Case ID: sw2d_278/html/0293-01.html
Source: Caselaw Access Project
Author: {"author": "McGILL, Justice. - -", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

E. D. PHILLIPS, Appellant, v. SEIBERLING RUBBER COMPANY et al., Appellees.
    No. 5072.
    Court of Civil Appeals of Texas. El Paso.
    July 23, 1954.
    
      Lester C. Boone, Odessa, for appellant.
    Blanton, McMahon & Fuller, Odessa, for appellees.
   McGILL, Justice. - -

This is an appeal from an order of the judge of the District Court of Ector County -granting a temporary injunction in a suit pending in that court\ wherein appellee was plaintiff and appellant was defendant. The order enjoined the defendant:

“* * ■* from engaging- in the ' business -of selling or dealing in tires and tubes in Odessa, Texas, or within a radius.of 1Q0 miles of said city, at any time before -May .10,. 1959, except with the written consent .of .Plaintiff, . Seiberling Rubber Company;”

The basis for .the injunction was a contract entered-into between the Ed Phillips Tire Company, Inc., .a corporation, hereinafter referred to. as “the corporation,” appellant, and other- stockholders of such corporation, and appellee, whereby.appellee agreed to sell its goods,-wares and merchandise to.the corporation -and to extend credit to the corporation. The corporation was indebted to appellee in the sum of approximately $70,000. Appellant was the principal stockholder of the corporation. He endorsed his -stock and pledged it to ap-pellee as security -for the .corporation’s debt. - He remained-as-president and manager of the corporation, to. which he was personally indebted.in the sum of approximately $7,000. Among other provisions of said contract was paragraph (d):

“(d) That Ed Phillips will not for a period of five years after any severance or termination of business connection with theCorporation engage in the business of.selling or dealing in tires and tubes-in.Odessa,- Texas, or within a radius -of 100- miles, of said . city except with the written consent of Seiberling.” ■

Some , time after the contract was signed appellant resigned as president and mana.-ger of the corporation and accepted employment with the Garrison General Tire Service, a competitive company, ’ as manager of its truck fire sales department. In this capacity he admitted that he had contacted customers of the corporation in an effort to get -them to do business with the Garrison Tire Service, and that he was attempting to sell tires within the- area covered by' the' restrictive covenant.

Appellant’s main contention .on-oral argument was and -in his brief is that the restrictive covenant does not' embrace and does not prohibit him from selling tires and tubes as a servant, agent and employee of another. : - ' •

In Martin v. Hawley, Tex.Civ.App., 50 S.W.2d 1105, the rule quoted from 9 A.L.R. 1468 relating to such restrictive covenants in contracts of sale of a business is said to be the rule well settled in this state. That rule is:

“ ‘It is clear that if the nature of the employment is súch 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 rdasoriabl-y necessary to secure the protection of the-business or good will of the-employer.’ ” - •' >

Here the restriction as to time during which the restraint is imposed. and the territory embraced, is reasonably necessary- to secure the protection of the good will of. the business of the-corporation, the stock of which was transferred to appellee.by appellant as security for a valuable consideration. As a stockholder appellee was..interested in protecting such good .will and entitled to enforce the covenant. Martin v. Hawley, supra; Annotation 63 A.L.R. 316. Appellant does not question.the .rule,.-nor appel-lee’s right to enforce- the covenant. A,s above stated, his main.. contention- is, that the covenant -properly construed ;dqes.-: not prohibit him. from selling or- dealing in. tires and tubes as - an employee . pf, another, so long as he has no proprietary:inj:pi;est in. such business. =

In Parisian Live Dyers & Cleafiefd, v. Springfield, Tex.Civ.App., 275 S.W. 1098, 1099, wr. ref. the restriction was that

* * I, will not, within..a period of six (6) months' from the time I sever my connections with the Parisian Live Dyers & Cleaners, vrork either, directly or indirectly for any person in the dry cleaning business in the city oí Houston in the capacity of pither solic- . itor or driver, soliciting trade, in the.territory on the west, side .of--¡Main.-, street and south side-, -of;. Buffalo ■ Bayou.’ ”

The contention was that this covenant did not bar the covenantor from driving upon the route involved, for himself, and did not cover the contingency of his becoming a proprietor. In disposing of this contention the court said:

. ?(Cshstruing the contract in 'the light-of ;.the surroundings of'the. par-' ties and'of their testimony .as. given upon .the witness stand, the conclusion seems ¡to; us inescapable .that the mutual purp;ose':and intent was that' appellee should not,' either as solicitor or driver, .work that - particular territory for th'e;..brief,¡time specified for a rival business of ¡.the same kind. -To say. that hg;could> evade so clear an obligation as that by merely turning joint proprietor would be to exalt the form (arid :a very technical form at that) of his agreement above the plain spirit ófi it. It may be that the instrument wa's rather iinartistically drawn, but the objective of its makers admits, we think, of no substantial doubt. They 'had the Very thing in view that appel-lee 'turned1 'around and did, however much of good faith there may have been in his 'act in so doing.”

The- situation presented in that case was"the converse- of that which we have here, but the' quoted language is just as applicable here;- There can be no doubt that the "rnkin ' purpose of the restrictive covenant1'was‘to guard against competition by appellant:. The only other purpose it could have had would have been to serve as an inducement to persuade or compel him ■ to .remain with the corporation. -He was .an. expert tire salesman; it was-through his efforts that the corporation had been made'á success as an outlet for ap-pellee’s "tires. The good will of the corporation- \vas largely due to his efforts. We think the language of the covenant, viewed in 'the light "of the surrounding circumstance's ⅛ not ambiguous. The word “business” is said to be synonymous with occupation, -‘ánd 'denotes employment or occupation "in "which a person is engaged to procure'“k living. S Words and Phrases, Business, p. 998 et seq. The-..covenant here involved, we hold, in unamtjfguoue language prohibits appellant from selling or dealing in tires and tubes withm the specified area during the specified • time. The case of Byers v. Trans-Pecos Abstract Co., Tex.Civ.App., 18 S.W.2d 1096 by this court, strongly relied on by appellant, is readily distinguishable, as is apparent' from even a casual reading thereof. -

We deem appellant’s other contentions embraced in appropriate points entirely without merit.. All points-are overruled. - - .....

Judge Simkins, in the Third Edition of his work on Contracts and Sales,, p. 493, gives as the first rule for construction of contracts:

“Rule 1; As men bind themselves, so shall they be bound. ■' :
“This means that when the terms, of the contract are not against the policy of the law to enforce that the rights of parties and subject matter are- fixed, and they will be protected and enforced by the- courts.”

Under the rule is cited the case of Menard v. Sydnor, 29 Tex. 257. In that case appears the following:

“As men bind themselves, so must they stand bound. When the ternis- of a contract are free from ambiguity, and not such as are against the policy of the law to enforce, they establish the rights of the parties in th,e subject-matter, which will be protected and enforced by the courts.”

See also Burns v. American Nat. Ins. Co., Tex.Com.App., 280 S.W. 762, loc. cit. 765 (4-5).

The order appealed from is affirmed.