Scotsman-Norwood Co. v. Hinsley

515 S.W.2d 347, 1974 Tex. App. LEXIS 2684
CourtCourt of Appeals of Texas
DecidedOctober 17, 1974
DocketNo. 16364
StatusPublished

This text of 515 S.W.2d 347 (Scotsman-Norwood Co. v. Hinsley) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Scotsman-Norwood Co. v. Hinsley, 515 S.W.2d 347, 1974 Tex. App. LEXIS 2684 (Tex. Ct. App. 1974).

Opinion

PEDEN, Justice.

This is an appeal from an order temporarily enjoining five former employees of Scotsman-Norwood Co. for two years from directly or indirectly soliciting, diverting or taking away any of that company’s customers and enjoining them for six months from directly or indirectly soliciting, diverting, or taking away or attempting to solicit, divert, or take away any prospect or person to whom a sales proposal was made within three months prior to termination of the five employees’ employment with the company. A list of the customers and a list of the prospects covered by the injunction were attached to the order.

Scotsman-Norwood had sought a temporary injunction enjoining the appellees from calling upon and soliciting fire alarm, burglar alarm and security alarm accounts in Harris County and from engaging in the business enterprises prohibited by their contract of employment with the appellant. The only point of error presented is that the trial court abused its discretion by limiting the temporary injunction to the listed customers and prospects and by declining to enjoin the appellees from engaging in the alarm business.

Scotsman-Norwood had employed the ap-pellees in its alarms division, Alarm Engineers. At the time of their employment each employee signed papers which included a contract of employment containing a covenant not to compete with appellant for a period of two years following termination of his employment. Appellee Hinsley was the sales manager; appellees Walter, Griffin and Garrett were salesmen and ap-pellee Cooper was the operations manager.

Appellee Hinsley’s contract contained this provision:

“In consideration of such employment on such basis, the Employee convenants and agrees that he will not accept or pursue any employment or business venture within the State of Texas directly or indirectly involving the sale, lease and/or service of ice making machinery, soft cream freezing equipment, carbonic and other drinks dispensing equipment or any other product classification sold or distributed by the Company at present or during any part of the tenure of Employment or for a period of two (2) years after termination of this Employment with the Company, irrespective of the reason for the termination of his employment with the Company.”

[349]*349The other appellees’ contracts provided:

“In consideration of such employment on such basis, the Employee covenants and agrees that he will not accept or pursue any employment or business venture within the State of Texas directly or indirectly involving the sale, lease, and/or service of security equipment of the Multra-Guard type with sound receiving and listening capabilities as distributed by the company at present or during any part of the tenure of Employment or for a period of two (2) years after termination of his employment with the Company.”

Appellees terminated their employment with appellant on February 8, 1974. They immediately began the operation of Soni-trol Security Systems of Houston, Inc., whose articles of incorporation had been filed with the Secretary of State’s office one day earlier. Appellee Hinsley was one of the incorporators. Sonitrol had been selling, installing and operating Sonitrol Security Alarm Systems for about a week when the hearing in this case was held.

The general rule regarding the enforceability of a covenant not to compete is stated in Weatherford Oil Tool Company v. Campbell, 161 Tex. 310, 340 S.W.2d 950, 951 (1960):

“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.”

A trial court judgment either granting or denying a temporary injunction will not be reversed unless the appellate courts are convinced that it represents a clear abuse of discretion. Sun Oil Co. v. Whitaker, 424 S.W.2d 216 (Tex.1968).

Scotsman-Norwood argues that the trial court’s order granting only partial relief denies it the protection of its business and goodwill because the appellees were appellant’s only contacts with the public and because the appellees had gained confidential information and training from Scotsman-Norwood.

The evidence is clear that its customers’ contacts with Scotsman-Norwood were through its sales personnel, of which appel-lees comprised a major part. In support of its position that the injunction should not be limited to its customers and prospects Scotsman-Norwood cites Blaser v. Linen Service Corporation of Texas, 135 S.W.2d 509 (Tex.Civ.App.1939, writ dism’d jud. corr.). The pertinent language of that case is:

“It is clear that if the nature of the employment is such as will bring the employee in personal contact with the patrons or customers of the employer, or enable him to acquire valuable information as to the nature and character of the business and the names and requirements of the patrons or customers, enabling him, by engaging in a competing business in his own behalf, or for another, to take advantage of such knowledge of or acquaintance with the patrons or customers of his former employer, and thereby gain an unfair advantage, equity will interfere in behalf of the employer and restrain the breach of a negative covenant not to engage in such competing business, either for himself or for another, providing the covenant does not offend against the rule that as to the time during which the restraint is imposed, or as to the territory it embraces, it shall be no greater than is reasonably necessary to secure the protection of the business and good will of the employer.” Citing Martin v. Hawley, 50 S.W.2d 1105, 1107 (Tex.Civ.App.1932, no writ).

[350]*350The relief granted in the present case is similar to that granted in the Blaser case, where the employees were restrained from dealing with their former employer’s present customers. That appel-lees were the prime contact with appellant’s customers lends them little, if any, advantage in soliciting the business of potential customers not recently contacted. Nor did the trial court abuse its discretion by declining to restrain the appellees from competing with appellant for the business of previously unsolicited customers although appellees were formerly appellant’s contact with the public.

Appellant contends that it was hurt by appellees’ overbidding on contract proposals prior to their departure from Scotsman-Norwood, but the trial court was entitled to conclude from the evidence that no overbidding took place.

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Related

Wissman v. Boucher
240 S.W.2d 278 (Texas Supreme Court, 1951)
Arrow Chemical Corporation v. Anderson
386 S.W.2d 309 (Court of Appeals of Texas, 1965)
Sun Oil Company v. Whitaker
424 S.W.2d 216 (Texas Supreme Court, 1968)
Weatherford Oil Tool Company v. Campbell
340 S.W.2d 950 (Texas Supreme Court, 1960)
Martin v. Hawley
50 S.W.2d 1105 (Court of Appeals of Texas, 1932)
Blaser v. Linen Service Corp. of Texas
135 S.W.2d 509 (Court of Appeals of Texas, 1939)

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515 S.W.2d 347, 1974 Tex. App. LEXIS 2684, Counsel Stack Legal Research, https://law.counselstack.com/opinion/scotsman-norwood-co-v-hinsley-texapp-1974.