Reed, Roberts Associates, Inc. v. Bailenson

• Decision Date: 11 May 1976
• Docket Number: No. 36799,36799
• Citation: 537 S.W.2d 238
• Parties: REED, ROBERTS ASSOCIATES, INC., a Corporation, Plaintiff-Respondent, v. Stewart BAILENSON, Defendant-Appellant. . Louis District, Division One
• Court: Missouri Court of Appeals

Page 238

537 S.W.2d 238

REED, ROBERTS ASSOCIATES, INC., a Corporation, Plaintiff-Respondent, v. Stewart BAILENSON, Defendant-Appellant.

No. 36799.

Missouri Court of Appeals, St. Louis District, Division One.

May 11, 1976.

Shifrin, Treiman, Bamburg & Dempsey, Richard B. Dempsey, Clayton, for defendant-appellant.

Lewis, Rice, Tucker, Allen & Chubb, Mark T. Keaney, St. Louis, for plaintiff-respondent.

WEIER, Presiding Judge.

This is an appeal from a decree enjoining defendant for a period of three (3) years commencing on January 8, 1974 from (1) soliciting or acting to solicit any of plaintiff's customers, (2) making statements to plaintiff's clients to divert their business from plaintiff, and (3) engaging in consultation service in unemployment compensation and workmen's compensation matters within the states of Michigan, Illinois or Missouri. Appellant seeks a reversal of the trial court's judgment on the theory that the non-competition contract is void for lack of consideration either as an original contract or as a modification, that it is unreasonable and therefore should not be enforced in a court of equity, and that it is no longer in force since defendant has not been an employee of plaintiff's company since 1971. We affirm the findings of the trial court.

There is little conflict in the evidence. Plaintiff is engaged in the nationwide business of rendering unemployment insurance advice and service to private employers. Defendant commenced evployment in the service department of plaintiff's St. Louis office on August 1, 1967. Prior to this initial employment he signed a non-competition agreement similar to the one in dispute. Defendant's duties included interviewing clients, performing annual audits, and helping clients in special problem situations. Defendant was moved to plaintiff's Chicago office in the summer of 1971 and finally to its Detroit office in May of 1972. During his employment defendant signed a total of three non-competition agreements, the original agreement dated July 24, 1967, the second dated December 13, 1968, and the third, June 11 and 14, 1973. Until his resignation on January 8, 1974 defendant's duties with plaintiff remained substantially the same.

Defendant is currently employed as vice-president of the service department of James E. Frick, Inc., plaintiff's competitor. In this position defendant performs services on a nationwide scale similar to those he performed for plaintiff. Defendant has performed work in Missouri, Illinois, and Michigan, as well as other states, since he began his present employment. In addition, while in his present position defendant presented a program on unemployment compensation in June of 1974 to a hospital administrators meeting in St. Louis at which clients of plaintiff were present.

The June 1973 Non-Competition Agreement which was enforced by the trial court provides in part:

'I, the undersigned, do acknowledge that I have been employed by Reed, Roberts Associates, Inc. (Reed, Roberts) to perform such services as Reed, Roberts may direct, at a mutually agreed upon weekly salary, which employment may be terminated by me or Reed, Roberts upon one week's notice in writing, and which employment is further subject to the following terms and conditions to which I voluntarily agree:

'1. I acknowledge * * * that I have or shall become acquainted (with Reed, Roberts' business), and with employees of Reed, Roberts who perform specialized and technical services and who come in contact with Reed, Roberts clients. * * * During the course of my employment, I have learned and shall continue to learn, the names and addresses of Reed, Roberts clients, many of whom are serviced on a national basis and shall become acquainted with the executives and administrative employees of such clients.

'2. By reason of the foregoing, I do agree,

(b) that I shall not, at any time, either directly or indirectly solicit or conspire to solicit any of Reed, Roberts' clients, no matter where the principal office of such client shall be located.

(c) That for a period of three years from the date of termination of my employment, no matter the manner thereof, I shall not either directly or indirectly be engaged in nor in any manner whatsoever become interested, directly or indirectly, either as employee, partner, agent, stockholder, director or officer of a corporation or otherwise, in any business of the type and character engaged in by Reed, Roberts, within the geographical limits of the region wherein I may have been employed at any time by Reed, Roberts, such region being more fully circumscribed below.

(d) That Reed, Roberts shall be entitled to an injunction in any suit for such relief, should I breach the foregoing provisions hereof.'

This agreement was signed by both plaintiff and defendant in June of 1973.

Defendant contends that all three non-competition agreements are void for lack of consideration. Consideration is something moving from one party to the other; it can be in the form of a legal benefit or detriment. Melton v. ACF Industries, Incorporated, 404 S.W.2d 772, 777(6--9) (Mo.App.1966). 'A valuable consideration 'may consist of some right, interest, profit or benefit accruing to one party, or some forbearance, loss or responsibility given suffered or undertaken by the other. " Charles F. Curry and Company v. Hedrick, 378 S.W.2d 522, 533(1) (Mo.1964). Clearly the defendant has given sufficient consideration to support a contract by his agreement to perform sevices as an employee of plaintiff and to refrain from competition with plaintiff for a period of three years after termination of his employment. Plaintiff likewise agreed to employ defendant and pay him a weekly salary, the amount to be mutually agreed upon. American Pamcor, Inc. v. Klote, 438 S.W.2d 287, 290(3) (Mo.App.1969).

The trial court in its findings of fact determined that defendant signed the contract relied upon by plaintiff 'in consideration of his employment and continued employment by plaintiff.' Parties to employment contracts while they are still executory and before a breach occurs, by a later agreement, frequently rescind, alter or modify the agreement, or replace it with a substitute. This later agreement is usually referred to as a secondary contract. See Anno. 158 A.L.R. 231. A continuance by employee in the employment of employer where he is under no obligation to remain and the continuance by the employer of the employment where continuance is not required supplies adequate consideration for a secondary contract. In City Ice & Fuel Co. v. Snell, 57 S.W.2d 440 (Mo.App.1933), the employee, who had been employed July 1, 1931, signed a contract with a restrictive clause on November 3, 1931, and left the employment June 16, 1932. Lack of consideration for the secondary contract of employment was raised as a defense in defendant's answer. The mutual promises of the parties as to continued employment were held to be sufficient consideration. p. 442(4). So also in the companion case of City Ice & Fuel Co. v. McKee, 57 S.W.2d 443, 447 (Mo.App.1933). See also Birch v. Glasgow Savings Bank, 114 Mo.App. 711, 90 S.W. 746 (1905), where mutual understanding and...