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01/07/76 WORGESS AGENCY v. LANE AUTO-OWNERS

January 7, 1976

WORGESS AGENCY, INC.
v.
LANE; AUTO-OWNERS INSURANCE COMPANY V. MICHIGAN NATIONAL BANK



Appeals from Calhoun, Richard Robinson, J.

Leave to appeal denied, 396 Mich .

R. B. Burns, P. J., and D. E. Holbrook and D. F. Walsh, JJ.

SYLLABUS BY THE COURT

1. Contracts -- Construction of Contracts -- Sale of Business -- Sale of Good Will -- Implied Covenants.

The sale of a business along with its accompanying good will gives rise to a covenant precluding the seller from soliciting back to himself that which he has sold.

2. Contracts -- Sale of Business -- Express Restrictive Covenants -- Implied Covenants -- Question of Fact -- Jury.

An express restrictive covenant by the seller of a business not to compete in the field of the business sold for a specified period does not preclude the existence of an implied covenant not to solicit the customers of the business after the expiration of the specified period; it is a question of fact for a jury whether a seller has refrained from solicitation for a sufficient length of time where it is alleged that the seller is attempting to improperly regain that which he sold for a fair consideration.

3. Contracts -- Sale of Business -- Implied Covenants -- Restraint of Competition -- Relevant Considerations.

Facts which are relevant to the determination of the existence of an enduring implied covenant not to solicit the customers of a business which has been sold are: the length of time since the seller's last contact with the customers of the business, the seller's continued participation in the business after the sale, the length of time between the completion of the payment of the purchase price and the beginning of solicitation by the seller, as well as any other relevant evidence.

The opinion of the court was delivered by: Holbrook

Complaint by the Worgess Agency, Inc., Donald R. Worgess, Grethe Worgess, Russell V. Worgess and Charlotte Worgess against Elmer Lane and Auto-Owners Insurance Company for damages and injunctive relief from breach of contract arising out of the sale of an insurance agency. Counterclaim by Elmer Lane against the above-named plaintiffs and against Michigan National Bank and Lorraine Traut for damages for wrongful termination from a profit sharing plan and for wrongful withholding of salary. Partial summary judgment for defendants Elmer Lane and Auto-Owners Insurance Company. Plaintiffs appeal.

This is an appeal from orders granting two partial summary judgments in favor of defendants Elmer Lane and Auto-Owners Insurance Company. The facts were certified to this Court and are involved.

Plaintiff, Worgess Agency, Inc., has been engaged in business as an independent insurance agency in the City of Battle Creek, Michigan, for a period of approximately 35 years. One of the insurance companies plaintiff represented was defendant Auto-Owners Insurance Company. Defendant Elmer Lane was the principal officer and shareholder of Elmer Lane, Inc., which was engaged in a business similar to plaintiff's and for a like number of years, also in the Battle Creek, Michigan, area. Late in 1963, the parties agreed upon a sale by Elmer Lane of his insurance agency to the Worgess Agency. To that end, a "sales agreement" was executed by the parties to become effective January 1, 1964. The sales agreement provided for the transfer of all of the common stock of Elmer Lane, Inc. and:

"1. * * * All of the assets used or useful in the business of the insurance and bonding business known as Elmer Lane, Inc., including office furniture, fixtures and equipment, and all expiration records, line records, daily reports, all other records, documents, books, writings and papers, including good will, effective as of January 1, 1964, and the good will in the name Elmer Lane, Inc., ...


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