Ramey v. Combined Am. Ins. Co.

• Decision Date: 25 July 1962
• Docket Number: No. 13996,13996
• Parties: Robert Lee RAMEY, Jr., et al., Appellants, v. COMBINED AMERICAN INSURANCE COMPANY, Appellee.
• Court: Texas Court of Appeals

Page 523

359 S.W.2d 523

Robert Lee RAMEY, Jr., et al., Appellants, v. COMBINED AMERICAN INSURANCE COMPANY, Appellee.

No. 13996.

Court of Civil Appeals of Texas, San Antonio.

July 25, 1962.

John Peace, San Antonio, for appellants.

Clemens, Knight, Weiss & Spencer, F. N. Welmaker, San Antonio, Arrington, Healy & Wilson, Chicago, Ill., for appellee.

BARROW, Justice.

This is an appeal from a temporary injunction granted plaintiff, Combined American Insurance Company, pending a trial on the merits in a suit brought against Robert Lee Ramey, Jr., Harold L. Hooper, Clarence Vogel, Richard F. Wadzeck and Richard A. Reese, to enforce negative covenants in their contracts of employment with plaintiff. Ramey, Wadzeck and Reese had been employed as salesmen; Hooper, as district manager; and Vogel, as sales manager, and all had signed contracts of employmet which contained negative covenants. All had left the employ of plaintiff in December, 1961, and commenced selling the same type of insurance for another company. Following a hearing before the 37th District Court of Bexar County, an order was entered which provided that each of the defendants, during the pendency of this suit, not to exceed two years from the date of termination of each of their contracts, respectively, with the plaintiff, 'shall not nor shall they aid, or abet others to do so, in any of the following things:

'(a) Sell or attempt to sell any form of accident or health insurance to any policyholder of Combined American Insurance Company in any sales territory in which said defendant has heretofore worked for Combined American Insurance Company or in any sales territory over which said defendant heretofore had supervision for Combined American Insurance Company.

'(b) Induce or attempt to induce any policyholder of Combined American Insurance Company in any sales territory in which said defendant has heretofore worked for Combined American Insurance Company, or in any sales territory over which said defendant heretofore had supervision for Combined American Insurance Company, to cancel, lapse or fail to renew his policy with Combined American Insurance Company.

'(c) Induce or attempt to induce any of Combined American Insurance Company's district managers, sales managers, salesmen or employees to terminate their relation with Combined American Insurance Company or to sell accident or health insurance for any other company.'

Appellants assert that the trial court erred in granting the temporary injunction, because (1) the appellee failed to show a definite territory which was reasonable and necessary for protection of its business; (2) appellee failed to show that the restraint is reasonably necessary in order to protect it from undue advantage by appellants; (3) the order does not comply with Rule 683, Texas Rules of Civil Procedure, as no definite area is designated; and (4) the negative covenant in the contracts is too unconscionable to entitle appellee to equitable relief.

We are guided by a well-established rule in the character of appellate review required in passing upon the granting of a temporary injunction as distinguished from a permanent injunction. To warrant the issuance of a writ of temporary injunction, the plaintiff must show only a probable right and probable injury. Transport Co. of Texas v. Robertson Transports, Inc., 152 Tex. 551, 261 S.W.2d 549; Cargill v. Buie, Tex.Civ.App., 343 S.W.2d 746; 31 Tex.Jur.2d Sec. 224. The judgment of the trial court should not be overturned pending a trial on the merits unless the record discloses a clear abuse of discretion. Texas Foundries v. International Moulders & Foundry Workers Union, 151 Tex. 239, 248 S.W.2d 460; Mosimann v. Employers Casualty Company, Tex.Civ.App., 354 S.W.2d 171.

The rule in Texas is that an agreement on the part of an employee not to compete with his employer after termination of the employment is in restraint of trade and will not be enforced unless the terms are reasonable. Where the public interest is not directly involved, the test for determining the validity of the covenant as written is whether it imposes upon the employee any greater restraint than is reasonably necessary to protect the business and good will of the employer. Weatherford Oil Tool Co. v. Campbell, 161 Tex. 310, 340 S.W.2d 950.

Each of the appellants executed a contract while going through a training program. Each contained a covenant providing essentially as follows: that in consideration of the company's hiring the salesman, sales or district manager, as the case might be, and training him, said employee covenanted that upon terminating his employment he would not, for a period of two years, (1) sell accident or health insurance to any of the Company's policyholders in the Sales Territory; (2) induce, or attempt to induce, any of the Company's policyholders in the Sales Territory, to cancel, lapse or fail to renew their policies with the Company; or (3) induce, or attempt to induce, any of the Company's employees to terminate their relationship with the Company, or to sell insurance for any other company. The employee also agreed that he would not aid or abet others to do any of the above acts. The Sales Territory of the three salesmen was defined in their contract as the State of Texas, but they were to work only in such parts thereof as would be mutually agreed upon, from time to time, by the salesman and his district or sales manager. The Sales Territory of Hooper and Vogel was shown by a list of cities attached to the contract of each.

The sales technique used by appellee and taught appellants was a 'cold canvas' approach. That is, several salesmen would enter a city, work up and down a street calling on various business houses. They would sell a pre-signed policy at a very low rate, which expired in six months. Just prior to the expiration date, the...