*1 here con- we are such circumstance 876. Under or the issue to either quantum fronted any sufficient or aliunde the necessary of evidence, grant, quality below high to lands lying intent to title convey an prove water mark. to con- insufficient being itself grant
The language being there title to the tidelands question vey itself, to show fact, any grant aliunde absence of proof mark below water high to convey anything an intent Honor, in error His the trial judge, follows in favor of to direct a verdict appellant. failing Reversed. ALMERS, Jr., Appellant, J. v. The SOUTH CAROLINA
Herbert al., CHARLESTON, et corporation, BANK OF NATIONAL Respondents. 185)
(217 S. E. *2 Dobson, Messrs. Dobson & Greenville, Appellant, for Fant Greenville, Messrs. (cid:127)& Re- Rainey, McKay, spondents, 26, 1975.
June
Ness, Justice: of whether non- case the question
This involves ain noncontributory plan, clause pension competition in terms of time and is unlimited where such clause extent, restraint an unreasonable constitutes geographical trade, unenforceable against on and is thus void and policy. Carolina National Aimers the South was Charleston, a seventeen- during SCN) Bank (hereinafter 1965, he In left the from 1948 until 1965. year period took with Southern employ position respondent’s in Green- Southern), Bank and Trust Company (hereinafter SCN, ville, At vice- appellant South Carolina. *3 His fourth in chain of command. duties ranking president, be administrative SCN could with categorized generally the same with Southern. internal; substantially under a been From to had covered 1950 1965 appellant all contributions SCN which profit sharing program no individual there was were made the Bank and by plan All any provi- contribution forfeitures under by participants. employment sion of the including competitive plan, accrue to the benefit of the remaining participants provision, had in the not to the Bank. The acquired estimated interest at oral vested argument 85% to Dollars. How- be worth Thousand Twenty ($20,000.00) ever, of to Aimers’ from the departure employ subsequent Southern, SCN, his and his of new with assumption position his benefits under the aforementioned profit sharing plan to the restric- were terminated SCN pursuant following tive contained in plan: proviso Plan contrary, “Notwithstanding anything no benefit shall be hereunder to the date paid subsequent
51 former any or Retired Participant, Participant Employee Carolina, enters in the if in any employment State South Board opinion such is in competition with or to the detriment of The South Carolina National Bank of Charleston.”
The master concluded that the clause was unreasonably broad and invalid. reversed. We county judge agree with the master. contends that this forfeiture
Appellant void because it is an unreasonable restraint of trade. While forfeiture is not a direct of trade in restraint that the appel- lant is not from in his chosen precluded engaging profession, that the appellant argues forfeiture enkindle consequences influence, in subtle albeit fashion. do restraining We not have any precedents with forfeiture of retirement dealing income1; however, the asserts that appellant the result unrestricted forfeiture clauses is permitting similar to that of covenants not to classic direct compete, example restraint.
Case our State is establish own precedent ample proposition agreements compete, disfavor, while examined, looked upon critically and construed against any will be as en- employer, upheld forceable if such is reasonable agreement as to territorial extent of the restraint and the period which the said Forms, restraint is to Eastern Business Inc. v. imposed. Kistler, 429, 258 C. 189 E. S. S. Oxman (2d) (1972); v. 28, ; 241 S. C. Profitt, S. E. Oxman (1962) Sherman, v. 218, 239 S. E. C. 122 S. (1961); Standard v. Co. E. Register 238 S. C. 119 S. Kerrigan, *4 ; 533 South Carolina Ander- Corp. Finance (2d) (1961) of 1 argues Co., 209, Respondent that Barton v. Travelers Ins. 84 S. C. 66 S. E. (1909) disposition 118 controls the of Barton dealt this case. upon with income from ac- being deferred sales insurance forfeited ceptance competitive employment year of within a period. one The distinguishes time limitation alone the Addi- appeal. it from instant tionally, plaintiff’s replacement salesman hired in Barton to assume would policies. have to to No duties continue service the obligation present sharing arrangement. similar profit in a 109, E. Co., 113 S. Side Finance 236 S. C.
son v. West 343, However, all ; 11 L. n. 4. S. C. Q. 329 (1960) have the valid- upon Court by passed previous opinions in the context of either the clauses ity noncompetition will, or the its good promise sale of a business or practice ancillary not to enter competitive into cases, In those contract of employment. execution former was employer an aggrieved remedy sought alleged on the employee the prohibition injunctive damages; and/or Here, the to inability particular profession. was engage in competitive is not the to inability engage consequence benefits should but the forfeiture pecuniary employment, action, determine that SCN, instant as the case come had within accrued benefits that the contend forfeiture clause. Respondents aforenoted cases is classes of critical. in the two to result distinction as considerable supporting not without In they so arguing, authority. discussion of not leading compete covenants is the well reasoned Chief Moss opinion Justice
in Standard v. Register Company Kerrigan, supra In in order for Moss observed that a covenant Justice enforceable, the covenant must be be and consistent with the interests. Inev- reasonable public reasonableness on the the determination of itably depends is entitled to needs parties. employer competing of his old customers himself from instant protect pirating time as the will of his business. At -the same well good from clientele is not to be forever insulated competi- the prior limitation must Therefore, tion. some time and geographic Likewise, in- into the covenant. incorporated terest, not be offended. A deter- an elusive must concept, economic factor in this minative regard consequences law, general principles on but Standard itself was based Ohio upon law of Oxman relied are consistent with the South Carolina. v. Shermam, supra; Kinsey, Delmar the Carolinas v. 233 S. Studios C. law). (1958) (interpreting E. North 104 S. Carolina
53 suffered The covenant by employee. incompatible with the interest if it is harsh and public oppressive” “unduly “to tending deprive opportunity sup 540; himself and his Id. porting 119 S. E. family.” (2d) p. Blake, see also Not to 73 Employee Agreements Compete, Review, Harvard Law 625 and a of cases multitude (1960) annotations, collected two L. R. 41 encyclopedia A. (2d) 15; 43 A. L. R. 94. (2d)
Since the is matter of novel a question presented impres- sion, we turn to cases from other which have jurisdictions' considered whether forfeiture as are void provisions against unless policy contain reasonable limitations. they
One line cases has accepted between analogy covenants not to forfeiture provisions. first case in this affords camp to the in- striking parallel stant In Van Hosen appeal. v. Bankers Trust Company, N. W. (Iowa 1972), career plaintiff’s with Bankers Trust spanned thirty-three (33) years, beginning as a boy and messenger A com- ending vice-president. pany retirement sponsored included a clause, forfeiture without limitation, time any in the event of competitive employment. Van Hosen waiver requested denied and his retirement benefits were terminated when he accepted employment with another bank. The court observed that like “employers, employees, participating in a constant Id. struggle survival.” 508. Neverthe- p. less, humanitarian, the court noted that have a pensions both -to design economic and financial in- provide stability- Thus, dependence otherwise “the nonproductive years. infinite forfeiture termination all rights pension affiliation with instantly acquired plaintiff through prior bank, with a defendant merely by accepting employment institution, and incivic unjust penalty competing imposes same on at the time disproportionately benefiting Id. defendants.” 509. Accordingly, these p. was not enforceable. Stores, Inc. v. Greeley, Food Fair case is
Another leading been had Greeley 285 A. (1972). 264 Md. Fair Food Stores years for sixteen (16) employed with a competitor. he decided to accept employment when time and ge- reasonable A without forfeiture provision The court to be invalid. restrictions was found ographical re- and indirect between direct the distinction recognized *6 difference straints, not find the dispositive but did not matters whether stated that it The-court question. sanction of an injunction is wih the armed legal employer -clause. forfeiture or -the subtle a persuasion in which a reasonableness standard was Another case of a for- considered a condition to enforcement precedent Edwards, 331, feiture is v. 264 Or. 505 Lavey. restraint, P. 342 The considered the (2d) court (1973). total, from while not sufficient to employees seeking impede alternative Often times a with a com- employment. job observed, if the court even it involved petitor, promotion and increase in be insufficient salary, would to compensate for the forfeited benefits. This restraint was con- deemed interest and therefore unenforceable. trary on Other' a similar result but which rely cases reaching Reuben H. are v. Muggill authorization specific statutory 239, 42 62 Cal. Donnelley Corporation, Rptr. Cal. (2d) Patton, 107, v. 398 P. 147 Flammer 245 So. (2d) (1965); see L. R. 1246 ; 854 also 18 A. (2d) (Fla. 1971) (3d) to that annotation (1968). According provisions at the date of that so rare no article were -that attempt state rules was general warranted.
The above cited line of respondent acknowledges however, cases; those cases in the numerical minority are it is rule should be followed. urged majority case rule majority Perhaps leading advancing Rochester, v. Rochester 450 F. 118 Corporation (4th At oral after in- Cir. several 1971). argument appellant, that Rochester from conceded is indistinguishable quiries, Russell, matter before the court. inter- currently Judge law, forfeiture covenant not rejected preting Virginia He stated: compete analogy. authorities, “The draw a clear and though, generally obvious distinction between restraints on em- competitive in contracts in ployment employment pension plans. strong holds weight authority .that forfeitures for in engaging subsequent competitive included employment, in valid, retirement pension un- plans, even though in restricted time or behind this geography. reasoning conclusion is forfeiture, that the unlike the restraint included contract, on the prohibition employee’s work but is engaging competitive merely denial of the he right the retirement if participate does so Id. 122. engage.” p. the North brief
Recently Carolina court in a has opinion .the advanced in Rochester. Hudson adopted rationale v. Bureau, etc., North Carolina Farm C.N. App. 4 ) . S.E. (197 Rochester is approvingly discussed in Couch v. Admin *7 istrative Committee Lab, etc., 44 44, Mich. App. Of Difco 205 N. W. (2d) Covenants were (1972). conceived as mechanisms that must be shackled with reasonable restric tions less disable they a former “might employee from earning at what is living perhaps only occupation for he which is Id. qualified.” 26. The p. penalty imposed by a forfeiture was as viewed “no such immediate having and Id. 26. The overwhelming impact.” Couch court p. upheld the unlimited forfeiture upon competitive pro vision even “the of the effect though practical is to a Difco who has provision discourage built under the from Difco equity sharing plan leaving profit 26. other Id. Other cases employment.” and seeking p. be for elaboration of view include which consulted may Bank, 166, 275 A. v. Girard Trust Pa. (2d) Garner 352, 215 N. E. v. 350 Mass. Flynn Murphy, 359 (1971); Inc., 60 Pelt v. Ill. Van Berefco, App. 109 (1966); (2d) 415, Brown Stove 208 N. E. 858 (1965); (2d) Works, 453, 167 E. (2d) Inc. v. S. 119 Ga. Kimsey, App. 693 (1969).
, consideration implicit An unarticulated but important contract. When line of cases is the freedom majority voidable, it to be is determined -ever a contractual provision of the parties. necessarily- upon expectations impinges " unlimited We held that the present practically have [I]n reason for restrict no of human there is enterprise good field only . . Interference would to contract . ing freedom that, in some way, demonstrable when it was justifiable Reeves v. Sargeant, interests were public endangered.” 494, 500, 21 184, E. 187 (1942). S. C. S. of cases danger have majority diagnosed the forfeiture de minimus concluded that as and therefore interest. clause does not collide with the public distinct, Presented we .with a divergence from views other a for- we hold that jurisdictions,- feiture in a or clause profit pension plan pro- vides with a upon employment competitor participant is under the is con- divested unless it rights plan invalid tains time reasonable limitations. Corbin geographic Contracts, on 94. ultimate test of reasonable- p. § ness on a depends sifting individual weighing facts of each case. Standard Register supra. Company, before currently the Court is without these Since features, the forfeiture limiting unenforceable. This three basic considerations holding upon premised hereinafter discussed.
First, we examine the economic injury employee. Standard Register In a covenant Company, supra, not to was considered unenforceable if it was bur- unduly *8 densome or a oppressive, of the tending deprive person himself and his family. right support consequences of the forfeiture without time or geographical limitations, will often work such a .result. Thus,, while the
57. is able to himself and his fam- employee currently support it is that he or others ily, likely situated be similarly may bereaved when the time for retirement come. The has funds allocated retirement, for when he period may incapable, of otherwise himself and his would supporting dependents, vanished, have or more inured the benefit of accurately, in the South Carolina National remaining participants Plan. It is the function of the law to maintain a reasonable this, balance cases as such and this us to requires recog- nize there that is such a unfair thing competition by as well as unreasonable ex-employee an em- oppression by The circumstances of each case must be ployer. carefully scrutinized. we think the result of the for- Accordingly, feiture under this would' provision, applied generally plan, erode the under of intended the rationale Stand- protection ard Register Company, supra.
Second, we consider the practical affect of the of presence the forfeiture clause. in 1974 Congress passed compre- hensive Pension Reform Act. While was not effective at the time of the institution of this action and thus not ap- it is of plicable, assistance great to us. After numerous pub- lic one of the hearings, conclusions reached was Congress forfeitability pension retirement in- profit sharing come labor, interfered “with the to the mobility detriment News, U. S. Code economy.” 3, & Admin. Cong. Vol. Act, under p. (1974). no Accordingly, will longer a vested benefit be forfeitable “because the later went to work for a or in some other competitor way considered Id. 4726. ‘disloyal’ employer.” p. Congress noted that it was in the interest to have a portable class, working unimpeded by provisions.3 already The South Assembly Carolina General evinced a has sim- protection ilar lina participants retirement assets the South Caro- system. exempt by way retirement Funds from creditors sale, “levy garnishment, any process attachment or what- .other unassignable except soever and wise specifically shall be as herein other- provided.” Supp.) S. C. Code of (1974 Laws 61-288 Cum. § preferred legislative recognition This status for retirement benefits is Likewise, uniqueness of such tax assets. favorable treatment permitting sheltering of special place income retirement- illustrates society. income has in our *9 the we think so that has concluded and properly
Congress due to for- retirement of financial spectre prostration upon from accepting feited deters effectively employees rights for- would be unduly This Court competitive employment.4 to because malistic if we a covenant not compete invalidated trade, forfeiture of but was direct restraint approved result. same indirectly accomplished provisions restraint is undoubt- Even the rule majority recognizes Couch, supra.5 of the forfeiture edly provision. purpose as noted in Finally, Standard Register Company, at common supra, law employment restraints were invalid. Gradually covenants not to were as an to this rule. When engrafted exception cir- properly cumscribed, were they enforceable. The specifically justifi- cation for this modification of the common law that the of had employer protectable interest-precipitous raiding clients, secrets, trade protection goodwill, security etc.6 The Court will the invasion of those enjoin rights. When the to restrain for- merely is employers design by feiture, it has all but conceded that the above mentioned business interests are In case of a invaded. being forfeiture the is not able to employer prevent employee from exercise by but competing only leverage divesting income deferred to avoid attempting rights. employer not to business assets. competition, legitimate protect restraint must be no is reasonable to protect than greater “—in business interest —.” some employer legitimate favored, are tol- While clauses are not they noncompetition in- erated, reasonable, if some business protect legitimate 4 Any upholding on the freedom to reliance for based deprivation by contract suffered wanes when we consider the position. potentially higher in a loss of services of the by represents a law This the writer of review conclusion has been reached security em for the' pension wherein he stated “the often ployee losing by competing years, his later cannot risk which he testing and then the forfeiture clause in the Courts.” Forfeiture Compete, 61 Pension Benefits for Not Violations Covenants 290, 299 (1966). N.W.U.L. Rev. justification opportunity in modern Another the increased our Beeves, society. supra. terest,. secrets, lists, be it etc. confidentiality, trade trade Here, no commer- concedes that he has valid employer cial interest with a clause. worthy protection may While employer by competi- prohibit employment tion within a reasonable time and extent for the geographic interest, he of a commercial cannot protection legitimate as a lawfully prohibit “legiti- competition Thus, mate interest” in itself. the instant clause commercial must fail there is no also because commercial legitimate interest of which is South National Bank protected Carolina *10 the clause.
From this discussion it would seem that the forfeiture Nevertheless, should be our dis- provisions always void. cussion this case illustrates that the covenant throughout not to and forfeiture are but alter- compete upon competing native to approaches the same result. accomplish practical Therefore, we would not substitute of the the reasoning for logician the realities of the business world and em- pure bark on a course of for covenants not separate treatment to and to their provisions. pruned When same they tend results and quintessence, accomplish be should treated accordingly.
The decision of the learned of the County Court Judge reversed, for Greenville is case and the remanded County the amount due. determination of and Reversed remanded.
Moss, C. J., and and concur. Bussey, Lewis JJ., Littlejohn, J., dissents. :
Littlejohn, (dissenting) Justice I order respecftully dissent and would affirm the of Judge Price essence the Greenville Court. The of the County is such as Ness contract involved opinion Justice is here should not State against public policy be tolerated and enforced. contract of an evil is in the
In view there nothing my judicial process the intervention nature warranting it to declare unlawful. of this State of an contract illegal in the
There is certainly nothing so affected nature, adversely nor is the public or immoral establishment of a should frown upon that the courts in the opinion with the quoted sharing plan profit is diffi- the term “public policy” of- Ness. Although Justice that the courts define, seems to be agreed cult to generally employer, employee, should consider the interest of record before in the There is no showing- and the public. if the will suffer this Court that the public of the contract. to the conditions case is to live required up There is no fast rule or definition of public policy applica- ble to all cases. it forbids one to do that which Generally, has a welfare. What tendency injurious is a matter contrary public policy primarily for the to determine. From the fact that legislature our leg- unlawful, islature has not declared such contracts we may infer that the are not obnoxious to that branch of contracts with the of declar- government duty primarily charged ing public policy.
The courts should exercise and out restraint judicial stay of this field of relates as to contracts unless the legislation welfare, is since agreement manifestly injurious public it is the of the law to hold to to contracts policy persons which are they voluntary parties.
“The courts averse contracts unenforceable are to' holding on the of is clear unless their ground public policy illegality and certain. the of contract Since is no small right private citizen, of the of the im- liberty the usual and most part function of courts of is en- to maintain and portant justice force contracts rather than to enable es- thereto to parties from their on the cape obligations pretext public policy, unless it that contravene clearly appears they public right or the welfare. Rules which that a say public given agree- ment is void as to be being public against policy because, extended ‘if there is which arbitrarily, thing one more than men of another it is that public requires policy full the utmost age competent shall have understanding contracts, entered liberty and that their contracting, when into freely and courts of voluntarily, shall enforced by justice.’ in courts have recklessness con-
“Many cautioned against as in violation of demning policy. agreements being public said, Public some courts have a term of policy, vague uncertain the meaning it is the duty lawmaking define, power and courts are to encroach apt upon domain of branch that of the if character- government they ize a transaction invalid because it is contrary public unless the policy, transaction contravenes some positive statute or some rule of courts well-established law. Other have approved statement an English judge policy an horse unruly astride of which be car- one may ried into unknown paths. Considerations such as these have led to the statement that the of the courts declare power agreement void in contravention of sound being pub- lic policy and, is a very delicate and undefined like power to declare a power statute unconstitutional, should be in exercised cases free from doubt.” only 17 Am. Con- Jur. tracts 178. §
With this rather limited discussion of we public policy, to set forth facts in proceed involved this The case. plain- tiff and SCN entered into a voluntarily contract employ- ment. Obviously, the enjoyed many promotions such that he became high administrative organization of the bank. SCN established voluntarily sharing profit plan. made no conrtibution to the Although employees it, after worked under the same took on a con- plan, they tractual nature. that if the plaintiff contract provided was, in entered into an State which board, SCN, no benefits opinion competition all of would be now plaintiff would' *12 paid. accept the, asks to outlaw those benefits of and this Court parts him in his of the which are not helpful particu- contract lar situation. Under the terms profit sharing plan, those who leave the with compete persons employment benefits the benefits which a de- bank are denied and inure to the benefit would have received parting employee this not solely all of the other employees. Accordingly, n a between It is more of SCN and dispute plaintiff. contest between the plaintiff remaining employees In no for its own use and SCN. event can SCN retrieve $20,000.00 benefit which the approximately plaintiff would The remain- now drain out of the profit sharing plan. suffer the detriment. ing employees It is to note that other here- interesting have employees tofore left SCN to accept with other compet- banks and have been ing denied benefits the administra- by tion of which this was an plaintiff important part. benefits which the now plaintiff seeks enhanced such action.
Contrary the view of Ness’ I think that opinion, Justice a clear distinction should be made between those cases which deal with not to agreements like agreements, Court, one now before the which involve forfeitures The reason for only. declaring agreements not to compete void is the desirability to use his permitting person talents to make a livelihood. Such is not involved here be- cause the has a of his job own choosing.
is not of this talents. In either deprived plaintiff’s employ- ment turn, he devotes his skills to his which employer, at least and at least benefits the indirectly theoretically, public.
I find no wickedness the fact that the bank a bene- gets fit from the contract which established the voluntary profit There is sharing plan. nothing wrong employer, who has trained its into a contract or employee, entering em- setting up profit sharing plan encourages *13 ployees to remain. An to raise the employer may sal- agree of an ary employee a stipulated amount over every year in order period years them to remain. Such encourage does not contravene public policy, although obviously would encourage not to employee change jobs.
Although many cases refer to em- that which the ployee when he gives up leaves the being forfeiture, in my view there is no forfeiture in the genuine usual sense of the word. In order to receive the benefits pro- vided in the must with his comply part contract, and upon failing comply he simply entitled to any words, benefits. In other one cannot forfeit that to which he was never entitled.
I consider the issue policy primary ground However, this case. appeal also contends that plaintiff he should be entitled to relief because the com- profit sharing mittee abused its discretion in his determining employ- ment was or competitive detrimental SCN. plaintiff was a vice president charge the installment loan de- at partment SCN’s Charleston office. He accepted employ- ment, assuming position vice president and comp- troller with the Southern Bank and Trust Company Greenville, a bank with competing SCN which has branches in Greenville. The duties of the plaintiff are substantially same, and it is inferable clearly that he is the vast using training experience which he obtained through employ- ment with SCN for the benefit of a con- competitor. The tentions of the on this issue without clearly merit.
I would affirm order of the lower court.