Thomas W. Briggs Co. v. Mason

• Decision Date: 17 December 1926
• Citation: 217 Ky. 269
• Parties: Thomas W. Briggs Company v. Mason.
• Court: United States State Supreme Court — District of Kentucky

217 Ky. 269

Thomas W. Briggs Company v. Mason.

Court of Appeals of Kentucky. Chancery Branch, Second Division.

Decided December 17, 1926.

1. Contracts — Contract Restraining Employee from Engaging in Competitive Business Reasonably Necessary to Protect Employer, and Not Unreasonably Restricting Employee, Held Valid. — Contract prohibiting employee coming in personal contact with employer's customers from engaging in competitive business within limited time and area is valid, where restraint on employee is reasonably necessary for protection of employer's business and does not unreasonably restrict rights of employee, and where not against public policy.

2. Contracts — Contract Restraining Employee from Engaging in Competitive Advertising Business in Any City or State in which he Worked for Two Years Held Reasonable. — Contract by salesman not to engage in competitive advertising business of employer in any city or state within which he had worked for employer for period of two years after termination of employment held reasonably necessary to protect employer, considering nature of business.

3. Contracts — Business of Employer Must be Considered in Determining Validity of Contract Restraining Employee from Engaging in Competitive Business. — Validity of contract prohibiting employee from engaging in competitive business after leaving employment must be considered with reference to business of employer.

4. Contracts — Contract Restraining Employee from Engaging in Competitive Business is Reasonable if Confined to Territory in which Employer Carries on Business. — Territorial limit in contract restraining employee from engaging in competitive business on leaving employment is reasonable if it is confined to territory in which employer keeps his market or carries on his business.

5. Injunction — Petition Averring Employment Terms of Contract Prohibiting Employee from Engaging in Competitive Advertising Business and Breach Thereof Held Sufficient. — Petition to restrain employee from violating contract not to engage in competitive advertising business with employer, averring employment, terms of contract, and breach within terms, held to state cause of action.

Appeal from Jefferson Circuit Court

BURNETT, BATSON & CARY for appellant.

PETER, LEE, TABB & KRIEGER for appellee.

OPINION OF THE COURT BY JUDGE SAMPSON.

Reversing.

Shall appellee, Mason, be enjoined from violating the terms of a written agreement with appellant, Briggs Company, by which he engaged to do work for that company and agreed that upon the termination of his employment, by act of either party, and for two years thereafter, he would not engage, directly or indirectly, in the same or similar business in any city or state where and within which he had worked for appellant under the contract, is the question we have for decision. The Thomas W. Briggs Company, a Memphis concern, entered into a written contract with appellee, Mason, on April 18, 1922, whereby it employed Mason "in the capacity of department or crew manager and as solicitor or salesman in its business of selling and soliciting advertisements and publicity, and especially in putting on special advertising, weekly business review pages, book campaigns, historical and biographical publications, and other and general publicity and advertising specialities, through and from leading newspapers, magazine and periodicals throughout the United States," agreeing to pay him certain commissions upon work accomplished, the contract to remain in force only so long as it is the mutual desire of the parties. Either party could terminate it at will.

Pursuant to the contract Mason entered the employ of appellant company and continued therein until about the time of the commencement of this action in May, 1926, when he, claiming to need a rest, asked for a vacation and immediately thereafter organized a similar business to that of his former employer, and entered into a contract with the Courier Journal at Louisville, in which he was to do for the Courier Journal work of the same nature as that which he had been doing for it pursuant to a contract theretofore made by the Briggs Company with it for the getting out of a special edition of that newspaper, in violation of the terms of a written contract. The Briggs Company instituted this action against appellee, Mason, praying an injunction restraining him from carrying out his contract with the Courier Journal to put on a special advertising edition of that newspaper, and restraining him from engaging in the same kind of business and work as that conducted by appellant, Thomas W. Briggs Company. A restraining order was issued by the clerk and continued in force by the chancellor to the extent of restraining appellee, Mason, from making or taking new contracts for work similar to that of appellant, Thomas W. Briggs Company, in violation of his contract, but not enjoining him from carrying out his contract with the Courier Journal. To that order both parties objected and excepted, and obtaining time for the purpose, each made a motion before a member of this court, one for injunction restraining appellee from carrying out his contract with the Courier Journal, and the other to dissolve the order restraining Mason from carrying on a business similar to that of appellant company. On hearing both motions were overruled and the matter referred to the chancellor for preparation and decision upon the merits. On final hearing the chancellor sustained a general demurrer to the petition, dissolved the injunction and finally dismissed the cause, when appellant company declined to further plead. From that judgment this appeal is prosecuted.

The written contract between the parties, insofar as it is relevant, reads:

"Whereas, the party of the first part is engaged in the business of selling and soliciting advertisements and publicity, and especially in putting on special editions, weekly business review pages, book campaigns, historical and biographical publications, and other and general publicity and advertising specialties, through and for leading newspapers, magazines and periodicals throught the United states and . . .

"4. Party of second part agrees and binds himself to conduct each campaign of which he is assigned as manager in a high class manner, to give to it his undivided time and his moral support; to employ solicitors only of good repute, sobriety and integrity; that he will conduct himself at all times as a gentleman; and, further, that he will observe the rules and regulations and reasonable requirements of the party of the first part. . . .

6. "It is expressly agreed that upon the termination of this employment by act of either party and for a period of two years thereafter, the party of the second part will not engage, directly or indirectly, as employee, manager, proprietor or solicitor, for himself or others, in a similar or competitive business or the same character of work which he is here employed by party of the first part to do and perform in any city or state where or within which he shall have worked for party of the first part under this contract. . . .

7. "If the party of the second part should breach the good will clause of this contract (paragraph six) he will pay the party of the first part, as liquidated damages, the sum of $10,000.00 for each and every city in which he shall operate, it being agreed that sum is reasonable and just. . . .

11. "This contract will remain in force only so long as it is the mutual desire of the parties. Either party may terminate it at will."

Appellant company insists that appellee, Mason, wantonly violated his contract in making use of the business methods, good will, trade secrets and acquaintances with the clientele of the appellant to compete with it, and should be enjoined; and, further insists that an employer is entitled, under a convenant restraining an employee from competing against him, to protection against employee's use or knowledge of specific facts which he has acquired in his capacity as employee, such as knowledge of the names of persons with whom his employer deals, trade...