Woodward Ins., Inc. v. White, 1-1280A372

Decision Date09 September 1981
Docket NumberNo. 1-1280A372,1-1280A372
Citation425 N.E.2d 258
PartiesWOODWARD INSURANCE, INC., Plaintiff-Appellant, v. C. M. WHITE, Defendant-Appellee.
CourtIndiana Appellate Court

Edward F. McCrea, McCrea & McCrea, Bloomington, for plaintiff-appellant.

Daniel M. Mills, Barbara Freedman Wand, Andrew C. Mallor & Associates, P.C., Bloomington, for defendant-appellee.



Woodward Insurance Co., Inc. appeals from a judgment for C. M. White (White) which found an agreement not to compete to be void and unenforceable and found that White had not breached any duty owed to Woodward or acted in a manner which constituted unfair competition. We affirm.


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 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:

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.

"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, firm 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.

Woodward brought this action seeking damages and the enforcement of the covenant not to compete under Count I and damages as a result of alleged unfair competition under Count II. The trial court granted White's motion for summary judgment on Count I, finding the agreement not to compete lacked consideration, was not ancillary to and necessary for the main purpose of the contract, and that the terms of the agreement expired upon White's relinquishing his shareholder status. After the presentation of evidence on Count II,

the trial court entered judgment in favor of White finding that customer lists, expiration dates, premium amounts, and other information relating to policies do not constitute trade secrets; that Woodward failed to show that White breached any duty owed to Woodward; and that Woodward failed to show that any of White's acts constituted unfair competition with Woodward.


Woodward raises the following issues, which we have restated, for our consideration:

1. Whether the trial court erred in granting White's motion for summary judgment as to Count I of the amended complaint.

2. Whether the trial court erred in finding that White did not engage in unfair competition with Woodward.

Issue One

Woodward contends the trial court erred in granting summary judgment for White. Under Ind.Rules of Procedure, Trial Rule 56(C), summary judgment is appropriate only when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Kendrick Memorial Hospital, Inc. v. Totten, (1980) Ind.App., 408 N.E.2d 130. In order to determine whether a genuine issue of material fact exists, all materials on file will be construed liberally in favor of the non-moving party and all doubts resolved against the moving party. Moll v. South Central Solar Systems, Inc., (1981) Ind.App., 419 N.E.2d 154. Since summary judgment may not be used as a substitute for trial in determining factual issues, the trial court may not weigh conflicting evidence. Suyemasa v. Myers, (1981) Ind.App., 420 N.E.2d 1334; Collins v. Dunifon, (1975) 163 Ind.App. 201, 323 N.E.2d 264. Furthermore, summary judgment should not be granted if conflicting inferences arise from the facts. Clayton v. Penn Central Transportation Co., (1978) Ind.App., 376 N.E.2d 524. However, 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, trans. denied. Woodward asserts 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. Since the trial court was correct in granting summary judgment because the covenant not to compete was not ancillary to and necessary for the main purpose of the contract, we will not discuss whether the covenant was supported by consideration or whether it expired when White sold his stock.

A contract or covenant not to compete is generally considered to be in restraint of trade and hence is not favored. Captain & Co. v. Towne, (1980) Ind.App., 404 N.E.2d 1159. Such a contract or covenant will be enforced if it is reasonable, is ancillary to the main purpose of a lawful contract, and is necessary to protect the covenantee in the enjoyment of the legitimate benefits of the contract or to protect the covenantee from the dangers of unjust use of those benefits by the covenantor. Milgram v. Milgram, (1938) 105 Ind.App. 57, 12 N.E.2d 394. If the restraint imposed by the covenant or contract exceeds the necessity presented by the main purpose of the covenant or contract, then it is void because it oppresses the covenantor without any corresponding benefit to the covenantee and tends to a monopoly. Id.

Woodward argues the covenant in the present case meets the ancillarity requirement set forth in Milgram v. Milgram, supra, because it is ancillary and necessary to a valid employment contract. We recognize that covenants not to compete have been held sufficiently ancillary and necessary when contained in valid employment contracts. See Buanno v. Weinraub, (1948) 226 Ind. 557, 81 N.E.2d 600; 4408, Inc. v Losure, (1978) Ind.App., 373 N.E.2d 899. However, as White has correctly stated, the covenant not to compete was not contained in an employment contract in the present case. The written contract dealt with the terms of a stock purchase offer; it did not contain any provisions dealing with the terms of White's employment. Despite this fact, Woodward argues the covenant was "ancillary to the main purpose of the contract because that main purpose was establishing the corporation and establishing a relationship between it and its employees." Appellant's Brief at 25. In essence, Woodward is asking us to interject an employment contract into a stock purchase offer because the purchaser was an employee. This we...

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2 cases
  • Woodward Ins., Inc. v. White
    • United States
    • Indiana Supreme Court
    • 19 Julio 1982
    ...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 ......
  • Young v. Van Zandt
    • United States
    • Indiana Appellate Court
    • 23 Mayo 1983
    ...referred to in the employment agreement.4 We note for the benefit of appellants' counsel that our decision in Woodward Insurance, Inc. v. White, (1981) Ind.App., 425 N.E.2d 258 was vacated by our supreme court at 437 N.E.2d 59 on July 19, 1982. The appellants' brief was filed April 13, 1983......

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