671 (covenant held to be unreasonable regarding the scope of the prohibited business activities); Horne v. Drachman, 247 Ga. 802, 805, 280 S.E.2d 338 (covenant prohibited employee from being an employee in any capacity with a competitor); Howard Schultz & Assoc. v. Broniec, 239 Ga. 181, 236 S.E.2d 265 (territorial restrictions too broad).

Scrutiny of the addendums signed by Burt and Evans reveals that they do not mirror provisions previously held by our cour...