Court Opinion

ID: 9768928
Source: CourtListenerOpinion
Date Created: 2023-08-29 13:56:35.754608+00
Date Added: 2024-06-11T07:30:49.735327
License: Public Domain

Mr. Justice Griffin,
joined by Justices Smith and Hamilton, concurring in part and dissenting in part.
I agree with the majority that for the purpose of the injunction sought the contract must be held to be reasonable and enforceable and that the injunction action is now moot. Under the case of Lewis v. Krueger, Hutchinson & Overton Clinic, 1954, 153 Texas 363, 269 S.W. 2d 798, restrictive covenants of the nature of the one before us, the time stated must be reduced to a reasonable time in order to uphold the validity of the contract. Spinks v. Riebold, Texas Civ. App. 1958, 310 S.W. 2d 668, wr. ref., extended the above doctrine to the area covered by the contract.
The majority opinion recognizes this principle of law as applicable, and holds that the contract is a valid one as relates to the injunctive relief sought. But after holding that an injunction would have been proper, the majority then holds the identical contract invalid insofar as an action for damages is concerned. Thus, we have in the same lawsuit a contract which is valid and at the same time also invalid.
The majority, in effect, recognizes the well-established principle of law that “whenever possible, contracts will be construed so as to render them effective^ rather than ineffective, [and], if a contract is susceptible of two constructions, only one of which will render the agreement valid and effective, that construction will be adopted which will render the contract valid,” (13 Texas Jur. 266, 267, section 111, Contracts) as applied to the injunctive relief sought, but refuses recognition to the same *316well-established rule of law in construing the contract in a suit for damages.
In 17 C.J.S. 627, section 246, the rule is stated that “generally, the tendency of the modern authorities is to reject the fixed rules * * * and to gauge the validity of the contract by the reasonableness of the restraint imposed as necessary to the protection of the covenantee, and as compatible with the public interest.” This is not a new doctrine in Texas. In 1933, in the case of McAnally v. Person, Texas Civ. App., 57 S.W. 2d 945, wr. ref., the court approved the doctrine that an agreement not to compete with a former employer in an employment contract would be enforced in so far as it covered a reasonable time and area. That case also approved the holding in the Kentucky case of Ackelbein v. Davey Tree Expert Co., 233 Ky. 115, 25 S.W. 24 62, 64, that a covenant not reasonable would be reduced to what was found to be reasonable in the trial court, and so enforced. The McAnally case further says:
“In the case of Thomas W. Briggs Co. v. Mason, 217 Ky. 269, 289 S.W. 295, [52 A.L.R. 1344], this court pointed out how covenants of the character of the one in question must not be wider than reasonably required for the protection of the employer’s business, and restraint must not be broader than is neces-' sary for the protection of the business or good will of the employer. Judge Dietzman in his opinion [in the trial court below] above referred to, expressed the view that the contract under consideration was too broad in its terms, in that its negative covenant restricted the operations of Ackelbein to limits not necessary for the protection of the business of the Davey Company. He held, however, that, although the covenant in question may be too broad, yet, if it can be cut down to what is reasonable, and enforced to that extent, the Davey Company is entitled to such relief as may be necessary for the full protection of its business. Contracts restraining freedom of employment are enforceable when they are reasonable, taking into account the interest of the employer, the employee and the public. * * *”
In discussing this problem, Corbin, in his work On Contracts, Vol. 6, p. 487', says: “For a considerable period it seems to have been assumed by some of the American courts that legality of an agreed restraint of trade was determined by the distinction between ‘general’ and ‘limited.’ ” After discussing this rule he then concludes: “In the best considered modern cases, however, the court had decreed enforcement as against a defendant whose breach has occurred within an area in which restriction would *317clearly be reasonable, even though the terms of the agreement imposed a larger and unreasonable restraint.” pp. 500-501. See also the opinion of the Court of Civil Appeals in the Krueger, Hutchinson & Overton Clinic v. Lewis case, Texas Civ. App., 1954, 266 S.W. 2d 885(7), where are cited Texas cases which have reduced an unreasonable area to a reasonable one and have enforced the contract in such reduced area. See also Corbin, On Contracts, Vol. 6, p. 499, section 1390 and p. 505, Note 59.
I would hold that the trial court could reduce the extent of the territory to an area which was necessary to protect the plaintiff’s business against competition of defendants for the one year period prescribed in the employment contract. It is argued that the contract must stand as written and as written it would be void; therefore, no recovery for damages may be had.
I have been unable to find any Texas authority in point. Since the majority cites no authority substantiating their holding on this point, I am sure they could find no cases sustaining their position. The case of Wright v. Scotton, 13 Del. Ch.- 402, 121 Atl. 69, 31 A.L.R. 1162, 1923, and the annotation following discussing the power of a court of equity to award damages in an injunction, in my opinion, lays down the correct rule. The point raised by appellants in that case was that the trial court erred in holding that the complainants were entitled to both an injunction and damages. In overruling this point the Court said:
“It cannot be questioned that the chancellor had jurisdiction of the case before us for the purpose of granting an injunction, if he believed the complainants had no adequate remedy at law. The question is: Had he the right to grant not only an injunction against future breaches, but also to award damages for past breaches?
“The court are of the opinion, under practically all recent authorities, — in this country, at least, — that the chancellor had the right to grant both remedies, because both were required to give full relief to the complainants, satisfy all the just requirements of the case, and promote the ends of justice, and are also of the opinion that the chancellor, having the power to award damages sustained by the complainants between the breach of the contract and the granting of the injunction, had the right to direct that an issue of quantum damnificatus be submitted to a j ury to ascertain the same.
“If the chancellor had granted injunction only, the com*318plainants would have been compelled to sue in another court for damages, when full relief could be had in the one chancery proceeding. The prevention of multiplicity of suits is one of the reasons for the awarding of damages by a court of equity, when it has jurisdiction of the subject matter.”
In answering the certified question, “Under the foregoing facts and the jury verdict, was (the appellant entitled to the injunction prayed for, and did the trial court err in refusing to grant it,” this court, in the case of Malakoff Gin Co. v. Riddlesperger, (1917), 108 Texas 273, 192 S.W. 530, held that an injunction restraining competition within the terms of a contract would lie where damages were also recovered.
In the case of Miller v. Chicago Portrait Co., 1917, Texas Civ. App., 195 S.W. 619, wr. ref., the court stated that the only question in the case was the validity of the contract entered into by the employee (Miller) restricting" his right to compete after severing employment with the Portrait Co. If such contract were valid, did the provision therein contained providing for liquidated damages, take the case out of the jurisdiction of a court of equity to the extent that no injunction could issue? The court, after discussing various authorities, held that a provision for damages did not take the case out of equity jurisdiction, and, therefore, injunction would lie under proper facts.
In the case at bar plaintiff brought a suit for injunction and for damages. This invoked the jurisdiction of the court. On the injunction feature of the case, we have held the trial court should apply the test of reasonableness to the contract, and should reduce the area set out to such area as was reasonable under all the circumstances in order to protect the rights of all parties. It would be an anomaly to hold that in considering the question of damages to be recovered the contract could not likewise be reduced to cover a reasonable area, and, therefore, hold the contract to be valid as to such reasonable area. In this reasonable area such damages as plaintiff could show it suffered during the one year period could be recovered. To apply two entirely different rules to the construction of the same contract between the same parties in the same lawsuit would lead to a multiciplicity of suits, hopeless confusion and inconsistency.
I would reverse the judgments of the courts below and remand the cause to the trial court to determine the amount of damages, if any, to which plaintiff may be entitled.
Opinion delivered December 7, 1960.