National Linen Service Corp. v. Clower

• Citation: 175 S.E. 460,179 Ga. 136
• Decision Date: 11 July 1934
• Docket Number: 9992.
• Parties: NATIONAL LINEN SERVICE CORPORATION v. CLOWER et al.
• Court: Georgia Supreme Court

175 S.E. 460

179 Ga. 136

NATIONAL LINEN SERVICE CORPORATION v. CLOWER et al.

No. 9992.

Supreme Court of Georgia

July 11, 1934

Syllabus by the Court.

1. A restrictive covenant whereby an employee agrees that he will not engage in a competitive business either for himself or in behalf of another after the termination of his contract of employment is, if valid, assignable with the business of his employer; and the more especially is this true where the contract embracing such restrictive covenant contains a stipulation that its provisions shall extend to the successors and assigns of the employer.

2. The petition in this case alleged facts sufficient to show at least an equitable assignment of the restrictive covenant and in the absence of other obstacle, the plaintiff assignee was entitled to injunction to prevent its continuous violation.

3. The covenant referred to was limited both as to time and territory, and was not objectionable as attempting an unreasonable restraint of trade or as unwarrantably infringing the employee's right to pursue a chosen occupation.

4. Under the allegations of the petition, the plaintiff could not have obtained adequate relief by an action for damages and injunction was an available remedy.

5. This was not a suit to enjoin a breach of contract for personal services, but was an action to restrain a violation of an agreement not to perform like services in the behalf of any one in a designated territory for a period of twelve months after termination of the contract of employment. In such case it is immaterial that the services which the employee has agreed not to perform for himself or another may not be of peculiar merit or character.

6. It is unlawful for a third person knowingly to induce one to break his contract with another or to aid him in its breach and in a proper case an injunction may be granted to prevent such conduct.

7. The petition stated a cause of action for injunction against both the former employee and another person alleged to have been aiding and abetting him in the violation of his agreement. The court erred in dismissing the petition.

Error from Superior Court, Fulton County; G. H. Howard, Judge.

Suit for injunction by the National Linen Service Corporation against W. A. Clower and another. To review a judgment dismissing its petition as to both defendants, plaintiff brings error.

Reversed.

On May 4, 1928, W. A. Clower made a contract with Atlanta Linen Supply Company, in which he agreed to work for this company for an indefinite period to be terminated at the will of either party on five days' notice, and in which he stipulated that for the period of one year next following the termination of his service under such contract he would not in any capacity engage in the same business within the limits of Fulton county. National Linen Service Corporation, as an alleged assignee of Atlanta Linen Supply Company, brought this suit to enjoin Clower from violating the restrictive covenant, and to enjoin Henry Grady Hotel Company from aiding and abetting him in so doing. The court sustained a general demurrer filed by Clower, and an oral motion made by the Hotel Company, and dismissed the petition as to both defendants. To this judgment the plaintiff excepted.

More specifically stated, the material provisions of the agreement between Clower and Atlanta Linen Supply Company were as follows:

"Whereas the said corporation [Atlanta Linen Supply Company] is engaged in what is known as the towel and linen supply business in said county [Fulton County], and has built up and established a valuable and extensive trade in the same in said county; and whereas said routes have been established and maintained at a great expense to said corporation and are of great value to it; and whereas said W. A. Clower desires to enter the employ of it; and whereas great loss and damage will be suffered and sustained by it if during the term of his employment, or upon the termination thereof, said W. A. Clower should, for himself or on behalf of any other person, persons, partnership, or company by whom he may be subsequently employed, call for and deliver or solicit laundered or unlaundered towels, etc., within the territory covered by said Atlanta Linen Supply Company, during his employment by said corporation, for which loss and damage by reason of his financial circumstances the said W. A. Clower could not be compelled to respond in damages in an action at law; Now therefore, the said parties hereto, in consideration of the premises and covenants and agreements hereinafter contained, by them respectively to be kept and performed, covenant and agree as follows:

1. The said corporation has agreed and does hereby employ the said W. A. Clower as a salesman and driver, and hereby agrees to pay said $28 per week, or such wages as may hereafter from time to time be agreed upon.

2. Said W. A. Clower covenants and agrees that he will at all times faithfully and industrially perform all the duties the said corporation may require of him, and that he will devote his entire time and attention to them; that he will keep just and true accounts with all customers and said corporation, and will turn in and settle for all collections, on demand; and that he will be responsible for all cabinets, towels, linens, etc., that may come into his possession by reason of his said employment.

3. Said W. A. Clower hereby further expressly covenants and agrees, which covenant and agreement is of the essence of this contract, that at no time during the term of his said employment, or for a period of one year immediately following the termination of his employment by said corporation, will he for himself, or on behalf of any other person, persons, partnership, or company, call for and deliver towels, etc., to any customer of said corporation; nor will he in any way directly or indirectly, for himself or on behalf of or in conjunction with any other person, persons, or company, solicit, divert, or take away any such customers or the business or patronage of any such customers of said corporation during aforesaid time; and further covenants that at no time during the aforesaid period of one year will he for himself, or on behalf of any other person, persons, partnership, or company, call for or deliver towels, etc., aforesaid, or will he directly or indirectly for himself or on behalf of or in conjunction with any other person, persons, partnership, or company, solicit or attempt to solicit business or patronage of any persons whatsoever, within the territory of Fulton County, State of Georgia, and that upon the termination of his employment, either at the request of said corporation or upon his voluntary resignation, he will promptly turn in a complete list to said corporation of all customers on his route, and any cards with customers' names, or other memoranda thereof, and that he will not disclose any of the names or addresses of said customers, and further agrees to assist any new employee whom the said corporation may select to become acquainted with their routes.

4. It is hereby mutually agreed that said employment may be terminated by either party upon giving one week's notice to the other.

5. The provisions of this contract shall extend to the successors and assigns of the corporation."

On September 1, 1928, National Linen Service Corporation made an agreement with Atlanta Linen Supply Company, whereby the latter as party of the first part conveyed to the former as party of the second part "all linens, cabinets, machinery, tools, fixtures, appliances, and apparatus employed by first parties as a part of their business in Atlanta, Georgia, including live stock, harness, drays, garage equipment, office furniture and fixtures, situated and located at No. 289 Simpson Street, Atlanta, Georgia, and No. 1306 Broadway Street, Macon, Georgia, together with all trade-marks, inventions, processes now in the possession of parties of the first part or owned and controlled by them, and leased and in the possession of customers, and the good will of parties of the first part as a going concern; together with their cash on hand, accounts receivable and supplies; together with its lease contracts, corporate name, charter, choses in action of every description, and every other form of asset owned or controlled by the parties of the first part as a part of the businesses conducted in the name of Atlanta Linen Supply Company and Macon Linen Supply Company." On the date of the execution of this agreement W. A. Clower was still in the employment of Atlanta Linen Supply Company, and from that date to June 6, 1933, he did continue in the employ of petitioner and did continue to work for petitioner under the terms of his contract with Atlanta Linen Supply Company; this being the only contract between Clower and petitioner. This contract "was among the contracts the Atlanta Linen Supply Company had with its employees and agents and delivered to National Linen Service Corporation," upon the closing of the transaction between these companies on September 1, 1928. On or about June 6, 1933, Clower voluntarily left petitioner's employment.

The petition further alleged: "That the duties of the defendant W. A. Clower as a salesman and driver for your petitioner required him to make frequent trips among the customers of petitioner, who reside in Fulton County, and that in his capacity as salesman and driver he had knowledge of petitioner's business, and that he had contact with petitioner's customers and dealt with them not only as a salesman and driver but also as an agent of petitioner, his position as such being generally known throughout the trade of petitioner. Petitioner further shows that the duties of the...