Security Services, Inc. v. Priest

507 S.W.2d 592, 1974 Tex. App. LEXIS 2030
CourtCourt of Appeals of Texas
DecidedFebruary 7, 1974
Docket18295
StatusPublished
Cited by9 cases

This text of 507 S.W.2d 592 (Security Services, Inc. v. Priest) 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
Security Services, Inc. v. Priest, 507 S.W.2d 592, 1974 Tex. App. LEXIS 2030 (Tex. Ct. App. 1974).

Opinions

GUITTARD, Justice.

On this appeal we affirm the trial court’s denial of a temporary injunction restraining competition by plaintiff’s former employee.

Security Services, Inc. sued Carl B. Priest, its former sales manager, to restrain him from violating a covenant in his employment contract restricting him from competing with plaintiff within Dallas County and adjoining counties for a period of one year after termination of his employment. Defendant admitted the competition, but defended on the ground that plaintiff did not come into court with clean hands. The trial court denied the temporary injunctive relief pending suit, and plaintiff seeks reversal on the ground that the trial judge abused his discretion, since the undisputed evidence shows that defendant was engaged in soliciting plaintiff’s customers in violation of the covenant and that temporary relief was necessary to preserve the status quo of the subject matter during pendency of the suit. Defendant contends that the injunction was properly denied because the evidence supports a conclusion by the judge that plaintiff was guilty of unconscionable conduct in discharging defendant without cause after only a short period of employment and after getting the benefit of customer contacts that defendant had developed while working for a previous employer who was in competition with plaintiff. We find that the evidence does support such an inference and, for this and other reasons, we hold that no abuse of discretion is shown..

The evidence is conflicting in several important respects. Defendant testified that in August 1972 plaintiff’s president, Martin Coben, approached him about employment, but that he was not interested at that time because he was happy with his employment with American Couriers, a competitor of plaintiff. The next contact occurred in December 1972. The witnesses disagreed as to which party initiated this meeting, but defendant admitted that he was then available for employment because American Couriers had asked him to leave when he had not accepted an offer to go to Iowa. Defendant testified that in one of their preliminary conversations Coben told him plaintiff never had any trouble with competition from American Couriers until defendant went to work for them and that Coben wanted to know how much business of American Couriers he could bring with him. He replied he could bring approximately $2200 a month.

Defendant’s employment with plaintiff began January 31, 1973. The contract recites that his previous contract with American Couriers had included a covenant against competition and that defendant represented that he was free to enter plaintiff’s employ without violating his earlier contract. At the time of signing the contract with plaintiff, defendant furnished at plaintiff’s request an opinion of his own lawyer, who represented him in negotiating the contract, that he was free to be employed by plaintiff.

According to defendant, Coben encouraged him to solicit the customers of American Couriers, and he did. Defendant testified that he put approximately $3700 [594]*594worth of business per month on plaintiff’s books, and that sixty per cent of it was probably from American Couriers. This estimate was disputed, and much of the testimony in the record concerns how much business defendant was actually responsible for. We accept defendant’s estimate, however, since the trial judge evidently did. According to defendant, when his employment was terminated he had forty or fifty proposals outstanding with American Couriers’ customers, and he felt that he had “saturated” all of those customers.

The contract of employment provides:

[T]he employment of Employee may be terminated by either party, upon thirty (30) days’ written notice, or may be terminated by Employer with or without cause, upon payment of two (2) weeks’ severance pay to Employee ....

Defendant was discharged without notice on June 8, 1973. Plaintiff paid him two weeks’ severance pay, as the contract required, and he does not dispute plaintiff’s contractual right to terminate his employment in this manner. He contends, however, that the contract was unconscionable in that it did not bind plaintiff to employ him for any period of time, but permitted plaintiff to take advantage of defendant’s contacts with the customers of American Couriers by soliciting their business, and then, as soon as it got the benefit of those contacts, it could discharge him and prevent him from earning a living. He insists that under the circumstances shown, the trial court was not required to enforce the contract.

As bearing on the question of whether the circumstances of defendant’s discharge would justify a court of equity in denying enforcement of the restrictive covenant, both parties presented evidence concerning the cause of the discharge. Plaintiff’s evidence tends to show that defendant was not producing ,as expected, that the new accounts which defendant wrote were not profitable because of the scattered location of the customers, and that plaintiff had difficulty maintaining contact with defendant when he was in the field. Defendant’s testimony tends to show that he brought in a substantial volume of business, that he never heard any complaint about his work, and that Coben assured him that his services were satisfactory until June 8, 1973, when Coben informed him that plaintiff would have to let him go because he was too expensive.

Defendant’s title during his employment with plaintiff was sales manager, but Cob-en acknowledged that plaintiff had no employee with that title before defendant was employed and that the position was not filled after defendant left. Defendant suggests that this circumstance adds force to his argument that plaintiff’s purpose in employing him was to attract the customers of American Couriers and that he was discharged when that purpose had been accomplished.

Although defendant admitted that he was competing with plaintiff at the time of the hearing, he had barely started his business, and there is no evidence that he had actually diverted any customers from plaintiff. He was cross-examined about various prospective customers whose business he had solicited, but it is not clear from the record that any of them had current contracts with plaintiff.

We conclude that plaintiff has not established a clear right to enforcement of the covenant against competition. Such covenants are not favored by the courts because of the public policy against restraints of trade and the hardship resulting from interference with a man’s means of livelihood. Byers v. Trans-Pecos Abstract Co., 18 S.W.2d 1096 (Tex.Civ.App. — El Paso 1929, writ dism’d); 6A A. Corbin, Contracts § 1394 (1962). Therefore, an agreement by an employee not to compete after termination of employment will be enforced only to the extent reasonably necessary to protect the business and goodwill of the employer. Weatherford Oil Tool Co. v. Campbell, 161 Tex. 310, [595]*595340 S.W.2d 950 (1960). The burden is on the former employer to go beyond the terms of the employment contract and establish by satisfactory evidence both the necessity for and the reasonableness of the restraint on competition which he seeks to enforce. Weber v. Hesse Envelope Co., 342 S.W.2d 652 (Tex.Civ.App. — Dallas 1960, no writ); Denny v. Roth, 296 S.W.2d 944 (Tex.Civ.App.

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Security Services, Inc. v. Priest
507 S.W.2d 592 (Court of Appeals of Texas, 1974)

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Bluebook (online)
507 S.W.2d 592, 1974 Tex. App. LEXIS 2030, Counsel Stack Legal Research, https://law.counselstack.com/opinion/security-services-inc-v-priest-texapp-1974.