Weber v. Hesse Envelope Co.

• Decision Date: 30 December 1960
• Docket Number: No. 15757,15757
• Citation: 342 S.W.2d 652
• Parties: Harry E. WEBER, Appellant, v. HESSE ENVELOPE COMPANY, Appellee.
• Court: Texas Court of Appeals

Page 652

342 S.W.2d 652

Harry E. WEBER, Appellant, v. HESSE ENVELOPE COMPANY, Appellee.

No. 15757.

Court of Civil Appeals of Texas, Dallas.

Dec. 30, 1960.

Ivan Irwin, Sr., Dallas, for appellant.

Golden, Croley, Howell, Johnson & Mizell, and Donald G. Canuteson, Dallas, for appellee.

THOMAS, Justice.

Appellant, a former salesman of appellee, filed this suit seeking by declaratory judgment an adjudication as to the enforceability of covenants contained in his written employment contract providing that for a period of two years immediately following the termination of appellant's employment he would not engage in a competitive business to that of appellee within 'a trade area radius of 200 miles from Dallas, Texas.' By cross-action the appellee-employer sought a declaration that the restrictive covenants in the contract were in all things binding and enforceable.

The case was tried to the court without a jury; appellant was the only witness, and judgment was rendered that the restrictive covenants in the contract of employment were valid and binding for a period of two years from and after September 3, 1959, the date the employment terminated, 'within a trade area radius of 200 miles from Dallas, Texas.' We are of the opinion that the court's judgment was correct except that the restrictive covenants should be declared enforceable and binding only within Dallas County, Texas, the only county in which appellant solicited or was permitted to solicit customers.

Appellant began work for Hesse Envelope Company in September 1953 and continued such employment until September 1959. Appellant's initial salary was $350 per month, but at the time of the termination of his employment he was one of appellee's leading salesmen with his earnings on a commission basis averaging approximately $1,000 per month.

After a short term of training, appellant became an outside salesman to solicit orders for envelopes and related products handled by appellee. At first he worked 'all over Dallas', but commencing in 1955 through the date of termination of his employment, appellant solicited orders mainly in the territory assigned to him, being the Trinity River Industrial Area of Dallas, estimated to be about 2 miles by 6 miles in extent. However, he was permitted to sell throughout Dallas County to customers he had theretofore developed. Also, the Dallas was open to all salesmen even after Dallas was open been divided into districts, the county had been divided into districts, and separate districts assigned to each of appellee's salesmen. Except to service his old accounts, salesmen could not solicit business outside his assigned territory and downtown Dallas. Appellant was never permitted to solicit directly any customers for envelopes or related products outside of Dallas County. On occasions he did receive orders by mail from national concerns, but he never went outside of Dallas to solicit such business. All of such sales had been initiated by appellant calling on a branch operation of the national concern located in the area assigned to him in Dallas.

Appellant was taught the envelope and related products business by appellee. He had access to the books, records and files showing the names and addresses of customers of the company, the description of their orders, the type of envelope and related products sold to them and the prices at which they were sold. Appellant received valuable information as to selling techniques, and sales devices used by appellee. Appellant was furnished a list of customers who had been purchasing products from appellee for his use in soliciting business. Appellant frankly admits that if given the opportunity he fully intends to compete with appellee in soliciting orders from the customers he had been calling on while working for appellee.

Appellant forthrightly explained that he realized that the restrictive covenant in his employment contract was to prevent successful salesmen 'from quitting and setting up their own operation and trying to raid the customers of their previous employers', and that he considered the restrictive covenant to be reasonable for that purpose.

By his first three points of appeal appellant contends that the restrictive covenants involved are not enforceable or binding upon him: (1) for a period of two years following termination of the employment contract, because (a) the period is too long; (b) the type of work he did did not require any restraint; and (c) the covenant was not supported by any consideration; (2) within a radius of 200 miles of Dallas, Texas; and (3) as to products other than envelopes, that appellee may handle in the future.

The Supreme Court of Texas on December 7, 1960, decided Weatherford Oil Tool Co. Inc., v. Campbell et al., 340 S.W.2d 950, 951, in which it held that a covenant in an employment contract which effectively prevented former employees from competing with the employer anywhere in the world for one year was unreasonable as written as to area; nevertheless, it was enforceable within an area that is reasonable under the circumstances. In its opinion the Supreme Court said:

'An agreement on the part of an employee not to compete with his employer after termination of the employment is in restraint of trade and will not be enforced in accordance with its terms unless the same are reasonable. Where the public interest is not directly involved, the test usually stated for determining the validity of the covenant as written is whether it imposes upon the employee any greater restraint than is reasonably necessary to protect the business and good will of the employer.

* * *

* * *

'Since the decisions in Lewis v. Krueger, Hutchinson and Overton Clinic, 153 Tex. 363, 269 S.W.2d 798, and Spinks v. Riebold, Tex.Civ.App., 310 S.W.2d 668 (wr. ref.), it can no longer be said that a covenant not to compete is void and unenforceable simply because it is not reasonably limited as to either time or area. These cases hold that although the territory or period stipulated by the parties may be unreasonable, a court of equity will nevertheless enforce the contract by granting an injunction restraining the defendant from competing for a time and within an area that are reasonable...