Court Opinion

ID: 9562117
Source: CourtListenerOpinion
Date Created: 2023-08-21 18:21:53.776036+00
Date Added: 2024-06-11T09:17:12.889225
License: Public Domain

Rosellini, J.
(dissenting) — The respondent was born and raised in the small community of Cleveland, Tennessee. *315When he was 17 years old, he entered the United States Army and had not completed his high school studies. While in the army, he was awarded an army high school diploma.
The respondent, prior to army service, had no special training for employment and had not held any compensable employment.
After his discharge from the army, the respondent married and lived with his wife at Eatonville, Pierce County, Washington. He was 25 years old at the time of trial.
Prior to beginning his apprenticeship as a horseshoer, he served 4 months as a deputy sheriff for Pierce County. In November 1961, the respondent began apprenticeship with the appellant and was paid $1 for each horse shod. Nothing was said in regard to an agreement not to compete. In the latter part of 1961, the appellant asked the respondent to go to his accountant’s office, stating that he had a contract which he desired the respondent to sign. The respondent signed the contract described by the majority.
Evidence discloses that horseshoeing can be taught in college in a 5-weeks’ course. The apprenticeship under the appellant lasted from November 1961 to the middle of July 1962, approximately an 8-months’ period. From July 1962, the respondent was considered a journeyman horseshoer. He was permitted to and did shoe horses without direction or advice from appellant.
The record shows that there are approximately 3,000 horses in Pierce County. The appellant had approximately 130 customers. There is no contention that these customers owned all or even a substantial percentage of these horses.
When the respondent terminated his employment with the appellant, he began shoeing horses. Eleven months after his departure, he had only 13 rotating customers who had been customers of the appellant. A rotating customer is defined as one who, by agreement, has his horse shod for a period of a year; during that period his horse will be shod every 6 to 8 weeks without the necessity of the owner asking for the service.
The majority, in reversing the trial court, fails to note that courts are reluctant to enforce contracts which pro-*316Mbit individuals from continuing to work. It holds that the contract is enforceable even though the restriction of engaging in the business of horseshoeing for a period of 5 years and within 100 miles’ vicinity of Pierce County is unreasonable. The majority has failed to observe that there is a different test applied where restrictions are contained in bargains for transfer of land or business and to where they are contained in bargains for employment. A restriction which may be upheld as reasonable in the sale of land or a business, may be found unduly harsh where the relationship between the parties has been that of employer and employee. This is rightly so because by an improvident contract entered into by an employee may deny him the opportunity to earn a livelihood which is every man’s right.
Restatement of Contracts, § 515 (1932), and the comments beginning at 988, illustrates this rule:
A restraint of trade is unreasonable, in the absence of statutory authorization or dominant social or economic justification, if it
(a) is greater than is required for the protection of the person for whose benefit the restraint is imposed, or
(b) imposes undue hardsMp upon the person restricted, or
(c) tends to create, or has for its purpose to create, a monopoly, or to control prices or to limit production artificially, or
(d) unreasonably restricts the alienation or use of anything that is a subject of property, or
(e) is based on a promise to refrain from competition and is not ancillary either to a contract for the transfer of good-will or other subject of property or to an existing employment or contract of employment.
b. No identical test of reasonableness applies to bargains for the transfer of land or goods or of a business, on the one hand, and to bargains for employment on the other. The elements that must be considered in order to determine reasonableness differ in the two cases, especially where the employment is of a specialized character, and familiarity and skill in it are assets of the em*317ployee. Limitations of his use of these assets are less readily supported than limitations of the use of property or in carrying on a business.
Illustrations of Clause (b):
5. A, a lawyer, employs B, a young lawyer, as his clerk, who as part of the bargain covenants not to engage in the practice of law within the State after the termination of the employment. Although A’s practice extends throughout the State, the covenant is illegal, since it imposes undue hardship upon B.
6. A employes B for five years as manager of a clothing store. B covenants as part of the bargain not to engage or to be employed in similar business in any city where A has a store. A has stores in five of the principal cities in the State. The covenant is illegal, as imposing an undue hardship on B.
7. A and B enter into a contract of employment in which B promises not to engage in a similar business anywhere within the State after the termination of the employment. A’s business does not extend throughout the State but he hopes that it may later do so. B’s promise to refrain from entering into a similar occupation is illegal.
Also, when the restraint is excessive as to time, the court will not enforce the restriction. Thus in Schneller v. Hayes, 176 Wash. 115, 28 P.2d 273 (1934), the court refused to enforce the restriction because it was unlimited as to time.
In Welcome Wagon, Inc. v. Morris, 224 F.2d 693 (4th Cir. 1955), a case in which it was sought to enjoin Morris from violating a covenant (contained in her contract of employment with Welcome Wagon), not to engage in the same business or a business similar to that of Welcome Wagon, the district judge denied injunctive relief, and the decision was affirmed upon appeal. The contract in that case provided:
‘. . . [T]hat she will not during the term of this employment, and for a period of five whole years thereunder, engage directly or indirectly, for herself or as a representative or employee of others, in the same kind or similar business as that engaged in by the said Thomas W. Briggs, under the trade name of the Welcome Wagon *318Service Company and its subsidiaries, (1) in Gastonia, N. C., and or (2) in any other city, town, borough, township, village, province or other place in the United States or Canada in which said Thomas W. Briggs, under any of said trade names, is then engaged in rendering his said services, and/or (3) in any city, town, borough, township, village, province or other place in the United States or Canada in which said Thomas W. Briggs, under any of said trade names, has been or has signified his intention to be engaged in rendering his said services.’
The opinion states at 698:
One of the most elaborate opinions in this field is that of Judge Hoover (Court of Common Pleas of Ohio, Cuya-hoga County, 1952), Arthur Murray Dance Studios of Cleveland v. Witter, 105 N.E.2d 685, 687, covering twenty-seven printed pages. As Judge Hoover said in that opinion: “This is not one of those questions on which the legal researcher cannot find enough to quench his thirst. To the contrary there is so much authority it drowns him.” He then cites voluminous authorities under seven seas: the periodical sea, the sea of annotations, the sea of encyclopedias, the sea of treatises, the restatement sea, the digest sea and Ohio’s own sea.
Such contracts were regarded with high disfavor under the old common law. And they are so regarded, in general, by modern courts, though apparently with some amelioration of the ancient disfavor. Modern courts have usually, in passing on these contracts, employed three criteria: (1) Is the restraint, from the standpoint of the employer, reasonable in the sense that it is no greater than is necessary to protect the employer in some legitimate business interest? (2) From the standpoint of the employee, is the restraint reasonable in the sense that it is not unduly harsh and oppressive in curtailing his legitimate efforts to earn a livelihood? (3) Is the restraint reasonable from the standpoint of a sound public policy.
And, at 701:
Even if the restrictive covenant be not void, so that a suit at law for damages arising out of a breach of the covenant might lie, we think this covenant here might fairly be characterized as harsh and oppressive. And equity is slow to enforce such contracts through its extraordinary remedies such as specific performance and injunction, remedies that normally rest in the sound discretion *319of the trial judge. Nor do we think that Welcome Wagon here has suffered anything even approaching irreparable damage.
In the leading case of Herbert Morris, Ltd. v. Saxelby, [1916] A.C. 688, 702, Lord Atkinson said that an employer
[I] s undoubtedly entitled to have his interest in his trade secrets protected, such as secret processes of manufacture which may be of vast value. . . . He is also entitled not to have his old customers by solicitation or such other means enticed away from him. But freedom from all competition per se apart from both these things, however lucrative it might be to him, he is not entitled to be protected against. He must be prepared to encounter that even at the hands of a former employee.
Lord Parker pointed out that there is a distinction between restrictions placed upon a vendor and equal restrictions placed upon an employee. He said, at 709:
It is quite different in the case of an employer taking such a covenant from his employee or apprentice. The good will of his business is, under the conditions in which we live, necessarily subject to the competition of all persons (including the servant or apprentice) who choose to engage in a similar trade. The employer in such a case is not endeavouring to protect what he has, but to gain a special advantage which he could not otherwise secure. I cannot find any case in which a covenant against competition by a servant or apprentice has, as such, ever been upheld by the Court. Wherever such covenants have been upheld it has been on the ground, not that the servant or apprentice would, by reason of his employment or training, obtain the skill and knowledge necessary to equip him as a possible competitor in the trade, but that he might obtain such personal knowledge of an influence over the customers of his employer, or such an acquaintance with his employer’s trade secrets as would enable him, if competition were allowed, to take advantage of his employer’s trade connection or utilize information confidentially obtained.
In Nordenfelt v. Maxim Nordenjelt Guns & Ammunition Co., [1894] A.C. 535, 566, Lord Macnaghten said: “[T]here is obviously more freedom of contract between buyer and seller than between master and servant or between an em*320ployer and a person seeking employment.” This was quoted in Mason v. Provident Clothing & Supply Co., [1913] A.C. 724, 738, and the idea repeated:
[T]here is much greater room for allowing, as between buyer and seller, a larger scope for freedom of contract and a correspondingly large restraint in freedom of trade, than there is for allowing a restraint of the opportunity for labour in a contract between master and servant or an employer and an applicant for work.
See also Styles v. Lyon, 87 Conn. 23, 86 Atl. 564 (1913) [ Allen Mfg. Co. v. Murphy, 23 Ont. L.R. 467 (1911).
In Standard Oil Co. v. Bertelsen, 186 Minn. 483, 487, 243 N.W. 701 (1932), the court said:
The defendant resided with his children in the community of Buffalo Lake. He had lived there for some 17 years, was known and had his friends and relatives there. To require him either to change his occupation, which he had followed for some three years, or to remove to a different community, was a harsh burden on him. A man’s right to labor in any occupation in which he is fit to engage is a valuable right, which should not be taken from him or limited by injunction except in a clear case showing the justice and necessity therefor.
The restriction of 5 years and 100 miles’ vicinity are unreasonable as to time and area. The court should be slow to enforce an agreement restraining an employee from engaging in his occupation. In the instant case the respondent does not know and has never worked at any other occupation than horseshoeing. If an injunction is granted it will be necessary for respondent to sell his home and move elsewhere. The great hardship to the respondent seems oppressive and harsh when it is compared to benefits the contract bestows upon the appellant. There is no showing of irreparable harm to the appellant if the contract is not enforced. The damage he may sustain is minute in comparison to the respondent’s damage. From the record it appears that the restraint is not reasonable and necessary for the protection of the appellant. This is so because there are 3,000 horses in the vicinity and the appellant has only 130 customers. Thus he has ample opportunity and potential to increase his busi*321ness, while the respondent is prevented from earning his livelihood in the only manner for which he is trained.
The cross-examination of the appellant suggests that the reason some of his customers left him was because he was inattentive to his business and some of his work was not satisfactory to them. The public interest is a factor to be considered. The public has a right to obtain the best services possible and should not be forced by the court to accept services which may be inferior.
When the equity power of the court is invoked, it is the duty of the court to weigh the consideration of the contract. It must find that the bargain is fair and equitable between the parties. If it is unfair or the consideration of the party seeking injunctive relief is small in comparison to the penalty he seeks to impose on the other party, the court should refrain from using its injunctive powers.
Since horseshoeing can be taught in 5 weeks in college, and an apprentice can become a journeyman horseshoer in 8 months, it is not an occupation that is special, unique, or extraordinary. Thus a restriction such as that imposed on the respondent is not a reasonable quid pro quo for being taught the occupation of horseshoeing.
I believe this contract should not be enforced. I would affirm the trial court. In any event if it is enforced, it should be governed by the rule in Columbia College of Music & School of Dramatic Art v. Tunberg, 64 Wash. 19, 116 Pac. 280 (1911), where the court refused to enforce a contract by a music teacher not to teach elsewhere except to restrain him from soliciting clients of his employer. Any other result would be unjust and would prevent the respondent from earning a livelihood by the only occupation for which he is trained.
Hale, J., concurs with Rosellini, J.