PURITAN/CHURCHILL CHEMICAL COMPANY v. McDaniel
PURITAN/CHURCHILL CHEMICAL COMPANY v. McDaniel
Opinion of the Court
Puritan/Churchill Chemical Company sought to enforce its employment contract against former employee, Ronald L. McDaniel, but was denied injunctive relief on the basis that its restrictive covenants were unreasonable and overbroad. Puritan/Churchill appeals. We reverse.
Ronald L. McDaniel worked for more than thirteen years for Puritan/Churchill as a sales representative for its sanitary maintenance chemicals and other specialty chemicals under several employment contracts, the most recent one having been entered upon in June 1, 1980.
In October, 1980, McDaniel successfully negotiated a three-year sales contract between Puritan/Churchill and one of his principal clients, the Graniteville Company.
Meanwhile, Graniteville had let its cleaning supplies contract out for bid. McDaniel resigned from Puritan/Churchill on April 8, 1981. Mrs. McDaniel received an invitation to bid from Graniteville on April 13, and Ronald McDaniel successfully negotiated a contract with Graniteville on behalf of Chemtrol, Inc.
Puritan/Churchill then sought injunctive relief to enforce the restrictive covenants in its employment contract with McDaniel. The trial court found the covenants to be void, and refused to issue an injunction. Puritan/Churchill appeals.
1. Under the contract, McDaniel was restricted from attempting to capture or divert any of Puritan/Churchill’s business in the territory (or territories) wherein he had been employed during a two-year period.
2. As other issues now remain for decision, we remand this case for further proceedings not inconsistent with this opinion.
Judgment reversed and remanded.
The contract was for one-year term, automatically renewable absent 30 days’ notice of non-renewal by Puritan/Churchill.
The three-year contract purported to set prices for one year as of the prices quoted September 20, 1979; the next two years’ prices, to be negotiated based on the wholesale price index for industrial chemicals. In 1979 and 1980, Puritan/Churchill’s sales to the Graniteville Company were over $150,000 and $250,000, respectively.
McDaniel stated in his affidavit that the letter was within company policy.
We note here that in Puritan/Churchill Chemical Co. v. Eubank, 245 Ga. 334, 335 (1980), we held that the broader restrictions on “owning, managing, controlling, operating or even participating in owning, managing or controlling any business which is in competition with Puritan” in Puritan/Churchill’s former contract were too vague and overbroad to be reasonable. The present contract does not contain this or similar provisions.
Concurring Opinion
concurring specially.
Under the strict interpretation of covenants against competition given by this court in prior cases, the trial court should be affirmed.
Thus, I believe we have introduced into the law of employee restrictive covenants a balancing test — the propriety or impropriety of the employee’s conduct weighed against the reasonableness or unreasonableness of the covenant against competition. However unpredictable and unmanageable this balancing test may prove to be in future cases, it is permissible in equity cases such as this.
A more manageable standard would be that a reasonable restrictive covenant be enforced against an employee who voluntarily leaves the employer to go into competition, but not be enforced against an employee discharged without good cause. The majority apparently opt for the less manageable balancing test. I concur in the judgment only.
I am authorized to state that Justice Gregory joins this concurring opinion.
Southeastern Beverage &c., Inc. v. Dillard, 233 Ga. 346 (211 SE2d 299) (1974), and cases cited there; C. V. Mosley Const. Co. v. McCuin, 238 Ga. 503 (233 SE2d 763) (1977).
Reference
- Full Case Name
- PURITAN/CHURCHILL CHEMICAL COMPANY v. McDANIEL Et Al.
- Cited By
- 6 cases
- Status
- Published