Tatum v. Colonial Life & Acc. Ins. Co. of America

• Decision Date: 17 February 1970
• Docket Number: No. 43405,43405
• Citation: 1970 OK 27,465 P.2d 448
• Court: Oklahoma Supreme Court
• Parties: 1970 Trade Cases P 73,080 Tommy TATUM, Plaintiff in Error, v. COLONIAL LIFE AND ACCIDENT INSURANCE COMPANY OF AMERICA, Defendant in Error.

Page 448

465 P.2d 448

1970 Trade Cases P 73,080

Tommy TATUM, Plaintiff in Error, v. COLONIAL LIFE AND ACCIDENT INSURANCE COMPANY OF AMERICA Defendant in Error.

No. 43405.

Supreme Court of Oklahoma.

Feb. 17, 1970.

Appeal from the District Court of Oklahoma County; Harold C. Theus, Trial Judge.

M. W. Cooper, Oklahoma City, for plaintiff in error.

Crowe, Dunlevy, Thweatt, Swinford, Johnson & Burdick, by V. P. Crowe and D. Kent Meyers, Oklahoma City, for defendant in error.

LAVENDER, Justice.

This is an appeal from an order of the district court enjoining the plaintiff in error, who was the defendant below, for a period of two years after the date on which a certain agreement between him and the plaintiff insurance company had been declared terminated by the company, from selling, or attempting to sell, any form of accident or health insurance to or on any of the plaintiff's insureds under group policies or franchise policyholders, and from inducing, or attempting to induce, any of the plaintiff's insureds under group policies or franchise policyholders to cancel, lapse, or fail to renew their policies with the plaintiff.

Such injunction was based upon the defendant's admitted violations of covenants by him (contained in an amendment to a written agreement between the plaintiff insurance company and the defendant in which the company appointed the defendant as its 'Soliciting Agent for the purpose of canvassing for applications for policies for accident or health insurance on individuals, and groups of individuals') not to do any of the prohibited acts during the period of two years following the termination, for any reason, of the agency agreement.

The primary question presented is whether or not such contractual restriction upon the activities of the defendant is void under the provisions of 15 O.S.1961, § 217:

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

Clearly, neither the sale of the good will of a business nor the dissolution, or anticipated dissolution, of a partnership is involved in the contract in question herein, so this contractual provision does not fall within the exceptions provided for in 'the next two sections' (15 O.S.1961, §§ 218 and 219), which provide, respectively, that: '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;' and that: '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.'

The defendant contends, correctly, that courts will not enforce, nor aid in the enforcement of, a contract made in violation of law, nor will they grant relief at the instance of a plaintiff who, in order to prevail, is compelled to rely solely upon an illegal contract (Crawford, County Treasurer et al. v. McConnell et al. (1935), 173 Okl. 520, 49 P.2d 551; Sigmon Furniture Manufacturing Company v. Massey (1943), 192 Okl. 436, 137 P.2d 793). And, in this connection, the defendant cites 15 O.S.1961, § 211, which provides that: 'Those contracts are unlawful which are: 1. Contrary to an express provision of law; 2. Contrary to the policy of express law, though not expressly prohibited; or, 3. Otherwise contrary to good morals.'

In support of his primary proposition that the contractual provision involved herein is void (and unlawful) under the provisions of 15 O.S.1961, § 217, supra, the defendant cites E. S. Miller Laboratories, Inc. v. Griffin (1948), 200 Okl. 398, 194 P.2d 877, 3 A.L.R.2d 519, and the 1904 South Dakota case of Prescott v. Bidwell, 18 S.D. 64, 99 N.W. 93, as being supportive of his proposition. It is unnecessary to discuss the cited South Dakota case, since that state had three statutes exactly like 15 O.S.1961, §§ 217, 218, and 219, the contractual provision involved in that case was, in effect, the same as the one involved in the Miller Laboratories case, and the court reached the same result that this court reached in the Miller Laboratories case.

In Miller Laboratories, Inc. v. Griffin, the defendant had terminated his contract of employment as a salesman, in a specified territory, for the plaintiff, a manufacturer and seller of pharmaceutical, chemical and biological products, and, admittedly, had gone to work, immediately, as a salesman, in the same territory, for another pharmaceutical company, in violation of a provision in his written employment contract that, in the event, he left such employment, he would not work in that territory for any other pharmaceutical company or distributor for a period of two years thereafter. In affirming the trial court in sustaining the defendant's general demurrer to the company's petition for an injunction against further violations of the covenant during the two-year period following termination of the defendant's employment contract, this court held that such contractual provision was void under the provisions of the statute that now appears as 15 O.S.1961, § 217, supra, and, therefore, was not enforceable.

However, we think that the contractual provision involved in the present case is distinguishable from the one involved in the Miller Laboratories case. Unlike the one involved in that case, the contractual provision in the present case does not, in any manner or to any extent whatsoever, restrain the defendant from exercising a lawful profession, trade, or business of any kind whatsoever, either in competition with the plaintiff or otherwise. It, in substance and effect, simply requires the defendant, for a period of two years after the termination of his appointment as a soliciting agent for the plaintiff insurance company, to maintain a 'hands-off' policy with respect to those whom he knows are 'insureds' under then-outstanding group policies, or franchise policies, of health and/or accident insurance issued by the plaintiff company. The contract requires him to refrain, during such two-year period, from inducing, or attempting to induce, any such known insureds of the plaintiff company to cancel, lapse, or fail to renew, their policies with the plaintiff company (whether or not he sells, or attempts to sell, them or any of them health or accident insurance written by another carrier).

Clearly, this contractual provision is not intended to preclude the defendant from selling, or attempting to sell, any other form of insurance to those insureds, or to preclude him from selling, or attempting to sell, any form of insurance (including health and/or accident insurance) to any one else. Just as clearly, it is not intended to protect the plaintiff company against fair competition in the insurance field involved, but is intended to protect the plaintiff company against unfair competition in that field, on the part of its former soliciting agents, particularly that which would result from the former agent's use of information concerning the company's group, and franchise, health and/or accident policies and those insured thereunder, furnished by the company to him as its soliciting agent, or acquired by him through his activities as such a soliciting agent.

The record herein discloses that the plaintiff company sometimes assigns policies sold by one soliciting agent to another one of its soliciting agents for 'servicing,' with the renewal commissions, as earned, being divided between the two agents involved. Such an assignment, of course, requires that information concerning the insured and the policy, including the renewal date therefor, be furnished by the company to the servicing agent, and this information is in addition to all...