Shirk v. Loftis Bros. & Co.

• Decision Date: 17 October 1918
• Docket Number: 969.
• Citation: 97 S.E. 66,148 Ga. 500
• Parties: SHIRK v. LOFTIS BROS. & CO.
• Court: Georgia Supreme Court

97 S.E. 66

148 Ga. 500

SHIRK v. LOFTIS BROS. & CO.

No. 969.

Supreme Court of Georgia

October 17, 1918

Syllabus by the Court.

An agreement in restraint of trade, ancillary to a contract of employment, supported by a valuable consideration, and limited as to both time and territory, and not otherwise unreasonable, is enforceable.

If the consideration for such an agreement be legal, it is sufficient; the adequacy of the consideration is a matter to be determined by the parties thereto.

(a) If the consideration be so grossly inadequate as to shock the conscience, and to amount in itself to evidence of fraud equity will not enforce the agreement.

Under the evidence in the record the judge of the superior court did not abuse his discretion in holding that the business conducted by the plaintiff in error was in violation of the restrictive covenants in his contract with the defendant in error, and in granting an interlocutory injunction.

Error from Superior Court, Fulton County; Geo. L. Bell, Judge.

Bill by Loftis Bros. & Co. against M. G. Shirk. Judgment for plaintiff, and defendant brings error. Affirmed.

Evidence held to show that business conducted by an employee after leaving his former employment was in violation of his contract with his former employer, justifying an interlocutory injunction.

Some time prior to August, 1917, Loftis Bros. & Co., a corporation, purchased the business of the Banta-Cole Company at No. 5 South Broad street in the city of Atlanta. Prior to said sale the Banta-Cole Company was engaged in business of buying and selling, on the installment plan, jewelry watches, clocks, optical supplies, glassware, and articles of a similar nature. M. Grant Shirk was employed by the Banta-Cole Company as an optometrist, optician, and salesman. After the transfer of the business to Loftis Bros. & Co., he remained with that company, performing for it the same services but without written agreement, until August 20 1917, on which date he entered into a written contract with Loftis Bros. & Co. This contract recites that the corporation is engaged "in the business of selling diamonds jewelry, precious stones, clocks, watches, silverware, optical supplies, glassware, and other articles of a similar nature on installment, part payment, or credit plan," and that the business conducted by it "is of a peculiar nature and character, and its success depends upon certain methods of advertising and the use of certain systems, plans, and methods originated or used by" it, and that Shirk "has and will further become familiar with the said plans, methods, and systems of carrying on said business, * * * and will become possessed of secrets and confidential information pertaining to the various departments of said business, and has and will become personally acquainted with the customers and trade" of said corporation, and that the said Shirk, "in consideration of his employment, * * * is willing to agree to all the covenants and conditions of this contract, all of which it is understood and agreed are necessary to the protection of the business" of said corporation. The material covenants and conditions of the contract are as follows:

(1) "The said second party hereby agrees to and does employ the first party for the term of one year from the 15th day of August, 1917, in such capacity and at such places and for the performance of such services and duties in and about the said business of the second party as the second party may from time to time require the said first party to perform, and the said first party hereby agrees to and does accept such employment upon the terms and conditions herein agreed."

(2) "The first party hereby agrees that during the term of said employment he will devote his entire time and attention exclusively to the business and interests of said second party, and that he will perform to the entire satisfaction of the second party such duties as may be assigned to him, and that he will do his utmost to further enhance and develop the best interests and welfare of the second party and obey all rules and regulations of the second party."

(3) "The first party agrees further that while he is in the employ of the second party, and for a period of four years after the termination of said employment, either by the expiration of the term of employment under this contract or for any cause whatever, he will not communicate or divulge to others, or use in any way, any information relating to the methods of conducting the business of the second party, or its processes, methods, plans, forms, or systems used in carrying on and conducting its said business, nor its methods of advertising or solicitation of business, nor any knowledge or secrets which the first party may acquire from time to time pertaining to any department of the business of the second party."

(4) "The first party further agrees that during said period he will not directly or

indirectly sell or supply any article sold or dealt in by said second party to any person who shall have been a customer of said second party at any time while said first party may have been employed under this contract, nor will he in any way directly or indirectly, solicit, divert, take away, or attempt to solicit, divert, or take away, any of the custom, business, or patronage of such customers within said period."

(5) "The said first party further agrees that during the continuance of his employment hereunder, and during the period of four years after the termination of his employment hereunder, as aforesaid, he will not directly or indirectly, under any circumstances or conditions whatsoever, for himself or any other person, firm, or corporation, engage in or become interested or be employed, directly or indirectly, in Atlanta, Fulton county, Georgia, as an individual, partner, stockholder, director, officer, clerk, salesman, buyer, principal, agent, employé, trustee, or in any relation or capacity whatsoever, in the line of business carried on by the second party, as aforesaid, and will not assist, advertise for, or give any information in relation to said business, directly or indirectly, to any one engaged, interested, or employed in any such line of business."

(6) "In consideration of this contract and the salary herein stipulated, it is further understood and agreed that the party of the first part is to render service as a regular employé to the party of the second part or any of its affiliated concerns during the term of this contract, as the party of the first part may be required or directed by the party of the second part."

The contract was to remain in effect after August 15, 1918, until terminated by either party upon reasonable notice. The salary paid the employé before the execution of the contract was $25 per week, and his...