Thames v. Rotary Engineering Co.

• Court: Texas Civil Court of Appeals
• Writing for the Court: FRASER; HAMILTON
• Citation: Thames v. Rotary Engineering Co., 315 S.W.2d 589 (Tex. Ct. App. 1958)
• Decision Date: 06 August 1958
• Docket Number: No. 5288,5288
• Parties: Alonzo C. THAMES et al., Appellants, v. ROTARY ENGINEERING COMPANY, Appellee.

Page 589

315 S.W.2d 589

Alonzo C. THAMES et al., Appellants, v. ROTARY ENGINEERING COMPANY, Appellee.

No. 5288.

Court of Civil Appeals of Texas, El Paso.

Aug. 6, 1958.

Rehearing Denied Aug. 27, 1958.

Turpin, Kerr & Smith, Thornton Hardie, Jr., Midland, Blanton & McMahon, Odessa, for appellants.

Harris & Culver, H. S. Harris, Jr., Whitaker & Brooks, Richard S. Brooks, Midland, for appellee.

FRASER, Justice.

This suit originated in the District Court of Midland County, Texas, as a suit for a permanent injunction to enjoin the two defendants in the court below, appellants herein, from carrying on business activities engaged in or contemplated by the plaintiff, appellee herein. The trial was held before the court, and judgment entered for the plaintiff, enjoining defendants below from engaging, directly or indirectly, in the trade or business of hydrocarbon well logging for a period of five years from the date of termination of employment, within an area having a radius of 200 miles from Midland, Midland County, Texas, and this appeal results.

Defendant-appellants were originally employed by a partnership calling itself the 'Rotary Engineering Company.' The two defendant-appellants executed non-competitive agreement in 1951, agreeing not to compete with said partnership for a period of five years after termination of employment with appellee. Subsequently, at different dates, various members of the partnership withdrew, and one partner died in 1955. Each time new articles of partnership ship were entered into by the survivors. Later in the year 1955, richard S. Brooks, who was then trustee, conveyed the partnership assets to the appellee, a corporation comprised of the remaining partners.

Appellants terminated their employment in 1954 and 1956, and appellee then secured this injunction. (Thames in 1954; and Eubanks in 1956.)

Appellants appeal on the ground that there was no evidence, or insufficient evidence, to show assignment of the non-competitive agreements from the original partnership through to present appellee, and that such agreements were not assignable without the acquiesence and consent of defendants, and that there was no proof of such acquiescence or consent.

First of all, we do not find any inhibition against the assignment or transfer of this type of covenant or agreement. These are not agreements to work, but are restrictive agreements promising not to compete. It has been held that such are transferrable or assignable as assets. Blaser v. Linen Service Corp. of Texas, Tex.Civ.App., 135 S.W.2d 509; Malakoff Gin Co. v. Riddlesperger, 108 Tex. 273, 192 S.W. 530.

The record here shows that in each amended article of partnership there is reference made to the transfer of all assets of the former partnership into the new partnership, and that the partnership assets were transferred to the corporation by Richard S. Brooks, Trustee, in 1955. It does not appear that any additional burden or hazard was cast upon the appellants, or either of them, by the various changes. It is equally clear from the record that the appellants continued working without any new type of agreement, as the various changes in the makeup of appellee transpired. We believe that the record substantiates appellee's position that these noncompetitive agreements were transferred into and inherited by each succeeding partnership, and, Eventually, the corporation. By their continuing to work, without any apparent change in their contractual relations, we also believe that appellants acquiesced and consented to such changes by virtue of their continuing to accept their salaries and perform the services required. As said in the Malakoff case, supra [108 Tex. 273, 192 S.W. 533]:

'It must be immaterial to them whether they are required by the corporation to keep the contract, or whether they are so required by the co-partnership.'

In other words, appellants had received the benefits during the changes, and we think are, therefore, obligated to abide by their promise and commitment. A similar situation was found in Oak Cliff Ice Delivery Co. v. Peterson, Tex.Civ.App., 300 S.W. 107, 112, the court there saying, on motion for rehearing:

'for the effect of its language (the petition) was to allege that appellee remained in appellant's (corporation's) employ from March, 1924, to March 22, 1927, by virtue of said contract, worked for appellant during said time under the terms and provisions of said contract, and appellant paid appellee his wages and salaries according to the terms thereof. Certainly this could not be true unless said original contract had in some way become the contract between appellant and appellee so that the terms thereof became equally binding upon them as the same were upon the original parties thereto.'

Both appellants testified that they continued working without change of conditions, and neither objected to any changes in the partnership. It has been held that continuance of the employment is, as a matter of law, continuation of the old contract. 29 Tex.Jur., pages 18-19; Magnolia Compress & Warehouse Co. v. Davidson,...