Tolman Laundry, Inc. v. Walker

• Decision Date: 11 November 1936
• Docket Number: 5.
• Parties: TOLMAN LAUNDRY, INC., v. WALKER.
• Court: Maryland Court of Appeals

187 A. 836

171 Md. 7

TOLMAN LAUNDRY, INC., v. WALKER.

No. 5.

Court of Appeals of Maryland

November 11, 1936

Appeal from Circuit Court, Prince George's County; J. C Mattingly, Judge.

Suit by the Tolman Laundry, Incorporated, against George W. Walker. From an adverse decree, plaintiff appeals.

Reversed.

Argued before BOND, C.J., and URNER, OFFUTT, PARKE, SLOAN, MITCHELL SHEHAN, and JOHNSON, JJ.

Stedman Prescott, of Rockville (Charles E. Pledger, Jr., of Washington, D. C., on the brief), for appellant.

Lansdale G. Sasscer and T. Van Clagett, Jr., both of Upper Marlboro for appellee.

PARKE Judge.

The Tolman Laundry, Inc., conducts a laundry, dry cleaning, rug cleaning, and linen supply business in the District of Columbia, and certain adjacent territory in Maryland and Virginia. Its principal place of business is in Washington. The laundry has been engaged in its business for a number of years, during which it has acquired a number of regular patrons, who live along and in the neighborhood of fixed routes which the laundry has established in the District Maryland, and Virginia for the service of its customers. These routes are well defined and present and prospective patrons are listed and classified or solicited by the laundry with reference to the particular route by which they are or will be accommodated. The success of the enterprise depends upon keeping the good will and patronage of its customers, and obtaining new ones. The loyalty, personality, and efficiency of its servants who make collections and deliveries on the several routes were important factors in the laundry's success, since the employer's transactions with its customers were largely through the agency of the men who served the routes. Among these routes was one in the District of Columbia and Maryland, which was known in the business as route No. 5, and it covered a specified and limited territory. This route was valuable and was a source of great revenue to the laundry.

From April 2, 1920, to August 17, 1935, the defendant, George W. Walker, was employed by the laundry. He was engaged in serving route 5 until January, 1932, when he became a supervisor for the laundry and route 5 was one of those under his supervision. In April, 1933, he returned to his former service in which he continued to August 17, 1935, when the defendant voluntarily severed his connection with the laundry pursuant to a provision of his contract. During his employment the defendant was furnished by the plaintiff with the names and addresses of all its customers along route 5 and in its territory. Except for the brief period during which he was a supervisor the defendant collected and delivered clothes, linen, and other articles which were to be or had been laundered; and, also, rugs and other things which were to be or had been dyed or dry cleaned for customers in the territory embraced by his route; sought and kept trade for his employer and did any other thing incidental to the work in which he was engaged including the collection of accounts. The nature of the business and the form of the defendant's employment brought him in personal contact with the customers of the route and taught him the extent and scope of the business done on his route; the requirements of every patron, the accommodations advisable, the dates on which the laundry was customarily collected and delivered, and the prices paid for the work, and the credit which was safe to give.

When the defendant stopped, he was under a written contract of employment. It was made on May 1, 1933. In consideration of the employer supplying and maintaining an automobile truck for the defendant's use in the business and of agreed salary and commissions at a specified rate, the defendant undertook the performance of a prescribed service for his master in a specified and delimited territory, which was known as route No. 5 in the master's business, and agreed that he would not become a competitor nor perform a similar service for a competitor for the period of one year after his employment had ceased.

The bill of complaint was filed on September 20, 1935, and set forth, in substance, what has been stated. The defendant, in addition, was charged with a continuous violation of his stated promise to the great and irreparable injury of the plaintiff. The relief prayed was for both a temporary and a permanent injunction against the defendant in accordance with the terms of the agreement; and for other and further relief. A temporary injunction was accordingly issued on September 20, 1935, upon a bond being filed and approved. The defendant answered, and moved for the rescission of the order and a dissolution of the injunction. The parties took testimony before an examiner in equity, and later testimony was taken in open court in support of a motion to charge the defendant with contempt for his alleged disobedience of the temporary injunction. The chancellor held the defendant had not been guilty of contempt, and discharged the rule laid on December 3, 1935. In his opinion filed on December 31, the chancellor disclosed that he had considered not only the testimony taken before the examiner in equity, but also that given in the citation for the alleged contempt, and it is assumed that this is the reason why all the testimony is included in the record at bar. It is, however, clear that while his obedience of the command of the writ of the temporary injunction will relieve the defendant of contempt, yet proof of such obedience does not go to any other issue.

The chancellor dissolved the preliminary injunction and dismissed the bill of complaint, without prejudice, and imposed the costs upon the plaintiff. The appeal is from this decree, and the questions are the validity of the defendant's negative covenant in restraint of employment; and, if valid, its meaning and whether it had been violated.

The covenant in question is in these words: "The said party of the second part also agrees that he will not at any time while he is in the employ of the said party of the first part, or within one year after leaving said service of the party of the first part, for himself or any person, persons or corporation other than the party of the first part, call for and deliver laundered and unlaundered goods, articles that are dry cleaned or dyed, or that are to be dry cleaned or dyed, rugs, cleaned and uncleaned, and linen supply in laundered and unlaundered condition to any person or persons, who, during the term of this contract, shall have been customers of said party of the first part, nor in any way, directly or indirectly, solicit, divert, take away, or attempt to solicit, divert or take away from said party during the life of this contract any of its custom, business or patronage of such customers, in that portion of the City of Washington, D. C. & Md., known as the 'laundry,' 'dry cleaning' or 'coat service' route or territory especially entrusted by said party of the first part to party of second part, and herein described."

When considered in connection with the subject-matter, the limitation in time and in space, the relation of the contracting parties, and the nature of duties of the servant, the quoted terms are valid. The principle is firmly established that contracts only in partial restraint of any particular trade or employment, if founded upon a sufficient consideration, are valid and enforceable, if the restraint be confined within limits which are no larger and wider than the protection of the party with whom the contract is made may reasonably require. Guerand v. Dandelet, 32 Md. 561, 565-569, 3 Am.Rep. 164; Warfield v. Booth, 33 Md. 63, 69, 70; Brown v. Benzinger, 118 Md. 29, 37, 38, 84 A. 79, Ann.Cas.1914B, 582; Kaliopulus v. Lumm, 155 Md. 30, 36, 141 A. 440. Compare Jones Cold Store Door Co. v. Jones, 108 Md. 439, 445, 70 A. 88, 129 Am.St.Rep. 446; Rosenstein v. Zentz, 118 Md. 564, 85 A. 675, 44 L.R.A. (N.S.) 63.

Here the nature of employer's business or trade renders it peculiarly dependent not only upon the servant's fidelity and loyalty in the performance of his contractual obligations, and the maintenance of secrecy in his master's affairs, but also, after the term of employment is at an end, upon the servant's inability, within a defined time and space, to become, in his master's trade or business, a competitor or to engage in a similar service as the servant or representative of a third party in competition with his former master in the designated locality. Supra. Webb v. McCloskey, 68 Md. 196, 200 11 A. 715; Underhill v. Buckman Fruit Co., 97 Md. 229, 245, 246...