Woodward Ins., Inc. v. White

• Decision Date: 19 July 1982
• Docket Number: No. 782S261,782S261
• Citation: 437 N.E.2d 59
• Parties: WOODWARD INSURANCE, INC., Appellant, v. C. M. WHITE, Appellee.
• Court: Indiana Supreme Court

Page 59

437 N.E.2d 59

WOODWARD INSURANCE, INC., Appellant, v. C. M. WHITE, Appellee.

No. 782S261.

Supreme Court of Indiana.

July 19, 1982.

McCrea & McCrea by Edward F. McCrea, Bloomington, Ind., for appellant.

Mallor & Mills, P. C. by Daniel M. Mills and Barbara Freedman Wand, Bloomington, Ind., for appellee.

ON PETITION TO TRANSFER

PIVARNIK, Justice.

This cause comes to us on a petition to transfer from the Indiana Court of Appeals. The Monroe Superior Court granted appellee White's motion for summary judgment on Count I, dealing with a covenant not to compete, and after presentation of evidence on Count II, involving trade secrets and confidential information, entered judgment in favor of White, and Woodward Insurance, Inc., appealed. The Court of Appeals, First District, affirmed the decision of the trial court. Woodward Ins., Inc. v. White, (1981) Ind.App., 425 N.E.2d 258.

The questions presented for our review are whether the trial court properly entered summary judgment in finding that the covenant not to compete contained in the stock purchase offer to White was void and unenforceable, and also whether the insurance company's customer information constitutes trade secrets and confidential information, thereby making use of such information by a former employee constitute unfair competition. We believe the Court of Appeals erred on the issues presented under Count I at the trial; therefore, we grant petition to transfer, and vacate the opinion of the Court of Appeals.

The facts and circumstances of this cause were well enumerated in the Court of Appeals opinion and we adopt that portion of the opinion and incorporate it herein as follows;

"Woodward is an independent insurance agency located in Bloomington, Indiana. White is a casualty-property insurance agent and is currently employed by the May Agency in Bloomington, Indiana. White began his career as a casualty-property insurance agent approximately in 1930 with G. B. Woodward Company, a partnership. Later in the 1930's, White purchased fifty shares of stock of the Insurance Premium Acceptance Corporation (Acceptance Corporation), a corporation formed to finance insurance premiums associated with the Woodward agency. Also, he became an officer and director of Acceptance Corporation. In the late 1930's, the G. B. Woodward Company, Inc., was formed upon the dissolution of the G. B. Woodward Company. White was an employee, officer, and director of G. B. Woodward Company, Inc.

In 1959, Acceptance Corporation became Woodward Insurance Company, Inc. (Woodward), and White's stock in Acceptance Corporation was exchanged for stock in Woodward. Woodward also took over the insurance business from G. B. Woodward Company, Inc. In addition to the stock which he received from Woodward in exchange for his Acceptance Corporation stock, White purchased another fifty shares of Woodward stock for seventy-five dollars per share. On December 30, 1959, White signed an "offer to purchase stock of corporation and agreement not to compete in business" with regard to the fifty shares of stock he purchased. This stock purchase offer, which was drafted by Woodward representatives and is the subject of the instant litigation, contained the following covenant not to compete:

'As an express inducement for the corporation to sell me said shares of capital stock and as additional consideration for the purchase of such capital stock, I do now by the execution of this instrument expressly covenant and agree with the corporation as follows:

'1. In the event that my continued or future connection with Woodward Insurance, Inc., its successors or assigns, either as an officer, director or employee, is terminated for any cause or reason whatsoever subsequent to the execution of this instrument, I agree that I will not engage directly or indirectly in the insurance business or any of its lines either as agent, broker, solicitor or employee, or as an officer, director, employee or stockholder of any corporation which may now or hereafter be engaged in the local agency insurance business in Monroe County, Indiana.

'2. I do further covenant and agree that I will not loan any money or extend any credit to any person, form or corporation engaged in the insurance agency or insurance brokerage business and doing business in Monroe County, Indiana, at any time subsequent to the termination of my employment with Woodward Insurance, Inc. and its successors or assigns.

'3. The above and foregoing covenants and agreements made by me shall remain in full force and effect for a period of five (5) years immediately following the date of the termination of my employment with Woodward Agency, Inc., its successors or assigns. It is expressly understood, however, that following the expiration of such five (5) year period I shall be free to do all or any of the above and foregoing things without restriction.

'4. The terms and provisions hereof shall pertain only to my engagement in the local agency insurance business, either directly or indirectly as hereinabove set forth, within the territorial limits of Monroe County, Indiana, and shall not be applicable to my engagement in such business subsequent to the termination of my employment with Woodward Agency, Inc., its successors or assigns, in any other county in the State of Indiana, or in any other state or territory of the United States.'

On September 21, 1979, White tendered his resignation, which was effective October 5, 1979, as an employee, officer, and director of Woodward. He subsequently offered to sell his stock in Woodward back to the corporation, and Woodward purchased it. On October 7, 1979, White negotiated a work agreement with the May Agency and began his employment with that insurance agency on October 8."

425 N.E.2d at 259-60.

Under Ind.R.Tr.P. 56(C), a summary judgment motion shall be granted if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits and testimony, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. If there is any doubt as to the existence of a factual issue, the motion should be resolved in favor of the non-mover. Klinger v. Caylor, (1971) 148 Ind.App. 508, 524, 267 N.E.2d 848, 857. In ascertaining the existence of any doubt, the contents of all pleadings, papers and affidavits are liberally construed in favor of the non-movant. Blankenbaker v. Great Central Insurance Company, (1972) 151 Ind.App. 693, 699, 281 N.E.2d 496, 500. Summary judgment should not be granted if the facts give rise to conflicting inferences which would alter the outcome. Clayton v. Penn Central Transportation Company, (1978) Ind.App., 376 N.E.2d 524, 525. Even though conflicting facts on some elements of a claim exist, summary judgment may be proper when there is no dispute or conflict regarding a fact which is dispositive of the action. Hayes v. Second National Bank of Richmond, (1978) Ind.App., 375 N.E.2d 647, 650. Woodward contends that there are material issues of fact as to whether the covenant not to compete was supported by consideration, was ancillary to and necessary for the main purpose of the contract, and whether it expired upon White's relinquishment of his shareholder status. The trial court granted summary judgment on all three of these grounds. The Court of Appeals found the trial court was proper in granting summary judgment on the issue of whether or not the covenant not to compete was ancillary to and necessary for the main purpose of the contract and therefore did not discuss nor decide the issues concerning consideration or whether the contract expired when White sold his stock back to the corporation. Since we feel the Court of Appeals erred in affirming the trial court, we will discuss all three issues.

The two most recent opinions of this court regarding covenants by an employee not to compete are Buanno v. Weinraub, (1948) 226 Ind. 557, 81 N.E.2d 600, and Donahue v. Permacel Tape Corporation, (1955) 234 Ind. 398, 127 N.E.2d 235.

In Buanno, supra, the Weinraubs were partners engaged in a window cleaning and janitor service business in the city of Fort Wayne, Indiana. Appellant Buanno had been employed under an oral agreement with the Weinraubs for several years. In 1943, Irvin and Leonard Weinraub were about to enter the armed forces for service in WW II and in order to keep the business operating while they were away, submitted to appellant Buanno a written contract which was supplemental to the oral agreement of employment he already was working under. The written contract provided for additional duties for Buanno in the absence of the two men. Those duties involved managerial work which the contract set out, delineating Buanno's responsibilities, plus additional pay he would receive during this period. The contract provided that it could be terminated by either party upon giving sixty (60) days notice to the other party. The contract further provided that Buanno was not to engage in the window cleaning or janitor service in Allen County for a period of three years after he left the employ of the Weinraubs. After Leonard Weinraub returned from the armed forces, a sixty-day written notice of termination of the written contract was sent to the appellant. After the expiration of the sixty (60) days notice, appellant Buanno formed a corporation of his own and went into the janitorial and window cleaning service in Ft. Wayne. The trial court found in favor of Weinraubs and enjoined Buanno from taking part in janitorial or window cleaning business in the Ft. Wayne area for a period of three years, pursuant to the contract.

In affirming the trial court this Court said:

"The evidence was conflicting as to whether the appellant had been discharged under both the oral agreement of employment and the written contract, but the evidence viewed most favorably to appellees...