Wyatt Safety Supply Co. v. INDUS. SAFETY PORD., INC.

566 So. 2d 728, 12 A.L.R. 5th 1102, 1990 Ala. LEXIS 629, 1990 WL 121841
CourtSupreme Court of Alabama
DecidedJuly 27, 1990
Docket88-1653
StatusPublished
Cited by9 cases

This text of 566 So. 2d 728 (Wyatt Safety Supply Co. v. INDUS. SAFETY PORD., INC.) is published on Counsel Stack Legal Research, covering Supreme Court of Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Wyatt Safety Supply Co. v. INDUS. SAFETY PORD., INC., 566 So. 2d 728, 12 A.L.R. 5th 1102, 1990 Ala. LEXIS 629, 1990 WL 121841 (Ala. 1990).

Opinion

566 So.2d 728 (1990)

WYATT SAFETY SUPPLY COMPANY, INC.
v.
INDUSTRIAL SAFETY PRODUCTS, INC.

88-1653.

Supreme Court of Alabama.

July 27, 1990.

Louis E. Braswell of Hand, Arendall, Bedsole, Greaves & Johnston, Mobile, and Joseph S. Bird III and John E. Goodman of Bradley, Arant, Rose & White, Birmingham, for appellant.

Jerome E. Speegle, Michael Gillion and Michael R. Mills of Miller, Hamilton, Snider & Odom, Mobile, for appellee.

ADAMS, Justice.

Industrial Safety Products, Inc. ("Industrial"), filed an action against Wyatt Safety Supply Company, Inc. ("Wyatt"), alleging that Wyatt had tortiously interfered with contractual relationships between Industrial and two of its employees, Joseph Michael Lushington and Edna Faye Harridge, by inducing Lushington and Harridge to breach noncompetition agreements that they had signed. Industrial also sought to enjoin Wyatt from employing Lushington and Harridge, alleging that such employment would be in breach of the noncompetition agreements. The trial court granted Industrial's motion for a preliminary injunction, and Wyatt appeals. A.R.App.P. 4(a)(1). Industrial had a corporate predecessor that was also named Industrial Safety Products, Inc. We refer to that corporation, which underwent a reorganization described below, as "Old Industrial." We reverse and remand.

Industrial has its principal place of business in Mobile, and it is engaged in the sale of safety equipment and supplies to contractors, plants, and industry; Wyatt, which has its principal place of business in Birmingham, also engages in the sale of safety equipment and supplies.

In February 1987, both Lushington and Harridge, who were employees of Old Industrial in Pensacola, Florida, executed a covenant not to compete with Old Industrial. The covenants provided that Lushington and Harridge would not, for a period of two years following the termination of their employment, compete with Old Industrial within Mobile or within 200 miles in any direction.

Between November 1 and December 3, 1987, a series of interrelated corporate transactions involving Old Industrial took *729 place. Old Industrial entered into a "Reorganization Agreement" with Control Resources Industries, Inc. ("Control"), and ISP, Inc. ("ISP"), as well as a merger agreement with ISP. The agreements involved the creation of a shell corporation, ISP, wholly-owned by Control, into which Industrial as it then existed (Old Industrial, as we have been calling it in this opinion), was merged. ISP then changed its name back to Industrial Safety Products, Inc. (Industrial, as we call it in this opinion). Old Industrial transferred 100 percent of its stock to Control.

Lushington and Harridge became employees of Industrial, and they worked for Industrial in Pensacola until July 1989. Lushington and Harridge resigned from Industrial on July 7, 1989, and began employment with Wyatt, still in the Pensacola area, on July 10, 1989.

Wyatt contends that Industrial cannot enforce the noncompetition agreement because all such agreements are void according to Ala.Code 1975, § 8-1-1(a), except as provided in § 8-1-1(b) and (c), and Wyatt further argues that the noncompetition agreement does not fall within either of those exceptions. Section 8-1-1 provides:

"(a) Every contract by which anyone is restrained from exercising a lawful profession, trade or business of any kind otherwise than is provided by this section is to that extent void.
"(b) One who sells the good will of a business may agree with the buyer and one who is employed as an agent, servant or employee may agree with his employer to refrain from carrying on or engaging in a similar business and from soliciting old customers of such employer within a specified county, city or part thereof so long as the buyer, or any person deriving title to the good will from him, or employer carries on a like business therein.
"(c) Upon or in anticipation of a dissolution of the partnership, partners may agree that none of them will carry on a similar business within the same county, city or town, or within a specified part thereof, where the partnership business has been transacted."

The noncompetition agreement at issue falls within the general prohibition of § 8-1-1(a). Accordingly, the dispositive issue is whether § 8-1-1(b) exempts the agreement from that prohibition and thus makes it enforceable. Section 8-1-1(b) explicitly provides that the successor to a purchaser of the good will of a business can enforce a noncompetition agreement against the sellers of that good will; however, § 8-1-1(b) does not state that Industrial, a successor to Old Industrial, can enforce a noncompetition agreement made by Lushington and Harridge with Old Industrial, their former employer. In other circumstances, we have addressed § 8-1-1's failure to make an explicit exception to the provision's prohibition of contracts in restraint of trade, and we examine those cases for guidance.

In Odess v. Taylor, 282 Ala. 389, 211 So.2d 805 (1968), the Court addressed a noncompetition agreement between two doctors, Dr. Odess and Dr. Taylor. Taylor entered practice with Odess and agreed not to practice within 50 miles of Birmingham if he left his association with Odess. Later, Taylor stated that Odess was treating him unfairly with regard to the practice, and he left his practice with Odess. Odess sought to enjoin Taylor from practicing medicine in Birmingham, but the trial court denied Odess's request for such a permanent injunction. In affirming the trial court's judgment, the Court wrote:

"Assignment of error No. 6 is to the effect that the lower court erred `in finding as a fact or concluding as a matter of law that the agreement between complainant (appellant) and respondent (appellee) * * * is void under Section 22 of Title 9 of the 1940 Code of Alabama (Recompiled in 1958) [now § 8-1-1(a), Code 1975] and does not come within the protection and purview of Sections 23 and 24 of the said Title 9 [now § 8-1-1(b) and (c)].'
"These sections are as follows:
"`§ 22. Contract in restraint of trade, void.—Every contract by which *730 any one is restrained from exercising a lawful profession, trade, or business of any kind, otherwise than is provided by the next two sections, is to that extent, void.
"`§ 23. Exceptions in favor of purchaser of good will and employer. One who sells the good will of a business may agree with the buyer, and one who is employed as an agent, servant, or employee may agree with his employer, to refrain from carrying on or engaging in a similar business and from soliciting old customers of such employer within a specified county, city, or part thereof, so long as the buyer or any person deriving title to the good will from him, and so long as such employer carries on a like business therein.
"`. . . .'
". . . .
"Even a specific covenant not to compete in a profession, trade, or business is void under Section 22, supra, unless within the limited exceptions created by Section 23, supra. Joseph v. Hopkins, 276 Ala. 18, 158 So.2d 660.
"As pointed out in Parker v. Ebsco Industries, Inc., 282 Ala.

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Bluebook (online)
566 So. 2d 728, 12 A.L.R. 5th 1102, 1990 Ala. LEXIS 629, 1990 WL 121841, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wyatt-safety-supply-co-v-indus-safety-pord-inc-ala-1990.