Title: Hill v. Rice
Citation: 67 So. 2d 789
Docket Number: N/A
State: Alabama
Issuer: Alabama Supreme Court
Date: October 29, 1953

67 So. 2d 789 (1953)
HILL et al.
v.
RICE.
1 Div. 568.

Supreme Court of Alabama.
October 29, 1953.
*790 Thos. E. Twitty, Marshall J. De Mouy and Inge, Twitty, Armbrecht &amp; Jackson, Mobile, for appellants.
Albert S. Gaston, Mobile, for appellee.
GOODWYN, Justice.
The appellee, complainant below, filed a bill of complaint in the Circuit Court of *791 Mobile County, Alabama, in equity, seeking an injunction to restrain appellants, respondents below, from conducting a dancing school in competition with complainant. The bases of the claimed right to injunction are contracts entered into by complainant and with each respondent separately. These contracts are referred to in the bill of complaint and attached thereto as exhibits. The contract with respondent Hill, executed on November 14, 1951, and the contract with respondent Taylor, executed on March 3, 1952, are identical, except for dates and parties. Each provides as follows:
"1. The employer hereby employs the employee as a dancing instructor supervisor or interviewer for a period of one year from the date hereof, and the employee agrees to serve in such capacities and observe the rules and regulations of the employer therein. The employer will pay to the employee, who will accept in full payment for his or her services, the following:
"(a) Per hour of actual instruction, not less than $1.00 nor more than $5.00, according to the rating of the employee.
"(b) Commissions on renewal courses shall not be less than 5% nor more than 25%, according to the rating of the employee. Renewal courses shall be those taken by pupils immediately following another course. The commission thereon shall be paid to the employee only during his actual employment.
"(c) For supervising and interviewing, the employer will pay the employee commissions of not less than 1% nor more than 15%, according to the rating of the employee.
"(d) For instructing or other services at hotels where branch studios are or may be established, the employer will pay the employee compensation at the rate paid by the employer at such branch studio pursuant to arrangements made with the hotels in which they are located.
"The employer will establish rating schedules in which she will fix ratings which she will give to employees and the schedules of compensation for each group in such rating schedule, within the limits hereinbefore set forth. The employer shall determine the rating to be given to each employee, and may change such rating from time to time.
"2. The employee shall render his or her services on the afternoon and night shift or the morning and afternoon shift or at such times of day and at such days as he or she may be directed by the employer, but there shall be no fixed minimum or other provision with regard to the total number of hours that the employee shall be actively engaged.
"3. The employer will give to the employee a course of training in dance instruction in order to fit the trainee to teach dancing according to the methods of the employer. After such course of training is given to the employee, there will be disclosed to him or her further information as to the methods of the employer, the names of pupils and patrons of the employer, and he or she will have occasion at the behest of the employer, to meet such pupils and patrons. Proprietors, managers and all employees of hotels, resorts, ships or establishments of any kind at which the employer had or may have branch studios, shall, among others, be considered patrons of the employer.
"4. The employee agrees, during his or her employment, that he or she will not directly or indirectly be or become engaged in business as a dancing instructor or teach, accept employment in any capacity whatsoever in any dancing studio, dance for hire or compensation in any manner, give exhibitions, instruction or lectures in dancing in any form whatsoever, directly or indirectly solicit business in any manner relating to dancing or dancing lessons or instructions from anyone or have any dealings, contracts, relationships in respect to dancing with any person, except for or at the direction of the employer.
"5 The employee agrees that upon the termination of his or her employment for *792 any cause, and for a period of two years thereafter, that he or she will not in the City of Mobile or any county, whether in the State of Alabama or not, which adjoins Mobile County, within a radius of 75 miles of the employer's studios in the City of Mobile or within 75 miles of any studio which uses and is entitled to use the name of Arthur Murray, without the written consent of the employer, accept employment in any manner relating to dancing, dancing engagements or exhibitions, dancing lessons or instructions, or lectures in dancing in any form whatsoever, or be or become engaged directly or indirectly in business in any such respects relating to dancing at any hotel, resort, ship or establishments of any kind at which the employer has, had, or may have a branch studio, during the employee's employment or during such two year period thereafter, nor solicit business for himself or any other business in any manner relating to dancing, from any of the employer's pupils or patrons or from any other persons who had, at any time, been pupils or patrons or from persons whose names have been furnished to the employee by the employer, nor directly or indirectly engage in teaching dancing to any person.
"6. The employee will never at any time after the termination of his or her employment hold himself out or advertise himself, for business purposes, as having formerly been connected with Arthur Murray or any Arthur Murray dancing school or studio in any capacity, nor in any way use the name of Arthur Murray. The employee also agrees that during the term of his or her employment or any time thereafter he or she will not in any manner for any reason discourage or influence students or prospective students from continuing or commencing courses of dancing lessons or instructions from any Arthur Murray Dancing School."
It is alleged in the bill of complaint as follows:
This appeal is from decrees overruling respondents' demurrer to the bill of complaint and granting to complainant a temporary restraining order applicable to Mobile County. The grounds of demurrer here insisted on are that, (a) there is no equity in the bill, (b) there is a misjoinder of parties-respondent, and (c) each contract is unenforceable because it lacks mutuality. We address our discussion to these insistences.
Except as to failure to show a sufficient consideration moving from complainant to respondents, as hereinafter indicated and discussed, we think the general demurrer going to the equity of the bill was properly overruled.
The enforceability of negative covenants in employment contracts, such as we have here, has been the subject of many litigated cases and a fertile field for text-book writers, law-journal contributors, and annotators. In this connection, we invite attention to the case of Arthur Murray Dance Studios of Cleveland v. Witter, Ohio Com.Pl.1952, 105 N.E.2d 685-712, as indicative of the feeling of frustration which might reasonably engulf the researcher on the subject. While that case is not from the court of last resort of Ohio, it is, to say the least, proof sufficient of the difficulty encountered in resolving questions incident to such covenants. As there plaintively observed, in which we feelingly concur:
The policy of this state with respect to such contracts is embraced in Sections 22, 23 and 24, Tit. 9, Code 1940. Sections 22 and 23 are as follows:
Section 24, not here applicable, provides for further exceptions in favor of partnership arrangements.
Mr. Justice Bouldin, in discussing these sections in Shelton v. Shelton, 238 Ala. 489, 492, 192 So. 55, 57, observed that "the statutes * * * mean what they say". There can be no question, then, in view of Section 22, supra, that if the contracts place more restraint on the respondents than permitted by Section 23, supra, they are, to that extent, void. And as further observed in Shelton v. Shelton, supra:
In determining whether such relief is appropriate, there should be taken into account "such considerations as the nature or character of the employment, the size and condition of the locality to which the prohibition extends, the duration of the prohibition, and the consideration moving to the employee for his agreement to the restriction." 36 Am.Jur., Monopolies, Combinations and Restraints of Trade, p. 554, sec. 78. Continuing to quote from the same authority: "Where the restraint is larger and wider than the protection of the party with whom the contract is made can possibly require, such restraint must be considered as unreasonable in law, and the contract which would enforce it is therefore void." From sec. 79 of the same authority is the following:
As to the reasonableness of such covenants, "the test generally applied * * * is whether or not the restraint is necessary for the protection of the business or good will of the employer, and, if so, whether it imposes on the employee any greater restraint than is reasonably necessary to secure to the business of the employer, or the good will thereof, such protection, regard being had to the injury which may result to the public from restraining the breach of the covenant, in the loss of the employee's service and skill and the danger of his becoming a charge upon the public. In order to sustain such restrictive covenants in contracts of employment it is necessary that the covenants shall 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 reasonably necessary to secure the protection of the business or good will of the employer." Anno., Agreements Restricting Employment, 119 A.L.R. 1452. For other annotations on the subject see 3 A.L.R.2d 522; 152 A.L.R. 415; 98 A.L.R. 963; 67 A.L.R. 1002; 52 A.L.R. 1362; 29 A.L.R. 1331; 20 A.L.R. 861; 9 A.L.R. 1456.
The principle is thus stated in 17 C.J.S., Contracts, § 254, page 636:
One of the many well-considered cases on the subject which we have read and considered is Kadis v. Britt, 224 N.C. 154, 29 S.E.2d 543, 546, 152 A.L.R. 405. We call attention to the following observations from that decision which are in accord with our views:
In Deuerling v. City Baking Co., 155 Md. 280, 141 A. 542, 545, 67 A.L.R. 993, the court, in considering a contract in restraint of employment, stated as follows:
In Cropper v. Davis, 8 Cir., 243 F. 310, 314, 156 C.C.A. 90, it is stated as follows:
By the foregoing, we have attempted to set down some of the guiding principles in the consideration of contracts such as we have before us, with the thought that they may be helpful should this case proceed to further trial in the court below.
The objection that there is a misjoinder of parties-respondent is not well taken. Although there are two separate and distinct contracts involved, they are identical in form, and the bill shows that the respondents are jointly engaged in the alleged violation thereof. Under the peculiar facts stated in the bill, it is our opinion that it would serve no good purpose to compel the institution of separate proceedings against each respondent. We see no reason why there should be any confusion in protecting the rights of both respondents in this proceeding. As stated in Allgood v. Bains, 247 Ala. 669, 675, 26 So. 2d 98, 102:
In Stamey v. Fortner, 230 Ala. 204, 205, 160 So. 116, the rule is thus stated:
The respondents contend that the contracts lack mutuality because no obligation is placed on the complainant to provide any work for them from which they could derive compensation; that the contracts firmly bind the respondents, while under paragraph 2 thereof it is expressly provided that "there shall be no fixed minimum or other provision with regard to the total number of hours that the employee shall be actively engaged." We have no difficulty in concluding that so long as the contracts remained wholly executory and unperformed, they lacked that mutuality of obligation essential to an enforceable contract. As stated in Alabama City, G. &amp; A. Ry. Co. v. Kyle, 202 Ala. 552, 558, 81 So. 54,60:
A similar doctrine is thus expressed in Iron Age Publishing Co. v. Western Union Telegraph Co., 83 Ala. 498, 509, 3 So. 449, 454:
As indicated in the Kyle case, supra, a contract lacking in mutuality is unenforceable mainly because there is an absence of consideration moving from one party to the other. Whether there is sufficient consideration to give validity to contracts such as we have here depends upon the facts and circumstances in each particular case. It may be inferred from the allegations of paragraph 13 of the bill that the complainant did, in fact, provide respondents with work and did, in fact, pay them compensation therefor as prescribed in the contracts; but on demurrer such inferences are not warranted. As the bill now stands, it does not sufficiently show the passing to respondents of any consideration.
In this connection we observe that the test of mutuality is not to be applied as of the time when the promises are made, but more properly as of the time when one or the other of the promises is sought to be enforced. It may be stated as accepted doctrine that absence of inceptive mutuality constitutes no defense *797 to the enforcement of an executed contract supported by a sufficient consideration.
Our cases approve the principle that although an agreement might not be binding on both parties at the time of its execution, it may be made so by performance under it. In Pratt Consolidated Coal Company v. Short, 191 Ala. 378, 391, 68 So. 63, 67, it is thus stated:
See also Majestic Coal Co. v. Anderson, 203 Ala. 233, 234, 82 So. 483; Jones v. Lanier, 198 Ala. 363, 73 So. 535; Pullman Co. v. Meyer, 195 Ala. 397, 401, 70 So. 763; Davis v. Williams, 121 Ala. 542, 546, 25 So. 704.
The rule is stated in 12 Am.Jur., Contracts, § 114, P. 609, as follows:
From what we have said it follows that the decree overruling the demurrer to the bill should be reversed, and that an order should be entered here sustaining the demurrer to the bill; and that the decree issuing the temporary injunction should be reversed and said injunction dissolved. It is so ordered. Complainant is allowed twenty days in which to amend her bill if she sees fit to do so and renew her application for an injunction upon the bill as amended. The cause is remanded to the Circuit Court for further disposition.
Reversed, rendered and remanded. LIVINGSTON, C. J., and SIMPSON and CLAYTON, JJ., concur.