Neil v. Pennsylvania Life Ins. Co.

• Decision Date: 22 September 1970
• Docket Number: No. 42390,42390
• Citation: 474 P.2d 961
• Parties: 1970 Trade Cases P 73,336 Charles Edward NEIL, James Chowning Henderson and Robert W. Nordyke, Plaintiffs in Error, v. PENNSYLVANIA LIFE INSURANCE COMPANY, a corporation, Defendant in Error.
• Court: Oklahoma Supreme Court

Page 961

474 P.2d 961

1970 Trade Cases P 73,336

Charles Edward NEIL, James Chowning Henderson and Robert W Nordyke, Plaintiffs in Error, v. PENNSYLVANIA LIFE INSURANCE COMPANY, a corporation Defendant in Error.

No. 42390.

Supreme Court of Oklahoma.

Sept. 22, 1970.

Syllabus by the Court

1. Where plaintiff sues for damages sustained because defendant allegedly obtained a temporary restraining order in an attempt to enforce a void contract, and plaintiff is not required to rely on a void contract to recover, his claim for damages may not be defeated on the ground that plaintiff's action arose out of an illegal contract in which both parties were in pari delicto.

2. Uncertainty as to the amount of damages does not prevent recovery where it clearly appears that loss of profits has been suffered, and it is proper to determine what the reasonable loss probably was from the best evidence the nature of the case will permit.

Appeal from the Court of Common Pleas, Oklahoma County, Dwain W. Box, Judge.

Action by plaintiffs, Neil, Henderson and Nordyke, for damages allegedly sustained by reason of the improper procurement of a temporary restraining order against them by defendant, Pennsylvania Life Insurance Company. From judgment sustaining defendant's demurrer to plaintiffs' evidence, plaintiffs appeal. Judgment reversed and remanded with directions.

Robert H. Vaughn and Floyd L. Martin, Jr., Oklahoma City, for plaintiffs in error.

Bruno H. Miller, and Fenton, Fenton, Smith, Reneau & Moon, Oklahoma City, for defendant in error.

JACKSON, Justice:

Plaintiffs Neil, Henderson, and Nordyke are former insurance agents or 'supervisors' in Oklahoma of Pennsylvania Life Insurance Company, defendant. They quit working for the defendant and obtained employment as insurance agents for The Paul Revere Life Insurance Company. Pennsylvania Life Insurance Company filed an injunction suit against Neil, Henderson and Nordyke to prevent them from soliciting insurance contracts for The Paul Revere Company which was allegedly in competition with Pennsylvania Life. The contracts between Pennsylvania Life and Neil, Henderson, and Nordyke provided that these agents would not directly or indirectly represent or be connected with any other health and accident or life insurance company engaged in business competitive to Pennsylvania Life for a period of one year following the termination of their services with Pennsylvania Life in the territory where these agents represented Pennsylvania Life.

The instant action, a damage suit, was filed because the District Court of Oklahoma County issued (what Plaintiffs call) a Temporary Restraining Order effective for two weeks pending a hearing upon the petition for injunction. These agents, as defendants in that case and plaintiffs herein, were restrained from soliciting and selling policies of sickness and accident, hospitalization and similar forms of insurance for Paul Revere, or any other company engaged in a similar and competitive business with Pennsylvania Life. The Temporary Restraining Order expired by its own terms at the end of the two weeks period, the injunction suit was not tried, but was dismissed after one year following the termination of their employment with Pennsylvania Life.

After plaintiffs had presented evidence in support of their action for damages the trial court sustained a demurrer to their evidence upon the following grounds as announced from the bench.

'All right, Gentlemen, I am going to sustain the demurrer on two grounds. Number one, that it arises out of an illegal contract and that the parties hereto both, or all parties entered into that contract so therefore they cannot avail themselves of any benefits. They are Pari Delicto as far as both parties are concerned, they both entered into it. Number Two, I am going to sustain his demurrer, a general demurrer on the grounds that nowhere have you set out and have you given this Court any basis for determining any absolute damages these gentlemen suffered.'

The journal entry sustaining Pennsylvania Life's demurrer to plaintiffs' evidence substantially conforms to the Judge's pronouncement from the bench, but added:

'That said actions (the instant case) were brought under or in conjunction with certain employment contracts executed by and between said parties, and which plaintiffs contend and have alleged are invalid and void as being in restraint of trade, and the same having been asserted by plaintiffs in their behalf, said plaintiffs are 'in pari delicto' with defendant in having entered into said allegedly invalid contracts and are therefore precluded from bringing an action for damages based thereon, or in conjunction therewith, whereby it becomes necessary to prove such invalid contracts in order to maintain the action, and that said demurrer should further be sustained for that reason.'

We find no merit in the conclusions that plaintiffs asserted their employment contracts with Pennsylvania Life in Their behalf and that it became necessary for plaintiffs to prove such invalid contracts in order to maintain their action.

Plaintiffs' action is not based upon invalid contracts but is based upon damages sustained because defendant, Pennsylvania Life, caused the temporary restraining order to be issued. Plaintiffs' reference to their agency contracts with Pennsylvania Life in their petition was not for the purpose of obtaining relief under the contracts but for the purpose of explaining why the temporary restraining order was improperly issued. It is the defendant in this case which is attempting to utilize the unlawful contracts to justify the restraining order and as a shield against the damages allegedly sustained by plaintiffs. In Hunt v. W. T. Rawleigh Medical Co., 71 Okl. 193, 176 P. 410, we said this court will refuse to render assistance to Any party in any stage of the proceedings in which such illegality appears. See also Holden v. Lynn, 30 Okl. 663, 120 P. 246; Thomas v. Owens, 206 Okl. 50, 241 P.2d 1114, and 17 C.J.S. Contracts § 276.

The contract restraint upon the plaintiffs from engaging in their business for a period of one year was void. 15 O.S.1961, Sec. 217, E. S. Miller Laboratories v. Griffin, 200 Okl. 398, 194 P.2d 877, 3 A.L.R.2d 519.

We find no merit in the pari delicto theory. We are supported in this view by another principle of law to the effect that where the law that creates the illegality in the transaction was designed for the coercion of one party and the protection of the other, there is no party of delictum between the parties, and the one protected by the law may resort to the law for redress. Local Federal Savings & Loan Ass'n of Oklahoma City v. Sheets, 191 Okl. 439, 130 P.2d 825; Turney v. J. H. Tillman Co., 112 Or. 122, 228 P. 933; 17 C.J.S. Contracts § 278b. The statute under consideration in this case, 15 O.S.1961, Sec. 217 provides:

'Every contract by which one is restrained from exercising a lawful profession, trade or business of any kind, otherwise than as provided in the next two sections, is to that extent void.'

Undoubtedly this section of the statute was adopted for the protection of individuals engaged in lawful professions, trades, and business, and for the benefit of the public.

The facts in this case are not the same as in Tatum v. Colonial Life and Accident Ins. Co. of America (1970), Okl., 465 P.2d 448. In that case the contract required a 'handsoff' policy with respect to those whom the agent knew were 'insureds' of the plaintiff company under outstanding group policies. The contract in that case required the agent to refrain from inducing, or attempting to induce known insureds of the plaintiff to cancel, lapse, or fail to renew their policies with the plaintiff company. We found the provisions of that contract were not in violation of 15 O.S.1961, Sec. 217.

The second ground for sustaining the demurrer to plaintiffs' evidence is that the evidence did not give the court any basis for determining any absolute damages suffered by plaintiffs.

There is evidence that plaintiffs sold some insurance for The Paul Revere Life Insurance Company and earned commissions both before and after the temporary restraining order was issued. It does not appear from the record that either of them was earning $150.00 per week as they contend, nor what their expenses, if any, would have been if they had been working. We have held that it is proper to determine the reasonable probable loss where it clearly appears that a loss of profits has been suffered. Firestone Tire & Rubber Co. v. Sheets, 178 Okl. 191, 62 P.2d 91; Muskogee Electric Traction Co. v. Eaton, 49 Okl. 344, 152 P. 1109; and see discussion and cases cited as to Certainty of Damages in 6 Okl. Law Rev. page 301. We hold that the trial court erred in sustaining defendant's demurrers to the evidence presented by plaintiffs.

Since the case must be remanded for new trial we feel that it may be...