Sermons v. Caine & Estes Ins. Agency, Inc.

• Decision Date: 10 December 1980
• Docket Number: No. 21351,21351
• Citation: 275 S.C. 506,273 S.E.2d 338
• Court: South Carolina Supreme Court
• Parties: William O. SERMONS, Respondent-Appellant, v. CAINE & ESTES INSURANCE AGENCY, INC., Appellant-Respondent.

Page 338

273 S.E.2d 338

275 S.C. 506

William O. SERMONS, Respondent-Appellant, v.CAINE & ESTES INSURANCE AGENCY, INC., Appellant-Respondent.

No. 21351.

Supreme Court of South Carolina.

Dec. 10, 1980.

W. Francis Marion and Frances D. Ellison, of Haynsworth, Perry, Bryant, Marion & Johnstone, Greenville, for appellant-respondent.

Harvey G. Sanders, Jr., Leatherwood, Walker, Todd & Mann, Greenville, for respondent-appellant.

LITTLEJOHN, Justice:

This action involves the validity of several different covenants not to compete.Both the plaintiffWilliam O. Sermons(employee) and defendantCaine & Estes Insurance Agency, Inc.(employer) moved for summary judgment in the declaratory judgment proceeding below.The motions were denied by the trial judge and both parties have appealed.

Employee was employed as an insurance agent by the employer in 1973.He signed an employment contract containing certain covenants restricting his activities upon his termination or retirement; the restrictions were designed to protect the business of the employer.This agreement was replaced in 1977 by a new employment contract containing similar restrictions.In 1978, the stock of the employer was acquired in its entirety by another corporation.In the sale of his shares to the new corporation, each shareholder was required to execute a document containing two sets of restrictive covenants designed to preserve the goodwill of the employer.Employee, being a shareholder, was subjected to these noncompetition clauses in addition to the covenants in his 1977 employment contract.In 1979, employee terminated his employment with employer and commenced selling insurance through his own newly-formed agency.Soon thereafter, employee brought this suit to determine the enforceability of the above-mentioned sets of covenants not to compete.

We first address the issue of whether the trial judge should have granted summary judgment to one of the moving parties.Counsel for both sides stipulated that there remained only legal issues to be resolved.Inasmuch as we find the restrictive covenants unreasonable as a matter of law, we conclude the trial judge should have disposed of this action on the merits by granting the motion of the employee for summary judgment.

The three sets of restrictive covenants at issue are as follows:

(1)1977 Employment Agreement

"(Upon) the termination of this contract by either party, ... the Employee should (not) enter upon the solicitation of fire or casualty or life or health insurance or bonds within the State of South Carolina, which solicitation in any way competes with the business of Caine ... for a period of three (3) years ... (or else) shall pay to Caine (calculated damages)."

(2)1978 Agreement to Preserve Goodwill of (employer), paragraph (b):

"The Shareholder will not at any time, except in the normal course of business on behalf of Caine-Estes, solicit or accept insurance agency or brokerage business from any corporation, firm or individual that was a client of Caine-Estes on the date of this agreement or within one year prior to such date.

(3)1978 Agreement to Preserve Goodwill of (employer), paragraph (c):

"This Shareholder agrees not to establish or open within the state of S.C., ......