Racine v. Bender
| Decision Date | 06 January 1927 |
| Docket Number | 20079. |
| Citation | 141 Wash. 606,252 P. 115 |
| Parties | RACINE v. BENDER et ux. |
| Court | Washington Supreme Court |
Department 2.
Appeal from Superior Court, King County; Ronald, Judge.
Action by Samuel F. Racine, doing business under the name of Samuel F. Racine & Co., against G. D. Bender and his wife. From a judgment for defendants, plaintiff appeals. Reversed, with instructions.
George W. Williams and Philip D. Macbride, both of Seattle, for appellant.
George W. Korte and J. Knox McDowall, both of Seattle, for respondents.
The appellant, in 1909, opened offices in Seattle, where he has continuously since maintained a school of accounting, as well as the business of a certified public accountant. In 1920 the respondent, who had previously thereto taken a course in appellant's accounting school, accepted employment with him as a certified public accountant at a salary of approximately $150 per month. The employment lasted five years. During that time he became the leader in his branch of the auditing work, and his salary was increased to $250 per month. At the time of employment nothing was said between the parties as to any restrictions upon future employment which respondent might engage in, but at the end of each week during the employment he was required to prepare a report showing the clients of appellant for whom work was performed by respondent, as well as the number of hours. At the bottom of the report, and immediately above the signature of the respondent, appeared the following:
It will be noticed that the warranty recites an agreement for a 'period of three years.' The first reports contained a provision for only 18 months, but this was changed to 'three years' long prior to the cessation of employment by appellant. After the services of respondent were terminated, he opened a school of accountancy and offices as a certified public accountant, and sent out notices to this effect, some of which were sent to appellant's clients, and began to perform services for many of appellant's clients.
Appellant then brought this action, asking for an injunction against the respondent to prevent him from doing business with appellant's former clients, and to enforce the provisions of the contract with reference thereto. Upon the hearing, evidence showed that the business of a certified public accountant is such that the person who actually performs the labor incident thereto acquires an intimate knowledge of the business of the client, preparing audits of the business, income tax returns, and other matters very confidential in their nature, and vital to the business itself. It showed also that appellant has spent some 17 years in building up this business, and that he employs a number of men to do the actual work at the clients' places of business; that, as work is to be done, he sends an accountant to do the work, but, as the client learns to know the accountant, the desire of the client to have the particular accountant do his work increases to the point where it is almost impossible to change the accountant, owing to the confidential knowledge he has of all the important and vital matters concerning the business; that many times the appellant has no personal acquaintance with his clients, but they come to him because of his reputation and ability to have in his employ careful accountants, capable of doing the client's work, and the accountant in most cases is the only point of contact between the appellant and the client.
The evidence disclosed that at least 22 of appellant's former clients changed to respondent when he commenced business for himself, and that substantial damages has resulted to appellant.
The trial court held that the warranty contained in the weekly report signed by respondent was not a part of the contract. Respondent testified that, while he read it many times, he did not consider it had anything to do with his employment, and that at a luncheon when he was present the appellant had described the provisions thereof as having no legal effect, and being placed there for the moral effect alone. The court thought that, since the warranty was contained in the report for the week's work just finished, it referred to that week's work only, and was unenforceable since the services were already performed. It concluded that it could not be effectual as to the next week's work or any future services. This distinction is too shadowy to be upheld. It may be that as to the first week's labor the warranty could not be effective, but, when each week respondent signed the warranty which expressly provides in the first three provisions in words that no man may misunderstand, '(a) my entire time shall be devoted; (b) during such employment I shall not do; and (c) either during or after leaving such employment I will not take any action,' such a warranty contained in each report was certainly a basis and a part consideration for future employment. Counsel for respondent has cited a number of cases involving mercantile transactions where the courts have held that invoices accompanying delivery of goods pursuant to the previous contract, and containing modifications and qualifications thereof, are not binding upon the party purchasing, and are denominated by the courts as mere announcements in terrorem. Their application to the facts here, where respondent signed each week for 260 weeks a warranty that he would not do certain things, is not apparent. It is a part of the contract of employment, and must be up-held, if it be not contrary to law. This brings us to the serious point in the case.
It is respondent's contention that the contract is void, because it is against public policy, in that: (1) It unduly restricts respondent's liberty of contract; and (2) it unduly prevents the public from availing itself of his services. The provisions which are said to be unduly restrictive are sections 1, 2, and 3 of subdivision (d), as follows:
Roughly construed, these provisions prohibit respondent from soliciting or doing, within a period of 3 years, any work for any of those people whose desire for his services comes because through his work as a representative of the appellant he was enabled to acquire a knowledge of their business, or become intimate with the members of the staff of such business. This construction appears to be recognized by both parties to the controversy. Construed in this manner let us see to what extent the restrictions go. In the broadest sense the restriction is nothing more than to...
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