Shelton v. Shelton, 8 Div. 989.
| Decision Date | 16 November 1939 |
| Docket Number | 8 Div. 989. |
| Citation | 192 So. 55,238 Ala. 489 |
| Parties | SHELTON v. SHELTON. |
| Court | Alabama Supreme Court |
Appeal from Circuit Court, Limestone County; A. A. Griffith, Judge.
Bill in equity by Emory Shelton, an individual trading and doing business in the firm name of Peerless Dry Cleaners, against Edward Shelton to enjoin defendant, former employe of complainant, from violating his contract and agreement not to engage in a like business within the time and territory mentioned therein. From a decree overruling demurrer to the bill and motions to dissolve temporary injunction, defendant appeals.
Affirmed.
Thos S. Woodroof, of Athens, for appellant.
W. W Malone, of Athens, for appellee.
Bill in equity by employer to enjoin a former employee from engaging in a like business within a limited area and time in breach of the terms of a written contract.
The appeal is from a decree overruling demurrers to the bill and a motion to dissolve the temporary injunction.
The bill alleges:
Complainant was engaged in a dry cleaning business in the city of Athens had built up a successful business in the city, and extending into various parts of Limestone and Lauderdale Counties.
By contract between the parties, made exhibit to the bill, respondent was employed to solicit, call for, and deliver articles to be cleaned or pressed over specified routes, three covering territory outside the city, and one in the city. The employee was given the exclusive right to solicit customers on these routes, was to furnish his own truck, bring in the articles, deliver them back, and collect the charges; was to cover each route twice a week on specified days. His pay was a commission on the gross receipts from the business brought in. If his work was satisfactory to the employer, the contract was to continue for two years beginning March 13, 1939.
The stipulation on which complainant bases his right to injunctive relief reads:
"Seventh: That the said Edward Shelton, party of the second part, covenants and agrees to and with the said Emory Shelton, party of the first part, that, in and for consideration of the party of the first party's act of employing said second party, and for and in consideration of the covenants undertaken by first party, said second party will not, directly or indirectly engage in the business of dry cleaning and/or pressing, whether by himself or agent, or as employer or employee, and will not solicit such business for any other person, firm, or corporation, anywhere in Limestone County, Alabama, or on any of the herein described routes, within a period of three years from the time that the other provisions of this agreement shall cease to be in effect, or binding on the parties of the first and second part."
The bill further avers that the employee entered upon the performance of the contract, and after a few months of diminishing returns, voluntarily quit the employment; and in breach of his contract began working for a competing company, alleged to be doing a cut rate business; that respondent is soliciting business for the rival concern in Athens and other parts of Limestone County, including the routes specified in the contract; that, while working for complainant, respondent obtained the names and addresses of complainant's customers and is using such information to the injury of complainant, who is being damaged in his business in violation of the contract.
Injunctive relief in cases of this character is said to be in the nature of a negative specific performance--not specific performance of the continuing obligations of an executory contract for the conduct of business operations. These a court of equity will not, as a rule, undertake to supervise. But specific performance of a lawful covenant not to engage in a rival business, readily accomplished by an injunction forbidding a breach of such covenant.
Such covenants are often challenged on grounds of public policy because in restraint of trade, tending to monopoly, and injurious to the public having occasion to patronize the business whether strictly public in character, or a private enterprise.
Throughout our judicial history we have dealt with cases involving this question arising under varying facts. As relates to private business enterprises, a partial restraint of trade by covenants fairly protecting the interests of the covenantee, and not injuriously affecting the public interest in such substantial manner that private rights should yield to the public welfare have been upheld and enforced by injunctive relief. Numerous cases are digested in 5 Alabama Dig., Contracts, pp. 51, 53. See, also, Maddox v. Fuller et al., 233 Ala. 662, 173 So. 12.
The contract here involved is not of the class tending to stifle competition. No competitive concern is put out of business. All dry cleaners, whether cutting the rates alleged in the bill to be fair and reasonable or not, are free to engage in business in this territory as before.
The contract forbids this employee taking advantage of the information and contacts growing out of his employment to divert custom from his employer to the injury of his business.
The bill is challenged on the ground, among others, that equity will not interfere to restrain an employee from engaging in his gainful occupation, that opportunity to work at a lawful business and earn a living is a natural right, and contracts denying such right are themselves against public policy.
Sections 6826, 6827, 6828, new to the Code of 1923, constitute a separate article under the chapter on contracts, dealing with contracts in restraint of trade.
Section 6826 reads:
"Every contract by which any one is restrained from exercising a lawful profession, trade, or business of any kind, otherwise than is provided by the next two sections, is to that extent, void."
Section 6827, before amendment, read:
"One who sells the goodwill of a business may agree with the buyer to refrain from carrying on a similar business within a specified county, city, or a part thereof, so long as the buyer, or any person deriving title to the goodwill from him, carries on a like business therein."
Section 6828 relates to contracts between partners on dissolution.
Justice Mayfield, who later became the Code Commissioner inserting this Article in the Code, wrote the decisions of this Court in Roquemore & Hall v. Mitchell Bros. et al., 167 Ala....
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