Court Opinion

ID: 3387679
Source: CourtListenerOpinion
Date Created: 2016-07-05 18:44:23.698268+00
Date Added: 2024-06-11T14:02:43.927053
License: Public Domain

I concur in the conclusion that the temporary restraining order rendered by the court below should be reversed. Not, however, for the reason discussed in the opinions heretofore filed in this case. There are other errors which are, in my opinion, good ground for reversing the case, one of which goes to the admissibility and sufficiency of the evidence upon which the restraining order was based, both as to the breach of the contracts, and the showing of irreparable injury to plaintiff.
On the question of law discussed in the opinions already filed in this case, I am not able to fully agree with all that is said. It must be remembered that there was no effort to enjoin these appellants from working for some one else, or in the City of Miami generally, or elsewhere; it was only *Page 153 
sought to enjoin them from soliciting laundry from the former customers of the Miami Laundry located within the very limited territory which had formerly been served by these appellants, respectively. Thus, the appellant, J. A. Curry, was sought to be enjoined from soliciting and diverting customers from his former employer in that territory in the City of Miami described by boundaries as follows: "North by 36th Street, East by Biscayne Bay, South by 20th Street, West by N.W. 7th Avenue." And similar limited portions of the city were described in connection with the prayer for injunction against the other two appellants.
This suit was filed against three individuals upon three separate and distinct contracts entered into between the Miami Laundry Company and each appellant independently of the other. Each contract was signed both by the Laundry Company, by its President, and by one of the appellants. The introductory portion of the contract made with each of these three parties reads as follows:
"Miami, Fla., July 11, 1930.
"THIS AGREEMENT made and entered into this __________ by and between THE MIAMI LAUNDRY COMPANY, a Florida Corporation, party of the first part, also hereinafter called the Company, and E. H. LOVE, party of the second part, also hereinafter called the Driver; both parties being of the County of Dade, State of Florida.
WITNESSETH: That whereas, said Company is and has been engaged in the Laundry, Dry Cleaning and many other kinds and types of Services, and that said Company has built up and established an extensive trade therein; and
"Whereas, the principal asset of said business is the good will thereof, consisting of its customers, patrons and agents regularly doing business with said Company; and *Page 154 
"Whereas, each of the drivers employed and entrusted by said Company to collect and deliver unlaundered and laundered goods and dry cleaning and other merchandise handled by said Company, is able to learn the names of said Company's customers and patrons and is enabled by such employment to discover and acquire its methods of business in such territory as may be entrusted to him from time to time, commonly known as routes, and
"Whereas, said party of the second part is desirous of being employed and entrusted by said Company as a Driver and thereby becoming personally acquainted with the addresses and names of the customers, patrons and agents of said Company and learn the methods of business of said Company; and
"Whereas, said Company is willing to employ said second party as such Driver upon certain terms and conditions, and is willing to furnish a truck for his use in such employment,
"NOW THEREFORE, in consideration of the premises and the mutual agreements and covenants herein contained, the parties hereto agree as follows, to-wit:"
The validity of covenants by employees, in cases of this particular nature, not to engage in a similar or competing business for a reasonable and definite period of time, within definite limited territory, reasonable in extent, following the termination of their employment, is sustained by the overwhelming weight of the court decisions in this country. Thus, it was said by the writer of the note in 9 A. L. R. 1468:
"It is clear that if the nature of the employment is such as will bring the employee in personal contact with the patrons or customers of the employer, or enable him to acquire valuable information as to the nature and character of the business and the names and requirements of the patrons or *Page 155 
customers, enabling him, by engaging in a competing business in his own behalf, or for another, to take advantage of such knowledge or of acquaintance with the patrons or customers of his former employer, and thereby gain an unfair advantage, equity will interfere in behalf of the employer and restrain the breach of a negative covenant not to engage in such competing business, either for himself or for another, providing the covenant does 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."
Numerous decisions are cited by the annotator in support of this statement. The above quoted principle appears to be sustained by the following cases: Eureka Laundry Co. v. Long,146 Wis. 205, 131 N.W. 412; Axelson v. Columbine Laundry Co. (Colo.) 254 P. 990; Owl Laundry Co. v. Banks, 86 N.J. Eq. 230,89 A. 1055; Suburban Laundry Co. v. O'Reilly (Mass.),148 N.E. 373; Sherman v. Pfefferkorn (Mass.), 135 N.E. 568; Ideal Laundry Co. v. Guliemone (N.J.), 151 A. 617; Brannen v. Bauley (Mass.), 172 N.E. 104; Jennings v. Shepherd Laundries Co. (Texas), 276 S.W. 726; New York Wet Wash Laundry Co. v. Unger, 156 N.Y. S. 598; Eastern New York Wet Wash Laundry Co. v. Abrahams, 160 N.Y. S. 69; J. and J. G. Wallach Laundry System, Inc., v. Fortcher, et al., 191 N.Y. S. 409; Philadelphia Towel Supply and Laundry Co. v. Weinstein,57 Pa. Sup. Ct. 290; Walker Coal and Ice Co. v. Westerman (Mass.),160 N.E. 801; Walker Coal and Ice Co. v. Love (Mass.),179 N.E. 199; Bettinger v. North Fort Worth Ice Co. (Texas), 278 S.W. 466; City Ice and Fuel Co. v. Snell (Mo.), 57 S.W. (Ed.) 440; City Ice and Fuel Co. v. McKee (Mo.), *Page 156
57 S.W.2d 443; American Ice Co v. Lynch, 74 N.J. Eq. 298,70 A. 138; Athletic Tea. Co. v. Cole (Mo.), 16 S.W.2d 735; Jewel Tea Co. v. Novak, 146 Wis. 224, 131 N.W. 415; Hoops Tea Co. v. James A. Dorsey, 99 Ill. App. 181; Whitkop and Holmes Co. v. Boyce, 112 N.Y. S. 874; Jewel Tea Co. v. Petersen, 200 Ill. App. 157; Erie County Milk Assn. v. Ripley, 18 Pa. Sup. Ct. 28; Mutual Milk and Cream Company v. Prigge, 98 N.Y. S. 458; Mutual Milk and Cream Co. v. Heldt, 105 N.Y. S. 661. See also 32 C. J. 220-221; 67 A. L. R. 1002; 52 A. L. R. 1363; 20 A. L. R. 861; 31 L.R.A. (NS) 249; 24 L.R.A. (NS) 933.
As to the validity and enforceability of a stipulation by a purchaser of a trade or business that he will not exercise the same trade or business so as to interfere with the value of the trade or business purchased, see Massari v. Selciccio, 102 Fla. 847,  136 So. 522, in which the case of Lee v. Clearwater Growers Assn. 93 Fla. 214, 111 So. 722, was cited with approval.
It would seem therefore that the enforceability of contracts of this nature is determined by the reasonableness of the contract and the restraint imposed, as being necessary to the legitimate protection of the employer's business. That a customer's list is, in a case of this kind, valuable property of the employer is evident, and for an employee to use for his own or another's benefit his knowledge of such a list as pertains to the limited territory in which he has been working, to the detriment of the interest of his former employer, is generally held to constitute a species of unfair competition. To hold these contracts unenforceable would be to allow an unscrupulous competitor to greatly injure or destroy a rival business, and, incidentally, throw many people out of work. Empire Steam Laundry v. *Page 157 
Lozier, 165 Cal. 95, 130 P. 1180; New Method Laundry Co. v. McCann (Cal.), 161; Colonial Laundries v. Henry (R. L.)138 A. 47; Dairy Dale Co. azevedo, (Cal.) 295 P. 10; Olschewski v. Hudson, (Cal.) 262 P. 43; French Bros. Bauer Co. v. Townsend Bros. Milk Co., et al., (Ohio) 152 N.E. 675.
In one of the briefs filed in this case our attention has been called to the fact that such contracts as the ones here involved are in accord with code provisions which have been adopted and promulgated under the authority of the National Recovery Act; that the code of distributors of milk in Dade and Brevard Counties contains the following:
"It shall be considered unfair practice to do any of the following things in the conduct of the milk business in the Miami Marketing Area:
"Sixth Clause:
"(3) To place an employee in a territory which within 12 months previously he has covered as milk delivery salesman for another firm, person or corporation."
"This Code was adopted by a majority of the distributors of the area and is under the control of the Florida State Milk Control Board.
"Again, in the Chicago Marketing Agreement for Milk, the license issued by the Secretary of Agriculture, United States Department of Agriculture, United States Department of Agriculture, provides in part:
" 'The following practices are considered unfair and shall not be engaged in * * *
" '16. It shall be considered unfair practice to place a salesman on a route, which within one year previously he had covered in whole or in part for another distributor.'
"As shown by the cited authorities, the milk business is exactly the same as the laundry business in this respect. *Page 158 
Provisions of this type have been approved by the President of the United States himself. That they are embodied in the Codes show their urgent necessity and utterly disprove the contention that such a provision is against public policy in any form."
In the case of Eureka Laundry Co. v. Long, supra, a case closely in point, the Supreme Court of Wisconsin said:
"The first question raised by the appeal is the validity of the portion of the contract set out in the foregoing statement of facts wherein the defendant agrees during the term of his employment and for two years thereafter not to solicit laundry trade from any customers of the plaintiff who have been supplied by him during his employment, and for two years thereafter, either directly or indirectly, engage in the laundry business in that part of Milwaukee known as 'Route B.' Were this a case where the defendant had sold the plaintiff the laundry business and had made the covenants above referred to, no question as to the validity of the contract would arise under the decisions of our own state. Cottington v. Swan,128 Wis. 321, 107 N.W. 336; My Laundry Co. v. Schmeling,129 Wis. 597, and cases cited on page 606, 109 N. S. 540. It meets all the requirements of the rule laid down in Tecktonius v. Scott,110 Wis. 441, 86 N.W. 672, to the effect that such contracts, in order to be valid must be limited as to time, space, and extent of trade, to what is reasonable under the circumstances of the case, and it is much more limited as to time and space than the contract held valid in Cottington v. Swan,128 Wis. 321, 107 N.W. 336.
"The question raised, Does it make any substantial difference whether the thing of value bargained for is contained in a contract of sale or in a contract of hiring? If it is lawful and proper to protect a business just about to *Page 159 
be acquired from certain acts by the seller who is familiar with such business, why is it not equally lawful and proper to protect an established business from such acts by one who has become familiar therewith? We perceive no difference in principle. The purchaser says to the seller: 'You are familiar with this business. You know your customers. Your personal acquaintance with them is such that you could divert their trade from me if you saw fit. Now I will purchase your business upon the express condition that you will agree for a limited length of time not to engage in a like business in this locality. At the expiration of that time I shall know my business and my customers well enough to be able to protect myself.' So the owner of an established business says to a prospective employee: 'In the employment you will become familiar with the customers of my business in a way that I cannot. You will meet them frequently, while I see them rarely, if ever. Now, I will hire you upon the express condition that you will agree for a limited length of time not to solicit trade from such of my customers as you may have supplied while in my employ, and will not engage in my business within a limited time in the territory you have occupied. At the end of that time my new employees will be sufficiently well acquainted with my customers to protect my business.' Why is not one contract as valid as the other? Both are based upon valuable considerations. If it be said that the latter contract tends unreasonably to hamper employees in their quest for employment, the answer is: Whatever is reasonably necessary for the protection of a legitimate business promotes the best interest of the employees of that business. No doubt experience has shown that owners of a business like that of plaintiff need such protection in a large city, where the customers as a rule come in contact only with the employee, *Page 160 
and that his personality and his acquaintance with them has much to do with the retention of their patronage. Freedom to contract must not be unreasonably abridged. Neither must the right to protect by reasonable restrictions that which a man by industry, skill, and good judgment has built up be denied. If the restrictions are not otherwise contrary to public policy, they must be held to be valid when they appear to be reasonably necessary for the fair protection of the employer's business or rights, and do not unreasonably restrict the rights of the employee, due regard being had to the subject-matter of the contract, and the circumstances and conditions under which it is to be performed. My Laundry Co. v. Schmeling, 129 Wis. 597,109 N.W. 540; Gibbs v. Consolidated Gas Co., 130 U.S. 396, 9 Sup. Ct. 553, 32 L.Ed. 979; Anchor Electric Co. v. Hawkes,171 Mass. 101. 50 N.E. 509, 41 L.R.A. 189, 68 Am. St. Rep. 403; Harrison v. Glucose Sugar Refining Co., 116 Fed. 304, 53 C. C. A. 484, 58 L.R.A. 915.
" 'If the restrictive covenants of the contract are held valid, it is apparent that an action at law, for their breach, would no more furnish an adequate remedy than would an action at law for the breach of similar covenants in a contract for the sale of a business. That equity alone can furnish an adequate remedy in such cases is well settled. My Laundry Co. v. Schmeling, 129 Wis. 597, 109 N.W. 540.' "
For the reasons above pointed out, I am unable to agree that a contract of this nature, when fair and reasonable as to time and territory, is contrary to public policy and unenforceable in a court of equity.
The only feature of the contracts here in question which give me any doubt on the subject of their enforceability in equity is the fact that they do not provide for the employment of appellants for any particular period of time, inasmuch *Page 161 
as they were subject to termination on one week's notice, either by the employer or the employee. It is true that this is a point which the authorities do not appear to give any weight to. But the fact that these appellants had been in the employment of the Miami Laundry Company for several years at the time they left that company and went into the employment of a rival company indicates that there was no intention on the part of the Miami Laundry Company to throw them out of employment without just cause.
There is nothing in the contract here involved which unduly invades the liberty of the employee, such, for instance, as a provision which would preclude the employee from joining a labor union or quitting the employment of the Laundry Company and going to work for some other company whenever he got ready, provided he gave the same one week's notice to the Laundry Company which the Laundry Company would have to give to him in case they decided to discharge him.
Nor is this a case where some strong gargantuan industrial corporation is attempting to oppress the weak. The record in this case shows that the Miami Laundry Company had been in business in Miami for over twenty years; That it had, throughout that period, made some money each winter and lost money each summer, with the exception of the summers of 1925 and 1926; that it managed to survive the collapse of the boom, but like many other similar industries, it went on the rocks when the devastating depression had been in full swing for awhile and finally wound up in the bankruptcy court. So I gather from this record that here we are dealing with one of those many small industries, independently operated, not as a part of a chain of some gigantic system, but as a single unit, which is merely *Page 162 
attempting by a contract with its employees to make a reasonably necessary and legitimate effort to protect and preserve its own business from unfair competition. The bill did not seek to enjoin the former employees from soliciting and obtaining customers for the rival company anywhere else in the City of Miami or State of Florida except as to that route and those customers within the described limited territory in Miami which they had been serving as employees of the old company when they quit its employment. Self preservation is the first law of nature, and the power to make fair and reasonable contracts to that end should not be denied to those industries of the nature here involved, which while they afford some profit to their owners, likewise furnish employment to such a large number of people in this State. I hardly think, therefore, that it lies within the province of this court, in the absence of any legislation on the subject, to hold that such a contract is contrary to public policy, or to deny the only adequate remedy for its enforcement, when the aid of equity is sought on proper pleadings and proof.
I heartily agree that contracts of this nature should be carefully scrutinized by the courts, and whenever they are unreasonable, or impose undue hardship upon the employee, a court of equity should not lend its aid to their enforcement. Nor should they be enforced unless there is a clear showing that the loss to the employer is irreparable and his remedy at law inadequate. And the burden is upon the employer to show both the necessity for, and the reasonableness, of the contractual restraint which he seeks to enforce.