Case Title: Knoebel Mercantile Company v. Siders

Citation: 439 P.2d 355

Docket Number: 

State: colorado

Court: Colorado Supreme Court

Date: 1968-04-08T00:00:00Z

Document:
439 P.2d 355 (1968) KNOEBEL MERCANTILE COMPANY, a Colorado corporation, Plaintiff In Error, v. Francis L. SIDERS, Defendant in Error. No. 22825. Supreme Court of Colorado, In Department. April 8, 1968. Rehearing Denied April 29, 1968. *356 Fuller & Evans, Mackintosh Brown, Dwight A. Hamilton, Denver, for plaintiff in error. Knowles, Hopper & Molen, Denver, for defendant in error. MOORE, Chief Justice. Plaintiff in error will be referred to as Knoebel, and defendant in error as Siders. Knoebel brought the action against Siders, a former employee, seeking to restrain him from working as a salesman for one of its competitors. The injunctive relief sought against Siders was based on a restrictive covenant contained in a written contract of employment entered into between him and Knoebel under date of June 1, 1964. Pertinent portions of the contract are as follows: Prior to the date of the contract Siders resided in Wyoming and was working as a salesman for a candy and tobacco distributing business. After some preliminary negotiations he was advised on May 14, 1964, that his application for employment was accepted by Knoebel and he reported for work on June 1, 1964. While completing and signing documents relating to insurance, social security, withholding tax and similar matters he was presented for the first time with the restrictive agreement above quoted. He read and then signed the agreement. He was given the customary training course for salesmen, after which Knoebel assigned him to a territory consisting of Colorado Springs, Colorado, and a limited adjacent area in which about 150 customers were located. He was furnished with a price list, prospect cards, some information as to the credit ratings of the customers, their buying habits and other general information. He was also furnished with a car, order books, and other things useful to him as a salesman. Siders terminated his employment with Knoebel on September 9, 1966, and went to work for John Sexton & Co., a competitor of Knoebel, as a salesman. Though Sexton was in competition with Knoebel there was a considerable difference in the scope of operations in the business of the two companies since it appears from the evidence that Knoebel dealt in 10,000 items of merchandise, all manufactured by others, and Sexton dealt in only 1600 items many of which it manufactured. The record discloses that although Siders was employed as a salesman, he was assigned to a small territory with only 150 customers, whereas if the restrictive covenant is enforced by injunction as prayed by Knoebel he will be prohibited from operating in all of Colorado, Wyoming, Montana, New Mexico, Nebraska, Kansas, South Dakota, and any other State in which Knoebel was transacting business on the date of termination of his employment. Trial was to the court which found for the defendant, and Knoebel seeks reversal of the judgment, dismissing the action. The undisputed evidence was that Siders intended to and would, unless enjoined therefrom, solicit on behalf of John Sexton & Co. some of the customers he previously solicited on behalf of Knoebel, and the court so found. Lengthy Findings of Fact entered by the trial court included the following: The full record has been read and we find ample evidence to sustain the fact findings of the trial court. We shall not disturb those findings. It is argued by counsel for Knoebel that the trial court erred as a matter of law in denying Knoebel's claim for injunction and, alternatively, if the restriction was unreasonable as to time and area this court should "reform" the restriction with regard thereto. The test as to whether a covenant of this kind will be enforced by injunction hinges on a determination of the reasonableness of the restriction under all the facts and circumstances of each case. Addressograph-Multigraph Corporation v. Kelley, 146 Colo. 550, 362 P.2d 184. If it is unfair and unreasonable in a given set of circumstances, relief by injunction will be denied. The restrictions in contracts not to engage in business in competition with another, to be valid must be reasonable, must not impose undue hardship, must be no wider than necessary to afford the required protection, and each case must stand on its own facts. Whittenberg v. Williams, 110 Colo. 418, 135 P.2d 228. In the instant *359 case the trial court, after a lengthy and searching inquiry, determined that the restriction here involved was unreasonable under all the pertinent circumstances. We cannot say that the court erred as a matter of law in reaching this conclusion. In Goldammer v. Fay, 10 Cir., 326 F.2d 268, the court held as follows: This language is applicable to the facts in the instant action. The judgment is affirmed. DAY and KELLEY, JJ., concur.