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American Food Management, Inc. v. Henson





APPEAL from the Circuit Court of Jackson County; the Hon. ROBERT W. SCHWARTZ, Judge, presiding.


Defendants appeal from a judgment of the circuit court granting a permanent injunction which prohibited the violation of restrictive covenants in a contract of employment and a contract for furnishing food services. We consider provisions of two written contracts although litigation in the case has dealt principally with but one of them, that containing the employee's covenant not to compete.

Plaintiff, American Food Management, Inc., a Missouri corporation, provides food services in several States to facilities such as college dormitories. One of plaintiff's numerous contracts for such services — and one of the two contracts with which we are here concerned — was with the Stevenson Arms Dormitory in Carbondale, Illinois. This contract was signed for Stevenson Arms Dormitory by "Lewis H. Smith" as an individual without any reference to a partnership or to any other type of business association. Lewis Smith is a practicing dentist who owns and operates the Stevenson Arms Dormitory. By the express terms of the contract it was to become effective on February 21, 1981, and was to expire three months later on May 21, 1981. This contract provided:

"The Dormitory [Stevenson Arms] agrees that it will not hire management employees of American Food Inc. for the purpose of providing food service for the duration of the contract and one year thereafter."

No question was raised in the trial court as to the validity of this contractual provision.

In the operation of its business plaintiff uses a system of "absentee management," relying heavily upon the services of its unit managers. Defendant Wesley Henson had worked in food preparation under plaintiff's supervision while he was a student at Southwest Baptist College in Bolivar, Missouri. As he was finishing his final semester of college during the fall of 1979, he entered into an oral agreement with plaintiff to work as one of its unit managers at an annual salary of $9,000. In order to take the position in Chanute, Kansas, where Neosha Community College is located, defendant Henson moved to that city. He began to work for plaintiff on January 3, 1980.

Approximately a week to 10 days after he had begun working he received in the mail a letter mailed by plaintiff to him at Neosha Community College, instructing him to sign the original and one copy of the written contract enclosed, which contained a covenant not to compete expressed as follows:

"5. The Manager agrees that in consideration of the terms of this contract, the training which he received, and his continuing good relationship with American Food, that he will not operate, establish, re-establish, open, reopen or in any manner become interested, directly or indirectly, either as an employee, owner, partner, agent, stockholder, director, or officer of a corporation, or otherwise, in any business, trade, or occupation similar to the business of American Food or in the business of college food service in any form within a TWENTY-FIVE (25) mile radius of any unit at which he has worked for American Food, which is operating on the date of this contract or commences to or agrees to operate during the life of this contract, for a term of TWO (2) years after the termination of this contract."

It is undisputed that reference to a written contract or to an agreement not to compete was never made by either party to the employment agreement at any time prior to Henson's receipt of the written contract in the mail after he had begun to work for plaintiff. Plaintiff's president, Roger Neilson, testified at the hearing for injunctive relief that if Henson had refused to sign the employment contract, he would have "fired" him and that plaintiff requires all its unit managers to sign a covenant not to compete. Henson testified that when he received the written contract and instruction to sign it, he did not believe he had an option as to whether to sign it. Asked what he thought at the time, Henson answered,

"I thought that I was — I was told that I was to sign the contract, and I thought that if I signed it, then I would have my job, but if I did not sign the contract, then I would not have a job and I had already moved to Kansas and I would have to find another job somewhere else."

Henson signed the contract, which contained as its final provision,

"7. In so far as it is possible to do so, under the laws of any state in which this contract is to be enforced, the parties agree that the laws of Missouri shall apply."

Prior to Henson's receipt of the written contract neither party to the agreement had referred to the application to the employment agreement of the laws of any jurisdiction.

Henson had worked for plaintiff approximately 18 months when, in compliance with his written contractual agreement, he gave in writing, in a letter dated August 20, 1981, 21 days' notice of the termination of his contract with plaintiff. At that time he was serving as the manager of food services for the Wilson Hall Dormitory, located in Carbondale, ...

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