Taylor Freezer Sales Co. v. Sweden Freezer Eastern Corp.

• Decision Date: 07 March 1968
• Docket Number: No. 24482,24482
• Citation: 224 Ga. 160,160 S.E.2d 356
• Parties: TAYLOR FREEZER SALES COMPANY, Inc., et al. v. SWEDEN FREEZER EASTERN CORPORATION.
• Court: Georgia Supreme Court

Page 356

160 S.E.2d 356

224 Ga. 160

TAYLOR FREEZER SALES COMPANY, Inc., et al. v. SWEDEN FREEZER EASTERN CORPORATION.

No. 24482.

Supreme Court of Georgia.

March 7, 1968.

Rehearing Denied March 21, 1968.

Syllabus by the Court

1. The employment contract in this case is in general restraint of trade and is unenforceable.

2. The evidence is insufficient to show that the former employer has any trade secrets or confidential information peculiar to its business the disclosure or use of which by the former employee will injure its business.

McCurdy, Candler & Harris, Walter P. McCurdy, Jr., Decatur, Claude E. Hambrick, Atlanta, for appellants.

Wilson, Branch & Wilcox, Michael C. Murphy, F. Frederick Kennedy, Alexander E. Wilson, III, Weekes & Candler, Atlanta, John Wesley Weekes, Decatur, for appellee.

UNDERCOFLER, Justice.

Sweden Freezer Eastern Corporation brought suit against Charles M. Auerhahn to temporarily and permanently enjoin him until April 15, 1969, from soliciting any 'soft-serve equipment' business within any of the 152 Rand McNally Basic Trading Areas shown in its petition, which areas comprise generally the Eastern seaboard of the United States; from assisting or advising others in soliciting or delivering any such equipment to any customer who was such during the period of employment of Auerhahn and contacted by Auerhahn for the plaintiff; from revealing to others the name of any customer of the plaintiff who was a customer at the termination of his employment; from giving any information of a concerning the business transactions of said customers; and from selling directly or indirectly to certain governmental agencies with which he had had dealings as an employee of the plaintiff. Taylor Freezer Sales Co. Inc., Auerhahn's present employer, was also made a party defendant and the plaintiff sought to enjoin it temporarily and permanently from revealing or using any information obtained from Auerhahn concerning trade secrets, transactions and customers obtained by Auerhahn during his employment with the plaintiff.

The employment contract from which this litigation arose provides:

'In the event of termination of his employment with the division voluntarily * * * for a period of three (3) years thereafter he will not directly or indirectly engage in the distribution or manufacture of products competitive to those of the division without its written consent in any area in which Sweden Freezer products may be distributed or sold at the time of such termination.'

The petition alleges that the plaintiff is a wholly-owned subsidiary of Sweden Freezer Manufacturing Co. which is engaged in the manufacture of machines to produce soft ice cream and related products; that on April 15, 1966, when Auerhahn voluntarily terminated his employment, it was selling and distributing its products in 152 Rand McNally Basic Trading Areas; that Auerhahn was employed as area manager of its New York Division; that he serviced special accounts headquartered in the New York area which purchased Sweden products for use throughout the United States and many foreign countries; that at its expense it provided him with the opportunity to visit and entertain these customers to develop good will for it; that he was assigned to work with various governmental agencies in order to gain their confidence and learn of their product requirements; that because of these customer contacts, he has an unfair advantage when he attempts to sell in competition with plaintiff because of the knowledge he has of its confidential pricing policies and product characteristics; that due to the nature of the soft-serve industry, individual salesmen cover large geographical territories to reach the limited markets for the industry's highly specialized products and the only means by which it can prevent unfair competition by a former sales manager is to contractually prohibit competition in the well-defined geographical areas where Sweden Freezer products are sold; that without its written consent, Auerhahn began employment with Taylor Freezer Sales Co., Inc., a competitor of the plaintiff who had knowledge of the employment contract between them and encouraged him to leave the employ of the plaintiff for the purpose of obtaining trade secrets and sales contacts of the plaintiff; that Auerhahn is engaged directly and indirectly in the distribution and manufacture of products competitive with those of the New York division in areas in which Sweden Freezer products were sold or distributed at the time of termination of the employment contract.

The defendants filed motions to dismiss the petition of the plaintiff which were overruled by the trial judge. After hearing evidence, the trial judge entered an order enjoining the defendant Auerhahn from soliciting any soft-serve equipment business within any of the 152 Rand McNally Basic Trading Areas described in the petition and granted the other prayers of the petition temporarily restraining the defendants as prayed therein.

Taylor Freezer Sales Co., Inc., and Charles M. Auerhahn appeal to this court and enumerate as error the orders of the trial judge denying their motions to dismiss the petition and the injunction prohibiting them from engaging in business and employment in 155 cities in 16 States of the United States. They contend that these orders are illegal, unreasonable, contrary to law and contrary to the public policy of the State of Georgia.

1. Whether the restraints imposed by an employment contract are reasonable is a question of law for determination by the court. The restrictions imposed upon the promisor must not be larger than necessary for the protection of the promisee. Rakestraw v. Lanier, 104 Ga. 188, 30 S.E. 735. Greater latitude is allowed in those covenants relating to the sale of a business, or...