E. S. Miller Laboratories, Inc. v. Griffin

• Decision Date: 15 June 1948
• Docket Number: 33166.
• Citation: 194 P.2d 877,200 Okla. 398,1948 OK 149
• Parties: E. S. MILLER LABORATORIES, Inc. v. GRIFFIN.
• Court: Oklahoma Supreme Court

194 P.2d 877

200 Okla. 398, 1948 OK 149

E. S. MILLER LABORATORIES, Inc. v. GRIFFIN.

No. 33166.

Supreme Court of Oklahoma

June 15, 1948

Appeal from District Court, Tulsa County; John Ladner, Judge.

Suit by E. S. Miller Laboratories, Inc., a corporation, against George W. Griffin to enjoin the defendant from working for a competitor of plaintiff in violation of alleged agreement with plaintiff. From a judgment for the defendant, the plaintiff appeals.

Judgment affirmed.

Syllabus by the Court.

Under Tit. 15 O.S.1941 § 217, providing that 'Every contract by which any one is restrained from exercising a lawful profession, trade or business of any kind, * * * is to that extent void,' a provision of a contract of agency by which the agent covenanted not to engage in the sale of any product competing with that of his principal within two years after termination of the contract is not enforceable.

Logan Stephenson, Harry L. S. Halley, W. D. Wooley, F. C. Swindell and O. C. Lassiter, all of Tulsa, for plaintiff in error.

H. A Tallman and A. E. Ross, both of Tulsa, for defendant in error.

GIBSON Justice.

On December 25, 1945, plaintiff in error, a manufacturer and seller of pharmaceutical, chemical and biological products engaged the services of defendant in error as salesman for a particular territory. By the terms of the contract it was provided that in event the latter left the employment he would not work in said territory for any other pharmaceutical company or distributor for a period of two years thereafter.

Plaintiff in error, as plaintiff, instituted this action against defendant in error, as defendant. In plaintiff's petition it is alleged that on April 1, 1947, defendant, in violation of said agreement, left the service of plaintiff and immediately entered the employ of another pharmaceutical company, a competitor of plaintiff, and is working for such competitor in said territory, in violation of said provision of the contract. And, alleging plaintiff is without adequate remedy at law, a permanent injunction is prayed for. Defendant demurred generally to the petition. The demurrer was sustained and judgment rendered for defendant. Plaintiff appeals from the judgment.

The only question involved on appeal is whether the provision of the contract is in restraint of trade, and therefore against public policy and void.

Plaintiff's contention is reflected in the following statement in the brief:

'The authorities at common law to sustain a contract as in the instant case are overwhelming, and there can be no question but that at common law this contract is valid.

'What is the effect of the Oklahoma Statute on this situation? It is the contention of the plaintiff that the Oklahoma Statute is only declarative of the common law rule, and as such must be interpreted as being subject to the same qualifications as the common law rule.'

There are cited from other states, where the common law rule obtains, cases that sustain the validity of such a provision. It is recognized that Alabama, California, North Dakota and South Dakota have the same statutes as Oklahoma but there are cited no decisions of any of those states. The question here has not been decided by this court and our decisions on other phases of the statute are not helpful.

The applicable Oklahoma statutes, Tit. 15 O.S.1941 §§ 217, 218 and 219, are as follows:

'Sec. 217. Every contract by which any one is restrained from exercising a lawful profession, trade or business of any kind, otherwise than as provided by the next who sections, is to that extent void.

'Sec. 218. One who sells the good-will of a business may agree with the buyer to refrain from carrying on a similar business within a specified county, city or part thereof, so long as the buyer, or any person deriving title to the good-will from him carries on a like business therein.

'Sec. 219. Partners may, upon or in anticipation of a dissolution of the partnership, agree that none of them will carry on a similar business within the same city or town where the partnership business has been transacted, or within a specified part thereof.'

Concerning the common law rule and the effect thereof of similar statutes, it is said in Vulcan Powder Co. v. Hercules Powder Co. et al., 96 Cal. 510, 31 P. 581, 31 Am.St.Rep. 242:

'At common law, originally, all contracts which in any degree tended to the restraint of trade were void; but afterwards the rule was relaxed so as to countenance contracts for the partial restraint of trade,--that is, contracts in which the restraint was confined to reasonable limits of time or place, and which were founded upon sufficient consideration, etc. Quite a full statement of the rule at common law is to be found in Wright v. Ryder, 36 Cal. [342], 356, . The rule, however, was uncertain, and led...