*1 any authority parties in their themselves included which the performance employment a condition of alternative contract of contract, contingency party either had or a over which fully perform control which would the contract. case, upon interpretation
Based of the Chevalier upon understanding here, my application cause to our study pertinent authorities discussion other cases and directly thereto, my opinion majority’s therefore, contrary declared, would, affirm law thus and I Appeals. the Court Civil
Opinion ,1960. delivered November Rehearing 7,1960. overruled December Incorporated Company, Tool Oil
Weatherford Campbell Et Al. A. G. 1960. Decided December No. A-7549. (340 950) 2d Series *2 part Smith, concur in and dis- Justices Griffin Hamilton part. sent in Baker, Botts, Shepherd, Andreivs and petitioners. Hagman, and Ben Weatherford, Borden & Fulgham, Hand Frank Weatherford, E. respondents. delivered the of the Court.
Mr. Justice Walker brought by This action was Company, Weatherford Oil Tool Inc., petitioner, against employees, three former who are respondents here, following negative to enforce the by contained in contracts executed the latter at the time of their employment: hereby agree
“I contract and that for a year of one from the my employment, date the termination any reason, I offering will neither enter business like merchan- dise to that offered Company, Weatherford Oil Inc., Tool nor directly indirectly any assist either competitor or of Weather- Company, Inc., any ford Oil Tool person, or other company or offering that offered
organization merchandise to like Inc., where Weather- Company, Oil Tool Weatherford carrying Inc., may on operating Company, Tool ford Oil during period.” said one petition and to Respondents as whole excepted ground the cove- alleged agreement set out therein on em- being attempt to restrict their face, nant ployment is void on its ex- and the world. entire over the United States petition although sustained, was thereafter ception amended, was plead- again exception No further was susstained. ings filed, Civil dismissed. The Court the case was have been Appeals affirmed. 327 S.W. 76. *3 engaged of alleged the business is that Petitioner operates and equipment. It
manufacturing selling1 oil field and gas any is oil or every there products in state where its sells employed as salesmen. respondents production. the Two of the techniques for and in the methods trained them Petitioner names products, them the furnished of its use and installation assigned customers, each a prospective and and of customers they upon orders for territory customers solicit called where equipment the com- give as sold instructions to use petitioner’s respondent office of pany. third worked the The allegations indicating that plant There are no at Weatherford. respondents that their em- or trade secrets were disclosed ployment any respect. Shortly ter- other after was unusual organized company employment, respondents of such mination began to those selling equipment similar certain items of by petitioner. manufactured compete agreement part on of an not to the An is his after termination of
with enforced in accordance with restraint of trade and will not be public in the same Where the its terms unless are reasonable. usually directly involved, de is the test stated for terest termining of the covenant written is whether it greater imposes upon employee any than reason restraint is good ably protect necessary to em business will ployer. Restatement, According to the a restraint of trade is statutory unreasonable, or in the domi absence authorization greater justification, than nant economic if it is social or person required protection of benefit the whose person imposes upon imposed hardship undue restraint during period of the restraint is to restricted. The time which important last is included are fáctors to agree- determining the reasonableness be considered in 861, 52 A.L.R. 1456, 20 A.L. R. A.L.R. ment. See Annotations 9 963; the Law A.L.R. Restatement 67 A.L.R. Stores, Inc., Contracts, 515, 516; v. Askin sections Ofsowitz ref.). (wr. Texas Civ. 2d 923 reading might present con of the appear It a casual from territory. Respondents tract that is not as to the same unlimited agreed they enter into period would not that for a of one by peti selling a business to that offered merchandise similar during might operating any tioner in area where latter upon period. depend such of the included will size petitioner’s operations, extent and under the terms engage respondents are in a similar free to assurance, territory they might in however, other select. There is no they products permitted would their sell throughout petitioner there should If of restraint. operations territory, respondents extend its business obligated selling competing their contract discontinue year. merchandise therein for the Enforcement remainder of the fectively prevent its terms thus ef with accordance respondents competing petitioner from with anywhere period. stipulated the world for the practical therefore, operation, amounts undertaking by to an respondents compete petitioner not to with year following for one employment. their termination of There *4 give is no territorial limitation that would them the unrestricted right engage during to ain similar clearly necessary protec- of It restraint. is not for the petitioner’s g'ood tion of employees business or will that its office or prevented engaging competitive salesmen be from in a busi- petitioner ness may products. wherever to sell its Mar- elect See tin Hawley, v. App., writ). (no Texas Civ. 2d 50 S.W. 1105 pointed As 42, Lueth, out in Wisconsin Ice Coal v. 213 & Co. Wis. “the N.W. restrictive covenant must bear some re- lation to the employee. activities of the It must not restrain his territory activities in a his which former work has not given taken him opportunity or him enjoy to undue ad- vantages competition employer.” later with his In our the covenant is unreasonable as written and cannot enforced be terms, in accordance with properly but this does not mean that exception by was sustained trial court. Since Krueger, the decisions in Lewis v. and Hutchinson Clinic, Overton Spinks 153 Texas 2d 269 S.W. and ref.), can it no (wr.
Riebold, Texas Civ. un- compete is void longer not to a said that be reasonably as to limited is not simply because enforceable although the cases hold time or area. These either unreasonable, a court may parties period stipulated be or granting an enforce the contract equity nevertheless will competing time restraining defendant from injunction and the circumstances. under present an area are reasonable within petitioner if in the case have been done should While relief, an in- suit for equitable otherwise entitled to was junction to cause could submitted moot -the be became before Supreme Court. recovery dam alleged prayed for the Petitioner also necessary to deter ages $10,000.00, it is amount upon predicated of action mine whether cause competition cannot promise from which of a to refrain breach is If the its terms. enforced in accordance with parties space, reasonably or limited either time as to rights until respective and duties definitely apprised of their not a period that or a equity has out an area court of carved thing for the court It one reasonable under the circumstances. granting injunctive relief to do this as an incident entirely matter to operates prospectively and an different which giving employer a purpose reform the contract defend In the latter situation the cause of action for respond he had required ant for what be. determining, except way at a time when there was no done possibly by declaratory judgment, where or for action competing. long obligated legally refrain from how he was rule, reason for the If this were the there would be no attempt in the first in a reasonable contract even stance. The make obligate simply never could compete anywhere world, then in the and the latter would engaging at his required to choose between similar business capable quite peril asking parties to do what the doing agreement, they prepared reason when i.e. write provisions area. as to both time and able enforceable resulting competi- from hold that an action for We *5 occurring and have tion reasonable before prescribed by competent jurisdiction must stand a court been not en- If the is or fall on the contract as written. the time either with its terms because forceable accordance may unreasonable, stipulated is or the area therein money re- injunctive awarded relief obtain but will be covery anything prior judi- to a have done rights obligations arising cial declaration from the of the case, contract. in this No determination has made been period during now ex- which the restraint exist has was to pired. Since the contract not contain a terri- does limitation, legal damages torial there is no basis for an award of for breach of the same. judgment Appeals
The Court Civil has affirmed the dismissing trial injunction cause. Since the feature sustaining the case is now moot and the trial court did not err in exception concerned, far so as the action for is judgment Appeals of the Court of must affirmed. It Civil is so ordered.
Opinion 7,1960. delivered December Griffin, Mr. joined Justice Justices and Hamil- Smith ton, concurring part dissenting part. agree majority I purpose with the that for the in- junction sought the contract must held to be reasonable injunction enforceable and that action is now moot. Under Krueger, the case Clinic, of Lewis v. Hutchinson & Overton 1954, 363, 153 Texas 2d S.W. restrictive covenants of us, the nature of the one before the time stated must reduced to a reasonable uphold time in order to contract. Spinks Riebold, App. 1958, ref., Texas Civ. wr. extended the above doctrine to the area covered the contract. majority opinion recognizes The principle as of law applicable, and holds that is a contract valid one as relates injunctive sought. to the junction relief But after that an in- proper, majority have been then holds the identical contract invalid insofar as an action for Thus, concerned. we have the same lawsuit contract which is valid and at the same time also invalid. majority, effect, recognizes prin- the well-established
ciple possible, of law that “whenever contracts will be construed so as to render ineffective, them rather [and], than effective^ if a susceptible contract constructions, only of two one of which will effective, render the valid and that con- adopted struction will be valid,” which will render the contract (13 266, 267, Texas Contracts) Jur. applied section injunctive sought, recognition relief but refuses to the same
316 construing ain suit the contract in rule of law well-established for “gen- that 627, 246, stated rule is the In 17 section C.J.S. reject the tendency is to erally, modern authorities the of the * * * by the gauge contract the
fixed rules necessary to the imposed as restraint reasonableness protection the public covenantee, compatible the with the and as 1933, in the In in Texas. interest.” This is not a new doctrine 945, App., McAnally Person, v. Texas case Civ. ref., not approved that an the the doctrine wr. to court employment compete contract a in an former with time a in far as it covered reasonable would be enforced so Kentucky case approved the in the area. That case also Co., Expert Ky. 25 Davey 233 v. Tree S.W. Ackelbein 62, 64, reduced a not would be 24 that court, and so trial en- in the what was found be reasonable McAnally says: forced. The case further Ky. Briggs Mason, case of “In the Thomas W. Co. pointed out how 1344], this court A.L.R. [52 question the the must be covenants of character of one employ- reasonably required protection the than wider business, er’s sary than neces-' restraint must not be broader good protection the em- will of of the business Judge opinion ployer. the trial Dietzman in his below] [in to, under expressed referred the contract above view negative terms, consideration was too its broad operations to limits not covenant restricted the of Ackelbein Davey protection necessary Com- pany. held, however, that, although question He the covenant may broad, yet, is reason- be if it can cut down to what too able, Davey Company is extent, en- and enforced to that necessary protection titled to relief full as restraining of its business. Contracts freedom of reasonable, taking they are when into account enforceable * * *” employer, public. interest of and the discussing Corbin, Contracts, problem, this in his work On 6, p. says: 487', Vol. “For considerable it seems have legality assumed courts that of an been some of the American agreed restraint of distinction trade was determined ” ‘general’ discussing between he and ‘limited.’ After rule cases, however, then concludes: “In the best considered modern against court had decreed whose enforcement defendant breach has occurred within which restriction though clearly reasonable, the terms of even larger imposed pp. restraint.” 500-501. See unreasonable Krueger, Appeals also the of the Court of Civil case, v. Lewis Texas Hutchinson & Overton Clinic Civ. *7 885(7),
1954, are Texas cases which where cited one and have have reduced an unreasonable area to Corbin, enforced the contract in such reduced area. also See Contracts, 6, 499, 505, p. p. On Note 59. section 1390 Vol. of
I would hold the trial court could reduce the extent necessary protect plain- the which was to the to an area against competition tiff’s business of defendants for the one argued period prescribed the contract. It is that the contract must stand as written and as written would damages void; therefore, recovery no be had. authority point.
I have been to find unable Texas substantiating majority authority Since the ing cites no their hold sustaining they point, on this I am sure find no cases could position. Wright Scotton, 402, their of The case v. Del. Ch.- 69, 1162, 1923, following 121 Atl. 31 A.L.R. and the annotation discussing power damages equity aof court of to award injunction, my lays an point opinion, down the correct rule. The by appellants raised in that case was that the trial court complainants erred in that the entitled an were to both injunction overruling point In this the Court said: questioned “It jurisdiction cannot be that the chancellor had of purpose granting us injunction, case before an if complainants adequate he believed the remedy had no at law. question right grant The only injunc- he is: Had to against breaches, tion future but also to award past breaches? opinion, “The are practically court under all recent authorities, country, least, this at the chancellor had —in —that right grant remedies, required both because were both give full complainants, just relief satisfy require- all the case, promote ments of the justice, the ends of also of damages chancellor, having power to award complainants sustained between the breach granting the contract and injunction, right had the to direct quantum that an issue of damnificatus be submitted j ury to ascertain the same. granted
“If the injunction only, chancellor had the com- another plainants compelled would have to sue been chancery damages, in the one full relief could had when one proceeding. prevention multiplicity of suits equity, awarding damages by when a court reasons for the jurisdiction subject it has matter.” foregoing answering question, the certified “Under (the the in- verdict, appellant jury entitled to facts and the was refusing junction prayed for, court err and did the trial it,” grant court, Riddle- Malakoff v. in the case of Gin Co. 530, in- that an sperger, (1917), held 108 Texas 192 S.W. restraining junction competition a contract the terms of within lie where also recovered. Chicago Co., Texas of Miller Portrait In the case only ref., stated that the the court Civ. wr. *8 contract entered question in case was the right (Miller) restricting" compete after his severing If such contract the Portrait with Co. liqui- providing valid, provision did contained therein damages, jurisdiction a court dated take the case out of the court, injunction equity to the extent no could issue? of after discussing authorities, provision held that various damages and, equity jurisdiction, not did take case out of therefore, proper injunction facts. would lie under brought injunction plaintiff at suit for the case bar jurisdiction the court. On This the case, invoked the trial court injunction have held feature of the we contract, and apply should the test reasonableness as was reasonable set out to such area should reduce the area rights protect order to under all circumstances in considering parties. anomaly to hold all It would be question contract could recovered the therefore, area, and, reduced to cover likewise be area. In this valid as such reasonable hold reasonable area such during contract it suffered plaintiff could show apply two recovered. To the one could be entirely contract of the same different construction rules to a parties would lead same in the same lawsuit between the multiciplicity inconsistency. suits, hopeless confusion judgments and re- of the courts below I reverse the the amount to determine mand the cause to the trial court plaintiff may entitled. damages, any, if to which Opinion December 1960. delivered