ARGUED SEPTEMBER 10, 1962.
DECIDED OCTOBER 1, 1962.
Injunction, etc. Case No. 21753 from Worth Superior Court. Case No. 21803 from Tift Superior Court. Before Judge Gray.
Irving K. Kaler, S. B. Lippitt, for plaintiff in error.
David Jones, Bob Reinhardt, Cain Smith, contra.
The contract of employment contained a restrictive covenant not to engage in a similar business during employment and for a period of two years after the employment is terminated in a defined territory where the employer does business which is not unreasonable and is valid. At the interlocutory hearing the evidence showed the former employee was violating the terms of the contract, and it was error to refuse to enjoin such violations.
ARGUED SEPTEMBER 10, 1962 — DECIDED OCTOBER 1, 1962.
These two cases arise out of equitable petitions to enjoin former employees from violating their respective employment contracts which contain restrictive covenants in which the employees, who are the defendants in error along with their new employer, agreed that during employment and for two years after its termination they would not solicit business or otherwise enter into or assist others in competing in a business similar to that of the plaintiff employer. The facts in each case are, in substance, the same although they do differ in some degree but not in the material issues before the lower court.
Counsel agreed that the contracts are reasonable as to time, and the court had for consideration the single question of whether the restrictive covenants in the contracts are reasonable as to territorial limitations. The uncontested evidence showed that the employer did business in every city contained in the restricted areas, the employees attended special service schools held by the employer, had access to customers' lists of their respective assigned routes, to confidential bulletins and confidential information about pest control and termite eradication, and were acquainted with a number of customers in certain towns and cities in the trade areas, having obtained these customers themselves, had contacted several former customers of the employer since the termination of employment but before the two-year period of restraint had ended and since entering new employment with a company in competition with their old employer. The evidence was in conflict as to many issues, particularly as to what areas the defendants had worked under the restrictive covenants and as to what customers' lists the employees had access to.
The lower court issued separate temporary restraining orders pending a hearing, and after a hearing in each case found from the evidence before the court that the territorial limitations included in the restrictive covenants in the contracts are broader than are reasonably necessary to protect the employer, and for this reason, the interlocutory injunctions prayed for by the employer-petitioner were denied. The exceptions are to these judgments.
With full knowledge of the numerous decisions by this court involving contracts of the class here in question this court clearly and correctly stated the elements essential to validity in Thomas v. Coastal Indus. Services, Inc., 214 Ga. 832 ( 108 S.E.2d 328), as follows: "Reasonableness as to territory depends, not so much on the geographical size of the territory, as on the reasonableness of the territorial restriction in view of the facts and circumstances of the case. Rakestraw v. Lanier, 104 Ga. 188, 195 ( 30 S.E. 735, 69 ASR 154). `. . . as a matter of law, such a contract is to be upheld, if the restraint imposed is not unreasonable, is founded on a valuable consideration, and is reasonably necessary to protect the interest of the party in whose favor it is imposed, and does not unduly prejudice the interests of the public.'" This clear statement of the law leaves only an examination of the facts here involved to determine if the contract is valid and its violation should be enjoined. By the restrictive covenant the employee agrees that while employed and for a period of two years after his employment is terminated he will not for himself or others, directly or indirectly, call upon, solicit business or take orders from any customer of the employer, or otherwise engage in the same type of business in a defined area where the employer is doing business. Such restriction is reasonable as to time and territory and is not otherwise unreasonable. Burdine v. Brooks, 206 Ga. 12 ( 55 S.E.2d 605); Kirshbaum v. Jones, 206 Ga. 192 ( 56 S.E.2d 484); Northeast Ga. Artificial Breeders Assn. v. Brown, 209 Ga. 547 ( 74 S.E.2d 660).
The mere fact that while the employer does business in the entire territory, the employee did not work all the territory, would not render it unreasonable to bar the employee as provided in the contract. See Northeast Ga. Artificial Breeders Assn. v. Brown, supra. It is shown by this record that the employee had access to business information, data, technical developments and other restricted information belonging to the employer. Thus it is shown that the restriction is necessary to protect the employer. The evidence shows that this business is highly competitive and secret, which requires continued changes in engineering and technical skill. This employee is shown to have had access to such information, and he was given courses of training which could be used against the employer. In the light of this undisputed evidence, the fact that the employee did not actually work in all the territory embraced in the restriction is immaterial. His knowledge of the employer's business as thus acquired could be effectively used to the detriment of the employer throughout the territory embraced since the employer was doing business in that entire area. The employee was trained for the kind of work carried on throughout the area covered by the restriction and under the contract he was subject to be sent to all parts of that area. We hold that the restrictive covenant upon which this action is brought is legal, valid and enforceable. Therefore, it appearing without dispute that the defendant is violating the contract, a judgment enjoining further such violations was demanded, and the court erred in denying the injunction.
Judgment reversed in each case. All the Justices concur.