United Insurance Agency, Inc. v. Martin

J. Fred Jones, Justice. This is an appeal by United Insurance Agency, Inc. from a chancery court decree in favor of the respondent-appellee Herbert Ray Martin in which the chancellor granted Martin’s motion for summary judgment on a petition filed by United for a restraining order and damages for breach of an employment contract. The petition alleged that United is an Arkansas corporation with principal offices located in El Dorado, Union County, Arkansas; that on or about May 24, 1972, Martin entered into an employment agreement with United Insurance Agency, a partnership, and that the plaintiff corporation had succeeded to the interest of the partnership in said agreement. A copy of the entire agreement was attached as an exhibit to the petition and its pertinent provisions are as follows: “THIS AGREEMENT made and entered into this 24 day of May, 1972, by and between UNITED INSURANCE AGENCY, a partnership (hereinafter referred to as ‘UNITED’) and HERBERT RAY MARTIN, (hereinafter referred to as ‘MARTIN’). WITNESSETH: UNITED hereby employs MARTIN, and MARTIN hereby accepts employment from UNITED on the following terms and conditions: 1. MARTIN agrees to devote his entire time during his employment hereunder faithfully and diligently to the service of UNITED. During this employment, he will not, directly or indirectly, place any insurance whatsoever with or through any other insurance agency or company or the agent, representative or broker thereof, unless authorized and directed to do so by UNITED. 2. MARTIN agrees that within the territory assigned to him by UNITED he will solicit and procure applications for fire, life, casualty, accident, disability, health and all other types of insurance and will render such services to policyholders and perform such other incidental duties as may be requested of him from time to time by UNITED. 3. (a) MARTIN shall be paid such compensation as the parties may determine, from time to time, by mutual agreement during his employment. It shall not be necessary to set forth the compensation in writing but such compensation is and shall be a material part of the consideration for this Agreement. (b) New York Life Insurance Company and/or other insurance companies pay commissions, and/or compensation direct to the individual broker. The parties specifically understand, covenant and agree that any and all commissions, checks, monies or compensation of any type or nature paid, accrued or due as a result of work performed by MARTIN while in the employment of UNITED belongs to UNITED and will be immediately endorsed and paid over to UNITED as its property; and (c) In the event of the termination of the employment of MARTIN for any cause whatever, any and all commissions, monies, expenses, or compensation of any type or nature which has accrued at the date of termination or may thereafter accrue shall belong to and be the property of UNITED, regardless of when the same may be paid. * * * 5. MARTIN AGREES that he will not, within a period of five (5) years following the date of the voluntary or involuntary termination of his employment with UNITED, either directly or indirectly, by and for himself, or as agent of another, or through others as his agent within an area of a radius of seventy-five (75) miles of the City of El Dorado, Union County, Arkansas: (a) Engage in, or in any way be connected with, the fire, life, casualty, accident, disability, health or any other type of insurance business, directly or indirectly. ♦ * * 8. In the event of any breach or violation by MARTIN of this contract, UNITED shall have the right to enforce specific performance of all the agreements on the part of MARTIN. The rights and remedies given to or reserved by the employer hereunder shall be construed and held to be accumulated and not exclusive of any right or remedy otherwise available. 9.1 This contract may be terminated at any time by UNITED or MARTIN by mailing or delivering to the other written notice of termination. 9.2 Upon termination of MARTIN’S employment, his compensation and right to any compensation shall absolutely cease, and neither MARTIN nor any person, firm or corporation claiming under or through him shall have any claim whatsoever against UNITED for any compensation of any nature, except only for the agreed compensation which in the usual course of business had become certain and due and payable to MARTIN prior to the effective date of such termination. 9.2» No modification of or addition to this Contract shall be valid or effective for any purpose unless embodied in an endorsement of this Contract signed by a partner of UNITED and by MARTIN.” The petition then alleged that on or about August 15, 1972, Martin terminated his employment with United and became associated with Benton, Owens, Martin, Inc., an insurance agency with principal offices located in Little Rock. The petition then alleged that subsequent to August 15, 1972, Martin had engaged in activities which violated the terms of the employment agreement with United; and, the petition prayed permanent injunction restraining Martin from the act of competing directly or indirectly with United within an area having a radius of 75 miles of the City of El Dorado for a period of five years from August 15, 1972. The petitioner then alleged monetary damages and prayed an award of such damages as United would be able to prove. Martin filed motion for summary judgment alleging that there was no genuine issues as to the terms of the employment agreement; that the agreement is void and unenforceable, and that he was therefore entitled to a summary judgment in his favor. Martin also filed an answer in which he admitted that he was a resident of Pulaski County. He denied generally the allegations in the petition and alleged damages by way of counterclaim. United filed a reply to motion for summary judgment in which it simply stated as follows: “There are material issues of fact disputed in this cause and Defendant is not entitled to a Summary Judgment as a matter of law. The Agreement involved in this dispute is not void and unenforceable as a matter of law.” The appellant argues that the summary judgment should be reversed because in effect it makes all covenants not to compete invalid per se if they involve a period of five years. We do not so construe the effect of the chancellor’s decree or order granting the motion for summary judgment in this case. In determining the validity of a contract not to compete, the courts have always examined the facts and circumstances of the particular case. Miller v. Fairfield Bay, 247 Ark. 565, 446 S.W. 2d 660 (1969). It is apparent from the record that the chancellor did consider the contract, pleadings, briefs, and oral arguments in determining that the five year restriction was unreasonable and the contract void in this case. It would thus appear that the chancellor examined the particular circumstances surrounding this case and not solely the length of time involved in the covenant. Such examination of the facts, however, does not preclude a summary judgment. Ark. Stat. Ann. §29-211 (Repl. 1962 and Supp. 1973) sets out the procedure for summary judgment, and §29-211 (c) states the situations where a summary judgment is required as follows: “. . . The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” The agreement in this case was entered into between the appellee Martin and a partnership insurance agency. The agreement was then apparently assigned by the partnership to the appellant corporation. The agreement does not define the appellee’s allotted territory nor does it set out the remuneration the appellee is to receive for his services, but only provides that his compensation is to be determined from time to time by oral agreement. The agreement provides in express terms that it may be terminated at any time. The agreement not only provides in paragraph 3 (c) that Martin is to forfeit to United all remuneration accrued at the time of termination of the agreement for any cause, the agreement then attertipts to prevent Martin from engaging in, or in any way becoming connected with, the insurance business directly or indirectly within a radius of 75 miles of El Dorado for a period of five years. It is true that upon a motion for summary judgment the burden of demonstrating the nonexistence of a genuine fact issue is upon the moving party (Wirges v. Hawkins, 238 Ark. 100, 378 S.W. 2d 646 [1964]), but in the case at bar the appellant does not challenge the judgment on the ground that there were facts in dispute, except by the mere allegation in its reply to the motion for summary judgment. We conclude that the chancellor was right in granting the motion for summary judgment in this case. The decree is affirmed. George Rose Smith and Fogteman, JJ., dissent.