Court Opinion

ID: 5597656
Source: CourtListenerOpinion
Date Created: 2022-01-11 02:45:14.89081+00
Date Added: 2024-06-11T08:36:38.881473
License: Public Domain

Weltner, Justice,
dissenting.
I respectfully dissent.
The term, “business opportunity,” in Code Ann. § 22-714 (a) (1) (C) should be broad enough to encompass reality, which includes the well-established customer relationships reflected here. Southeast Consultants v. McCrary Eng. Corp., 246 Ga. 503 (273 SE2d 112) (1980) adopted an “interest or expectancy” test to delineate a business opportunity within the meaning of the statute. This test “precludes acquisition by corporate officers of the property of a business opportunity in which the corporation has a ‘beachhead’ in the sense of a legal or equitable interest or expectancy growing out of a preexisting right or relationship.” (Emphasis supplied.) Id. at 508. Goodwill, which is defined as the “... favor which the management of a business wins from the public, and the probability that old customers will continue their patronage and resort to the old place,” is a “. . . species of property and constitutes a valuable asset of the business of which it is a part.” N. A. A. C. P. v. Overstreet, 221 Ga. 16, 29 (142 SE2d 816) (1965); see Armstrong v. Atlantic Ice &c. Corp., 141 Ga. 464 (81 SE 212) (1914). The majority holding creates within our law this anomaly: an inchoate opportunity to bid on a public works contract is a “business opportunity”; goodwill, a species of property subject to transfer and sale, is not.
In plainer terms, it is difficult to reconcile our holding that no business opportunity has been lost with the fact that a group of corporate directors has departed en masse pirating away customer accounts representing 50% of their company’s gross revenue.
Corporate directors and officers occupy a fiduciary relationship to the corporation and its stockholders, and are held to a standard of the utmost good faith and loyalty. Union Circulation Co. v. Trust Co. Bank, 143 Ga. App. 715 (2) (240 SE2d 100) (1977), reversed on other grounds, 241 Ga. 343 (245 SE2d 297) (1978), on remand, 146 Ga. App. 612 (247 SE2d 197) (1978); King Mfg. Co. v. Clay, 216 Ga. 581 (1) (118 SE2d 581) (1961). In view of Code Ann. § 22-714 (a) (1) (C), the freedom of competition allowed employees by our decision in Taylor Freezer Sales Co. v. Sweden Freezer Eastern Corp., 224 Ga. 160 (160 SE2d 356) (1968) does not necessarily extend to former officers and directors. See McCrary, supra, at 505.
Finally, it must be remembered that the test set out in McCrary, supra, consists of two parts. If it first be determined that a business opportunity has been appropriated by former officers or directors, the court must then consider whether that was accomplished in violation of their duty of good faith and loyalty while they were officers or directors of the corporation.
I would include long-standing customer relationships as a *818business opportunity within the meaning of Code Ann. § 22-714 (a) (1) (C), and remand for further consideration.
I am authorized to state that Chief Justice Jordan and Justice Marshall join in this dissent.