Shirk v. Loftis Bros. , 1918 Ga. LEXIS 398 ( 1918 )

George, J.

(After’ stating the foregoing facts.)

1. The contract involved is in restraint of trade, but the restraint is limited as to both time and territory, and is not otherwise unreasonable. Jenkins v. Temples, 39 Ga. 655 (99 Am. D. 482); Rakestraw v. Lanier, 104 Ga. 188, 196 (30 S. E. 735, 69 Am. St. R. 154). In the opinion in the case last cited it was said: “But if, considered with reference to the situation, business, and objects of the parties, and in the light of all the surrounding cimcumstances with reference to which the contract was made, the restraint contracted for appears to have been for a just and honest purpose, for the protection of the legitimate interests of the party in whose favor it is imposed, reasonable as between them, and not specially injurious to the public, the restraint will be held valid. The true test, therefore, of the validity of such a contract is, whether it is supported by a sufficient consideration, and whether the restraint is reasonable.” This court has thus adopted the test so clearly stated by Tindal, C. J., in Horner v. Graves, 7 Bing. 743: “We do not see how a better test can be applied to the question whether reasonable or not, than by considering whether the restraint is such only as to afford a fair protection to the interest of the party in favor of whom it is given, and not so large as to interfere with the interest of the public. Whatever restraint is larger than the necessary protection of the party can be of no benefit to either; it can only be oppressive, and, if oppressive, it is in the eye of the law unreasonable. Whatever is injurious to the interests of the public is void, on the grounds of public policy.” While a restrictive agreement by one who enters another’s employment is not ancillary to the sale of a business, or the good will thereof, there can be no doubt that an agreement that during the term of the service, and for a reasonable period thereafter, the employee shall not become interested in or engage in a rival business, is reasonable and valid, the contract being otherwise legal and not in general restraint of trade. This is the rule followed by a majority of the American courts and is supported by reason. See 6 R. C. L. 805, and cases cited in note; Kinney v. Scarbrough Co., 138 Ga. 77, 83-83 (74 S. E. 773, 40 L. R. A. (N. S.) 473), where the restrictive agreement ancillary to the contract of employment was held illegal because the restraint was unlimited as to territory. With respect to contracts of the character here under consideration this court seems to be committed to the rule that the contract must be limited both as to time and territory, and not otherwise unreasonable. If limited as to both time and territory, the contract is illegal if it be unreasonable in other respects. And with respect to restrictive agreements ancillary to a contract of employment, the mere fact that the contract is unlimited as to either time or territory is sufficient to condemn it as unreasonable. In this view of the matter, the rule announced by this court is in harmony with the rule generally followed by the courts of other States. With respect to a restrictive agreement ancillary to the sale of a particular business and the good will thereof, the absence of a limitation as to time or territory may become of considerable importance in determining whether the restraint imposed is so unreasonable as to be violative of public policy, and in many cases may become controlling upon that question. See, in this connection, Seay v. Spratling, 133 Ga. 37 (65 S. E. 137).

.3. On the question of consideration, if there be a legal consideration, this is sufficient. The court will not make a bargain for the parties, and equity will not refuse to enforce the restrictive covenants unless there be such gross inadequacy of consideration as to shock the conscience and amount in itself to evidence of fraud. Rakestraw v. Lanier, supra. The case differs from the class of cases of which Hammond v. Georgian Co., 133 Ga. 1 (65 S. E. 124), is an example. Where an employee agrees to give his entire service to an employer, equity will not enforce the negative covenant, whether implied or express, unless the services of the employee are of peculiar merit and character and can not be performed by others. In the light of the foregoing we are of the opinion that the contract involved in this case is an enforceable one.

3. Did the plaintiff in error violate the terms of his contract of employment with the 'company? He contends that by the terms of the contract he was not to engage in the business of selling diamonds, watches, jewelry, optical supplies, etc. Admittedly, the plaintiff in error has installed in his place of business a stock of optical supplies and is selling them to the public generally, including the former customers of the company. It is not disputed that the repairing of watches, clocks, and jewelry sold by the company under a guaranty was a part and parcel of its business, and that the principal duties of the plaintiff in error while in the service of the company were the making of these repairs. The contract did not specify the particular services to be performed by the plaintiff in error. Generally he was to do anything required of him by the company in connection with the line of business carried on by it. Hnder the evidence the court did not abuse his discretion in finding that the business conducted by plaintiff in error was in violation of the restrictive covenants in his contract, and in granting an interlocutory injunction.

Judgment affirmed.

All the Justices concur.